Back in the 1990's, global debt was $40 Trillion. Today it's at an astounding $250 Trillion! The dishonest monetary system is a massive bubble looking for a pin. The ideas in favor of sound money are more important now than ever before.
Back in the 1990's, global debt was $40 Trillion. Today it's at an astounding $250 Trillion! The dishonest monetary system is a massive bubble looking for a pin. The ideas in favor of sound money are more important now than ever before.
Back in the 1990's, global debt was $40 Trillion. Today it's at an astounding $250 Trillion! The dishonest monetary system is a massive bubble looking for a pin. The ideas in favor of sound money are more important now than ever before.
Hello everybody and thank you for tuning in to the Liberty Report.
With me today is Chris Rossini as co-host.
Chris, welcome to the program.
Good morning, Dr. Paul.
Very good.
What do we have on the agenda today?
We're going to talk about the economy or foreign policy or just what should we talk about?
Today it's going to be debt and boy is there a lot of it.
We read a statistic that in the 1990s global debt was $40 trillion, which is amazing in itself.
But today it's up to $250 trillion.
And we have our own federal government that owes $21 trillion and then they have another underfunded or unfunded liabilities of $210 trillion.
So what do you think, Dr. Paul?
Is the monetary system sound?
Well, the system is working very well for the few.
And I'm just wondering, how can we become that few that do so well under these circumstances?
But that's poking fun at something I think is very serious because sometimes under this situation like this, there will be a change and there will be a downturn.
And some who are very, very wealthy right now might not be very, very wealthy later on.
But no, it's a real challenge because the system is working for the special interest.
There's no doubt.
The people who are in charge, the bankers, the military-industrial complex, the people who believe in debt, on the short run, they're doing very, very well.
But we also know that we have created a situation where there's more hatred and dissension among the classes, the rich versus the poor, than ever before.
You know, people were even more tolerant in the Depression and during wartime than they are today because they're coming close to fisticuffs.
And people even talk about civil strife and civil war because of this.
And that is because under today's circumstances and this debt system that we have, it has caused all this malinvestment.
But Chris, you have to admit, if you look at the statistics and listen to the news, everything is okay.
Trump's been a great cheerleader.
Matter of fact, I think when he came in, he was a cheerleader.
He described everything as being very wonderful and was going to get better and cut taxes and cut regulations.
And I think there is a subjective part of the economy and all that we do that's very important.
So that has given a tremendous boost.
But I think one of our complaints has been that the real problems haven't been addressed, and that is the monetary system which breeds debt.
And that is what we're facing today.
It seems to me that the debt is coming out our ears, and we see hints that something's going to happen.
But so far, the people who are doing well are going to continue to do well until that day comes when the debt has to be paid.
So I think that's something we have to consider.
Yes, and what's very concerning is the mentality that goes along with this.
There is an addiction to debt in our country, whether they be individuals, governments, corporations, states.
And the even more troubling part is they don't believe it has to stop.
They think that this can go on forever.
But we see outside of our country that it always has to stop, whether it be in Venezuela or Turkey.
And the same economic laws apply to Americans.
We're not exceptional in the sense that we can buck economic laws.
And that's very concerning.
And debt, when it gets out of control, always has to be liquidated.
Governments that liquidate, they try to liquidate it and keep things together by inflating and just devaluing the currency.
You pay off the debt with junk money.
Or people declare bankruptcy if they're individuals or company, and that liquidates debt.
Debt under our system is very, very bad and very, very dangerous and very, very large.
And that means the bubble is bigger than ever.
But, you know, it isn't like debt is bad.
There are some people who are very, very frugal.
And in many ways, you know, I admire them.
I know that there are some people who have religious beliefs that believe that debt isn't good.
If they want to buy something, they save their money.
I can remember my parents would save enough money to buy a car, and that would be it.
Oh, that's too slow.
But, you know, in a free market, debt is legitimate, but people have to make choices.
And in a free market with sound money, the money supply isn't expanded just to subsidize debt and pass it out to welfareists and for warmongering.
So in a free market, if people have to save, I remember the first house I bought, I had to go to the savings and loan.
And the savings and loan, one savings loan said, well, people in this town, it's not saving so much money now, but we know this town next door, they have some people who are better savers.
You can go over there and get a loan.
So it was thought that people save money, and that restrained the bubbles.
But that doesn't mean they wouldn't go broke, they could.
But if you borrow money and you use it productively, possibly buying a house or investing in a business, then you can reward the benefits.
The person that loaned your money, you pay them interest and you make profits and you share in this.
But if you lose, you suffer the consequence.
The whole system doesn't come unglued.
Today, just look back to 08 and 09 when the collapse came, debt was out there.
It was all going in the stock market.
It was overextended.
And a lot of people suffered, but a lot of people kept making a lot of money.
So that's the big problem with a debt-rigged system: it's not even.
If everybody, if you printed money massively, like we generally do, if it were to be passed out evenly to everybody and prices went up all the same for everybody, you know, it wouldn't be a big deal.
They double the money supply, it stimulates the economy, salaries go up double, and prices double.
Well, there'd be no reason to do it, but you know, it wouldn't be so harmful, but it never works that way.
Some people benefit at the expense of others.
But debt you have to be careful with.
And debt, when you have an inflationary system in the monetary system and you have a Federal Reserve accommodating debt, they encourage debt.
They insure the debt so that banks are more careless.
And that was more or less what was happening with the housing bubble.
The money was there, and there were all this insurance, and you have FDIC, and the banks were all insured.
So that makes the problem.
And that system has not changed.
Chris, the way I see it, this debt is going to continue for a while longer, but it's going to end badly.
I think about, not that I remember this, but in 1928, there was an election at the time of great prosperity.
And Hoover is running.
And he says, a chicken in every pot and a car in every garage.
And the economy was booming.
And yet, in less than a year, guess what happened?
It was October 29th, 1929.
And things changed dramatically and rapidly.
So it won't happen.
The bursting of the bubble won't be exactly the same because the conditions are different.
But I think there's an absolute rule that when debt gets too large and you can't productively pay it off, it gets liquidated.
So the big question is when and how and how many people are going to suffer and how many people are going to rig the system where they're going to benefit from this mess.
Yes, and the reason why we do these shows is to help people understand the direction that we should go in.
Because when crisis occurs, government is notorious for taking a bad situation and making it worse.
They like to huddle up and try to take advantage of the crisis.
And there's a lot of people that have been wanting a global currency, more centralization.
So they're going to be ready to capitalize.
But our arguments are to go in the opposite direction.
Decentralization, sound money, and market chosen currencies.
The more people that understand it and desire that, the harder it'll make for the people that are looking to centralize.
I think one of the basic problems is that we've lost an understanding of what capital is.
Capital comes from working and having an earnings and that you save a certain portion of that earnings over and above what you need to live.
And that's capital and you can reinvest it or loan it or something along that line.
But this has all changed systematically over 100 years from 1913 on.
It always got worse on what the Fed was expected to do.
And every time there's a crisis, they say, well, we're going to get out of this.
And they get us out and they go back to super inflating, super printing press money.
This is a new paradigm.
And we hear that now.
This is different this time.
We can do this.
And yeah, Venezuelans, Zimbabwe, and a few other countries, they'll get into trouble.
Turkey, countries like that will do it because they're excessive.
But we have the reserve currency in the world and we can dictate.
So we're invulnerable.
But it's the Fed that is the creator of this mess.
And it was designed to help special interests.
And it has.
It's helped the rich get richer and they get the bailout.
But when the Fed is able to create this money and just loan it out, it's loaned out as if it's capital, but it isn't capital.
It dilutes capital because it dilutes the value of what everybody owns.
But it encourages bad investments is what it does.
When they do this, the most important harm that they cause is the destruction of the price of money.
And they do it on purpose because they say low interest rate.
Just think of how they got out of this last downturn.
Well, you know, it's not so easy.
Why Sound Money Matters00:02:29
It's not working.
Old tools aren't working.
You know, usually if interest rates are 7%, we take them down to 4% and everybody's happy.
Well, they went down to zero and nothing happened for years and years until all of a sudden there's been a burst of energy and some of that QE is coming out and being spent.
It's going in the stock market and all these other places.
But this is artificial and there will be a day when the market will demand that we start talking about sound money unless we want to live in total poverty and dictatorship.
But right now we're on the verge of something being needed to be done.
And the question is, what will happen?
Are we ready?
Do we have enough people who understand what sound money is all about?
And quite frankly, I don't think we're quite there.
So if this is delayed a bit, I think it's better for us because the more people that understand this, the better.
But from my experience in Washington, Chris, the people who I met, they never heard of Austrian economics.
They thought, but they just haven't understood real free markets.
But I wanted to give you one sign of benefits that we had there because I've talked about the Fed for all these years.
And nobody in the Congress cared about the Fed.
They never talked about it.
Well, then, how did that?
How did you get that bill passed in the House where they would audit the Fed and check out and find out what they're doing?
Well, that was a reflection of me circumventing the Congress.
I had no clout.
I had no legislative clout.
I wasn't a chairman of some big committee and they weren't going to listen to me.
But we went outside and talked to the people, and the people then lobbied our Congress.
At least have oversight.
At least let's shine a light on the Fed because people were becoming aware of it.
That's very encouraging.
The people are waking up, but so far, the sentiment isn't there in the Congress.
So the big thing is, is when the bus comes, how will the people react?
And of course, how will the Congress react as well?
And I'll close, Dr. Paul.
You know, thank you to the people that do watch this show because you do have an interest, and hopefully, we can pass on some good ideas.
I mean, if you just look at what happened in Turkey, imagine waking up and 35% of your savings are just gone.
And nobody's going to warn you.
The government's not going to say this is about to happen.
They're thinking about themselves.
But you can think about yourself.
Putting Hard-Earned Savings Safely00:03:36
So you can put your hard-earned savings into sound commodities, whatever you decide is best for you.
But also to understand Austrian economics, as Dr. Paul pointed out, go to mises.org, M-I-S-E-S.org.
So much free information to explain how a real sound economy would work, and it could be very beneficial.
And Chris, you've made some good points there.
One of trying to protect oneself and one's family, and that is having a survival instinct if things get really bad, because that's what people can't do very well when it falls apart, like in Venezuela.
It is really, really tough.
It goes back to very primitive bartering and this sort of thing.
So people suffer, but then it can also get very violent.
So I think you should do all that.
The sad part is if you're just frugal and you're a little bit worried and you put your money in a CD and you make 0.5%, it's really cheating, you know, the people who should be rewarded.
And yet the Federal Reserve never cared about that when I brought that to their attention.
Say, well, that's one of those things you have to have to put up with.
But I think there's a lot of things that people do in a survival situation of their investments and earnings and gold and land and being prepared.
But I tell you what, I think the most important investment, and you alluded to it when you mentioned education, the most important thing we do is not only be educated, but do what we can to restore the devotion to liberty, understanding what liberty is all about, that you can be rewarded or you will be punished if you don't work.
And that if people need help, it has to be voluntary.
And in a prosperous society and with the American tradition, believe me, Americans have been very, very generous.
Even under tough times, when they hear of earthquakes and others, they donate billions of dollars.
So I could just think, you know, in a very prosperous economy, people say, yeah, but what about those that fell through the crack?
Well, tell you what, I think the cracks would be very, very minuscule and there would be more wealth from the people who would be willing to help.
But I think the most important thing is to understand what the principles of liberty are because I've argued the case that if a bus comes, which it could, and wiped out the wealth of all of us immediately, just like you said, Chris, that somebody lost 35% overnight in Turkey.
Well, what if everybody lost 85%?
If we had our liberty and we had a sound currency, which could come out of the free market or whatever, but it's just our freedom to work for ourselves and take care of ourselves and keep what we earn and assume responsibilities for ourselves, I think it would be tough.
I think, though, there would be a lot of people helping each other in community spirit.
But I think it would be over in a year.
Can you imagine what it would be like if you knew if you just went to work and you didn't ask Uncle Sam for anything, any help and subsidies and help and make take care of us?
I mean, all of a sudden, there would be the prosperity and we would be out of it and then we'd have our dignity.
That's what is most important.
I've argued the case that even if I were to live in a poorer society and have less wealth in a society that is perfectly free, I would still opt for freedom because I value it so highly.
But we don't even have to consider that because if we have a free society and free markets and property rights, believe me, it will be a wealthy society and history shows that it's always the wealthiest society, the freer it is.
I want to thank everybody for tuning in today to the Liberty Report.