Day of Reckoning Approaches: The Math Is Finally Catching Up To Big Government
It's been reported that (just) the interest payments on the U.S. government's debt will be larger than Medicaid in less than 2 years, and larger than the military budget in 6 years. The math is finally catching up with the big government. Supply & Demand is finally catching up to The Federal Reserve. Change is coming, and believers in omnipotent government are in for a big surprise. Ron Paul discusses on today's Liberty Report.
It's been reported that (just) the interest payments on the U.S. government's debt will be larger than Medicaid in less than 2 years, and larger than the military budget in 6 years. The math is finally catching up with the big government. Supply & Demand is finally catching up to The Federal Reserve. Change is coming, and believers in omnipotent government are in for a big surprise. Ron Paul discusses on today's Liberty Report.
It's been reported that (just) the interest payments on the U.S. government's debt will be larger than Medicaid in less than 2 years, and larger than the military budget in 6 years. The math is finally catching up with the big government. Supply & Demand is finally catching up to The Federal Reserve. Change is coming, and believers in omnipotent government are in for a big surprise. Ron Paul discusses on today's Liberty Report.
Hello, everybody, and thank you for tuning in to the Liberty Report.
Today, we're doing our program by audio, and holidays season is still on, but we'll be back to regular programming with video probably at the beginning of the new year.
But today, along with Chris, we want to talk about the deficits and spending.
Chris, welcome to the program.
It's great to be with you, Dr. Paul.
Thank you.
Good.
It's easy to find material about the deficits because every place you look around, whether they admit it or not, that's about all we do, is expand deficits, expand the need to pay interest on the deficits.
And it's probably, in a way, amazing that we've gotten away with it for so long because there were dire predictions many, many years ago, literally decades ago, that what is happening today was very predictable.
You know, if we maintain the reserve currency of the world and we got to print that money, and debt really didn't have much meaning because we were very powerful militarily.
And if we couldn't pay our bills, we would just print up the money.
And, of course, that undermined and destroyed the gold standard and removed all restraints on the size and scope of government.
But we're in a mess now, and people are starting to admit it, even though the stock market has been a little rocky.
People claim that all this spending and deficit still is holding the economy together.
But if practicality works out and the good theories of the Austrian school are acceptable, we will soon see a downturn in the economy, just as we've seen the downturn in the stock market.
Yes, and we read that the interest just on the national debt will, in the next 18 months, surpass Medicaid costs.
And it's believed that by 2025, they will pass the national defense, or what we call militarist costs.
So the math is catching up with the American empire.
There's not much time left because once you can't pay just the interest on the debt that you've accumulated, you're dead meat.
It's game over.
And, you know, in our own lives, you can buck reality for a little while.
Life gives you a little bit of slack to straighten yourself out, whether it's your health, your relationships, your finances.
But if you don't turn things around, a price has to be paid.
And right now with our government, they're not even close to turning it around.
They're shut down right now, not to rein in the out-of-control spending, which would be admirable.
They're shut down in order because Trump is not able to spend even more on a wall.
So things are going in the wrong direction, and it doesn't look like they're about to turn around anytime soon.
In the old days, people would respond by saying, oh, it's those Democrats.
They're in charge of their spending.
But up until the beginning of this year, guess who was in charge?
And those are the Republicans, and they were not fiscally conservative.
The debt is going up $1.3 trillion per year.
And nobody knows exactly how long that will go, but it is out of control.
It's interesting to see the problems coming, the stock markets problems and all.
And because of the politics of it all, they've already blamed Trump for every single thing in the world, and he deserves a little bit of blame for that, for sure.
But, you know, the stock market downturns and the problems and the deficits, that's been, it's an institution.
It's occurred, you know, last 30 or 40 years.
And if a recession starts this year, it can't be all put on on Trump.
It has to be put on deficit financing, the Federal Reserve inflationism, and all the distortions in the market.
But it is a consequence of both Republicans and Democrat policies because they both endorse intervention.
They believe that the spending should be there for military.
It should be domestic spending.
And they just have come to the point where they don't believe the deficits matter.
But Keynesianism actually teaches it doesn't matter.
As long as you have the reserve currency and people trust the money, ah, that's it.
How long will they have confidence and trust of money?
I think that is the big thing going on today because I think the trust in the American system and our dollar is starting to wane.
But, you know, that is amazing because the competition isn't all that great.
What currency is now available that could easily be used to substitute for the dollar?
People Spend Worry Later00:08:13
There isn't much.
But we also see countries in the East, Russia as well as China and other places are buying a lot of gold.
So I think they have a suspicion that there will be a monetary reform to replace the dollar at one time in the future, which is unknown.
Yes, and the dollar, the national debt, and as you mentioned, the deficits don't matter.
The debt is so big and so many trillions of dollars that it really means nothing to the average American.
It's just pass it off to the next guy.
With the dollar, a hamburger used to be a quarter, now it's $5.
Well, maybe someday it'll be $20, right?
Who cares?
That's life.
No, it's not life.
You can't destroy the currency forever.
Ultimately, it becomes completely worthless.
And someone, some generation, will be holding the bag.
If it's not us, it'll be our kids, our grandkids.
But by the looks of it, you know, it may be us.
So we have to get our own individual houses in order and learn the truth so that at least we can get through the tough times that are ahead.
You know, in a free market, people make decisions, and to some degree they still do, on what they will spend immediately for what their needs are, regardless of what they have, and worry about it in the futures.
In the old days, people would make a decision and say, well, I don't have the money in the bank.
I'm going to save a little bit, then I will be able to buy what I want.
And there was a time preference.
But governments have never been required to do that because they just spend.
And if they have to deal with it, you know, when the time comes, they just either print the money or borrow more money.
So it doesn't work to restrain government.
It will and have restrained people in the private market because people figure, well, I'm going to have to pay for this later on.
But this Christmas is something else.
Either we're on the wrong track or somebody's in for a big surprise.
This Christmas was a great spending Christmas, $850 billion at Christmastime.
And there were a lot of people very, very happy and profits were made and a lot of kids enjoyed all their presents.
But when is that going to be paid for?
That's just a delay.
And that means that maybe in a month or two from now, the spending is going to go way down, which is different than governments.
Governments would just print the money and be able to get by.
But the market forces aren't there to restrain government.
And there's never any restraint on the immediate gratification.
People talk about immediate gratification that has crept into our culture.
And they want And personal debt does get run up to a point where it's unsustainable.
So, people have joined in this idea that you can have everything you want and you spend it and you worry about it later.
And I think a good example of that has been how it was accepted so readily for students to borrow money to go to college.
Well, everybody wants to go to college and pay for it.
Well, we don't have any money, it's too expensive.
They never asked the question why it's so expensive, and that's because the prices were inflated because we were subsidizing universities.
But we have to have it, we have to have it.
And I am astounded as much as I've watched these price inflations in the various sectors of our economy.
I am astounded at what our young people are paying their kids to go through a college, tens of thousands of dollars.
And it's all this immediate gratification that, well, I'm going to have a degree and we'll worry about paying it for it later on.
And the worst part about this, it hasn't improved the education.
And the quality of education goes down, and deficits skyrocket.
And there's no way that the student debt now is up to $1.5 trillion.
That means that whether it's the government debt or even the personal debt, there will be a liquidation.
It's something that's been known throughout the centuries that this kind of attitude exists, and eventually the debt has to be liquidated.
And people will either walk away from it, there will be a declaration of bankruptcy.
Individuals do it all the time.
But the one thing that I am absolutely convinced of is that debt, when you look at the government debt and a lot of individual debt, will not be paid for.
How many people think that if we quit the student loans right now and we say, look, we're changing our ways, you have to pay the debt down, then maybe we'll do something later on.
Can you imagine the people who owe that $1.5 trillion, do you think they could pay it off in 10 years or 20 years?
No, they say, well, we can't even go to the college now.
So it's a system that's not viable.
And yet it's been endorsed philosophically by liberalism and progressivism, believing that only government can take care of it and they can do it and don't worry about it.
But I maintain the argument that there will be a payment.
And when there's a pretense at time preference, we say, well, we'll spend the money now and pay for it later.
When government does that, the debt doesn't get paid, but it gets paid through the penalty of inflation.
And somebody other than the ones who receive some benefits, if they had food stamps or schooling, they don't pay it.
It's transferred.
It'll be inflated away.
And then others suffer for it.
And that's ongoing because that's why the middle class is being wiped out, you know, because of this transfer of payments.
And the penalties go to somebody who never received any benefits.
Yes.
And I'll finish, Dr. Paul, by saying that it is too late to reverse this without pain.
Dr. Paul's right.
There's going to be a major liquidation.
And even if Dr. Paul were president himself and shrank government down to its constitutional size, it would be very painful because so many people have warped beliefs on what government is.
It's their be-all and end-all.
I mean, even if you look at President Trump, he's expanding the size of government everywhere.
And they're still losing their minds over it.
So it's pretty bad.
And the only thing it looks like that will take care of this is the math itself, the economic laws of supply and demand.
And no one, no matter what they do, will be able to stop it.
And, you know, on an individual level, the best we can do is unwarp our own thinking and then share it with others because there's going to be a lot of people getting out of the government cult once their beliefs have been shattered.
Very good.
And I'll close also by following up on this issue of liquidation.
Debt will be liquidated.
Sometimes it's liquidated by an honest upfront bankruptcy.
That does not happen with government.
It won't happen with student loans or anything else.
But the debt usually gets liquidated through the inflation.
But I think the most important thing is to, in my efforts and yours too, Chris, has been to try to explain this to people, to understand why we're in this trouble and why it is dangerous and anticipated.
I think anybody who understood Austrian economics has had no surprises in 2018 other than the fact that it wasn't worse than it was.
And that it is possible to understand it.
So we have an opportunity to explain the economic system.
But in doing this, it should also be meant for how do you handle this?
Does it have to be that the total society is destroyed?
And if there is an answer, I always found when I was doing the campaigning that if you had an answer and say, you know, it is bad, it's terrible, but there's a simple answer to it.
It isn't that difficult.
Prolonged Crisis00:00:46
It is, you know, simple honesty, you know, telling people the truth, believing in liberty, reducing the size and scope of government.
Admit there could be a bad year or two, but there's no reason in the world why we can't get back on our feet rather rapidly.
If we endorse and understand the principles of personal liberty, non-intervention in foreign policy, and sound money, we can recover easily.
But the big thing is, is right now it's being prolonged, and the agony is going to be prolonged because people aren't quite willing to give up.
So therefore, we will have the crisis.
But the repair of the system has to be something that is positive, and that should be our goal, is to try to present the case for liberty.
I want to thank everybody for tuning in today to the Liberty Report.