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Aug. 21, 2019 - Ron Paul Liberty Report
18:01
Fake News: The Media Cannot "Cause" Recessions As Trump Claims

The president took to Twitter this morning to make a claim that doesn't hold any water about the economy and the media. At a time when a serious recession inches closer and closer, political posturing should take a back seat. The Federal Reserve is the culprit. It creates the bubbles and the unavoidable busts.

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Time Text
Talking About Recession Blame 00:10:45
Hello, everybody, and thank you for tuning in to the Liberty Report.
Once again, we're doing this by audio today due to the conference at Dulles Airport.
But we are pleased that we can still reach a lot of people, even through audio as well as video.
But today, we want to talk a little bit about the most recent tweet put out by the president.
I generally don't pay much attention to that because there are so many.
But Chris is interested in talking a little bit, you know, about this tweet that I find really fascinating.
He's talking about the Fed and the recession that's coming, and he claims he has exactly the culprit that's causing all this.
And I'm going to have Chris read the tweet so that we all know exactly what we're talking about.
Chris, welcome to the program today.
Good morning.
Great to be with you and with everyone.
Yes, President Trump really came out with a doozy this morning.
I'll read it.
I'll quote.
He said, the fake news lame stream media is doing everything possible to create, in quotes, a U.S. recession, even though the numbers and facts are working totally in the opposite direction.
They would be willing to hurt many people, but that doesn't matter to them.
Our economy is so strong.
Sorry.
So what do you think, Dr. Paul?
Oh, fascinating.
Like, all of them, they don't necessarily reflect the sound economic theory.
And I don't think he has pretended to follow anything like Austrian economics.
But he has good instincts.
He's a good political person.
He knows how to stir the pot.
And I was thinking, though, what can I say favorably about this?
And the best I can do is that he's correct in saying that the media sure would like to bring on this recession as fast as possible, because, holy man, if the appearance is that the economy is half decent next year, that's going to help Trump.
And we can't do anything.
I mean, we've worked for three, four, five years now lying through their teeth trying to destroy this person, but they ought to just let Trump be Trump and then let the chips fall where they may because we happen to have a future criticism of his foreign policy and his monetary policy.
But this whole idea that the media can talk us into a recession, that's the absurdity of it all.
It can have some type of a psychological influence.
People may change their habits.
But there's only one cause of recessions, and that is the reaction to the inflation that the Federal Reserve causes.
And there's a lot of causes for that, and we can talk a little bit about it.
But why does the Fed do this?
They just do it out of clear blue, or are there people behind them pulling the strings?
Or are there people who are sincerely trying to help people have a healthy economy and take care of special interests?
There's a lot of motives behind this.
But it is definitely not the media that pops up and say, oh, look out, there's going to be a recession.
And yet, I think that's exactly what they want.
If they think they can help, they're going to pursue that.
But the recession will come.
It is true that recessions come and go at different times, but they are always a consequence of faulty Federal Reserve policy.
And the big sin there is artificially low interest rates that cause excessive debt and excessive malinvestment and mal distribution and a distortion in wealth distribution that requires correction.
And of course, all the politicians, Democrats and Republicans, do whatever they can to hide it or blame somebody.
And I think, you know, the Democrats would love to blame Trump and say, you know, it's every bit of Trump's problems.
But the truth is it's the Federal Reserve.
And of course, Trump would just as soon say, well, it's the media's problem.
But if you boil it down, Chris, I think it goes back to the fact, what is the purpose of the Federal Reserve and what has it been?
And of course, it's to accommodate special interest and to accommodate excessive spending.
And that is where they all agree.
You know, the recipients, the Democrats, the Republicans, the money managers, the whole bunch all believe that wealth can come out of creation of new money.
And that's the culprit.
But I don't think we're going to hear them talking about that.
We're going to hear them talking about Trump causing it and the media causing it.
But it'll be interesting because the one thing for sure coming from an Austrian viewpoint is it will come.
You cannot avoid it.
The distortions have been placed out there, and so people should be prepared for it.
And that should be, you know, a sort of a structured preparation for what can come.
But that's a lot different than saying, well, the media is going to talk us into a recession, and they don't even care about poor people.
You know, that gets to be a little bit political.
So, Chris, I know that you've been thinking about this little tweet today.
What's your opinion about what he's trying to say?
Well, first, I'd like to also acknowledge what you said.
You know, there's never been a bubble that hasn't burst ever.
They always burst, and they're created by the Fed.
And, you know, we're not coming to the defense of the media.
I mean, Trump has pointed the finger accurately at the media, especially with the Russiagate stuff.
So this is not, but the president should be truthful with the Americans, whether he knows it or not.
He was elected because people were tired of the political nonsense.
But he couldn't, right from the beginning, bring himself to tell Americans the truth.
When he was elected, before he was elected, he was truthful.
He said we're in a big, fat, ugly bubble.
And then magically out of nowhere, when he steps into the White House, it became the greatest economy ever.
Now, that's impossible.
So we're actually in the same bubble.
It's now only bigger, which means that the pain is going to be bigger once it bursts.
And to try to point fingers at the media at this time is really an insult to everyone.
Right.
And, you know, I think it's ironic.
There's justification for criticism on both sides.
But the media really loves to go after Trump when he makes these statements that at times are pretty silly.
But because it's sort of a populist attitude that's sitting out there that Trump has tapped into, I think that the Democrats make it worse for themselves.
You know, people say, yeah, yeah, that just gets a man hit the Democrats.
And I think that's what surprised him in the last election.
You know, Trump was playing the populist theme.
People were buying into it, and all the Democrats could do is call them names.
And the names in the last two, three years have gotten much, much worse.
But that is so much of an effort to avoid the real issue.
I think that neither side wants to avoid the real issue.
And that, of course, is the spending that goes on because when they spend, they have to tax and they have to borrow money.
Trump now is saying we could help ourselves with less taxes.
We could, but it's not going to make much sense if you keep running up the spending.
But then when the Fed has, I mean, when the Treasury has to borrow money, they have to go to the Federal Reserve, you know, to have them monetize the debt.
And this is ongoing and it benefits.
You know, you could say, well, it's all the Democrats and the Republicans, which is true.
You can say that the Trump people and the Democrats all participate in this.
But What they have to really deal with is the fact that no matter how unhappy people will be with recession and bail out, bail out, take care of me, and all will happen.
They're at fault too.
I mean, how many people want free stuff?
Guess right now.
I mean, when you look at how socialism can get attention, even out of proportion to what they deserve, and the media chimes in and said, yeah, yeah, yeah.
And so this is saying free stuff, free stuff, and there's no question.
You don't have to pay for it.
But if you try to counteract that with more distortion of economic facts, you know, it just makes it a lot worse.
And that is why we dedicate so much part of our Liberty report to trying to get people to understand certainly monetary policy, which has been my issue for a long, long time, ever since I first went to Congress in the 70s.
And I think we're making progress, but there's still a lot of understanding yet to behold, because even though people now are saying, well, we don't like the Fed, but they would have a fit if all of a sudden you didn't have the Fed because it would bring on the crash, which is necessary, which will probably come, but no politician can really do that because it's going to be so outrageous.
We have to look at the fundamentals.
And when I go back one more step, it's what should the role of government be?
You know, the founders gave some role for government through the mandate to the Congress that only gold and silver could be legal tender.
So there was an issue.
But that's so long gone, you know, from 1913 on up and the elimination of gold from the system and all these things.
But Chris, one thing I want to mention that we don't mention enough, and I know we have in the past, and that is we talk about the Fed and they monetize the debt, but we don't talk a whole lot about fractional reserve banking.
Because when banks get a deposit, they can loan it out immediately.
And that can multiply.
So they create a lot of credit too.
And with that, they can buy Treasury bills as well.
So some of the purchase of Treasury bill is achieved through the increase in the credit through the fractional reserve banking system, which is another form of counterfeit.
And a lot of people will complain about the banks because they benefit with the interest rate spreads and things like that.
But they also benefit tremendously by being able to loan out money that they really don't have.
That's right, Dr. Paul.
And one thing is for certain, and it's obvious, Trump is not going to want blame if it happens on his watch for the recession.
And we get it.
And you know what?
He doesn't deserve all the blame.
This started before him.
Why Media Blame Democrats? 00:03:03
He hasn't helped, but it's not all of his fault.
But the blame belongs at the Federal Reserve.
They are the ones, as you mentioned, that create the booms and the busts by suppressing interest rates.
And I urge people listening, if you're interested in how this actually works, look up fractional reserve banking and Austrian business cycle theory.
Don't be intimidated by the names.
It's not hard to understand.
It's just a step-by-step process.
But please look it up and maybe even go to Mises.org, M-I-S-E-S.org, to really learn about how this happens.
But instead of the President explaining that, you know, we're in a bubble that I didn't create and I'm going to try to do the right things to get out of it, he has added to it by constantly pushing for lower rates.
He's acting as bad as the Fed along with them.
So he really hasn't helped at all.
He just doesn't want to be blamed for it.
But, you know, for the rest of us, that's not a good thing.
Yeah, he's acting in his own self-interest, his narrow interests, as well as the interests of his friends and allies and Republicans.
So they have an interest in this.
But I thought there was one sentence in his tweet that I found interesting because he said they, the Democrats, or no, the media, they're willing to hurt many people with bringing on this recession, which is a pretty far-stretched, purely political talk.
But I believe there's truth to that.
I think even though we don't believe the media can create the recession, I think they believe that they can make it worse and they can blame the Republicans.
And they don't have a deep concern about the harms that they do.
But if you look at other economic matters, how about the foreign policy matters?
All these things done for humanitarian reasons and why we have to go over and put on sanctions to get rid of dictators.
And all we do is hurt the people, the innocent people of those countries.
And the people who do that, Republicans and Democrats, they don't care about those people either.
So I don't think that's the issue.
I don't think the Republicans are driven by the interests, nor are the Democrats.
And so the media can play this same game.
But I do think, though, that the Austrian economic theory and the people who believe in it ought to be given enough credit because it is designed differently.
It's not there to serve anybody's special interests.
It's supposed to serve the interest of promoting individual liberty, voluntarism, market choices, contracts.
And at the same time, I at least, and most all other Austrian economists, believe that this is in the best interest of these people that the other groups pretend they're wanting to take care of, because it's sort of the invisible hand of Adam Smith that prompted this, where we have had tastes of that throughout our history.
Global Plans and Perils 00:04:09
And it's lasted for a long time.
So there is a definite benefit, but this claim that they're doing this on purpose, I believe they are trying to do it on purpose, but they're not even powerful enough to do that.
And you have to go back to exactly what you said, Chris, back to the Federal Reserve.
It's the creation of that money, which distorts the economy, distorts the pricing structure, and it guarantees that there will be a recession.
How it evolves and how big it is still is up for grabs, but it will happen.
And I think most people are starting to recognize that we're on the verge of it.
That's right, Dr. Paul.
And I'll finish by saying, you know, regardless of what President Trump says or does, the government and the Fed have really created a perfect storm for themselves because government spending and debt are at record levels now during the supposed good times.
And usually, you know, it's the wrong thing to do, but during recessions is when government spending and debt go through the roof.
So what are they going to do during the recession?
They're already going to be hitting trillion-dollar deficits.
Were they going to do $2 trillion deficits?
I mean, they really have dug a deep, deep hole for themselves.
And everything that they're doing is wrong.
So what's going to happen?
I mean, life is too complex with too many variables for us to have the answers.
But there's going to be a lot of confused and angry people that have been lied to for decades after decades.
And, you know, for the people that are listening to this show, thank you because you're one of the people that others can turn to for some sanity and some truth.
So if we can help in that in that way, that's very rewarding in itself.
Very good.
And one thing that people have to remember is that when a country lives beyond its millions, that's what inflation is all about.
They're borrowing into the future and dumping the debt on other people later on.
And there can be some apparent benefits.
So if you and I were counterfeiting money, Chris, we could do pretty well until we got caught.
And that's what happens, the counterfeiting of money, the inflation, the fiat money.
Finally, they get caught and people reject the money.
But if an individual or a company or a country lives beyond its means, and that's what we're doing, certainly with the borrowing system that we're using and all the spending in Washington, that you are destined to live beneath their means.
And that's what we're moving toward.
And a lot of people, you know, express some concern.
Well, we better watch out.
We don't want to be socialist.
We'll be like Venezuela, which is what we should be concerned about.
And I even like to think in my own mind, it can't get that bad.
It can't get that bad.
But the truth is, it could get that bad because this bubble is an exceptional bubble, the biggest in the history of the world.
More inflation, more distortion.
It's more of a global economy.
So right now they're saying, well, Germany's in a recession, but we're not, and we're going to get by.
Now, there's no way this is going to be very global.
Even the recession, the great recession of 88 and 90, which is still ongoing, is global.
But this next one, next go around, it will be even more global.
So this is why when you see global plans by other and maybe even new individuals, beware, because it's going to be something that those who love one world government and a unitary government for all world may come across as saying, oh, yeah, well, we want freedom of movement and no borders.
But what they want is one new world order and one government that will control everything.
And I think that's one of the greatest danger.
Of course, the great danger to me is the people who undermine personal liberty and also the people who are willing to give up their liberty for safety and security.
And we have too many of those individuals around too.
So we have to get people to have respect and have a desire to live in a free society.
That is the only thing that will ultimately correct these problems.
I want to thank all our viewers today and our listeners for tuning in.
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