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Oct. 30, 2020 - Ron Paul Liberty Report
22:38
Is Fed Counterfeiting An Economic Stimulus?

Politicians want the Fed to counterfeit more money. The Fed wants politicians to spend the counterfeit money even faster. All are trying to "stimulate" a broken economy that rests on a foundation of sand: central economic planning. Human civilization, society, and the economy cannot be controlled by Fed price-fixers, counterfeiters and bureaucrats. Freedom and sound money are the only things that can fix what they have broken.

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Economic Troubles Since Coronavirus 00:07:04
Hello, everybody, and thank you for tuning in to the Liberty Report.
With me today is Chris Rossini.
Chris, welcome to the program.
Great to be with you, Dr. Paul.
Good.
Chris, you know, frequently we talk, as soon as we see you on the program, we talk about economics and the Federal Reserve, and we plan to do that again today.
And I know our audience will be anxiously waiting to find out how we're going to solve the problems in the economy.
But while planning this program, you and I have decided that we do have problems, we do need help, but we are not going to Bill Dudley, who has spoken out about the economy.
We are not going to depend on him on how to solve the problems, because quite frankly, we believe that he is the source of the problem.
You know, he was the president of the New York Fed for a long time.
He's not there now.
But the New York Fed is one of the most important positions in the Federal Reserve system.
But he's out of there, but he still calls himself an economist, but not the kind that we like.
We like the kind of economists that sort of have heard, at least have heard of the Austrian School of Economics.
But if you're in the Federal Reserve system, most likely you haven't heard about it, nor do you care about it, or you're there to undermine the principles of sound money.
And that is the reason that it is still important that we listen to what they're saying, and Bill Dudley does speak out.
And the whole thing is, is he has been a source of many problems.
He comes up with solutions, but they're always the same thing.
You know, what are we going to do now?
How are we going to deal with the unemployment?
What are we going to do with interest rate?
They're mismanagers.
They think they can manage it.
And obviously, the whole system isn't manageable.
So that usually prompted an answer for me when they would ask me in the campaign is what would you do?
You know, if they're in a dilemma, they're deciding today, should interest rates go up or hold or go down or whatever.
And I would say there's no answer for that.
They wouldn't like it because I said, I don't even want to pretend I can participate in saying what they should do other than quit doing it, you know, because they mess it up.
They believe they know what interest rates they should have.
They know what the money supply should be.
And they look at all these charts and they think that they are the source of all the prosperity.
And the whole thing is, that we have said so many times, is they can't know what the money supply should be.
They can't know what the interest rate should be.
And they can't avoid that their temptation to serve the special interest.
And of course, the Federal Reserve and people like Dudley are the participants and the organizers of making sure we have a system that transfers wealth from the middle class to the elite.
And that is what's happening.
And that is a source of economic troubles that we're facing today.
And it's a source of the problems that we have socially and philosophically because, you know, the people who suffer aren't very happy because they see the rich getting richer.
And we don't disagree with that.
But it's a consequence of policy quite different than what the Marxists are claiming because their answer, the Marxist answer, is, oh yeah, what we need is the Congress to be more involved.
We need more transfer of wealth.
We need more force.
We need more regulations, all these things.
But it is true that the consequence of the type of monetary system we have now and the corporatism is the same.
It causes the same things that the far left, the Marxists, and the communists complain about, and they use it as an excuse to promote their whole system.
And of course, Chris, we have our plans and our ideas and what we promote, but it's quite opposite of authoritarianism.
It happens to be a system that is done voluntarily with honest money.
So that is what our goal should be.
And Chris, what do you have to say today about how things are going?
Yes, Dr. Paul.
We saw ex-New York Fed chief William Dudley some quotes in Zero Hedge, and I was going to read what he said.
He said that no central bank wants to admit that it's out of firepower.
Unfortunately, the U.S. Federal Reserve is very near that point.
This means America's future prosperity depends more than ever on government spending plans, something the President and Congress must recognize.
Now, first of all, the Fed's firepower, so-called, is price-fixing and counterfeiting.
These are not good things.
These are what caused the booms and busts that we're constantly going through.
And the enriching of the 1%, the basing of our money, price increases.
That's their firepower is to do that.
And second, prosperity does not depend on government spending.
It's the exact opposite.
Prosperity is wiped out by government spending.
Prosperity is when you can work, you earn money, and you save it or invest it or spend it based on what you want to do with your money.
Not send it off to Washington so that they could fight endless wars, bail out Wall Street and crony corporations and countless other schemes.
So he has it absolutely backwards.
And it's a good day, if it ever comes or when it ever comes, when the Fed finally does run out of firepower.
I guess the most credit we can give Dudley is the fact that they're running out of firepower.
You know, they really are.
They never had that much because all they had was explosives that blew up the economy.
But yes, they're running out of the effort to tinker with the economy because since I've been watching this closely, especially since 1971, they've had a lot of ups and downs, booms and busts.
And they've generally gotten away with, you know, as soon as the economy turns down and prices start to go up and interest rates are higher, they can adjust that and they can get by and they can cause a slump and then it comes back again.
But that worked fairly well.
They were able to cover their mistakes up until 10 years ago with the downturn in 08 and 09, where it didn't work.
And we've continued into a very serious crisis since then.
But over the years that I spent in Washington and when the Federal Reserve Board chairman would come before our committee, you know, I would frequently try my best to challenge them about the philosophy that they were following and what we believed in.
And they would say, yes, this is true.
This is true.
We have our problems.
But just like Dudley has done recently, they defer away from assuming responsibility.
Challenging Fed Philosophy 00:06:19
Yeah, we're running out of tools, but what we really need is the Congress to do more.
And they've said that even when things weren't so bad.
But right now, that issue is a lot.
And well, just think about the, since coronavirus has occurred, I mean, they have used the Congress to spend, spend, spend trillions of dollars.
And actually, I would say that you could see some evidence of what it did.
People had money in their pockets.
They went out and bought things.
But it really didn't change anything.
It dug a deeper hole for us.
It created more debt, and that's where the real problem is.
It's a pretense of having wealth by just creating new money, and it doesn't work.
So they do this, but they pretend that, well, now it's not working so well.
Monetary policy has weakened its effectiveness.
Congress has to start spending more money and help out here a little bit, which is really total nonsense.
The Congress has not been bashful.
That's one place where if the people want more bipartisanship, they don't have to have more because when it comes to spending, they're very much bipartisan.
They get together and they spend the money.
And this is supposed to solve the problem.
And yet, it doesn't make any difference.
If the Fed spends the money or injects it into the system or bails out somebody, that's an injection of money and supposed to stimulate the economy.
But if the Congress spends the money, they don't have any money.
They have to steal it.
They have to go to the people.
How do they steal it?
Well, send out a tax bill and collect the money.
Well, people, you know, in a slump and in the conditions we have today, they can't raise the taxes.
We need to lower the taxes, what we need to do.
So what do they do?
They spend it, run up the debt, print some treasury bills and send them to the Federal Reserve.
And what do they do?
They print the money.
So you can't separate the two.
If the Congress initiates it by spending money and the Fed accommodates by monetizing it, it's the same thing long-term economically.
If the Federal Reserve just prints the money and starts passing it out, because they have a lot of helicopters now, the helicopters go out there and they start passing this money out.
So it's the same thing, but it's sort of, you know, ducking the responsibility because nobody in Washington, except for our handful of good Austrians that are in Washington, they say, well, we have to do this.
We have to spend the money and help the people.
Deficits don't matter.
And they accept this whole principle that as long as the Congress spends the money, it'll be okay.
But that means they're just going to run up more debt, pass it on to the next generation.
That's what we've been doing.
And that's why the crisis has not been alleviated.
I know the GDP now suddenly recovered.
It suddenly went down when the coronavirus hit, and now it has suddenly gone back up again.
And the Federal Reserve created the problem.
They can't solve the problem.
Congress can't solve the problem as long as they just resort to more spending.
So this is the reason if you're looking for the utterances of former Federal Reserve Board members like Dudley, you're not going to find the answer.
The answers are going to be found outside of Washington, and they're going to be found by studying what free markets and what liberty is all about.
Yes, Dr. Pong, you know, they are wrong on a fundamental level about the economy, which is why they constantly fail you.
They look at the economy as if it's like a mechanical machine, and they're on the outside of it, the elites who are there to oversee and manipulate this machine.
You know, Dudley said that even though he's worried about them losing firepower, the Fed can still push down longer-term rates.
They can promise to keep short-term rates lower for longer.
They could put a ceiling on long-term rates or even take rates to negative.
So if you see how they think, they treat the economy as if they're like in a lab and they're just poking and prodding.
Mix this chemical with that chemical and you'll get a certain result.
But you cannot do that with human beings.
We each, all 7 billion of us, we think independently.
We value things subjectively in our own minds, and then we choose how to act based on how we individually value things.
So there are no constant variables in human actions like there are in the physical sciences.
When you mix two chemicals, you get this result every single time.
So they can never know what they're doing.
Not that, and it's not a matter of intelligence.
It doesn't matter how intelligence they are.
The real intelligence comes from understanding and accepting that you cannot micromanage and centrally plan human life.
You know, definitions and language is very, very important.
And in economics, generally, many terms that they use are either distorted or removed or totally ignored.
And one of it has to do, one place where they really mix up the terms is capital.
You do need capital if you're running a capitalistic type of economy.
And it originally was understood that capital came from savings.
You saved what you didn't need to live on, and then you can invest it and earn interest.
But now we hear the Federal Reserve peoples at times say, you need, the people need to save money, so they have to blame somebody.
So we'll go back to the people.
They never save any money.
They have too much debt.
Well, you know, that's the whole thing.
And that means that they don't save money because there's no interest.
There's no market for savings.
And people know that the government's always going to come to their rescue.
So they go out and spend and run up debt, but they don't save.
But what that does then, in order to continue this process, they have to keep the interest rates very, very low, which destroys the most important pricing in the economy.
People Know Government Will Rescue Them 00:05:09
And as what is the rate of interest to send out the signals on what savers and investors and entrepreneurs ought to be doing.
So what do they do about this?
Well, what they do is they start printing money, and it's the fiat system that they engage in.
And the only reason that works is there is still wealth in our country, but if you take the currency, the fiat money, and dilute it, it sort of acts as capital.
But there's a limit to that because the dollar goes down and prices go up and you do actually pay the tax that way.
But if you do that for very long, all of a sudden it comes up and quits working.
And I think that's what Dudley was talking about.
It looks like they're against the wall.
It's not working like it used to be.
And I think that's what it's indicating is the bankruptcy.
That we're in a lot worse shape financially and monetarily.
And, you know, the economy is much worse off than they're willing to admit.
Because if they admitted it and told the people the truth, you couldn't handle it because you'd have to say, well, we failed.
Our government messed up.
They shouldn't have had a Federal Reserve.
They shouldn't be printing money.
We shouldn't be involved in these wars.
We shouldn't have a welfare state.
We shouldn't have socialized medicine.
And we should balance the budget.
But nobody in Washington is able to accomplish that.
And so few would even vote for it.
So this is where the problem comes from.
And that's why, unfortunately, we are destined to continue on this course.
And people are going to be in worse shape, not better shape.
So I think that, you know, to say, well, if we do a little bit here, cut a little bit here, and urge the people to not spend so much, run up the debt less, next year will be a better year.
I don't think so.
There's going to be no backing off.
The politicians are not going to do it because it's so unpopular.
So we can depend on the politicians that are in charge, the bankers who are in charge, the special interests, the deep state that are really in charge.
They're going to continue in their place of running things, and they are going to milk the middle class.
And the unfortunate thing is, it's been terrible what has happened to the middle class, but it's even worse now: it gives an opportunity for the Marxists to come along and say, see, we told you, we told you freedom wouldn't work.
And that is the real challenge we have as believers in a voluntary society to convince people that, you know, it's sort of like we have a serious medical problem here.
We have a cancer that has to be taken out by surgery.
There's nobody willing to do that.
So that is why things will get worse.
And some people will argue, well, why have them bite the bull and make things worse?
Because what's coming, when the ultimate collapse comes of the dollar in the system, it's going to be much worse than what it would be like if we bit the bullet now and started cutting back.
But I guess the best we can do now is for people to look for the answer because there will be an opportunity.
We will have to rebuild.
And we ought to start planning to rebuild and what is necessary, even though people aren't quite willing to say, yes, we need to know why we're in this shape and we know exactly why.
And it has a lot to do with big government and loss of liberty.
Dr. Paul, I'm going to finish up.
This is similar.
The way I view it is like with people that struggle with addictions.
You know, they do the wrong thing.
They know they're doing the wrong thing.
They just keep going and things keep getting worse.
Well, this is on a bigger scale, not an individual scale, of people that are addicted to counterfeiting, central planning, power, and that's why it just keeps getting worse.
Like you said, nobody's willing to reverse course and do the right thing.
And it'll keep going until it can't keep going anymore.
But everybody doesn't have to go down with the ship.
You know, you can always do the opposite and be different.
And, you know, if you're watching this show, you are different.
So just think of the opposite.
If they're telling you that gold and silver are no longer money, you know, seriously consider whether or not you should own a little bit of gold and silver to protect yourself.
If they tell you that you need to go out and spend and go deeper into debt to help the economy, think the opposite.
You should perhaps save, pay off your debts, get out of debt slavery, and get on solid footing.
So everybody doesn't have to go down.
Most unfortunately, do that seems to be the way that it is.
But hopefully our show, for those people that are different, that watch us, we help you with some information that you can use in your own personal life.
Very, very good, Chris.
And you're pointing out that surviving is a very important issue.
Why We Stay Independent 00:03:48
And a lot of people talk about it.
A lot of plans are made.
A lot of books have been written about it.
And I think it is very important to do our very best.
But ultimately, I think the best protection that we can have is also protecting our freedoms.
Because without that, if we don't have a First Amendment right or a Second Amendment right, then it's going to be really tough.
But people can do things to help and be self-sufficient.
And that is the key to it.
Because the more people who agree with the recovery coming from a freer society, the better off we'll be.
Because if there's only 1% or less people who say, well, we know what's best, we need more.
We don't need 51%, but we need more than 1%.
And it's an intellectual fight.
And that is why I emphasize so often the various institutes that do lecturing and teaching of the free market.
The Mises Institute, for instance, has done an overwhelmingly great job in introducing people to sound economic policy.
And that is what will have to come.
But in the meantime, whatever a person can do to preserve their liberties and protect themselves, which is difficult because right now the streets are getting more violent and it's really tragic that the authorities are joining the mobs.
The authorities in our cities are actually joining and yet they should be helping to suppress the violence and the blowing up of the buildings and the robbing and all that's going on.
So that represents how infiltrated the Marxist thoughts have gotten into our system.
There's too many people.
I'm really shocked and surprised how far down the ladder these views have infiltrated all the way down to city councilmen and mayors of little towns because they love the opportunity to be authoritarians, believing everything they've ever told you about the need to lock down, take away your liberties, and because you don't know what to do and you don't know how to do it.
And there's this enemy within us called a virus.
It's going to kill us all.
And people say, well, why don't we just live in a free society and solve this problem?
No, a lot of people are frightened to death.
Ultimately, the solution comes from the ideas and the understanding what personal liberty is all about.
And believe me, the record is very clear.
The freer the society, the healthier the middle class is.
And we should argue our case for that.
And it makes a difference on how things are approached.
One is done by authoritarianism, by a small elite group of people who think it's the best thing for everybody to follow their rules and their laws.
At the same time, the opposite is voluntarism.
Everything is voluntary with a rejection of the use of force to take care of oneself and to plan for the future.
The ideas are there, they're crystal clear, and the nice thing about it, the things that would solve our problems are very pro-American, and they're very pro-liberty, they're very pro-morality.
And right now, though, there's a growing interest in those subjects, but quite frankly, the founders warned us about this.
And I'm afraid we're at a point now where the institutions that have been established years ago are under threat, mainly because the morality of the society has been diminished.
So our effort is to address this because if you care about peace and prosperity, that is what we would have to do.
And I want to make sure all our viewers know how much we appreciate your participation and your understanding of what we're trying to do to spread the message of liberty and peace.
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