Waters & Warren Threaten Bankers: Tolerate Those Who Overdraft Their Accounts!
It's rather ironic that politicians who work for a government that is in the red $28 Trillion are criticizing bankers for charging "overdraft fees." Shouldn't politicians be on the side of enforcing voluntary contracts, rather than advocating breaking them? America's broken monetary system is a major problem, but the problem lies in government granting monopoly powers to the banking industry. Shouldn't the major concern be the abolishment of those monopoly powers?
Hello everybody and thank you for tuning into the Liberty Report.
With us today is Chris Rossini, our co-host.
Chris, welcome to the program.
Great to be with you, Dr. Paul.
Very good.
We're going to talk about banking and the Federal Reserve and a couple clowns, no, we won't call them clowns, but a couple people from the Congress, one from the House and one from the Senate, very important people because they had all the bankers called in and they were going to grill them.
Of course, they're really deep down inside.
They're partners.
When it comes to the Congress and the Federal Reserve, they're buddies and the banking system is the same as the Federal Reserve.
But the purpose of the hearings that they held here this past week that got some attention was the fact that a few members of Congress like Maxine Waters and Elizabeth Warren, they discovered that during the pandemic there were some people that didn't make, had a shortage in money, so they overdrafted their accounts.
And when they looked at their contracts, which they did not, the bank has this authority to fine them for it.
And they collected, no, not a couple hundred dollars or a couple million.
I mean, there were billion dollars of fees collected, so it was very lucrative for the banks.
But it's a mixed bag.
Well, they owe it.
And there is some truth to that.
They did owe it.
It was in the contract.
But it's also something that, you know, in many ways, it's an incestuous relationship of the banks and the customers and the regulations and all that they do.
But anyway, it was an issue that the left, far left, and even some Republicans could demagogue the issue and say, you know, this is unfair.
And I happen to think it's a lousy system, you know, because government is responsible for the banking system, and they're supposed to have a little bit of involvement.
But the way I understand the Constitution, Chris, is that their main role is to define precisely the unit of account and nobody can abuse it.
Because if you abuse it, you're a counterfeiter.
It just happens that it's abused all the time and they're the counterfeiters.
So when they come in and chastise the banks for collecting for overdraft, who's going to collect for the overdrafts of the Congress?
I was thinking of somebody who needs to take a look at Earl Elizabeth Warren and Maxine Waters' voting record.
I wonder how many times they overdrafted the account.
That's where the real problem is, counterfeiting the money, abusing the restraints of the Constitution.
And then they come along and the banks, which are doing their bidding really in many ways, because the banks perform according to the regulations.
So they were within their so-called rules and regulations.
But it's just the system that is so rotten.
And the big thing is, Chris, I really believe if we had free market banking and a sound currency, that this would be handled by contract and people would come to know their responsibilities.
If you overdraft, you're going to get a $50, $100 penalty.
You will have to pay it.
But this whole idea of actually encouraging loans and doing all the mischiefs they have and all the regulation, the government will take care of you.
And in the atmosphere of coronavirus, it was the guarantee.
But the tragedy of all this, Chris, is that the banks get taken care of when they get overstretched.
And they don't really have to worry.
But the individual does.
So it's really the system that's at fault and it's a little tricky because people, in a free market, you're supposed to be able to do it.
But we don't have a free market.
So that's why this is a messy subject in many ways.
Right, Dr. Paul.
And as our viewers know, we critique the banking and monetary system almost on a weekly basis.
But, you know, even though we criticize a lot of things, it is important to keep in mind that banking on its own is a legitimate and extremely valuable business.
We can't forget that.
The problem is when you mix banking with monopoly privileges granted by government.
Mix government with banking and you will ruin banking.
Just as if you mix government with education, you'll ruin education.
Mix it with health care, it'll ruin health care.
On their own, all of these industries are extremely valuable.
But when you mix government with them, everything becomes political.
And we saw that with COVID.
It was like a political virus.
So what we have today is a flawed non-free market system of government plus corporation partnerships.
But we have to remember it could get worse.
You can try to have government do everything on its own.
And that's what the Soviet Union tried.
And they created the biggest disaster in human history.
So you could always go from bad to worse.
What we advocate is going from bad to better, and that is by separating government from banking, from healthcare, from education.
Separate the corporate plus government partnership.
You know, and another subject that came up at this hearing has been the social engineering about how loans are made and how the Fed gets involved.
And one Republican did bring this up and said that, you know, when you go and make loans or call loans or penalize people, you actually go after some of the conservative groups like the gun owners group.
But I think there's an awful lot of that activity going on because when they tax people and penalize people, that's one example of how much political power that they have.
But then they also have the political power when they divvy up the loot.
You know, when they're bailing out, you know, this is peanuts compared to the bailouts.
The bank's gone, they always get their bailouts.
So in a way, you can understand why somebody feels justified in getting it.
It's sort of like the rent issue, too, because if you have a renter that all of a sudden doesn't pay, the government comes in and protects them against the eviction and say, oh, you can't do that.
Consequences of Inflation00:04:43
And that, of course, is subsidizing one group at the expense of the other.
And yet the people who might own a building, it might be the landlord, might be just some small entrepreneur that has a renter or two, and you punish them.
So it's just this whole idea that government is the manager of everything.
And it emanates, I think, so often from the principle of money.
Where does the money come?
Who regulates the money?
How much money is there?
And what about the inflation and deflation and rigging of the interest rate?
There's always a gimmick in there.
The interest rates at 0%.
Whom does this really help?
The poor guy out there that's trying to save so he can get another rental?
He makes no interest?
At the same time, the banks get into trouble and they can borrow money at 0%.
And if you put money in, you get nothing for your saving.
So it's a system that will not be rooted out until the American people wake up and a few more members of Congress and others wake up and say, you know, this is a rotten system.
And it started about 50 years ago or really got out of hand 50 years ago with the breakdown of the Bretton Woods agreement when we totally separated the dollar from gold without any restraints.
And all we have now is a mismanaged fiat currency and serving the special interest.
And I think that's what we're seeing here.
We're tinkering on the edges and saying, oh, yes, it's those bankers.
They're making too much money.
But how about the politicians having passing out money?
They pass out trillions this past year.
And right now, the new budget is going to be up for $6 trillion.
And you talk about mismanagement and who gets to spend that money.
There's a little bit of argument that goes up there, not on the principle that we should get rid of this mess.
It's arguing who gets to sign the checks and who gets to decide who gets bailed out, who gets the taxes and this sort of thing.
Eventually it's going to end.
I think I see it coming, that it's already started.
It's going to get unraveled.
The price inflation right now, which is not the inflation, it's the printing of the money is the inflation.
But the prices are going up and people are starting to wake up.
And that is not inflation.
That is the consequence of inflation.
The inflation comes from a monetary system where the special interest can print money at will and pass it out.
And it never goes through the appropriations project.
It's government out of control and without supervision.
Yes, Dr. Paul, in this upside-down system that we have, you know, the role of government should be very limited.
But one of those limited things that it should be doing is the enforcement of contracts.
Instead, in this upside-down world, politicians advocate breaking contracts.
And that's what you mentioned.
The CDC was during the summer or the last year breaking rental contracts.
And now, you know, this Warren is criticizing overdraft fees.
Well, it's part of the contract.
And she was also saying, and this really struck me, that how could you do this during the COVID, during these tough times?
Well, it was the politicians that locked down the economy.
The bankers didn't do that.
Politicians created tens of millions of small businesses going out of business.
Bankers didn't do that.
And another irony is, like you pointed out, there are 28 trillion in debt.
If that isn't an overdraft, what is?
And you know who picks up the overdraft fees for the politicians?
We do.
The taxpayers.
So the whole thing is flipped upside down, and we have to somehow flip it back to reality.
You know, you talk about flipping it upside down.
Look at the employment situation that is a consequence of all this mess.
We have people now, the small businessmen, to a small degree, they're getting opened up and things are moving in the right direction, but they're no workers.
And yet there's a record number of people who are on the unemployment rolls.
But it pays better to stay there and not take a job and not make essentially any more money by taking the job.
So you have it, so therefore the production isn't going to go up.
It's not going to help these small companies, but it's a consequence of the mismanagement that you bring up, but the mismanagement of, you know, that always comes with a fiat currency and the way that money is distributed.
But right now it is strange about signs up.
We need help, we need help.
Well, you know, there's such a distortion.
Mismanagement Of Fiat Currency00:04:20
It just reminds me of the time where we, it's not so long ago when the Romans did this.
They said food and, you know, bread and circuses.
So this is the bread.
You can stay home and play on your computer and play games.
And at the same time, you don't have to go to work.
And they, and the people, and all they do is they boost the benefits.
But the one thing on our side, Chris, that I'm totally convinced of that if you're waiting for an honest assessment, it will come.
The market is very, very powerful in rejecting nonsense, even though it takes a long time.
And that's finally what happened in 1971 when they were rigging the system outwardly by claiming, well, yeah, we have a sound monetary system, dollars backed up by gold at $35 an ounce, and it was all a lie.
And yet, it still has lingered on.
But I think it has been the creator of this thing that so many people complain of.
It sets the stage for Marxism.
That is, the rich get richer and the poor get poorer.
Under these circumstances that we're talking about today, the bankers are going to be able to collect some fees.
They're not going to suffer.
If they go broke, they're going to get bailed out.
And then you have the other people, the consumer, who sort of gets sucked in on this and believe either they don't understand or believe they'll be taken care of.
Well, that's a fallacy.
And that eventually will force a more decent reform.
And, of course, we'd like to participate in that by suggesting to, you know, people would ask me, what do you do now?
What do you do now?
Well, you could start, if anybody gets sincere about it in Washington, you could start by reading the Constitution, even on the money issue.
Oh, you're supposed to define the unit of account, and that's important, and that's the only thing we're supposed to do.
Yeah, that would help a whole lot.
Anyway, it's coming to an end because this whole system that we have now of trillions and trillions of dollars of spending and debt and printing of money is so out of control.
I think when the history of this period of time is written, it's going to show that how did they ever allow this to happen?
And yet, we're still getting along okay, but people are getting awful worried.
The price of a loaf of bread is going up, and the price of gasoline is going up, the price of lumber is going up.
But that isn't exactly an accurate statement.
The value of the dollar is going down because of this system that we're trying to call attention to under this particular incident of where the banks have a little bit more leverage and technically, oh, yeah, yeah, we should be able to, you know, collect a fee for people who are overdraft.
But that's minor compared to the big overdraft by our U.S. Congress and our Federal Reserve System.
Very good, Dr. Paul.
I will finish up by pointing out, especially for the younger, the teens, those in their 20s that are just learning about politics and what's going on.
Well, as long as this system stays in place, what you can expect going forward is it's all about symptoms.
You know, do something that feels good without considering any consequences of the future.
It's all present-oriented.
So you turn on the TV, you see politicians screaming at bankers.
Yay, you know, it feels good.
But what actually is happening?
Well, look at the last year.
We have lived through something that is unprecedented.
You had a government that did things that have never been done in history.
They locked everything down with masks and social distancing.
And this was them, quote-unquote, doing something to address a problem.
Well, none of those things worked.
None of them should have been done in the first place.
And all it did, it didn't solve the problem, there's still COVID, but it created multitudes of problems that we'll be dealing with for decades going from today.
So it's always symptoms.
Do something quick to feel good and create even bigger problems.
The government could come back and say, all right, well, let's do something on top of that.
And then on top of that, the only way out of this is to come to the realization that government cannot rule the world, rule individuals, and neither can corporations, and neither can a partnership of them.
Monetary Policy and Civil Liberties00:04:23
There is only one solution to this problem, and that is a return of our individual liberties.
Very good.
You know, the hearings that were just held aren't generally held.
They had similar hearings a couple years ago.
Democrats are more prone to do this, which is fine.
Somebody should call attention to this.
So they're saying that, of course, that what we have to do is just have more monitoring.
And they are calling these hearings annual.
They have to do this every year.
That is to have this grandstand of calling the bankers on the carpet and really show that the Congress is protecting the consumer, this sort of thing.
But it's a distraction is what it is in many ways because they're not dealing with those things I had just mentioned.
And the other thing that they do, they're willing now because they have to, become self-evident that inflation is coming, inflation is coming, which I don't like because they're misdefining inflation.
Prices are going up.
Prices are going up.
The value of the dollar is going down and going down.
They don't do that.
And it's done deliberately because they want to draw the attention to those people, whether it's the banker who's making money, making profits on overdraft, or whether it's somebody else making profits.
Oh, the farmers are making too much money.
And the industrialists are making too much money.
The labor unions are making too much money.
And you can find all these incidents which seem very unfair and distorted, and they are.
But that's to distract from what they ought to be talking about.
You know, in the 70s, one thing that became very popular, and they really should do it again, and that is every day, especially when Volcker was in there when he was trying to stop the inflation, everybody looked at the money supply figure, every little blip, because he had to slow it down, slow the growth down, and say that we're going to crack this.
So he was dealing with the issue of the money supply, monetary statistic.
I think we need to do that because you really don't hear much of it.
And I would suggest anybody interested in this, they ought to call up on the internet the monetary base.
There are some charts on the monetary base that are so dramatic.
But most people don't see the relationship of what's happening with the monetary base.
Then all of a sudden, because that's been going on for quite a few years, especially the last 10 years or so, it's just been totally out of control.
But they figure, well, nothing really happens because they think if the money goes up today, prices will go up tomorrow and everybody's price will go up the same and wages will go up the same.
It has nothing to do with that.
You know, because it's unpredictable because it depends on a lot of personal choices made by millions and millions of people.
But the goal here, and I think even these hearings are distract from the real issue, and that is, if you want to look at the overdraft, look at the overdrafts of the Congress and look at the system of monetary policy that allows this to happen in a very dishonest way, and that's with fiat money, creating money out of thin air, and it becomes the spending tool and the taxing tool.
You don't have to send it through the Congress.
You don't have to get an appropriation, and they can spend trillions and trillions of dollars.
But the fortunate thing is, if you're interested in sound money and moving in the opposite direction, it's going to happen because this is going to fail.
But the big thing is there could be a lot of danger because when the transition occurs, there's always an attack on civil liberties, just like the attack on the civil liberties of the people in this country over the concoction of the bailout of COVID.
That is what we have to be concerned about.
But I am still leading in the direction of being optimistic that more and more people are waking up.
I believe there's more understanding of Austrian free market economics.
I think that common sense is on our side.
And yet, we live in very dangerous times.
So I encourage you very much to continue to have interest in our program of peace and prosperity.
And that to me is sound money and trying to understand exactly how the monetary system works.
I want to thank everybody for tuning in today to the Liberty Report.