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Aug. 27, 2021 - Ron Paul Liberty Report
21:21
The Stage Is Set for A Crack Up Boom — Are You Prepared?

The late and great Austrian economist Ludwig von Mises was the individual who logically conquered the impracticability and unworkability of Socialism, Communism & Fascism. But just because an idea can't work, doesn't mean that those with a lust for power won't attempt to pull it off anyway. These bad ideas end in a catastrophe that Mises called a "Crack-up Boom." Are you ready for it?

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Recessions and Wealth Redistribution 00:05:21
Hello, everybody, and thank you for tuning in to the Liberty Report.
With us today is Chris Rossini, our co-host.
Chris, welcome to the program.
Good morning.
Great to be with you again, Dr. Paul.
Good.
You know, currently, as we speak, there's a few people having a meeting up in Jackson Hole or wherever it is, and they're powerful people.
They determine what the money supply will be and what the interest rates should be.
And they have a lot of influence and they pretend that they're knowledgeable.
But the real farce of it all is the pretense is that is all there is.
They're pretending that they know how to regulate and run an economy, but they're in big trouble right now.
The country's in big trouble.
It's made me think about a warning from Mises.
He talked about the crackup boom.
He talks a lot about the business cycle, but what is the final conclusion?
Because I get this question a lot of times.
What is the final conclusion?
And when is it going to come?
And Mises deals with this.
And the ending, if you don't change your ways, is very, very difficult because it is a crackup.
And it's just not a recession.
It's just not a depression.
It's major economic and political activity that goes on and a real threat to the people and a tremendous readjustment of wealth.
The wealth is dissipated.
A lot of wealth is destroyed.
A lot of wealth is taken out of the hands of the middle class.
Even though it's been doing that right along, it gets very bad.
But this is something people should understand.
It's called the crack up boom.
And the questions we are asking today is, you know, exactly what it is.
And I gave you a little hint there on what the crackup boom is.
We'll talk some more about that.
But also, are there signs of it?
Are there signs of the crackup boom or is this just another recession?
We've gone through recessions.
You know, I can remember recessions all the way back to the 40s, right after World War II.
Recessions come and go.
And because of our situation as having the reserve currency of the world and our willingness to spend endlessly because we can get away with it and we can manipulate interest rates, this has served our interests very well.
And we, the Federal Reserve and Congress, through their mutual agreement, the Fed would print the money and the Congress would help spend the money, but the Fed would also do things secretly.
And in a way, you'd have to say, well, they've been relatively successful in doing this and getting out of the recession.
But eventually they can't do it.
They run into a problem.
And that is the crackup boom.
And this is a very serious problem.
And that's what we will be talking about today.
Yes, Dr. Paul.
And Ludwig von Mises, I would like to point out, you know, he should be much more famous than he is, but it's very understandable as to why he isn't.
It's because he was the one in 1922, the great economist that showed logically and without a question of the doubt why socialism and communism cannot work.
And that was 1922.
The entire 1900s of the hundreds of millions dead did not have to happen if people listened to Ludwig von Mises, but of course they did not.
Now, as far as the crackup boom, I do want to read a quote by Mises.
And he said, but then finally the masses wake up.
They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly.
A breakdown occurs.
The crackup boom appears.
Everyone is anxious to swap his money against real goods, no matter whether he needs them or not, no matter how much money he has to pay for them.
Now, the first thing that you know, the knee-jerk reaction of America is: oh, that can't happen here.
That's just stuff that happens in Zimbabwe and other countries.
Well, look at since 2020, 2019, look at what has happened here.
You know, millions and millions of Americans would never have guessed that this is what would have happened to their country.
So it absolutely can happen here.
We are not immune from the consequences of bad ideas.
And does it have to happen?
Are we predicting it?
No, but it absolutely can.
And we better shape up and do the right things in order to avoid it.
Very good.
And I want to follow up on your point that Mises makes that the people finally wake up.
They realize it's a fraud and that they've been conned into it.
But in the short run, they benefit.
Everybody benefits because it's counterfeit and people are accepting it.
And if you think of it in terms of counterfeiting, and people rigging, hey, you know, all that money we have is counterfeit.
So they want to, boy, can I pass it on?
They try to pass it on and buy stuff.
And of course, that leads-you know, that leads to the real crash.
Crisis of Confidence 00:08:21
And it's a confidence factor, which I think is very important.
This, what we're describing here can't be calculated by the Keynesian.
They can't, even if they agreed with these cycles, they can't say, Well, we have this computer is going to measure the money supply here and the regulations here, here, put it all together and have 17 pages of formula and say, Well, on January 10th, you know, the whole thing comes about.
There's a subjective element there, and it is a confidence factor.
And once the people understand it's not going to go away, the expectations is causes the momentum.
And because on the early years of the inflation, the people have too much trust and too much hope in the government that it goes longer than anybody dreams it should.
But then when it hits, it's worse than they ever expected.
But of course, people like Mises and other Austrian economists aren't too shocked that it is that bad.
It's the bigger surprise that it lasted so long.
But it is not easy to correct.
It is not just an economic matter.
It's a political matter.
It's a financial matter.
It is a matter of social stability.
And why we're in such a mess today is that it is on the horizon.
At the same time, it's aggravated tremendously with this great bubble of regulations with lockdown, this whole episode in the last year and a half with COVID.
The COVID could have been handled quite differently.
There would have been serious problems, but it wouldn't have been done the way it was.
And it wouldn't be a reflection of the mismanagement of medical care.
So we have mismanagement of monetary affairs and interest rates coming along with the mismanagement of a medical necessity for private medicine and individuals solving the problem rather than the bureaucrats and a single doctor that represents all the doctors of the country.
Which right now, though, I think there are good signs because I think we're moving into that waking up period and that people are waking up.
And when they wake up, you know, Mises says, you know, it ends, which is very dangerous, but it also means that the people who have made plans for a reform, more people will wake up because you have to get support from the people.
Because if you don't get support from the people and having good reforms, you end up with authoritarianism much worse than what we have today.
Yes, Dr. Paul.
And, you know, the next concept that I want to get across for people that really think about it and understand it, it will change the way that you view the world.
And, you know, this comes from Austrian economics, but it's very, very difficult for most people to accept.
In the economy, when a recession or depression occurs, that is not the crisis.
Now, when it occurs, every magazine, every mainstream media, it's crisis, crisis, crisis.
What is happening actually is the cure.
The crisis is the moment that the Fed starts counterfeiting money.
That's the crisis.
The cure is when it all falls apart.
Now, why is that?
It's because you cannot have a counterfeit economy.
Now, let's take this concept to foreign policy.
Look at what is happening in Afghanistan 20 years later.
This is considered the crisis.
The crisis was in 2001 when the U.S. invaded Afghanistan.
That's when the crisis began.
Today, we are seeing the effects of it.
And why?
Because you cannot go across the world and remake totally different societies.
The same concept applies to COVID.
The moment that 15 days to flatten whatever they were talking about flattening, that was the crisis.
Liberty was conceded.
So now we're two years later and they do not want to let go no matter what.
So the return to truth is painful, but that's the cure.
That's not the crisis.
And no matter how painful it is, we have to go through it in order to get back to reality.
So all these situations that I just listed have the same lesson attached to them.
Never sacrifice your liberty because that is the real crisis.
Very good, very good.
Well said.
You know, the markets know what's going on.
That's the people and how they're reacting.
And markets, when the governments get them out of whack, too much money, interest rates artificial, and all those things that they do, and price is going up much too fast.
The market is saying you have to liquidate.
Well, market is always demanding it to work.
I think so often about the Bretton Woods Agreement because it was really serving our interests and people warned about it.
But, you know, for a long time, the market was saying, you know, this can't be.
You're putting too much money and the gold that you have it is inadequate.
And then it took a lot of years until finally in 1971, it broke down.
So the facts, you know, ruled over the politician.
And that's the way this is right now.
The facts, they cannot contain this.
Well, I could say it that way.
They can sort of contain it, but they can't correct it because of the political factors, because the people are there, they're accustomed to it.
And the most recent history shows, well, the Fed usually pulls us out of it.
Congress will pull out.
Look how well they sent those, look how quickly they sent all those checks out for COVID.
People got checks right away and started feeling better.
But that is all temporary.
And one thing that you will always hear, we're still hearing it, but you will have to hear the end.
Now, Misa says they will finally witness what the inflation is coming from, and that's putting too much money.
But right now, we're still in the phase where the shouting and screaming is there's not enough money.
And that's everybody from the military-industrial complex, all the bankers, consumers, the unemployed, whatever, to the point where we subsidize the unemployed, where they're given so much that there's no incentive to go back to work.
And all of a sudden, there's a shortage.
If you talk about malinvestment and disturbing the economy, I mean, we're really into a mess right now.
And all I can say about what to expect, you know, I do not believe we're going to escape having a horrendous mess, the crackup.
And that event, I believe, will be the biggest economic event of all history, mainly because there's never been a fiat currency so intertwined with the whole world.
And if people finally one day wakes up, which they won't wake up tomorrow and say, you know, this is coming.
I believe these guys.
I'm getting rid of my dollar.
But they're starting to do that.
And it's when the consensus say the dollar is not going to be recovered.
We can't trust the Fed.
We can't trust the Congress.
And we are fearful now of our loss of liberties.
And we are.
We're losing our liberties over this COVID thing.
And they're also going to say, you know, why do we have this empire?
It just proved once again, empire building goes badly and it uses, it demands so much wealth.
It now is determined that $2.3 trillion was spent on fighting that war in Afghanistan.
And that has to be one of the most ridiculous expenditures ever.
But that money is really printed money.
People say, well, at least they didn't tax us.
Wrong.
Inflation Is a Tax 00:03:49
That's a tax.
Inflation is a tax because they steal value from your money.
So if you double the money supply, prices double, not exactly that way, but that prices go up.
And that is essentially the tax because the purchasing power of your dollar goes down.
It's identical to the tax collector coming and knocking on your door to collect the taxes.
But this is much more acceptable because the government can get away with it.
Because right now they say 60% of the people don't pay income tax.
Well, that's good, but it's not good that they keep spending.
And right now, I think, along with the crackup boom, the thing that I fear the most is the maldistribution of wealth.
It keeps getting worse.
And initially, until we fix this, that is going to get much, much worse.
And when you look at the statistic of the middle class and the poor, how they keep getting poor, I mean, the numbers are there.
And the number now, we used to talk about how many millionaires are there in the country.
Then it was a person has a billion dollars?
What is he going to do with it?
What about 10 billion?
What if he's a trillionaire?
People must say, think, and they don't even know what to do with the money.
To tell you the truth, it keeps building and building.
All we know is the people who are struggling and are out on the street, it's not going to make them very happy.
And that's social disorder.
And that will come along with the crackup boom.
Very good, Dr. Paul.
I'm going to finish up now by saying, you know, our individual lives and civilization itself has to be built on truth.
There is no choice in this matter.
And today, and not just today, anybody who has followed the career of Ron Paul knows that we live in an empire of lies.
Our entire society is infested with lies, no matter where you look.
So what is needed in this situation?
Well, the truth is needed.
You need individuals to stand up and tell the truth no matter where it is.
Now, on this show, the truth that we preach is about liberty, but that's not the only truth out there.
There's health, parenting, whatever profession you're in.
You know in your individual life where the lies are and which lies are dominating and it's nonsense.
And it just contributes to this whole picture of an empire of lies.
So we need as many people as possible to be like beacons of truth.
And then the lies cannot be sustained.
The whole house of cards comes down.
We specialize in the monetary and the foreign policy and aspects of liberty.
So let's each do our part in whatever aspect of life that you see that you can stand up for the truth.
And you're going to have to take the slings and arrows just like Dr. Paul did decade after decade.
Telling the truth gets you booze, gets you name calling.
You just have to do it because it's the right thing to do.
And, you know, in the end, it'll all be worth it.
You know, I think what we're going to see shortly is that more people will recognize that the band-aids don't work anymore.
The injury to the system is much greater.
And a few band-aids here and there and printing a little bit more money and shifting the wealth around.
It's not going to work.
And that's what they're recognizing.
So we're moving now, I think, more rapidly each day toward the crackup boom.
But we do not know.
Nobody knows exactly when that'll happen because things can pop up rather quickly.
Just think of the policies in Afghanistan, how that has deteriorated.
Government Reins in Protection 00:03:44
So things can change very quickly and they can change in the financial markets.
So the foundation has eroded.
I don't think that in next week we're going to have the crackup boom and everybody will recognize it.
I think it's going to continue to deteriorate and get much worse.
But there will be a time when people will give up and that will be the end of the American empire and it's going to be end of the dollar being the reserve currency of the world.
There probably will be a dollar, but it will not be the reserve currency of the world.
Right now, the big discussion is: will they try another band-aid?
And they're talking, well, the Federal Reserve even is saying, hey, maybe this is getting out of control.
I guess what we better do is tighten a little bit and see if we can save it.
Well, that's the same rationale that Nixon had.
And it didn't solve the problem.
Ultimately, it made things much worse.
But the Fed will talk about it.
They might try it like they did a couple of years ago, and the markets don't like it.
So they go back to printing money like crazy.
But it's the Fed with plans to tighten, raise interest rates, and shrink the expansion of money supply.
It's not going to solve the problem.
It's too ingrained.
There's too many people totally dependent.
And one thing that the banks and the big companies and the military industrial complex and the recipients of the welfare state, both rich and poor, they're really not gold people.
They might be indifferent to it, but they're not friends of gold.
They're not arguing for the gold standard because big government is necessary.
Big government doesn't exist with a gold standard and they don't like that.
So that is the problem that they have.
But I think we should be prepared.
And there are so many different things people can do.
And I could list them and people should work on that on trying to protect themselves.
You have to have political protection.
You have to have physical protection.
But you know, the truth is the only ultimate protection is a renewed interest in personal liberty, because I claim that if you had all the stock market and all the welfare state just dissipate, and what was left was personal liberty.
You can do what you want.
You can't steal.
Just go to work and keep what you earn.
If you really had that, I think we'd be back on our feet rather quickly.
But the idea that we can, you know, take advantage of other people through the inflation system is one thing.
But the whole idea that when people need something, they can, they sort of still reject the notion that they should be able to steal from their neighbors, even though there's too much of that going on.
But they asked the government, we have to understand that when the government comes in and destroys the wealth and has wealth redistribution through the printing of money, that is theft.
And it's a moral problem as much as it's an economic problem.
And you can't say the people, you know, should follow the rules and not steal and cause violence.
And yet the government can do it.
That means the government has to be reined in.
If the government is reined in and their sole effort should be to make sure that people have their freedom and a right to keep what they earn, believe me, I think our crisis would be over rather quickly.
I want to thank everybody for tuning in today to the Liberty Report.
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