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Oct. 22, 2021 - Ron Paul Liberty Report
24:44
Don't Be Deceived: The Fed Is The Main Culprit of Rising Prices

By creating many trillions of new dollars out-of-thin-air, the Federal Reserve set in motion an economic disaster. The warnings are over. Inflation is now here. Every excuse imaginable will be offered up as "reasons" for the economic pain. Don't be deceived. The unconstitutional Federal Reserve is the problem.

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Time Text
Leadership Through Mandates 00:02:27
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.
Dr. Paul, it's great to be with you again.
Very good.
You know, the news is filled with the economic conditions of the country, and of course, the conditions of our personal liberty.
And for some reason, I suspect they are related, but they are talking more about the economic things going on.
You know, why are there so many jobs available and nobody taking these jobs?
And people are complaining about the economy and complaining about prices, a lot of inflation.
So there's lots to complain about.
The other day, the president was talking about it, and he went over three or four major problems that this country faces.
You know, everything like from immigration.
He recognized it was a big problem there, and we had to do something about it.
And then also, there's inflation, there's inflation, and we have to deal with that, and we have to deal with the budget.
And he went on and on and foreign policy.
And he was pretty good in identifying the problems that the American people are concerned about.
But what was interesting that I sort of had to hold my breath on it because after he announced each problem, he says, there's only one thing we need to solve this problem.
It's leadership.
And I thought, well, you're the president, don't you remember?
You're the president.
You're supposed to be the leader.
But anyway, I think he hit the nail on the head that there are some problems out there, and maybe leadership is necessary.
But of course, our idea of leadership is so different from the ideas of an authoritarian or an authoritarian president or a vice president, an authoritarian Senate or an authoritarian Congress, all these things, because they have only one solution.
Their idea of leadership is mandates.
If there's problems, more mandates, more enforcement.
Punish people, threaten people.
Tell them if they don't behave, we'll make sure that they're canceled.
You're going to lose your job.
On and on of what we've been putting up.
So we are facing a lot of those problems.
But when it comes to economic distortion for years now, I've talked about and mentions the fact that there is a lot of distortion.
It comes and goes.
Fed's Role in Inflation 00:08:11
You can predict when bubbles form.
You can't predict when they're going to burst and exactly what will happen.
But we do know from the study of Austrian economics that there are bubbles and there are a lot of bubbles around.
And it's not like you have to be a genius in the early part of this century to predict and say, you know, there's a housing bubble.
There was a dot-com bubble.
And now there's another bubble in the stock market and where else.
And if you come to the conclusion that it is the Fed, then you say, well, what are they doing?
Well, they're doing their best to try to calm things down.
They're monetizing $120 billion every month.
They're buying up the debt so that they do not have to rely on work and savings and the things that occur in a free market economy, which adds to the gross distortion and contributed to the so many problems that we have today.
But Chris, I'm sure you've paid attention to this.
What are we going to do about it?
I don't know, Dr. Paul.
I think you and I have been paying attention to this for a long time now because longtime viewers and listeners of our show will know that we have been warning the Fed can't create trillions of dollars like this.
It's going to drive up prices.
The warnings can only go so far because the people in the media and the politicians, they're only focused on the current moment.
They're like, ah, there's no inflation.
Prices are stable.
In fact, there's too little inflation.
The Fed wants prices to be higher.
Well, we were not focused on what was at hand at that time.
What we were focused on was what the Fed set in motion, and it is now here.
It is unavoidable.
Everybody sees it now.
Prices are rising everywhere you look, whether it be gas or food, whatever your bills are, you definitely can see that prices are going up.
And even though we're here, here is not static.
Here is going to get progressively worse.
The Fed really set in motion something very bad.
And that's the main thing that we want to get across: keep your eye on the Fed.
They are the cause.
Because everywhere else that you're going to look, whether it be media, politicians, even CEOs that are closely tied to the government, they're going to try to muddy your ability to see that it's the Fed.
They will blame X or they'll blame Y or Z, which will be real things.
They'll point out this is why prices are up, or this is why prices are up.
But those are all accessories.
They're complementary to the main core problem that we have, and that is the Federal Reserve.
So please always keep your eye on the ball.
It's always the Fed.
And, you know, a lot of people are aware, and we talk about it all the time, that when the Federal Reserve creates money out of thin air and gives us artificially low interest rates, this causes, you know, eventually it does push up prices.
And, of course, Milton Friedman said this very clearly, and a lot of people will quote him and saying, you know, it's always a monetary problem.
But it's not the way you're able to spend more money and get re-elected.
So they have to not emphasize that too much.
But I think there's a lot more emphasis on, you know, you print a lot of money, the value goes down, and the prices go up.
And people, you know, generally can see that.
But one thing they don't talk about a whole lot is the malinvestment.
That is, when you lose the important signal of interest rates, market rates of interest, what are the people doing?
Are they earning money?
Are they saving money?
Are they investing money?
And what are they doing?
And the interest rate traditionally in a free market is very, very important.
But they hardly ever talk about that.
But they do talk about certain things that some things go up faster than others.
I remember the 70s quite well because there was a distortion.
There was a lot of price inflation.
They were introduced to the notion of stagflation.
Prices were going up.
Although the economy was weak.
And the one big issue was the price of energy because we were fussing with the Saudis over the oil.
And there was an embargo and the oil was cut off.
And these prices were skyrocketing.
And so the 70s were very much involved in that.
But that reminds me of exactly what we're doing today.
Because if you read the news today, they're talking about what's the price of gas.
Oh, yeah, it's, you know, not super sky high, but you can see some charts where it has started to go up significantly.
And there are some projections which I pay attention to.
And it's going to go much, much higher.
And you say, well, is that because the Fed prints too much money and there's inflation and the value of the dollar goes down?
Probably.
That's the fundamental problem.
But the other thing is, is the malinvestment and the activity that we get involved in with by the use of funds that are created out of thin air and the amount of debt that we run up.
Then our government gets involved, just as they did back in the 70s with the Saudis.
We got involved really a whole lot in pipelines.
Whether it was the XL pipeline here in the United States or also the Nord Stream on the North Sea.
Then this was done and it involves politics and there was a shift in policy.
Trump was much more market-oriented and tried to remove some of the regulations and open up some of these things.
But Biden came and what was the first thing he did was he closed down the pipeline which was thriving and it was helping the Canadians, helping the Americans and all these things.
So that pipeline was down.
So we cut off our supply and that was giving us more shortages, at least perceived to be shortages, but it was really a disruption of the market that we created.
So then we worry about the Russians are right now arguing with the Europeans.
We were involved in the middle of that because our customer over there that we're trying to protect is Ukraine.
And the Ukrainians have, they're right in the middle of this battle between Russia and Europe.
But this is a major event.
And so that pipeline hasn't even been opened.
So we have the inflation, but we have the malinvestment.
We have bad foreign policy, which is permitted because we're still in control to a certain degree of the reserve currency of the war, of the currency world, the world currency.
And we get away with interfering.
So this is also a major problem, but it's geopolitical too, and who knows what, because the Russians have said, and I probably tend to believe them, well, don't come to us and beg and plead for us to just open up the spigots after what we've done.
Put on sanctions on the various countries to close down a pipeline that was directly involved in this country.
So the Russians have warned us, which means that the bottom line, Chris, I think it means that not only do we have inflation, that is the printing of money that will devalue and prices are going to go up generally, we're also going to have some specific things dealing with energy, especially if we have an excessively cold winter.
But no, don't worry about that.
We have global warming and it'll be warm.
We won't need any of that gas.
So we'll wait and see what happens.
But I think it might be a long, cold winter for a lot of people.
Central Bank Planning 00:13:52
And it will be related very much to government interventionism and mischief in the marketplace.
Right, Dr. Paul.
And it's important to understand where this government interventionism, this philosophy, and even the Fed, when it was created.
You know, the United States was conceived in liberty, as it was said.
And, you know, in its early years, the prosperity and freedom was unparalleled to ever exist before.
But, you know, once the mid-1800s and early 1900s, you know, America turned into almost like a rebellious teenager.
And individual liberty, which was the nucleus of society, would be tossed aside in order for what you're talking about, complete government interventionism.
And in order to do that, they needed this institution of Federal Reserve.
And that is the nucleus of it all, of this progressive, so-called progressive idea that government is going to scientifically manage all of human life.
Well, we may be in the latter stages of that major mistake of this rebellious teenager, maybe even the end stages, who knows?
Because central planning always fails.
They always lose control of what they think they control.
Inflation being one of the things, and that's what we're talking about today.
Once inflation, it could get to a point where it's completely out of everybody's control.
You know, with bailouts is another thing, and we've been through how many rounds of bailouts of Wall Street.
And each time it multiplies moral hazard.
Bad decisions are rewarded, which leads to more bad decisions with the expectation of being rewarded again for your bad decisions.
We see it with raising the debt ceiling.
Once you do that, there is no debt ceiling.
And you constantly hand out more welfare, which means the desire for more welfare will just increase exponentially.
And we're getting to that point where now we have politicians that are saying, well, that doesn't have to be repaid.
There's no cost to any of this.
Oh, really?
There's no cost?
So what ends up happening is the authoritarians, the progressives, they corner themselves where every move that they make ends up being wrong.
It harms.
More and more people get disgusted, unhappy, and they start to lose faith in this progressive scientific management.
That is when the ideas of liberty are so important because they will look like a stairway to heaven to people.
And that's why we push those ideas and hope that as many people as possible adopt them.
Very good, Chris.
You know, the question comes up about why is it that the central banks of the world, the various ones, and everybody has a central bank now because this progressive era that may be ending, hopefully, is why is it that they've all adapted to the same thing and they all inflate and then they also concede certain powers, which they did to us after World War II,
because we had most of the gold and we had the reserve currency of the world and we maneuvered us into there.
So we had we had the military power to back it up and we also had the authority to manipulate the financial markets.
So that's been very, very powerful for us.
But basically all central banks like inflation.
It wasn't that only the United States inflated throughout these many decades, but all central banks could inflate.
And the reason for this is that governments have this natural desire to enhance their power.
And the people who gravitate to government are the ones who want the power and they enjoy this.
And it makes them rich and it makes their friends rich.
So it's very, very important for them to have this control.
So they actually love inflation.
You say, well, why don't they, if they're all this powerful and the economy is doing well, why don't they just tax people?
Well, they do that, but there's a limit to that.
Right now, there's a limit because if we were still taxing people for what we were spending in Washington, you know, this ballgame would be all over.
But if you look at since the last bubble bursting in the housing bubble, and with COVID activity going on, we just keep printing money like crazy.
And because the direct taxation is unacceptable.
Well, it would be unacceptable for financial reasons.
The loss of confidence would be tremendous.
But it would also be a rebellion by the people because they would hope taxes going up is one thing as long as you're taxing the rich and they think they're not getting hit.
And yet the real tax burden falls on the middle class.
So they have to use deception and the deception is inflation.
That is increase the supply of money.
And it's one of the most deceitful, dishonest things that a government can do to the people because they become literally the counterfeiters.
And, you know, people frown on counterfeiting.
Governments especially frown on counterfeiters that aren't under their control.
But government central banks are counterfeiters and they're taxing people.
That's the way they do it.
You say, oh, no, they're not taxing people.
They're not taking money from the middle class.
Yes, they are.
What they do is they print the money for their various schemes, whether they're international scheming or financial scheming and welfareism here.
They dilute the value of the money and the purchasing power goes down.
The prices go up.
So people should remember, if they've been annoyed in the last week or two or last month or two or in the coming months, when the prices are high and you have trouble paying the bills, you shouldn't say that, well, I need a better salary.
That's going to solve the problem.
Yeah.
A better salary.
But a better salary would mean getting paid in honest money.
That's not losing value.
That would be the thing to do.
But that isn't the case.
It's much easier for the politicians and the people who want war and welfare to just go ahead and steal wealth from the people, and that is by printing money.
And that is why all central banks participate in this.
And it's also something that is not permanent.
And right now, there are signs now that we are losing steam in being able to manage the reserve currency of the world.
So this idea that we can continue to do what we've been doing since World War II, just print the money and sort of force it on other people and threaten them if they don't do what we tell them, that is coming to an end.
And this is why people should be prepared to understand what the problems are, because printing money, changing the Federal Reserve chairman or something like that, that is not going to do it.
And Chris mentioned, as the progressive era is ending, it has to end because it can't pay for itself.
And that means that we have to have a replacement.
And that's one of the things that we try to do here with this program is to offer the solution to this.
And as far as I'm concerned, it's just not, you know, a better leader than have that leader do our thing.
It has to do with the understanding and the promotion of the cause of liberty.
And we would go a long way to solving the problems that we're facing today.
Finish up by summarizing central planning has to fail.
There is no other option.
So this is very good news for people to understand.
I'll try to at least share my thinking on why it always has to fail.
And that's because the world and all the people in it is way too complex to be planned, either by human beings or so-called AI, you know, creations of human beings.
You know, because our universe is under, it's constant change.
All change affects everything else, either in a big way, a small way, a minute way.
And there is no way to know ahead of time how change will affect all aspects of the material world.
And that's just the material world.
Then it gets even more complex with human beings because each and every one of us have our own knowledge, our own beliefs, our own experiences that no one else shares, that we have our own.
And we interpret the world to ourselves in our own way.
Now multiply that by 7 billion people.
There is no way to know ahead of time how one specific individual will interpret an event versus another.
I may see things one way.
You may see it a totally different way.
It's the same exact event.
And there's no way to predict ahead of time.
And there's no way to predict how I would act on what I interpret to myself versus how you would act.
So the idea of central planning is nonsense.
You know, but there's always people, and we've mentioned this before, who believe that they are special, they are super intelligent, they are the ones that are going to move the pieces around the world.
But, you know, the truth is we're not moved by others.
We are the self-movers.
So that's why it always fails.
But these people, they create a lot of destruction in trying to achieve the impossible.
And we're actually living through another episode of it.
So we just have to stay strong, look for the truth, seek it out, and cling to it as hard as we can to get through this.
Very good, Chris.
You know, a lot of people are fearful of the marketplace and freedom because who would do the planning?
Who would plan to build the houses and the highways?
And who would plan to deliver health care to us and provide food?
And, you know, we have an abundance of interference right now, and they're having a lot of trouble delivering newspapers.
And it's a real mess.
But, you know, they say that that's why you need government, is for the planning to take care of the people, especially the people who are the ones who are suffering at the hands of the wealthy, which is only a gimmick in order to get support, political support from these people.
But there's a lot of planning individually, but it's done in a voluntary fashion.
So it's not like there's no planning.
The planning is done by individual, and it's done in a voluntary fashion, and there's no force and fraud.
You have sound money, and this is completely different than when the government plans.
And, you know, Adam Smith talked about the invisible hand in a free market economy.
Things seem to work out.
You know, you can't have one person pulling the strings and writing orders, executive orders, do this, do that.
We've just been through a couple years of that nonsense.
And it would be that if we had that central economic planning, it would be working.
But what it is, is the individual makes the decision, and he called it the invisible hand.
And you know what I think has happened?
The invisible hand, which is sort of like magic, because all the problems are solved, the ups and downs, and decisions are made, what you should manufacture, what prices should be, and the protection of personal liberty, all these things.
But in this case, I'll tell you, people now are quite frightened about the iron fist.
That's what's happened.
The invisible hand has turned into an iron fist because it's mandates.
If you don't do this, this, and this, you're going to lose your job.
You're going to be canceled.
And there's a lot of suffering going on there.
And there's reason for a lot of people to be concerned about this.
This is why if there's temporary reprieve in our economy with just a lot of printing money for a year or two, that's going to end because all these decisions, this whole idea that billions of dollars worth of goods and services are sitting out in the ocean and they're not being delivered because the market has just disappeared.
There is no disappearance.
There's no planning anymore.
It's central economic planning, which doesn't work.
And all you have to do is look at those ships at the ports not being unloaded.
Then you have a pretty good idea of what it's like when you don't have individuals making the plans, working for their self-interest, working to make a profitable business, working to keep jobs for people.
So it is so easy, I think, to understand because the answers can be found in the cause of liberty, and understanding liberty is not complex.
You should have a right to your life, your right to your liberty, and a right to do with what you earn as long as you don't hurt people, as long as you don't participate in the fraud and deceit and violence that governments get involved in.
Believe me, this would be a major step in the right direction.
No perfection overnight, but I'll tell you what, at the rate we're going, this country is going to be less perfect than a year from now than it is today.
So we will eventually have to assess this whole principle of what are the rights of the individuals, and does the government have the authority, and are we going to permit them to decide everything for us, whether it's social or economic?
That is a losing argument.
I want to thank everybody for turning in today to the Liberty Report.
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