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Dec. 3, 2021 - Ron Paul Liberty Report
22:50
'Between A Rock & A Hard Place': The Fed Is Being Crushed

Attempting to micromanage human economic life by counterfeiting money and manipulating interest rates is a fool's errand. Ultimately, those who attempt it must corner themselves into an impossible situation. Nothing they do works. Everything they do fails. The costs of keeping the illusion going become overwhelming. Don't miss today's Liberty Report!

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The Fed's Dilemma 00:15:21
Hello, everybody, and thank you for tuning in to the Liberty Report.
With us today is Chris Rossini, our co-host.
Chris, good to see you.
It's great to be with you again, Dr. Paul.
Okay, as we often do, we want to talk today about the economy in general, but more specifically, that little organization that's been floating around here since 1913 that we would like to abolish.
We need to talk about them because they have over these many years gained a lot of power, a lot of power.
And they thought that all they could get out of that would be wealth for the wealthy and take care of everybody and throw a few crumbs to the people to pacify them.
The only problem with that theory has been the fact that the people may rebel by getting the crumbs and they get crummier all the time.
And yet, the markets keep going up and down and up and down.
And there are some people who make money in both cycles.
When the market goes up, fine.
If it goes down, they make money too.
And that causes a lot of resentment.
I think that's what we're seeing.
And there was a lot of excitement this week.
Powell was on again, off again.
Should I inflate?
Shouldn't I inflate?
And you and I, and many other who have an understanding of Austrian economics have predicted that when they come to the point of turning off the spigot, it won't go easily.
You know, I think it was a year ago.
So they tried it.
The markets went down, lo and behold, and they had to stop doing it.
Now, once again, they were going to shrink the amount of money they're going to take out of the system because they were taking $120 billion in a month and shrink it in order to say, well, we are dealing with inflation.
This inflation is just transitory and we can handle it.
But lo and behold, I think the predictions of the Austrian economists were correct in saying that it's not that easy.
You're going to run into trouble and it won't last long.
The attack on inflation, technically speaking, that's what has to be done, but the way they were going, it would never have worked.
That you have to stop the inflation, which is printing the money and spending the money.
So that's what they planned to do, but it came to a screeching halt.
And once again, the market skyrocketed when they stopped cutting back.
And also the market crashed when the Wall Streeters believed that they were actually serious about this, you know, that it was necessary.
But so they're back to square one.
And the way I think people should look at this is that the old saying that when you're in a difficult pitch situation, you're between the rock and the hard place.
And I would say the Fed ought to be feeling like the rock is there and the hard place is there and it's squeezing them.
But the problem is, guess what?
The people are the one who are really going to get squeezed.
And that's why we like to address this problem, Chris, because it also explains why we have this monstrosity government that takes care and pretends that they can take care of the welfare warfare state and everybody will be happy, including the people.
We will send them food stamps and they will be happy.
And they never admit and predict the fact that if you do what you're going to do, the people are going to get angry because the prices are going to go up and they won't have enough money to live on.
And Chris, I think that's where we are right now.
Yes, and they are between a rock and a hard place because they are attempting to do the impossible.
When you try to do the impossible, you're not going to get away with it in the end.
And by the impossible, what they try to do is micromanage the world, the central banks, by printing money and artificially manipulating interest rates.
And they're not the only ones we see about big pharma and the food and this.
They tell us all these things that they're going to do to humanity.
Well, they're trying to micromanage humanity.
And in the end, that is going to fail.
But at the core of it is the money.
The money comes from the Fed.
So we have to watch them closely because when they go down, they take the rest with them.
And we're starting to see a few cautious headlines.
I saw one in the mainstream media.
You know, the Fed might not be able to save the economy this time.
Well, that implies that they saved it before and they did not.
They did not save the economy after the NASDAQ bubble by creating an even bigger housing bubble.
And when that burst, they didn't save the economy by creating this monstrous bubble that we're living in now.
All they saved was the illusion that everything is fine.
But that illusion is becoming heavier and more costly with each passing day.
So, you know, for people, and that's what we try to do to understand where do we go when this comes down the curve.
But a lot more people understand that sound money is the way to go.
And if you believe that and are ready for it, you're in a good position.
Of course, one thing that I look at continuously, because it's a good measurement of the value of the dollar, excuse me, and that is the price of gold, because that's been a universal measurement of value for five, six thousand years.
And so when they make these announcements, the stock market shifts rapidly and gold does the same thing.
But sometimes, you know, you have to stop and think, well, why is that happening?
Because when they decided they would go back to inflating again and not cut the balance sheet any, all of a sudden the stocks responded by going up.
And that means they're going to inflate the currency.
But the gold went down.
So temporarily, those things happen.
But ultimately, as long as they continue this policy of up and down and printing money and depending on it and not restoring a definition to the unit of account, believe me, you know, the answer to this for people who worry about it, if you look at all of history, and that is, you know, and see what gold is doing, because eventually they will have to resort to gold on restarting a sound currency.
So there's a lot of mixed signals there.
And actually, I think it's a lot of missed signals because so much depended on what Powell said.
He could change one word or one or two words and the market go up sharply.
And a lot of money is involved here.
But you could say, well, they have this all planned and they know exactly what they're doing.
They don't.
They have a plan to try to save their skin.
That's it.
That's it.
But they're trying to get out of that rock and hard place.
And they're not going to without doing certain things.
And I think they have to do two things that are major that has brought us to this point.
One is you can't operate a major economy without a precise definition of the unit of account.
And up until 1971, although imperfect, there was a definition of the dollar, and all world currencies define their currencies against that dollar.
They still do that to a degree because we still have the reserve currency of the world.
But we really don't have a precise definition of the dollar.
And the best way people can judge the value of the dollar right now and the average purchases of goods and services know if you go to the store, you know, prices are going up.
And that's telling you that the unit of account is all messed up.
The other thing that has to happen if we ever expect to go in the right direction is you have to have a measurement of borrowing and lending and spending.
And that means you have to know what interest rates are.
But the interest rates really don't exist.
It's all artificial and it's just popped into the inflation, but that's all temporary.
But the big threat is: if they have a reality of where interest rates will be if you have shifts, they have to be higher.
And just think of the federal deficit, almost $30 trillion.
You don't have how many trillions of dollars will the budget go up by, you know, just one point, one percentage point on interest rate.
So they are indeed between the rock and the hard place.
They cannot do it.
They can't cut the printing and turn off the printing presses.
And they certainly can't come back and say, well, you know, good economy, interest rates are very, very important.
They give us the information of when we should invest and when we should save and when we should buy a house or when we should sell houses.
All this information is gone.
And when they pretend that they have, you know, that they can substitute themselves, then they're hitting themselves.
I remember one time, Greenspan, who's certainly at work.
He says, well, we believe this is pretty close to what he was telling me.
We believe that we have learned over the many years how to manage a fiat currency so it will act like gold.
I would say, Chris, I would say that I think he was telling us the truth.
Either was very confused, but this whole idea that you can substitute the whole process of millions and millions of people deciding what the value of the currency is and transaction.
But the definition is so important.
But if the definition is changing, that's what, in a way, that's what Powell has been doing this last week or two, changing the definition.
This is what we plan to do.
We are deciding the people are right.
There's too much inflation.
And this is transitory.
So we have to help it along so we can get this behind us.
And Yellen kept always saying, yelling about what she thought, she said, don't worry, if prices start to rise and we have inflation, that type of inflation, we know how to handle it.
But I would like to venture a prediction that they don't know how to handle it and they're trying to get away with something that they're dealing with.
And I happen to believe that the problem they're dealing with and the world's dealing with and the people in this country are dealing with is the biggest financial concern that's ever existed.
That is the financial bubble is huge.
When you think that the dollar bubble is huge and yet all currencies are locked to it, all prices essentially in the world are locked into it, that that is a big deal.
And this idea of tinkering, I think the fluctuations are going to get we know about the gold standard and how it works, so we'll follow the rules of the gold standard.
As long as they do that, people should get prepared financially and they should get prepared for just protection of themselves because politically we're going to have some problems too.
Absolutely, Dr. Wall.
And as their ship sinks, we can expect that they're going to lie all the way down.
And that's what they do.
You know, we always see in the headlines that everything is fine.
And we're actually, it's gotten to the point where we're seeing that inflation is actually not bad.
It's actually good for you.
It's becoming common now to see those types of headlines, and it's absurd.
They're trying to convince you that your ability to buy less is good.
Now, you're not working less.
You may be even working more.
Many people have two jobs.
So you're working more to buy less.
And only in a fantasy land can that be considered a good thing.
But that's what they have to try to convince people of.
And there's always some external factor thing.
The only thing that matters is what we talk about at least once a week.
That is that the Fed prints trillions of dollars and that our money loses value and we buy less.
That's the only thing that matters.
Everything else is just, you know, a deception to try to keep your mind off of the Fed.
And it's so simple.
You know, it loses value.
That's it.
But it's buried.
That simple truth is buried under mountains of lies.
Now, here's the upside, though.
I remember when I discovered Dr. Paul, it was about 20 years ago.
And back then, the amount of criticism for the Fed was hard to find.
You know, it was Dr. Paul.
And if you were able to see it at the Mises Institute or on Lurappo.com, that's where you would see it.
Today, that is not the case.
While the media will not criticize the Fed, the people are increasingly realizing what is going on with the Federal Reserve.
And that is a very good thing for the future.
You know, most people remember because we've talked about it and it was an important day, and that was August 15th, 1971, because that was a declaration essentially of a bankruptcy.
We could no longer defend the definition of a dollar as being related to gold.
But there was another event that caused a shift in attitude, and that was in 1987.
And not much talk is made of this, but that was when the markets got out of whack, which is commonplace under this type of a standard of a fiat standard.
And the market actually went down more than 20% in one day.
Can you imagine what that would be like today?
It goes down 20%.
And those things are possible because they don't have an anchor and therefore they have to be concerned about it.
But as a consequence of 1987, and Reagan was president, he issued an executive order that would set up what became known as the Plunge Protection Team.
And it's called the Presidential Working Group on Financial Markets.
And there are four groups in there.
They were told they could do whatever they can to calm the markets.
You can't have a market dropping 20 points, 20% in one day.
So the group that they put together and gave even more power to first, the Federal Reserve.
You know, they're pretty powerful.
Treasury, they're pretty powerful too.
So the Treasury was part of it, the group.
And also the Commodity Futures Trading Commission, they have a lot of power on fixing prices and making up for the marketplace.
And also the SEC, very, very powerful.
Theoretically, when a crisis comes, they get together and make decisions.
But my understanding is that that happens.
They even make record of so-called meetings that they have.
But the truth is, most people and they pay the most attention to, of course, is the Federal Reserve, the Federal Reserve Board Chairman.
Debt Crisis Correction 00:07:26
So that's why he or she can move markets more than anybody else.
So that is a group, again, like super planners, and they'll take care of it.
And I often think about the promises over the past 10 years of people saying the Federal Reserve Board chairman said they've been working on this diligently to really help out because they associate prices going up with a healthy economy.
Well, a healthy economy might push some prices up, but a healthy economy might lower prices too.
And they, but they say that if prices are going down, you're going to have a, you're working for a depression.
If they're going up, you're having a good time.
So why don't we just raise the prices?
You know, raise prices and it'll look like the economy is growing.
So they've worked on that and they say, they decided, well, how much should you raise it?
Oh, we should raise it about 2%.
When the inflation, that is the price inflation to the consumer, when it finally broke out, nobody remembers when it was 2%.
You know, that came and went.
Then it became 4%.
The truth is, it's probably more like 10%.
And they have no control on.
That's what is the problem right now, because they can't cut back and they can't solve the problems that they have.
And the debt, the debt is related to this.
$20, $30 trillion federal debt is peanuts compared to what the real debt is about when you look at all the future obligations that exist.
So it can't be done, but there's no desire politically to cut something.
They're not going to cut anything.
It's going to be cut by the market because, right, prices have to go down because they're too high.
But how do they go down?
That is the value in the way, the value in the currency, and the people can't buy as much stuff.
So, and wages, real wages have to go down.
That's the market telling them there has to be a correction.
But then they don't pay any attention to that.
They have such strong belief in the management of the economy, central economic planning, Keynesianism, and socialism.
And they pay so little attention.
I would suggest anybody who doesn't have a full understanding of this certainly could find the material to further understand that is go to the Mises Institute.
And Mises and Mary Rothbard are the two that helped me the most to understand how the business cycle works.
Very good, Dr. Paul.
I will close by saying, you know, on our show, we discuss huge problems.
They're basically people trying to do the impossible.
And we basically point out that they're not going to, and here's why.
But we have to, at the same time, always think the opposite of how they think, you know, because every one of us our entire life, we only deal with what is right in front of us at the moment.
We never deal with the world as a whole or government as a whole or crony corporations as a whole.
We only deal with what is in front of us.
And that is different for each and every one of us.
So when these tyrants and authoritarians put up these barriers, you know, people say, okay, well, I'll do this instead.
They put up another barrier.
I'll do this instead.
So there's alternatives for everything in our local situations.
And some are not so right now.
We're seeing people actually quitting their jobs because that's the only alternative that they see.
But at least alternative, at least it exists.
You know, when there's a life vest, we can't complain, oh, I don't like the color of that life vest.
No, at least there's a life vest and you got to take it.
So we have to stay focused on what's in front of us as these individuals who are so mistaken and misled try to build their tower of Babel.
You know, these globalists, what is also happening at the same time is people are scattering.
They're focusing on local.
They're focusing on their, you know, taking care of themselves.
And this is all for the good, because once this big global nonsense comes apart, people will be focused in right places.
Very, very good.
And I want to close with talking about a definition of one word, and that is transitory, because that's been thrown around here these last several weeks and months because they wanted to reassure the people.
And the officials said, what's transitory?
It's part of the COVID problems that we have.
Yeah, COVID is part of the problem.
It's mismanagement of medical care, which they shouldn't be doing that either.
So they say it'll be transitory.
And as soon as we handle the COVID problem, then the prices will go down and we won't have the inflation.
Well, the effort to do that would involve cutting back on the printing presses.
But that didn't work.
And that's why all of a sudden, Powell said, no, it's let's get rid of this idea about transitory.
That's the one thing that he said that is true.
He can't get rid of it.
He's given up on it.
He's throwing it in the towel.
And therefore, they say, well, that should be bad news.
And, you know, for everything.
Stock market, you know, has had several very, very good days, but that doesn't mean that, wow, he's going to do this.
And for the next five years, we're going to have a healthy economy and a skyrocketing stock market.
And gold will never say there's something wrong with this.
No, it's not going to be that way.
So I think most people realize that there's still a big bubble out there, but they don't know exactly what happens.
And it's not transitory.
But for the average individual who goes to the politicians and their representatives to demand some help, it's always the same thing.
And the scenario is they go to the politician, their prices have gone up.
They can't afford a house.
They can't afford the gasoline.
They can't afford going to the grocery store.
And they say, Mr. Government, you need to help us.
We don't have enough money.
Send us more money.
And it never dawns on them that maybe that's the problem.
But the transition from what we have to a sustainable economy is very, very rocky.
It's not going to happen.
So that's why people have to be prepared for some very, very tough times.
The most important investment I believe I can make or anybody should be able to make is to promote the ideas of getting people to understand eventually that printing more money is not going to solve the problem of rising prices.
It makes it worse.
So therefore, getting rid of government intervention and government planning would go a long way.
And of course, the obligation falls on all of us that if we are inclined to believe that we'd rather live in a free society, we have to invest our time and energy in doing that because of the necessity for more people to join us in this fight for peace and prosperity.
I want to thank everybody for tuning in today to the Liberty Report.
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