The Coming Economic Meltdown - And How To Protect Yourself - With Guest Phillip Patrick
Government spending is through the roof. A few trillion for "Covid," a few tens of billions for "Ukraine" and a massive military budget. Americans are feeling inflation every time they go to the gas station, the grocery store, anywhere. US actions overseas threaten the dollar as the world's reserve currency. In these treacherous times, what can we do? Birch Gold's Precious Metals Specialist Phillip Patrick has some thoughts in today's Liberty Report.
To learn more about how Birch Gold Group can help you protect your savings, viewers of the Liberty Report can request a free info kit at https://birchgold.com/ron.
Hello, everybody, and thank you for tuning in to the Liberty Report.
With us today is Daniel McAdams, our co-host.
Daniel, welcome to the program.
Good morning, Dr. Paul.
How are you?
Good.
And we have a special guest today.
He's a colleague for me, at least.
We both work at Birch Gold.
And he's been with Birch Gold for 10 years or 12 years.
So he knows Birch Gold very well.
I haven't been there that long.
I've been there a couple months, but he is known as the precious metal strategist at Birch Gold.
And of course, that's a big issue for a lot of people and more so now than in the past.
And his name is Philip Patrick.
Philip, glad to have you with us today.
Thank you for having me, Dr. Paul.
It's an honor.
Very good.
You know, we might start off now with a little bit about what's very, very current.
And that was the FOMC met two days ago.
And boy, I'll tell you what, there was lots of ups and downs.
The one thing fascinated me, and I might get you to comment on it, is the rumors that go before the markets and the markets are trying to outguess it.
And then there's leaks, and it takes the time to sort out facts and fiction.
And I think that misinformation occurs not only in social matters and war matters, but they appear in economic matters too, with our government.
But I was fascinated with the fact that, first off, about interest rates, and I will in general ask you a question about interest rate.
But the question I had, the thing that fascinated me was, you know, they were anticipating 25, 50.
Oh, it was going to be 50.
But there were rumors it could be 75 points higher.
So the market, they don't, Powell didn't announce the rise of interest rates to 75 by 75 points, but just 50.
And that became euphoric.
You know, ah, good.
The world's better off.
So the stock market went up a thousand points.
So to me, that's a little bit fickle.
And go ahead and make a comment on that if you like.
It's definitely a little bit fickle.
We saw a thousand point jump yesterday.
And as you rightly say, you know, people weren't sure.
I think the consensus was it was going to be a half a percent jump, which it turned out to be.
But there is a lot of people out there saying it could be three quarters of a point.
When they only moved at half a percent, the markets rallied.
That's all over today.
Every gain we saw yesterday has been eaten up today.
Look, we've known for a while these rate hikes are going to be coming, right?
Last year, the Fed pivoted.
Inflation became the number one concern.
So although they jumped half a point yesterday, I think there's quite a few more to come.
Analysts are predicting probably a 3% federal funds rate by the end of the year.
And the markets are already suffering this year so far on the back of it.
So I think it's the beginning of more movements to come there.
You know, at Burch, your title is includes wealth management, or at least they mentioned that you were a wealth manager in the private sector.
Is that correct?
That before you were there, what exactly does that mean?
So I worked at Citigroup.
I was a banker and I looked after individuals' investments.
So I was back then a wealth manager.
For the last decade, I've been focusing really on the precious metal side.
That's my forte these days.
That's what I spend my time doing.
Yeah.
Well, maybe you can explain to me and to others, because I think this debate has been going on a long time about one particular precious metal.
And I've watched it, you know, since I was a kid when I collected silver coins and saw them disappear in the 1960s.
And so I've been fascinated with silver and sort of like silver, like I like gold.
But the predictions of silver.
They never seem to be right.
There's always tomorrow is the next day.
It's going to explode.
It's rigged and all these things.
It's a big deal.
And I like to talk about it because it's very commercial, although gold is a commercial metal and a jewelry as well, which helps make it money.
But silver especially is very, very sensitive.
So tell me what your predictions are.
Do you think it's a right time for our viewer to say, yep, it is up and down and we don't know about it, but we better buy silver because next week it's going to double.
Look, I think in general, the climate in front of us is very conducive for safe haven assets like gold and silver in general, right?
Look at the nature of our issues.
We have inflation.
We have stock market correction on the horizon.
These problems tend to be conducive for growth, right?
Inflation tends to drive the value of gold and silver up.
Stock market crashes tend to drive the value of gold and silver up because people look for safe haven commodities.
So I think in general, the climate is conducive for the two of them.
Silver, I think, is very interesting.
As you mentioned, it has broad industrial application.
It's used in solar technology, electric cars, both of which are booming.
The other side of it is just the pricing relative to gold.
Inflation And Beyond00:14:21
It's very cheap today.
Gold and silver have a historical trading ratio of 16 to 1.
Today, they're running it closer to 80 to 1.
So I think for somebody who's interested in longer-term growth, looking for an asset that is applicable broadly in the economy, I think silver's probably the most interesting in that respect.
Right.
Philip, Daniel has a question for you.
Philip, we have some similarities.
I notice you have an international relations background, as do I.
So I bring a little bit different of a perspective, but I think it's related overall.
The discussion has been about inflation.
We all see it.
We all feel it very acutely, particularly if you bother to go to the store at all.
We're hearing now about another $33 billion that President Biden wants to send overseas to Ukraine.
That's in addition to, I don't know, three or four $800 million checks that he's written over the past.
It seems every other week is another $800 million check.
I wish my name was Ukraine because I would love to have those checks sent to me.
We talked about it on our show this past week that according to polls, the American people, by and large, are not buying the Biden administration's line, that all of this inflation is because Putin and we have to save democracy overseas.
They're blaming it on the Biden administration.
So you have this massive overseas spending.
You have this massive military spending, a very, very large military bill this year, and you have inflation coming.
When do you think is this inflection point where the American people are going to say, enough is enough?
I'm tired of spending.
And where can I go to preserve my money?
Look, I think it's coming.
I think it's coming now.
And people are starting to become very frustrated with this administration.
Look, there is a time to spend, right?
We're talking about Ukraine now.
Before Ukraine, it was the Build Back Better program.
You know, this administration has been pushing through massive spending packages.
Now, what's so concerning, we have inflation coming from different directions.
Look at what the war in Ukraine is doing to global food prices, to oil and gas prices.
All of this stuff is inflationary.
There is a time to spend and there is a time to cut back.
And now is the latter, but this administration don't seem to understand it.
In fact, what we're getting from them is gaslighting, right?
They're coming out and pushing through spending packages, telling the American people spending money is anti-inflationary, that it's going to lower the debt.
So we're being lied to, and they're trying to force spending packages down our throat.
And they've been caught out in those lies.
In fact, the San Francisco Federal Reserve came out and said the $4 trillion in COVID pandemic relief led to 3% of the current 8.5% inflation.
So they're fueling the issue.
Now, in terms of when will this end, I think, look, the Biden administration's popularity is falling fast.
I think the midterms are going to be very telling, but the Democrats don't look like it's going to be a good midterms for them.
So we could see them hamstrung a little bit come November, and I think we'll see a change in 2024.
But my concern is, as long as these guys are forcing through these fiscal policies, these spending packages, these problems aren't going to go away.
They're going to get compounded.
Very good.
I want to follow up on this inflation thing because it's the big issue.
It's the big issue politically speaking and economically.
We hear nothing more, nothing more than just inflation.
And I want to key in on the definition of inflation because everybody seems to have a different definition.
If we don't have an agreement on the definition, how are we going to solve the problem?
Can you narrow it down to one thing that is the inflation that we have to deal with, rather than saying it's Putin or Biden or food shortages or COVID or this sort of thing?
What would be the most important issue or policy that has to be changed?
I mean, the definition of inflation is the rising cost of commodities and services over time, right?
It's when things become more expensive.
Now, where that inflation is coming from, everyone's trying to pass the buck, right?
Remember, last year, the Federal Reserve were denying it in a way, right?
They were saying, oh, it's transitory, it's short-lived.
Don't worry, it's going to disappear.
It didn't happen.
We've had 24, 25 consecutive months of rising inflation.
Now, the Biden administration have been pushing it on Putin, right?
They referred to Putin's gas hike, Putinflation.
Clearly, that isn't the case, right?
For anybody that has a memory that goes back longer than 18 months, we all remember gas prices were going through the roof before a Russian boot stepped foot in Ukraine.
We knew what was happening to food prices.
Now, is the war in Ukraine inflationary?
Certainly, right?
Russia and Ukraine amount for 25% of the world's wheat, 17% of the world's fertilizer.
So, this conflict is certainly compounding the issue, but it was here.
And like I said, the Federal Reserve, sorry, the Biden administration are, I think, making the problem worse.
They're forcing down more spending packages and they're fueling the issue.
What we really need now is synergy, right, between the Federal Reserve and the executive branch, right?
I almost feel sorry for Powell in this climate because he's trying to engineer a soft landing, which in and itself is going to be almost possible to achieve.
But he needs an executive branch that are playing ball, that are cutting back spending, and we're just not getting it.
And who suffers?
The American people.
Because if there's one, you know, where inflation really hits, it's the people, right?
90% of U.S. stocks are owned by 10% of the population.
Everybody in the United States is feeling inflation, particularly the bottom 99% of the population.
It's a big, big problem.
And even worse than that, Philip, is the fact that we're seeing our standard of living sacrificed on the altar of ideology or political correctness.
You know, we can't drill for more oil now, even though the gas price is through the roof, because we have to have green energy.
You know, too bad American people, too bad working class people, too bad middle class.
You know, it seems like the ideology is coming first in this administration over anything else.
You're absolutely right.
And it's trumping common sense as well.
It's funny you mentioned oil and gas prices.
First of all, this was in many ways predictable, right?
And this administration has been pushing down to shut down, or pushing us to shut down pipelines, right?
And essentially, we've increased our dependence on our strategic enemies for oil.
And the solutions that come up are just bonkers as well, right?
So Biden's touted solution for high gas prices, every time it goes over $4 a gallon, just cut checks to the American people.
And the craziest thing about that, he was asked, well, how are we going to pay for these checks?
And he said, we're going to tax the oil companies.
Since when does raising producer costs ultimately lower the price of a product?
It just doesn't work.
They're not thinking it through.
And you're absolutely right.
This is ideologically driven and we're not ready for it.
And the people are suffering.
That's the issue.
And I think it's going to get worse because my biggest concern of all is we don't even really have the tools to tackle the issues.
Look, the Fed are trying to raise rates to curb inflation, but they can only do so so much, right?
These nominal raises in interest rates, they're crushing the market.
And I think they'll continue to do so, but they're not aggressive enough to stem this level of inflation, right?
The last time inflation was this high was the early 1980s.
The federal funds rate back then was almost 15%.
Volcker had to put it there to crush this level of inflation.
We can't do that today.
We've got $30 trillion of debt.
There's no way we can let the interest rate get that high.
So I think we're stuck between a rock and a hard place.
And I don't see the tools to really combat the issues.
It's a messy situation.
I want to pick up on the trade, trade internationally, and find out how that affects prices, how it might push prices up.
And traditionally in the United States, especially in our early years, it was very well known that free trade was good and that free trade, they would frequently say, you know, if you trade with people, you're less likely to fight wars with people.
That doesn't seem to be the case right now because there seems to be, even though there's logic between Germany buying oil from Russia, that doesn't seem to prevail.
But we now live in an age where free trade is not the mantra, but people almost shy away from it because it's condemned.
But what about this age now that we're in?
Do you see any danger in the number of sanctions that are used rather casually and also the tariffs that are being used?
How much damage is this doing?
And if you were advising some politician someday, would you say what would you say to them about dealing with this problem of sanctions and tariffs?
Look, it's a tough issue.
I think that we've been using sanctions.
Look, it's a tough situation to advise politically.
You know, is what Russia did acceptable?
Probably not.
But, well, definitely not.
But look at how we use our sanctions.
What's been concerning for me about this administration is the weaponizing of the U.S. dollar, right?
Look at what we did to try and force Russia off SWIFT.
We're using the U.S. dollar as a weapon, and it's effective shorter term.
My big concern with it, though, look at what China are doing now.
China are looking around.
They're seeing what's happening to Russia, and they're saying, we don't want that to happen to us.
They have aspirations for Taiwan, and I think they're thinking those through now.
But what we've done, I think, in this process is we forced our strategic enemies to start looking for a solution.
Is it going to be rough for Russia?
Absolutely.
Absolutely.
But as they try and find alternatives, they team up with China.
We'll see what happens there.
That starts to reduce the grip that we have on global reserve currency.
And for me, that's a big one, right?
We have an incredibly privileged position here in the United States to have control over global reserve currency.
It strengthens our dollar.
It allows us to do a lot economically.
My concern is by printing the dollar into oblivion, we're making it less attractive.
By weaponizing that dollar against Russia, against China, we're making our strategic enemies, we're making other nations seek alternatives.
China now, you know, negotiating with Saudi Arabia to trade oil outside of U.S. dollars in Chinese yuan for the first time since the 1970s.
These moves are significant, and I think they risk our position longer term as global reserve.
That's where I see the danger.
Well, you know, reserve currencies have a history of lasting for a period of time and then they disappear and you can sort them out.
There may be 10 or 12 major times in reasonably recent history.
But do you think you're at the point now where you can say the dollar's days are numbered as a reserve currency?
I think there's evidence that it's being diminished and you bring that subject up that it's sort of getting a little bit messy.
But what are you projecting or think about what might happen?
You think things will be about the same in five years from now?
Or do you think people should be concerned that if they're thinking about investments and things, do they think, boy, no, I don't want anything in dollars because even though the dollar is holding up and it's pretty important, you know, it's vulnerable.
Where do you come down on that?
Look, I think we're escalating.
If you ask timeframes, it's tougher to predict because we have to see what happens with this administration, how much damage they can do, and what the next administration, if it's different, decides to do.
But what you said at the beginning is absolutely right.
Look, global reserve currency status circles throughout history, right?
Great Britain had it before the U.S. from 1815, I think, to around 1946 after Bretton Woods.
So the average length one nation ever holds reserve currency status is around 90 years.
We're heading towards that average.
Now, this isn't a new thing.
The dollar's potency as global reserve has been diluting a little bit from the 1970s up until today.
So it's been a slow dilution.
Global Reserve Currency Status00:02:58
But I think what we're doing today is escalating that inevitability, right?
If I'm another nation and I'm watching the U.S. Federal Reserve printing huge amounts of money, devaluing the value of the dollar, devaluing the dollar, I should say, that becomes an issue, right?
Like I said, using the dollar as a weapon starts to become an issue.
So I think what we're doing is we're escalating the inevitable.
If we continue down this path, massive spending, massive, then I think it can happen soon, potentially in the next five years.
If there is a change of course, if we start to think about things, if we have an administration that's really thinking bigger picture, right, not pushing through ideology, then we have a chance to extend it.
But I think in general terms, our time is running thin here.
Very good.
We're going to need to wind this down now, but I'd like to give you a chance to tell our viewers precisely how they can get in touch and stay in touch with the services that you may be involved in providing and the company, if they're interested in precious metals.
What's the best address or way of doing this?
And do you put out publications or do you have a website or anything like that?
Go ahead and tell our viewers what is available.
Of course.
So look, for us, information is the most important thing.
And that's what we try and do for our customers.
We try and give as much information as possible so that they can make informed decisions.
For your listeners, for your viewers, they text Ron, R-O-N, of course, to 989898.
Again, that's Ron to 989898.
Our website, for anybody looking for information, birchgold.com, and it's birchlikethetry, B-I-R-C-H-G-O-L-D.com.
A lot of good information there.
But there is a free, extensive information package for anyone who texts Ron to 989898.
Very good.
Philip, I want to thank you very much for joining us today.
And I'm sure our viewers will be intent on following up on this and getting an interest in sound money.
Like I mentioned in our interview, I started when I was a kid because I collected paper money, newspapers, and I always checked the silver dimes.
But if I was disappointed when the silver left, now we don't even have copper in our pennies.
And also, of course, before I was even born, they made it illegal to own gold.
But anyway, it's very interesting.
And one way they could follow up on this is to take your direction.
But I want to thank our viewers today for tuning into this program.