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June 10, 2022 - Ron Paul Liberty Report
24:20
Don't Blame "Corporate Profits" or Rising Wages For Inflation -- Blame The Fed!

Every excuse in the book is given for inflation. But inflation has a single source: The Fed and the immoral fractional-reserve banking system. Why waste time on the periphery? Perhaps it's to make sure that the "system" continues? That's unacceptable. Go to the source!

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Short Term vs Long Term 00:04:30
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.
It's great to be with you, Dr. Paul.
Very good.
You know, today there are a lot of releases on functioning of the monetary system, a little bit of inflation out there, as the conventional wisdom of Washington calls it.
You know, prices are going up.
So that's inflation.
According to us, though, that's the consequence of inflation.
The inflation is quite a bit different, and they refuse to even talk about it.
They have to make up a scheme of things on why it's up.
Today, we wanted to mention a couple of things that contributes to inflation.
One is fractional reserve banking.
You know, I don't think enough people talk about that.
And also this week, there was a lot of talk about wages and profits.
That's the real enemy, and we have to deal with that.
But, you know, the reports today were a little bit confusing.
The stocks went down.
Well, we'd expect to go down because the prices were going up more rapidly than they had anticipated.
So the markets got a little shaky about that.
The stocks went way down.
But it was a little bit surprising to some people.
The gold prices didn't do so well.
They've since the opening, they were down like $20.
Now they're back acting more normally.
But I think it wasn't that unusual because the immediate, people invest on a very, very short term.
They don't go by economic laws like we're more likely to.
What does it mean to have a Federal Reserve?
And we know what it does to the currency.
But on the short run, the government can make an announcement and cause all kinds of havoc.
And that's what happened today because the immediate reaction, oh, interest rates are going up.
Nobody will want to buy gold if we're going to put our money in bonds and interest rates that are rising.
And also, since the world depends on the dollar still, it's a lousy currency, but right now the world still endorses it.
So the dollar went up, you know, on the interchange the market.
And those were pressures on the gold.
But I think subsequently the gold started going back up.
And I think we look more at the long term than the short term.
And the markets, especially, are very, very short term.
But it is very confusing.
It has to be confusing for people who are interested in gold.
I've been interested in gold since the 60s before the Bretton Woods broke down.
And it's fascinating to me.
I think I found interest because of its fascination.
But it's also dawned on me.
It's related to liberty.
It's related to protecting wealth.
And it's not always that easy, especially since the government regulations in the short term can be difficult to interpret.
So one thing that we do here at the Ron Paul Liberty Report is recommend that if you have questions on gold, you can actually click on a number that we have on the screen and go to Birch Gold Group and get somebody to talk to because all infections, all protection and investments aren't the same.
People are different ages, different jobs, different savings accounts, different investments.
But so it's not easy to decide exactly when and how to get involved or expand or put more money into gold.
But if you have those kind of questions, you should look at that number on the screen, give it a call and talk to somebody at Birch Gold Group.
And I think it'll be very helpful to you.
In the meantime, Chris, we will talk a little bit more about why are we in this mess.
And I was talking to somebody this morning and they knew I was interested in gold all way back before people, before it was legal for us to own it back in the 60s.
And my comment to that individual was, you know, this is a rough market, even though there's not blood on the streets, even though there's too much of it.
But I mean, there's not a lot of people.
There's still people, you know, looking for jobs and they can get jobs.
Why Banks Loan Excessively 00:03:50
But I think the basic conditions, the fundamentals, the value of the currency, the spending, the debt, the size of government, the wars that are going on, I think it's the worst it's been.
And I've had through the 60s, you know, I was drafted.
There was a Cold War going on and Vietnam was going on.
And we had horrendous inflation in the 70s, interest rates up to 21%.
And my comment to that individual this morning was, I think it's worse than any of that.
I think it's probably one of the largest crises in the history of the world because the dollar has been so universally used and it's going to affect everybody.
And basically, if you're looking for one incentive to cause all these troubles, that to me would be spending and the debt, the debt accumulated by everybody and the debt that won't be paid.
And now they're wrestling with it.
And that's why we're facing this crisis, Chris.
Very good, Dr. Paul.
Yeah, inflation is the huge problem that most people have on their minds today.
And I wanted to start by explaining fractional reserve banking because that may sound complicated to people.
You're actually not even supposed to know what it is, but it's very easy to understand.
And I would put it this way.
Imagine that you buy a storage unit.
We see them all over.
You could buy a storage unit.
You pay for the storage and you store your stuff there if you don't have room in your house.
So let's say you have this storage unit and you drive over an old lamp and you put it in there.
And the guy working there goes, okay, we owe you one lamp.
And you may think to yourself, oh, you don't owe me anything.
I'm storing my lamp here.
So now let's talk about storage of your money in a bank.
You put your money in a bank and, you know, it's there for you to spend it, to pay your bills.
You don't think of it as the bank owes you that money, but that's on their books how it works.
And you may think to yourself, I could log in.
I could go into my account right here online.
I could see my balance.
You know, $7,000.
Yeah, that's the balance that the bank owes you.
So right there, you should think, well, something's fishy.
And the reason is because they loan out the money and they only keep a fraction.
That's why it's called fractional reserve.
They only have a fraction there.
So what you see on your screen doesn't mean that it's there if you were to get it.
And in fact, if you were to go and get your money, now all these red flags go up.
What do you need all this money for?
You taking out all this over a certain amount, all these, and then it goes all to all the intelligence and everything.
You're just getting your money that you're storing at the bank.
So you can see how depraved and immoral this system is.
So that's what fractional reserve banking is.
It shouldn't be that way.
It should be your money's there.
And if you go and take your money, it's your money and it's there.
So that is a big problem with inflation because the banks create tons of money in this process too.
Yes.
And it's fractional reserve.
It's dishonest, it's fraudulent, and it's a pyramid scheme.
Because if I put $100 in the bank, the bank says, you know, if you want to, we'll get into where they get the money is another story.
But I put $100 in the bank, the law says they have to have 10% in reserves.
They only have to get 10%.
What are they going to do with the $90?
Oh, they'll loan it out.
So the money goes to somebody else and they hit $90.
Fed's Faustian Bargain 00:15:15
And what do they do?
They put it in the bank and the bank does the same thing over again.
They reserve $10, $9, and they loan out the next.
So the thing snowballs and gets totally out of control because the amount of money isn't fixed at all.
It's just, just look at the massive monetary inflation in these last several years.
It's just way out of control.
And so it is a pyramid scheme.
And the unwinding eventually has to come about because production can't keep up and the standard of living can't keep up because the debt becomes overwhelming.
And that's what we're facing today.
And that's why, you know, it's such a serious problem.
But there's so many different things that starts this off in motivation.
And the founders were motivated by honest money, you know, only gold and silver being legal tender.
They had runaway inflation with the continental dollar.
But the big, big problem we have today is we have dishonesty in government.
Guess what?
And it's bipartisan.
They're bipartisan.
So they all abuse the money, but it's convenient because on the short run, that's how they get votes.
But then they run into trouble because you can't continue it.
The debt gets excessive.
The value of the currency goes down.
And that's where we are today, because every day you're going to hear something about what the Fed is going to do.
And they don't know what to do.
And they won't admit the truth.
They'll say, ah, wages and profits.
You know, buying is terrible.
We got to do away with the profits, especially on those energy companies.
That'll create a lot of new energy.
So it is so sad that so much ignorance is around.
But the big thing is, is people have been conditioned.
This is what people have been taught in schools.
I was exposed to it.
I always kid, people sort of laugh a little bit.
I said, you know, it took me several years to unlearn all the bad things that the government schools taught me because really to get an education and sound money and sound economic policy, you have to go to places like the Mises Institute and several other good places.
You can even come to the Ron Paul Liberty Report on occasion.
We'll talk about these things.
But no, it's the understanding of the principles of money.
And we've been indoctrinated.
And there are some people who like the indoctrination because their ultimate goal is a Marxist type of society.
And because our society is so fragile now, that is a real threat.
Right, Dr. Paul.
And, you know, we've been saying when the Fed was going on their printing and counterfeiting binge, you know, that this is going to drive up prices, but be alert because they're going to blame anything except the Fed as much as they can.
And of course, today that is what's happening.
And you hear from the usual suspects, oh, it's corporate profits, corporate profits.
No, no, these are effects.
You got to go to the cause.
And a little bit of basics on prices and profits, what they mean wouldn't hurt you.
When someone is selling something, they always want to get the highest price.
And when someone is buying something, they want to pay the least amount and ideally even free.
That's why people rush to get something free.
So, but it doesn't happen that way.
If you have a $100,000 house, you're not going to sell it for a million just if you put a million-dollar price tag on it.
So, what is agreed upon is the market price.
And that's what we see out there: what people are willing to pay and what corporations and companies are able to charge.
Profits, on the other hand, are merely a market signal.
They tell us, hey, this is in high demand.
People want this.
We're satisfying this.
It's driving up the price.
It's time to create more of this, increase production.
On the other side, when prices are low, you don't want to increase production.
Go build something else.
There's plenty of supply.
Prices are low.
So that's how the market works.
And you never want government to come in and tax away profits.
Because if you need more production, which is what high profits signal, how are you going to increase production if Nancy Pelosi takes it to go buy another house on the ocean?
If they take your money that you're going, that you need to increase production.
That's why corporate profits tax all these profits.
It's pure emotion, envy.
And that's not to say that we live in a free market.
Government tilts the tables terribly in this country, but you don't want to make things worse by giving them power to now go create wealth taxes and every other piece of garbage to just make things worse.
You know, one thing that they're discovering is for the Fed to keep tinkering on a system that they don't understand and they don't want to understand.
They want to use it for their benefits.
And there's a lot of politics involved in this.
But they tinker on, but none of that's going to work.
Tinkering with interest rate and saying we're going to decrease the reserve, reserves a little bit at a time.
They're so far removed, even for the problems that we have.
And I thought they were less severe than today.
Volcker, his idea of stopping this nonsense was he took interest rates up to 21%.
So right now, you know, we're not anywhere close.
And it's just too bad that the answer is returning to the free market and sound money.
And I think everybody knows that's not going to happen.
But, you know, yesterday there was a big deal going on.
There were hearings in Washington and they were checking things out to find out, you know, what's really going on with this country.
And it has to do with the last election.
They had this recount in election, and it turned out to be the most significant insurrection in the history of this country.
So, but they had two hours of propaganda on the major networks.
And all it was designed for was to hate Trump.
It was a hate Trump program and to stir up the troubles like that.
So, but this polls recently have showed that if you take 20 items of what the people are concerned about, guess what?
Inflation isn't number one concern.
COVID and all this lying and innuendo is that high.
That was number 20.
They've sort of forgot about it.
Just this week, they were trying to put on regulations to control monkeypox.
And there's about 20 cases of it.
I mean, that's how absurd the whole thing is.
But I think what was happening last night was just a scheme to distract from inflation and not want to talk about where does the inflation come from?
Oh, it comes from the Federal Reserve.
Why?
Oh, well, there's a lot of special interest groups that do it.
Instead of talking about that, how it's been politicized, how it's a tax and how it's fraudulent and how evil it is and how it creates the debt and how it brings us to this brink.
Good times, which are artificial because they paid for through debt and printed money.
Instead of dealing with that, what do they do?
Well, they have, well, we can get all the networks except for one or two little ones.
Well, we can get on the air and we can have, we can spend two hours on our own to show them why we really should hate Trump even more.
And that'll solve the problem of inflation.
That doesn't mean that I believe that Donald Trump had all the answers because we know that he would spend money and sort of things.
He's locked in the same system.
But I think, you know, the conditions right now puts Biden in the worst conditions.
And therefore, this is a scheme of things to distract from a discussion that we have here at the Liberty Report been trying to get attention for for a long, long time.
And it's ongoing.
You know, I was with Jefferson.
I remember it so clearly.
And we were against Hamilton, but we're still fighting that same fight.
Yes, very good, Dr. Paul.
I'll finish up with my last point here.
Our problem is government intervention.
We have the biggest government in the history of the world and Fed inflation that has created the most money in the history of the world.
But another big part of the problem is media and they just lead people into creating situations that are bad that the citizens ultimately look back on and be like, oh, we were ripped off again.
Let's just think back at these last few years with they tried to force people to get vaccines and the pharma companies raked in more money than ever from the government.
And then there were the lockdowns where big business cleaned up and the small guy got hammered.
And then, you know, the after effects are all these new billionaires were made and billions were made.
We're reading about it now, all the billionaires that were made from COVID.
And now everybody wakes up and they come to their senses, or at least most people, and they just start blaming all these billionaires, these corporations are to, you wanted it, you got it, you know, and but that's the thing.
People have to stop falling for the latest thing is what it's called.
And they do it with wars all the time.
They get people fired up.
And then, you know, when it's all done, your $6 trillion has been taken from you.
Another crop of billionaires were made and you cheered it on the whole way.
Now, the people that do this to us probably think, you know, these people are never going to wake up.
We could do this forever.
Is it true?
No, it isn't true.
Ultimately, there comes a breaking point where the people do wake up and they've had enough.
We say at the Ron Paul Liberty Report, get there faster.
You know, we don't have to keep going through this cycle of being ripped off by the government and the Fed.
Very good.
You know, we keep asking and we keep trying our best to answer the question: why, why, why?
Why do people go along with it?
If it ends up like this, then there's good history to show that it always does it, sometimes much worse than others.
Right now, there's a couple of countries around the world that have runaway inflation where the currency goes to zero.
But I think one of the major motivations for all this, for human nature to do this, is probably basic greed.
You know, there's a work ethic where you earn, you earn honest money, you save it, and then you invest and do these kind of things.
But the temptation is overwhelming, and it's been around since Roman times.
There's an easy way to do it.
And most of the time, it starts okay with honest money, but even in Roman times, they got to the point of food and circuses and food and circuses.
And finally, they destroyed the money.
But most empires ending currencies in when they extend themselves too aggressively and too far in foreign policy and foreign adventurism.
And inflation of the currency does this.
And that's why you have the probably very well could be the largest lobbying group in Washington.
That is the military industrial complex that's always lobbying for more weapons and more weapons.
Well, that's going to come to an end because eventually the people will reject the dollar, even though in the short run, you will see the blips upwards and down on this.
But the support for the empire is going to be constant.
But people also have to remember the greed issue is there, but it's also the way big government people tax because inflation of the currency is actually a tax because it drains value from the currency.
And you don't even really, they still send the IRS to intimidate us, but they do not have to march in your house and take the money out of the drawer.
They intimidate us and people do send in a lot of money, but the real fraud is the devaluation of the currency.
So if you can double the price inflation, you know, the real debt went down by half, but it never works smoothly and people catch on and they know what's happening.
But it's a form of theft.
It's a tax, but it's a theft too, because how can they steal half of the value of your currency without even going in with a robber?
You're not a robbery.
You don't even have to hire the gun to go in there.
All right, this is a bank hold off.
Give me some money.
No, the outfit, all they do is just run the printing presses.
Your value of your currency goes down.
The new money that they created will still have some value and it goes to the special interest to do bad things.
So it is not complicated.
It's just so sad that we cannot get people to understand this.
And they have to also remember that there ain't no such thing as a free lunch.
And a lot of people still think so because still the lobbying is incessant to get more money.
And I've often said that I think is rather silly that the problem is there's been too much fiat money.
So what do the people say when they come to Washington and they send their special interest groups, whether it's the military industrial complex or the pharmaceutical index or whatever, what do they want?
More money.
And of course, that's where the problem started.
Honesty is what they're really looking for, honesty and money.
You know, that concept, the inflation has been around for thousands of years.
And actually, the argument about thou shalt not steal has been around a long time, but we have been ignoring that as a people in this world.
We do not follow the, so it's as much of a truth issue as anything.
And yet, in spite of all this, I still think more people now are awake to what's happening than there was before, because I know that, you know, when I went to Congress in 76, what's that guy talking about?
Federal Reserve and printing money on all this kind of stuff.
And now the Fed, the Fed is more, is getting attacked more than ever.
The Fed's New Critics 00:00:41
And that's where the attack has to be.
But it also has to be an attack or an understanding of our educational system, teaching bad economics, and also this greed factor of saying, hey, is this going to be a free lunch?
Well, the free lunch deal is over.
You get it for a while, but it's all fake.
We've had a fake economy, and that's been ended.
So we have a tremendous opportunity to present the ideas.
And that is our job of those of us who believe in liberty and sound money is to present our case for sound economic policy and for our liberty.
I want to thank everybody for tuning in today to the Liberty Report.
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