Inflation Inferno: The Consequence of Fed Money Printing & Government Spending
One would have hoped that after the fall of the Soviet Union, the idea of a centrally planned economy would have been discarded forever. But alas, it was not. And now we are witnessing the failure of the "Western" version of central economic planning.
It doesn't matter how brilliant the planners believe they are. The "advanced" technologies that they may have make no difference whatsoever. Even "artificial intelligence" (an oxymoron if there ever was one) can't make central economic planning work. Freedom is fundamental to civilized life, and sound money is the immutable foundation.
Get your tickets for the Ron Paul Institute's November 5th Conference!
https://www.eventbrite.com/e/shut-up-cancel-culture-and-the-war-on-speech-tickets-421629353747
Hello everyone and thank you for tuning in today to the Liberty Report.
Dr. Paul is traveling, so I will be your host today.
And this week I gathered up a few stories that I noticed, economic related stories, and I figured I'd go over them, give my opinion, and hopefully you'll like what I have to say.
So let's get started.
This is from disclose.tv on Twitter.
United Nations calls on the U.S. Federal Reserve and other central banks to halt interest rate increases.
Central banks risk pushing the global economy into recession, a UN agency said on Monday.
And here's another one from another global institution, so-called global, from the IMF.
This is from Breaking Market News.
And it says, IMF's managing director, George Eva, the Fed has a very high responsibility to consider the impact on the rest of the world.
So we see central planning is now a global affair.
We're coming up with interest rates that are, you know, everybody has a say other than the market, you know, all the central planners around the world.
And the Fed is a central planner itself.
So it's deciding on interest rates that, you know, the UN and the IMF are not very happy with because they're raising rates.
And, you know, the bubble that has been created over these years is now on very shaky ground, to say the least.
You know, and we should go to the basics here on prices because interest rates are a price.
You know, they are an agreed upon price by two parties at a certain place and time.
So, you know, watch any stock trade.
Anyone who is familiar with the stock market, you'll see the price of a stock changes constantly for the active stocks.
You know, it'll be, let's say it's $20 and then $20.50 and then $0.19.50 and $75.
It's constantly changing.
And prices are historical facts.
After the exchange is made, it's a historical fact.
It's not a fixture.
So when something traded at $20 five minutes ago, but it's at $21, you know, that five-minute ago price is a historical fact.
It's, you know, it's not something that remains fixed.
So you can't say, well, what should the price of the stock be?
Well, it depends on the two people making the exchange in the moment.
And if you take it, you know, away from the stock market into like our daily lives, let's say you go to a store and a pair of sneakers is $20.
Well, are you willing to pay for that, you know, $20 at that moment?
It depends on your situation.
If you have 1,000 shoes at home and you can wait, you'll wait.
But if you're a marathon runner and you have one pair of shoes and they're all worn out and you have a marathon tomorrow, you'll pay up.
So that's how prices are formed in the precise moment based on the values of the two people making the exchange.
So it would be absurd for somebody to come up to me and say, well, what do you think the price of sneakers should be?
That's an absurd question.
I, you know, as a third party, have no say.
It depends on the two people making the exchange.
Well, it's the same thing with interest rates.
If, you know, we have people at the Federal Reserve who sit around the table deciding what interest rates should be, you know, and then fixing them.
And then you have people on the other side of the world who are unhappy with, hey, that's not what the price of interest rates should be.
It should be lower or higher.
And all of it is nonsense.
None of them should have any say in what interest rates should be.
Interest rates should be like the market, like when we go to buy sneakers, like when you go buy a stock on the stock exchange.
You know, you're in the market.
You decide in that moment what the price should be.
So when the price is fixed, which is what the Fed does with interest rates, they create problems, economic problems, major economic problems.
They create the boom that we have.
Now, let's take another example.
Let's say you go to the supermarket, and normally the market price is stable for potato chips around $5.
It doesn't change very much.
But one day, the supermarket fixes an artificial price of 10 cents on those same chips that are five bucks.
So what's going to happen to those chips if they're 10 cents now?
By the time you get to the supermarket and find out about it, those chips are gone.
The shelf is going to be empty because people will just go and buy them up.
What a great deal.
Usually $5 now for 10 cents.
Shelves are empty and they're gone.
Well, when you go into the loan market and interest rates, when the price, let's say, of a loan would be 7% in the market, and it fluctuates, but let's say it's 7.
And the Fed comes in and says, and they fix it at 1%.
Well, what happens?
People are going to rush.
What a deal.
I could take a loan for 1%.
The market would be 7%, but the Fed is saying it's 1.
So people go and they take all these loans.
And the banks and the Fed, they counterfeit money to give these loans.
So while the potato chip shelf could be empty, the money shelf could never be empty because they're just creating the money.
And that's how money gets flooded into our economy.
They fix the interest rates low.
People go, take out loans.
You don't have to worry about running out.
You just create more of the money.
And this sets up a major economic disaster.
It creates all the booms that we go through, the stock market boom, the housing market boom.
It funds the wars.
How do you think the government can get into $31 trillion in debt?
The government creates a bond.
The Fed creates money out of thin air and buys the bond.
And the government has money, and then they go fight the war.
You see how everything gets all messed up?
And resources are now shifted to fund a war.
You know, and as we've seen over the last decades, there are endless wars.
They're wasteful wars.
They're wars that produce no good result, just dead people and rich contractors who get the money from the government.
But all of this happens because we have a Federal Reserve, fixes rates low, money floods into the market, money will flood to the politically connected first.
When the Fed creates money, they're not just handing it out to anybody.
Whoever gets it first gets the money and then they could go bid up prices.
And then the rest of us, we watch prices go up and they say, what's going on?
Well, the Fed flooded it in the money and all this money is now chasing after the goods.
So hopefully this helps to explain why prices should not be fixed, whether it be for sneakers, whether it be for potato chips, or whether it be for interest rates.
You know, it's wrong and it's immoral.
And it funds this crazy government that we have.
And they're able to fund all the crazy ideas that they come up with.
So it's very bad.
Let's go to the next tweet.
And this is from Gold Telegraph.
Well, apparently, it's not just the UN and the IMF that's upset.
Here's billionaire Barry Sternlich.
He says the Federal Reserve is going to cause unbelievable calamities if they keep hiking.
Things are already beginning to break.
Now, here's the thing: the calamity is already created.
The calamity is when the Fed artificially lowered rates and counterfeited all this money that was pumped into the economy.
That's the calamity.
Hiking rates is the cure.
It's the cure to the problem.
But nobody wants the problem to go away.
They like the artificial bubble.
They like the artificial wealth, all the debt that they're able to just sit on, and the money keeps getting worth less, you know, as they counterfeit.
So their debts, you know, in real terms, go down.
So the calamity is the counterfeiting.
So this billionaire has it backwards.
As painful as it is, the bust is the cure.
It's the return to economic reality.
Since the artificial boom allocated all these resources in places that are uneconomical, take the green stuff, for example.
It's uneconomical.
This is not the market talking.
These are political products.
But money and resources are creating these political products instead of creating actual products that we want and that are economical, are profitable.
So the Fed creates this bubble with all this waste, and then nobody wants all the waste to go away.
They don't want the bust.
And they think that they could avoid the bust by just printing more money.
And that's illogical.
If what you have created is malinvestments, then more counterfeiting will create more malinvestments.
You can't avoid the cure.
You can't avoid the return to economic reality, but they just keep counterfeiting, keep counterfeiting, keep sending $600 billion here, another billion here.
The government is, they're constantly trying to find ways to just pump money into the system just to give this artificial look, this Potempkin village look.
But the longer that this goes, the bigger the bust in the future.
And unfortunately, we're already at that point.
We're already at that point where a big bust is unavoidable.
There is nothing that could fix that.
And that's only because in the past, in 2008, in 2000, they just kept kicking the can.
Just print more.
Create another illusion.
Print more.
Create another illusion.
Now it's getting to the point where even printing more money will not keep the illusion going.
Everything is so twisted and messed up in the economy that even printing more won't help it.
And I think the Fed kind of realizes that.
So they have a choice to make.
Do we keep printing and perhaps put the dollar in danger?
You definitely don't want to create hyperinflation.
I don't even think the Fed wants that.
Or do we finally pull the plug and create the necessary bust?
Whether or not they have the fortitude to do that, as of this recording, they've been hiking.
They could stop at any moment.
But if they keep hiking, then in all actuality, we're in for a serious bust.
And it's only because of the previous unnecessary, illogical boom that they created up to this point.
Next story, also from Gold Telegraph on Twitter.
Central banks have added over 300 tons of gold to their holdings so far in 2022.
Now, when I read this, what do you think the first thing that came to mind was?
Do you think gold is money?
No.
It's not money.
Even if it had been money for 6,000 years, somebody reversed that and eliminated that economic law.
Well, it's an asset.
I mean, it's the same.
Would you say treasury bills are money?
I don't think they're money either.
Why do central banks hold it?
Well, it's the film reserves.
Why don't they hold diamonds?
Well, it's tradition, long-term tradition.
Some people still think it's money.
That is one of Dr. Paul's greatest moments.
Thank goodness it was on public display for everyone to see.
And even all these years later, we still talk about it.
Do central banks, do governments, Russia, China, are they just holding gold for tradition?
Absolutely not.
Absolutely not.
Everyone knows in those echelons that gold is money and that we're just shuffling around paper.
And like with musical chairs, you want to make sure you end up with a chair.
So people, the central banks and the governments, they're accumulating gold.
Because at the end, when the music stops, if your choice is to have the paper, the worthless paper or the gold, you better have some gold.
And the reason why they do this is also they don't trust each other.
They don't trust the Fed.
They don't trust each other because that's how power works.
And speaking of power, when you hear about the deep state or globalists, always remember that it's not a cohesive unit.
This is not, even though it seems that way sometimes, this is not one big team that is against us.
They're all against us, but they're not all together.
Because you have to think about the nature of power and the authoritarian mentality.
People that desire power, that lust after power, they want it themselves.
They want to be the ones that gives the orders.
They want to wield it.
They don't want to take it from someone else, take orders from someone else.
They want to be the top dog that says, this is the way it should be.
They don't want to hear someone else, some other powerful guy or girl, tell you how it's going to be.
So that's why this whole pipe dream of global government, great reset, it's a pipe dream because it ignores the fact that people who reach for power, they want it for themselves.
So even if theoretically they set up some global government, all the authoritarians will be at each other's throat right away.
Power Lusters Control00:05:27
It'll never last because their socialism is always going to be better than the other guy's socialism.
You can look at the Soviet Union, what a disaster that was.
You weren't even safe if you were a part of the Communist Party.
So that's how power is.
So that's the good thing.
The bad thing is we live in a world, you have all these power centers, they're like gangs, and we live in a world of gang warfare.
They will work together when their goals align with one another.
COVID was a great example.
A lot of power centers took advantage of that.
Not that they were all on the same page, but they all took advantage of it.
Their goals aligned, but the moment the goals do not align, then they'll be at each other's throats.
And that's why we see the UN, the IMF, the Fed, Russia, China, you have all these conflicts.
So again, that's power center analysis for you.
Don't think of it, even though it feels that way, that there's this one giant team that is doing all these things to take away our liberties.
It's not a giant team.
They're not a cohesive unit.
They are trying to take our liberties for themselves, for their own benefit.
So the accumulation of gold is a reflection that they'll talk a big game about paper currencies and fiat money.
But in the end, they will go for the gold.
Same thing with climate.
Our government talks a big game and wants to control our movements and actions about climate, but they're the biggest polluter on earth, the military empire.
Whether it's first or second with China, it doesn't matter.
They're one of the biggest polluters on earth.
And are they changing that?
Are they changing that they're going to be, you know, the are they bringing all the troops home?
Are they closing all the bases?
Are they saying, you know, our earth is in danger?
We better stop this.
Absolutely not.
Not in either party, not even the left, which, you know, they virtue signal with this climate stuff.
They're not stopping the biggest polluter in the world.
Instead, they want to make us use paper straws that fall apart and these bags.
It's ridiculous.
So, you know, they will put out for propaganda, but their actions are what matter.
When governments buy gold and central banks buy gold, their actions matter.
If they don't care about the pollution, when they're the biggest polluter, their actions matter.
And what they say about climate to me means absolutely nothing.
Okay, the last story that I want to cover is from FX Hedge on Twitter.
It says, Fed's daily, we are committed to lowering inflation and will not change course until we are completely finished.
And this is a great example of an arsonist who creates a fire and then he turns around and he's going to be the guy that puts out the fire.
The Fed is the source of inflation, this inflation problem that we have.
Yes, government spending makes it happen, but the Fed creates the money for the government to spend.
If the government does not have the Fed there, the government can't spend all this money.
They're only spending it because the Fed creates it out of thin air.
So it's a double team against us, but the source, the one that really makes it happen is the Fed.
So the Fed is the source of inflation.
They start the fire, and now they're going to be the ones who turn out the fire.
Now, are they planning on, let's say they get inflation under control?
Will they inflate again?
Will they create another fire?
Yes, because they're arsonists.
That's what arsonists do.
They create fires.
So they're not planning on, if they get inflation under control, shutting the doors, saying, you know, this Federal Reserve, it was a bad idea.
We shouldn't have done it.
Look at all the damage we've created.
You know, we really shouldn't be doing this.
We've created all these infernos that we've had to then have painful busts to fix.
We shouldn't do this anymore.
Absolutely not.
If they get inflation under control, once it's under control, they will start printing again.
They will create more economic havoc, more bubbles, and will just keep going through this as long as the Fed exists.
Ultimately, it will reach the end of its rope.
Nobody could know when that is.
They've already lasted 100 years, which for us is a long time, you know, for our lifespan.
In the grand scheme of things, 100 years is not even a blip on the screen.
So it hasn't been around that long.
But how long it can pull off this financial chicanery is, you know, I don't have that answer.
I don't think anybody does because our world is too complex to know something like that.
But what's happening here is, you know, they're now, they created the inflation.
They are going to now fight the inflation.
Cancel Culture Discussion00:01:17
They're, you know, the source of it all.
The best way to avoid all of this is, as Dr. Paul has said, for many years and continues to say today, is to end the Fed.
One final note before I leave, I'd like to draw your attention to our conference coming up in November.
It's called Shut Up, Cancel Culture and the War on Speech.
Yeah, we have battles from every angle.
We're talking about economics today.
At our conference, we're going to be talking about cancel culture, the speech, the censorship, the radicalism that does not want to hear the other side, which is so often the truth of the matter.
So yeah, please join us.
Please, we love seeing everyone.
You know, we live digital lives these days, especially for our job, you know, where we speak to a camera.
It's wonderful to get together with everyone, to see the people that we're speaking to.
Please come up, say hello to us.
We're going to have a great time.
We always do.
And we look forward to seeing you there.
So I will finish up by saying, on behalf of Dr. Paul, Daniel, and myself, I'd like to thank you for tuning in today to the Liberty Report.