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Jan. 11, 2024 - Ron Paul Liberty Report
27:15
Student Loan Crisis: It Couldn't Have Happened Without The Fed

When government claims that it's going to make something (anything) "more affordable" or "more accessible" ... watch out! Their attempt to tilt the tables in a certain direction always backfires. It ends up ultimately hurting those who they intended to help. There are countless examples, but on today's program, we discuss how the government (and Fed) created the student loan mess.

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Time Text
Exciting Birch Gold Insights 00:02:43
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.
Happy Friday, Dr. Paul.
Very good.
Good to be with you again and it's good to be with our viewers.
And once again, we will be talking about a subject we frequently talk about and that is the Federal Reserve and big government and all the nonsense they participate in.
But we're going to talk a little bit more specifically, you know, about how significant the loan, the student loan business is, because there's a lot of debt there.
It's not going to get paid.
And we'll discuss that a little bit.
But you know, this week's been very exciting.
The Fed made some reports and stirred up the markets.
And, you know, in a way, a month or two ago, if anybody would say that the Fed would raise interest rates in one day more than they had in 50 years and it would make the stock market skyrocket.
You know, and even gold came alive again.
So it was a busy week.
But, you know, what goes up quickly may go down quickly too.
So this is a new week and a new time to look at it.
But I tell you what, I've been looking at that for a long time because the fact that it was the gold price and the gold connection that got me involved in politics.
I remember very clearly August 15, 1971, when the last connection of the dollar to gold was severed and gold was at that time $35 an ounce.
And a lot has happened since then.
And it's still happening.
And I think if this is exciting and interesting, there's going to be a lot of excitement, a lot of interest.
Unfortunately, there's going to be a lot of people suffer.
And I frequently, you know, get a call and still I get them.
I've had them over the years.
You know, what do you do?
How do you invest?
And where do you go to buy?
And what's the best thing to do?
One thing for sure is timing is tough.
And, you know, what one person does or what I do is not necessarily a thing that everybody else should do because one size does not fit all.
And this is one reason why I partner with Birch Gold Group because they are very up-to-date in gold.
Now, if you want to get more information, and this will be free information, if you look at the text number on the screen and get in touch, you can receive some free information from Birch Gold about gold.
Wanted to thank everybody once again for tuning in today.
We want to start off with talking about a subject that will be related to, in general, debt.
Debt And Government Policies 00:15:07
Debt is a big deal.
And I think that if you look at the debt and combine that with the interest of the Federal Reserve, it is the big deal.
And then you can go into the subsets on why is there debt?
Oh, it's always for good and good.
And now, philosophically, the far left, Marxists, are arguing once again.
And not in a token way, but vehemently.
Debt doesn't matter.
And they want to even make it worse by this modern monetary theory.
But they've already tested that for a long time.
It just means they're going to print money at will and in secret.
So that is still there.
But debt is a big deal.
And just, you know, recently, in the last 608, since the last crisis, which I argue is still the same crisis going on now, the national debt went from $10 trillion to $30 trillion.
But it couldn't have done it without the Fed.
The Fed is the culprit.
But is it always just those members of the Federal Reserve Board?
Well, they're special because they get hand-picked and they represent the establishment.
And they pursue it.
But what they do is in secret.
So that is one of the reasons why if they're a key player, which I've always believed, we should know more about them, you know, understanding the policy, but also what does the Fed do?
How do they bail out people?
You know, just at the beginning of COVID, they were dishing money out by the trillions.
And this is why the audit the Fed really is very necessary because I'm convinced that when the people in this country know about what's going on at the Fed, they're going to say, we have to have reform.
There's too much special interest built into it.
So this is something that's going to get much worse.
And the measurement of this is difficult for the average person because they're told and they've been conditioned debt doesn't matter and yet they're starting to suffer because even with the low interest rates and all, there's still way too much debt.
And this will prompt what usually is a consequence of the Fed printing money to take care of the debt that the politicians run up for special interest groups.
And what it does, it leads to the devaluation of the currency, debauching the currency.
That means that each unit of account has no definition, so it's bound to go down if they just keep printing them out.
It's like monopoly money.
So that's what's happened.
But when it finally ends is when the people wake up and say it's ruining the dollar.
So far, people still want dollars because they said when COVID broke out, what happened?
The government immediately sent everybody a lot of money, you know, to make them feel better and say, it'll be okay.
It'll be okay.
We can print money.
And they did this.
But the whole thing is, is that this is not the answer because the very fact that they just throw out more money at it, further devaluation, which is the fuel of the fire of the problem that we have, is the fact that the money is losing value and it creates debt and it creates problems we don't need.
And one of them, Chris, and you've looked into this a bit, and that is, you know, the student loan program.
You know, that sounds just so wonderful.
Loan a little bit of money, a little bit of money to the students, and they'll pay it back, and that will help take care of the next students.
But guess what?
That is totally out of control.
It is bankrupt.
And they have had a moratorium on the students since we've had this more recent ongoing crisis.
They say, oh, we'll just postpone these payments.
Don't worry about that.
And now the argument in Washington is, should we resume the pressure for the students to pay this, or are we going to resume the exemption they don't have to pay?
Big political thing.
But quite frankly, Chris, what I think will happen is there will be very little pressure, real pressure on the students to pay because they don't have the money.
It's not going to happen.
The big question I think that we wanted to address a little bit, Chris, is who suffers the consequences?
Who loses the money?
Is it just some private individual who invested and thought this was a good investment?
Or is it in combination with politicians, big banks, and the Federal Reserve?
I suspect that we have a hint to who exactly is responsible.
Right, Dr. Paul.
And student loans are yet another episode of government help that completely backfires.
And here's a pro tip for everyone out there.
Whenever you see that government is going to make something more affordable or more accessible, watch out because there is going to be trouble in the future.
So how are they going to make colleges more affordable, more accessible?
With almost $2 trillion in loans.
Now, what do you think is going to happen?
Let's say you're sitting at an auction, you know, and people are auctioning off goods, and all of a sudden the doors burst open, and all these people come flooding in with a trillion dollars.
Now, what's going to happen to the price of the things that are going to be auctioned?
It's going to skyrocket in price.
And that's exactly what happened with going to college.
All of these loans drove up the price to the point where going through college is a ridiculous idea for most people today.
So it did the exact opposite.
It didn't make it more affordable, more accessible.
It just drove tons and tons of people into debt.
Now, the banks made these loans.
Now, are they stupid?
No, the banks are a lot of things, but stupid is not one of them.
Why would they make loans that they absolutely knew could not be paid back?
Well, because of the government guarantee.
And if the banks know that the taxpayer will end up picking up the bad loans, they'll be like, okay, we'll make our fees, our commissions, and we'll make tons of money.
And then, you know, once everything blows up later, we'll be made full by the Fed.
So this whole thing is another example of government help that backfires, which is why government is not there to help.
It's there to protect our liberties so that we can live our lives.
Very good.
And you make a good point about the malinvestment and the unintended consequences.
Things much worse.
But I suspect that some of the people that really are privy to this don't mind it too much.
They might have other motives, like because the wokeism movement is involved in some of this too.
So they channel this money with conditions and they can control where the money is spent in the universities.
And then everybody wonders, why do we have all these progressive woke professors on our universities?
So all the experts there.
And guess who writes all the papers, hundreds of papers for the Federal Reserve, just defending the position of the monetary system like this that we have.
So the malinvestment is there, it's structural, but the big question still is, how is it going to resolve?
And, you know, Doug Casey had a neat article the other day on Lou Rockwell's site, and he talked about a bigger picture than just student loans.
But he was indicating, you know, what you ought to do is just let it go.
You know, even everything the government owns, it's just money stolen or printed, and it causes more problems, the problems that Chris was pointing out.
So he says it's just default on them.
And that sounds atrocious to a lot of people.
But, you know, when the rules were set, conditions were different, and there was a different understanding of bankruptcy.
Because, you know, bankruptcy is mentioned in the Bible, and they talk about you have to have a day of jubilee.
It must be human nature for people to either have bad times happen or live beyond their means.
And so they had a way to try to save a person's life where they can start all over again and declare bankruptcy.
So that is the case that people can do that.
But if they don't do it, his whole argument was that would clean the slate.
And the government doesn't have to steal the money from anybody.
But it still is not easy to solve that problem.
Because right now, not only has this condition been around for biblical times, but what about even with our founding in the Constitution?
They knew people were going to go bankrupt, but they didn't have a Federal Reserve, and they didn't have these massive spending programs.
It was usually meant, my understanding, usually meant for people who have had bad times and they just couldn't do it and that was more of a compassionate thing to happen.
And in the Bible, they think there has to be a cleansing every 50 years.
And sometimes I think we're about on schedule, maybe a little earlier, a little late at times, but to liquidate the debt.
And that's the bad thing about it.
The worst thing is, is all debt will be liquidated.
No matter what they do about these programs, who's going to pay?
How can we justify taxing people who got through college and paid their student loans off, tax them so that we can send money to the banks to bail the banks out who gave money to the students now they can't pay the notes?
See, that gets pretty immoral and not a very compassionate thing to do.
But when they had those conditions, they thought they were really helping out.
But they were completely, completely different.
And the founders obviously knew about this.
This was one of the very few things in Article 1, Section 8, that they made it a national problem.
You know, debt was to be handled.
You have a unit of account that the country endorsed that they would use bankruptcy and it would be national.
And that is something.
Whether that's totally good or bad, there are other ways to handle that in a free market.
But anyway, they looked at it, they knew about it.
People generally didn't jump up and down and love debt prisons because that certainly didn't help anybody get paid off on the long run.
But the debt problem is very structural.
It's ingrained.
It's built into our educational system.
And because there's so much of this system, it turns out that the people at the Fed on how they distribute loans and grants, they control a lot of the wokeism philosophy on what people have to do.
And they force their business, people who have gotten loans.
They can force them to participate in these lockdowns and do all the things.
It makes no sense whatsoever unless you're a Marxist and your goal is to have chaos.
Well, unfortunately, the tinkering around with what we're talking about is not going to stop the problems in the street.
We're going to have that no matter what.
We can't get enough money out of the people who have money and pay off the debt and everything's going to be.
It's not going to happen.
But the printing of money is going to happen because it's happening right now.
Because with this massive increase in debt, during that period of time when the debt went from $10 trillion to $30 trillion, guess what?
The money supply went from up threefold as well.
So it is structural and it's an addiction and weaning our government off and our politicians.
It's not going to happen as far as I'm concerned.
It's preparation, understanding, understanding economic, finding out how to get an education without depending on our university.
And this, to me, is the solution.
So people have to know what's happening and know what's done and then find as many allies as we can possibly find so that at least we have allies during this period of time, which is destined to get much worse.
Yes, Dr. Paul.
And whenever government intervenes, it creates problems all the time.
So we just, and we cover on the show, you just move from one topic to the next, and it's all government intervention and the problems that it creates.
And it's always the innocent people who have to pick up the tab and pay for it.
So now you see politicians out there, cancel student loans, cancel student.
I mean, do they realize what they're saying?
I mean, so people who never went to college are going to have to now pay for someone else's risk that they took in taking a loan.
Or if they did go to college without a loan, they paid their way.
Or what if they paid their own loan off?
Now they have to pay someone else's loan.
I mean, the total immorality of this idea, but politicians, they don't care about morality.
It reminds me of like people who take a risk and live in a hurricane area.
You know, you say, you know, there's hurricanes there.
I'm like, yeah, I know.
I'll take the risk.
You know, so a hurricane comes, it strikes, and then here comes the government.
They're going to make everyone else pay for the risk that these people took.
You know, that's wrong.
And that's not, you know, this is different than charity.
Americans are very charitable when they're given the chance.
You know, they are quick to help.
But government help is not charity.
You know, when they aid, so quote unquote, it's, you know, they use the money.
A, they take a cut for themselves and their friends.
You know, all these people get rich off of the aid.
Look at Ukraine.
You know, so it's very different than actual charity.
You know, we have a redistributive state, and we should not have one.
If it's wrong for you and I to take from A to give to B, then it is also wrong for government to take from A to give to B. You know, they'll argue, the opposition is going to argue and say, yeah, it's not perfect, there are problems, they have to pay back.
But they won't want to concede because they'll say there are some that did real well.
Some went through college and they got to go to medical school and it worked out.
That's true.
Some people can do that and get a free ride.
But the big picture is morally it's wrong on doing this.
Even though bankruptcy has been around for a long time and some has been with true compassion, but basically it is something that is done on purpose and it's a way it's a form of theft.
Soft Landing Dilemma 00:06:01
But then again, if you just let it leave it to the Federal Reserve, inflation is a form of theft.
That's a sneaky way of taxing the people.
Nobody wants to pay the taxes bill, these people out that won't pay their bill.
But so we print the money, devalues the currency, and that becomes a tax, and that's what they think they can get away with.
That's why for a decade or two, our Federal Reserve was saying, well, they knew there was an ongoing building up of the debt.
And they said, well, we need at least the depreciation of the dollar by 2% every year.
The cost of living has to go up 2% a year.
But what they're saying, the real debt that is owed by the government is going to go down.
But it doesn't work that way.
It moves very slowly and it's very choppy.
So they go in, they go into that, and they let them do that.
And eventually, it just becomes horrendous because it's not based on any moral principle.
There are people still around now that if they owe something, they pay it.
But I think those numbers are short in supply because the educational and financial system and the government has all conditioned us to accept the idea, borrow and pay back later.
It's advertised.
It's up really up front.
Borrow now, borrow $100,000 and buy this, even though you don't need it, because in a couple years from now, oh, yeah, it'll be worth, you'll only have to pay $30,000 because of the devaluation.
So it's a moral issue dealing with money, and it's something that could not happen if you had a gold standard.
Right, Dr. Paul, I'll finish up.
All of this mischief occurs because of the Fed.
Student loan crisis could not exist without the Federal Reserve there as the ultimate money printer.
You know, government doesn't have 1.7, 1.9 trillion, whatever it is, to make out all these loans to students.
They're 30 trillion in debt.
So the emperor has no clues.
Now, the Fed was originally created to protect the big banks.
It's a cartel of banks.
So when the banks get into trouble, the Fed will print up new money, bail them out, the public pays for it, and so they can make all their bad loans, and the Fed will keep them in business when they should go out of business.
So that's, you know, from the banker point of view, that's why the Fed is there.
Now, it has morphed way beyond that.
The Fed now bails out everyone everywhere, even around the world, they're a bailout.
So this whole thing is destined to end at some point because it's impossible.
But it's very big.
You know, the world is a very big place, so it could last, and it has lasted.
But in the end, it is us, us who have these dollars in our bank accounts in our wallets that are constantly being depreciated.
That's the reason why.
They're bailing themselves out, they're bailing students out, they're bailing everybody out.
Ukraine, you name it.
It's an endless list.
So in the end, what this show tries to drill home is the Fed has to go.
Very good.
You know, they talk a lot about whether or not we might be able to have a soft landing.
That's always the goal.
You know, take off with your airplane and your helicopters and pass out the money.
But can we have a soft landing?
Will that happen?
Will they gradually be weaned off from this system or will they become addicted to it?
Well, the answer is they become addicted to it, and it's like a drug.
And when you wean somebody off a drug, it's not a happy circumstance, but there has to be a lot of adjustment.
But also, if you don't wean somebody off the drugs, the drugs kill the patients who's addicted.
But they still talk constantly about the soft landing.
But right now, you know, people are getting a little bit more worried.
There's still some say, yeah, it's a little bumpy right now, but we could still have a soft landing.
The odds of a soft landing, which means it'll be just so smooth, it'll be a gradual transition, and you won't even know it.
If you have a soft landing on an airplane, you know it.
A real good landing, you land, and boy, wow, that was smooth.
You barely felt it.
But sometimes you have a rocky landing, and sometimes you have landing in a storm, and there's a lot of rocking going on, and it's very, very bumpy, and then it settles down.
But the whole thing is, there's not going to be an easy outlet if we're in an economy that's descending from the height of inflationary pressures and it's getting very, very bumpy now.
How can they adjust that airplane quickly so when they're on the runway, they say, wow, it's pretty smooth here.
That probably won't happen that easily.
But fortunately, the airplanes do much better recovering from, you know, having a bit of a problem up in the sky because we're in the sky with this money issue and the government issue and the war issue and all the nonsense we're going through.
And the ideas about the student loan is a typical example.
And Chris did such a good job in describing that on the motivational head.
The motivation is always good.
The intent is always wonderful.
And then, but you say, wasn't it just to help the students?
No, it was there.
Guess who gets the guarantee?
Who doesn't have to worry about being bailed out?
The taxpayer has to worry about paying for it.
But people who backed up and had the guarantee who will get bailed out are the banks.
And it says the government owns 92% of all these loans, but that doesn't mean that it won't hurt the taxpayer.
92% Government Loans 00:03:23
No matter what, if you just print the money, the value goes down.
So the 92%, but if they're guaranteed by other banks, banks, you know, somebody from the government agency didn't make these loans.
You had to have the banks that process these loans.
So that's why you have a bureaucracy, whether it's student loans or any other type of project that they have.
And the Department of Homeland Security probably has billions and billions of dollars that they have, contracts and payment system, all based on fiat money, all based on fake money.
We've heard a lot about fake news, but we should hone in on the whole subject of fake money.
And of course, that's the fiat money that people know about.
Because that is the problem where the temptation comes, and that's where the greed and the avarice comes, where people can make money while somebody else is losing.
There's no money, there's no wealth created.
This whole idea that you can create wealth and somehow or another, it's translated into GDP growth.
That's a fiction.
So printing more units of account, which you can't even define, and measure that as an increase in wealth, that is wrong.
A lot of people still believe that's true just the way they give us our statistic.
But guess who wakes up and finally stops all this nonsense?
And that's the people who do the grocery shopping and the people who still buy gasoline.
And they think that, oh, that'll be all right.
We'll do that because pretty soon I'm going to be able to buy electricity and that'll be cheaper and there will be no inflation, you know, with electric cars.
But anyway, I think the whole subject is well known and well understood.
And I think good economists understand exactly how we got here and what it means to the cause of liberty.
And it's well known what could be done.
But there would have to be a liquidation.
There has to be a jubilee for a year.
And people have to liquidate their debt because the debt will be liquidated.
It's much better to get the pain and the suffering over with.
But that will not sell.
So what are we going to do?
We're going to have the pain and suffering for a lot longer time.
And the biggest change in attitude on how to take care of a downturn occurred in 1929, 1930, when it was by that time the university professors had enough influence to say, look, it doesn't have to happen.
All we have to do is print money, print money, and it'll be over in no time.
Set wages, have price controls, and all this.
So guess what?
They gave us the longest depression ever.
It went from, you know, 1929, 1930 until after World War II.
But they don't say, oh, we made a mistake.
We shouldn't do it like that.
But we're doing it the same.
But the bubble and the spending and the distortions and the amount of dust, all much worse.
So that's why we're in desperate need for more people to understand and learn to love the cause of liberty because they're the answer.
That's people making decisions what to do.
People know how to take care of their kids' health matters.
And I'll tell you what, Fauci doesn't.
I want to thank our viewers for tuning in today.
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