No Good Options For The Fed; So Audit It & Get Rid Of It!
Central planning never works. Unfortunately, this doesn't deter authoritarians from trying to make it work. Central planners always corner themselves; they checkmate themselves. They reach a point where every decision is a bad one; where every move is the wrong move. The Federal Reserve is unconstitutional, immoral, and the primary source of economic calamity in America. It's yet another of example of central planning that must ultimately fail.
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.
Great to be with you, Dr. Paul.
Very good.
A lot of exciting things going on.
People are still talking about gold.
Gold's a bit in its old doldrum.
So I think what we need to do is suggest something to our viewers of what they might do if they're interested in picking up on more information about gold is to take a look at that number on the bottom of the screen, the text number there.
If you call there, that'll be part of the to reach the company, Birch Gold Group, who we work with and who have been supporters and helpful with us for our program here, the Liberty Report.
But if you call that number, they can send you some materials on gold and it doesn't cost anything, so that's a pretty good deal.
But right now, you know, I imagine most people that have an interest in gold, and the financial people do, probably the average person doesn't look at gold too strongly for various reasons.
But this week has been rather hectic because sometimes markets don't go exactly as people promise.
They go, oh, if we do ABC, something's going to happen.
And in Austrian economics, they teach us that you can't predict precisely what human action is going to be like.
And I think that's part of what we're facing here in the gold market.
That's why I like to think that you can get advice and get some help if you're thinking about getting into gold.
What are the different options?
And I've looked at gold even before it was legal because I knew it was going to be a big deal.
And that was prior to the breakdown of Bratton Woods.
So those were hectic times.
The 70s were very, very hectic.
But right now, the distortions are worse than ever.
Even though the degree of irrational market, it was pretty bad back then.
But the fundamentals are so different now.
You know, when you look at the extremism of what the Fed is doing and the policy and the loss of confidence, wars keep going on and the deficit is up to $31 trillion.
So this is a time where you want to get advice and information from as many sources as possible and maybe get some guidance as to how you might get involved in gold if you're looking for something to protect against the inflation.
Now, am I predicting there's an inflation?
No, not exactly.
What I'm saying is it's here.
Inflation is what they've done for 10 or 15 years significantly with QE and all this other stuff.
And they do it continuously.
That's the inflation.
Usually when most people talk about it, they're talking about the consequence of inflation and that's the prices.
So I always like to sort that out because it's really the fundamentals is looking at the monetary system and looking at gold and interest rates and it all together and then realizing that you can't predict precisely human reaction.
So Chris, that'll be our subject today about the Federal Reserve.
And I do know that you have some opinions on this which we'll look forward to.
But I want to just refresh our memories on something because it's fascinated me for a long time.
A long time in this case is about 12 years plus.
And that is, you know, all along when they thought, boy, our main problem is that we don't have enough price inflation.
We're not destroying the value of the currency.
We're fast enough.
We're not taking down, you know, we're not pushing the cost of living up.
So they set a goal in 1996.
And this is, this is, I just sort of picked this up.
I didn't know it was done in secret.
In 96, it was done in secret.
Fed, here, I want to quote from that on an article on this.
It says, Fed policymakers privately agreed that their target for inflation was 2%.
But Greenspan's insistence, they didn't.
tell anyone.
It's a secret.
In 2012, Bernanke came along.
He said, oh, we should at least tell the people what we're doing and let them make some choice.
So a minor plus for Bernanke telling us that we deserve to know.
And that was in 2012.
But 2012, all the way up until just recent terms, they've always talked about, well, everything is so good and things are going along.
But we're worried about the health of the economy, which they should.
And they equated prices rising.
This is another crazy thing of Keynesian economics.
Prices rising indicates a strong economy.
Tell that to the people in Zimbabwe and Venezuela.
It doesn't make any sense at all.
But anyway, they talked about that.
And then the prices have continued to rise.
And all of a sudden, I've made fun over the entire decade or two about how silly this is and how destructive, how immoral it is, and how dumb it is, was to purposely inflate the currency to a point where you lose 2%.
Well, even over time, 2% can add up.
What if you had compound interest at 2% for savings in the last 15 years?
It would have been a lot better than what we put up with because we don't make anything on interest compared to what the cost of living is.
So anyway, that has been around for a long time now.
And my prediction back then was you better keep your eyes wide open and pay a lot of attention because back then I didn't even believe that it was less than 2% because governments lean toward fudging a little bit and rigging a little bit, CPIs or whatever.
So you can't say, well, you lied, you lied, you lied, and this is when you did it.
But I've always remained pretty suspicious, and those suspicions usually come true, unfortunately.
So I think this won't work.
They're going to do it.
Wait till it gets to 2%.
I don't even think people will see it.
It's going to come so fast.
And it did.
I don't know how many people, I don't remember the day it hit 2% because nobody talked about it.
But I can remember this just in recent years, last couple years.
Very recently, like this, they say, oh, they're talking about a target rate for the price increases because that's their job.
They say that's the job of the Fed.
Well, that's so dumb.
That's one of the reasons we should get rid of the Fed.
So now they have a new target.
The new target for the Fed is 3%.
I said, what are these guys talking about?
2%, they could, oh, what it is now, they think it's too high.
Oh, sure.
They admit the 8% or 9% price inflation rate.
So we have to do it.
So now we have a target of 3%.
Well, let me tell you, I can be about as cynical as that as I was about the 2% because they will do this, add great harm to the economy.
And quite frankly, all the so-called plans the Fed has won't go through.
And they just prop up a plan here and it changes next month and they do something else because the one reason why it's safe to take our position and say that the Fed can't do that is they don't know how to do it.
Nobody knows how to do it.
You know, there's no money manager that can manage a deficit of $21 trillion and printing money, a balance sheet of $9 trillion.
That's not possible, even if you do it in secret and you have these economists at the Federal Reserve tell them how to do it.
So, Chris, it's a bit cynical, so cheer us up.
What do you have?
I'm sorry, I'm not going to be able to do that today, Dr. Paul.
But yeah, the big news this week was the Fed raised interest rates again.
And nobody should be raising, lowering, manipulating interest rates at all.
So the fact that we're talking about this means that something is wrong.
The market should be setting interest rates, just like the market should set every other price.
But we have a Federal Reserve and they manipulate interest rates, so we're going to report on it.
So they raised the Fed funds rate to between three and three and a quarter percent, and that is still very low.
You know, the interest rates are still very low.
So there's still going to be upward pressure on prices.
You know, every day when we wake up, we see the federal government, they're just looking for ways to spend billions of dollars.
You know, it's like they make up stuff, just give $10 billion for this.
So the spending is continuing.
But even at this low 3% Fed funds rate, our economy is so distorted that something is likely to break.
And perhaps soon.
We don't know.
It could be the stock market.
It could be a big financial institution.
It could be real estate.
There's no way to know what will break ahead of time.
For those who remember 2008, and I do very clearly, there was nobody saying, you know, in a few days, Lehman Brothers and Bear Stearns and other major institutions, they're going to be gone completely.
Not financial trouble, gone, closed doors.
So that's what happens in these situations.
One firm gets in trouble and then another one that's associated with it gets in trouble and it's like dominoes that go down.
And all this is unnecessary.
This is intervention that should be illegal and actually it is illegal.
It's unconstitutional to have the Federal Reserve to manipulate rates and to counterfeit.
There's very few federal laws.
One of them is that you can't counterfeit.
But we have the Fed for over 100 years.
They've been counterfeiting and they have now created the biggest financial mess that's ever been created.
Boy, there's no doubt about that.
And I think more and more people are recognizing this.
And it's out of control.
And you're seeing more articles now in the headlines about they don't have control of it.
And it's not from people that have an intense interest in Austrian economics and personal liberty.
It's a lot of people who just look at it in a pragmatic way and they have lived with this ups and downs and all the mess that happens and all the special interests and the subsidies to the military industrial complex and to the welfare state.
They're starting to say the same thing.
You know, the Fed's in a trap and they lost control, but they never have a conclusion.
I think we sort of hinted to it.
A conclusion with this program is we need to audit the Fed and then get rid of the Fed.
But no, that isn't the case.
They're looking for better management.
And the whole problem why it won't work is it's the epitome of central economic planning.
And central economic planning, the ultimate central economic planning is the fascist, socialist, communist state.
And the interventionists and the people who right now are fighting to get total control, the cultural Marxists, they want this because they want central economic planning.
And even though they recognize some problems with that, what we have now, as far as they're concerned, has to be destroyed and replaced with another central economic planning.
The problem and the evil is really the principle of central economic planning.
I remember one conversation I had with Greenspan, because Greenspan, you know, wrote this fantastic pro-gold article when he was a friend of Anne Rand and they had the objectivist newsletter.
And it was a great, great article.
And so I would have occasional conversations with him.
And in the committee, one time I asked him about it.
I said, how can you do this?
There was a time when you believe in gold and gold has this.
And he understood all the benefits of gold.
And his explanation to me, so I would understand it, he didn't disagree.
He says, yes, that is true.
But we have advanced to the state where we at the Federal Reserve can manage money as to mimicking what a gold standard would do.
We know that gold is good and we know what happens and that's what we're doing.
So we are understanding that this paper fiat money is gold and that's the way we're going to manage it.
The pure and simple answer is that when you have a gold standard, you don't have a Federal Reserve managing a gold standard.
You just have the management of integrity is what you have.
So this has been going on, but there's an opportunity brewing.
More and more people know where the trouble comes from and why counterfeiting is not legal.
It's not good economic policy.
It's not in the Constitution.
So the side of correctness in what we ought to do is on the side of the Austrian economic theories and personal liberties that must go with it.
Right, Dr. Paul.
And, you know, after the Fed breaks something, like I said, whether it be a stock market, real estate, what will they do next?
Will they do the wrong thing again?
Lower interest rates?
Will they cave to pressure to go back down to zero rates again?
That's what we're used to, right?
I mean, I remember the dot-com bust, the real estate bust, 2008, COVID.
It's all the same thing.
Just turn on the presses again.
That'll fix it.
But what if this time that doesn't work?
What if they turn on the presses and go to zero rates and there is no bounce?
What if there is no recovery?
Inflationary Depression Looms00:07:07
What if the spiral goes downward even with rates at 0%?
Then what?
See how, like Dr. Paul was saying, central planning, they corner themselves.
They eventually corner themselves.
And that is ultimately what's going to happen.
I don't know if it'll be this time, but ultimately, even zero rates will not breathe life into their fake economy anymore.
And that day will come.
It's impossible to know when.
And this is why you don't do central planning.
You're not supposed to have that.
We should have learned from the Soviets and the Maoists and all the other countless examples throughout history.
You don't give up sound money under the false idea that this small group of elite people can run things, can run the economy.
It's all nonsense.
They cannot, the only thing that they can do is run it into the ground.
One of the problems I see with this, Chris, is that on the short run, when they do things, when governments do things, when they have an appropriation or bail out somebody, there's an immediate benefit, at least for some people.
But then when that becomes total policy, then the secondary reaction to what they've done, then that's a different story.
But on the short run, they say, oh, this is a benefit-benefit.
You take, for instance, they've sort of manipulated the stock market pretty well.
They tried to reduce their balance sheet here recently and thought that zero rates of interest.
They had some really astute economists step in the door for a while at the Fed and they say, it's not a good idea to have them at zero rate.
That really, really disrupts the marketplace.
But they do know that when they're in trouble and they lower rates, it's the stock market's in trouble.
That's psychologically and a little bit of economic policy and a pragmatic way.
When they do that, there's more credit and everybody say, oh, you know, the markets are going to go up and they do.
And there's a boost.
And the other way that happens, too, is when you start tightening to solve the problem because their idea of tightening has nothing to do with sound monetary policy.
What they want is to stop growth because the Keynesians believe that it's good for the economy to have prices rising a little bit.
That's why they argued for 2%.
You just have to control that 2% because they think that if there's growth, there's price increases.
Exactly opposite of what happens in a sound economy.
Take the latter part of the 19th century, beginning of the 20th century, when a gold standard was relatively in place, and prices actually go down.
They say, oh, that's deflation.
Deflation is going to happen.
It's not deflation.
It means prices go down.
So they decate prices going down as deflation.
Maybe prices go down because they increase productivity.
And prices go up if you increase demand.
You stimulate it, give them free money, go out and buy stuff, and prices will go up.
Well, to the point which you've raised, Chris, what happens if it quits working?
And that's what we're facing right now.
That's why they're between the rock and the hard place, because they know that's coming.
And what are they going to do?
And politically, it's easy to decide what they're going to do.
Although they're doing the right thing right now, because if you let it go to the market, the market would raise interest rates.
There's no doubt about it.
And that would hurt some people who have become accustomed, especially the special interest.
So they're not going to do that.
The political pressure, and even the worst it gets, but when the decision comes that they give up, I think this will be a big signal.
I don't think it'll go unnoticed, like it wasn't noticed when they hit 2% on up to 8% to 10%.
They're going to, you know, when this thing hits and all of a sudden pumping the money in there, it doesn't, if prices go up, but the economy crashes, you know, it starts off as a deflationary recession, you know, a recession like that.
But a depression could be that way.
Price is inflationary.
You can have an inflationary depression.
You know, that's what Zimbabwean and Venezuela was all about.
They keep printing money.
We're not there right now, but there's bits and pockets of that existing because everybody isn't doing well right now, even though there's high, and I think they fudge the figures on the employment rate because people who drop out of the workforce for various reasons, they're not counted, so the unemployment rate looks good.
And that gives a plus for the Federal Reserve and for their propaganda.
But eventually there will be a time it'll be well recognized that once they say, oh, we have to shave, we have to shift gears, they will shift gears.
And they're going to do it.
And all of a sudden, they'll find out it might do the opposite.
They might not even get a temporary reprieve.
They might not even get a temporary blip.
Once again, we can't predict exactly what people will do when you hand them free money.
They might say, this is free money.
It's not worth much.
And you can't predict that.
But this to me is a time bomb.
And right now, the Fed is tough.
They're tough.
They want to be like Volcker.
But they're not even doing it, being like Volcker.
Volcker tightened the money supply and let the interest rates follow what happened because he says the inflation of the prices come from the money supply.
So he did that and interest rates came down.
He had his recession.
And then they went back.
When Reagan got in office, they went back to the old standard.
But the money supply, by doing that, they pretend that they can really do that, manipulate the money supply to the point where it will be beneficial.
But it's not going to work.
What they're doing now is they are getting, they want the recession, they want the depression, they want the market to be weak.
They want the stock market to go down.
So, oh, we'll raise interest rates and that'll turn it off.
And they're right.
They're going to turn it off.
Today, I walked in this morning.
The stock market wasn't doing so well.
So they do this and say, well, we need the recession, but we're going to protect that by, we won't allow interest rates to go down.
So they manipulate, I mean, they manipulate the interest rates.
They want those to go up, but they don't do anything with the money supply.
They'd have to turn off the money supply, and guess where the collision comes?
Manipulating Markets00:02:48
From the spenders, guess where they are.
They're in two places, the Republican Party and the Democrat Party.
They both want it.
One might want more for the military, and the other wants more for food stamp or something else.
But the political power, mostly the special interests, are the ones who benefit from this system, and they will be heard from.
And that's when we'll wait and see what Chris was asking the question.
What are they going to do then?
Unfortunately, I'm afraid we're going to find out.
Yeah, we are, Dr. Paul.
I will make my final point.
You know, we are surrounded by absurdities.
And, you know, when we go on to social media, people call it clown world.
We live in a clown world, you know, with this wokeness, the endless welfare, the endless wars and empire, the ESG, environmental, social governance, all the climate nonsense.
All of this takes place because of financing.
Without financing, this nonsense would have no legs to stand on.
And I read something this week that is just, it's shocking.
I read that 80% of the entire debt that our government has was added in just the last 20 years.
I mean, we're a young country, but 270-some years, the last 20 years, 80% of the debt.
And you look out and you see clown world.
So the clown world is financed by debt.
And when the financial crisis finally hits, and we don't know when that would be, a lot of this absurdity is going to go bankrupt.
It's not going to have the financial legs anymore to rip through our society.
But the Fed, you know, we always have to keep this in mind.
Their primary goal is going to be to save themselves.
You know, everything else can burn.
And that's Dr. Paul mentioned the 80s with Valkyrie.
Valky saved the Fed.
You know, he did what he had to do, and he paid a terrible public price for it.
You know, everybody was after this guy for what he did, but he gave the Fed at least 50 more years of life.
And we don't know how many more years they have, but their primary goal is not going to be all this garbage that they finance.
It's going to be to save themselves.
And we're starting to see, you know, Jamie Dimon yesterday was telling Congress they're saying, can we go to zero fossil fuels?
And he said, no, that would be hell for America.
And he's right.
You know, so they're going to ditch a lot of this stuff, I'm sure, in order to save themselves.
You know, we maintain that they should not exist because they created this mess, and it's all very, very wrong.
Very good, Chris.
You know, there's a lot of similarities in comparing what it was like when Volcker was in the 70s.
Seeking the Truth00:05:37
The one thing is quite different.
There's a management of a debt now that is huge.
It's percentage-wise on bed, huge too.
But it's up to $31 trillion.
So you raise interest rates a little bit, and now they went from zero up to 3%.
But the Treasury bills and the bonds and all this, those interest rates are going up.
And they have to pay the interest, or we'd lose international, we'd lose our international credibility because the people still need the dollar because their currencies aren't much better.
So they do this.
And when the interest rates go up, there's a tremendous increase in the budget.
It's uncontrollable.
So that's why this will, I don't think the Volcker approach, there would be any toleration of it.
And that's why they only took half of it anyway.
They got the rates of interest rates up rather than messing around with the money supply.
Because if you mess around with monetizing debt, then you're messing around with Congress, wars.
Well, my goodness, they might decide to spend more money on fighting another useless war.
They might decide to go into Ukraine.
Oh, no, they've already been in Ukraine, wasting trillions of dollars for an event that is unconstitutional and very dangerous.
So it is different.
The other one point I want to close with that bothers me most and might be the most serious for us that we're facing.
And that is the wealth distribution, the maldistribution of wealth under these conditions.
Because there is no doubt that under these conditions, both the legislative branch of government and also the monetary system and the Federal Reserve cow tiles to the special interest.
And the wealthy do get wealthier.
And some of it's sort of a consequence of the market.
It might not be quite like just writing them a check for it.
But the money is distributed through the banking system and you have a close connection there.
And then there'll be scenes and talks about these people who, well, they've done quite well.
Aren't you a free enterpriser?
They have a yacht.
It cost them a billion dollars.
But yeah, they deserved it.
They have a good business.
It's not quite that simple.
Social media, you can't say, well, you can't even think about social media because that's free enterprise.
And they can work with the CIA and the FBI and the government and provide secret information and destroy our civil liberties.
So with this attitude, civil liberties generally are diminished.
But the conflict I want to make a point is the conflict between the rich and the poor.
Because the rich get richer and the poor will get poorer and more numerous, even though there's still a lot of apparent wealth in this country.
It's all on borrowed money.
It's like we could go out and borrow a million dollars every month for a year.
I'll bet we could have a pretty good time.
But eventually, the Piper has to be paid.
And that's what is starting to happen right now.
And just turning on the presses will not happen.
People are going to get unhappy.
But people now, it's scary stuff when you start reading for various political reasons.
We had the conflicts of COVID.
We've had the conflict of legislation because the country's bankrupt, and that's why they're at each other, the two political parties.
There's no respect for telling the truth.
And we have not enough truth tellers in our government.
I'll tell you that for sure.
And certainly, since the last couple of elections, presidential election, a lot of people have lost confidence in the electoral process.
And it now is stirring up more troubles and threats.
So it emanates from an immoral, unconstitutional system of profligate spending and borrowing and putting the pressure by just printing money.
It's a system that is absolutely preventable.
And that is, if you just, to start with, just follow the Constitution.
And of course, the people who wrote the Constitution said it won't work unless you have moral people in support of what you do.
But now we have too many people looking for the special benefit, whether it's in the military sector or just the domestic social sector.
So that is something that could be corrected by just more people seeking the truth.
And because my thesis right now and lately has been that if they don't accept the truth tellers and they become Nietzschean in that you don't know truth.
How do we know truth?
This is a mess.
Who's telling the truth?
Am I telling the truth?
Or is Greenspan telling the truth or Bernanke or Powell?
So there's no way.
And so it becomes nihilistic.
There's no truth.
And that means the system breaks down.
So until we have more of an understanding about people wanting to seek the truth and doing their best to work toward that and make sure that people do not believe there's any benefit whatsoever to be a nihilist and deny even the effort by some to seek the truth.
It's not that difficult to understand.
I want to thank everybody today for tuning into the Liberty Report.