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Jan. 11, 2024 - Ron Paul Liberty Report
29:19
Inflation Nightmare & The Fed's 2% CPI Pipe Dream

The posturing that inflation is such a "surprise" is typical, but shameful nevertheless. No one should be surprised that prices are skyrocketing after the government spent many trillions that it doesn't have. Further, it was only able to spend those trillions because the Fed counterfeited the money out-of-thin-air. Today's economic suffering could not be more predictable.

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Wall Street's War Sanctions 00:03:51
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.
And, you know, lots of things are going on today.
The Supreme Court is staying busy all week, and they're going to be busy.
The American people are still struggling to get along, and rightfully so, but our job is to help sort some of this out.
It's not always that easy.
I was looking at some of the news today, and it's very interesting and fascinating, but it's also very, very dangerous.
You know, we have a foreign policy which is interventionist and has caused for a lot of harm, injury, and financial problems, and it contributes significantly to the bankruptcy.
And we talk about it all the time, you know, during the week and weekends, whenever we can, because we consider the financing of war through the inflationary machine at the Federal Reserve is one of the worst parts of the system that we have.
And one of the reasons why the founders, with their bad experience with inflation before they wrote the Constitution, they'd like to have prevented that from us doing this.
But that didn't work out.
And the inflation machine is really working.
So we have a lot of aggressive attitudes with people.
And lately, we protect our empires by being interventionists.
We throw our weight around.
We have the reserve currency of the world.
And what we do, though, is we think we can control things and pretend that we're really people of peace.
But the sanctions and other things are essentially acts of war.
And some people who are anti-war think this is the compromise to have with the system.
Punish the people we don't like, and things will be okay, and we won't have to send so many young people off as we have up until really till now.
We did it in the world wars.
We did it with Korea and Vietnam, the Middle Eastern wars and Syria, all these things keep going on.
But right now, we have worked real hard to get involved with this Ukrainian-Russian war, which really is a war between NATO and Russia.
But since we have a lot of power, a lot of clout, and a lot of weapons, we'll show those Russians.
So we put on a lot of sanctions.
We're going to punish them and blockade and keep them from exporting.
Well, Chris, you'll never guess it.
Hasn't worked very well.
The Russians are making $100 million a day, you know, going around our sanctions because, you know, the world is such that the people aren't, they're not joining us so easily and just obeying everything that we want.
So the Russians are doing pretty well, but it leads to chaos.
Economic calculation becomes more difficult.
Our deficits keep going up.
Peace is not promoted.
And yet we never seriously considered the change in our foreign policy.
You know, there's hint now in the headlines even this morning that the Fed probably is going to back off instead of continuing to raise rates.
By the end of the year, they're going to be talking about closing it.
And they say, they pretend that, well, we've done some good.
You know, we've raised some rates and caused a little bit.
But to think they've solved the problems of many, many years of this horrible monetary policy and all the inflation and all the interference and think that they're somewhere achieved something, well, that is a pipe dream.
So the markets are saying, you know, we hear that the interest rates are going to go back up.
Financial Experts' Illusions 00:14:58
And there are some people even on Wall Street that think that you shouldn't be doing that.
It was so bad.
They're even challenging the Fed because most of the time they're lowering rates for the benefit of Wall Street.
So this time, but today, I don't know whether the hint that the interest rates aren't going to continue to be raised, that the markets are very happy with it.
It was up over 600 points this morning, but the dollar's down because there's less interest rates.
Because of that, gold is going up.
So there's a lot of things to digest, and then you come along, and then there's a lot to digest in wokeism, and now the major discussion going on in the country over abortion.
So there's a lot of chaotic discussion going on right now.
And for this reason, it makes it very hard for the individual.
Many of those individuals follow our program.
What do we do?
They know I'm very sympathetic to gold, and I've been involved in that for a long time and decided that in 1971, when the last link to gold was removed, I knew what would happen because it wasn't that I was so smart.
It was just common sense.
If you just have no restraint on politicians to spend, they will and they'll print the money.
And that's what they're going to continue to do.
But it's not going, even though with that understanding, it's not easy to know exactly what to do.
Hard assets are good.
Gold and silver is good.
Property is good.
All these things are good.
So sometimes people, especially if they're younger and they're just starting, how do I get started?
And how do I find an interest?
And that is one reason why I work with Birch Gold, because they have individuals that spend their whole day trying to explain what's going on, especially they believe, as I do, that gold is a haven and can overcome some of these obstacles, which are natural and expected from the policies that we follow.
When you have a total fiat currency and you have a government and a whole world that believes in interventionism, you can expect chaos.
And then you add on top of that the goal of the cultural Marxists.
Well, that's what we like.
We like chaos.
More chaotic it is, the more we're going to have our Marxism marching back to it.
So I think it's a good idea to look into the number at the bottom of our screen today.
You can look at that and call and talk to somebody at Birch on some of the things that you might like to do in a way of investing and trying to protect yourself.
And I think that it's important.
I'd like everybody to be protected because when the real crunch comes, the more friends we have and the more allies we have, the better it is to survive the whole thing.
But the better it is to have more individuals willing to rebuild on a system.
And right now, I would say they outnumber us, but I think our numbers who believe in free markets and sound money are growing.
A lot of people entered the liberty movement through the fact that it became knowledgeable to them that the monetary system was being corrupted and that gold money makes a lot more sense than fiat money.
Anyway, those conditions are continuing.
We're going to keep reporting and talking about it.
But today I want to spend a little bit of time, Chris, on talking about 2% inflation.
And that's what the Fed's official policy has been.
2% inflation to them means they want the price of products to go up at a rate of 2%.
And they have looked at history and said, it seems like around 2% is the right balance.
No decrease, no increase, 2%.
And I found it interesting, Chris, that they made that official policy in 2012.
And they were frustrated because the inflation of prices, the price inflation, wasn't accommodating them, and they couldn't understand that.
But the one thing they don't understand, I'm going to mention the reason why it is, even though it's complex and we'll talk more about this someday.
And that is the whole thing that there's a value and prices are determined subjectively.
The subjective theory of value is part of Austrian economics.
That means you can look at the money supply, which is very, very important.
And if you print a lot of money, believe me, it's going to lose value.
And the gold prices in dollars will go up.
But in the meantime, there's a lot of subjectivity involved.
There's so many variables.
So you can't predict it.
So to predict and say way back 10 years ago that 2% is perfect, well, the first thing is they didn't understand subjectivity.
It could be held steady because for various reasons.
Maybe the economy was doing better and compensating for rising prices.
But nevertheless, they worked hard on that.
And they equated with, well, if you get 2%, that means the economy will be healthy.
That's a bunch of nonsense.
And they keep saying if you let the money go, if it doesn't increase, the prices don't increase at all, that's bad for the economy.
That's nonsense, too.
And so the Fed has been determined to try to aim this target at 2%.
I have predicted, and I think my predictions have come true during those 10 years when that was the goal.
I said, yes, they'll finally get their 2% because they were claiming the price index were only the indices were only going up at 1% and they needed 2%.
So they were working out.
I said, the day will come, they're going to get their 2%, and they better keep their eyes and ears open because it won't last long because it's going to go soaring past there.
And then they'll have to talk about how do we get back down to 2%.
Chris, that's exactly where we are today.
So we're not a whole lot better off than we were 10 years ago when they had this new system of following and demanding 2% destruction of the value of your currency every year and thinking that was a good policy.
Right, Dr. Paul.
And, you know, the big picture of what we're suffering under is bad ideas.
You know, at 100 to 125 years ago, Americans were suckered.
They were suckered into believing that freedom is no longer what America is about, individual freedom.
Instead, you're going to be ruled by experts.
And that is what we have had for 125 years.
And, you know, just look at the last few years, what the medical, so-called medical experts did.
What a huge disaster.
But, you know, what we are talking about today is the so-called financial experts that control the money supply and interest rates, things that should not be controlled by people.
And, you know, this week, Jerome Powell, the Fed chair, he said, quote, we need to get inflation back down to 2%.
We're using our tools to do that.
See, the experts.
And he said, and the public should believe that we will get inflation back down to 2% over time.
End quote.
Now, the public should not believe any of this.
Inflation should be 0%.
Nobody should have the ability to counterfeit money because inflation is a tax.
And you see the higher prices that we're paying out there?
That's how we pay the tax.
We don't get a bill in the mail, you know, a nice bill that you send a check.
No, when you go out and buy things, and gas is $5, $6, now you're paying the inflation tax.
Now, where does the Fed get the authority to tax us?
They're unconstitutional.
They're not in the Constitution.
We're not supposed to have a central bank.
So not only are we being taxed, it's even worse than that.
We're being taxed by something that shouldn't even exist.
So this entire process of 2% up to 2%, down to 2%, is a complete shell game.
It's the illusion of control.
They cannot control the market, but they need people to believe that they can control the market.
As long as enough people believe that, our economic lifestyle is going to continue to go down the drain.
You know, over the years, the Fed has changed in their policy, obviously, because they don't have a policy of sound money and allowing the market to determine interest rates.
So they become these economic giants because they have dictatorship over trying and pretending that they can regulate the market for their friends, of course.
And they have done that for a long time.
But in 1977, they actually expanded the plan that they had because it was supposed to be twofold.
It was to have high unemployment, high employment, lower the unemployment rate, and also to have stable prices.
That was the dual mandate.
And it never worked very well because that was around for a long, long time.
And all you can do is go back and look at the variation.
But there was always an excuse.
There's a war, there's a recession, and whatnot.
Something would happen that they would change it.
But just recently, you know, I said in 2012 is when they sat down and they had this announcement, 2%, and reassure the businessman to know what to expect.
Prices may be going up at 2% rate.
And then the big question back then was, I wonder how long it was going to last.
Well, we know it doesn't exist now.
But when it started to fall apart was in the year 2020, two years ago, all of a sudden they said they had to change this.
And so they changed the rules.
Oh, that's not our target anymore.
2% is not our target now.
But we want to do it, and we want to change the exact policy.
So first they had to change what they were doing as for their target.
They said now it is a flexible average inflation targeting.
You know, that sounds a little bit like their ducking issue.
It's flexible averaging.
So if the interest rates were too low or too high in the past, what they do the next day could do, well, we're just averaging it in.
And now, you know, the inflation rate, they are starting to admit it's 8 and 9 and 10%, but it's even a lot higher.
So now they're saying, well, does that mean that we should be targeting 2%?
Oh, yeah, we will.
But we can do that later on because we have a flexible policy.
So it's really a lot of, you know what, because it's just a game they play.
They don't have control, and yet they deceive the people.
And yet the goal is to spend money on the special interests, the powerful special interests, whether it's the domestic welfare state, the corporatism that is going on, the military-industrial complex, the medical industrial complex, all these things.
All those individuals benefit from this type of operation.
And it's always financed by debt.
There's no restraint.
In all this talk and discussion about policy, they never say, well, you know, this debt is a big deal because that puts pressure on the Fed to monetize.
They never talk about that because they don't want you to talk about the Federal Reserve because the Federal Reserve could get blamed.
But no, it has to be some mystical thing out there.
Ukraine, it's all Ukraine.
Oh, it's Biden.
Biden caused all the problem.
He's caused a lot, especially in the energy field.
But he didn't create this system.
I mean, this system has been around for a long time.
So it's not going to last.
And now we see that there's hints that they're already conditioning people.
Well, we're not going to pursue this idea of allowing interest rates to rise a little bit.
So they're in a way throwing in the towel.
You know, a couple years ago, they tried this, and the markets went down, and they had to quit when they tried to shrink the balance sheet.
So these tinkering around and pretending they're going in the direction of what should be done and what the market would do is all it is.
And because there is some subjectivity in the marketplace, there's a lot of people out there listening to every word, every tidbit, every word the Fed says.
This is what the Fed says they're going to do.
Even though they don't even believe the Fed, they say that's what they said to do, and people are going to react.
So this will alter things, but it's far from a market.
They have just really ruined the market mainly because the Federal Reserve exists and they are a dictator and they have a tyrannical and they are the central economic planner.
They accomplish the biggest taxation system ever and they also are the biggest regulator and they are the cause, they are the source of the problem.
Does that mean if we didn't have a Fed, we wouldn't have special interest trying to manipulate, you know, they'd always be there.
It's the convenience of the Federal Reserve being set up for the special interest that there's no limits on what the lobbyists are lobbying for because they know the Fed will accommodate.
And also, this participates into the wokeism that happens today because this locks in our corporations to the monetary system and the culture of Marxism.
And so they carry out the orders.
The businessman carries out the orders, especially like it was easy to see during the lockdown, you know, with COVID, because the corporations are very, very dependent on easy credit, bailouts, and whatever is necessary.
So we've now, this whole system has pushed us in the direction of corporatism, and we're on the verge of having a definite fascist state.
And of course, that means the further destruction of the individual liberty of this country, which we should be protecting, not destroying.
Right, Dr. Paul.
And as bad as the Fed is, the other side of the coin is not much better.
They're just as bad, and that's the politicians, especially the Democrats.
You know, Dr. Paul and I saw an article where Elizabeth Warren was questioning Powell, and she doesn't want higher interest rates because she probably knows that it's going to create a strong recession, as it should.
But she says, you know, what's worse than higher inflation and low unemployment?
Fed's Political Priority? 00:03:59
She said, high inflation and a recession with millions of people out of work.
I hope you'll reconsider that before you drive this economy off a cliff.
So she doesn't want the illusion to stop.
She wants the printing to go on, keep the illusion going, keep the illusion going.
Now, why would she want that?
Obviously, for political reasons, because if we go into a recession, the Democrats are going to be blamed for it.
But it's shameful that she would want the illusion to keep going, to keep the jobs of bureaucrats over the people having sound money, a sound economy, more money in their pockets.
She's putting political reasons, obviously, the Fed to just keep it going just a little while longer.
But keeping it going a little while longer will only make things much worse.
That's what we've been doing, especially since 2008 and even well before that with Greenspan.
So it's all political.
Everybody looks out for themselves.
How can they benefit from higher or lower interest rates?
It should not be this way.
It should be the marketplace that sets interest rates, no counterfeiting, and then you let the chips fall where they may.
You know, in her statement, in a way, she had bits and pieces, you know, of really understanding what's happening because if you don't do this correctly, you're going to have inflation of prices, that prices are going to go up.
And it will not be the indicator that so often they claim.
If we just get the inflation rate up, that'll be a sign of a healthy economy.
She recognized that and mentioned it, but she also thought that she could overcome it by her explanation.
But I don't think she was coming close.
But she had sort of an understanding of this because that is the concern that Austrian economics expresses.
And that is if we continue to do this, and my prediction, of course, is they will not quit printing the money.
So we will have the devaluation of the currency.
We're going to have more inflationary pressure on all the prices.
At the same time, it's not going to be a sign of the economy growing.
Eventually, even the special interest groups will not be able to continue because the economy is not going to be able to operate very well.
So this to me is crucial to understand because I think if they don't inflate, you know, if they didn't inflate, there would be total chaos.
If they didn't print the money, people would rebel and there'd be a rebellion in the country.
If they do and they will print the money, you can expect that there's going to be more inflation, even with some areas you might see prices going down here and there, but they will print the money.
And to allow this to go on and not being serious about sound economic policy, we can expect even a country like ours could go in the direction of becoming more like a third world nation.
In some ways, people claim we're getting there.
And also, you know, get so bad that you have runaway inflation and doing nothing for prosperity.
The more inflation of the prices, the worse the economy gets and the weaker the economy gets.
And that is what we should be worried about.
She sort of understood this, but she doesn't understand.
You have to cut spending.
You have to turn off the printing presses for a while.
Very good, Dr. Paul.
I'm going to make my closing statement.
Last week, I remember pointing out that the Fed is talking about fighting inflation, but they're still inflating.
Their balance sheet is still going up.
Well, this week went up again.
So this is more, this fighting inflation is more talk than action.
And, you know, that's the unfortunate situation that we find ourselves in.
People Lie, Government Limits 00:05:11
Is when you read statements from public officials and see these hearings and questioning on TV, they're mainly to pacify the public.
They say what needs to be said, true or false, just whatever will work in this moment, and then tomorrow we'll deal with tomorrow.
So that's how they work.
But, you know, from a civilization point of view, how do you trust public officials?
How can you trust people that lie all the time?
How do you trust the media that lies all the time?
How is it possible that all the media, they all say the same exact thing?
If I was to go down my street, all these houses down my street, and ask people's opinions, they would all be different.
How is it possible that all the media says the same exact thing?
So how do you trust public officials and authorities when they're just all lying all the time?
And the big lesson of all this is this is why you need limited government.
This is why America was created.
You know, when people lie, if the government was limited, they could lie all they want.
Who cares?
The damage that they could do to us is limited.
But when you have this monolithic empire that is looking to control every aspect of life, they could do and do a lot of damage to us.
So hopefully when all of this damage is, you know, that people realize what has been done and it can no longer be hidden, the desire for limited government will once again, you know, be prevalent in our society.
Very good, Chris.
And I think your point is well taken, especially when you use the word lying, because that's what happens.
And when you think of the political system now, I think politicians generally, as long as I can remember, they have tended to bend the laws and to bend the rules.
And they've always been demagogues, I think.
But now it's worse than ever.
I mean, when you think of our judicial system that's going on, and of course, from our viewpoint, there's a lot more going on with the party in charge at this particular time.
But the whole system does that because they're living a lie.
This whole monetary system is living a lie.
And it's important and significant because it's based on fraud.
It's based on deceit.
It's based on everybody in the Congress takes the oath of office.
I'll obey the Constitution.
What if all of a sudden lightning struck and they all believed in a higher law that said that you can write rules and laws and constitutions and declare all kinds of things, but there is always a higher law.
People know you're not allowed to steal, cheat, and rob and kill.
You're not allowed to do that.
And people know that.
But people can lie to themselves, and that's probably the biggest lie.
They lie to themselves, and they go on and they have these systems and they serve the special interest, and they're usually part of that special interest.
When it comes to what are they doing with the money?
Well, the Federal Reserve and the government that participates in all the special interests, they're participating in counterfeit, which is a vicious crime.
Matter of fact, it was one of the few crimes written into the Constitution.
Few federal crimes.
There weren't very many federal crimes.
Counterfeiting was one of them.
And they thought that was a horrible, horrible thing to do.
And yet now we live with counterfeit.
That's why it can't work and it's going to fail.
How long can you fool the people?
Right now, I would say there's a lot less people being fooled now than there was before.
And even now, people are waking up and the reassessment of what was going on with COVID.
I mean, the articles are pouring out now of the questions being raised about all the counterfeit medical science that came out and how they destroyed so many doctors who said, oh, well, when I went to medical school, including myself, we were taught about natural immunity and that some of these things you're saying about vaccines is just not true.
Now the statistics are coming out and they're scary on what the complications are.
But the biggest problem with all this activity is that it's based on authoritarianism, based on force and violence.
Violence by people who have guns.
And it's not the people who are defending their families at home because millions do that.
They're not the ones that are committing in the streets in the inner cities.
And right now, the authoritarians with the guns are the people who are in the government.
The bureaucrats now carry the guns.
But even the other people who don't carry the guns, they carry the authority and they get the government to protect them.
They get protections.
So the political gated communities still have their protection and they of course can corrupt the judicial system as well.
But the biggest danger I see is the move toward authoritarianism and the diminishing of personal liberty and individual responsibility.
Because without that, you don't live in a free society.
At a Crossroads 00:01:18
But we're at a crossroads now and people are waking up.
And the crossroads can be seen as waking people up and saying, we need to do something.
But it also can be an awakening to people say, you know, this is the time to make a decision.
And there were some episodes that I saw on TV when the subject came up by, you know, the town hall meetings and the PTA meeting, where all of a sudden the people said, we've had enough of this, and we're going to stand up to all these ridiculous rules and regulations that were not verified by good economics.
And the people who did challenge on economics and scientific reason could lose their jobs and all.
But the worst part there wasn't so much that one person had all the knowledge and the other one had nothing.
It was the fact they outlawed discussion.
You know, it was just the fact that some doctors wanted to discuss vaccine, that they could lose their job.
So no, we are at the crossroads.
We're at the crossroads with the financial markets.
We're at the crossroads with our foreign policy.
And we're at the crossroads right now on which way our country is going to go in the defense of individual liberty.
That is the way we have to go, if we want to promote peace and prosperity.
I want to thank everybody for tuning in today to the Liberty Report.
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