Governments Will Turn The Recession Into A Depression
When the Fed counterfeits dollars, creating an artificial economic boom, a recession is inevitable and unavoidable. Recessions are a return to economic reality; the antidote for The Fed's poison. While recessions are unavoidable, depressions can be avoided. Depressions occur when the government interferes and tries to prevent a return to economic reality. Government implements "policies" that are meant to "help," but only end up extending the economic misery into a depression
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.
We're going to talk about economics and we're going to hone in a little bit on Europe.
We have a global economy now and we have always believed we're in charge of it.
But the Europeans have always been tag along, but they make a lot of their mistakes by doing that.
And they're a big mess.
And there's been some announcements today on economic policy that shows that the Europeans are in bad shape about whether their houses are going to be worn.
We have a mess here, but they've managed to make it much worse over there in Europe.
So this is a real mess.
And of course, it's not unpredictable because we know what governments do.
We know what our Federal Reserve does.
We know they're the currency of the reserve currency of the world.
So therefore, there are going to be distortions.
We take the unit of account, which is the dollar that the world uses, and we destroy its definition.
So how do you make planning?
How do you make good decisions?
And one major thing that happens there is that they destroy the most important information you get from the marketplace, and that is what does the market think the value of the dollar is and what we should pay to borrow it.
And all of a sudden, how many dollars do you need to buy things?
It's a measuring rod of great significance, and yet we haven't had that really in a defined way since 1971.
And even before that, it wasn't so good.
But now, over all these years, it keeps getting worse because the principle here is what we're facing is we haven't had a unit of account.
We don't know what the interest rate should be.
And it's legalized excessive spending in the sense for now you can get away with it and worry about paying it later.
And then it messes up individuals who are investing.
You can't even save money because you lose money by saving.
So you have to go and invest in other things that are not necessarily the wisest thing to do.
So this has been going on for a long time, and that's what we're talking about here, is the bubble.
There's a bubble when you get money printed to pay the bills.
You get excessive debt.
You get excessive mischief by the legislative bodies.
And it finally ends.
And Chris, the way I see this and the struggle that we're looking at today is it's recognized that we have a mess, and nobody talks about what the real cause is.
But things are in excesses, and that's why you have inflation and distortion and potential bankruptcies, because the country really is bankrupt in the world.
Is bankrupt.
But when these things occur, there are still market messages on what to do.
The market is helpful.
But Chris, I think you agree with this, that the stuff we've been reading shows that the markets, yeah, they're busy, but they're doing the wrong things continuously.
The market generally, if you just allow the market to solve some of these problems and individuals making decisions, it actually is on the side of deflation.
You know, you get rid of the debt, you cleanse the system, you go back, the money supply actually shrinks, and then if you don't allow it, you know, you have a year of penalty paying for the excesses.
But the government, and for political reasons and for special interest reasons, like the rich bankers, the pharmaceutical companies, the military-industrial complex, and also the average person would say, oh, no, prices are going up.
We have to do something about it.
But they still won't look at it.
So governments and the people and the business people and the banks all vote for inflation until it gets a little bit too much.
Then they want to rig things.
And Chris, I think what we're talking about today will be what are they doing since they won't admit how it came about and they won't admit what you really have to do.
So guess what?
I think we came across a lot of things the government's doing, especially in Europe, because Europe happens to be worse than we are.
So we don't allow that to happen.
But it doesn't look good.
It looks like the whole thing that's happened for the last almost 100 years is the effort by government to solve a problem by doing exactly the opposite thing.
Chris.
Right, Dr. Paul.
And just to get a few definitions out of the way, when the Fed counterfeits money and the government spends money that it doesn't have, they are artificially creating an artificial economy, so to speak.
And when you do that, a recession is inevitable and unavoidable.
It's much the same like when you drink and escape reality for a little bit.
Well, if you want to live, you're going to have to return to reality.
So that's what a recession is.
It's a return.
It's, you know, get rid of all the waste.
It's a return to economic reality.
And that cannot be avoided.
Now, the depression, on the other hand, can be avoided because a depression is when the government doesn't want to return to reality.
They want to keep the artificial going forever if they could.
So what they do is they then interfere with their policies.
They bail out students and then they help the semiconductors and then the war and this.
And they constantly pile on policy after policy in order to quote unquote help whoever believes they're being helped.
But in reality, it's not helping.
It's making everything much worse.
And the problems multiply.
So this pile on of government new problems turns the recession into a depression, which is a long, drawn-out period of economic misery.
And that part is not inevitable.
That doesn't have to happen.
But, you know, it's not so simple as government, well, just make sure the government doesn't intervene.
No, the people want the government to intervene, and they want to intervene because that's how they increase their power.
So that's why we believe that the government will turn a bad recession into a bad depression, and we just have to prepare ourselves for it.
Right.
And, you know, what we're witnessing now is a predictable result.
Some people will mention to me, and they want to compliment me in a way.
How did you know the inflation was coming?
I'm not predicting the future.
I think if you understand Austrian economics, you find out that you're just observing things because the inflation didn't just come a year or two ago.
And what happened is the inflation has been there for a long time.
It's steady, it's constant.
But it really, the inflation of the money supply exploded in 2008 with that recession that never got taken care of.
Then they got into QE, and then they got into COVID, and then the military-industrial complex got busy, and they have more wars going on, and they were printing money like crazy.
So to predict that prices are going to go up, you don't have to be a genius to do that.
But people have been so conditioned not to look at it in these terms.
I mentioned to you a little while ago, Chris, all these articles that we've been reading about and how bad things are, but I said I couldn't find the word Federal Reserve in there.
So they're not talking about where the real source of it is.
Of course, it's the motivations, the special interests who benefit from what the Fed does.
But the Fed, without the Fed, you don't have the artificial inflation.
You have price.
You want prices to go up and down as the market demands on for other reasons.
But when you just do it for political reason, then we get into trouble like that.
But you know, it seems strange to us why they do this, but we have to realize how many people get to go to school and have a good economist teaching them something that has an understanding of Austrian economics.
Very rarely.
And thank goodness we have at least the Mises Institute to do a really good job, which helped influence what I think and read and the people who were Austrian economists even before the Mises Institute.
I'll tell you what, that is very helpful.
But we think, why aren't they, why don't they look at this and understand?
They don't even know what Austrian economics means.
I remember in the campaign, some of the reporters would sort of poke fun of them.
And they think, boy, this is silly.
What's this Australian economic policy all about?
So it's one of those things.
So with the absence of that information, we can't just modify what they're doing and say, oh, price controls.
They're talking about price controls and all this thing.
Don't you know they should know the damage done, the immediate effect, and not do it.
But that still doesn't get to the bottom of it.
And the bottom of it is monetary policy.
And this is a reflection of two individuals in particular that had access to young people interested in studying economics in college and getting a degree in economics and then a PhD in economics.
But it's the Keynesian economic policy which was modified and made worse even by Paul Samuelson.
He was bad, but he had more exposure.
And there's been a lot of people depending on that all the time I had in Congress, except for those few people I happen to know that had read about and understand Austrian economics.
Most of them didn't really care enough.
They cared about the politics at all.
They want the political interpretation of looking like we're really doing something.
And that's why when things get bad like this, and that's what the Europeans are facing right now, things are getting real bad.
And they're coming up with political solutions.
And, you know, just yesterday we read about a new prime minister lined up for Great Britain.
And the new prime minister believes in more economic intervention, more spending, more stimulus, and also she's a hawk on foreign policy.
And that's exactly opposite of what would happen if you had a free market.
If anybody really cares about trying to answer the question, well, what would it be like if we didn't have the Fed to bail us out?
Let me tell you, if the Fed wasn't there to cause the trouble and then attempt to bail it out and make it worse, the world would be a lot better off.
And if you want an example to look into and find out, because it's very instructive, it's something that has awakened a lot of us to study in economics, and that is the 1921 Depression, which was the first really great depression after the Federal Reserve was created in 1913.
And it was bad, really bad, for one year.
But they had not adopted all this Keynesianism stuff.
Okay, we have to spend more money.
And it's a great lesson.
And once again, why it's a great lesson is it touched on what was the cause and what you should do.
And exactly opposite, and Chris, I think, already mentioned it, is Republicans and Democrats, Hoover and FDR.
You know, they were participants in taking a correction, which was an expected one due to policy, and also doing the wrong things by aggravating it.
Oh, we can't pay for our groceries.
That means we need more money.
No, what you need is more value in your dollar.
That's what you need.
And that is a big undertaking, but that's part of our efforts here at RPI to get people to understand and look for sensible answers.
Because right now, people are getting frightened.
And reading the news today really got my attention more than usual because the Europeans and Europe is breaking down.
But that doesn't mean that we're home safe on this because we aren't quite as bad and the dollar is still strong unless you want to try to spend it.
Then you find out it's not buying as much.
But anyway, Chris, I think that there's a lot we can do about it.
One thing we like to do with this is use this as an example and get people interested in looking for the real economic policies that we need.
Yeah, Dr. Paul.
And, you know, it may surprise some people.
It wasn't always the case where the government would interfere with recessions.
You know, if a recession is a return to reality, get it over as fast as you can.
Don't intervene.
And then you can rebuild.
That's how it was until, of course, the source of so many of our problems, modern day, came along called progressivism in the early 1900s, where they changed that.
And the two key figures, like you mentioned, are Hoover and FDR.
Now, some people are like, Hoover, wait a second, he was a free market capitalist who didn't do anything, and then FDR saved capitalism.
Yeah, that's an entire, that's what you would expect the government to teach you in their schools.
And it's, you know, a total fabrication.
Hoover was a massive interventionist.
Even before he came into office, you know, Calvin Coolidge said, for six years, that man has given me unsolicited advice, all of it bad.
And then Hoover himself said about his administration, he said, we may have done nothing.
That would have been utter ruin.
Instead, we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever involved in the history of our republic.
He admitted that he was going to intervene with government policy, government help, to help during the recession.
And of course, it didn't work.
And then FDR just took what Hoover did and put it on steroids.
And I have a quote from him.
FDR said, we didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover had started.
Syria's Complex Web00:04:38
So you see what changed during that time?
And those two men gave us the greatest depression that the country ever had.
It's called the Great Depression because they would not allow the recession to run its course.
They were going to help the American people.
And we can expect that going forward.
That's why we say our government, which is hyper-interventionist, will turn the recession into a depression.
Very good.
You know, how this mess started in addition to the long-term bad policy all the way back to 1913 with the Federal Reserve coming into being.
But in recent times, we have been throwing our weight around Europe, around the world.
We have the military power to do it.
We've had the economic power.
But everybody's really in many ways broke, I think, financially and morally.
The whole world is bankrupt.
But what I really think things started here last two, three, four years has been the sanctions, you know, the introduction of sanctions and putting on countries and picking an enemy.
So it looks like it was an easy target, at least they thought it was an easy target.
Well, we'll go after this guy, Putin.
Now, Putin is not a capitalist in the true sense of the word.
He's not a libertarian, but he's a little bit less aggressive with what's going on.
But the people here, especially in America and other parts, that we need to blame them.
The Russians are the bad people.
And Putin did it.
Putin caused this whole thing.
But then because they went and they did some things that we have tried to prevent for years is that his alliance with China becomes stronger and stronger.
So what happens?
With all these sanctions and we're going to punish Russia.
Russia takes their oil and sells it to China and China sells it elsewhere.
And their profits have gone up.
And they can control the prices too.
So they can manipulate the price.
So at the precise moment just recently, they said, oh, you guys are fighting and doing this.
And you won't take off all the punishment and the sanctions you've put on us.
We're going to cut the gas off.
And if Europe had made any sense, they wouldn't follow the United States and do everything we tell them to do.
They'd probably say, well, you know, it might be a wise thing just to talk to those Russians.
They've already built a pipeline and that's worked out pretty well.
But it turned out to be a weapon that when the problems are built, the Russians were able to turn the gas off.
And this is the aggravation of it now.
It's a real mess for the Europeans, the Germans in particular.
So it's almost like some of this additional stuff is making things much worse, especially for Europe by saying we will have to blame Russia for everything.
And yet here we have Russia, they're not the old Soviet system, but they're wise enough to know that maybe trade is good.
And if Europeans won't trade with us and they put sanctions on us and they punish us, okay, we'll trade because we think trade is good.
So we'll trade with Red China.
You know, they go and try trade with Red China.
And this goes on.
It makes no sense other than the fact that people have been taught some really, really bad economic policy and then they're easily intimidated.
And I think the Europeans have been easily intimidated.
And one of these days they're going to recognize that the United States is actually bankrupt and they can't take care of the world and they can't maintain their empire.
So they ought to prepare for that.
And one of the things would be maybe we change our policy for a starter, change our policy with Syria.
You know, we went into Syria and we were just going to monitor things.
And here we were very much involved.
And we ended up with a big hunk of Syria in East Syria.
And we're getting 66,000 barrels of oil a day.
And it's ours because we literally own the oil patches in Syria.
And you know, long term, it's not going to work.
People are going to finally figure it out and get angry and all these kind of things.
Knowing the Government-Induced Storm Ahead00:02:37
But that's the kind of thing that people don't really want to get involved with and thinking, oh, that'll confuse things.
Yeah, well, I'll tell you what, the principles of liberty, they're not confusing.
They're pretty easy.
You know, mind our own business, be honest with trade, and don't go looking for fights and don't be interventionists in foreign policy and don't put sanctions on people and try to punish them.
And when we have a perfect society here, maybe then we can be critical of the policies in other countries.
Excellent, Dr. Paul.
I will finish up with my closing comments.
But before I do, I do want to express on behalf of all of us, Dr. Paul, Daniel, and I, you know, we had a great weekend in Washington, D.C. with everyone at our conference.
It was great meeting everyone.
I met so many new people that I haven't seen at previous conferences.
And Daniel is taking a much well-deserved break this week, so I'll be with Dr. Paul for the rest of the week.
And with my closing statement, you know, we do read comments on our videos and social media, and we see a lot of people think this, you know, this is depressing.
You know, we can't do anything to fix this.
What are we supposed to do?
Well, a little change in perception can help.
You know, knowing that government is producing a situation, even if it's bad, knowing it ahead of time, is a blessing in disguise.
You know, you have an opportunity to prepare yourself, to protect yourself, your family, and think of ways to shelter yourself from the storm that they create.
And, you know, a depression is a storm.
You know, it's a government-created storm.
And I can create it.
I live on the East Coast, and I love when I have a week or two warning that there's a hurricane coming, rather than waking up one day and there's 125 mile an hour winds.
That week and a half gives you time to think, okay, well, how do we protect ourselves?
Should we get out of here?
Should we leave the house and go somewhere safer?
So knowing things, like the things that we talk about on this show, you know, versus not knowing them at all, is a benefit.
It's a blessing in disguise because a lot of people do not know.
They don't know that there's a hurricane out there, or they think, I work for the government.
I'll be fine.
I'm safe.
I'm sheltered.
No, working for the government is not going to shelter.
Look how many people took the vaccines.
Even troops were kicked out.
You want to talk about a secure job, kicked out for not taking a jab.
Why Knowledge Matters00:04:50
Whether you work for the government or not, you're paying $4 or $5 for gas.
So the problems that government creates, you're not going to be sheltered even if you work for them.
So it's better to know, even if it's not pretty.
And our job is not to fix the whole thing.
That's too big of a job.
But we can help each other.
We can share ideas with each other.
We shared ideas at the conference.
And whoever is open to them can take the proper steps to protect themselves and their family.
And once the storm passes, and it'll pass someday, it'll be time to rebuild on the ideas of liberty.
Chris, very good.
And I'm going to just close with summarizing a lot of what we've been talking about and a lot of the things I talk about for a long time.
And that is working toward liberty rather than authoritarianism and a society that participates with voluntarism, that is, the intermixing of people and policy and socially and internationally.
If everything has to be voluntary, which means it's not going to be one person demanding and telling other people what to do.
And I'll tell you what, the world would be a lot better off.
But I think this thing all started, it made much worse, of course, in 1971 when they decided we don't have to have a definition of what money is.
So therefore, money has no definition.
There's no relationship of the dollar to metals like the Constitution says.
And therefore, there's no unit of account.
There's no measurement.
It's hard to measure prices and interest rates and all the things that lead to the mess that we have.
And then when the prices start to go up, which were very predictable and uncontrollable because it is a reflection of millions and millions of people reacting in certain ways.
And the way they spend the money is up to them.
And nobody knows exactly what to do because you can't use a computer and say, well, if we put out $10 trillion like we have, essentially, we don't know exactly what will happen to it.
Oh, we'll send it to the people and to help just the people.
Well, that never happens.
It always ends up in the hands of the very rich or in the governments or fighting another war.
And then when these prices start to go up, you know, well, there's no recession.
We can't even, so they say, we'll change the definition and no recession.
Everybody's supposed to feel better, which is a bunch of, you know, malarkey.
It's just total nonsense.
So they say, well, they think that if you just tell the people lie after lie after lie, they're going to believe it.
And maybe sometimes you tell lie after lie after lie.
People figure out it wouldn't believe the thing they say.
And that's about where we are right now.
But they come up and they say, well, yes, there's inflation.
And for them, inflation just means when prices go up, which is not exactly correct.
It's the value of the dollar that's going down.
They'll say, yeah, yeah, we recognize that prices are going up and it's a problem, but we're going to take care of it.
We'll write some more regulation.
This is just transitory.
It's not a big deal.
And it's still, you know, so it's still Putin's fault all the time.
And or then they'll come and say, say, some Republicans will say that Biden's fault too.
No, it's much bigger than Biden.
Biden is just, he's sort of just been pushed around by the silliness and ideas.
And he's in a position that he has to react to political pressures.
That's all that is.
So it is this blame game of finding out who exactly is guilty.
And one thing is, and I started the program in all these articles I read this weekend, none of them once talked about the Federal Reserve and monetary policy and what inflation is all about.
And that's what we have to do.
We have to get around to that.
But it's a confidence issue.
And we have confidence in the people to make their own mind up, make up their own mind about how they want to spend their own money.
Economically, that should be enough.
And also, giving up on this notion that authoritarianism, the force of government, telling people what to do or telling other countries what to do, will always end up in failure and more hostility.
And we have to recognize that the value of personal liberty and a free market is so important for people to get along.
And it's the only way I can see is following some of these very simple, clear-cut rules.
And that is to be able to work toward a society for the purpose of promoting peace and prosperity.
I want to thank everybody for tuning in today to the Liberty Report.