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Jan. 11, 2024 - Ron Paul Liberty Report
26:39
Unsustainable Debt: U.S. Government's Interest Payments To Skyrocket

Debt matters, and there are no "free" lunches when it comes to government spending. But with enough propaganda, it becomes easy to think that government can spend money without any limits. As the U.S. national debt approaches the $31 TRILLION mark, interest rates are rising, and interest payments are the debt going to skyrocket. Financial reckoning draws nearer.

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Time Text
Finding Patterns in Austrian Economics 00:08:30
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.
Good.
It's good that we have Fridays because we tend to concentrate more on economic matters.
But you know, it's a really tough job finding any problems in the economy when the economy is rolling along and everybody's in charge of this and take care of things so we shouldn't worry.
Because I listened to Biden's speech the other day.
He sounded pretty upbeat.
He yelled and screamed a bit.
I didn't know exactly what he was upset about.
But he tells the people everything is all right.
But you know what, though, Chris?
I think less and less people are believing what he says.
But the market's all over the place.
I mean, the stocks crashed one day and they hold their own.
But you know, gold has done poorly in here.
It's making an adjustment.
And if you understand Austrian economics, it's not disturbing.
It might annoy people who say and still believe, as I do, that gold is a haven.
Gold handles the economic problems when the problem is inflation and too much spending and printing money and distortions and all these things.
So gold is something that is important.
That's one of the reasons why I work with Birch Gold, because Birch Gold has been helpful with us for our Ron Paul Liberty report, and they also are in the gold business.
And maybe this is a good day to call up and find out what they're thinking about on why is gold not doing better and what is it?
Matter of fact, in the last hour or two, gold did start to do better.
And that's the reason you have to have an understanding.
You have to have a basic understanding of economics to not get too panicked.
Because if you're looking for a quick kill, you know, invest in something, oh, this stock's going to go up and they run the stock up and somebody makes a lot of money and then it crashes and somebody loses.
It's sort of like the speculations in the commodities markets.
And then you hear rumors and stories about, well, is the silver market rigged?
There's a lot of rigging.
The government does it all the time.
Their goals are different than the people who want a sound economy.
Their goal is to take care of their clients, you know, the military-industrial complex and the banks and all these other things.
So this is the reason I do work with Birch Gold.
And there's a way of getting into contact.
There's a number on the bottom of this page, a contact number, where you can get some information.
And that's a text number.
You text in there and they will send you something and get you started if you'd like to visit with them.
It's very important to sort things out on the very volatile days that we have here, because I've looked at this since I really concentrated on this for the couple years before the gold, before the Bretton Woods broke down.
So that's been a little while.
And the one thing about Austrian economics is that you can't use a computer, you can't use history, you have to understand, you know, what the what how the market works and there's a subjective element to this and there's a lot of intrusion, a lot of sorting out to do.
So when you're getting ready to make your investments and where to put them and the different things that are available to you, just take a look at that number again, the text number at the bottom of the page and get some of this free information.
I do want to thank everybody for tuning in today because it is an exciting week.
I keep thinking that so many people have said, and I think Robert Lee may have said this, it's good that war is so evil because it certainly gets exciting, you know, this sort of thing.
And people suffer.
Well, this war on the economy and the war on inflation, you know, in a way, I'm sort of fascinated with it because there's a human element with it, there's a political element to it, an economic element to it, there's a war issue related to it.
So it's also important.
So I like to look into this.
But one thing that Austrian economics teaches is you can't get a computer and say, well, give me the numbers.
I'll type them in.
And then they have these equations.
Even the best mathematicians, it's impossible for the mathematicians to get the smartest mathematician in the world and say, here it is, and these are what's happening right now.
What's going to happen next week?
It's impossible.
There's too much what Mises would call human action.
And human action is spontaneous.
It's not predictable.
You can anticipate and predict some of the actions of what the government does, but still, it's the anticipation.
But it is fascinating, so it's important.
But it's also pretty darn important that we know what's going on here because people right now are getting scared.
This is the reason today, Chris, we want to concentrate a little bit on should search around.
Maybe we can always find something positive to say.
But to tell you what, we have to be truthful about what's happening.
And things are in a mess.
And I think the best thing I've been hearing lately, the American people aren't trusting the government's clichés much anymore.
I mean, just this week, we heard our president speak out, and he was pretty adamant.
He said things are okay.
Some of the best legislation ever passed in the world.
And the American people know that.
They go to the grocery store, they go to the gas station, and they know about no matter what the employment statistics shows, everybody seems to be a little bit nervous about what's happening in the market and what's going to happen to the jobs market.
So there's lots there to be concerned about.
And Chris, I'm sure you've been paying attention to what our president is saying.
And I have a suspicion that you have not been enthusiastically endorsing his position.
Absolutely not, Dr. Paul.
And, you know, we're talking about debt today.
And wouldn't you know, the government's debt is approaching $31 trillion.
And what we want to say is, you know, debt matters because we're finding out from the CBO that the fastest growing part of the whole federal budget is interest payments on the debt.
And as interest rates rise higher, you know, those interest payments are going to skyrocket on the government.
And, you know, this is all predictable.
This is how debt works.
You know, we're trained as Americans.
Oh, it doesn't matter.
It doesn't matter.
It matters.
But when government wants to spend, they have a propaganda apparatus ready to go.
It's the same pattern, repeated over and over, year after year.
And anybody that, you know, pick a spending package, and you could just point out, you know, that's not the role of government to do that.
It's not going to work.
And it'll make the problem worse, which is usually what happens when government spends money.
But the propaganda kicks in, and it's very predictable.
First, they'll tell you, oh, you're against the poor.
You're against the Ukrainians.
And then they'll tell you what you do care about.
You only care about yourself.
You only care about the rich.
And then finally, you'll get labeled.
And there are a million names out there.
Just pick one.
You're A.
And we went through this with COVID with the vaccines.
You're against the community if you didn't get it.
You only care about yourself and you're selfish and you're going to die if you don't get it.
So it's the same pattern and this is how they spend money.
And once they spend it, you'll forget all about it and the next spending package comes in and the same process just repeats itself 31 trillion times.
So this is where we find ourselves, Dr. Paul.
This cannot last forever, this game of loot the taxpayer.
But as of today, it's still going.
Well, certainly what you say is true because on the short run, those announcements, sometimes they last an hour and they'll have the market jump up or down rapidly because it's sort of an emotional reaction.
Interference and Market Forces 00:04:04
And it's done outside the reality of a free market and sound money.
And those things do happen.
So it's a lot of noise you hear.
And I just think it's fascinating, but it's really very scary about what they do.
But one thing for sure, what you're hitting at or really saying, Chris, is that this will end.
You just can't keep doing this.
And the market, ultimately, my argument is the markets are stronger than the governments, the Federal Reserve, and everybody else.
Because you can have a Federal Reserve.
They can steal and rob and be influential and support welfare, warfare.
And they've been doing that since 1913.
First thing they did was help finance World War I.
And then there was a depression and on and on is what they have done.
So that exists, but ultimately the market wins out.
They fixed the price of gold, the ratio of gold to dollars in 1945 with a Bretton Woods understanding that we, the powerhouse, had most of the gold and we had most of the wealth and we were spared the brutality of World War II.
So we became in charge of the economy and the world currency.
But it's been abused since that time.
So for 40 years, there was no direct relationship.
But of course, the American people weren't even allowed to own gold, so there was always interference.
In a way, you can say our governments fixed and rigged the price of gold, the ratio of gold, $35 to an ounce of gold.
And that gave license to the point where, yes, we consumed a lot of gold, but when the consumption was running out, which happened in 1971, Nixon had to close the gold win.
Hey, we're not going to have any gold left.
So they had to stop it.
And yet, that was the market forces saying that.
When we were saying as a powerhouse that the ratio is $35 to the ounce of gold, and we can do it forever, don't worry about it.
You can trust us.
And anytime you say, we won't let Americans do this, but anytime a foreigner does this or a foreign government comes in, they take their dollars, which we had been printing a lot of.
If they turn it into the Fed, they get the gold.
And, you know, back in those days, and I remember the talk about it because everybody was to hate de Gaulle, you know, the French.
They had some people in their administration that was much more sympathetic to gold.
So they started turning into gold.
And that was one of the motivations for finally saying, hey, the French are going to have all their gold because all the dollars are outside the country.
But the markets are powerful.
It was the market that was driving that.
And Chris, the problem you described, the market is going to take care of it.
You know, today the markets are jumping all around.
It may be the beginning of the end, and it may be in a month or two.
And now it will be much, much worse.
But no, it may recover.
There's still some gold left.
And the other countries are in such shambles.
But then we have the trading problems around the world.
We have the friction among the various entities.
There's so much talk about more militarism and that's involved with the Fed because somebody's making a lot of money off militarism and this interference in trade.
So the problems are out there, but eventually common sense is forced upon us that you just can't take a piece of paper, put some marks on it, and use it as money and everybody's going to believe you forever, especially because the people who get to put the money, put the printing on that money and get to use it, they're the counterfeiters, and they do quite well.
Finally, the people wake up and they say, enough is enough, no more, just like they do with a hot war.
Compounding Consequences 00:11:28
Yeah, you've been fighting for 20 years in Afghanistan.
Don't you think it's time we quit?
And the different countries, it happened, you know, in Vietnam.
The people have an obligation to speak out.
The people finally spoke out about the lockdown with COVID.
And they had to back off on that.
But we should be vigilant enough to sort it out and see what's coming, warn the people.
And if we had a better educational system, the people would react in a much better manner than I've had so far.
Right.
That's for sure, Dr. Paul.
And, you know, with these trillions in debt, the spending, the spenders in government will never admit that what they're doing is wrong because the solution to everything is always more money, more debt.
You know, my whole life, I've been hearing schools need more money and then they get worse.
And then schools need more money and then they get worse.
How many times have we heard, oh, the military is gutted?
They're taking a trillion dollars at least that we know about a year, but the military is just gutted.
It's gutted, and they need more money, and we need to spend more and go further into debt.
Now, the reason why this just keeps repeating itself is because the incentives in government are the exact opposite of like what we deal with out in the real world.
We can't tax anybody.
We have to offer voluntary services, and then people pay us voluntarily.
We can't just go and take their money.
Well, in government, it's the exact opposite.
And if you're in, like, let's say I'm in a department of government, my incentive is to spend every single dollar of my budget.
Because when you do that, you can say, well, we don't have enough money.
You've got to give us a budget increase.
Now, if I don't spend my budget, then they're just going to pass right over me, and it'll go to another agency that needs the money, so to speak.
So your incentive is to spend every dime that you have so that you get a budget increase.
This is not how the world works out here, but that's how it works there.
And you can see, you know, our government does a vast majority of what it does is unconstitutional.
It shouldn't be doing any of it.
You can see why the founders did their best.
It failed, but they did their best to try to contain government.
You can't do these things.
You can't do this, can't do this.
Because once they break free and they're able to just spend on whatever they make up in their imaginations, they do not turn back and you're just going straight ahead into bankruptcy.
You know, there's so oftentimes that just cliches are being used as policy statements.
And that's just because they don't know any better and they have to say something politically.
And there's enough gullible people out there that will buy into it.
Look how many people bought into all the nonsense regarding the danger of COVID.
It turns out that especially young people, if young people got those immunizations, it turns out to be exactly the opposite.
They're more likely to get COVID.
And that's about the way it is in economics.
They warn and talk about it.
And, you know, take, for instance, the Inflation Reduction Act.
Who believes that stuff?
Except those professors in the universities that have taught hundreds and thousands of economists and the people in the media and all that, and they recite this.
But the Inflation Reduction Act, which is just total nonsense, but it sounds good, and people say, Well, give them a chance.
Maybe it'll work.
And then they'll say, Well, then somebody comes along and says, Well, you know, there will be some tough times, and we have to worry about it.
We have to be prepared.
But we have a cliche for that, too.
Build back better.
After we crash the market, we're going to build it back better again.
Well, why do you have to tear it down?
And they tear it down.
And there's an ounce of truth of that.
The free market says all the bad stuff, all the bad investment, all the debt, that needs to be eliminated.
And then you start back better.
But that only works if you start back with a sound currency and free markets and personal liberty and understanding of property rights.
Yes, eventually that will come.
But it will be the market that will bring that along.
And it is subjective in many ways.
The precipitating factor is going to be a subjective thing.
An underreaction, an overreaction, an acted, a red flag, you know, warning just coming.
People, you know, deliberately stir up trouble, politics involved.
A lot of variables in there.
And that is why it's so attractive for so many people right now to resort to something that eliminates that factor and think that individuals have a responsibility and they can do it and they will act responsibly if they have just a little bit of help, like a sound economy and a protection of property and protection of civil liberties, rather than the nonsense going on right now.
But the markets will work and we have to understand that and be available to present the way you really ought to build back better and have a constitutional government once again.
Excellent, Dr. Paul.
I'll finish up.
Yeah, along this subject with the debt, you know, as time goes on, government promises are going to increase, but they're going to become less and less feasible.
You know, once the interest payments get so bad that government can't even handle the interest on the debt, there's going to be some big problems, and there's going to be a lot of people who are expecting things from the government that they're not going to get anymore.
You know, there's going to come a point where they're not going to be able to come through on their promises, and you're not going to be able to run to them and say, well, you promised me X amount of dollars or whatever it is.
So all of us need to, as best as we can, lessen our dependence on them.
And this is a tug of war because they want you more dependent.
They want to constantly entice you.
Don't you want free this or free that?
And we could make it happen.
We'll just pass this bill.
But in our minds, we have to decentralize because these are empty promises eventually.
And we need to stop believing them.
And after COVID, it should be much easier to stop believing them after those policies.
And I know from just my circle of people that I'm around, there are a lot less believers and a lot more upset people based on what they did to us over those years.
And they're still doing to a large extent.
But there's still a lot of believers out there despite what happened with COVID.
And those are the people that need to be reached.
They need to hear the ideas of liberty first and ultimately come to understand them.
For some people, it's a long shot, but they need to at least hear it.
And hopefully the Liberty Report, we do our part in helping that happen.
Very good, Chris.
I want to talk a little bit about the principle of capital and the saying that has been around for a long time.
And many of the founders of this country knew the principle, and that's why they were anxious to have sound money.
And that is the principle of compound interest.
And I'm sure people have seen and read about, you know, if you take $100 and you can make even 2% or 3% on that and compound it for 100 years, it's unbelievable how big that gets.
So if you have real capital, capital is what is left over after you spend what you need to live on, but it has to be defined.
You have to have a unit of account that will measure it.
So if you have a sound dollar, you make $100 and it's left over after you take care of all your problems, and you put it into a savings account or you loan it to somebody or somebody else takes it and loans it to somebody else.
And you just say, well, I'm going to keep it there for a rainy day, and let's just see what happens.
That compounds, and that means if you're making 3%, you have $103, and then that interest that you earn, that gets compounded in there, and it's an exponential thing for growth.
Today, nobody thinks in those terms.
I want to, but it doesn't make any sense because they're inflating the currency and devaluing the currency too fast.
You can't even keep up with it.
So that's a real problem.
But, you know, this principle, though, is sort of reversed in what we do.
We can't define capital.
Our lender becomes the government that prints the money, and they send it out there, and they start collecting the interest rates, theoretically, and people buy U.S. bonds and this sort of thing.
But it has nothing to do with really compounding capital.
What they do is they have a token payment, and it varies tremendously.
You can have interest rates at 0%.
I've seen that, 0%, real interest rates being negative.
And in the 70s, I saw interest rates up to 21%.
But it wasn't compounding.
What gets compounded now is if interest rates, if the market is saying, look, this thing is in bad news and prices are going up too fast and we have to bite the bullet and we have to get interest rates up.
Now they have to deliberately raise interest rates even though they don't know where they should be.
But they certainly should be higher than 0%.
So they do that and they send more money to our government.
Now, is that more wealth to the government?
No, the government doesn't.
They destroy wealth.
They don't do it.
And they use it, but that debt keeps growing and we have to keep paying on it.
So an increase of interest rate, you know, say from two to four, can be very, very bad.
And this is what Ray Delio was mentioning this week.
You know, if interest rates gets above 4%, you better watch out about the stock markets because they can't handle all the market is fragile and it's ready to come apart.
But they have this idea of compounding.
If you're a savers and you have sound money, yes, you can compound the interest and it's a very, very conservative way of preserving wealth.
But if you have to send it to the government and the government, where are they going to get the money?
They just print it more.
And they run up more debt.
They have these silly programs of Inflation Reduction Act.
So they just spend more money, trillions more, print more money, and so it gets compounded.
But you know what we're compounding is we're compounding interest payment, debt, and also compounding the evilness of what governments perpetuate.
evilness in the runaway welfare state, the runaway warfare state, the runaway everything.
The lack of interest and concern or understanding what personal liberty is about and how a free market and a sound money system could do a lot of good if we could get the people just to not wait until we have a big, big problem and try to sort it out when the crisis hits is trying to preempt them.
Compounding Crisis 00:02:05
That is the reason I fought for so long and continue to do it.
Stay out of the wars.
It's hard to come home, especially if somebody's making money.
Just look at it.
I never believed that people would tell me that like I was in high school and oh yeah we better stay out of such and such because we might be there for 20 years.
Things were bad there and we got into wars that we shouldn't and the Korean War was high on my mind.
But still the conditions are different.
Even Vietnam, we were lucky enough to get defeated in Vietnam and we had to leave.
And not long after that, after 20 years of mischief over there, all of a sudden things got better.
Vietnam got to be a better, better society.
There was no domino affected, but did then become totally communist.
So I think this understanding is so important if we have to understand the money, but it's a principle of liberty because I have a lot of confidence in most American people.
They will do the right things and they're not looking for a fight and suffering.
And if how many people, even Democrats now, are starting to say, hey, maybe we have too much violence in the cities.
And they don't like it when I say, don't ever point out this is bad.
They'll take you, they'll cancel you for sure if you point out that the six worst cities for safety are all run by, you know, these progressives who believe the government should take care of everybody.
Doesn't work anyway.
We know what can work imperfectly, of course, and that is it's worked in the past.
We've had hints of that for thousands of years of the progress and the understanding how free markets can work.
And that's what we need.
But we need a much better system of education because that makes all the difference in the world.
Because when people start at grade school and they're brainwashed about all these issues, it's really hard to get them to think differently.
A Better System of Education 00:00:29
And I remember it clearly because when I got out of college, it was the first time I thought about sound economics.
I had some economic courses, but they didn't make any sense.
They didn't add up.
And I kid, but seriously, I said it took me years to unlearn the things they taught me before I came across this wonderful explanation of economics called the Austrian School of Economics.
So I want to, once again, thank all our viewers today for tuning in.
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