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Feb. 2, 2024 - Ron Paul Liberty Report
21:23
America's Fiscal Future...Debt, Deficit and War Spending with Guest Philip Patrick

Philip Patrick joins the Liberty Report to talk about the grim future of America's economy.

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Time Text
Federal Reserve's Concerning Behavior 00:05:01
Hello, everybody, and thank you for tuning in to the Liberty Report.
Today we have a special guest, the economist from Goldberg Gold, and he is here with us once again, and that is Philip Patrick.
And Philip, welcome to the program.
Thank you so much for having me, Dr. Paul.
Very good.
We'll be talking today a little bit about budget, and you've done a little investigating there, and I assume from the little note you sent me that you're not too gun-ho over Biden's budget.
We wouldn't be surprised.
But we'll talk about budgeting and how that affects the economy.
But also, before we start, I want to talk a little bit about what gold has done in the last couple of days.
You know, a couple of days ago, gold was up a little bit, and then the chairman of the Federal Reserve Board came in and said, oh, we're not going to lower interest rates.
You know, and what astounds me, and I'm sure you're quite aware of how just one or two words might make a big difference when it's the Federal Reserve Board chairman.
It also, to me, reflects the fact that they don't know what they're doing anyway.
But, you know, he announced that, no, I'm not going to lower interest rates.
And the market goes, boom, down.
And yet today, you know, one day later, oh, no, he had an exception.
He said that I don't want to do this.
I have to be cautious.
I have to protect the economy and all that stuff.
He says, unless there's sudden labor deterioration would hasten the cuts.
So he always has an exception.
So I was wondering whether today might have been that exception, because today gold prices see a bounce as U.S. weekly jobless claims rise to 224K.
So today gold bounces back up again.
That to me doesn't guarantee that we know exactly what's going to happen because they don't know what's going to happen.
And millions and millions of people who are investing money, they're the ones who make the decision.
But I think that little spat with the Federal Reserve Board Chairman indicates that they're not quite sure what they're doing.
And that's, I think, why our economy gets so messed up.
What do you think?
Yeah, I mean, I would agree with that vehemently.
And I think we've been seeing that with the markets actually for quite a while now.
We saw, you know, the end of last year, the market, the stock market, that is, would rally on the back of sort of positive words from the Federal Reserve Chairman.
When they'd get a little bit more bearish, we'd see a collapse.
And we're seeing the same thing now, right?
End of last year, the Federal Reserve, at least in my opinion, got political, suggesting that they would lower rates heading into this year, despite the fact that inflation was 50% above their target when they said it.
And of course, we saw a rally on the back of that.
But this in and itself, I think, is concerning behavior when we're seeing markets that are being driven not so much by fundamentals, but more by Federal Reserve minutes and sentiment.
That in and itself, I think, is a concerning thing.
But if we focus on the fundamentals, I think it spells very good long-term prospects for gold, given the nature of the problems that we have, right?
We have inflation, which is sticky.
We have recession on the horizon.
And I think our biggest issue in the form of de-dollarization that's happening around the globe, these things as negative as they are, bode very well, I think, for the longer term prospects.
So we'll see volatility.
I'm predicting it this year.
Like you said, I don't know if the Federal Reserve really, they're in uncharted territory here.
So I think we'll see volatility, but I think the fundamentals are still very, very strong for gold.
You know, and there's another variable, and the Fed claims they have no control of this, but I say they instigate it, and that is dealing with the budget and the deficits.
You know, so often when I was in Washington and the Federal Reserve Board chairman would be before the committee, I would ask him about this, and they usually deferred, you know, about the deficit.
They usually deferred to the Congress.
They spend the money and we have to do what they say.
But the other way to look at that is the Congress does it because they're partners with the Federal Reserve because they know the Fed is going to print the money.
But they go back and forth and they leave out the people who suffer the consequence because long term, you know, the people will have to pay for it.
But there has been budget discussion and I sat through those things for many years.
And really, it didn't take long for me to come to the conclusion it's all talk.
The Numbers Game 00:07:17
It doesn't give a budget that they live by.
It has nothing to do with a business person that has to deal with a budget.
And they talk about this.
They can change it.
They can increase it.
They can always have emergencies.
But what are the numbers this year?
I guess they didn't cut very much or not even pretending to cut anything.
Because if they're pretending to cut, I probably wouldn't believe them anyway.
Yeah, it was more of the same, quite frankly.
And we're getting a lot of rhetoric from the administration, and I would argue some gaslighting as well.
But the numbers really don't support it.
I mean, you know, the introductory message for the budget suggested, and this is a direct quote, Biden said, throughout we have delivered on our commitment to fiscal responsibility, cutting the deficit by more than 1.7 trillion in the first two years of the administration.
But, you know, fiscal responsibility sounds impressive, but I'm not sure it's the reality of the situation.
I think a quick look at the numbers really dispels the notion over the next 10 years from 24 up until 33, the total deficit is projected at 17.16 trillion.
There will not be a single year in which the deficit will be less than $1.5 trillion.
And that's all assuming that there are no intervening wars, recessions, or other spending sprees in that time period.
But to think about that for a moment, right, responsibility is now defined as spending at least $1.5 trillion more than the government extracts in revenue every single year for the foreseeable future.
Federal spending is now projected to grow from $6.9 trillion in 2024 to over 10 trillion in 2033.
So the one thing that's clear, there isn't a plan in mind.
And, you know, spending is the name of the game moving forward.
And I think that just ends very poorly without a sharp change in direction.
You know, we all talk about, and the people are becoming aware of it.
And even the average pundit on TV knows that there's a big debt.
It's $33 trillion.
And there is a how is it ever going to get paid?
But then they go and do the same thing again because it isn't one party.
You could say, well, it's only the Democrats that spend the money.
But the record shows that it is a bipartisan thing.
So when people cry out, what we need is more bipartisan.
Well, so far we have too much bipartisanship because they're the ones who finally passed the budget and they endorse all this activity.
They endorse this foreign adventurism.
So I think that bipartisanship is a big deal.
But you know, the one thing they don't talk about a whole lot, I think is very significant because this will be the bottom line because it depends on other factors.
And that's the unfunded liabilities.
And there are some predicting now that, you know, Social Security is going to be in real trouble in less than 10 years and maybe sooner.
And I don't think they can predict exactly when because if there's a big dip in employment, you know, the cash flow is different, and there's so many variables.
But what about this unfunded liability?
Does a number come to you about what people because I see different numbers referring to how much we really owe?
You know, if you were a business and just because it wasn't funded and you owed the money, it would be a significant number.
But that number has to be huge as well.
It is.
We hear varying numbers, of course.
I think over $100 trillion.
The reality is, you know, I don't see how we pay our unfunded liabilities in the situation we are, particularly in a climate of mounting debt and mounting debt service.
You mentioned Social Security.
Debt payments last year were essentially the same as Social Security outlays.
So the reality is there isn't a plan.
There isn't really even a plan to pay for, you know, the budget shortfall, right?
Biden's talking about taxing, right?
He's saying wealthy corporations and individuals aren't paying enough taxes.
So the solution is to tax them more.
But even by, you know, the administration's own numbers on increasing taxes, it would bring in about $120 billion in extra revenue.
Furthermore, the 10-year deficit projections include these increases in taxes.
So, you know, we've got about 6.6% of deficit reduction over the next decade.
Where is the other 93% of the money coming from?
Presumably, that money will be borrowed.
So, you know, there isn't a way to meet our unfunded liabilities.
The direction we're heading now is to amass more debt.
And any student of history understands how that ends for empires.
It always ends in the same way.
Yes, and some days I think about this and worry about it, but also I'm very realistic on what's going to happen and what they say doesn't count very much.
But does it ever come across your mind someday, like it does for me?
I'll say, you know, why is it held together?
You know, and I come up with a few excuses like, well, everybody else is worse than we are, and we still have the military and we still have a reserve currency and different things.
But it is rather amazing because I was very, very much involved in thinking about, and it had an effect on me on the breakdown of the Bratton Woods.
You know, when that was a declaration of bankruptcy, we couldn't order our dollar at gold.
And that was a major thing, but we got through it.
And yet there's more times there's crisis.
I think it's when the theoretical fund of the Social Security, we can borrow from that and fudge the figures, but eventually that fund will be gone.
And I just think that it's amazing it is held together, but it doesn't convince me that we should be complacent about it.
I agree vehemently with that.
It surprises me too.
I think the key, though, is our position as global reserve currency, right?
That's what's allowed us to amass the debt, to service the debt at levels.
And that's why I say de-dollarization may be the biggest sort of obstacle on the horizon.
Because as long as the dollar is king, like I said, it allows us to amass debt and do what we've been doing.
But as the demand for the dollar wanes, obviously we would have to start to make our debt more attractive, raising interest rates with the level of debt that we have, that could kill us from the inside.
So that's why I think of all of our issues, this longer term potential loss of global reserve currency.
And I say longer term on purpose.
De-Dollarization Dilemma 00:07:46
I don't think there is a natural soute yet, but it certainly feels that the wheels are in motion and we are losing a grip.
And I think if we do ultimately, the ability to muddle through will disappear.
You know, they use terminology that can scare the people and also appeal to the people who have to pay the taxes and say, well, it's a national emergency.
National security is important.
They're attacking us.
And they're able to galvanize people and say, well, you guys know it, and we have to be safe and secure.
And there's an emergency going on.
And the people can't.
That's one of the things that it's very hard for members to vote against, something that is portrayed as necessary for national security.
So that's ongoing because if they take care of one problem, they get a new one the next day.
And sometimes they plan for the third one.
And also what they'll do in order to get some of this stuff passed is the humanitarian instincts.
And somehow people believe, I think it's less and less because of this disaster we have on our borders.
We have, you know, there's a, and I feel the instincts.
It's such a tragedy and a mess.
I blame it all on government policy, but it's still so tragic.
So the humanitarian instincts of people who lose their jobs or they are out on the street, a lot of people are moved by that and say, well, we have to help them and take care of them.
But the thing that the government, I think, gets away with is they don't say, well, we messed it up.
We need to change ourselves.
We can't just say, that's the excuse for digging in and having more debt and all.
So this whole idea about national security and us needing to be humanitarians or we should feel guilty about ourselves seems to motivate the spending.
It absolutely does.
And, you know, there's a lot of emergencies.
And this is sort of the rhetoric that is used when the government needs to force something through.
Hey, we're backed into a corner.
It's a national emergency.
We have to spend.
But, you know, the problem I think, and I agree with you, I think it's bipartisan.
You know, I think this administration has gaslit us in a way that we haven't been gaslit as the American people for a long time.
But if we talk about spending, it's certainly bipartisan.
The problem as I see it, though, is to a degree the system.
And I'm not sure it's a problem that we can fix.
But we need to, politicians need to start looking beyond two and four year election cycles, right?
And I think as long as we can start doing that, that will ultimately fix the problems, right?
But until we can do that, I think politicians will be politicians and they're going to kick the can further down the road to give themselves a sort of smooth passage and let the next guy deal with it.
And I think that's in large part why we have the scale of the problem that we do today.
And I think we just need to start looking a little bit further than the next election cycle.
Because if we do, you know, it's time to go through some tough times to have a brighter future.
But to try and kick the can further down the road consistently, it's only going to end in one way.
You know, there's another factor that affects a large number of people, a very large number of people in this country, is the educational system we have.
Because our educational system has definitely morphed from something different 150 years ago to, you know, the progressive era and the acceptance of socialism and welfarism and all the nonsense and accepting the idea that we have to manage an empire.
But in Congress, I enjoyed talking and trying to understand how the other side thinks about it.
And some of them were interesting because they had different views.
But then it dawned on me, if you look at a group of people that find their way into Congress, that they most of them got their education from a government school.
And most of them learned Keynesian economics.
You know, they're not going to, you know, think about free market economics.
I mean, there are bits and pieces that have come together and it's out there.
And I think there's some background going on right now that despite the fact of the shrinkage of some of our civil liberties, I think there's still, you know, you and I get to talk on a program.
We don't have millions of people, but at least we're able to do that.
So I think it's out there.
And there are educational groups that, you know, participate in talking about economics in a different way and talking about sound money.
And I think as long as we can talk about that, I think more people support our views on that than we know about because we don't have control.
One thing we don't have control of is the propaganda machine to generate the enthusiasm for putting up with this nonsense.
But I think people are getting tired of it.
I think, you know, just like COVID, all that aggressive attitude about how to regulate people, people finally woke up and said, we don't like this stuff.
You know, we don't like the lockdown.
So I always try to put into my thoughts, you know, where are things positive?
And, you know, in the one other area that you and I talk about a lot is, yes, you have to do that in a general sense of education, but you also have to do that to prepare, if it is true that this is a serious, serious problem, that we like to participate in talking to people what they can do financially to be able to protect themselves on what is coming.
And we can always hope it won't get as bad as some of us think it's going to be.
But I think that's important as well.
And that's one reason why we work together with Birch Gold.
I mean, I couldn't agree more with that.
Education is key to everything.
It's key to fixing every problem.
The ability to discuss, to have discourse is key to a democracy.
And that is why democracies have creativity, right?
Dictatorships have some advantages in sort of long-term plans, but they lack the creativity.
And creativity comes through discourse.
But look, I agree with you.
I think education is key.
It is what we are very big on with Birch Gold Group.
We like to educate people.
We give them free information, historical information, as we always say, history is key.
But I think once you have the knowledge, then solutions start to present themselves.
So I couldn't agree more with that.
It's the most important thing.
That's right.
And a lot more people are doing this.
They said that there weren't riots in 1933 when Roosevelt took the gold in.
You weren't even allowed to own it.
And that lasted a long time.
But people weren't attuned to it.
They were suffering from deflation and a lot of other problems.
But I think the general atmosphere now, because of groups and the education of Birch Gold, that people are more aware of it and more people are prepared.
People Prepared 00:01:05
And that, I think, is good.
And that's why we participate in it.
And that's why we offer the ability to reach that.
And if people want to reach out to Birch Gold, if they text Ron at 989898, they'll be able to sign up and get some of this information.
They do not charge about this because you could get the information and decide for yourself if it can be helpful.
I happen to have come to that conclusion a long time ago because the event of 1971 when they closed the gold window, I mean, that really caught my attention because the predictions of the 60s came true and it was epitomized by what Nixon did in 1971.
And yet we continue and we seem to be able to get away with it, but that's why we like as many people to be prepared as possible.
And I would also like to thank our viewers for tuning in to the Liberty Report.
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