How Political News Impacts Markets: Economist Phillip Patrick on Gold and the Economy
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Hello everybody and thank you for tuning in to the Liberty Report.
With us today we have a special guest who's been with us before and that's the economist from Dirks Gold.
His name is Philip.
These are special precious metals.
Thank you so much for having me Dr. Paul.
It is an honor as always.
Wonderful.
You know, there's lots to talk about and there's big news out there and usually when there's big news in any area, gold responds.
Sometimes it goes down sharply, sometimes it rises sharply.
But you know, we've been talking lately a lot about the president's health and that is a big issue and the unknowns associated with that.
And then we had the attempted assassination.
That is a big deal.
But you know, even before the attempted assassination and before when we were talking about the health of the president, what we were doing, I thought, was it was sort of a distraction.
We have a big problem.
This is a political time.
And they were talking about important things like who's going to be the candidate and what's their platform and all this.
But sometimes I think that that can be a distraction.
Because when you look at the things that we're interested in, Philip, is like the gold standard, limited spending, cutting back, and not just talking about it, but doing it.
That they don't talk very much about that.
They talk about gold in a very limited fashion.
It's not quite the way we talk about it because we think somebody messed up this gold standard that we had years ago, but now we have a fiat standard.
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And that keeps you and I and others interested in that and the people at Birch Gold very, very busy thinking about the economics, thinking about the politics and thinking about their investment.
So today we're very happy to have you on to further our conversation about this.
But I'll start off with one sort of an economic question.
And that is the one thing that the Trump administration has talked about, and they're not bashful about it, so it's no secret, that they favor tariffs.
And, you know, tariffs have not, they've had their ups and downs.
I think when I first started looking at economics 30, 40, 50 years ago, both sides sort of criticize, you know, tariffs.
But lately, they become more popular.
And, but Trump has also said that he favors lower taxes.
Of course, we'd support that.
And that's very good.
But the question I have for you, isn't there a little inconsistency there?
Because can't we make the case to say that the tariffs are actually a tax on the people because it raises the prices?
So in a way, it might be canceling out what they're trying to do, protect our businesses and our commercial activities here by excluding import.
So do you see an inconsistency there that they might do one good by lowering taxes at the time they're raising taxes?
And I guess the market will make the decision on which way it's going to go.
I mean, the answer is absolutely.
And I think the tariffs that Trump has in mind is to try and address a trade imbalance between, of course, the U.S. and China.
And I think that conceptually makes sense.
However, of course, tariffs tend to be retaliatory.
And, you know, we are big importers, right?
We import more from China than any other nation on earth.
And of course, if we're hit in reverse, we'll feel it coming back.
And when inflation is one of the biggest problems we're facing at the moment, these policies can add to the problem and ultimately be inflationary.
So they can compound and perhaps mitigate any benefits of tax cuts of the administration.
So I do think these policies can conflict, but it's a reflection of how tough the situation is.
I mean, whoever wins in 24, and it's looking more and more likely like it'll be a Republican win, but whoever does in 24 has an almost impossible job in front of them.
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They're dealing with almost $35 trillion of debt.
We have inflation that's proving particularly sticky.
We have recession potentially on the horizon.
And it's a very tough position to be in.
I mean, whichever president steps in, they're going to want to put pressure on the Fed to lower interest rates.
But if the Fed do, we risk inflation going out of control again.
Look at what happened with the Bank of Canada recently.
They've gotten inflation down to about 2.2%.
The central bank said, hey, job's done, cut a quarter point.
The next report came in at 3.8%.
So things are fragile at the moment.
And I think we're lacking in the tools to really iron out the problem shorter term.
And I, of course, and I've said this many times, I blame the educational system because if anybody gives me any credit on understanding economics and free markets and monetary policy, it didn't come from my grade school or my high school or my college.
And I had all those courses, economic courses, but it came from finding out misinformation elsewhere.
I don't know, maybe you had that same type of experience because the official education we all get isn't necessarily the one that is the most legitimate.
It really doesn't address these financial issues.
It's funny, I was a banker prior to working for Birch Gold Group.
I worked for Citigroup and I did through the 2008 crash.
And I remember at the time, somebody coming up to me and saying, look, it's these experiences, real life experiences that you're really going to learn.
And it's very true.
And we're going through a lot today.
And I think people are slowly sort of seeking out the information, getting more and more educated.
So I would agree with that, Dr. Paul.
You know, I'm sure since you've observed these markets for years when political things happen, the markets are quick, you know, to react.
Sometimes they're perfectly right and sometimes they're preemptive and they respond.
And, you know, if I remember when 9-11 hit, I was watching the business station and all of a sudden the markets were closed within seconds.
You know, it didn't take long.
So the markets are powerful tools, but they also can mislead people too.
And if you combine that with an educational system that doesn't teach what sound money is all about and why it's freedom that we need and not just talk about balancing a budget, when I was in Washington, you know, there were a lot of people who didn't disagree with my idea, you know, of cutting spending, which I had promised I'd always vote to cut it.
They would say, I wished I could be with you, but there's too many people in my district.
They need and want these foundations.
So it's not total ignorance.
It's playing the political game because in the short run, it satisfies people, you know, to get a boost from the government.
And that's why they go to government.
And I think you probably agree pretty much with me that the big problem is shrinking the size of government because it's universal.
It's not just this here.
It's sort of around the world because I guess since especially 1971, the world currency was a total fiat currency.
So making predictions in 1971 on what it would lead to was no big chore.
And yet, even when it's happened now, when I see gold, you know, over $2,000, $2,500, it's still, wow, I can't believe this.
And yet, in 1971, the predictions were made.
This is what's going to happen if we have a currency like that.
That's why I keep working on this issue that we need is currency reform.
And I think this is also why both you and I and Birch Gould work on what do we do about it if Ron Paul is pessimistic that you can't convert the people when you're there and cut a little spending here and there.
What are you going to do?
So I think that we have to find out how to protect ourselves because I don't know where you come down on this, Philip, but this adjustment, I think the point you made about Canada, it's not over till it's over, and they make some moves.
So we have some people say, and they act today, when can we start lowering these insurance rates?
And they argue over one quarter percent for years as if they knew what was supposed to be right.
So I think that is a big problem that we have on what to do and get and to convince people that they have to do something.
And I think that's what Birch Gold is interested in.
How do average people, you know, say, oh, it's too late.
Silver, you know, when I first started saving silver, it was $1.29.
But people would say, well, now, look, it's $30.
You can't save anymore.
Well, if you think that there's not going to be any more spending deficits and that they're going to continue to do this and print money, then it's still going to go up in dollar terms.
But it's hard to adjust to, you know, to it because people who might have known five years ago or 10 years ago is what going, but they weren't in a position where they could really make an investment.
And I think that's one thing that Birch Gold tries to do is try to help people who are looking ways to invest in gold.
That's absolutely correct.
And I think you summed up very well why people should be looking at gold.
At the end of the day, we have a problem and you sort of highlighted it.
It's this cross between politics and economics.
We've been suffering from politicians thinking short-term, satisfying short-term interests and ultimately compounding the problem by creating a massive debt issue.
This is why when we were on a gold standard, we didn't have the ability to do this.
We didn't have the ability to spend money that we did not have gold to support.
And since 1971, since we've been on a fiat currency, we've seen the value of the dollar dissipate over time.
As you rightly point out, it was very predictable.
In fact, when Nixon took us off the gold standard in the 70s, central bankers around the world came to the United States in delegations and they said, look, if you do this, if you remove the dollar from the global, you know, from the gold standard, what is going to prevent you from printing money and devaluing the dollar and affecting all of us?
And I think it was John Connolly at the time that said something to the effect of, look, the US dollar is our currency, but it's your problem.
The reality is in 1971, we had the power to do that.
You know, nations had two choices to like it or lump it.
Well, the problem today is that the argument for the dollar is the global reserve is weakening, right?
We're seeing significant devaluation escalated since the pandemic on the back of big money printing.
We're seeing weaponization through the administration, making the dollar less attractive to other nations around the world.
And ultimately, with the big increase in supply and waning demand, it's going to affect value longer term.
And as you say, precious metals are just a reflection of currency's value.
So, anybody who thinks gold or silver prices are high today, it's simply a reflection of the dollar's value.
And as the dollar continues to slide, gold prices will move up in U.S. dollars.
And that is why gold in climates like this is the best way to protect and preserve buying power.
As you know, Dr. Paul.
You know, I think one thing that people don't quite realize if they haven't studied monetary history is that the changes can be sudden and dramatic and horrendous, even though they may be destroying the currency.
Let's say from 1971 up until now, it's been deliberate.
And some of the things that we've talked about, like the price of the precious metals and the many things that go on, that did happen.
But at the end, when the political system weakens, you know, Germany would be an example, Zimbabwe.
There's some things that are sudden, and it's amazing how it could become unraveled.
You know, if a reserve currency like the dollar has existed way beyond its quality, but since it was chosen or made, we in the states made that the reserve currency of the world, that that meant we were able to build the bubbles bigger and bigger.
But my idea, I think, in what was happening, because the bubbles are bigger and they're all over, that means they're more dangerous.
And if when you start hearing about assassinations and horrible things like that, that is not only an economic issue, a political issue.
It's really a safety issue.
What's going to happen?
Because so many governments and people break down and systems break down.
That's why it's so important to understand and the motivation.
And, you know, Philip, the one thing I've said about those of us who have been involved, including you, is, you know, we try to get the truth out about it and we try to tell people what they can do.
And I'm baffled why we don't do a better job.
You know, we have, I think, truth on our side about what we should do with monetary funds.
We're talking about liberty.
We're talking about the effort.
You know, when a country is free, the freer the country, the more prosperity and peace there is.
You'd think that would be an easy sell.
But the truth is, people are locked into it.
They get addicted to it.
And they keep thinking it's like another take, another drug, another alcohol.
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We just need it.
We'll take it and we'll worry about that later on.
But I think when we get by with it, and we have the United States and the dollar, the whole system, Western civilization has patched this together.
That's why I fear that there will be bad times ahead.
And for some people, it's already the case.
They say, well, it's trouble is coming.
But believe me, there's a lot of people in this country that have already suffered.
And that's a real job is trying to get some help to them to understand what are the other things that we can do.
But once again, Philip, why don't you make a comment about what they can do and make a call to Birch Gold, maybe to get a little bit of helpful advice?
Of course.
So look, I think, you know, education.
Knowledge is so important, which is why shows like yours are so important.
Um so I think it all starts with information.
Your viewers can text ron to 989898, again text ron to 989898, and what that's going to give them access to is a free information kit, not only on how to invest in precious metals, but why, in climates like this, it makes so much sense to do so.
It shows people how they can purchase physical precious metals with cash for direct delivery or for those who want to protect portions of Ira's or 401k's tax deferred with physical metals.
So again, it's text ron to 989898, and that'll get them access to free information, and in times like this, it's more important than any Other time, certainly in my lifetime, I think, to get this information.
I want to thank you very much for being with us today, and I'm sure we'll see you at another time during this same program.