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Aug. 15, 2024 - Ron Paul Liberty Report
34:06
'Why Your Money's No Good...'

As Kamala Harris rolls out her economic program of price controls, today, August 15th, serves as a reminder as to just why inflation and prices are REALLY out of hand! Also today...A military parade on OUR biggest base in Afghanistan with OUR equipment?

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Time Text
A Date in History 00:14:54
Hello, everybody, and thank you for tuning in to the Liberty Report.
With us today, we have Daniel McAdams, our co-host.
Daniel, good to see you.
Good morning, Dr. Paul.
How are you this morning?
Good morning, and I'm doing well.
Excellent.
This is an unusual day.
It's a special day.
I don't think it's a celebration day, but I was going to say a lot of people remember this day.
And I would say, technically speaking, not enough people remember this day, and only a few of us.
It was a date in history that I considered very important.
I've talked about it a lot of times.
And it's something, though, the average person didn't pay any attention to.
And even now, unfortunately, they should understand it because it would help them explain our economy right now.
Sometimes it takes a long time to have lessons learned.
And what I'm talking about, August 15th, 1971.
And that to me was a major date for me personally.
I think it was a significant and one of the most significant days in monetary history because that was the day Nixon said, I've had it.
I've had it.
The country's had it.
I'm in trouble.
We have to quit giving away our gold.
And so he had Connolly, John Connolly, who was Secretary of Treasury, he was the one, he was the ringleader that put this all together.
And they came up with the idea, well, Bretton Woods is no longer working.
Well, what's Bretton Woods?
Well, it was a plan that from the beginning wasn't going to work.
And that was to manage the monetary affairs of the world after World War II ended.
So, interesting enough, the planning was done.
They knew they were going to win in 1944.
And interestingly, in 1944, there were 44 countries that sent representatives to Bretton Woods, and that is, of course, New Hampshire.
And the goal at that time was to, because there was chaos after World War II, and we had, I think we had the most gold in the world, and we were the most spared damage and all that.
So we were in the driver's seat.
We were the wealthy country.
We were spared the problems.
So it was meant to, and we had people there to protect our interests and really plan the future for the United States because we came out of that, you know, with having the reserve currency of the world.
And we had most of the gold, and we had the privilege of building our empire.
We had a lot of wealth.
We had money in the bank.
We had gold in the bank, and we guaranteed everybody else's currency, except the currency of American citizens.
That was taken away by Roosevelt, and that did not come back.
But it was set up where if foreigners accumulated dollars, you know, in trade and whatever, they could turn in dollars to our treasury, foreigners, and they could get reimbursed.
All they had to do is, as we depreciated, and the Fed depreciated the dollar, more and more people wanted the gold.
And that's what happened.
And I can remember people being very angry because the French were leading the charge.
They were sick and tired of depreciating dollars.
So they were annoyed with America, annoyed with our currency.
And so this was one of the reasons that Nixon finally ended up doing something.
But when Bretton Woods was passed, one of the economists that I have followed over the many, many years, who, interestingly enough, Henry Hazlitt, he befriended Mises.
When Mises came here, he was, even though it's amazing to me, Mises comes, I think he was 65, and he writes Human Action in English.
But he had some people helping.
Hazlitt was one.
And Henry Hazlitt, I had met several times.
He worked with the FEE Foundation, but he made a prediction.
He says, can't work.
You know, right in 1944.
So I recall that, and that was buried in my head that it can't work.
And over the years, people kept hitting the few that were out there and understood a little bit about monetary policy and Austrian economics knew that it was not practical because it was a pseudo-gold standard.
It was a gold exchange standard.
So it did offer some benefits because we had a lot of gold and we had a lot of wealth and we were spared so much harm from World War II that we were capable of becoming an empire builder, which was a real tragedy.
But it also planted the seeds of the destruction that Henry Hazlitt warned way back then that this thing couldn't work.
So the whole thing is that it didn't work.
Problems were building.
And in 1971 is the moment that, although I had read about it and anticipated something, but everybody was caught off guard on when it was announced.
Nixon picked Sunday night about 9 o'clock Eastern Time to give an emergency speech.
It probably lasted less than 15 minutes, but it was major.
It was a big deal.
And it was to curtail the devaluation of the dollar, skyrocketing inflation like we have, loss of confidence in the dollar.
And in many ways, the conditions today were very similar to back then, although I think the conditions are even worse because back then we still had a lot of wealth.
Today, the world is challenging us, challenging our dollar.
We have the stag inflation, and we think we're going to do it forever.
We have an empire, but it's not as strong as before.
So the monetary issue has been big.
And I can remember Sunday night, I was sitting there, I had to do so, and they said Nixon was coming on.
And, you know, it's one of those moments when you remember where you were.
I remember where I was.
So at that time, I was a member of the Chamber of Commerce, and I was on a legislative action committee just for, I know, interest.
So the meeting with that little committee, Lake Jackson Chamber of Commerce, we went and had lunch.
And the tradition there was the headquarters of the Chamber of Commerce, probably in Washington, took political positions.
And I can remember, and it would be recorded.
We didn't have video or anything else, but they did have a recording, and they would play the statement coming from headquarters, giving the marching orders.
So that's when the real shocker came to me.
They loved this.
They put on wage and price control.
They put on surcharges of everything we imported, 10%.
And then now the few people left or the people left, excluding the Americans who couldn't participate by buying gold and protecting themselves, foreigners, you know, were.
And that's what he put a halt to.
So that was major.
And I thought, holy man, this is going to usher in a horrendous age.
And it did usher in a terrible decade.
And we sort of pulled back from that.
But I think in many ways, if people can, you know, consider the problems that we were facing back then that forced Bratton Woods to go broke, similar today, only I think they're a lot worse because they were sick and tired of taking our dollars.
And there was an advantage to us that it didn't have it.
So eventually it was really the market saying things.
It wasn't a moral statement or constitutional statement.
There'd be a lot of ways you could say this changed us over.
But no, this was strictly a market thing and spontaneous.
And the people of these countries said enough is enough.
So since that time, you know, by the time in 1971, we had given away, you know, about half our gold, more than half of our gold.
And it was an event that I think if people would pay more attention, and I'm sure many people in this audience today probably have heard me talk about August 15, 71, very, very important day in history, and it's not over yet.
You know, matter of fact, the climax is coming.
I guess the one surprise I have had over the years is that it's lasted longer than I thought it would.
Just right now, stock market is sky high.
But all these things, when I see the stock market, back then, it was a big deal.
That was the other thing that happened on Monday morning after Nixon's speech.
I thought it was the end of economic policy in the country and the dollar.
And the stocks rose, and everybody was excited.
They loved it.
And the stock market went up at historic highs.
And it went up 34 points in one day.
And that was a historic high.
But that soon ended.
And that ushered in that decade that many people know and understand.
And that was the decade of the 70s.
And they called it mostly stagflation.
But for many people, it was a deep depression.
Yeah.
Well, I have a couple little mementos.
And the first one, if you put up, this is the original New York Times article on the day of infamy, the Nixon shock, they call it.
Nixon orders 90-day wage price freeze, asks tax cuts, new jobs in broad plan, severs link between dollar and gold.
And I did find an excerpt, Dr. Paul, of Nixon's speech where he outlines what he plans to do.
If you want to find your earpiece, let's listen to that.
I heard it once.
You heard it once.
You're going to hear it again.
Let's listen to it again because it really is fascinating.
It's a minute, 18 seconds.
But let's listen to President Nixon.
The strength of a nation's currency is based on the strength of that nation's economy.
And the American economy is by far the strongest in the world.
Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators.
I have directed Secretary Connolly to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the United States.
Now, what is this action, which is very technical?
What does it mean for you?
Let me raid arrest the bugaboo of what is called devaluation.
If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less.
But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.
The effect of this action, in other words, will be to stabilize the dollar.
So it will stabilize the dollar.
Isn't that something?
The statement in there, we don't worry, we have the strongest economy in the world.
I think somebody copied him, didn't they?
A guy by the name of Biden.
But you know, the other thing, at that period of time, with Kissinger's help, they were doing things that was considered unpatriotic and they had to do it secretly.
And that was open up the door to at least talking to China, trading with it, which turned out, as far as I'm concerned, that's what we should be doing.
So that happened.
But today, it's different.
Everything now is bipartisan, and that is to close the door with China.
So that's going to add to the fuel of the fire of this system not working or the changes that they're making.
It's not going to work.
So, you know, this exchange stability, that was the main purpose of the whole thing.
They were having trouble, you know, after World War II, there was a mess.
So it was this rate stability.
But that hasn't worked so well.
It's a mess.
And there was, you know, in 71, I believe it was that, no, no, in 2011, Volcker, Volcker made a statement.
And I think it was about that time that he was meandering around the halls, and that was a long time after he had been chairman.
And we talked in, but he made a statement in 2011.
And I think it's interesting.
Even much later, in 2011, Paul Volcker expressed regret over the abandonment of Bretton Woods.
And in a way, that is more sensible than what the other, because he had a type of sympathy for gold.
But it wasn't the gold standard that we would advocate.
But at least he wasn't saying throw it to the wind.
And that's what he says.
Guess what?
Nobody's in charge.
Is that like today?
Who's in charge?
Foreign policy.
Oh, they know what they're doing there.
Okay, then he goes on to say, the Europeans couldn't live with the uncertainty and made their own currency.
And now that's in trouble.
That, of course, was the pound.
They used the pound for a while.
So Volcker was an interesting person.
And there was a time I was early on that I was fussing about the Monetary Control Act.
And he was chairman.
And a debate came up when he was testifying before the committee.
Why Lou Fussed About Inflation 00:07:42
And I was arguing the case that they were going to have a change, that they could use anything as an asset.
It was going to usher in more inflation and that sort of thing.
And he very politely came up to me later on.
He says, I'd like to visit with you more on this, which is not, you know, it was not characteristic of a bureaucrat or the chairman of the Federal Reserve.
I said, yeah, that would be neat.
And so he invited me over to breakfast.
It was at that time that Lou Rockwell was my chief of staff.
And so I knew I could take a staff person over.
So Lou and I made sure we were there on time.
We got to the meeting room, and there was one other individual, and that was the chief aide to Volcker.
So we got, we just talked and was friendly talk.
And soon Volcker walked into the room.
And I thought, well, he'll come over and shake hands with the congressman.
No, he went directly to his staffer.
And he went with a firmness.
So he sort of not rushes, but he purposely goes over there.
He says, what is the price of gold?
So he had gold on his mind.
And that was back when gold was hitting, you know, $700,000, $800.
And it was also, you know, trying to sort out all that mess.
But I think we're doing very similar things.
We don't have stability.
And we have stagflation.
And the whole thing is the conditions, I think, are a lot worse.
I already mentioned, you know, just the whole thing that back then, probably there was a, I think, a big benefit at the time that we were less likely, you know, the Korean War was over.
We weren't bombing and killing each other.
And we started trading with China.
But all of a sudden, now China, I don't know which country they hate the most, the PD establishment, and it's usually bipartisan.
But anyway, right now they're gearing up for it to put on more tariffs.
And, you know, the other thing that, you know, back in 71, when they said that foreigners can't own the gold, well, they didn't have to deal with our relatives because they weren't allowed to own the gold anyway.
So it was already damaged.
It's sort of amazing, if you believe in sound money, how they can limp along.
But it's always at an expense, and you always have to pay the bill.
And that's why there's always liquidation of the debt that's run up, and there always will be the liquidation of the malinvestment.
And now that is supercharged, and the market does, nobody can predict and understand exactly which way the market will go or when it will go.
But if you just print up money and pass it on, a lot of mistakes are going to be made, and that's what it's inviting.
And so that's one of the reasons why I think this date is very, very important, but nobody's paying much attention to it.
Most people are trying to cover it up and say, oh, Nathan, we have the strongest economy ever.
They keep covering it up with laws.
And you said they're doing the same thing, you know, and I'm sure you and Chris will talk about it tomorrow.
But Kamala Harris's big plan is let's put price controls on things.
Yeah, that's true.
But, you know, President Nixon said, I'm going to dispel this bugaboo.
He said, your dollar will be worth just as much tomorrow as it is today.
Well, I got a couple charts, Dr. Paul, and I hate to bad mouth one of my favorite presidents, but it wasn't true.
And here is one chart that I got.
The source of this is the Federal Reserve Bank of Minneapolis.
You can see where that arrow points.
That's when Nixon closed the gold window.
And that line that's almost vertical, well, that's annual U.S. consumer goods price inflation in percentage from 1800 to 2020.
Basically from 1800, Dr. Paul, you can see that blip in World War II, of course, and then in the 60s when we got into all those dumb wars.
But it wasn't until Nixon took us off the gold to close the gold window that it went through the roof and continues apace.
But the other thing that happened, Dr. Paul, and this is the chart that I saw on Zero Heads, they've got an article about it today.
Put that next one on.
So what happened in 1971, this is interesting too, these divergent lines on a chart starting in 1948.
This is productivity and worker compensation.
Now, up until you can see almost exactly the point where Nixon closed the gold window, you had basically a line between productivity and compensation.
Workers increased their compensation as their productivity improved.
At that point, there's a massive divergence where you see compensation is only up 115% and productivity is up 246%.
So this is the Economic Policy Institute.
So I guess the short way of saying it is, it looks like lots of terrible things happened.
Right, there's no doubt about it.
And I think there'll be somebody in 10 years from now will continue the chart and it's already going up sharply and you're going to see it again until the whole thing comes down.
But the chart there is making an economic point that has been figured out a long time ago.
And that is if you inflate the currency, the value goes down and prices go up.
And this is the one thing that they know, that politicians have to take care of the average person.
Because just think, I think that is the number one issue in this campaign.
They don't want to talk about sound money, the number one issue in a campaign, that it's economics, and it's the average person keeping up with their standard of living.
And I don't think it's going to be only the people.
Matter of fact, if the people have been on all welfare, they might not be hurting as much as a person who wants to go on their own and they're just in low income category.
So the prices go up always much faster than the wages.
Even if you, just think, just think not that long ago, the minimum wage was like $8, $7.
I remember when it was a lot lower, but it's been going up.
But you can't keep up with it.
And now they talk about, you know, $50 and all kinds of things.
Instead of people saying, well, at least they're helping out those working people.
But it also says that's why people are getting poorer because there's this rampant devaluation of the currency and they can't get away with it.
They can cover it.
Some people will hog it up first and benefit tremendously.
And there's pretty good charts right now that the people in the very, very high income bracket have been said to do better.
But what do a lot of the interventions say?
Oh, what we need to do is just tax them.
We need to tax.
Those business people, they need to be taxed.
They never ask the question, why don't you check and see if they're getting any subsidies from the government?
Why They Never Ask 00:07:08
See if they're in the military complex, industrial complex, and cut that out.
Instead of saying, profits are bad, we're going to tax them.
And you hear it all the time.
And then no matter what the opposition to that might think, the public will say, yeah, and they'll put pressure on the politician.
I'll go along with it.
I know this isn't the best thing to do, but we'll deal with that next week or next year.
Well, hopefully people will remember this date, this anniversary.
If you wonder why things are so bad, unfortunately, it was old Tricky Dick who did it to us.
But we have another, we're getting close to being out of time, but I just wanted to bring up another anniversary, Dr. Paul.
And this is the three-year anniversary of the U.S.'s 20-some-year war to replace the Taliban with the Taliban.
And so let's look, they had a little parade.
Let's put on our ear pieces, Dr. Paul.
And let's have it, no, go to the clip, not this one.
Yeah, let's go to that first clip and have a look.
Put on your earpiece if you don't mind, Dr. Paul.
Let's watch this parade.
The third anniversary of the Taliban returning to power in Afghanistan.
Let's, yeah, here we go.
Okay, we can take it off.
So here they had a military parade to celebrate taking power.
But there's something peculiar about this military parade, Dr. Paul.
Did you notice it?
All that military equipment was American.
That was all our stuff that we left behind.
We basically left them behind an army.
Thank you very much.
So tragic.
When I was in the military, I was a flight surgeon.
One of our flights had to be hauling around military equipment.
But Pakistan at the time, they were good buddies.
So we landed in Pakistan, and we could drive from Pakistan to the border at Khyber Pass.
And that was historic area.
So as we were driving up there, the military personnel that was with me and others said, and they looked up into the mountains, and the mountains didn't look like the Rockies or the Appalachian mountains.
It was just rocks.
And these people that were sort of the tour guys, you know, people up there, there's, believe it or not, Ron, he says, there's a lot of people that live up there.
He says, there's tribes up there, and they've been there.
And the one thing they say, a point of history that most people know, and they've never been conquered.
So here we go, 20 years.
And so some of that stuff motivated me when they were stirring up 20 years ago.
You know, I was determined.
Wake up, folks.
What are we going to do this?
So we go over there and we end up, who has the last laugh on this one?
And I think the biggest point, even if I just wanted to be pragmatic, they ought to be more cautious when they go a great distance.
Empires do this.
Go a great distance and think that they can forever beat a determined nation and a people that see it as their homeland.
Exactly.
And evidently the Afghanis have a reputation for saying, we just want to be left alone.
Yeah, leave us alone.
Exactly.
But what?
They're not even using our oil.
We need that oil.
We've gotten, you know, we're building up supplies, even though we have the best in the world.
We have Syrias and we have these others.
So we will just go ahead.
And there's a lot of natural resources there.
And all they want is to be left alone.
Yeah, well, I think the CIA was interested in their poppies.
And they were not for flower arrangements.
Let's put it that way.
Well, I had a couple clips.
The thing is, there's so much revisionism about this because the Republicans, who for 20 years voted to continue the war, now they're saying the whole thing is Biden's fault.
And that's irritating.
Now, the first one is Speaker Mike Johnson, who's been on our bad list for a long time.
And Johnson again politicizes it.
Says, a stark reminder that the Biden-Harris administration chose to arm the Taliban and leave behind American soldiers.
We'll never forget the devastating consequences of the White House reckless withdrawal from Afghanistan.
Sorry, it was Republicans who armed them for most of that time.
And I go to the next one.
Here's our favorite little Miss Lindsey Graham.
And Miss Lindsay says, President Biden's memory is worse than we thought.
The truth is, I'm the only president in this century, this decade, that doesn't have any troops dying anywhere in the world.
That's what Biden says.
Graham says the American people will never forget the horrible withdrawal from Afghanistan.
I would say, Dr. Paul, the American people will never forget that people like Lindsey Graham voted for it for 20 years to put all those weapons that are in there that are left behind.
Yeah, I always find it disgusting because it's just a political trick they have.
Because right now, Biden is not a very good president.
I don't think he has a lot of character.
I don't think he cares that much nor understands the Constitution.
And I think Johnson, he had indicated that we thought he had some understanding, but now it doesn't look like that.
But I wonder what he was doing when this war started.
He probably wasn't trying to prevent it from happening.
But no, I resent the idea because it's false, even though I'm not sympathetic to Biden and all this.
But right now, Spiden did all this.
So the inflation, the inflation, all Biden's fault.
And they say we're the deregulators.
At the same time, we have all these sanctions put on company.
Those things shouldn't even exist.
And they don't get congressional approval on there.
They just get open authority by president and say, just executive order, we're going to go and do this.
So, like Biden said, if we can't do it, then they'll do it to us or something like that.
They make excuses.
To me, it's a sad story.
We ought to at least be honest and not say, you know, I think that's probably an unfair advantage that we have because we've come up more, you know, willing to look at both sides of every issue and come back more credible.
But if you're a Republican or a conservative or a Democrat and a liberal, then what if you do have a good idea?
Both Sides Welcome 00:02:09
How can you do it?
Well, if you do, you'll get beat up or you'll get ruined at the polls and all that stuff.
So it's going to provide an opportunity for us because this is going to end in somebody ought to do some rebuilding.
Yeah, and of course, us seeing both sides means that both sides hate us.
So that's what we get to do.
Oh, we want both sides to love us.
The good people do.
But now we mentioned the anniversary, the 53rd anniversary of Nixon.
Well, when we had the 50th anniversary, I just wanted to do a little slideshow for our viewers here.
You remember, Dr. Paul.
It was a Sunday, but it was the day, and it had to be on the day.
We had a little meeting with our people.
This was in Houston.
Put up that next clip.
This is one of my favorite photos.
This is when you met Jim Grant.
It was at the Carbock Brewery.
We went to a brewery for a luncheon.
You and Jim Grant and our old colleague Paul Martin Foss was there.
And I love when you first met him.
But if you look to the next one, this is, it was a packed room, a special room at the brewery.
We had great people there.
We had a great lunch.
We had a great conversation.
And we talked about Nixon getting us off the closing the gold window.
And I go to the next one here.
Here you are speaking.
And why am I showing this?
Well, partly because it's fun to remember good times that we've had in the past getting great people together.
And we're going to do this again in Houston soon.
But for now, it's also to remember that we are doing this again.
Now, put on that last clip.
This is something you haven't seen before.
This is the roster for our August 31st conference in Dulles, Virginia, near the Dulles Airport, the Liberty Platform.
Now you can see who's going to be there.
I'm going to be speaking about peace through strength with a question mark.
Gary Haven, Cower or Conquer.
Jeff Deist, the linguistic battlefield.
Joel Salatin, Uberizing Food.
Joe Mercola, the liberation of healthcare freedom, a blueprint for tomorrow.
Judge Andrew Napolitano, taking rights seriously.
Jonathan Turley, the indispensable right, free speech in the age of rage.
Roster for Liberty Platform 00:01:59
Professor John Mearsheimer, the limits of military power in international anarchy.
And Dr. Ron Paul speaking about the Liberty Platform.
And you outlined a little bit yesterday what you're going to be talking about.
All of these nine speakers, basically, now, if you know D.C., the amount we're charging for tickets for that, but basically buy you a decent lunch in DC.
We're going to give you a decent lunch and we're going to give you nine great speakers and a day with people who are of like mind.
So this is the bargain of the century, guys and gals.
So snap up those tickets.
We've already outsold last year, which is great, but we want to do better.
So please get those tickets, have a look at the people who are going to be speaking.
You're going to have a great time.
I'm going to see you in about two weeks.
Well, when I looked at that list again, that's a tough group to follow.
I don't know about this.
So every great idea will probably be said before.
No, it isn't that way.
Everybody has an idea.
Sometimes it's rephrased.
And sometimes I repeat myself.
Like I repeat myself like on August 15th, 1971.
So that's important.
And we do repeat the whole issue of liberty because it isn't complicated.
Liberty is just let the people alone.
Leave the people, lead their own lives, and don't commit violence.
And you don't need thousands and thousands and thousands of pages of regulations with thousands and thousands of regulators telling you what to do, with thousands, if not millions and billions and now trillions of dollars wasted.
And we believe that it can continue.
So what we have to do is wake up to the truth that this is limited.
And so is the one episode which is unlimited is what can be achieved in a free society where individuals make the decisions rather than government.
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