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Nov. 20, 2024 - Ron Paul Liberty Report
21:40
Can An Economic Catastrophe Be Prevented?

The damage done by endless wars and astronomical government spending may be at the point where economic catastrophe is unavoidable. However, life is far too complex, with far too many variables and unknowns to say for sure. With that being the case, there are certainly steps that the incoming Trump Administration can take to reverse course. The resistance to what is necessary will certainly be intense. But the immense damage can (at least) be repaired.

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Free Lunch Fallacy 00:03:47
Hello everybody and thank you for tuning into the Liberty Report.
With us today we have Chris Rossini, our co-host.
Chris, welcome to the program.
Great to be with you today, Dr. Paul.
Very good.
You know, we're asking ourselves a question.
We're trying to answer it because a lot of people are concerned about it and they're talking about it.
And that's an economic catastrophe and people, you know, recognize that there was a lot of talk in the campaign and they are putting their bet on Trump that he can handle this and let's hope he can because he does have some ideas about cutting.
But, you know, it's not like this economic catastrophe that everybody's worried about is something new.
I think it's almost like eternal from the very beginning of the money issue that people want a free lunch.
You know, in the 1970s, when I first got interested in organized politics, the libertarians, you know, came out with a slogan, there ain't no such thing as a free lunch.
They always thought that's neat.
They don't use it as much anymore.
But that really tells a lot because a lot of people think there is a free lunch.
And Keynes certainly decided that he could get a free lunch.
And he had this scheme of inflating the currency and writing regulations and doing all these things.
And you get the benefits in the increase in the value of the dollar, you know, with the inflation and more dollars.
And in some ways, it's true for a short period of time.
And in other ways, it's a temptation to overdo it.
And then that causes the distortion.
But by the time that filters down to the voter who gets very annoyed by this, like in this last campaign, a lot of times, you know, they said, we want something done.
And I've said so many times, their answer is, send me more money.
Prices are going up.
But sometimes people come up with the idea that this solution can be cured and helped and make the dollar stronger and make the economy stronger and erase some of these problems, you know, with tariffs.
Well, we have our hesitations who endorse tariffs.
But there's a lot of things.
But what we want to talk about, Chris, today is, you know, it's been around.
I think if anybody has a clear understanding of Austrian economics, they know how it develops and why it's variable.
You don't have a computer and a lot of arithmetic to work out and say ABC, and this is what lends to the collapse at a certain day.
It doesn't work like that.
There's a human activity there that determines so much.
And yet, collectively speaking, the people come around to worrying and trying to get things done.
And certainly that was occurring in this last campaign.
They came together because there's something amiss.
And I think the economy was probably way the number one reason that there was such a turnover because my theory is people don't vote from their heart and they don't vote for their head, which they claim sometimes.
They vote from their stomach, where they're going to get their next meal and how they're going to live and their cost of living.
So I think that's what we have.
But Chris, I work and you're familiar with it so well about the Austrian business cycle.
And there's an understanding there that Washington has lacked.
But I think there's a lot more interest now than there was 20, 25 years ago.
Chris?
Yes, excellent, Dr. Paul.
Yeah, we do face an economic catastrophe if things don't change.
And I believe that the American people want change.
I believe that President Trump wants change.
Market Wins Over Empire 00:08:16
And in my mind, there is no place to start in changing the trajectory of our country than the military empire.
We can no longer pretend to run the world.
We can't be the enemy of much of the world.
We can't invade the world anymore.
That time has passed.
And I believe Trump, you know, I don't know if he exactly believes something like that, but I believe he's moving in the right direction.
He says the right words.
I believe the American people are sick of the wars.
We have to close the bases.
We do not need a thousand military bases around the world.
Bring the troops home.
And President Trump has to be resolute about this, no matter what circumstances are in front of him.
And because things could be manipulated to, well, he's not going to do it now.
You know, he has to be resolute and bring the troops home and use the trillions and trillions and trillions of dollars to tide over those troops.
They're not going to be out on the street.
And to help all the people that have become so dependent here in America.
And even though we're libertarians and we're not big on the welfare state, we do have to realize that virtually half our country have become dependent on the government.
So take the military empire out of the equation and you can at least help the people that are on welfare for the time being so they can get themselves back on their feet.
You know, I think that's an important point because I think it's easier, politically speaking.
You don't have to go cutting child health care as the top of the list if you're trying to work our way out of it.
But most people want peace.
Most people don't realize how corrupt that system is.
I mean, recently it's been in the public news, and we've talked about it on the program, is that the Pentagon never gets a satisfactory audit.
So we don't even know where the money goes, and there's all lying and cheating in that outfit, too, because the principle is even bad.
The principle is take money from poor people in this country and pass it out to the arms manufacturers and then go and store up problems to scare the people into doing it continuously.
And we get in the middle of that and then we finally end up with way too much debt.
But I think suggesting and urging people to change their attitude about perpetual war is a good way to start and it's more likely to succeed than if you start doing Medicare and child health care, even though we as libertarians wouldn't be the champions of that totally because we do know that the marketplace and freedom is a good place to take care of a lot of those problems.
But the system that we've had and the way the Federal Reserve cooperates with the big spenders and the military-industrial complex and the banking system, they create too much credit and they cause a distortion in the economy and they cause the inflation of prices because there's too many dollars losing value and it's an erosion of the dollar.
So then you end up with too much debt.
But you also have another problem that happens when the people allow and sort of ask the government to keep spending and keep inflating and take care of me.
They have to realize that there's another factor to this.
And the other factor is not only is there debt that is perpetual and you have to pay interest on the debt, the other thing is what they call malinvestment.
Because if you think interest rates are 3% when they're really 9%, a businessman and a saver and individuals are spending their money will adapt their habits to what they think interest rates should be.
So that involves the decision of millions and millions of people making bad personal and business decisions.
So when it gets way out of whack, the market is saying, and the market is stronger than some of these regulators and these planners who think they can regulate it.
The ultimate planners, of course, are the total totalitarian socialist systems.
They believe they can do this.
But the market says liquidation, liquidation, liquidation.
And that's what they're talking about.
And that is why we at least offer out a solution that you could do it now and maybe work toward that.
But if it continues like this, there will be liquidation.
The market tends to always win that if the governments don't respond by cutting back, cutting the spending, and living within our means.
So that is a big problem.
But the liquidation occurs, you know, the business liquidation is people have to go bankrupt.
Nobody wants to go bankrupt.
But if it's overshot, the market says, if you can't pay the bills, you have to declare bankruptcy.
Oh, no, I don't want to do that.
So everybody's propped up.
And look, when the students couldn't pay back their loans, they liquidated it.
They say, oh, don't pay them.
Don't worry.
But that's a billion here and a billionaire.
That's nothing to compare to the trillions of dollars of debt and malinvestment exist.
And the market is saying, liquidate, liquidate, liquidate.
So it's urgent that we have successes of some of the desires of the new administration is to, yes, it's going to be tough, but how are we going to work it out?
And how can we popularize and get the people to understand that we need to cut back spending and get the government off our back?
That's right, Dr. Paul.
And it's a shame because America broke away from the British Empire, Empire.
We became an empire ourselves.
So we copied them in that respect.
And here's another way that we copied what we broke away from.
Here's right from the Declaration of Independence.
It was one of the main complaints about King George III.
It says, quote, he has erected a multitude of new offices and sent hither swarms of officers to harass our people and eat out their substance, end quote.
And is that not exactly what America has become?
And it's the bureaucracy that has to be drastically, again, drastically cut.
This is not just around the edges anymore.
We've passed that point.
And again, this is being talked about with the Trump administration, especially that Doge, the Department of Government Efficiency with Elon and Vivek.
And I don't know what powers they're going to have.
From what we understand so far, they won't, but they will have the power of exposing to the public what our government has become to at least because Congress is going to have to feel the pressure.
They're going to be the ones that have to cut, and they're going to have to hear it from the public that you better cut this if you want our votes.
And definitely, Elon and Vivek can help in that regard.
So that's a good thing.
Again, as with the troops that you're bringing home, use the money, the trillions saved from cutting bureaucracy to tide over the government employees that are being laid off necessarily.
Don't want them on the streets either.
Help them out, get them on their feet.
And again, we're minimizing the empire, minimizing the state, without throwing everything into disarray.
This will be resisted because public service has become a way to get rich, ironically.
So, these people are not going to want to give up their current artificial lifestyles, but it has to be done to what we put up with, and they've done it in cycles for a long time.
The motivation is always a good motivation to help the poor people, help people who don't have jobs, help people who need medications and whatever, and make the world safe for peace.
Unpredictable Economic Policy Changes 00:09:21
And that's why you have to have this military spending because we don't want to be attacked.
So, the motivations are there and it works, and the people go along with it.
But it doesn't work that way.
It usually ends up the distribution of the wealth as it comes out of the Federal Reserve ends up in the banks and the big guys who are getting the dollars first for military industrial thing or pharmaceuticals or what.
They get very, very wealthy, and the average person can't keep up with it, and they get poorer, their prices go up, and they're the ones who finally rebel.
And we're in the middle of that right now.
The people know that there's something wrong when these prices are going up, but they still don't have the understanding that it's government spending that is the big culprit and the government over-involvement.
So, it doesn't really help the poor.
But on the liquidation, liquidations can go different ways.
If the malinvestment law and the debt is not horrendous, maybe you could work away.
A little bit might help, but that's not the answer.
It's the prevention that has to occur and prevent it from happening again.
But even in the liquidation in the past, it has been that the liquidation tends to hurt the poor people more than the rich people.
Some of the rich are able to protect against it and they get away with it.
But I tell you, the difference is that the liquidation also encourages that.
More of the rich could protect themselves than the poor and the people who need the help.
So, right now, if it occurred where the rich had their assets liquidated, which would happen eventually, and the poor just write off their debt, you cleanse the system.
Some people say, well, that might be what happens, or maybe we should encourage it.
Because in 1921, when they had a liquidation in one year, things got better right away, and it didn't prolong.
But in the 30s, they propped up everything and they kept patching up and running government programs, and it was disastrous.
But the liquidation has to occur, and the liquidation promotes even more distortion of wealth distribution as it is when they're building up the big bubble.
So, that to me is more people have to have an understanding of economic policy, especially from the Austrian schools of economics.
Yes, absolutely, Dr. Paul.
I'll finish up with my final thought.
The last item that I had that can help avoid economic catastrophe is to legalize competing currencies in America.
Obviously, the ideal is to end the Fed, but that would be troublesome.
You know, we can at least take steps.
Dr. Paul has mentioned auditing the Fed.
Another step is to get rid of these legal tender laws that force us only to use dollars and that they can print by the trillions if they want and just diminish the value of our money.
Now, that has to end.
So, a good step in that right direction to avoid catastrophe is to legalize our ability to use other currencies.
If I go to the store and they accept Bitcoin, I can pay them in Bitcoin.
If they want, we'll accept silver eagles or gold, you know, gold is a little expensive these days.
But in any case, anything that we can freely transact with one another should be allowed.
Not this, we're going to pin you down and you use this dollar, because we said so.
So that has to change.
And you know what?
And in the beginning and probably for a while, most people will still use dollars because it's such a habit, breaking long-standing habits is not very easy.
But it'll at least let us wean ourselves off of the dollar if we want to.
And people will use the best currency for sure.
And then someday, when it's so antiquated and it's not a big deal, you could end the Fed and nobody will even care because we got ourselves unaddicted from their system.
So I think that that would be a great step in the right direction.
Very good.
You know, one of the problems when the bubble is being blown up and excessive credit is out there and excessive government, you can't know and you don't know exactly how the people are going to react.
What will they do?
If you print a lot of money and dump it out into the circulation, individuals will make those decisions.
It's called human action and human activity and decisions made by millions and millions of people.
And that's why, you know, computerized effort to figure out what will happen if they do ABC in economic policy, they expect such and such to happen.
It doesn't happen that way because there's a lot of subjectivity in what they do.
It doesn't change the principle that if you create a lot of free money and a lot of credit, that there won't be malinvestment and too much debt.
And people will still continue to do that.
But it's unpredictable exactly what they'll do.
But it's unpredictable what they'll do in the middle of a correction, too.
Because if it gets really, really bad, when the bubble bursts, and what if there is no fairness where the very wealthy get more assets rather than less, then there's going to be a little bit of noise going on because people will resent that.
And that's where I fear that we could end up with violence.
So to me, understanding economic policy and how these things occur and what the answer is, and that is limited government, let the people take care of themselves.
But if you let this go, we'll end up with two factions, the wealthy and the poor.
And I know that's on the minds of the current new administration, but the whole thing is that the problem is overwhelming.
And it will be very difficult.
But it can't go along unless there is an education of the people to know and understand exactly what's going on.
I always talk about the prevailing attitude about the people.
And I think during the last couple of years, politically, there was a perception of attitude to its change.
And the attitude changed that there was too much corruption in government, too much spending, and even now, talking about too much war.
So all these things are good.
But those attitudes are important.
So since this will not be smooth sailing, if even trying to get the bubble to quit bursting and add a little bit of decency to it, some people are going to be unhappy.
So that's why the information is so important.
And that's why we have to have leaders in the country that can explain what's happening and why cutting spending is ultimately necessary.
But of course, with my opening statement, I said the way you cut spending can be Adjust it a bit.
You don't start with the most popular thing, child medical care.
But I don't mind them saying this starts with government education.
You get rid of government education.
We go a long way.
We could get rid of that.
But I think more and more people will agree with us on that.
But I think the original suggestion by Chris is go ahead and go for our military-industrial complex in all these unnecessary wars.
When I think back of the 60s with Vietnam, I'm remembering a teacher in high school died in Korea.
And it's on and on in the Middle East in my efforts to try to stand up against these useless wars.
And yet, I may have sent a message to some, but I tell you what, the wars have continued even now.
And that's why the hints that there may be a change in that attitude, I'm sort of exciting about because we don't need all those wars.
And we don't have to believe everything that the Hawks are saying.
How, you know, they're on our shores and they're going to march in right now.
And we better get going.
We need more bombs.
We have to sacrifice everything to be prepared.
So that is a major undertaking.
But I think there's an easy answer for all that.
And that is the understanding and the emphasis on personal liberty, sound money.
And then, if our interest be peace and prosperity, it's much more achievable.
It will not be perfect, but believe me, what we have today is not perfect, and people are talking more about it.
Let's hope and pray that we continue to move in the direction of more peace and prosperity by emphasizing personal liberty.
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