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Dec. 6, 2024 - Ron Paul Liberty Report
27:11
"Corporatism: Friend or Foe? Insights from Birch Gold Expert Phillip Patrick"

In this episode, we’re joined by a leading expert to discuss the impact of rising tariffs, uncover the latest corporatism scandals, and evaluate the current state of the economy. Don't miss this insightful conversation!

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Hopeful Rhetoric, Concerned Economist 00:07:38
Hello, everybody, and welcome to the Ron Paul Liberty Report.
With us today, we have a special guest, and he's been with us before, and he happens to be the top economist at Perch Gold Group, and that is Philip Patrick.
He's been with us quite a few times.
But Philip, welcome back to our program.
Thank you for having me, Dr. Paul.
Well, great.
There's lots of things going on.
You know, first off, you know, the politics, right, they're changing right now.
You know, we can talk about what we've had, what we're dealing with, what the transition is like, and we've heard what the promises are for the next go-around, the new president coming in, the new old president coming in.
And there's a lot of conversation, a lot of changes, and it's hard to anticipate.
Of course, most people, you know, on the conservative libertarian side, are hopeful some good will come of all this.
And I'm in that category.
But I've also been conditioned to wait and see.
And we have to be concerned, and we have to have an input if possible.
And that's sort of what we like to do on the Liberty Report is talk about the issues that we want to keep out there discussing, because obviously perfection isn't going to occur next week or right after the president is sworn in.
And I think it's great that some of these issues have come up.
So I think that, you know, the economy looks like it's going to do well.
But I think the proof is in the pudding, and that is what's it like in six months from now.
So we will see.
But if it weren't so serious, because I do consider serious, I think, bankruptcies and wars and all that, very, very serious.
But it's, you know, interesting too, because I like to talk about economics as you do, and you're a professional at it.
So it's good.
But it's also scary at times if you say, maybe we should be spending so much money.
Maybe that's harmful.
But Philip, welcome to the program again.
And tell me what's been on your mind about this transition.
Are you hopeful?
Or just where do you stand on this?
Do you say, well, we heard a lot of good things, but one thing I'm worried about that we've heard them talking about, I hope it doesn't happen.
So where do you stand on all these important issues?
Look, for sure, I'm hopeful, more hopeful than I was, what, a month ago.
I think we have an administration that at least seems to be addressing the problems.
They're making global de-dollarization an issue.
They're addressing it.
They're talking about debt.
They're talking about deficits.
So the rhetoric is very much encouraging.
I do have concerns in terms of an ability to curb spending.
I mean, if we removed all discretionary spending, the budget would just be balanced.
So, you know, for the Republicans to not have any discretionary spending, I don't think that's going to happen.
So Trump being a supply-side guy, the hope is he's going to spend more productively because with tax cuts, we need productive spending to generate GDP.
But people have to understand the gamble here is that debt, GDP growth will start to outpace debt growth.
But it's going to take a huge boost in GDP to get there.
So, you know, this idea that we're going to slash the deficit immediately, I don't think that's going to happen.
The hope is that GDP growth longer term will start to outpace debt growth, but I don't think Trump has the ability to do that in a four-year term.
So, you know, I think the best we can hope for is they can lay the, you know, sow the seeds and lay the groundwork and set things up a little bit better.
But I'm encouraged, but, you know, people have to remember the fundamentals today are still very similar to the fundamentals a month ago.
We have big problems on the horizon.
I think this is going to be a much tougher presidential term than Trump was walking into in 2016.
You know, that's a good summation of your last sentence.
And I think a lot of people agree with that, but a lot of people don't want to emphasize it and are always hopeful that things will be better.
The one issue that I know you've given some thought to, and a lot of people have, because the new administration is going to take a much more aggressive position on tariff.
And it's going to be used not just for an adjusted and a trade imbalances or whatever.
It's used as sort of a threat to get involved in foreign policy.
You do it our way or we're going to give you our tariff.
So is this something that we should be concerned about?
And if you're concerned about it, what's the downside of this?
Because the people who are promoting it say, hey, this is good.
Maybe our income tax is going to go down.
They come up and they build the case for it.
But it seems like this issue has been around for hundreds and hundreds of years.
And just what do you think is the biggest concern about us getting too involved in tariffs?
Look, tariffs can be a very useful tool to address trade imbalances.
For example, the tariffs that Trump put on China in 2016 led to a boost in factory construction in the United States.
But it took a long time for that to happen, around five or six years.
Same with the tariffs Obama put on Chinese tires.
They led to a huge increase in domestic.
So tariffs used as a tool to address trade imbalances can be useful.
As a tool to dissentivize the BRICS from de-dollarizing, that's where I see it perhaps not working as effectively.
We've got to remember what motivated the BRICS to de-dollarize.
Part of it was, of course, a weaker dollar, but the other part of it was weaponization of the dollar, using it as a financial weapon.
And I think threatening the BRICS with trade or currency ultimately reinforces the idea that the dollar is a yoke and that these nations may be not better off not wearing it longer term.
So, you know, to dissentivize de-dollarization, I don't see them as being very effective.
Now, what we've seen from Trump before is he'll use things like this as a very aggressive negotiating stance as a starting point to work back from.
And it may work as that.
But I think longer term, to incentivize the world to start re-dollarizing again, we're going to need carrots as well as sticks.
And I think carrots will come ultimately in the form of a stable U.S. dollar.
And there's a lot of work to do there, of course.
You know, I do think that tariffs are risky, and people should be very cautious about this.
Because economically speaking, there's been a shift.
Market Forces in Medical Care 00:05:44
I can remember in my lifetime, there was a time when it seemed like liberals and conservatives, Democrats and Republicans, the general consensus was terrorists weren't a good idea, but that things have changed, and there's an attitude now that this is top of the list.
But, you know, I think one of the big things that helped the Republicans in this election was inflation of prices.
And I emphasize prices.
Prices going up.
Things cost too much.
The people were upset.
And my claim is that people, they used to say people voted from their heart or from their brain, but I think they vote for their stomach because of a job and having something to eat and a roof over their head.
So I think that's been a big issue.
But we just had something happen, a big event here this weekend where the CEO of United Medical Company was murdered.
And that in itself, one person being murdered on the street and nobody knowing what the incentives were, that's one thing.
But this one is a lot different because the person that did it had a beef.
And the beef was medical care was too high.
And it sort of has touched a nerve with a lot of people.
And having been and continue to be involved in medical issues, it's outrageous what's going on.
So the Blue Cross is talking about changing their relationship.
And the word popped up of corporatism.
And I think that's important.
Of course, that's the combination of business and big government.
And that is not modified capitalism.
It's a special issue.
So they're changing it.
And I just wonder what's going to happen here because there's so many people upset with the price of energy.
And of course, I'm sure you agree that we should, unfortunately, we don't have enough market forces in medicine.
And the government's taken over, you know, for these last 40.
You know, when I first got out of medical school, there was no Medicare or Medicaid.
And since then, the side of medical care has gone all to the government.
So this is something that is big.
But boy, this has really touched me of this outlandish murder over this.
And it's a misunderstanding of how we should be running our medical care because, you know, in a way, people have a beef about it, but they have to hone in on why these things happen.
Look, I agree vehemently, and it certainly brought the issue to the forefront.
And obviously, murder is not the way we want that done.
But it's an issue, and it's certainly an issue here in the United States.
Coming from the UK originally, the medical system there is not perfect either.
But here in the U.S., being the wealthiest nation in the world by far, I think there's some work to be done.
Obviously, not my area of expertise.
But if you touch on corporatism, I think the danger is primarily that corporations capture regulatory agencies.
So instead of having regulators police companies, they enable companies.
And ultimately, it's bad for consumers.
Bad incentives too, right?
Corporatism means kickbacks.
It means bribes between officials and NCEOs.
And ultimately, we're not benefiting the consumer.
And when it comes to health care, that starts to become a big issue.
So I'm glad it's, like I said, the issue's been brought to the forefront.
You know, on the back of the murder, it's, of course, a sad thing.
And I feel for his family.
But it's a big issue.
You know, and when we start thinking about big issues where there's a lot of money being spent, whether it's on foreign adventurism, foreign aid, and so many things, or government involved in issues that they shouldn't be involved.
So that's where I'm hoping, you know, the move with the new administration is away from that.
But I'm also very much aware how difficult it is.
There could be a lot of people who say, you know, I agree with these guys.
You and Philip make a good point.
But, you know, when it comes to the changes, it's not going to be easy because people have been dependent on it.
No matter how many complaints they have, they wouldn't understand why you have to reduce the government, not increase the government.
When they increase the government, then they're going to move toward more of a socialist fascist system and they want more authoritarianism.
Well, you know, this corporatism, the companies are benefiting from it, which is a true statement.
And so then the danger is, okay, we want the government to do it.
And then they say, well, we'll take the money away.
I see that as just terrible.
And that's why I work on the idea, which I'm sure you won't be offended by what I think.
We should have more market forces in medical care.
I mean, I keep thinking of some of the things that get distributed in our country and around the world when the government stays out of it.
I also think about what if the government had monopoly control of the distribution of cell phones and they had the one company they had and you know and they were distributing it, they'd be so expensive and they wouldn't work or whatever.
But everybody has a cell phone.
But people can't comprehend and say, well, you want medical care delivered like they buy cell phones?
Dollar Instability Worries 00:12:00
Well, yeah, there are some basic principles there.
Prices go down, the quality goes up, everybody's happy, and there are millions and millions of jobs.
But I guess, Philip, that might be a little too optimistic for me to dream about.
Listen, I agree.
Dr. Boer, as we know, capitalism works.
Competition drives down prices, it drives up quality, and government is inefficient.
And when it comes to healthcare, I couldn't agree with you more.
So we agree on that for sure.
Wonderful.
You know, the word trade war comes up, and you know, we talked about tariffs a little bit.
And how do you see that as an economist?
When does it become a trade war?
Is there a trade war going on now to some degree, but minor?
And do you expect this competition and the competition being more and more of fighting with tariffs and the trade word breaks out?
And when does it tip over?
Because the founders worried about trade wars because they believe the freer the trade between countries, the less likely it would be that we would ever have to fight with those countries we trade with.
Correct.
I mean, look, the big concern when you're talking about tariffs and tick, particularly if you take an aggressive stance, which President Trump is, the most common response, as one would expect, is retaliatory tariffs, and they can be at very high levels, like 100%, like President Trump is throwing around.
For some perspective, the current average tariff is just 1.5%.
It ranges widely from item to item.
But essentially, retaliatory tariffs are just going to make competing in the global markets more difficult.
Although there is a large trade deficit with the U.S., we're still major exporters of many products, cars and aviation parts, industrial equipment, refined petroleum and crude oil.
Obviously, these industries would suffer.
It would disrupt global supply chains.
Like I said, Trump may be using this as a negotiating strategy, planting a stake in the ground to try and get a more favorable trade deal.
As I mentioned before, tariffs do work.
Factory construction is up 242% since 2019, but it will take time to move forward.
My concern, though, is that what I mentioned earlier alone, that the threat itself, whether it's intended seriously or not, reinforces the idea of global de-dollarization.
If the world continues to run from the dollar, we're going to have big problems domestically.
So, you know, it's going to be interesting how it shapes out.
Like you said, we don't have a firm budget.
We don't have a firm economic policy.
So it's going to be interesting to see how it shapes out.
I suspect the rhetoric on tariffs will soften.
Otherwise, it could get messy, is my thought.
You know, if an economist looks at what we have been doing and they see there's too much spending, too much debt, and too much devaluation, and that is an important term because the devaluation tells you, pictures things differently, but it's the same as saying you're complaining about prices being too much because the dollar is weakening.
And right now, I think that people have to prepare because if the new administration does their job, it's going to be rocky because I think, yes, they're doing the right thing, but just like the devaluations and the printing of money and debt, that could last for years and years before the prices go up.
Well, when you reverse it, it takes a time for those prices probably won't go down, but they have to adjust.
And that, to me, is a real problem because when the cutbacks occur, people might say, wait six weeks or a month or two and say, hey, my bread still costs the same.
So it gets more complex.
And that is a problem.
In other words, the inflation, sometimes people say, how did you know we were going to have prices go up like that?
Well, you know it because if we spend too much money, we print too much money.
And we use, and the term you use is right, devaluation.
The devaluation is there.
And we know that will lead to prices going up.
So we're going to have to deal with this.
And therefore, politically there's something.
Public relations is another thing.
But also, also, Philip, is that we have to deal with the whole idea of our consumers, our people, the people who are looking for advice.
What are they going to do?
If you guys are saying, you know, no matter what happens as soon as the president's sworn in, it might take a while because people have to understand and it's going to be a little bit rocky.
So in the meantime, if you believe it's going to take some time, what kind of options do people have to try to protect that about the continuation of price inflation?
Look, I think precious metals, obviously, in climates like this, are a very conducive asset.
And people have to understand Trump.
Trump's economic policies, I think, are based on the premise of shorter-term pain for longer-term gain.
Tariffs, ultimately, they're designed to address trade imbalances.
When you're the world's largest importer, tariffs are inflationary.
Shorter term, they are going to drive prices up.
Now, the idea is that longer term, it'll incentivize domestic manufacturing and will help to boost the economy longer term.
But the key there, longer term.
And like I said, in the meantime, we're going to continue to spend.
And the hope is that the world doesn't continue to run away from the dollar.
But like I said at the beginning, the problem we had, the problems we had a month ago, they are still here today.
Inflation is still very sticky for the Fed.
U.S. dollar holdings by central banks are still at 26-year lows.
Many recession indicators are suggesting Trump may be handed an official recession in his first quarter.
So we've got some tough things to iron out.
I think, you know, we have an administration that is looking at creative destruction.
They're looking at changing the system.
That's going to take time and it's going to create volatility shorter term.
And I think precious metals in climates like this are the best way to protect.
When we talk about devaluation of currency, as you know, Dr. Paul, that drives the price of gold up.
When we talk about inflation, it drives the price of gold up.
So the climate in front of us is still about the most conducive I've seen for precious metals.
And I think everyone should be thinking about having some measure of a hedge for their retirement.
And I think in this climate with these problems, precious metals work very well.
Very good.
You know, recent history, which is going back to, say, 1933, we've had a lot of activity with gold.
We've had the undermining of the gold standard.
We've the undermining.
Actually, you know, even the founders admonition that we should use only gold and silver as legal tender.
That was blown away.
But in 1933, the depression was arriving, and the first thing Roosevelt did was take the gold from the people.
They didn't have any need for this, and we have to manage this terrible situation.
And for 42 years, we weren't allowed to own gold.
So I see as a very positive thing that the inflation is coming and is here, at least the tool of people being able to buy gold.
And it's sometimes awkward, and sometimes it needs to be studied, but it is a tool.
But it doesn't answer the ultimate problem of getting back to a sound currency.
You know, in 1971 is when we closed the last link to gold, because even though we as Americans couldn't earn gold, foreigners, if they put the dollars down, we had to give them an ounce of gold at $34 an ounce.
Finally, well, it was way lower than the price should be.
They were pretending so that we were losing our gold.
So we had to pull back on that and close the gold window.
But the gold was re-legalized in 1975.
So the movement has been sort of steadily erosion, actually, since the time the Federal Reserve was created.
But the question I have for you is: do you see any odds?
Are we moving in the direction that we will see any major country and any country or any group of countries or the United States ever going back to institutionalizing gold once again in our monetary system?
The BRICS, of course, are talking about using gold as a vehicle or as a large percentage of their currency, the unit.
And they need it, right?
Because their currencies don't have the stability that the U.S. dollar has.
So they need that stability to create legitimacy.
What I would say is, you know, like you said, from 1933 to 1971, U.S. dollars were redeemable.
So the world wanted to trade in dollars because they had intrinsic value.
They were redeemable.
After 1971, they were no longer redeemable.
So things like the petro-dollar agreement were put into place to ensure that demand was there on a global scale for the U.S. dollar.
And of course, the petro-dollar agreement, along with the stability of the U.S. dollar, you know, cemented our position as global reserve currency.
The petro-dollar agreement is slowly unwinding.
Of course, China is showing a willingness now, sorry, Saudi Arabia is showing a willingness now to sell oil in Chinese yuan.
On top of that, we now have a U.S. dollar that is no longer very stable.
It's lost almost 20% of its purchasing power since the pandemic.
Now, it is still today the tallest midget in the room.
There is not a currency out there better than the US dollar.
However, as demand continues to wane for the dollar, the stability or the lack of stability will start to increase.
The demand will go down.
And ultimately, I think the argument for the dollar as the global reserve currency will start to wane as its stability does.
And if the BRICS, for example, are smart, they launch their common currency, they peg it to gold, they give it a measure of stability and legitimacy, five years from now, if we lose the official status, I would say the game is up.
So in answer to the question, I don't think there is a natural suitor on the horizon just yet, but I think the wheels are in motion.
No nation ever holds, as you know, global reserve currency indefinitely.
I think the average length one nation holds it is around 90 years.
We're not too far from that average.
We're printing money.
We're running deficits, and we have more debt than has ever been held by any nation in history.
It feels like the beginning of the end.
But it does offer the rules have changed.
Access to Gold IRA 00:01:33
We can own gold.
So the rules have changed.
So if somebody wants to go on their own gold standard, that's something they could do.
And the Birch Gold Group, and you have talked about that.
We've talked about it on the program.
And that is getting some of the money and investments into a gold IRA.
So that is available and something that I think you have mentioned before.
Yeah, so information is key for us.
So for your viewers to get that information, all they have to do is text Ron to 989898.
Again, Ron to 989898.
That will get them access to a free information kit on how to invest in precious metals, on why to invest in precious metals.
So it's completely free.
People should reach out, get the information.
What they do with it, of course, is entirely up to them.
If they have an interest from there, they'll have access to myself and others like myself that will be there to guide them through.
So Ron to 989898.
Wonderful.
And Philip, I want to thank you very much for being with us again because our viewership is always anxious to find out what you've been thinking about and usually about gold, precious metals.
So thank you again for being with us.
And I too want to thank our viewers for tuning in today and staying interested in promoting the cause of liberty.
And that to me is an important responsibility for all of us.
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