What were the economic conditions really like under President Donald Trump? Join us for an in-depth discussion with Phillip Patrick, a seasoned economic expert, as we break down the key policies, market movements, and financial trends of the Trump administration. From job growth and GDP to inflation and trade, we cover it all.
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Negotiating Interest Rates
00:14:55
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| Hello, everybody, and thank you for tuning in to the Liberty Report. | |
| Today, we have a special guest, one who's been here before, and many of you who know about him and know who he is. | |
| It's the economist from Birch Gold. | |
| His name is Philip Patrick, and he is in charge of and knows a lot about metals and economics and all those important things. | |
| So, I have a few questions for you, Philip. | |
| But first, I want to welcome you to the program. | |
| Thank you very much for having me, Dr. Ball. | |
| You know, this week, there was a major announcement by our administration and our president that on the moment the tariffs would be dramatically increased and life would change for a lot of people, and a lot of people would lose a lot of money. | |
| And it was called Liberation Day. | |
| And, you know, that could be a neat term. | |
| You know, libertarians might say, hey, liberation, that's what we want. | |
| We want to be free. | |
| But what do you take from that? | |
| Is there going to be a liberation or is the president's definition of liberation a little bit different? | |
| Or do we have to just wait a while to find out what it really means? | |
| I'm leaning towards the latter, I suppose. | |
| You know, what we've seen on the back of the announcement, of course, is historic swings in asset prices, some of the biggest leaps and plunges we've ever seen in market history. | |
| And of course, economists and analysts double down now on recession fears. | |
| Of course, abrupt shifts in trade policy. | |
| They disrupt global supply chains and cause big problems for the markets, as we've been seeing. | |
| There was a lot of pressure. | |
| I know Jamie Dimon and others went and spoke with the president. | |
| And on the back of that, we saw a pause for 90 days on most tariffs outside of China. | |
| China, of course, have taken a confrontational approach, hit us back with reciprocal tariffs of around 84%. | |
| And Trump has responded with, I think, around 150% tariffs now on Chinese goods. | |
| So it appears to be a negotiation. | |
| Ted Cruz said a few weeks ago, President Trump tends to start negotiations by picking up a two by four, hitting somebody over the head with it, and working back down from then. | |
| So the hope is this is a negotiation strategy. | |
| But, you know, volatility is on the horizon for sure. | |
| You know, and even as you describe it here, we don't know exactly and what we can expect from the president. | |
| But from just watching the television and listening to his mood and excitement about all, it sounds to me like he is pretty firm on this, and yet he will look at the delays. | |
| In some ways, I see this as a little bit of confusion that they throw in there, because if you're a businessman, you have to decide what to do. | |
| You know, what are the interest rates going to be? | |
| We have enough manipulation of interest rates, you know, by the monetary system, you know, in the Federal Reserve. | |
| That's all they do is manipulate interest rates. | |
| And this is that dealing with tariffs has a lot to do with interest rate. | |
| I was a bit impressed about trying to analyze and think on the short run what's going to happen the next day in the markets. | |
| But I was wondering if you were a bit surprised or could you explain why there's been a significant increase in interest rates in this short period of time. | |
| And Trump, even before this was noticed in the market, he was after piled lower interest rates, lower interest rates. | |
| So were you surprised at all about this sudden shift in the last day or two on interest rates? | |
| Look, yes and no. | |
| At the end of the day, we have a colossal mountain of debt, and the administration has been very keen on pressuring the Fed, as you mentioned, to lower interest rates, obviously to help with the debt burden and to help stimulate the economy. | |
| The problem is when you start global trade wars with allies and others who are U.S. debt holders, it puts you in a tough position. | |
| And what we've seen, demand for U.S. debt starting to wane and borrowing rates on treasuries have been shooting up. | |
| And I think that may have been the catalyst for Besson to put pressure on President Trump, at least to put a pause on the tariffs, because the last thing they need is recession with higher borrowing rates on treasuries. | |
| That would be a disaster. | |
| Recession is typically a catalyst for the Fed to lower rates. | |
| But if demand for our debt is waning, that could lead to an increase. | |
| And that's what we've been seeing. | |
| And that will put a lot of pressure on them and work against their ability or their plan to supply side grow the economy. | |
| So it's not working out as planned at the moment, it appears. | |
| And as you went, when you open your statement, you said something about how much chaos there is and something historically noticed that it is huge. | |
| But everybody right now is, what about the significance? | |
| What are the politicians going to do? | |
| What are the markets going to do? | |
| And ultimately, I have a lot of respect for the big market. | |
| Everybody, they respond. | |
| And it may take a while until things set in. | |
| So, and they talk about revolutionary changes. | |
| And I think that's not overstating in many ways, because this is significant. | |
| And most people are recognizing this. | |
| But on the shorter run, you know, we have Doge and they're out there pretending or at least working hard to try to cut spending. | |
| They've pointed out a whole lot of problems in the spending. | |
| But on the shorter run, they say, you know, the current episode of budgeting in Washington, they did pass a budget in the House and the Senate that they sort of agreed on, but it left a lot of questions. | |
| It didn't leave a balanced budget or anything like this. | |
| So are you an optimist and say, well, they'll work it out and next year they're going to do it and they'll catch up and they really will cut spending. | |
| And I have the experience I've had in Washington makes me a little bit more cautious on saying, well, it's all going to work out well. | |
| Look at all they've exposed. | |
| The people will be for cutting spending and this is all going to happen. | |
| So I have my reservations. | |
| But how do you come down on that? | |
| Are you a hopeful, positive person saying, oh, it'll work out? | |
| Or do you say, we have problems with that budget? | |
| We're going to have a deficit to the end of this year. | |
| I certainly am in the latter camp. | |
| Listen, I'm encouraged by what's happening, looking at government efficiency, curbing wasteful spending. | |
| Of course, that's encouraging. | |
| What Doge have uncovered at the moment, quite frankly, is a drop in the bucket, right? | |
| 55 billion. | |
| You know, that's five, six days of spending at the current levels. | |
| On top of that, Trump has tax cuts as a key part of his plan, which will initially reduce income coming in and expand the deficit. | |
| So it is my belief 12 months from now, U.S. national debt will be approaching $40 trillion. | |
| I think it's a big job to try and close that gap. | |
| And I think it's going to take more time, at least in the next year or two, to do it. | |
| And you can see it from the rhetoric coming out of Doge, right? | |
| When they came in, they said they'd cut $2 trillion in the first year, then it was a trillion dollars, and now they're fairly quiet. | |
| It's a tough task. | |
| So I think they'll take strides. | |
| My feeling is any cuts in spending may mitigate the loss of revenue from tax cuts, but I don't think they're going to do a lot to close that $2 trillion gap. | |
| And until we do, we got big problems. | |
| You know, in Washington, one of the things I thought should be the easiest thing to cut were the silly worthless wars that we get involved in. | |
| A lot of killing, shooting, a lot of people making a lot of money. | |
| And everybody hears about the military-industrial complex. | |
| And already, you know, the administration is bragging about we are doing our job. | |
| We are really modernizing our military. | |
| And we think, and they're not saying this as a warning. | |
| They're saying this is sort of, this is good news. | |
| We're going to spend almost a trillion dollars on the military this year. | |
| And another one chimes in and says, you know, and at the rate we're doing and the good work we're doing in the military, maybe next year it'll be $2 trillion. | |
| And this is an attitude that seems to be universal. | |
| And so far, we haven't seen anybody that's interested in efficiency of government saying, why don't you start with that? | |
| That's been more my argument. | |
| Don't start with child health care. | |
| Why don't you stop, start with all these useless wars in Ukraine and Vietnam and Korea? | |
| And now we're pestering China. | |
| It seems like that should be an opportune time. | |
| Most Americans want us to come home from Ukraine. | |
| It's amazing to me how the special interests are able to manipulate the spending in Washington. | |
| So give me something to be optimistic about, Ronnie. | |
| You're worrying too much. | |
| They'll probably have to cut the military. | |
| What do you think? | |
| Oh, Dr. Pooh, I feel like the bearer of bad news, but it's hard to be, my feeling on Doge has been the same, right? | |
| The three biggest items in the federal budget, Social Security, number one, debt service, number two, defense spending, number three. | |
| Debt service, we can't do anything about, right? | |
| If the Fed decide to lower interest rates, if demand for our debt increases, we can see rates come down, but it's out of our direct control. | |
| Social Security is politically unviable, right? | |
| They call it the third rail of American politics for a reason. | |
| If you touch it, you die, which leaves us with defense spending. | |
| Right now, the administration have increased defense spending. | |
| It's gone from about $800 billion last year, projected over a trillion dollars this year. | |
| So it's an increase. | |
| Without looking at one of those three areas, I don't see how it's feasible to find $2 trillion. | |
| You're not going to get it under the couch cushions in the White House. | |
| They talk a big game. | |
| They talked about closing the Department of Education, right? | |
| That's how we're going to do it. | |
| Honestly, it's a drop in the bucket. | |
| You could take that a step further and say, we fired every single federal employee, down to food safety inspectors, 2 million people. | |
| It's $350 billion savings a year. | |
| So if you're not looking at defense spending or other big categories, I don't see where the money comes from. | |
| Right. | |
| You know, the tariff war really is going on. | |
| Most people are recognizing it, and they called this a tariff war between two of the biggest countries probably in the history of the world, you know, with the China economy and the U.S. economy. | |
| And they're struggling. | |
| But I saw something today, you know, China just raised their tariffs. | |
| And that the intention is, or one analysis is that they're going to deal less with just escalating tariffs. | |
| But what they will do is they will go to non-tariff type of retaliation. | |
| You know, some type of a regulatory thing and making it more difficult. | |
| So would you think that is probably a lot of opportunities for them, or do they have to search around for how they could take one item and try to punish America rather than just going with the broad picture of just raising the tariff rates? | |
| Look, I think they've got a lot of weapons in their arsenal, right? | |
| China are no joke. | |
| You know, I've heard a few things to getting rid of IP laws, right? | |
| Intellectual property so they can directly copy our stuff, same quality and pump it out cheaper, right? | |
| And we've talked about, I think Besson mentioned the other day, delisting Chinese companies from U.S. stock exchanges. | |
| So this thing could get very, very messy if it escalates. | |
| Let's not forget, China were one of the largest holders of U.S. debt, right? | |
| What if China decides to start dumping U.S. debt? | |
| What's that going to do to interest payments on the debt? | |
| So this thing can get very, very nasty. | |
| China have a number of cards up their sleeve. | |
| And that's why I think we're going to have to see how things progress. | |
| My hope is we come to a deal fairly soon, things calm down, and we start the rebuilding process. | |
| You know, when I was in the presidential races and during the primaries and having the debates, there was this pretense that, okay, this week we're going to talk about economic policy. | |
| Next week, we're going to talk about foreign policy. | |
| And I saw the bigger picture was it was all spending. | |
| It was all economics. | |
| It was all printing press money. | |
| And I couldn't, in my mind, nor do I think economically you could separate the two and make it, you know, have one thing over here and over and something else over here. | |
| But right now, even with this very lively competition with tariffs, it is a trade war that's going on as far as I'm concerned. | |
| But the one headline on anti-war today was, Trump again threatens attack on Iran, suggests Israel could delete it. | |
| And, you know, this is the thing that really bothers me because, you know, we're supposed to have less, we're going to end wars and we're not going to start any new ones. | |
| Well, hopefully the first one is supposed to end is, you know, in Ukraine, but that's taken a while too. | |
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Trade War Rhetoric
00:02:45
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| They're usually very diff, they're easy to start, but they're very difficult to end. | |
| So they're doing this, but there's still a lot of animosity there. | |
| But right now, there doesn't even seem to be softening of the language because it's Yemen. | |
| You know, just think of the bombs. | |
| You know, last week, just the one bombing raid cost us a billion dollars. | |
| So it is just unbelievable how much they do. | |
| I think it's a mixture, you know, of this economic problems with tariffs and also what we have to witness when it comes to foreign policy. | |
| Because, you know, and one thing that we use a lot, and it's, and I use it too, by mistake, and you used it a minute ago, we have to have defense spending and defense spending. | |
| And I try to tell myself, it doesn't ever seem to be defense spending. | |
| We don't, how did we defend our borders? | |
| You know, this sort of thing. | |
| So I think they spent too much and they spend it the wrong way. | |
| Let's just hope that's just how Musk sorts this out and has a lot more success. | |
| Yeah, look, I agree vehemently. | |
| It's concerning, but I question whether it's style more than substance. | |
| Trump doesn't appear to have the appetite for war. | |
| We saw that in his first term. | |
| At least the rhetoric this time seems to be the same. | |
| There's certainly a belief within the administration that Iran cannot get a nuclear weapon. | |
| I saw Pete Hegset talking about that on Fox in no uncertain terms. | |
| So it may just be strong rhetoric to use as a deterrence. | |
| What I will say broadly, look, I think the volatility we're seeing with tariffs and everything else is problematic. | |
| And obviously the markets are responding accordingly. | |
| But, you know, one thing I will say is you can't have a completely free nation when your critical industries are offshore, right? | |
| We can't defend ourselves truly if we don't smelt our own steel, we don't build our own microchips, we don't make our own antibiotics. | |
| So, you know, there is a rational argument there to onshore certain sectors of manufacturing. | |
| And that may be the one benefit we get out. | |
| I think during COVID, we saw some of the weaknesses there, right? | |
| We couldn't at times support Ukraine with javelin anti-tank missiles because we couldn't get the chips that we needed, right? | |
| So there's some things that need to be done. | |
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Central Banks and Gold Money
00:09:56
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| And tariffs, they're not a good revenue generator, but they are good at incentivizing domestic manufacturing. | |
| And in some sectors, I think it's important. | |
| And I think it's a national security issue. | |
| Right. | |
| You know, as an afterthought, it seems after the big announcements of the large increases in the tariffs, Trump went back and made gold exempt from the tariff, which is fascinating. | |
| And I wanted to just get your take on that. | |
| Why would this come up? | |
| And what is the significance of removing the tariff from gold just out of the clear blue? | |
| What are they worried about? | |
| Yeah, this one was easy to miss, right, in all the talk of Liberation Day, but they explicitly excluded physical gold bullion from almost every other commodity, fertilizers, semiconductors, plastics, they all carry price premiums. | |
| Gold doesn't. | |
| And, you know, it's hard to work out exactly why. | |
| The question for me, obviously, in times like this, gold is a lifeboat, right? | |
| If we look at the problems we talk about, it's inflation, it's currency devaluation. | |
| Gold drives, you know, goes up in those climates. | |
| So I think it's a smart move to have done it. | |
| It's almost like the administration is signaling where people should go for shelter for the foreseeable future. | |
| But it was an interesting exclusion and certainly welcome by us at Birch Gold Group. | |
| And the question is, like I said, is it a signal from the administration, go to safety? | |
| Don't know if it is that, but it was an interesting exclusion. | |
| You know uh, when I was in office and Bernanke was before our committee, I asked him a a question, the shortest question I ever asked anybody. | |
| I said uh, is gold money? | |
| And uh, he paused a long time and gave me the answer, and his answer was no it's, it's not money. | |
| And it sounded it sounded like he had to struggle with his. | |
| What is this? | |
| What is the significance of this if it's not money? | |
| Because uh, some of us uh believe that gold has been money for a long time and it's been picked by the marketplace and that it's very significant, so that, so it is different. | |
| It's uh, it's different than lead and all these other commodities that you could have. | |
| And uh he they, when we, when they did this Bernanke, you know, maybe he's looking at that I said why, why? | |
| Uh, I said if, if gold is not money, why do the central banks have it and why are they buying gold? | |
| And he said that's just tradition, that's the way they do it. | |
| But uh, what about? | |
| Can we make the comparison that they don't put a tariff on gold? | |
| Because what's shouting out is gold, is money. | |
| And we, who? | |
| What would anybody think of saying, oh i'm, i'm going to run on a campaign, that i'm going to go and i'm going to put a tariff on the dollar. | |
| I mean, it sort of wouldn't make any sense. | |
| So I just wonder whether it's the? | |
| Uh, it's an opening for us to have a serious discussion on why we think gold is pretty important. | |
| Yeah I, I think that's. | |
| That's a an absolutely fantastic point that you make and anybody that thinks gold isn't money. | |
| Look at central banks. | |
| Right, central banks, for the last three years, have been setting records year on year on year for gold buying. | |
| And the reason that they do it is because of what we're doing to our dollar. | |
| Right, dollar was the global reserve currency and what cemented its position as that was stability right. | |
| But what we've seen over the last four, eight years? | |
| Huge money printing on the back of that devaluation of the dollar. | |
| It's become far less attractive. | |
| So central banks are looking to de-dollarize. | |
| Well, guess what? | |
| The dollar is as tough as it, you know is, as much as it's struggling at the moment, it's still the best of a bad bunch. | |
| There isn't a better currency than the dollar. | |
| So central banks are using gold as a means to de-dollarize. | |
| Right, they're dumping dollars and buying gold right, and it's a very smart move in the same time period that the dollar's lost 20 of its purchasing power, gold's up over 40, so it's a move to safety. | |
| But, you know, anyone that understands the history of currency, as you do, knows the fragility of currency and gold has maintained and sustained throughout multiple currencies, multiple currency, disruptions and and devaluation. | |
| So, in my mind at least, it is money and central banks are using it. | |
| And, by the way, gold is now. | |
| It overtook officially the euro last year as the number two global reserve asset And it was a function of central banks selling dollars and buying gold. | |
| So, in my mind, it is money more so than most currents. | |
| You know, there's lots of reason to complain about the monetary system, the Federal Reserve, and they came into existence in 1913, and it's been abused and still being abused, and it manipulates secrecy, all this activity. | |
| So, it's all negative. | |
| But there's a couple of things I look at as a very positive moving our country back to the understanding that the founders had. | |
| And that is, you know, Roosevelt made it illegal in 1933. | |
| It was illegal for Americans to own gold. | |
| By 1975, we were allowed to own it before that. | |
| But in 1971, it was recognized we wouldn't even allow foreigners to cash in their dollars for gold. | |
| So, that looked like, boy, this is it. | |
| It's over. | |
| And it was a big, significant event in 1971 when they closed the gold window. | |
| It was in a way of declaring a form of bankruptcy. | |
| But the other thing is, was the re-legalization of gold. | |
| I think it's very, very important that we have. | |
| And I think the ownership of gold now helps tell it really is a message being sent to the world, especially when you see what's happening in the markets. | |
| And I think this is something that is very important. | |
| Another thing that's going on, and if anybody's listening has any access to this activity or they're interested in it, because the subject for me is what the individual states have been doing. | |
| And Trump has been good on turn it back to say, Department of Education, give it to the states, let them deal with it. | |
| And that's sound, that's sound constitutional policy. | |
| You know, it won't make our educational system magic overnight because there's so much falsehood in the system. | |
| But turning it over to states would be magnificent. | |
| Well, there's a group now, and I think there are up to about 12 to 14 states where they are working on it at home, at the home front, because the Constitution is very clear. | |
| States aren't even allowed to use anything else for little legal tender than gold and silver. | |
| But nobody cares about that. | |
| But this group now, and it's various states, they're doing it right. | |
| And it's growing in number. | |
| I think that's fantastic. | |
| So far, it's been they've allowed the states to do this. | |
| The main thing they promote to make it more like money, no sales tax on money, gold money, no sales tax, and no capital gains tax. | |
| Because today, if you go into a coin store and you buy a $5,000 coin, you're going to get a sales tax. | |
| And also, when you sell it for $6,000, you have a capital gains tax. | |
| So what the states are doing are repealing those laws. | |
| I think that's a significant step in the right direction. | |
| I couldn't agree more. | |
| And that's actually how it is in the United Kingdom, right? | |
| Gold coins that are legal tender, you know, they're not taxed on capital gains because you cannot tax the flow of currency. | |
| So I think any move like that would be very welcome here in the United States. | |
| It would be a very good opportunity for people to protect and grow retirement using sound money and get some tax efficiency in doing so. | |
| So I would certainly support that legislation. | |
| And I know a number of people that are pushing that in the states that you mentioned. | |
| So I think it's a great idea. | |
| You know, I want to close out with talking about, you know, Birch Gold, the companies that we work with. | |
| And they talk a lot about protecting assets. | |
| And they talk about being able to make it legal that we can do a little bit of that, pushing it. | |
| But if you have an IRA, you can't put gold bullion in there. | |
| But there are gold IRAs and they do a little bit of that. | |
| Could you mention that on one of the ways that some people might want to look into that matter? | |
| Yeah, of course. | |
| So by the way, you can. | |
| We can absolutely put gold bullion within an IRA. | |
| So for those that we deal only with the physical tangible precious metal, whether it's bullion bars, coins, whatever it might be, we can either, if customers have cash in a bank account, they can purchase physical precious metals. | |
| We can ship it to them. | |
| Or for those that have an IRA or an eligible 401k, they can roll over, so maintaining the tax efficiency, any portion of any qualified account, no tax implications or penalties. | |
| It remains within an IRA. | |
| We can place physical gold and silver bullion within a retirement account tax deferred. | |
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Free Information Kits
00:00:59
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| So it's either or. | |
| And all they have to do is get the information from us. | |
| We can tell them why did it, how did it, you know, why in this climate does it make sense. | |
| So information is big for us. | |
| We have a lot of free information for your viewers. | |
| And I encourage them to get the information and go from there. | |
| Yeah, how can they get in touch if they're looking for that information? | |
| Of course, it's very simple. | |
| So all they have to do is text Ron to 989898. | |
| Again, that's Ron to 989898. | |
| That will get them access to free information kits. | |
| And it's as simple as that. | |
| Wonderful. | |
| Philip, we have to close now, but I want to thank you once again for being with us today. | |
| And hopefully we can do this on another day. | |
| But I appreciate you very much being on our program today. | |
| Thank you, Dr. Paul. | |
| And I want to thank our viewers for tuning in today for this program. | |