All Episodes
Previous Next
June 20, 2025 - Ron Paul Liberty Report
30:36
“Recession, Iran Conflict & the Dollar's Future Phillip Patrick Breaks It Down”

In this episode, we’re joined by financial expert Phillip Patrick from Birch Gold to break down the growing tensions with Iran, rising recession fears, and what tariffs and global instability could mean for the future of the U.S. dollar.

|

Time Text
Spending and Regional Instability 00:15:01
Hello, everybody, and thank you for tuning into the Liberty Report.
With us today, once again, we fortunately have our favorite economist here, Philip Patrick, who is the economist for Birch Gold, knows all you need to know about precious metals.
He's been thinking about precious metals almost as long as I have been.
And so he will be our special guest.
But we will go to the details in a few minutes.
But Philip, welcome to the program.
Thank you so much for having me, Dr. Paul.
It's an honor, as always.
Okay, very good.
You know, I think that one of the first things we want to do is one of the top issues, you know, the weekly report that I do with Daniel, we usually look at what are people really thinking about.
And it's been several days now, and it's still up in the air.
Is, you know, there's the potential of the militaristic approach to our foreign policy may accelerate because, you know, this week our president said, and he gives us his justifications, and he says, well, I think we should bomb Iran, maybe, but I'll let you know in two weeks.
So the first thing is, Philip, is I don't think that is the best approach for diplomacy.
But I know you've thought about this because you're an economist and you're interested in the precious metals and you're interested in our safety and security.
What have you been thinking about this thing?
Because it isn't getting better because we already noticed it has affected oil prices.
You're absolutely correct.
I would tend to agree with you.
I don't think it's the best style of diplomacy, but it is very Trump-esque.
We'll have to wait and see.
I didn't think he had at all the appetite for war.
There's certainly a large section of his base that doesn't.
So it may be just another Trump negotiating tactic.
One thing's for sure is it's escalating, right?
And anytime we see a regional conflict turning into a broader war in the Middle East, you see, first of all, as you mentioned, an immediate response from energy markets.
Oil prices jumped 7.5% last Friday.
And of course, energy costs feed directly into inflation globally.
They are the most inflationary commodity.
Secondly, this sort of instability creates fear in the financial system.
And we see investors start looking for safety, which is exactly why gold rose 1.5% immediately on the back of the news of a war starting.
I would say from a broader economic perspective, regional instability adds fuel to existing inflation concerns here in the United States.
And I think it comes at a time when major economies are already strained, right?
Europe's in recession, China's growth is fluttering, and our own GDP growth in the first quarter was negative.
So, you know, as a summary, I guess, geopolitical shocks like this, they don't create an economic crisis, but I think they put pressure on the financial system at a time when we really can't afford more pressure.
You know, but there are a lot of connections.
I can't remember, and I mentioned this because it so much startled me during the presidential debates.
The group that were doing the debate, and we were sort of instructed.
Well, you know, this week we wanted to talk and kind of emphasize the economy.
Next week, we'll talk about foreign policy.
And, you know, in my thinking, how can you separate it?
I think what we're talking about so far, it's very difficult.
You can't do it.
And then you get into the money issue.
You know, that's the other big, big issue that sort of has been set aside since we're talking about, you know, the conflict with Iran and Israel.
Nobody, well, they're still talking about it, but they don't seem to be too worried, or they'd have settled this a long time ago.
But just what our foreign policy does, it does add a lot of money, and it has an effect because as far as I'm concerned, it has a major effect.
It in itself is not inflation, but if they spend the money they don't have and then they have to, you know, issue federal notes, not only federal notes, but treasury bills, that's an increase in the money supply.
And lo and behold, as you well know, that ends up hitting the pocketbooks of all American citizens.
And they say, why are the prices going up?
And that's one of my pet peeves.
And I know you understand it very well that the Fed has a lot to do with this.
I mean, I couldn't agree more.
And it comes at a time when we really can't afford to be adding more to the deficit, right?
We have a $2 trillion deficit.
The big, beautiful bill or Trump's budget, the CBO says is going to add another $2.5 trillion to the deficit over the next decade.
That's a close to $5 trillion deficit, which essentially equates almost our total tax revenue.
It would be an unmitigated disaster to put ourselves in that position.
So from a broader perspective, I couldn't agree more.
There doesn't appear to be an appetite.
And this was part of what Trump run on was sort of closing the deficit gap.
I think it's a harder job than they thought it was going to be.
I mean, Doge have gone quite quiet at the moment.
And ultimately, to push forward Trump's mandate, border security, defense spending, which has increased, not decreased, this stuff's expensive.
And it comes at a time, like I said, when we really can't afford to do it.
The problem, though, in Washington, as you know far better than me, is there isn't political appetite to do what's required.
I mean, right now, to get out of the position that we are, it needs significant austerity.
We need to go through some tough times.
We need to cut spending probably by 25% across the board, both discretionary and non-discretionary.
And I don't think there's any appetite in Congress for that sort of policy.
You know, I was in Congress when they were leading up to the war against Iraq and the Middle East and strongly criticized that.
And at the beginning, most Americans, you know, the majority of Americans say, no, we don't need another war, another war.
And it took them a while.
It took them months.
It didn't happen in a week or two.
But the propagandist got out there, and that shifted.
It scared the people.
You know, they use fear-mongering.
Whether it's an economic position, oh, yeah, deficits are bad, but not funding these organizations that we need.
That's worse.
So in the same way with the military, they say we can't avoid supporting the military and spending the money.
That is one of the things that is ongoing.
It puts a lot of pressure, but they use this scare tactics.
And it's easy to scare people.
But eventually, though, I see the bigger picture.
We're talking about the foreign policy and economic policy and gold.
But the big picture for me, whether it's the monetary system or personal liberties, I think that's the most important.
Is under these conditions, when we have to justify and not only fib, but maybe lie us into more spending and into more involvement.
I mean, we have troops in 120 countries.
I don't think we need that to be safe, especially if it's going to lead to a financial disaster.
So this is something that will continue unless the people decide that they understand it, because they're susceptible to this fear-mongering.
And we just need more economists speaking along the lines that you talk about, trying to get them to understand the economics of what's going on.
I mean, I couldn't agree with that more, Dr. Paul.
Listen, you know, what haunts me every day is Ferguson's law, right?
Ferguson is Niall Ferguson, a British historian.
It has been true of every empire in history, right?
When any great nation spends more on debt service than defense, the empire has collapsed.
We are in that position today.
So, you know, I understand the governments that the tactics, sorry, that the government use, they scare people into sort of approving spending.
People, and I'm just agreeing with you, if people understood the dire nature of our finances, I think they'd understand that the sort of closing that deficit, reducing the debt, that should be the priority because the result of not doing that is by far the most frightening outcome.
And, you know, you mentioned geopolitics and economics are combined.
We are seeing that, right?
We're dependent on the world now to continue to finance our debt, right?
Look at tariff policies Trump puts in place.
Everything's so intertwined, it's hard to stand firm today.
So we've got to start addressing the issues because if we don't, we put our reserve currency status longer term at threat.
And that has been the basis of our power really since, you know, for a long, long time, since Bretton Woods and certainly the 70s.
You know, another big issue that is important to what we're talking about is the issue of tariffs.
There was a time when not paying a lot of attention to it, it seemed to me that it wasn't a great debate maybe 10, 20, 30 years ago.
It seemed like both parties were sort of opposed to tariffs.
There were always some tariffs.
But now it's a big deal, and there's a lot of conversation going on with China and tariffs.
And you mentioned the way Trump negotiates and who knows what he'll do on tariffs.
It looks like he has a strategy.
But that sometimes invites not knowing.
I like the idea of knowing what's happening.
If they're going to cut my taxes 10% next year and they're going to do it, that allows me to make plans and everybody make plans on what's happening.
But when we use these tariffs for negotiations, but I'd have to say that so far, the tariff issue hasn't been that instrumental.
I think it's been talked about, and some people say, well, maybe there won't be any big repercussion.
I'd still worry about tariffs, especially the saying that if you can't trade with people, then the troops cross our borders.
And I think there's some realities to that.
Our founders actually believed that.
I agree.
Look, I don't think tariffs work well in a modern economy.
And I'll expand on that.
Tariffs were very good revenue generators 100 years ago when countries were more isolationist.
Today, when everything's so intertwined, tariffs don't work because the reality is you tariff a country, they tariff you back, right?
We saw it with China in 2016, right?
We put tariffs on China, they put retaliatory tariffs that affected the heartland, the farming industry in the United States.
And for every dollar we generated in revenue, we had to give back 90 cents in subsidies.
So, as a revenue generator, I don't really like them very much.
The other side of it is Trump's ability to negotiate.
When it comes to tariffs, I think we've seen it's not that strong, right?
Look at what happened with his tariffs.
He said, I'm going to stand firm, I'm going to stand firm, I'm going to stand firm.
And then he U-turned at the last minute.
And the reason he U-turned is it wasn't viable.
China and Japan dumped U.S. debt, borrowing rates on Treasury shot through the roof, and we couldn't do it.
So he brought us to the negotiating table.
This is the problem that we have.
It is very difficult to play hardball on the international stage when the world is financing you, right?
That becomes a very difficult position.
We did it in the 80s, right?
But we had a trillion dollars of debt back then.
Today, we have 30, you know, approaching 37 trillion dollars of debt.
We are not in a position of strength.
So, we're going through the song and dance of tariffs.
You know, so far, Trump has sort of come to terms with China.
We've got a 55% tariff on Chinese imports, 10% sort of reciprocal tariff coming back from China.
It's a decent deal for us, but it's short-term, right?
None of that, what it did was it opened up rare earth minerals again to U.S. manufacturers, which was big.
In return, we opened up visas for Chinese students again.
So, there was some tip for that.
But I would say nothing big has really been addressed, right?
Things like IP infringement, which cost us probably half a trillion dollars a year, manipulation of currency, subsidized manufacturing, all the stuff that China do that make them a very difficult trade partner.
None of that's really been addressed.
You know, the economists, I think, across the board generally don't say, I love price controls.
We should have wages price controls.
That's the way the world should run.
I don't think they say that, but buried in our system of economic intervention is a lot of manipulation by the lobbyists and by the special interest in manipulating prices and at times regulating certain important prices.
I think the most important price is the price of money, interest rates.
And that tells a lot of people what they should do.
And yet, they're all over the place.
I want to get your opinion.
What do you think of this little contest between Trump and Powell?
You know, should we lower interest rates now?
Is it desperately needed?
I mean, Trump, I have credit.
He's sticking to his guns that, you know, probably there's tough times coming, so we've got to lower these interest rates.
He's arguing this.
And here we have Powell saying, oh, no, we got to be austere.
We have to have a sound currency.
Tell me what you think about that little debate going on.
Interest Rate Debate 00:04:50
It's tough because there's strong arguments both sides, honestly.
Look, we know why Trump wants lower rates.
It's so he can manage debt service and stimulate growth in the economy.
But there is real arguments, right?
Businesses now, we're seeing hiring freezes.
We're seeing reduced capital spending.
Household spending across the board is down.
We saw negative growth in the GDP growth in the first quarter of this year.
So there is a strong argument for the Fed to lower interest rates.
And Trump, as you say, is keeping that pressure on.
But the Fed have a decent argument as well, and that is that we haven't seen the full effects of tariffs, right?
Listen, people have to understand you can't put tariffs in that work and prices don't go up, right?
That can't happen.
The whole idea of tariffs is they drive the price of imported goods up to create parity with more expensive U.S.-made goods and force us to buy.
by domestic, right?
So by definition, tariffs create inflation.
We haven't seen the effect of that.
And I think the Fed is cautious to lower interest rates too early and see another spike on the back of tariffs.
Also, of course, what's happening with Iran and Israel now, there is fear that oil prices will go up.
And as we mentioned earlier, oil is the most inflationary commodity.
So, you know, the Fed's mandate is different to Trump's, right?
Theirs is maximum employment, keeping inflation at 2%.
I don't think they're ready to let rates go down just yet because they're concerned about inflation.
Honestly, I'm torn.
I probably think inflation will spike again.
So if I'm Jerome Powell, I wait and see.
Probably drop towards the end of the year, but we'll see how it goes.
You know, the China factor is a big deal as well, too, because their economy is very, very large.
And politically, they're sort of in the middle of it all.
They're not the devout communists that we knew about 30, 40 years ago.
And sometimes I think they understand a little bit about capitalism.
They maneuver that they're interventionist, obviously, but they're not blind to market forces.
But the biggest job I think I have and others have is what's going to happen?
What will Trump do?
Would you have any suggestions on what kind of a policy we should have with China?
Because it's a big deal.
And there's another example of China.
You know, if we go too far in some of these other countries, in Iran or someplace, or Taiwan, just think of Taiwan.
You know, we throw threats back and forth there, which I don't see how it adds very much to the stability of our economic system.
Yeah, I agree.
China's a tough one because China, long term, look, a world run by China, I think, is a frightening proposition for us in the West.
So I think the China battle is an important one.
How do we combat it?
I don't think balancing trade is going to happen, right?
I don't think there's an appetite within the U.S. to make t-shirts for $5 a day.
Now, some good stuff has come out of this, right?
We need to manufacture strategically important things, right?
The fact that the Chinese make our medicine, our chips, the fact that during COVID we couldn't send javelin anti-tank missiles or we couldn't make them because we didn't have the chips to do them.
These things are an issue, right?
So sort of diversifying supply chains, bringing things back, you know, critical industries back to the domestic, I think will be important.
Longer term, I don't think we can beat China on our own anymore, right?
They are a manufacturing powerhouse.
We don't have the ability to cripple them.
And that's the problem with tariffs as well, right?
We were a large percentage of China's exports before 2016.
After Trump's first set of tariffs, China diversified their exports.
Today we constitute about 15% of their exports.
What I did think was interesting, and this was where I thought there might be a grand plan behind the tariffs, was Trump's UK deal.
The UK deal was interesting, and basically it was like, look, we have the ability to tariff you.
However, we'll have no tariffs as long as you agree to keep China out of critical supply chains.
So essentially, it's forcing nations around the world to make a choice.
Global Reserve Currency Debate 00:09:47
I thought it was smart.
And if that could be the blueprint for future trade deals, I think there's strength in numbers.
And I think that's where we have to be.
Ultimately, that's the approach the BRICS are taking to tackling the United States.
I think we need some togetherness as well.
So, you know, I don't have all the solutions, but I think there were some good steps there.
Yes.
And you have talked about and written about the importance of the dollar, perceptions about the dollar and where is it going?
Is a weak dollar?
Doesn't mean that it's a strong economy.
I know you've paid attention to that.
And right now, there's a lot of speculation on which way things are going to go.
And it reminds me of the fact that when I first got interested in Austrian economics and monetary policy during the 1960s, there was a lot of talk about the dollar.
And there was a lot of warning, but we weren't even allowed to own gold.
So there was really not a total assessment of what the market was saying, but the market was there, still saying, and there were quite a few good free market economists saying it can't last.
They're not going to be able to maintain a guarantee to foreign holders of Federal Reserve notes an ounce of gold at $35 because we had printed too many.
And I watched and watched and watched.
And there was a big evening for me when I listened to Nixon say, oh, it's all over.
We can't do this anymore.
And I said, boy, this is going to usher in a different age.
And it was a big deal.
And that meant the dollar was going to get a lot weaker.
Now, we're once again at a position where people are talking about that.
Which way are they going to do?
Will there be a major event?
Why don't you just give us a few words about that?
I know basically that you don't think the dollar all of a sudden is going to be stronger than ever, but what do you think should happen?
Look, I'm getting, this is where I have my big, big concerns.
It's all to do with debt, dollar, and ultimately global reserve currency status, right?
It is global reserve currency status that allow us to project the power that we do internationally.
And today it is under threat and it's under threat because we have weaponized our dollar.
It is under threat because we have printed it into oblivion, right?
Since the 70s, it was the petro-dollar agreement and the stability of the U.S. dollar that cemented its position through weaponization, through devaluation.
That's up in the air.
We had the Chinese central banker come out publicly and say, look, you know, warning the world about one currency that poses a global risk.
They didn't say the US dollar, but of course they meant the US dollar.
And this is part of a bigger coordinated effort by the Chinese to ditch the dollar and push the digital yuan.
Now, the bottom line in my mind is this.
The US dollar is still the cleanest, dirty shirt in the sort of hamper.
Other currencies certainly are worse, the yuan being one of them, right?
But, you know, it's still filthy.
And that in and itself is a frightening proposition.
U.S. strength and economic prowess used to be our advantage.
Now it's just that we're the best of a bad bunch.
For me, that is unsustainable long term, right?
So in my mind, if we don't make swift changes, it progresses like this, right?
We start to see we move into a more multipolar world and we start to see more non-dollar denominated international transactions.
And that is happening already.
Bilateral trade agreements signed outside of dollars and central banks gold buying.
I saw Nicholas Taleb talking on Bloomberg.
It was a few days ago.
And he basically said the dollar is losing its global reserve currency today.
And he was challenged by the presenter and they said, well, do you have evidence for that?
And he said, look at central bank gold buying and look at gold's performance.
They are dumping dollars and buying gold.
That is losing global reserve currency status.
And he's absolutely correct.
And the reason that is frightening is it puts us in a position where the first nation or first block that can offer a clean shirt, they're going to be in the position to dominate.
And that's why, in my mind, we've got to keep a close eye on the Rio Reset, right?
The BRICS nations have created a 21st century alternative to the Western dollar, you know, dollar-denominated system.
It allows for multi-currency transactions.
It's firewalled from U.S. oversight.
And if it continues to gather steam, which at least for now it is, we're looking at a permanent loss, potentially longer term, of our most potent non-kinetic weapon, not an end to the dollar, but an end to the dollar's dominance.
And that for us domestically would be a disaster.
I want to lead into a closing point here, but I want to talk about gold and how it has been used and what should happen.
But in 1971, when August 15th, when Nixon closed that gold, it was a seminal event.
That was a big deal.
But it was still illegal for the American people.
And we talk about all the negative things and the positions that have been added on since then, and not much of it has been positive, except I think there was one big deal that was positive.
Restoration for the American people to buy gold in 1975 was a big deal.
At the beginning of the Depression, when Roosevelt took into gold, they said not that many people were holding gold.
It wasn't the thing to do.
But in 1975, after 75, and even before 1975, a lot of Americans were finding ways to own gold.
So the legalization, I think, has been very helpful.
I think it more or less cancels out the effort by the government ever to come and try to confiscate the gold.
There's too much spread around.
But that doesn't mean they can't hurt the gold holders too, because where is the gold?
You know, what will they do with taxes?
So ultimately, we have to protect our liberty against all that.
But that is a big thing that in 1975, that re-legalization, I think, has been very good.
But we need to follow through and mostly get rid of the incentive to abuse the currency.
And we've already talked about that is unnecessary wars and deficits.
Philip?
Yeah, I mean, I couldn't agree more.
And you and I agree very much when it comes to this.
But look, you know, when I started as a banker, and this was a long time ago in the late 90s, I considered gold a relic, right?
And I had to look back at the 20th century.
I looked at gold's performance relative to other assets.
And, you know, it didn't perform.
This century, it has been an entirely different picture.
Gold has outperformed financial markets like two and a half to one.
Now, what's interesting is not that.
What's interesting is what changed at the turn of the century.
That is when we started massively increasing the money supply.
Obviously, that has escalated dramatically over the last four, eight, and twelve years, respectively.
But it started at the turn of the century.
So it will be no surprise to your viewers, there is a direct correlation between growth in gold and growth in the money supply.
It is the exact same reason central banks have set records for gold buying for the last three years.
They want to move away from the dollar for different reasons.
Some because it's not stable, others because it's being weaponized, but they don't have a better currency.
Gold is where you move when currency is in decline.
And just to wrap that point, there's a reason the Chinese populace buy gold in much larger quantities than we do.
They understand in a way that we don't the fragility of currency.
The dollar's stability for so long is almost unheard of in the history of currencies.
That isn't the norm.
This, what we're seeing today, is a reversion to the norm.
And in those climates, we always turn to gold.
And one thing that's very clear, it is not a relic.
You know, central banks are setting literally historical records for gold buying in this climate.
It is the most important asset when currency value is up in the air.
And just as a final point, this was one of the one commodities when tariffs were being touted.
The Trump administration made an exception for bullion, maybe as a life raft for the American people.
Okay, if people want to get a little more information from Birch Gold, what might they do?
It's very simple.
Thank you.
Text Ron to 989898.
Again, Ron, R-O-N, of course, to 989898.
That will get them access to free information on how and why to invest in precious metals, both within and outside of an IRA.
Also, why to invest in precious metals under a Trump administration?
So really talks about the current problems that we have.
Text Ron for Info 00:00:55
So text Ron to 989898, that simple.
Very good.
You know, some of this stuff does get a little complicated.
What do you do?
And what have they done?
And why we should do it and when should we bend the rules?
But, you know, there's one thing that I think people should key in on if they want to think about this, and that is for a sound currency, the unit of account has to have a definition.
If it's arbitrary, then the government can do anything it wants.
And if a dollar is one ounce of silver and they live by that, it makes a big difference.
But that's not talked about a whole lot because if we restore soundness to our currency, I think you have to have the definition of the unit of account.
I want to close by just thanking all our viewers today and especially thanking Philip to being with us today.
Export Selection