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June 27, 2025 - Ron Paul Liberty Report
29:25
Is the American Dream Dead Debt, Inflation & Crisis R Christopher Whalen Interview

On today's Liberty Report, we explore the collapse of financial stability and the future of the American Dream, with economist Christopher Whalen.

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Time Text
A Lot of Predictions 00:15:18
We had a few technical problems, but we are going to get into a very interesting interview with somebody who has written a recent book on gold, and of course we're very interested in gold, and the whole world has always been interested in gold.
The person we're going to be talking to today is Chris Whalen.
I've met him many years ago, and guess what?
We talked about gold back then, too.
So, but Chris, welcome to our Liberty Report today.
Well, thank you, Doctor.
And you're correct.
In my new book, Inflated Money Debt in the American Dream, we do spend a lot of time on gold.
Why?
Because it is slowly returning to center stage as the monetary asset of choice.
People don't realize that the dollar as a reserve currency after World War II was kind of an anomaly.
Everybody was broke.
They looked at Washington.
Washington had lots of money.
And so we decided to peg everybody's currency, paper currency, to another paper currency called the dollar.
But ever since the Chinese got very much back into the gold market about 20 years ago, and particularly with the opening of the Shanghai Gold Exchange, we're seeing nations start to buy gold pretty much indifferent to price.
They're buying volumes, and they're doing this as a reserve asset to back up their paper currencies.
So I think gold is coming back, Doctor.
I think, you know, it took us a few decades to get there, but I think that for a lot of reasons, people are starting to be less confident in the paper money that we have here in the United States, and they're looking to gold as a store of value.
Right.
A lot of people ask me still, and they say, well, things are bad, and we can't trust our own government.
What do you think they're going to do?
Because there was a time in our history that they decided that the American people weren't smart enough or qualified and too dangerous if we allowed them to own gold.
So they made it illegal, you know, under Roosevelt immediately and for 42 years.
We weren't even allowed to own gold.
But the conditions you just described after World War II, it was different because there was a lot of gold, but it was in the hands of our government.
People stored gold over here, and now they're taking gold away and taking it back, and they're repatriating this.
So I think conditions are so different.
But I often wondered how the people put up with 42 years and it didn't even bother them.
But conditions were different, and it was illegal, and they had other problems to fight with.
But today, wouldn't you agree, Chris, that conditions within the people themselves are so much more knowledgeable about it?
Because even back then, even years, even after Bretton Woods broke down, you know, people were just barely understanding the average person.
But I would say today there's a lot of excitement by the average person, which means that there's a better market and there's a better market price, even though the government would like to regulate that as they want to regulate everything, especially the price of money.
Oh, quite so, Doctor.
I think it's not just that Americans weren't sophisticated enough.
What we talk about in the book is that if Roosevelt hadn't seized the gold from individuals, he confiscated the gold at the Federal Reserve Banks, which ultimately belonged to the banks themselves, his government would have collapsed.
Simple as that.
There was still a ratio between paper and metal in 1933.
And Roosevelt took that gold away from the public so he could print more paper.
And that's what he did.
If he hadn't done that, his government would have failed.
And I think, you know, it's hard for people today to realize how difficult circumstances were in the 30s.
Many governments around the world had pretty much run out of ideas in terms of how to have a healthy growing economy.
And the U.S. was right there.
There were three New Deals, as you know, in Russia, the United States, and Italy.
And I think that people often forget just how desperate those times were.
And they substituted paper for gold because they knew that people would run away.
If people could have kept their gold in the 1930s, they would have just taken it and abandoned paper altogether.
That was the ethic of the time, right?
That's how people felt.
So I think today you're right.
People are rediscovering what value is and what money is.
And as we all know, gold is the only form of money that's not debt.
That's what it comes down to.
And I think the independence of gold, not just for Americans, but for countries around the world, is increasingly attractive because they don't like what they're hearing here in Washington.
You know, dates to me are important and they're symbolic and they usher in different ages.
And, you know, when they took the gold away, when Bretton Woods broke down, August 15th of 1971, it was a big event for me to watch since it was anticipated by a lot back then.
But there's another date that I think is very important and tells us something about exactly what we're talking about, people being interested.
You know, a lot of people didn't have the interest.
They didn't talk about it in colleges.
And it was illegal, so they weren't going out of their way to talk about it.
But I think January 1st of 1975 was a big event, and it was a positive event.
And that is, it was announced that the American people could own gold once again.
And that, you know, seemed to be a big issue among gold bugs.
But I'll tell you what, a lot of other people then started doing it, and especially when they got knowledge.
And now, I mean, there are millions of people that understand this, and they understand how to use it and how to save it, and they understand the nature of money.
So I'm often fascinated when I read a little bit of history.
And the one person that understood money early on was Aristotle.
I said, oh, boy, he was a smart old guy.
Yes, he was.
In 350 BC, he decided that, you know, money can be described.
His definition was it had to be a unit of account.
It had to be a store of value.
It had to be a means of exchange.
Well, you know, that's not complicated.
But it makes a lot of sense.
But since then, and you already used the word fiat, you know, we've been trying to get away with it.
And you can cheat.
You know, the counterfeiters can cheat for a while, but eventually truth wins out.
And I think that's what we're witnessing now is the consequence.
And you might say a little about that too.
What is the consequence of people who can manipulate a government for political reasons?
And we end up with a burden of a national debt because of this manipulation that they can get away with.
And they don't define money as being necessary.
But I think what we're witnessing now is more and more people realizing that we're not getting away with it.
And they're trying to figure out exactly what it means.
And I, of course, ponder it because a lot of other people can.
You don't know the thing.
When will events happen?
You know, nobody can say exactly, you know, in six months and two days from now, the dollar will be destroyed.
You know, I've been taught that you can't do that, but you certainly can defend trends and how it manipulates government and deficits.
Well, that's right, Doctor.
You know, one of the things I noted in the book is that when you put debt on top of a fiat currency that's already debt, you're going to have problems.
And that's what's really going on here.
The U.S., in hubris, I think, just believed that we could legislate economic outcomes and we could print as much money.
The whole economics profession is polluted by this kind of thinking.
But I really think ultimately, you know, the inflation rate, even though it hasn't been terribly high, has still been enough to make people worry.
And when the Fed comes out and says they want a 2% target for inflation, well, that'll take half of your money away in 20 years.
That's not price stability.
There's another very important date.
You know, you were talking about dates before, July 1st, right before our Independence Day celebration, the banks are going to be allowed to use gold as a high-quality liquid asset when it's held in their vaults.
It's going to become collateral for swaps.
And I think if you look around the country, the number of states that have made gold legal tender and allowed for contracts to specify payments in gold, there's a lot of very exciting things going on.
I don't think the dollar is going to go away, but I do think people are going to rely on gold as a store of value.
They can use the dollar as a means of exchange for a long time, and I think the world will.
They don't pay for it, do they?
You know, when people understand the real issue of monetary affairs, they have a feel for the money supply and all.
But right now, we hear talk by the pundits on the financial statements about, now, I wonder if these tariffs are going to cause inflation.
And sometimes I get very annoyed by the definitions because I've been taught that you shouldn't let them get away with, you know, the inflation is just prices going up because that invites them, oh, what we have to do is just regulate prices instead of talking about, you know, the money supply is the inflation.
And tariffs are very, very important when it comes to distortion.
And it might have some indirect pressure on inflating a currency.
But in itself, I don't call that inflation.
Oh, no.
You know, if you look at what happened after 2008 and particularly what occurred after COVID in 2020, the Fed has gone crazy.
They go into the market, they buy massive amounts of securities, trillions of dollars worth of securities.
And surprise, surprise, the banking system inflates too.
So we now have this transmission belt from the Fed policy desk that turns the banking system into essentially an engine of inflation.
If you go back and look before COVID, U.S. banks have grown 40% in less than five years.
That's not price stability.
So I think there's a lot of things that are giving people pause.
This is obviously one of them.
And it just says to me that we're going to see a change.
It'll be a gradual change.
The predictors of the apocalypse are wrong.
But I think that we're going to go back into a multilateral currency market around the world.
And gold is going to be the chief reserve asset.
It's the second largest asset today after the dollar.
It just surpassed the Euro.
I'd like you to make a comment about silver because it fascinates me.
I sort of like silver because as a kid, I delivered papers and delivered milk and did retail.
And then I heard about silver money.
So I became a coin collector.
And that to me was very important.
But there's been a lot of predictions over the years, ever since Bretton Woods broke down.
There is going to be a super explosion in silver.
And they still are looking for something that is super.
And I keep thinking, yeah, maybe it is.
And some of the statistics they put out sound reasonable.
But then I got to thinking, well, when I started saving those silver dimes, you know, it was $1.29.
So I would say there's been a bit of an explosion already.
So that I think.
But there are still some people who think silver is real money.
And so it fits the category of a use outside of money.
And do you have any comments about where you come down on the side of a continuation of the explosion of the silver relationship to gold?
Well, more than a century ago, the U.S. tried to forcibly use silver as currency.
It almost busted the Treasury.
The problem at the time was we had too much silver, and the use of silver around the world had declined.
So most of the governments in Europe just said, no, we're just focused on gold.
Now, today, the big difference is, unlike physical gold above ground, silver is consumed in industry.
It's consumed in a lot of industrial processes.
So by definition, we have less and less of it available.
The question is, can we get supply and demand to stabilize such that people could actually say, you know, we can use this as money.
I personally, Doctor, would love to see the Treasury issuing coins by weight rather than putting a monetary denomination on them, because it would force people to say, how much is this worth today?
They would have to look at the price that the Treasury was willing to pay for gold and silver.
And then you could reintroduce it back into society, but by weight.
And that way you don't have to worry about the fluctuations.
Whatever they are, they are.
But it would show people that this is real.
And it's a better type of money, if you will, than paper.
You know, with modern technology, if you have two currencies, even the paper currencies, they adjust these exchange rates rather quickly.
And we could do that with metals too, because the silver and gold, when it was rigid, when they have this, and people still look, is it going to be 18 to 1 or 100 to 1 or whatever it's going to be?
But you can't, well, the founders failed on tolerating bimetallism, you know, and forcing the ratio.
But you could have bimetallism as long as you didn't rig the price of one and force people to use it.
So it hasn't been, so if the whole system breaks down, which is a possibility, the market will sort that out pretty fast.
They'll know what the ratio should be.
Oh, yeah.
Very definitely.
And you know what, Doc?
It would be, I think, beneficial to society to have a way of measuring inflation.
You just look at the price of gold.
And it's interesting, if you look at the Asian markets, which are arguably the price setters today in gold, what are they trading?
Crypto's Gold Standard Tiebreaker 00:09:16
They're trading kilo bars.
They're not doing the old good delivery bars, which are far too large for any practical use.
They have to be kept in a vault.
But in Asia, people trade kilo bars and they can carry them around.
I think that's the future.
So coins would be the first step.
Give people an accessible way to get into metals.
And then if they have substantial funds, they can start accumulating kilo bars.
You know, in communist China, you can open a bank account for as little as a gram of gold.
They actually encourage people to own gold in that system.
Isn't that remarkable?
But they've banned cryptocurrencies, of course.
Yeah, Mary Rothbard's first choice was a gold coin standard.
So if you have a substitute, you can have substitutes and promises to pay.
And we did have gold certificates, and that was usable.
But the test would be every individual who would have a piece of paper that said this is redeemable in one ounce of gold or one ounce of silver, they could take it to the bank.
And so there was a check on it every single day.
But once the government gets involved, their goal is to make sure that counterfeiting remains confusing and legal.
And if there's any control over it, it'll be the Federal Reserve and other government people.
And I think this is one of the reasons why we have trouble getting anything decent passed in Washington is because the use of fiat money and deficit, it's bipartisan.
You say, oh, we have the Republicans.
They're going to bounce the budget.
But right now, we already see that they're not going to do this.
And that, I think, is the big thing.
And besides, both sides endorse the principle of the Federal Reserve, argue, oh, I like gentleman A because he wants interest rates down a little bit more than gentleman B wants down.
And they argue over that stuff.
It makes no sense.
But they both support all this warmongering that goes on, the whole mess.
So I just think that the freer the country, the better the solutions for these problems because they can't work it out when the government's big and bold and authoritarian.
So I don't like all that authoritarian stuff thrown around.
We'll solve the problems.
They're the ones who create our problems.
Oh, definitely.
You know, a gold-based system would force the federal government to live within its means.
They'd have no choice.
And I think it's a politically very significant change because it would also say to folks on the left, the privy days are over.
If you want to do a program, you've got to raise taxes.
That's the problem in our system, Doctor.
You know, one of the things I talked about in our book is Americans have never liked paying taxes.
You go back to the inception of our country.
They were always trying to figure out ways to avoid raising taxes.
Because Americans don't like paying taxes.
They remember when kings imposed taxes on them in Europe.
So I think that the gold trend that we're seeing today is very exciting, but it has big political implications as well.
Well, the inflation is used as a tax, but they don't call it that.
They call it some evil that we have to regulate with wage and price controls.
We're not doing too good of a job on that.
But it is a tax.
And if people realize that, maybe they'd have a different opinion because I've had people come to my office in Washington and come by and say, well, the inflation is bad, inflation is bad.
I said, well, what do you think we ought to do about it?
He says, send us more money, you know, so that we can catch up with it.
But the inflation tax, where does it go?
When you dilute the value of the money and the prices go up, you should count that as a tax.
And it's middle class and poor people who suffer the most.
You know, the people who get that money first, you know, they become trillionaires.
So it's not a very fair system whatsoever.
But I think that's a reflection of the education that we've had in this country for 125 years.
But I think that's changes.
It's changing because there's a lot more education being done with people like yourself who write books and talk about investments.
And there's a lot of educational groups.
The Mises Institute has been just great in getting the information out.
And I think ultimately you have to change people's minds and understanding of why to do this.
Because if you say, well, you have to cut spending, and that's too blunt.
You can't do that.
But they have to understand, but it's not going to come out of the government system.
So that's why I'm keeping my fingers crossed.
I don't think we're going to have any magic with the new administration, but at least I'm hopeful maybe the educational system will be a little bit more fluent and we'll be able to get a little bit more activity teaching what sound money is all about.
Well, the simple path, I think, is the route to success here, Doctor.
You're absolutely right.
How do we educate people?
Put that price of gold in front of Americans every day where the Treasury is willing to exchange paper dollars for gold.
And then people are going to see that that gold that they put in their sock drawer has gone up even as the federal budget deficit goes up.
You know, these folks can't even pass a budget now.
I know you're very familiar with this.
They just increase spending 10% a year, right?
Keep on going.
But the way you do this is by refocusing public attention on inflation.
The Treasury should be the catalyst.
And frankly, we should be buying as much gold for paper for our own stocks as we can.
Look at the Chinese, look at the Russians.
You know, they are telling you what the future looks like.
I want to talk a little bit about to get your thoughts on a big event because it's a many trillion dollar event going on, and that's in the crypto system.
I find it fascinating.
And I'm not with the mainstream that said it's a solution.
You know, now we have proposals where we're going to take crypto from some people and use it and put it in the Federal Reserve and use it as a reserve.
And they increase the price to gold to be a more honest price.
And we'll keep the same ounces there and everything will be the same.
But we're going to change it.
And we're going to take that extra.
And we're going to buy crypto.
And one rule is, well, of course, it's the opposite of a gold center.
Don't touch it.
You're not allowed to touch it.
We'll just hold it there and it's going to go up to trillions and trillions of dollars.
And we're going to pay off the national debt.
I'm sure you've heard some of that.
So where do you come down on that little argument?
Oh, I think it's a load of nonsense.
Cryptocurrencies are basically gaming instruments, the ones that can fluctuate in price.
Stable coins, which is a crypto asset that's pegged to the dollar or gold or what have you, are basically prepaid gift cards, if you think about it.
Imagine if Amazon came out with a stable coin.
They would give you a discount, so you would come and buy stuff from them, right?
So it's a marketing tool.
But this is not money.
I think crypto just evidences the fact that Americans are very, very uneasy about what's going on with inflation and with the currency.
And so they're looking for ways to escape the system.
But ultimately, I think crypto is tied to the fate of the dollar.
And if you want an independent source of value to protect yourself and your family, then you should be looking at gold.
That's for sure.
And there's been definite improvements in that atmosphere.
So a lot of things are bad, and the deficit's running rampant.
But it is something that we can do now, which many years of my own life, you just couldn't go out and do it.
I saw the silver disappear.
But now they finally quit making pennies.
Now, that's a smart move.
It was costing three and a half cents to make a penny, and people just threw them in the trash.
So it is so stupid for that to happen.
But anyway, I think there is progress, but I like the suggestion you have: make it realistic, show people what's happening on a daily basis.
And because the markets work that way, if the whole system breaks down, all of a sudden there will be something used that this market considers real money, even though it might be very primitive.
It'll have that assumption that we're trading something of real value and we can use it or pass it on.
But history has shown that the most practical thing is gold and silver is a close second place.
Powell And The Bubble 00:03:39
That's right.
And you could use palladium, you could use other precious metals.
But the point is focus people on real value instead of URSAT's value, you know, Bitcoin, things like that.
We're very clever little games.
But ultimately, I think they just show that people are looking for an alternative.
And the best alternative of all is metals.
I wanted to just mention and give you a chance to make a statement about that.
And this last week or two, well, the ongoing charade between Trump and Powell, deciding what interest rates should be.
When I watch Walk by the TV and they're arguing, well, it should be 2.2 or 2.6 and back and forth.
And somebody said, well, what would you do if I was there and I could set the right interest rate?
Well, I wouldn't have any idea what the interest rates ought to be.
I mean, that's a market function.
But they say ongoing like that.
But now they're talking, they're releasing eight names of the possible for the possible person to take over for Powell.
So as if this one individual makes all the difference in the world, and that's going to solve our problem.
Always denying, listening to what is really true and why these deficits are run up and where all the errors are made.
So I just don't, I'm not too optimistic about it, but some of it I think gets a little bit silly, you know, about what kind of conservative is Donald Trump if he's going to worship the golden calf, right?
Yeah.
The Fed, you know, Trump has actually caused long-term interest rates, the 10-year, the 30-year Treasury, to go up in terms of yield.
So even if Chairman Powell gave Trump everything he wanted tomorrow, I think you would see short-term rates fall a little bit.
But would mortgages fall?
No.
The uncertainty factor caused by Trump and his, at times, intemperate behavior is rippling through the market.
And that is hurting people who need lower interest rates, mortgage lenders, home builders, everybody else.
So, you know, my fear is that all of the jawboning at Powell is going to make him stay where he is.
So he will be done with his term as chairman early next year.
But like Mariner Eccles, who was confronting Harry Truman, that you remember that, I think Chairman Powell is going to stay on the board through 2028, just despite Trump.
Because if there's not an open seat on the board, he can't appoint a new chairman.
He'd have to appoint Mickey Bowman.
And that'll be that.
You know, there's talk of a housing bubble.
We know about the other one.
And I lean toward that subject about probably another bubble's coming.
But I saw the solution to it because houses, the prices have come down a bit.
And they had a picture the other day of a development.
And the houses was, what, 24 square feet or something?
Many houses.
And this is going to be the solution.
So it's such a shame, and it's such a bipartisan thing that we're the big one, the big issues, very bipartisan, and they set the stage for this.
Well, I'll tell you what, we're going to have to wind us down for in a few minutes, but why don't you talk a little bit more about your book and tell people, once again, make sure the name they know, what generally is in there, and where, of course, can they find it?
Well, sure, Doctor.
How the American Dream Got Inflated 00:01:10
Thank you.
The name of my book is Inflated, Money, Debt, and the American Dream.
There'll be an audio version of it out in about a month.
It's published by Wiley Global.
And it's essentially a readable and I think at times even amusing discussion of American financial history.
How did we get here?
How did the sleepy agrarian society of the 1900s end up as the custodian of the world's money a century later?
How did we grow this economy and all of the debt that we accumulated along the way?
It's not that things are horrible.
We actually did pretty well by ourselves and our people, but we've left them with a big burden for the future.
So I wanted a way for Americans to understand how we got to where we are.
And I told some fun stories that you'd like about my dad, Richard Whelan, getting Paul Volcker reappointed and some other political stuff that I think your audience would like as well.
Very good.
Well, once again, Chris, thanks for being on our program.
And I want to recognize our viewers for tuning in today.
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