“Are Banks a Threat to Your Freedom? | Guest: Phillip Patrick”
Banks were once seen as the safest place to keep your money—but is that still true today? In this interview, Phillip Patrick breaks down why the modern banking system has become a threat to financial freedom. We discuss recent bank failures, the risks of government “bail-ins” under Dodd-Frank, and the growing concerns over privacy in an age of digital payments and constant credit card tracking. We also take a hard look at how the Federal Reserve fuels instability and what everyday Americans can do to protect themselves.
📌 Topics Covered:
Why banks may no longer be “safe”
Lessons from recent bank collapses
Bail-ins vs. bailouts explained
Digital surveillance and the future of money
The Federal Reserve’s role in the crisis
Practical steps to safeguard your wealth
👤 Guest: Phillip Patrick
Hello, everybody, and thank you for tuning in to the Liberty Report.
Today, we have a special guest, Philip Patrick.
He's been on our program many times.
He's the economist for the Birch Gold Group.
So, we will get into that matter in a minute today, but we want to thank everybody for tuning in.
There's lots in the news, but we're probably not going to get involved in the major event of who shot whom and why.
And yet, that is a pretty important subject and very serious.
But we want to talk about today one of our subjects we visit quite frequently, and that is how do you preserve wealth in an age of inflation?
And it's getting recognized that a lot of people are thinking about this.
It used to be just a few on the margin that would be concerned and say they were just conspiracy people to say, Well, they're ruining the money, they're ruining the money.
And when the inflation, the upgoing of the economy is going, and the inflation is young for a cycle, you know, people are satisfied because the pain and penalty isn't paid yet.
But now we're in a period of time where the inflation, that is the printing of money and making it look like everybody is rich, is coming to a close, and people now have to pay the bills.
And the big question is, who's going to suffer for paying the bills?
Because there's a lot of debt out there, and they come up with all kinds of schemes to do it.
And one big operation that they talked a lot, I was still in Congress, was Dodd-Frank, and they came up with some mechanisms to deal with it.
And they ended up doing one thing, and they didn't use any new stuff and new legislation.
They just went back to the old method of bailing out to the tune of trillions of dollars and trying to keep the dollar safe as a reserve currency of the world.
So now we're in an age where we have to decide what's going on.
So, I want to welcome Philip to the program today, and we'll get into our program quite quickly.
Say hello, Philip.
Thank you so much for having me, Dr. Paul.
It's an honor.
Very good.
And, you know, we've titled this, Is It Safe Is Liberty Being Safe Under These Conditions?
Bail-In: Deposits at Risk00:03:28
And what is it?
What is the safety?
And how do we do that?
How do we preserve wealth?
But, you know, in 2008, Dodd-Frank was a bill that I had to suffer through when I listened to it all.
But they invented one thing called bail-in instead of bail out.
And they're talking about that right now again.
And bailing out, everybody knows that term, where you just, you know, send more money, print more money, and it seems to tide things over as long as the country has some remaining wealth and some credibility as a reserve currency of the world.
But right now, Philip, that is in question.
And the subject of bailing in has come up.
And I don't know whether you have a strong opinion about that.
But to me, I think there's a little bit of mischief going on here.
What do you think?
Yeah, I would say a little bit of mischief is a nice way to put it, Dr. Paul.
You're correct.
Look, a bail-out uses taxpayer money.
It's quantitative easing.
We all bear the cost a little bit.
A bail-in uses deposit money.
Our deposits legally deposits are classified as unsecured liabilities, essentially an IOU from the bank as opposed to your own private property.
Essentially, what this means is if our bank finds itself in trouble, they can use our savings or checking account balances to stay afloat.
Now, it may sound far-fetched here in the United States, but it's happened.
Cyprus in 2013, all deposits over the insurance limit were seized to recapitalize struggling banks.
In Greece in 2015, when banks were in trouble, they capped depositors' withdrawal to prevent a run on the bank.
Fortunately, the Greek banks got emergency loans.
Otherwise, depositors would have been robbed, just like they were in Cyprus.
Now, we in America, we have the FDIC, right?
It's a form of insurance that guarantees a certain amount of deposits.
But the concern is it only covers a fraction of those deposits.
Last time I checked, for every dollar that the FDIC fund has to pay out, they have less than two cents for every dollar of insured deposits.
Essentially, the fine print says your deposits belong to the bank.
And in a crisis, we simply cannot rely on banks to return our money, potentially when we need it most.
So, the idea of bail-ins is very concerning for depositors here in the U.S., particularly given the fragility of the banking system today.
But yet, they pretend this is just a normal operation, and we understand it because they're just taking money from here and turning bond money and somebody that owns this or deposit and turn it into an equity.
And then the equity has value, and they're going to use the value of the equity to bail out the banks.
That's the way I read this thing.
It's really quite crazy.
But the whole system of money is a bit crazy, too.
You know, I looked up just a few comments about Dodd-Frank and how it did, and I came across a paragraph that I think is enlightening because that was the OH recession, depression, and financial crisis.
People Understand the System's Madness00:07:05
That was a big deal.
And it remains a big deal because we're still suffering the consequence of the tremendous bailouts and the printing of money, interest rates at 0% for all those years.
And I have to tell you where I got this is on Wikileaks.
And this is Wikipedia.
And there is a statement on this is, there is no record of a bail-in, that's that new gadget, under the Dodd-Frank ever being triggered in the United States.
So they've never used it, and because they just printed the money through 08, but they're at a point right now that, well, this is a signal I think, Philip, is that the bankers themselves are talking about this.
It's a warning sign.
And there was a lot of that even before 08, and there was even a lot of this type of warning by the people who understood monetary policy all the way back before Bretton Wood.
Because there are people that understand it.
But one thing you can't predict is how long can you fool the people.
And the stronger the nation is financially and militarily, and how much control you have on a reserve currency tells you how long the system can last.
And even that is not knowable.
But when the establishment people get nervous about it, you know they're starting to worry about their trillions of dollars.
And so they've invited this thing.
And if this worked, it would probably work for about a week or so.
They're not creating wealth.
And I think what they're forgetting, Philip, is the fact that when debt is too big, whether you're an individual or a corporation or a country, the market is stronger than the politician because too much debt will be an overburden.
The interest will be too much and it will collapse.
So this is the, you can do one of two things.
You can work harder and pay the debt down.
This country's not going to pay down our debt.
And the other thing is you liquidate the debt by paying it off with funny money.
And I'm afraid we're embarked on that course, and it looks like it's not going to change.
You're absolutely correct.
There isn't the political will to pay down the debt the way it should be done, which is curbing spending, potentially raising taxes shorter term, and just going through a period of economic contraction.
But politically, that's a very tough job.
We would have to cut spending 25% across the board, meaning Social Security, Medicare, Medicaid, defense spending.
And there is not the political will to do that, right?
They call Social Security the third rail of American politics for a reason, right?
If you touch it, you die, which means growth is the only way out, but it's a very difficult way, right?
You know, since the 70s, debt has averaged 8% growth a year.
GDP has averaged 3%, right?
So this idea that we can, you know, triple the GDP of the United States to outpace debt is tough.
We're already a very mature economy.
We're 25% of the world's GDP.
We attract 60% of the world's capital today.
So my fear is the same as you.
There won't be political will to curb spending.
We'll continue to amass deficits.
We'll continue to print money to meet those deficits.
And ultimately, any student of history knows that that ends in one way.
You've been saying this for many, many years, Dr. Paul.
I've been saying it maybe for the past four or five, but it is becoming mainstream today.
Pick up the financial times, you see de-dollarization, you know, dollar holdings reducing, debt service exploding.
Everything that you've predicted for a long time and we've been talking around for a little while is coming to fruition, sadly.
You know, the one argument they use that want to pursue this thing of bailing in is that having an answer or a plan which is supposed to reassure people that they will still be able to handle this deficit and that banks are on top of this.
But, you know, that's where I think they're coming up short.
I think that is a joke.
And right now, in generally speaking, whether it's foreign policy or monetary policy, domestic policy, social policy, people have lost a lot of confidence.
And when I say that's good, that's good.
People say, what do you mean that's good?
That's bad.
I say, well, no, it's good because it's going to wake the people up.
They have to because this is unsustainable.
And people have to realize they have to do some planning.
That is also one of the reasons that you and I and many others participate in Birch Gold Group because there are some answers that we can give, but I don't think it's bailing in.
And one argument is, well, this will convey confidence to the people in the system and they will continue to do the same dumb things they've been doing.
And I think that's a little bit of a stretch, too, that people are going to be reassured.
And if you look at long-time history, you find out that this is not a new thing we're talking about.
It's happened many, many times, all the way back to Roman times, that they inflate and destroy the value of currency, and people then finally resort to something of real value.
And a lot of times it's many different things.
Anything just to get away from the fiat system of money, which is what brings us down.
So that's what people are preparing for.
And this is why it's so important for people to understand that when they complain about high prices, they can't blame labor unions for demanding higher wages.
And they can't blame the businessman for gouging them with profits.
They have to realize that the prices aren't going up as much as the emphasis on the dollars going down in value.
And they should understand that if you just print untold numbers of dollar bills, they're going to lose their value.
And yet today, it is so bad what has happened over the hundred years of preaching about the monetary system and undoing that.
And I think some of this discussion really came to a climatic end, almost final end, you know, in 1971 with the breakdown of Bretton Woods.
You're absolutely correct.
And the warning signs are there.
And look at what central banks are doing.
That for me is the biggest tell.
So what we've been seeing, and it started in 22 when Biden seized Russia's assets, which I think was a dangerous precedent.
Governments Seeing Red00:11:43
But central banks have set consecutive records for gold buying since 22.
The biggest six-month period in history for central banks have been the first six months of this year.
And the reality is they see the writing on the wall.
They understand what we do.
$37 trillion of debt, $2 trillion annual deficit is unsustainable.
So they know we're heading down the path of money printing and essentially a debt trap, this circle of essentially inflation and ultimately hyperinflation.
So they've been hedging dollar exposure using gold for the same reasons that we do.
Gold and the dollar, gold and currency have an inverse relationship.
Last year, gold overtook the Euro as the number two global reserve asset.
Today it takes up 20% of total global reserve.
It's now a larger share of global reserves than U.S. government treasuries.
That trajectory, I think, is going to continue.
75% of central banks that were surveyed said they plan on massively increasing gold holdings over the next half a decade, over the next five years.
And you can see why, right?
Yes, the dollar's in trouble, but it's still the best of a bad bunch.
There isn't another currency that can usurp the dollar.
So what the BRICS and other nations around the world are doing is they're using gold as a means to chip away at the dollar's dominance.
And it's working for them, right?
You know, as a trade, right?
The dollar's fallen since the pandemic 25%.
Gold's up over 40%.
So it works as a trade.
And my concern is the larger share that gold takes up of global reserve, the more that chips away at dollar demand and ultimately creates a self-fulfilling prophecy.
And all of this is in the backdrop of debt and debt service, which quite frankly is unmanageable.
I think the administration are trying.
They understand the need for revenue.
I think they were let down by Doge.
I think they were hoping to find $2 trillion of savings.
They didn't come close.
And obviously tax cuts expand the deficit.
So it's problematic, and I don't see an end in sight currently.
Yeah, many people were optimistic, including myself.
I was hopeful, at least, that the effort to cut spending at the beginning of this administration would work out better.
But it also dramatizes so clearly how big a problem we have, because I think a lot of good people, you know, believe what we're talking about.
But it's a tragedy on how many are willing to walk a line, you know, and vote that way.
You know, when it came to voting, there was hardly anybody supporting it.
You know, and not only did they not cut, they've increased it.
So that's why I always go back one step further.
It's the philosophy of what we're trying to run, whether it's the welfare state or whether it's a warfare state where we think we have to police the world or just the welfareism that it sounds good and it's good political tool as long as the country is rich.
But now we're getting poorer.
And the most accurate measurement is what is the currency doing.
And the currency right now is an aftermath of when we gave up a sound currency and that was in 71.
So we have a total fiat currency.
And what has happened since 1971?
$35 an ounce to $3,000 plus dollars and it's going to go a lot higher because the printing presses are running faster and we have to pay the money to pay the interest on the debt we have.
And grown-up people support this.
PhDs support it.
You know, I don't know.
I don't want to offend you, Philip, because you probably have a PhD or something.
But I don't think a PhD gives anybody license to think they understand monetary policy.
I think a housewife could do a better job, you know, looking at prices.
But I think we're, of course, we've said this so many times, we're in for bad times, but we have to change the appetite for government.
And that's why this thing came to a halt early in this administration.
Is the appetite for cutting just wasn't there?
And so my position has been they're going to continue to do it.
They will not find enough people to vote the right way.
And therefore, what we have to do is prepare.
And this is one reason why in Congress I worked hard on trying to get a bill passed where you could have competing currencies and not force everybody to use a dollar always as the final legal tender.
Nationally, that's still the case.
But the states have picked up on an item in the Constitution that the states were designated they could not use anything other than gold and silver as legal tender.
That's a mandate from the Constitution.
And many states are emphasizing this and they're denying the ability to have sales taxes or capital gains taxes on gold and silver.
So I think philosophically we're making inroads, but we have a long way to go.
And I think just talking about this debt and how to handle it, it's going to be up for grabs because when there is chaos, you don't know exactly who will pick up the pieces.
You're absolutely correct.
And as you mentioned rightly, we're seeing a move, a trend now to look at alternatives to the dollar, and they're gaining ground at a state level.
And it's easy to see why, because dollars are just not a store of value anymore.
A dollar printed at the turn of the century in the year 2000 has lost 48% of its buying power in the last quarter century, right?
The Federal Reserve, the federal government, cannot or will not solve the problem.
And the states have fed up and they're taking steps to stabilize their reserves, right?
But the problem is when a crisis breaks out, it tends to happen suddenly and without warning.
And I think at that point, it's too late to do anything but sort of stand in line at the bank.
So there's a move now to sound money, a move away from the dollar.
I think crypto's picking up some of that.
But for central banks, they understand gold's relationship with money.
And, you know, for some historical context, we are in a very tough position today.
So there's something called Ferguson's law.
And Ferguson is a British historian called Niall Ferguson.
Bergeson's law has been true of every empire in human history, and it is this.
When any great nation spends more on debt service than defense, the empire will collapse.
And that is, you know, we reached that milestone last year, 1.13 trillion on debt service, 800 billion on defense.
So we are at a very precarious position.
And gold has always held its value.
You know, we've been conditioned to have faith and trust in money, but that's not the reality or the history of money, right?
Money always devalues or disappears.
What we're seeing now is a reversion to the norm.
I always like the fact because it tells you, you know, people always ask about gold's price.
And my response is gold will go as high as currency goes low.
And the example that I like, World War I Germany, an ounce of gold was 142 Reichmarks.
10 years later, after a bout of hyperinflation, it cost 87 trillion Reichmarks for an ounce of gold.
So gold holds value, currency doesn't.
And we're heading into a climate where I think that relationship is going to be very important.
You know, in the midst of crises that the world has suffered from for thousands of years, and if they destroy a currency through the monetary debasement, people then have to seek something else.
Generally, when the market, a token part of the market exists where people can take their funds and convert it, they usually, if they can't get another currency or they can't get gold, they get stuff.
They get things, selling things they can't touch.
And right now that's going on.
You mentioned the fiat currencies, the cryptocurrencies.
That has been an alternative.
But what bothers me is that the government is so aggressive.
And maybe that's because I was in Washington and I know how aggressive they are.
So nothing is safe under these systems.
That's why I say if you really want to invest something worthwhile, invest in the promotion of liberty.
And that would be a much better investment.
Because you say, well, invest in gold.
I said, well, I think it's a good idea.
But there's a lot of pros and cons about gold.
What did Roosevelt do the first day he was in office?
He confiscated the gold.
And also, people say, well, no, it's going to be fiat.
It'll be crypto.
And there's some people who have benefited tremendously from crypto.
But the whole thing is, there's some dreams about that, too.
We're going to have the government control and put the crypto in a bank, and it's going to go to $10 million billion dollars, and we're going to pay off the national debt.
That's when it gets a little fictitious.
And yet, I think we should have alternative currency.
But I think you have a couple basic fundamental rules you have.
Like, you can't defraud the people.
You can't destroy the value.
That's why governments always fail.
They might take a good currency.
It took a few years for our governments to take the dollar.
And I think 1971 was the declaration that the dollar, that we literally were bankrupt.
And that's why we're seeing so many problems today.
Yeah, I agree vehemently.
And, you know, like I said, any student of history should get nervous, right?
Governments have historically turned to monetary manipulations to increase power and authority, right?
It happened in the Civil War.
It happened in both world wars.
It happened in Vietnam.
Every single time, the government grows in power, size, and its appetite for more.
As you've often said, Dr. Paul, sound money and liberty rise and fall together.
And like I said, your voice is echoing in my head in this climate.
It really is.
Well, this problem has been going on, as I said, for a long, long time.
And there are basic principles.
And I see it associated with the understanding of what personal liberty is all about.
Because to me, I don't like the income tax because the income tax is based on the fact that the government owns all our money and they'll allow us to spend it if we follow all the rules.
So they do this, and they don't realize that this is a funded money system.
It's designed for the government, and they can change it, and yet it runs up the deficits as well.
Now, there's been periods of time when it wasn't hard.
When I was a kid, I remember seeing gold coins, especially silver.
I remember pulling the silver out because I would have a paper root or a milk root or something.
I pulled out all the silver coins, you know, when, you know, in the early 60s when we knew that was coming.
65, they had to get rid of the silver.
Why We Prefer Gold00:03:11
So you can know these things.
And that's why people will act and protect themselves, but you don't, but if you eliminate that, you have a bigger problem.
So the more totalitarian a country becomes, the more control that they become.
So if you look at the old Soviet system and the Mussolini system, the authoritarians were rather ruthless, and they were ruthless on economic policy.
They did not want anybody surviving better by violating the authority of the government.
So it is a big issue.
It's very important.
And yet, in spite of all our negative talk today, Philip, I think there's a lot of people learning about it.
And that's one reason why I work with companies like Birch Gold and other companies that, you know, educational groups that teach this because they don't get it in their schools.
And I never heard this too in my economic classes in college.
I tell people that, you know, it took me a while after I got out of college to unlearn the things they taught me.
So anyway, I think there are some good things happening out there because I happen to believe the large majority of American people would vote for and support, you know, if they understood exactly what was going on, they would vote for personal liberty.
So do you have a little advice for some of the people now today, whether or not what they could do if they were looking to buy gold?
Yeah, absolutely.
First of all, I agree with you.
And the good news is I think it is working now.
People are really waking up.
They're really starting to understand the problem.
And my hope is that that'll ultimately result in action.
I think for the meantime, we should all have a cautious hedge.
There's a lot to be concerned about.
There's a lot to be encouraged about.
But I think either way, precious metals in this climate will be important.
So I encourage your viewers.
We have a lot of free information.
They just have to text Ron to 989898.
Get the free information on how and why to invest in precious metals.
It'll talk about the current climate, the economic issues we have.
And it's a really good starting point and some really good information.
So text Ron to 989898.
Get the information.
And there'll be people like myself that'll be there to guide people through and answer any questions.
Very good.
Thank you for that.
Philip, and if we are going to close, I want to show, tell the audience that we really appreciate you coming in here and dealing with these simple little problems to solve.
Just 10, it used to be billions of dollars.
Trillions and trillions of dollars worth of wealth is on the line.
But anyway, the other thing I try to do is, as bad as it all is, and sometimes it's difficult, we should try to enjoy with the ideas and dealing with it.
But it's very boring if we can't make some progress.
So I'm glad there are people out there thinking about the importance of gold and the association with the liberty.
And I want to thank our viewers for tuning in today to the program.