Ron Paul's Gold Company Is Birch Gold Group

With us today we have Philip Patrick as our co-host and a guest on the program. And he is the economist from Birch Gold. Philip, welcome to the program today.

Thank you for having me, Dr. Paul. Very good. You know, I have a question that fascinates me.

It’s the connection between the economy here at home and the wars we fight abroad. And I can remember very clearly, during the time I was doing a little bit of campaigning on the campaign trail in the presidential race, that once it was announced to the crowd, that was when we had about six or eight candidates, you know, for president. And by the way, I didn’t win that thing, just so nobody thinks that we did.

Anyway, they had an announcement. And the announcement was, well, last week we talked about the economy. And this week we’re going to talk about the war, foreign policy, domestic economy and foreign policy.

They saw it as two separate things. And I kept thinking, it isn’t separate. They’re connected.

And a lot of people realize that. And they often say, you know, during the war times where you get inflation and things like that. So it isn’t separate.

And right now there is a dilemma. The markets are superficially doing very well. But there’s one part of the market that is not doing so well.

And that’s the deficit. That’s the one part they don’t even talk about because it would be, you know, depressing if they thought that one day they had to compensate or take care of it or pay for it. So, no, they have to try and figure something else out.

Now, I’d like to ask you, Philip, about how do you see this? Is there a strong connection with this? And can you make a suggestion? We can make a lot of suggestions, I guess. What do we do if there is a definite connection between warmongering and shoot-up wars around the world as well as domestic problems where people run off deficits, individuals? And all of a sudden we have this nemesis called price inflation for groceries and gasoline. So I’m sure you’ve thought about this and also understand it.

I work working with Birch Gold that sometimes there are alternatives. Chris, I’m sorry, Philip. Yeah, look, first of all, I absolutely agree with you.

There is a direct tie between geopolitics and the domestic economy. And we’re seeing this play out in real time with the Iran conflict. People have to remember this conflict matters because it involves the Strait of Hormuz.

And that makes it in on itself, not just a regional issue. This is one of the most important energy arteries in the world. And when that route is threatened, oil prices react immediately.

And, of course, that affects the global economy. We’ve been dealing with oil very recently, over $100 a barrel. We’re seeing a ton of volatility.

I think Brent crude is now down to the mid 80s, but still significantly up from where we were prior to this conflict. And, of course, that’s a real issue because it fuels inflation. And we can see that reflected in the most recent CPI report.

Inflation came in at three point eight percent on an annualized basis. That’s after a 90 basis point annualized numbers back in March. This is causing a big problem for the federal government and, of course, the Federal Reserve.

The hope was that we could move into an environment, start lowering rates, hopefully ease debt service and stimulate some economic growth. But it’s looking now because of this regional conflict, rates will be higher for longer here in the United States. It’s going to put a lot more strain on the domestic economy.

And you mentioned already the elephant in the room, which is the national debt and deficit. Higher rates, higher debt servicing make that problem just much more difficult to deal with as well. So I agree with you vehemently what’s happening in conflicts around the globe.

They have an effect or a significant effect on the global economy as well. And we’re seeing that play out in real time today. You know, what annoys me is the fact that when people who are suffering from inflation, and that’s the various different factions in the political system, Republican and Democrats, they talk as if as if the money supply in a monetary system doesn’t have a whole lot to do with this.

You know, they when they talk about it, they don’t say, you know, prices are high and explain why they’re really high. They say, well, the people can’t afford it anymore. They can’t afford to buy gasoline.

They can’t afford their groceries. You already mentioned that there’s items out there, you know, like a war that can interfere with the transportation of energy. But there’s probably a little bit more to it than just that, because they never, never just really discuss and bring it up.

They know there’s a connection between war. People most of the time except they have a war. You tend to have prices going up and you have the conventional, you know, definition of inflation.

Prices go up and they never stop and think of why they go up. So when they deal with this affordability, they come up with things that what really causes this. Sometimes they’ll say, well, it’s the profits of the rich.

We got to tax the rich and the poor and the labor’s labor costs are going up fast and they always have these excuses. But very rarely, except when you talk to people who are more attuned to free market economics, they talk about it. Prices are going up.

Don’t you know about supply and demand? If you interfere with the supply, price is going to go up. Yes, but that’s only 50% of the problem because you have to think about the other half of the conversation between items. And the big one is what about the dollar and what about the value of the money? You have supply and demand of the money.

So that’s half of the decision making. Because if you have the increase in totally artificially increasing the supply of money, you know, the value goes down and the prices go up. But they do not talk about it, especially in Washington, because that would put all the pressure on people if they know that.

They say, why don’t we cut anything? And, you know, Republicans are supposed to be the conservatives and they come up, you know, with ideas on how to restrict that. So, you know, some of that spending overseas and they can’t even get you can get into trouble and say, well, I can’t support this. I’m not going to do this.

I can’t support it. I don’t believe this. What we’re doing is constitutional.

And I don’t I don’t believe that we should be doing this. I promised in my campaigns that I wouldn’t be voting for this type of thing. So they don’t want to deal with a subject.

And, of course, the subject gets back to one of the one of my nemesis. And that is the Federal Reserve System and why the Federal Reserve exists. And they are the ones that are, you know, rigging the price of and the value of the money, which forces the prices up.

But that’s a little bit more complicated. They want to hear on purpose because they want to just go and pass another bill. And believe me, you know, the thing that’s the thing I felt that impressed me most when I was in Washington is how many times, you know, they’d be out of money in debt.

Now it’s up to 30, 30 trillion, you know, and 38 trillion. Now they say, well, well, what do we do now? And it will be not even talking about the 150 percent of what’s in a transaction. And that is the price and the value of the money.

So we don’t hear the real answer. That’s why, you know, it’s a very important thing, especially when you’re involved in investments and things to understand just why this is happening and why government does these silly things. And why we have to think about how do we protect ourselves from this? It’s sometimes idiotic, you know, policies that we get out of Washington.

It’s just a great, great point. And I think it’s very clear what’s driving an increase in the cost of living. And you mentioned it yourself.

It’s an increase in the money supply. The taxation argument just doesn’t have legs. I saw a statistic.

You could tax everybody in the United States who owns over a million dollars a year. A hundred percent. And it wouldn’t deal with the debt crisis.

So Scott Besson, our sitting treasury secretary, wrote a very good op ed in The Wall Street Journal in the last year. And he attacked the Federal Reserve. And he basically said, listen, since the turn of the century, they had strayed way beyond their legal mandate of price stability and maximum employment and used what he termed extraordinary measures, which permanently distorted the economy.

But he did a good job, I think, of explaining why. What he said is, look, when a central bank prints huge amounts of money, the first place that printed money goes is through the banking system. So the first place to see inflation is asset prices.

And what he said is the Fed did this on purpose. They were pursuing what’s called the wealth effect. They knew essentially by juicing the markets, it would make a section of Americans much wealthier.

They would go out and spend. That spending would trickle down the economy. But it didn’t.

All it did instead was turbocharge inequality. The problem in the United States is the bulk of financial assets are held by a very small percentage of the population, about 10 percent. So what happened in reality as asset prices were inflation inflated, this section of Americans became much wealthier.

Then that spending bled through into the broader economy. And we saw inflation in the form of bread, eggs, milk, grocery prices increasing. So these, you know, small percentage suit huge saw a huge increase in net worth in asset prices and then had to bear the cost of higher prices for bread, eggs and milk.

The problem was the bottom 80 percent of Americans who really saw no benefit from asset inflation and ultimately had to bear the cost of higher prices. And I think that explanation really demonstrates, you know, why the economy looks as it does today. People are talking about a K shaped recovery, right? A section of Americans doing incredibly well while the bulk of us are feeling the strain.

And I think it was a very good explanation. But it also explains why broadly we have inflation and it is largely tied to a massive increase in the money supply. Well, I sympathize for those economists and that that have to try to do a little predicting, especially if they’re close to and want to advise people.

How do you react to it? What do you do in investments? And that that that is a problem because the news is very, you know, the markets are very sensitive to the news. You know, you might get a report out at eight o’clock in the morning and there’ll be a reaction. And by afternoon, it’s completely reversed.

And that comes more so really under today’s conditions than usual. And that is the markets have to react to what they think is going to happen. But I think there’s such a such a chaotic system today with what we hear about what they’re saying.

Who’s telling the truth? Even if you look at, you know, the reports on the pricing, most of most people say, you know, you’ve got to take some of those reports from the government with a grain of salt because, you know, they can’t know that. But the markets have to react in a sense of what other people think. Then they have to react to it.

So that gets very, very confusing, I think, and complex for somebody to come up. But I guess one thing I would like to sort of get a projection from you, but I’m hesitant to ask you this because I don’t think it’s an easy question. What do you know? We hear positive things and negative things about the war.

And if they believe it’s going to quit, the markets have react a certain way. So do you have a sense about what is likely to happen? Say, you know, this war was supposed to be very, very short, you know, week or two. And yet it’s lingering on.

And now it looks like it’s going to go that way for a time. And do you in your own mind and planning and thinking about economic policy, do you have to factor in? Oh, well, I guess those guys telling us that they’re going to clean this mess up in a week or two or a month and things will be OK. So just relax.

Or do you have do you ever sit around and think, well, we have a national debt. What is it? Close to thirty nine trillion dollars. What are you what would you say? Oh, it might be going up a lot more.

Who knows what? What kind of projections are you putting out? Look, I mean, we’ve got no handle on the national debt and the deficit is expanding, not retracting. And at the same time, we’re seeing borrowing rates go up on the debt because the world is now factoring in an inflation premium if they’re going to lend us money for the longer term. So it’s the worst possible storm.

And, you know, everything we’re seeing now is spending is increasing, which is very concerning because the previous administration really didn’t talk about spending. Right. It was just, hey, we need X, Y or Z. This administration came in with a focus on reducing the deficit and still managed to expand the deficit.

I think it tells us, you know, this is in many ways an unsolvable problem. You mentioned at the beginning of this huge volatility across the board today. And you are absolutely correct.

The Iran conflict is is a great example. When is it going to end? I really have no idea. The progress at the moment is very much uncertain.

We’ve seen reports that Iran has paused in direct talks now with the United States while threatening to tighten pressure around the Straits of Hormuz and possibly the Red Sea choke point as well through the Houthi proxies. Honestly, it’s like Zeno’s paradox at the moment. Every announcement from the White House is we’re one step closer to peace.

Yet somehow we never seem to get all the way there. And President Trump has made his position very clear. The United States is not interested in some tollbooth arrangement where Iran gets paid for safe passage.

And I think rightly so. They should not control global shipping. But the American position now is very simple.

Free passage means free passage. The Iranians are notoriously difficult to negotiate with. So I think the administration definitely want to put this to an end quickly.

But I think as long as the Iranians know that they’re going to try and squeeze a good deal. So we’ll just have to see. I know no more than anyone else when this thing is going to end.

I don’t think it’s going to be another 20 year war. The administration have been very clear. But we got to get a good deal out of this.

And if it pushes beyond the midterms, I think our chances of doing so increase. But I don’t think the administration wanted to get there. So we’ll have to see.

But when it comes to debt and deficit, no progress. In fact, we’re seeing the reverse. You know, there’s a difficulty with the markets today because there is a lot of cash out there.

A lot of this monetary stimulus that’s been put out there. Because no matter what happens, that’s what they rely to. They solve one problem of inflation by more inflation.

But there is one system that sort of evolves under these conditions where there’s so much cash. And the stock market is doing well. But people still get nervous about it.

And I don’t know too much about this. But I think I smell something that isn’t going to be good. And that is this private credit equity funding.

And there’s been a few articles recently saying, well, that type of loaning is a little bit fishy. And it’s called private. And I said, well, private might be pretty good.

But I have a suspicion that this is a result of so much cash and they’re looking for creativity. And right now the nervousness is coming from some people are backing away from it. But there’s, you know, it’s estimated that there’s over $7 trillion of this money going through this.

And it’s really, you would say, well, Ron, you shouldn’t worry about it. It’s outside of the Federal Reserve. They don’t know what’s going on exactly.

Well, they don’t even know what’s going on when they’re supposed to. So they don’t know what’s happening. And yet the nervousness is in effect.

I believe that type of funding can’t be good. And the articles that I’ve read, and I admit that I’m far from an expert on this, there are people getting nervous about it and trying to get their funds out because I think this is something private. I could at first, oh, it’s private.

That’s OK. If they don’t make any money, they should suffer the consequences. For some reason, I think that there’ll be a little bit of protection and the government will be quite concerned if that whole system would collapse.

I would agree vehemently. And ultimately, a lot of these private credit funds owe the money to the banks. So ultimately, it ends up with the banks as well.

But I agree with you. This is a big concern. For decades, money was essentially free and banks pulled back after the 2008 financial crisis and private credit funds sort of stepped in and became lenders on the fringes of the economy.

So, you know, for a lot of the more risky stuff and the market really exploded throughout that time from a niche strategy into a multi trillion dollar asset class. And the problem is that many of these loans were originated when rates were near zero. Now, borrowers are paying eight, 10, sometimes 12 percent plus.

And businesses that look healthy at 3 percent financing suddenly look much weaker at 10 percent. So cash flow is getting squeezed. And like I said, a lot of the big banks indirectly still have exposure to these private credit funds.

So, you know, it’s often problems like this. They start on the fringe of the market and they bleed in. We saw it with a lot of the subprime stuff in 2008.

So I agree with you. This private credit thing is not talked about enough, but it could be a big, big problem. The banking system now is generally better capitalized than it was back then.

But most private credit is held by institutions rather than highly leveraged bank, which reduces systemic risk. But it doesn’t eliminate economic risk at all. So this could be the next sector to watch and could be the catalyst for a broader downturn in the economy.

You know, as messy as it is and as much as this government is involved, I always say to myself, the markets are more powerful. It might take a little while, but just printing money might tide somebody over and somebody will benefit and they can get away with it for a while. But eventually the market is very powerful.

And when you get your debt way out of control, which other empires have, that sort of leads to the downfall of the empire. On the way over to the office this morning, Philip, I was listening to a news report about the farming. The farmers are in trouble.

And it was related to the war. And of course, you’ve already mentioned, you know, when you don’t have the fuel, you don’t have transportation. And then you can’t forget about fertilizer and all these other things.

It’s a big deal. So the farmers are in big trouble, they said, and they need bailed out. They were very blunt.

And one of the commentators said, yeah, and unfortunately, the big companies will get bailed out. The little ones won’t. You know, they were back to that problem.

And I got to thinking, you know, I sympathize with these people. What can I do? If I was there, if I had the power of the Fed, should I just print more money and help these people out? Of course, my old argument that I’ve used over the years is, no, what you do is you try to help the people who are really suffering. And there’s many who suffer as a consequence of the government in the welfare state.

There may be children getting food and this sort of thing. So you don’t start with that for political reasons, just humane reasons. So you don’t do that.

And I thought, well, how are you going to get the money? You can’t run up the debt, not with what I believe in. So I thought, well, what we ought to do, if you need a billion dollars for such and such program, you think, well, we can’t cut off that fast. And where are you going to find it? And you, as far as I’m concerned, find it in the military industrial complex.

I mean, that’s where that’s where the outrage is. And, you know, just the interest on the debt that they run up for militarism, you know, is just huge. And you could you could do this in such a way.

You could take the money and take care of some of these people that we have taught to be dependent on are really suffering. At the same time, you cut enough out of the military industrial complex without. I don’t I believe you can do that without endangering our national defense.

Our biggest our biggest danger is the the way we pay for these bills and the debt we have. So it would solve a lot of problems. But, you know, let’s say that is that does that sound pretty good.

That’s not too complicated. Cut enough where you can help people out and even have enough to cut down the deficit. Well, I’ll tell you what is not going to happen.

They’re not going to happen because the bureaucracy really protects the big guys, too, who build all these weapons. So they won’t tolerate. And they’re they’re one of the most powerful lobbying group in Washington.

So it is a dilemma. And that’s why it’s it’s the big picture of the economics of war, the Constitution, the morality of it all, living within our means and understanding what liberty is all about. If we don’t go in that direction, we’re going to have trouble solving the problems that we are facing today.

Again, I couldn’t agree more on, you know, I’m waiting for the moment. I disagree with you, but it hasn’t happened yet. There is first of all, there’s no need for I agree with you for the level of military spending.

Last year, our military budget was eight hundred billion dollars with the number one defense spender in the world. We spend more on defense annually than the other nine of the top 10 all combined together. Yet we’re struggling to deal with the Iranians in the Straits of Hormuz.

Now, on the back of that, the administration are talking about increasing the defense budget. They’re talking about a one point five trillion dollar defense budget. It’s an absolute absurdity.

Number one, like I said, we can’t even deal with Iran at the moment. So massive military spending is not we’re not gaining a huge amount from it. I think we could be smarter there.

Second of all, like I said, we could distribute those funds and help, for example, American farmers. But this immediate instinct from an administration just to print money ultimately and bail out the farmers longer term, it’s not going to work right. A lot of what’s causing problems are things like interest rates and inflation, right? Oil prices going up, more inflation is just not going to help.

So I agree with you. And I also agree with you that I’m not too hopeful that anybody come in and start to curb that. So my concern is we continue to amass deficits.

We continue to print. We continue to devalue. And, you know, we all know how that ends up in history.

I was going to say, we have to still think about what we can tell our viewers. Something to consider is not a dead end, because as long as we can talk about it and work on it and further educate ourselves as others, we have to do it because we don’t have a perfect world. And I think that is important.

But there are a few things to do. And that’s what we’ve talked about on this program. So in spite of all this trouble that we’re talking about, the wars going on and the myths and the debt and interest rate payments and all this stuff going on, that this is something there’s a couple of things that we do say, you know, in the short run, you know, it could be of help.

On the long run, we have to work on getting more people to agree about the importance of personal liberty. But if you could make a comment about what can people think about doing under these conditions? Yeah, great, great point, because we focus on a lot of the big picture stuff and it can be concerning. And I think when it comes to that, we go out, we’re politically active and we vote for people who represent our ideals.

But outside of the bigger picture, we have to look at what we can do. And I think being informed is the most important thing. It’s why I love coming on shows like yours, where we can educate people so they understand the problems, because I think in understanding the problems, solutions start to present themselves.

And you know better than I that in climates like this, commodities in general tend to perform very well. And when it comes to hedging longer term monetary hedges, gold and silver are the commodities of money. And in climates like this, they are performing very well.

And it’s really simple why. When the dollar goes down, gold goes up. When inflation rises, gold goes up, being a commodity.

So what we are big on at Birch is information. And I would ask all of your viewers to text Ron to 989898. We offer a lot of free information.

Again, it’s Ron to 989898. Get access to information on why precious metals and commodities in particular in this climate become an important pillar of retirement. You’ve said it for many years.

Gold is money. And I think the current climate is reminding all of us that that is absolutely the case. So I would encourage everyone just to get information and read Ron to 989898.

And I think solutions will start to present themselves. And, you know, these big concerning issues will start to get some context and we can start to work through. Wonderful.

Philip, I want to thank you very much for being with us today. And I want to thank our audience for tuning in. And I want to ask you, please return soon to the Liberty Report.

Spread the message. And until next time, we are.