The Staying Power of My Conversation with Ron Paul
To close out the week, I’d like to provide you with an excerpt from a conversation I had with former presidential candidate Dr. Ron Paul in September 2019.
Dr. Ron Paul is a former US Congressman from Texas and the leader of the pro-liberty, pro-free market movement in the United States.
In September, we discussed Federal Reserve policy – the Fed was just beginning to massively expand their balance sheet. We also mentioned that there was way too much debt in the system. That, and the bullishness of gold and silver.
Here’s the excerpt…
GS: As I’m sure you’ve noticed, the Fed has begun expanding its balance sheet once again. They’re trying to avoid calling it QE [quantitative easing] by saying that these are repo programs, but we both know it’s just another form of QE.
The question I have for you, is whether the Fed is aware its interventions are a problem and chooses to ignore it due to careerism and political pressure… or if they’re really totally clueless?
RP: I think on some level they are aware that the system is now so addicted to interventions that the Fed has to intervene regularly to keep things going.
I like to call them bailouts, because these are not interventions meant to help fix the problem, they’re actually bailouts to help those groups that are over-leveraged to stop from going bust. And when you talk about the actual money they are pumping into the system, it’s not a small amount. We’re talking about $75 billion, $80 billion.
The real issue is that there’s too much debt in the system. There’s too much leverage. And that is the consequence of the Fed and its activities, keeping interest too low. So now they have to provide more interventions so the people who bought that debt can keep buying more.
In terms of the Fed being aware of all of this, I remember when I served on the House Banking Committee in Congress I would voice my concerns about these kinds of interventions to the various Fed Chairs. I would point out that this kind of activity was reckless and would only lead to more problems.
When I finished they would acknowledge my concerns but they would say that it wasn’t really a problem as long as these things were done in an orderly fashion. With that in mind I expect they’d probably say that this recent series of bailouts are occurring in an orderly fashion and therefore it’s not a bad thing.
GS: So this begs the question, it’s clear there is a massive problem. It’s clear it’s going to eventually blow up. It’s also clear that anyone who has any degree of power isn’t going to do anything about it. The Fed’s going to keep intervening until something breaks.
This is frustrating but at the end of the day, there’s nothing you or I can do about it.
In Washington there are two parties that differ on some things, but when it comes to debt and spending, it’s a one-party system. No one is willing to take the steps necessary to deal with real structural issues.
With that in mind, what can we as individuals do to deal with this situation?
RP: That’s a great question.
To me, it all started when Nixon ended Bretton Woods in 1971. At that time, it was clear to me that this was a big mistake and it would open the door to all kinds of trouble.
Personally I started buying gold and silver. And you have to remember, you couldn’t even do that in 1971. It was illegal to buy gold up until 1975. But once it was possible, I started to acquire it.
I wasn’t buying it looking to sell it the next day. I wasn’t trading it. I was systemically acquiring it here and there, building my holding. This, to me, was real money. And it was untouchable by the debt markets or the interventions the Fed was doing.
I personally believe the market is much bigger than the Fed and while they might be able to intervene here and there to keep things going, at some point things will move towards reality.
We saw this with gold, which they artificially held at $35 for a long time. But once the artificial level broke, it took off. And in the late ‘70s it went as high as $800 per ounce. It’s now over $1,500 per ounce. And I think at some point it’s going much higher when the markets will eventually move to reality in terms of interest rates.
But for me personally, I try to think in terms of liberty, not just money. You asked what an individual can do, and for me I try to spend as much time as I can educating the next generation about liberty and the importance of individual freedom.
At the end of the day it’s the basics that will matter when the system breaks. That includes things like relationships, freedom, the ability to own property and the like. Those are the things that will exist when the system breaks and the current thing we call money no longer exists and the debt is finally cleared out.
That’s what really matters in life. It’s good to protect yourself in terms of your money. And that’s what gold and silver are for.
But in term of protecting yourself from the system, the most important things are insuring that you and your family know what is going on and are not playing along with this craziness.
That’s how I have lived and it’s what I think matters most in terms of passing on knowledge to others.
Editor, Money & Crisis