Speaker 1: Ron Paul, one of the great financial minds in the United States, he’s been speaking up quite a bit lately. I’m not sure if many of you have been paying attention to what he’s saying, but it’s interesting and I want to catch you up to speed. He thinks we’re currently in the biggest financial bubble in the history of monetary policy. Here’s the exact words
Speaker 2: I happen to believe. It’s the biggest financial bubble in the history of monetary policy for the whole world. And the correction is going to be very, very violent and it’s already pretty bad.
Speaker 1: So the question becomes, why? Why does he think this? OK, first thing he mentions is inflation. Now, generally, the Fed aims for two percent inflation rates each year. Recently, the Fed have come along and changed this policy. They now want to average a two percent inflation rate. So that means that the Fed is willing to allow inflation to run hotter than normal in order to support the labor market and the broader economy. Now, this all sounds well and good, but there are a lot of problems that come with inflation. Ron Paul, he doesn’t like it one bit because, OK, let’s look at the definition of inflation. Inflation is a general increase in prices and fall and the purchasing value of money, basically meaning if you just hold on to cash, it becomes worth less over time. As Ron Paul says, the policy of our government is to steal two percent of the value of the dollar on purpose, and now they’ve become even more desperate towards inflation. So do you think they’re any sound investor is going to want to have their money in the bank? No. Look at the type of interest that you get on your money. It’s terrible. The average USA bank savings rate is zero point zero nine percent. So basically this means the money in your bank is losing its worth for every second that you have it in there. The mix between inflation and low interest rates kills savers. So they think, no, I’m not going to have my money in the bank. Let’s look at the stock market and they start buying stocks. And what this does is it causes prices of stocks to go up. Anyone who’s done economics one on one will know. This is we can see the stock market has recovered to almost full time highs, up 45 percent over the past seven months. The economy, however, has been going terrible, but stocks have not seem to notice. And of course, it’s not just the stock market. House prices are around all time highs as well because of the same notion, low interest rates, which means you can borrow more and there’s no desire to have your savings in the bank. The next thing that poor refers to as being a driver of asset prices is this new notion of unlimited quantitative easing. So there was in March twenty twenty when the Fed announced that they will essentially allow unlimited quantitative easing to help the economy. Except, of course, they said it and a much more politically correct way. They announced that they will continue their asset purchasing program in the amounts needed to support a smooth market, functioning and effective transmission of monetary policy to broader financial conditions and the economy. Basically, there’s no limit to the amount that they can now, Prince. And this is something that we’ve never seen before, unlimited QE. So this has resulted in the Fed’s balance sheets blowing up. It’s now soared past seven trillion dollars and it’s almost doubled in size. And we don’t know how much worse this will get in the future. They’re not talking of further wanted to trillion in printing. Now, what does this unlimited buying of financial assets from the Fed do? Well, it lowers interest rates, of course, and this allows the government to borrow even more money because they pay less interest on their debt because interest rates are low. Therefore, they can borrow more. And this is exactly what they’ve done. They have borrowed a lot in order to fund these stimulus checks that they’ve received. As Ron Paul said, they created three trillion dollars to bail out the first part of the downturn. And now they’re talking about another one two trillion for the next episode. And it just means people need to get prepared in many different ways because, OK, if we look at the stimulus checks, where is it going? So Forbes’ they wrote a great article in which they did the research and they found that fifty nine point three five percent of stimulus bills was used to pay expenses, thirteen point three percent was used to pay off debts, and eleven point nine eight percent was used to add to savings investments. But what you need to remember about all of this is it’s all artificial money. Those companies that are receiving that stimulus money spent on expenses in a normal economy would not have got it. Those companies like banks who are saving debt payments from the stimulus bills, they would not have. They would have been considered faulty loans and the bank would have lost that lot and those who invested in the stock market would not normally have been able to do so. But of course, the stimulus checks allows them to do so. You know, it’s all artificial. It all comes from debt being used by the government, which has been helped by the Fed. And of course, this all adds to the bubble that Ron Paul has been talking about. So the question now becomes, what happens when this bubble bursts? What will this mean for Americans and what can we do about it? I’ll first let Ron Paul answer.
Speaker 2: So what happens when this bubble the biggest you’ve ever seen? What happens when this when this pops, Dr. Paul, people are going to get a lot poorer. We have been able to convince the people, those who promote this type of system, that wealth comes out of a printing press and the distortions have been so great and it allows everybody to live beyond their means, you know, as it circulates and the individuals can get low interest rates and they get their houses and the stock markets happy. But it’s all tied in with malinvestment. Nobody talks much about inflation and balance. That’s so it’s a system that can’t last. But people who have and a society that has lived way beyond their means, I’m convinced has to live beneath its means. I compare it to an individual. If you or I lived because somebody was going to give us a million dollars every month and we didn’t have to work, we feel pretty good. Hey, this is great. Until maybe somebody calls the tune and say, oh, we have to stop loaning you any more money because you have to pay your bills. And that’s what’s happening now. The bills have to be paid. The economy is going to turn down and a lot of people have already gotten a lot poorer. But they’re going to get it’s going to get a lot worse unless we wake up and return to some sound economic and monetary policies.
Speaker 1: Because you say we’ve been living beyond our means for almost 50 years now. On August the 15th, 1971, President Nixon made an announcement that shook the USA. He announced that the United States will no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard. This meant we could now print as much money as we possibly desired because our money’s not tied to anything.
We can go into as much debt and buy and produce more than ever before because of this. And this is what’s been happening over the past 50 years, but especially recently where we’ve borrowed a lot and we’ve lived well beyond our means. This has caused an artificial bubble and artificial inflation in the economy, which isn’t good. Ron Paul thinks the way we get out of this is to start living below our means. He thinks people are going to get a lot poorer and we’re going to have to get used to not living like 21st century kings like we do now. The other thing I did want to look at is what is Ron Paul investing in if he’s so against the dollar? If he thinks that the stock market is in a massive bubble, where does he have all of his money now? Because he doesn’t manage a mutual fund or anything like that, he does not have to publicly disclose what he invests in. However, I’ve done a bit of digging and I found that in 2011, he revealed to The Wall Street Journal what his portfolio looked like. OK, so let me give it to you. 64 percent of his portfolio was in gold and silver miners, 21 percent in real estate and 15 percent in cash. And I’m sure as of twenty twenty, that cash position is a lot smaller. But gold and silver, there’s no real surprise that he has most of his money in those positions. He’s a true currency guy. He’s a true analyst of the system. And he thinks precious metals should be the formal use of money. So this is what his top 10 holdings were in 2011. I’m not sure how much they’ve changed today, but even recently he’s been talking about buying more gold. So his number one position is Gold Corp ticker symbol GE, valued anywhere between 500000 to one million. Second largest is Barrick Gold. Now, that’s the same as Warren Buffett’s Berkshire Hathaway. Buffett recently bought into this exact same stock. And by the way, Buffett has long been known to avoid gold. So it’s very interesting that he’s been buying it recently. Then number three is Newmont Mining, the largest gold mining company in the world. And the rest of the stocks are gold and silver miners. So it’s fair to assume he loves precious metals as an investment, as Paul says. He says the question is, would you rather put 10000 dollars in a box for 20 years or a few gold coins? The Federal Reserve has destroyed 98 per cent of the purchasing power of the dollar since 1913. And in the meantime, they have financed every war they couldn’t have financed if they were. On the gold standard, I think what’s going to happen to gold is it’s going to explode when they realize that the economy is going down, that we’re really in a recession.
So in a way, gold is his big hedge, his big investment to counteract this massive bubble that he believes we are in. Of course, he owns silver and real estate on top of that as well. But let me know what you think. Is there anyone out there who actually thinks this mass printing of money is good? Or are you on Ron Paul’s side and you think the dollar is going to be destroyed and we should be looking into the likes of gold to prepare ourselves for what may be to come?