Ask Dr. Drew - The REAL Reason Humans Love Gold: Jeff Deist (President of Mises Institute) Explains – Ask Dr. Drew – Episode 178

Episode Date: February 6, 2023

For millennia, gold has appealed to both individuals and central banks. Why do humans love gold? Jeff Deist, the President of Mises Institute, joins Ask Dr. Drew LIVE to discuss the historical context of gold’s socioeconomic history. [ Ask Dr. Drew is sponsored by Birch Gold but this episode is not directly affiliated with Birch Gold, and neither Dr. Drew or the producers have received any compensation from Mises Institute or Jeff Deist. ] Learn more about Jeff Deist and Mises at https://mises.org/library/why-gold-still-matters 「 SPONSORED BY 」 • BIRCH GOLD - Don’t let your savings lose value. You can own physical gold and silver in a tax-sheltered retirement account, and Birch Gold will help you do it. Claim your free, no obligation info kit from Birch Gold at https://birchgold.com/drew • GENUCEL - Using a proprietary base formulated by a pharmacist, Genucel has created skincare that can dramatically improve the appearance of facial redness and under-eye puffiness. Genucel uses clinical levels of botanical extracts in their cruelty-free, natural, made-in-the-USA line of products. Get 10% off with promo code DREW at https://genucel.com/drew 「 MEDICAL NOTE 」 The CDC states that COVID-19 vaccines are safe, effective, and reduce your risk of severe illness. Hundreds of millions of people have received a COVID-19 vaccine, and serious adverse reactions are uncommon. Dr. Drew is a board-certified physician and Dr. Kelly Victory is a board-certified emergency specialist. Portions of this program will examine countervailing views on important medical issues. You should always consult your personal physician before making any decisions about your health.  「 ABOUT the SHOW 」 Ask Dr. Drew is produced by Kaleb Nation (https://kalebnation.com) and Susan Pinsky (https://twitter.com/firstladyoflove). This show is for entertainment and/or informational purposes only, and is not a substitute for medical advice, diagnosis, or treatment. 「 GEAR PROVIDED BY 」 • BLUE MICS - Find your best sound at https://drdrew.com/blue • ELGATO - See how Elgato's lights transformed Dr. Drew's set: https://drdrew.com/sponsors/elgato/ 「 ABOUT DR. DREW 」 For over 30 years, Dr. Drew has answered questions and offered guidance to millions through popular shows like Celebrity Rehab (VH1), Dr. Drew On Call (HLN), Teen Mom OG (MTV), and the iconic radio show Loveline. Now, Dr. Drew is opening his phone lines to the world by streaming LIVE from his home studio. Watch all of Dr. Drew's latest shows at https://drdrew.tv Learn more about your ad choices. Visit megaphone.fm/adchoices

hey everybody welcome we're having severe technical problems when it comes to spaces i'm trying again yet now it doesn't seem to well maybe we got up there nope it's not gonna let me in uh my guest today is jeff deist he uh is from the mises institute uh and he will talk about amongst other things the history of ludwig von mises canes, Hayek, these famous economic theorists, and why he stays with the Mises Institute. He's actually the president of the Mises Institute. He's previously worked on congressional staff of Ron Paul, a well-known libertarian, and there is a very tight connection between libertarianism and the Mises Austrian school. So, you know, we're always talking about humans here.

We've been sort of taking the medical perspective much of the time, but I thought it might be interesting to get into homo economicus, sort of man in his or her economic or their economic environment and historical sweep. So let's get right to it. Our laws as it pertained to substances are draconian and bizarre. A psychopath started this. He was an alcoholic because of social media and pornography, PTSD, love addiction, fentanyl and heroin.

Ridiculous. I'm a doctor for f*** sake. Where the hell do you think I learned that? I'm just saying, you go to treatment before you kill people. I am a clinician. I observe things about these chemicals. Let's just deal with what's real. We used to get these calls on Loveline all the time. Educate adolescents and to prevent and to treat. If you

have trouble, you can't stop and you want to help stop it, I can help. I got a lot to say. I got a lot more to say. BetMGM, authorized gaming partner of the NBA, has your back all season long. From tip-off to the final buzzer, you're always taken care of with the sportsbook born in Vegas. That's a feeling you can only get with BetMGM. And no matter your team, your favorite player, or your style, there's something every NBA fan will love about BetMGM. Download the app today and discover why BetMGM is your basketball home for the season. Raise your game to the next level this year with BetMGM. Download the app today and discover why BetMGM is your basketball home for the season.

Raise your game to the next level this year with BetMGM, a sportsbook worth a slam dunk, and authorized gaming partner of the NBA. BetMGM.com for terms and conditions. Must be 19 years of age or older to wager. Ontario only. Please play responsibly. If you have any questions or concerns about your gambling or someone close to you,

please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Well, my apologies today. I have been, I was on a Twitter spaces with a Naces with Mario Narfall a few minutes ago, and I had to jump off to do this.

And once I jumped off, and by the way, I had trouble getting on his Spaces because he was inviting me to co-host. Clearly some glitches over on Twitter Spaces. And in addition, while I was co-hosting, I couldn't hear anybody talking. So Mario was on me while I wasn't jumping in more because I couldn't hear anybody talking. So Mari was on me while I wasn't jumping in more because I couldn't hear a damn thing. So it says you're still on there, but... We're over at the other one?

Yeah, like your little purple halo is on and it says you're in there in that joint. It says joint space, but I guess maybe because you're a co-host, you're sort of permanently stuck there. I turned my phone off. We will see. If you want to talk to me get on the restream or come over to the rumble with mario uh we love you mario i want uh i want uh jeff uh i'm sorry um jeez i'm so discombobulated for myself

because uh you know i have plenty of questions myself so here we go please welcome Jeff Deist Jeff sorry it was such a and now I can't hear there we are I could barely hear Jeff there for a second I'm sorry this has been such a upside down morning here but thank you for bearing with us absolutely good to be here so let's let's i want to do a broad sweep a little bit because as we were sort of marks were warming up here i noticed that my wife who has suddenly got some interest in investing and in precious metals and currency currency stability um did not know the basic uh historical figures in much of current or at least the sort of should i call it modern economic theory is is it reasonable to put those three figures at the at the top of the page with that

so it'd be ludwig von mises john edward canes and uh what was hayek's first name friedrich hayek friedrich uh these are three gentlemen with very and i always thought hayek and mises were sort of on the same page but i was i spoke at a libertarian event one time with several of your organization were there. And I, I, I let slip out that I had that misconception before they, where they were, we were in an elevator and I felt the need to run out of the elevator for having, for having mistakenly put them on the same page. So let's have it. Give us a little primer here. Well, if we had to add a fourth, it might unfortunately be Karl Marx on top of all that. But I think if we're talking about where we are today and we look at the 20th century,

there were these sort of two tensions. For most of the 1800s, people saw economics as a discipline where we viewed it as a social science humans interacting and we worried about production right people want stuff economies have to produce goods and services and then john maynard keynes came along in the 1930s and wrote his general theory and this was an enormously popular book to his credit this radically changed the whole landscape in academia and amongst professional economists. And basically, what came out of what we now call Keynesianism is that, well, you build a productive, healthy economy by stimulating consumption. We have to get people to buy more stuff. Consumption is everything. And the way to get them to buy more stuff is to have more money and credit. And so this has been sort of a tension throughout the 20th century between one camp that says,

no, no, no, you have to have a productive economy. You have to have profits, you have to have capital investment. And the other side that says, no, no, no, we need to have government stimulus, either monetary policy or fiscal policy to get people to buy more stuff. And in its sense, that's still where we are today.

But if we look at governments, if we look at Western governments, clearly in a perverse sense, I think Keynes has won, at least in the short term. In other words, most Western governments think it's their job to get their citizens to buy more stuff. And that if they buy and borrow more, that'll produce a healthier economy.

I think we have to challenge that. And I think the role of gold in the financial system helps to serve as a warning against that. But nonetheless, we live in an era where the idea of stimulus, the idea of creating more demand is, at least at the governmental level, the animating force in economics. It to me though that uh the one thing that the sort of practical matter that differentiates uh the two philosophies is debt is is that is that safe to say that keynes is very the the you know uh sovereign debt is sort of looked at as the magic potion that makes economies run. And I would imagine Mises and certainly Hayek was always thought of, and I'm being grossly

oversimplistic, but I always thought of it in terms of they took the position that it's more, you know how your household runs? That should be how a government runs. That essentially saved the currency and the banking and these other things that make it more complex. But ultimately, much like a household, a government should pay its bills, not carry too much debt, accumulate a certain amount of savings, and invest in itself. Well, and that was certainly the view for the first half of American history. Other than during the Civil War period, America generally did not have national debts. And it was really up until World War I, when the amount of debt the US government had tripled, basically from 1914 to 1917, they were selling war bonds.

And the idea was that, hey, we're all part of this war effort. So that was absolutely the thinking. And I think even Calvin Coolidge embraced that thinking. Now, today, there's a very different mindset. And this isn't just something that's on the left. I mean, if you recall, Dick Cheney, during the W years famously said, well, we've proven that debt doesn't matter, when people were challenging all the expenses of going into Iraq and Afghanistan, all the deficit spending. And of course- Very scary. On the left, there's a whole new school of thought called MMT, Modern Monetary Theory, which basically says you can have unlimited sovereign debt unless you get hyperinflation in the economy. So there are certainly people like Paul Krugman, who may be among, I would argue is among the top five most famous economists today. He writes for The New York Times.

Paul Krugman essentially says government debt doesn't matter. I think that's profoundly wrong. I think it'll have tremendous bad ramifications for this country. The question is just when those ramifications come, how long they can be put off. And so if it's beyond one's own lifetime, then like John Maynard Keynes says, you know, in the long run, we're all dead. So I suppose it depends on your philosophy. But if your philosophy includes caring about future generations of Americans, then I think we have to look at it. And, you know, let's talk quickly about gold, if we could. Now, Susan, the thing about gold,

Susan, I want you to enter this conversation that's something you were interested in, is that it used to be our currency, or everybody's currency to some extent, was bound to gold. Sure. Do you understand that, right? Of course.

I was a history major. Right. And in the 70s, we, I it was richard nixon that sort of unleashed a floating currency and that seems to have worked uh but gold has still been the repository of last resort and even so far as because susan and i both our families come from the old country i'm familiar with people talking about burying gold coins in the backyard. They would literally do that because that was the last resort. When you lost everything, at least when they came for you,

at least you knew you had the gold coins buried under the house or something. As a bargaining chip to get out of the country quick. Well, that's what they might use it for, to get away, that kind of thing. But it still has that quality to it, which is kind of extraordinary. And its historical sweep, it's always been like that, is it not? Well, the historical sweep is almost unimaginable. People have been using gold as money for at least 2,500 years, pre-Christian times. The Roman Republic certainly introduced gold coins. And if you fast forward all the way to today, as you say, I mean, people still view gold as some sort of store of

value as an emergency. People have been known under dire circumstances when they're forced to flee a country for political reasons, famine, war, et cetera, to have wearable gold jewelry, you know, around their neck or around their wrist to transport a lot of wealth with them, along with maybe just the clothes on their backs in one suitcase. I mean, this has been something throughout history, but for most of human history, money wasn't paper. For most of human history, money was some sort of commodity. And in early days, it was things like salt and seashells and even certain stones. And then eventually gold was discovered along with silver. And it turns out that what distinguishes gold from any other metal, any of the precious

metals, any of all the industrial metals you can think of like silver and platinum that people use, is it just has this really unique chemical properties. It basically can't be destroyed. So it changes form, you can melt it down, but it never really goes away. So virtually all the gold that ever existed on earth is still with us today. It hasn't been consumed in industrial uses. It might've sunk to the bottom of the ocean on a Spanish galleon ship or something like that. But for the most part, we still have all the gold ever mined out of the ground. So it's just this totally indestructible form of metal. And over the years, that quality, along with the fact that it was fairly scarce, it's actually very difficult even today with

our modern processes to find it under the ground and then pull it out. It's actually very difficult even today with our modern processes to find it under the ground and then pull it out. It's a hellishly expensive process. So because of that, the marketplace, which is nothing more than human beings over thousands of years, eventually began to choose gold as a way to transact and transfer value between people. Because we all know that barter is no good. If you have a cow and I have some wheat and we want to trade, that's a very difficult thing to do. Whereas gold was divisible and you could create coins and other ways to make this all possible. So it wasn't really until governments and central banks got involved and started issuing paper based on that gold that was easier to exchange than to move gold from one bank to

another to sort of satisfy an IOU. It was when governments and central banks started issuing paper that the mischief came in. And that really started around World War I. And as you mentioned, by 1971, when Richard Nixon made it so that even foreigners couldn't redeem their US dollars for gold anymore, that we entered this era, this Paul Krugman era of really unlimited government spending, because government and central banks can create unlimited amounts of paper currency. And of course, most of that's digital, electronic now, but nonetheless, we can call it currency. They can create this at will. You can't just create gold at will. So that's the fundamental difference. And giving the governments that power has a tremendous potential to do harm.

I'm sure certainly from the Mises perspective, right? Almost unbelievable, almost unfathomable. And we're not just talking about economics here. We're not just talking about financial matters. We're talking about widespread cultural, social, foreign policy matters, all are hugely affected. When you have a government that can spend wildly beyond what it takes in taxes, and let's remember, let's take the COVID year of 2020. The government brought in about three and a half trillion dollars in federal taxes from all sources.

It spent seven. Okay, so it spent twice what it brought in in taxes. And so you say, well, gee whiz, Dr. Drew, if the government only needs 50% of its spending in taxes to operate, how about 30%? How about 20%, how about 10? Why are we paying taxes at all? Why about 30%? How about 20%? How about 10? Why are we paying taxes at all? Why can't they just finance this indefinitely? And the corrosive effects of

this. I mean, you can't even begin to imagine how this filters through society. And from my perspective anyway, it's been a cultural disaster for America. In other words, it has made us have a desire to live today at the expense of tomorrow. And if you do that on an individual level, if you do that on a more widespread level, if you do that on a national level, and then ultimately an international level, that means that we are basically spending the capital that we ought to be accumulating and bequeathing to future generations. Didn't the Bible have injunctions against this? It sounds like the kind of thing that, right? I mean, it would be that old as a philosophical position.

I'm going to go out on a limb and say that the staff at the U.S. Treasury and U.S. Federal Reserve Bank are not particularly animated by biblical principles in 2023. I'm sure of that. I'm sure of that. You're 100% right. And so does Mises Institute take position on these things? Do they offer position papers, advice? Do people listen? Or are you writing journalistic kinds of articles to try to get people to persuade it? Yeah.

In other words, well, for one thing, we absolutely advocate a gold standard, which is what a lot of the Western world had throughout most of the 1800s and again into about the World War I period. And that was actually, they call it the Gilded Age in Europe, the Belle Epoque. And it not coincidentally, in my view, was part and parcel of basically the greatest and fastest period of human achievement in terms of science, literature, art sound money, a form of money that government couldn't tinker with, that government couldn't just produce willy-nilly. So when we got rid of that, basically what we did was we created a political seduction for the political class. from this need to have sound money and to actually tax people to do all the things you want to do, that created the circumstances where we could have things like beginning in the 1930s, just a couple of decades after the creation of the central bank, we could have all of the New Deal programs, which were tremendously expensive. You fast forward to the 1960s, we could have all of Lyndon Johnson's Great Society programs. We could prosecute the World War II. We could prosecute the war in Vietnam.

We could have spending beyond our means. And now, because what the government does and what the central bank does affects the credit markets for normal people like us, that's also filtered down to where the cost of borrowing money is, in my opinion, cheaper than it would be without all this tinkering. And so it's not just government that lives beyond its means. As a result of this, as a result of a relentless, many decades long pressure on interest rates, making them lower and lower and lower, Americans do all kinds of things in response. They buy bigger houses than they would otherwise. They drive fancier cars than they would. They take nicer vacations. Their kids go to more expensive colleges and take out bigger student loans.

It's really, again, a cultural and social issue. And when you corrupt the money of a country, I would argue that in a sense, you're corrupting the soul of it. You're corrupting the culture itself. How in the world would you get back to the gold standard from where we are? Well, there's a few ways you could do it. One, and a lot of people argue for this, is that presumably Bitcoin or some kind of cryptocurrency is going to become the canary in the coal mine because Western governments are going to just keep spending and borrowing to such an extent that at some point, people are just not going to trust them anymore. They're not going to be willing to buy treasury debt except at junk bond rates or something like that. And so people

are going to worry about hyperinflation and they are going to be looking for an alternative to store their wealth in something other than dollars. Right now, if you're very wealthy, if you're Bill Gates, if you're Warren Buffett, you can have property all over the world. You can have assets denominated in foreign currencies like Swiss francs or Chinese renminbi, and you can somewhat protect yourself. You can diversify jurisdictionally against some sort of hyperinflation or collapse in the US dollar. But most of us, our paychecks, our savings, our wealth, our homes, all these are denominated in dollars. So you could view

something like Bitcoin as a potential safe harbor in the future, but you could also say, well, gold never went away. Central banks still hold tons and tons of it. There's a $12 trillion market worldwide. And with digital division now, we have the ability to have physical gold, but trade it amongst each other, use it as money using the equivalent of a debit card, let's say. And so gold could once again reassert itself in terms of its moneyness. Now, the question is not one of whether we have a technical ability to do this. The question is one of whether governments, including our own, will literally use force, will literally pass

laws to prevent that and come send people with guns and put you in jail if you do. That's a political question. But the idea that we could use gold or Bitcoin as money is not a technical problem. We know how to do that. But I feel like you're describing kind of a doomsday situation where things get so bad, there's nothing. You have to go somewhere for a safe haven. And I was really surprised to hear you say gold or Bitcoin.

That sort of surprised me. Explain how Bitcoin could be a safe haven given its wild fluctuations. Right. I think Bitcoin has a lot of maturing to do, and I'm not sure that that's so soon. And I think a doomsday scenario is correct. In other words, I don't predict the dollar collapsing or devaluing rapidly relative to other currencies anytime soon. And there's a whole host of reasons for that, geopolitical and otherwise. We're still the biggest economy in the world. We're still the biggest, baddest military. You still basically

clear international transactions by oil using dollars. So there's all kinds of factors which are very bullish for the dollar. And the dollar has done well since COVID against other currencies. But here's the thing is, as Americans, unless you're trading currencies, which is not for the faint of heart, we shouldn't care about how the dollar stands relative to other currencies. We should care about how the dollar stands relative to the goods and services, the stuff we actually want to buy and need to buy. And that's where it's not doing so well. That's where it's losing 8% a year. But hold on. I mean, the reason it seems to me, humbly, that we worry about the dollar's worth relative to other currencies is this has been a global market for some time now. We've been

getting a lot of cheap stuff from China, and it's been good for us with a strong dollar. It's been great for us. We've been exporting our inflation. We've been getting real stuff at Walmart from China in exchange for dollars that are worth about 8% less every year in trade. So you're absolutely right. I can't disagree with that. But again, even the cheap stuff from Walmart is getting less cheap. Here's what we can say about gold.

And we're, yeah, go ahead, gold. Well, so gold started 2022 at about 1800 bucks an ounce. It ended at about 1800 bucks an ounce. It ended at about 1800 bucks an ounce. It's now up closer to 2000. So while most assets, certainly stocks and bonds were losing 15, 20%, maybe more over the course of the year, gold was relatively stable. So that in and of itself, I think speaks to the idea of the stability, which you mentioned, which is certainly lacking in Bitcoin. But yes, I do think that the idea of

a dollar collapse is probably somewhat far off. And I don't love saying this, but I do agree that I think as long as things are relatively okay with the dollar and we don't have any kind of really nasty hyperinflation, I don't think there's going to be the political will to return to a gold standard or to learn from the lessons of history. But nonetheless, I think we have to learn. Yeah, I think your story is that humans don't do things till they have to, and you're sort of predicting them running to gold when they have to. It's homo economicus. We, we, it's, it's why, you know, I don't know if you guys, you must have positions on this because you have positions on everything.

It's one of the reasons I'm so concerned about how we're approaching energy. We seem to ignore economic, economics when it comes to energy rather than saying, hey, let, let, let the fossil fuel get used up, do the best you can to mitigate, get some carbon capture going until it becomes so expensive that economically it becomes advantageous to invest in all these other things. And then people will. They will just simply take over all the green energy and then that's that. But they seem to want to jump ahead of the economics or human economics.

And that never works. Well, more than jump ahead, ignore it. I mean, for example, we're so far off from having an electrical grid that could handle an electric car in every household in this country. I mean, that is just an absolute pipe dream. The idea that we're not going to use coal or natural gas or oil in just a few decades. But I would argue that this doesn't come from a particular economics as it does just from economics denialism. I mean, I happen to have read a lot about the history of money and gold because it interests me. And because of that, I worry.

You know, there are cautionary tales in history, periods in time. And these aren't all remote. I mean, we can go back and these aren't all remote. We can go back and look at Argentina in the late 90s. We can go back and look at Rhodesia, now Zimbabwe in the 70s and 80s. I mean, we don't have to go that far back. We can go look at Venezuela just in recent history and say, this really hurts people. This has real world consequences.

But a lot of Americans think that economics is not real, that there are no laws of economics, that legislatures or central banks can just sort of command things or adjust things as a policy matter, and that we don't have to worry about this. If we want a higher minimum wage, we just pass a law. If we want gasoline to not cost too much, we put a price ceiling on it. If we want everybody to use green energy, we just tax oil. And this is just, it's just economics denialism. And that is something that I think we have to fight against. Yeah. I was speaking to someone who was literally the budget director, this was a while ago, but the budget director for the state of California.

And she was complaining about, it was a time when there was significant debt and they had all these expenses and what they were going to do. And I go, what are you going to do? And she goes, well, we can't print money. And I go, yeah. And she goes, but the federal government can print money. They just need to print more money and give it to us.

And I was like, it was like breathtaking. This is the chairman of the budgetary committee. So people live in that world where that's how they imagine economics to work. That was to me a breathtaking realization that we have people

in government, in leadership, thinking that way. It was the most frightening thing ever. But the good news is, bad news also, is that when it comes to economics, reality has a way of asserting itself, coming to bear. And in California in particular, we are on the eve of

some real coming to Jesus sorts of experiences, I suspect. Well, why doesn't Sacramento just issue state bonds to pay for the choo-choo train from Fresno to Sacramento or wherever the hell it goes? The reason is because nobody would buy them. And she's absolutely right. That's the difference between states and Uncle Sam. And frankly, she's entirely rational to imagine that the ultimate backstop of her state, of California's own profligacy is Uncle Sam because it always has been. Look at COVID. State government's got huge amounts of money.

City and municipal and county governments got huge amounts of money, direct money. I mean cash money into their bank accounts newly created during especially, well, during two stimulus bills, one passed under Trump and one passed under Biden to the tune of about 6 trillion bucks. So she's right in a sense when you think about it so let's try to bring it to the present moment uh so the fed has their current what what the uh fed chairman calls job to do which is to try to get the uh fund down to 2%, the inflation down to 2%. And they are continuing to crank up the rates. They seem, I'm sure you heard the news conference with the Fed chairman.

He seemed thoughtful, but narrow vision in terms of his view of the landscape. In other words, the idea that they could go too far and seriously break something, he really did not seem like a real potential to him if I was reading him correctly. And it was kind of interesting to me that one of the things he talked about, again, I don't know all the specific terminology you guys use, but it was a price index. It was a consumer price index. It was excluding services or something, had dropped rather precipitously, very suddenly lately. And I thought, gosh, whenever you see a delta accelerating you should have a a good deal of caution moving forward you should at least at least pay attention and his position was oh yeah

it's very rapid change we don't expect that to continue so anyway it's like whoa you don't expect yeah i don't i hope hope you're right but this is how you get into these spirals that you have trouble getting out of. Well, let's think about that. He's a brilliant guy, and I think a well-meaning guy, Jerome Powell. But the idea that we, or at least the financial press watches with bated breath for his next pronouncement, he's going to tell us about interest rates and their goals and their targets. And what he's talking about at the end of the day are two things. One is the supply of money, supply and demand like any other good or service. Money's a commodity or it's supposed to be. It's not supposed to be a government issued tool. So one,

supply and two, interest rates, which is for lack of better, we'll just say is the price of money, what it costs you to go out and borrow money, let's say, buy a home. And so when we're watching all this, it just strikes me, most of us think, well, yeah, America is basically a free market country. We're a capitalist country. We don't have a centrally planned economy like the former Soviet Union. But what if we had press conferences where instead of Jerome Powell, it was some secretary coming on and saying, you know, this is how many bushels of wheat we're going to produce this year in the U.S. We're going to direct the farmers to do this. Oh, and here's how many cars Detroit's going to produce. And this is going to be the hourly wage of the worker in Detroit. And this is this is going to be how much a 2,000 square foot house cost. We would look at Scans today, we'd say, no, no, no,

the market provides us with houses and with automobiles and with bushels of wheat. That's supply and demand. The market figures that out. And capitalism is what makes us rich. So how come we don't have that same perspective when it comes to money? I mean, I consider the Fed a very spooky organization. I don't want my economy centrally planted. And half of it is because you've got a good and service on one side of every equation. You can look at that like a new Honda Accord and judge the quality, maybe do some research, decide if you want to buy it. On the other hand of that equation is the US dollars that you're exchanging for it. Does Honda look at the quality of those dollars? Do they look at that and say,

wow, what's this Jerome Powell guy doing? Maybe we have to raise the price of the Accord a little bit to compensate for this risk we're taking because we think this dollar we're getting is devaluing 8% a year. I mean, it really is very anti-capitalist at the end of the day to have central planning of money. And that's what we've got. And look, he's up against it. If you raise interest rates, the conventional thinking

is that, well, that slows down the economy. Both businesses and individuals borrow less. Makes sense, right? We demand less of something that costs more. And as a result of that, prices begin to drop because demand begins to drop because let's face it, so much of what businesses and individuals buy in this world, they buy on credit. Okay, that's conventional thinking. That's all well and good. But the flip side of that is, of course, by raising interest rates, you're making marginal corporations that have a lot of debt. You're putting them on the edge. They might go bankrupt. They might not be able to make it in the new environment. Then

that might reduce supply. You're probably putting some people out of work. I mean, generally speaking, when we're trying to fight inflation, that results in more unemployment. I mean, it's just this impossible situation. And what Jerome Powell inherited was decades and decades and decades, basically four decades from 1982 until 2022 of relentlessly lower interest rates. And I really think, you know, for your listeners that we are in a new turning. In other words, 2022 marks an absolute turning point in the U.S. economy and that in the future for many, many decades, we should expect higher interest rates and higher inflation, that the go-go days of the last four decades are over. So he's not going to get to that 2%? I don't think we're going to have 2% consumer price inflation this decade.

No way. That's my opinion. Yeah. That's his goal. He might break things trying to get there. And that's very interesting. Now, we have been essentially discussing sort of economic philosophy slash economic history, right? There are people, say, at University of Chicago that believe really the thing about economics is it's just mathematical

models it's more like physics you just build the right model and then you can predict you know how things are gonna move and you know how to how do you know what buttons to push to get things to go in the right direction what levers to push so to speak we're not going to talk about that I find I find that kind of boring because there's so much interesting history and philosophy around economics. I've taken a little break. When I get back, I want to bring in our friend Adam Smith. And actually, I don't really know Mises' relationships with Adam Smith, how close that

relationship is or is not. It might be interesting. And I'd like to kind of expose people to some of adam smith's genius if you don't mind you up for that absolutely you bet all right right right back after this not sure how to say i love you this valentine's day well nothing says i love you more than a few minutes of relaxation and genu cell skin care does just that gives you the luxury gift of feeling like you spent the entire day in the spa, all while in fact in the comfort of your own home. Susan loves to feel pampered and special,

especially on Valentine's Day. So why not relax with a detoxifying mask and feel amazing after only one use? I am a snob when it comes to using products on my face. The dermatologist makes a ton of money for me. But when I was introduced to genucell i was so happy because it's so affordable and it works great i was introduced to the ultra retinol cream which i love at night all the eye creams are amazing people notice my skin all the time and i'm so excited because it's actually working genucell's mask works wonders by pulling out all of your imperfections to make you feel refreshed and looking like you just stepped out of a facial appointment. Order the Dr. Drew package today and try this amazing mask for free.

That's right. Every single Dr. Drew and Susan package includes a free mask to celebrate you and your loved one on this Valentine's Day. Go to GenuCell.com slash Drew and enter code Drew for an extra 10% off your entire purchase. Plus, all orders are upgraded to priority shipping for free. That's Genucel.com slash Drew, G-E-N-U-C-E-L.com slash D-R-E-W. My guest is Philip Patrick. He is a precious metal specialist, trains at University of Redlands. He has spent years as a wealth manager at Citigroup, and his current position is with Birch Gold Group. So gold has always been

somewhat of a safe haven, particularly in times of great turmoil, much like our present moment, I imagine. Gold has always traditionally been a safe haven asset. Gold specifically has always been about wealth preservation, right? Gold has always held its buying power. You can look at as far back as you'd like in history and biblical times, one ounce of gold would buy somebody 400 loaves of bread. And today it does the same thing. So it's a store of value. But I would say in times like this, as you mentioned, it's particularly important when you're dealing with things like 40 year high inflation, you know, the air that's coming out of a stock market bubble, these times in particular tend to drive gold and silver

up quite significantly. If things are different, the solution needs to be different as well. So I encourage everyone to get informed and we have a lot of good information here to help your listeners. Just a reminder, I am not a financial advisor and I do not give out financial advice nor investing advice. Birch Gold has an A plus rating with the Better Business Bureau, And we are back with Jeff Deist from the Mises Institute, and we were about to talk about a gentleman, part of the Scottish Enlightenment, who was actually originally a moral philosopher before he came up with his Wealth of Nations.

And people have all kinds of strong feelings about Adam Smith, but forget the fact that he was actually a moral philosopher. He would have described himself as a moral philosopher. And he has a famous phrase, it sort of summarizes his moral philosophy, which is that men desire to be not only loved, but to be lovely. In other words, admired in the eyes of others. And he has this extraordinary book where he talks about, amongst other things, how the manufacturing of, say, a sailor's peacoat could be the price it is given the extraordinary steps it goes through. And I think, was it manufacturing pins was his other thing, how it is we're able to manufacture pins with greater efficiency given the way we conduct our economies. But tell me about little Adam Smith and a little relationship with Mises. Well, it's great that his book is called

Wealth of Nations. I mean, it's absolutely a staggering book. And earlier, you mentioned the idea of technical economists who viewed things in a formulaic or mathematical way. Well, Adam Smith was coming at this in the original way. And as you mentioned, the idea that this is a social science. As a matter of fact, the idea of an economist as a standalone discipline didn't really exist until the 20th century. Throughout the 1900s, people who studied economics thought that they were viewing, studying human relationships, and this was all related to sociology and philosophy and even logic. It wasn't until the 20th century that we started to think of economics as this discipline, and it got infected with the methods of the hard sciences. You mentioned physics. Well, in physics, we can observe

phenomena in nature, we can develop a hypothesis, and then we can go test it empirically, and we can retest it, and we can try to prove or disprove it because nature has properties. A human does not have gendered properties. Which repeat. Keep going. Nature has molecules and atoms and gravity and forces like that. But human beings are different. Human beings are irrational characters.

Human beings have self-interest and greed and lust and anger and hatred and all kinds of things that drive us. So when we're studying humans interacting with us, political science or sociology or economics, we're in a very different place. I think Adam Smith's combination of, as you put it, moral philosophy with understanding what we do and how we do it and why we do it, calling his book The Wealth of Nations, nobody in economics writes like that today. That's the question before us, right? We're all worried. How did America get so rich?

What if it all went away? Could we screw this up? And the answer is yes. And those are the kind of big picture questions that Adam Smith is asking. Today, you get this double speak from someone like Jerome Powell. It doesn't even seem like

they're asking the right questions. What question would you ask? I would say, how did we get rich in the West? Is it magic dirt? Are we somehow smarter? Do we have just some sort of magic cooperative process? No, we had a healthy degree of property rights, we had a healthy degree of the rule of law, and we had an understanding, sort of a social contract that generations would want to accumulate and save and put money away for future generations. And that's made us basically the wealthiest,

most long-lived people in the history of the world. And I think we ought to understand that, think about that, worry about that, and try to preserve that and improve upon that for future generations. Those are the questions, is how do human beings get together and cooperate socially? Government is laws and force and guns and prison at the end of the day. Markets are human cooperation. Markets are voluntary. I think that is something that's worthy of study.

And I think it needs to be viewed in the broader context of philosophy, logic, reasoning like Adam Smith did, not in this mathematical or statistical way of just collecting data and viewing human beings as aggregates. We're not aggregates. That's not how we're wired. Trevor Burrus, Is the position of Ludwig von Mises essentially a libertarian position? Dr. Well, I would say it is a liberal position in the way that that word was used right up until

the beginning of the 20th century. Yes. Classical liberal. In 19th century, absolutely. Understanding of liberalism was basically a government is liberal, it's liberal versus strict is like a parent who is liberal versus strict. It generally allows a broad degree of laissez-faire in the economy. It attempts to have non-aggression with respect to

its neighbors. And it has sound money to allow people to save for a rainy day. I mean, that was the idea of liberalism right up until, I would say it's during the 1930s and FDR when that word really started to become perverted into sort of a big government program. And that's when people began to use the term classical liberalism. So that's certainly a relative, an ancestor of modern day libertarianism, no question. And what is the relationship between Mises and Hayek? Well, Hayek's a German, Mises is an Austrian. They both are superstars in what we call the Austrian School of Economics, which was, again, part of that pre-Keynesian world where people thought production mattered more than consumption. And so they had different focuses. Hayek's brilliance was that he brought us the idea of spontaneous order, the idea that no human being or group of humans, I mentioned a Politburo deciding how many bushels of wheat to produce for the coming year, that no group of humans could have all the knowledge at their fingertips that markets naturally give us through their operations.

And so we need to reduce the role and power of government because otherwise they'll screw everything up and the marketplace needs to be the main driver of our economy within a set of rules and laws and property rights and that sort of thing. So Hayek's idea of spontaneous order is just a tremendous challenge to the whole 20th century because the 20th century, both the terrible things which happened in the former Soviet Union and in China, but then also the socialism which happened across the West, those were all based on the opposite premise, that we need to have centralized control over the economy.

Yeah, so it's distributed information, right? And one of the lessons of COVID is how destructive it can be when medicine becomes overly centralized as opposed to giving the authority and the information flow to come from the unit of the physician or nurse and the patient. That becomes an insignificant source of information information and some bureaucratic structure gets put on top of it and it is incredibly destructive how how is it that we can't seem to learn the lesson that centralization and totalitarian and forcing is inefficient and in all and especially when it's guided by ideology has sort of infinite capacity to do human harm. Well, it's just a political seduction.

There's always a parasitical or predatory class in any society. And some predators go into street crime or, you know, at a lower level. And some predators go into professional crime at the higher level of government. So it is part of human nature. It's just something we have to guard against. It's something we have to constantly warn against. And we have to learn the lessons of history.

I would say that there is a bit of a silver lining if we can find one to the centralization of medical authority during COVID. And that is that, from my perspective, anyway, I think, for example, the WHO, the UN, the American CDC, they were really unable to project authority worldwide. We found pretty quickly that countries sort of broke apart and acted on their own interests rather than following one international playbook when it comes to COVID. And even here in the US, we saw disparities amongst the 50 states and the

50 governors in terms of their approach to COVID. Some were very locked down, some were more open, some were almost draconian like China, like the city of San Francisco. So I love the idea that we have a little bit of a laboratory, a experiment during COVID. And I, in my opinion, the states and the countries that were more open, like Sweden, like Florida, like Singapore, actually demonstrated that the folly of following along with all of the lockdowns and the CDC guidelines and the masking and all that. But look, this is always the struggle. This is always the struggle. The history of the 20th century in terms of the political story, the political story of the 20th century was centralization. Things that used to be decided locally became regional, were decided at the state level, increasingly decided in Washington, D.C., increasingly decided by one Supreme Court, and then increasingly decided at the international level by the U. I'm very hopeful. I'm very optimistic that the story of the 21st century is going to be a decentralist story, breaking away from that.

And I'd love to see a far greater degree of diversity and sovereignty around the world. Where is the evidence for that? Other than, I guess, what you're saying and the fact that there were states and breakaway countries and things, and to some some extent people did their own thing but i i guess maybe i lived in a state that was so draconian and as you said it was not like china it was specifically like china and modeled after china because they had been hoodwinked by chinese scientists that this was the way to go and how they could have fallen for that is just beyond imagination. But there we are. So you're optimistic about the future. Would that be accurate?

I'm optimistic long-term, absolutely. How about short or intermediate term? Well, I think the next 10 years are going to be rough. And as to your earlier point, I hope, we all hope, we don't want some catastrophic condition in America to provide the impetus for change. We don't want a terrible, you know, a terrorist event, a terrible economic crash or dollar depreciation, another pandemic, some kind of civil war,

some kind of a breakaway movement. I mean, none of us want that. The idea is not to have some Mad Max scenario where we can plant our flag on top of the pile of rubble and say, you know, we were right. Look, we were telling you that you couldn't print money forever. That's not the goal. The goal is, I think, to create understanding and awareness here. But I'm absolutely convinced that America's too big. 330 million people. We see the rancor and the division in this country. I think we absolutely need to have a far greater degree of political separation, subsidiarity. Maybe outright secession is just a non-starter or a pipe dream. Okay, maybe that's above my pay grade, but we can

certainly have a far greater degree of federalism. We're already seeing this since COVID. We're seeing people voting with their feet. We're seeing different policies between different governors. And when it comes to the social issues, I mean, I tend to focus on the money and banking and the economics. But when it comes to these terrible social issues, Dr. Drew, can we just say, you know, we're probably not going to solve abortion. We're probably not going to create one national viewpoint on guns, on, you know, trans and drag queen story hour,

all these things which are so divisive in society. CRT, you know, the escape valve for all this, the release valve for all this is federalism. It's allowing people to have different rules in different states to have less decided in Washington, D.C. or at the Supreme Court and more decided at the state and local level. And I think this offers a lot of benefit to progressives, too. I mean, I'm obviously consider myself a person on the right, but, you know, I think there's there's room to deal here. I I lived in California for many, many years, my home state. I don't I don't want people to wake up in California and and feel like they have to worry about who is the senator from the state of Alabama. I mean, that strikes me as a crazy system. It strikes me as as inherently

divisive. And if we just get back to following a more federalist system, it's laid out in the Constitution, it's in the Tenth Amendment, I think we'd have a that our country has that very few places really have anything quite as well developed as that. and different than so many other countries. You literally, if you go all the way down the Jeffersonian logic, you can have almost independent little countries as long as the federal government is controlling the state commerce and the things that it's supposed to control. The problem is it just keeps getting, the centralized stuff just keeps getting bigger and bigger and bigger. For instance, let me ask this, should there be a Federal Reserve? Oh, absolutely not. I consider that all downside, no upside

whatsoever. I think money is absolutely something that the marketplace can handle and provide, just like cars or shoes or anything else. Now, obviously, there'd have to be a transitional period, but to me, that's an absolute no-brainer. Would you have some sort of national bank or something? Would there be anything else to replace it? Well, that was the idea. If you go back and look at the history of the Fed, it was designed to be a backstop. It was designed to be a banker's bank. It was there, at least ostensibly, to prevent bank failures in dire circumstances, ultimately to protect the shareholders and the depositors. The lender of last resort. Absolutely. That was the idea.

Yeah. And I recently read a firsthand account of the Depression in, I think it was Cleveland or some unwind, how low is low is a question that you're asking yourself every day for a long time. He kept talking in this diary. I forget what it was called. But he'd just go, oh, no, another bank failed. Oh, that must be the last one. We're going to be OK. And then, oh, no, another bank failed. Oh, that must be the last one. We're going to be okay. And then, oh, another, two more fail. Then things would stabilize and people would get back in

and start speculating again the way they did in what caused the original unwinding. And then, of course, there'd be another leg down. And I don't think people have a sense of what that is and how that can happen. Well, it was a very scary time, no question about it. But I think we have to look at the performance of the Fed since then. I mean, we've had booms and busts throughout now more than 100 years of central banking in the United States. So how do

we judge a success? Has your dollar held its purchasing power over the last 50 years? I mean, arguably it has not at all. So the question is always, what's the unseen? What would things have looked like in the absence of the Fed? What would things look like if we actually use gold as money and exchange that using paper or digital technology on top of it. I mean, we'll never know. And I'm not saying that this sort of unwinding would be easy. The idea of having more sovereignty at the state level, that doesn't solve the dollar,

that doesn't solve the national debt, that doesn't solve federal entitlements. So I'm not suggesting that any of this is easy, but I'm strongly suggesting that if we want to stave off what looks like a really nasty inflation, what looks like a really unserviceable debt, what looks like a bunch of unpayable entitlements, and what could ultimately become a national bankruptcy or even the destruction of the US dollar, that might sound far-fetched. That might be decades up. But nonetheless, it's never going to be easier to start addressing these problems than today. And so I guess that's why personally, I wish we weren't talking about trans or the latest school shooting or something like that all day. When from my perspective, we have these mechanical structural problems in the country which we ought to be addressing. Susan, any questions before we wrap this up? No. I know she had some gold on her brain.

No, I still don't understand gold, like how it goes up and what the value of it is. But I get that there's only so much of it. But are we betting on gold or are we buying gold? Are we, you know know how do we put we obviously whoever owns it um we obviously don't have it um i but i just i don't understand how the value is it because it's supply and demand and people buy more and more of it or bet on it it's price just maybe you ought to talk a little bit about it. How does the price go up? Maybe you ought to talk a little bit about price.

Like how did it go up $300 this year? It's certainly supply and demand. And it is certainly something that you should view as a safe haven. I wouldn't view it as an investment. I would view it as exchanging one form of money for another. In other words, you give up some US dollars, you get some gold in return, hopefully in physical form rather than just ownership in an ETF or something like that. And so it doesn't pay dividends. It just sort of sits there. So I wouldn't suggest going out and selling your house or putting your entire net

worth into it on the idea that it's going to go up because I'm not sure that it is. But here's what we do know. We do know that it's never gone to zero. Can you sell it? What do you do with it after you buy it? You put it in your safe and then it goes up in value? You put it in your safe? Sell it?

You could absolutely sell it at some point. It's never gone to zero in thousands and thousands of years. And here's the thing is almost, again, almost all the gold that's ever been produced is still on earth today. So let's say we had some economic crisis in America and gold went from roughly $2,000 an ounce, it went to $4,000 an ounce. And all of a sudden people are clamoring to buy it. The precious metals dealers are struggling to fill orders. Everybody wants gold. It keeps going up and up and up.

Well here's the thing is with almost any other kind of commodity, producers would immediately rush in to fill the void and come up with a whole bunch of new platinum or whatever it was that had doubled in a year. You can't do that with gold. Even in the years of biggest production, like in the 1980s, when gold went up something like 40% in one year, no matter how much the effort is put into producing more gold in the mining sense, even creating 2% of the existing supply would be a stretch. So no matter what happens to the underlying price of gold, to increase the supply of it more than at the very most 2% a year, more likely 1% a year is almost physically impossible.

So you don't have to worry as much about the supply increasing rapidly to devalue the gold you hold. You do have to worry about that with dollars or other investments. Do you get that? I think so. Okay. Susan has been thinking about gold lately. It won't go to zero. There's never been a time where grandma died with a bunch of gold and left it to her kids or grandkids, and they were unhappy because it was worthless. That has never happened. But lots of grandmas have died holding paper stock certificates for companies that no longer exist. Worthless. That's one difference I would add. Well, Jeff, I appreciate you spending some time with us. It is Mises.org. What's coming up for the Mises Institute? Where do you want people to go?

What do you want them to read? Anything you guys are excited about? Yeah, we have events year round. We're trying to be the canary in the coal mine here. If you go to Mises.org and go to our events page, or if you follow me on Twitter, at Jeff Deist, all one word, you can keep up with everything we're doing.

Thank you so much, sir. All right. Thank you, Dr. Drew. Appreciate you being here. and for everyone else we uh have a full week coming up next week um susan i believe we have uh michael schallenberger in here on tuesday is that correct susan yes yeah here it comes and then ron johnson on the wednesday the 8th uh and on the 9th maybe we will just take some calls finally and then we Johnson on the Wednesday, the 8th. And on the 9th, maybe we will just take some calls finally. And then we have Dave Rubin on the 13th. Rubin coming in the following week, Jessica Rose.

Yeah, the 9th, we're thinking possibly Naomi Wolf. Okay. We haven't talked to her in a while, and she came on. This would be the time. I don't know if you saw what came out during the show, but there were more Pfizer files that came out from project Veritas specifically about with recording specifically about the topics. Dr.

Naomi Wolf has been talking about. So this would be the time to get her on forever. Yeah. Yeah. Fertility issues. Okay. Yeah. Literally.

I mean, I didn't, I didn't get a chance, didn't get a chance to watch it. I just saw it all popping up during the show and it's whatever the new Pfizer release is that just came out five minutes ago. Today? During today's show? Yeah, like five, ten minutes ago. It's trending right now. In the Twitter spaces that Drew's locked in for the rest of his Twitter experience? Yeah. I think what happened, Drew, was you were made a host on another Twitter file,

so you can't log out of it until they log you out so yes that seems to be right yeah so note to self is don't join a twitter spaces with somebody else unless you know yeah before a show but just go back on there i know i'm sorry yeah you can go back if you want i you know goofy all right uh that's that's why all of a sudden something about gender popped up in the middle. Oh, yeah. I was trying to go in. There is no gender with gold. Yeah, that's true.

Look, we just did a very light romp through economics here. It is a fantastically complex topic. It's like doing a light romp through medicine or something. It gets very, very complicated. But I've always been fascinated by the Mises Institute and Hayek and his ideas. It seems to me that Keynesianism has been sort of an overplayed hand. It just seems excessive. But the Chicago School, people who are creating mathematical models around economics, I'm fascinated by that because those can be

very accurate and very useful. Are they telling us something? Can they be, you know, are they flexible enough to be able to deal with future changes and the way humans are act and behave? Because it's like trying to find a mathematical model for human behavior. It's very, very, very difficult to do that. It's such a complicated topic. And really, these transactions that we have are really just about relationships. That's why people have coined the term homo economicus, really, that man ultimately at his head or his or her core is an economic being, and that there are these relationships and exchanges of all sorts that occur of an economic nature. And as we said earlier, the three big players were

Mises, Keynes, and Hayek, and they've held sway over the 20th century and now the 21st century. It is interesting to hear what Jeff had to say. I have a feeling that we are more sort of bureaucratically ossified than we know. It'd be very hard to change some of the stuff that's going on now. It'll be interesting to see. One of the key things we can sort of look at is whether or not we ever do get to that 2% inflation rate. Jeff's position was no, that we'll never get there.

And that will be a significant change, particularly with the magnitude of the debt we have right now. So as I said, I appreciate Jeff joining us. I appreciate you all being here. Sorry, the Twitter spaces did not work, but you know, that's the way it goes. They're busy listening to Mario and your other Twitter spaces, which you can go back to if you want. I might do that. So again, thank you, Susan, Caleb. Thank you for this week and thank you all for watching.

We'll see you next time. Ta-ta. Ask Dr. Drew is produced by Caleb Nation and Susan Pinsky. As a reminder, the discussions here are not a substitute for medical care, diagnosis, or treatment. This show is intended for educational and informational purposes only. I am a licensed physician, but I am not a replacement for your personal doctor, and I am not practicing medicine here. Always remember that our understanding of medicine and science is constantly evolving.

Though my opinion is based on the information that is available to me today, some of the contents of this show could be outdated in the future. Be sure to check with trusted resources in case any of the information has been updated since this was published. If you or someone you know is in immediate danger, don't call me, call 911. If you're feeling hopeless or suicidal, call the National Suicide Prevention Lifeline

at 800-273-8255. You can find more of my recommended organizations and helpful resources at drdrew.com slash help.