They warned Us. Now it’s here. Are you prepared?
A Conversation between
Dr. Ron Paul and Porter Stansberry
Introduction by Steven Longenecker
Illustration by Kevin Kallaugher
For years, former U.S. presidential candidate and 12-term Congressman Dr. Ron Paul offered an alternative to the typical positions taken by both the Democratic and Republican Parties…
Ever since he first went to Washington, D.C. in 1976, he has been a critic of fiat currency. He’s pushed to abolish the Federal Reserve, even writing a book titled End the Fed. And he’s spoken out for decades on the need for a new standard in the U.S. financial system.
He was of the few voices advocating for limited government, individual liberty, and sound fiscal principles. You won’t hear many other politicians take those positions.
And we would all be better off if his warnings were heeded. For example, several years before the 2008 financial crisis, he warned the House Financial Service Committee that mortgage subsidies were dangerously distorting the U.S. housing market…
Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
Joining him in these warnings was financial publisher Porter Stansberry, founder of Stansberry Research.
In June 2008, Stansberry published a letter titled: “Freddie Mac and Fannie Mae Are Going to Zero: How to Protect Yourself from the Greatest Financial Calamity of Our Lives,” wherein he described the massive danger in the American housing market.
At the time, Freddie Mac and Fannie Mae were each trading for more than $25. Within a few short months, they would each trade for less than $1. This dead-on prediction of the mortgage meltdown got the attention of Barron’s, which labeled Porter’s work: “remarkably prescient… Nothing, as far as we can see, has happened to contradict his dire prophecy.”
In the years since, both Dr. Paul and Mr. Stansberry have detailed an even bigger crisis currently building in America…
Porter Stansberry wrote and produced a public warning a few years ago titled “End of America,” which more than 40 million people read or watched on YouTube. This coming crisis, with a catalyst of an imploding national debt and the end of the dollar’s reserve currency, will dwarf the Great Recession…
Read their recent frank and unscripted conversation here, which American Consequences has lightly edited only for clarity…
Ron Paul: I’m sure you recall back in 2015 you had a conference up in Tennessee and that’s when we got to know each other. The questions I probably had for you then and I have now, and I think our viewers would be interested, is a little bit about your background. You have a big operation. You’re well-known and you have so many subscribers. But how did you get started? Did you know what was going on in the world when you were 15 years old or did you become knowledgeable later on? And how did you finally get around to doing this advisory letter?
Porter Stansberry: Well, I think like a lot of libertarians, I was a bookworm. So I found the ideas of Henry Hazlitt and I went on to read things like Eat the Rich by our mutual friend P.J. O’Rourke.
Then I stumbled onto Agora’s letters. Bill Bonner is a big publisher and he introduced me to Doug Casey, and I got a job working for them out of college. And from there, one thing led to another. In college, I went to The University of Florida, and I learned all the things that the mainstream teaches you about political science and about how the republic is supposed to work and how democracy is supposed to work, as opposed to how it really does work. And I was just very impressed when I met Doug and Bill and started traveling around the world with them.
I was also very impressed about how the Austrian economics described the world as it was and how much better that was as a forecasting tool, because it really revolves around human incentives, human actions, and human decisions. And I don’t see any of our mainstream political leaders or thinkers talking about the realities of how the public makes decisions and how they respond to incentives. But of course that’s what the Austrians focus on.
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Ron Paul: So you officially started your letter and your advisory service in 1999. Were you doing exactly the same thing immediately or did you start out with a small, little newsletter that just grew? Or was it always the same thing of advising people and giving them information to help them make their investment decisions?
Porter Stansberry: Yeah, definitely. I have had a passion my entire career for helping individuals level the playing field with the folks on Wall Street.
I started in 1996 working as an associate at Agora for Bill Bonner. And then in 1999, I left and started my own publication because I was quite a bit younger than they were and I could see in ways I don’t think they understood yet how the Internet was going to change the economy and change our way of life. And so my first independent publication was all about the Internet and how it was going to change things. And you might have remembered seeing the advertisement that I launched my business with. The headline was, “There’s a new railroad across America and it’s making some people very rich.”
And it was all about how companies like Amazon and Qualcomm and the growth of bandwidth and Moore’s Law was going to really change the way that we do things… everything from, for example, digital photography to retail. And so having some insight into that, because I had a background in computer programming as well, really gave me a big advantage in the markets for a number of years.
But the real advantage that I think we have at Stansberry Research is we are very well-grounded in Austrian economics. So I think we have a much better idea of what the numbers mean than what the mainstream media and other financial advisors would say.
Ron Paul: Right, and you’ve had some successes. I know you were on top of it when the housing bubble was building – warning people and getting prepared for that. But you also have to keep up with all current events, and I can’t think of more challenging times than what we’re going through right now.
You know about the business cycle. You know about the Fed and the distortions there and you can anticipate financial bubbles. But then right now, we have thrown in the mix here – we have the coronavirus, the overreaction on coronavirus, Black Lives Matter, too much concentration on the Federal Reserve, and the financial bubble. And the lockdown and what’s happening in the streets are very important, but no one is not talking about the real source of how the financial bubbles develop.
So how do you handle that? Do you talk about the lockdown and the damage and tell people some of the things that they have to do and how to invest because of that? And of course the Black Lives Matter is significant – we can’t ignore that. But I think that unless they’re reading your advisories and a few others, not too many people concentrate on basic monetary policy.
Porter Stansberry: Yeah, we’re definitely on the same page there. But if I may, let me just bifurcate a little bit. I have a larger research company, Stansberry Research, and there are a lot of good analysts and writers there. And they have different areas of specialty.
For example, I think the two things that my business does the best is biotech research and, ironically enough, property and casualty insurance research. And they’re not really related, but we have staffs with decades of experience in those fields, so we produce very insightful industry work in those categories.
I’m probably the one person at my company who cares the most about these ideas – about the overall impact of monetary policy – and I’ve probably written more about it than any other writer. So I just want to be careful that I’m speaking for myself here and not necessarily for all the writers or all the thinkers at Stansberry Research. They all are entitled to their own opinions.
But, Dr. Paul, I will tell you that I wrote something as far back as 2010 where I saw how the Fed was responding to the mortgage crisis. And what I know about history and what I know about monetary policy and theory is that once democracies begin to print money to pay for the government’s bills, they never stop. And that has a corrosive effect on society.
A lot of people in the mainstream media snickered when I said that this would lead to violence in the streets. It would lead to a breakdown of societal norms. It would lead to more and more and more printing and a total devaluation of the dollar and the loss of our world reserve currency status….
But virtually everything I wrote over a decade ago has come to pass.
The thing that I wrote was called “The End of America.” And of course a lot of people in the mainstream media snickered when I said that this would lead to violence in the streets. It would lead to a breakdown of societal norms. It would lead to more and more and more printing and a total devaluation of the dollar and the loss of our world reserve currency status. And everyone made fun of me.
But virtually everything I wrote over a decade ago has come to pass.
And what I see is that both the response to COVID and the rise of Black Lives Matter movement are nothing more than what happens in every historical situation where you have a government that begins to behave like ours with its monetary policy. It leads to a tremendous centralization of power and it leads to a degradation of civil society, and in both cases that’s what you have here.
You have a government that’s well overstepped its constitutional authority to tell people to remain in their homes. And of course you have the societal breakdown where people genuinely believe that they can’t get ahead in American society because of the color of their skin. You’re not allowed to say this anymore, but I find those ideas absurd and feel genuinely bad for people.
When you tell a whole segment of your society that their own initiative and efforts aren’t going to count, you’re lying to them, but more importantly you’re giving whole swaths of them this limitless excuse to not try their best and to not participate in society in a normal way. And that’s why you see the rioting and all the other things that have happened.
So even though the micro-causes of all these things may be due to specifics, the reality is that this entire genre that we’re living through is completely a normal part of what we have done with the monetary base.
Ron Paul: With all the news and the markets being so rocky, when you think about the political situation, the economic situation, the runaway deficits and all, where do you come down emotionally in a sense that you end up with a bit of optimism because we can correct these things?
Or do part of your investors or your writers, do they talk about why you have to move out and go overseas? I mean, there’s all types of reactions to this. But I always work hard at it, and some days it’s more difficult. I’d like to think that if we did the right things, we should be optimistic. But where do you come down on this side of optimism and pessimism?
Porter Stansberry: Well, given that my two mentors in business were Doug Casey and Bill Bonner, I have to say that compared to them I’m a wild-eyed optimist. Though I’d like to believe that I’m a steely-eyed realist.
And what I will tell you, Dr. Paul, is once you understand what is behind the collapse in civil society, once you understand what’s behind the soaring valuations in the stock market, the soaring price of gold, and so on, it actually becomes pretty easy to make a lot of money. And if you look at the track record of our advisories, we’ve done incredibly well over this 10-year period because we had a very good sense of what was going to happen in the markets.
Our primary financial strategist is Dr. Steve Sjuggerud, and he has been calling uniformly for market upside. Originally, he called it the Bernanke Bubble, and then he predicted what he’s calling the Melt Up. But what he’s saying is that the primary recipient of all of this excess liquidity would end up being the stock market. And if you have followed that advice and you followed our recommendations over the last decade, you have made a tremendous amount of money.
Now of course we both know that that money is going to buy you less and less and as that destruction in value accelerates at some point the markets will of course turn. There will eventually be a panicked sell-off. But if I knew when that would happen, then it would be a lot easier to do our job.
So while we’re telling people to enjoy the fruits of this inflation, we’re also of course warning people that you’re going to be a whole lot better off if you put some of your savings in gold. If you have some real estate offshore, I think that’s a sensible precaution. We’ve also recommended things like farmland and timber that have historically provided wealthy people and wealthy families with refuge in times of domestic crisis.
I think what you have to do is do the best you can to make hay while the sun is shining. But be aware that the storm clouds that are building right now are the most serious our country has ever seen.
So I think what you have to do is do the best you can to make hay while the sun is shining. But be aware that the storm clouds that are building right now are the most serious our country has ever seen.
Ron Paul: I’ll bet you watch the polls to some degree. How much weight do you place on that? Because a lot of people anticipate which side wins, so are some of your arguments or recommendations based on who you think will win the election?
Porter Stansberry: I know that probably makes sense to a lot of people, but honestly, Dr. Paul, as libertarians I have serious objections to both of the major parties. I personally wouldn’t be interested in voting for either of the major candidates right now. And no matter which candidate wins, I don’t think that the economic fortunes of our country are going to change very much. When you look at the unfunded liabilities that we already have that are cooked into our whole legal structure, there isn’t anything anyone’s going to be able to do to stop the inflation.
So I really don’t pay that much attention to it. I will tell you, though, that looking at the futures markets around volatility, this is the most expensive election that we have ever seen in the entire history of the financial markets. And by that I mean that buying protection around the volatility of the stock market will cost you more than it ever has before because of the anticipated uncertainties of this election.
So for sure a lot of major investors are very concerned about a contested election or how long it may take to determine who won. For me, I would rather sell insurance around that volatility than buy it at this point because I think it’s too expensive.
Ron Paul: I have frequently said over the years that this desire for more bipartisanship won’t make much difference. I argue that we have way too much bipartisanship and I assume that you might lean in that direction because they’re the same. They fight like cats and dogs over the power, but we wouldn’t expect one side to be more likely to bring about sound monetary policy.
Which side is going to really cut spending? Which side is really going to shrink the size of government? Which side will likely bring the troops home? It seems to me like philosophically there’s a lot of bipartisanship, and unfortunately I think we as libertarians would like to challenge that and give them another option.
Porter Stansberry: Yeah. I contend that the best metaphor for the relationship between Republicans and Democrats is to look at the infighting that goes on in academic circles, right? Never has so much blood been spilt over something of so little consequence as when you get into an academic department and you’ve got people warning like they’re fighting a religious battle over some minor theory or question of history. And of course it’s not going to make a whit of difference in the real world whatsoever.
And I feel the same way when we look at whether we’re talking about Trump’s tax plan or Biden’s tax plan. The numbers are not inconsequential, but they’re also not material. They’re not going to change the course of our country’s future. And as I’m sure you’re very well aware and as all your listeners are, there isn’t a choice for us.
Could you imagine if there was a major party out there who said, “Look, we’re going to cut taxes to no more than 10%, and then we’re going to decide what we can afford to spend after that.” That would be so revolutionary that it’ll never happen, at least not without a complete collapse.
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Ron Paul: And some people narrow it down, “Well, we need more good members in Congress.” But actually, the government’s on autopilot. If they’re not in session or anything, they spend the money. There are executive orders. How much money was spent during the collapse of the housing bubble? A lot by the Federal Reserve, into the trillions of dollars, so it’s totally out of control.
But I did have one question. You have so many different advisories and different letters. Do you deal with this or is there somebody in your organization that talks a lot about overseas investment and actually going overseas? And that’s been something that has been with the libertarians for a long time. I never get too excited. I guess I sort of enjoyed where I lived and I had a large family, so it wasn’t attractive to me, but a lot of people think about that. Do you deal with that subject at all?
Porter Stansberry: Yeah, we do. We have a fantastic researcher, Kim Iskyan, who lives overseas. And prior to his time with us, he was a leading investment researcher in Moscow actually, working for some investment banks there during the original rise of capitalism in Russia in the late 1990s. And his wife, interestingly enough, is a World Bank employee and has been stationed all over the world. So he has seen 50, 60, 70 different countries and he has invested in three or four dozen of them. And so he writes a very good global perspective investment advisory for our clients.
And of course just me personally, I’ve owned real estate overseas now since the mid-2000s, so for about 15 years. And I really do like having a toehold in a foreign jurisdiction, not because I want to leave the United States or because I anticipate that someday I will. I just like having an asset somewhere that’s a little bit more difficult to seize than my bank account or my farm here in Maryland.
Ron Paul: The solution comes from understanding what liberty is about and understanding what the purpose of government is. And in a libertarian society we have such little government we don’t have to decide this. But people get upset because libertarians are cold and callous and they don’t care. But it just seems to me that our argument is that people do better if they’re happier, they’re richer, they have more security, and all this stuff in a free society.
So I always talk about this in my speeches. I say, “We have such a great philosophy, why is it that we can’t convince people of this?” And of course I think it’s the freebies that help take care of that. But I’m convinced that liberty can solve so many of these problems.
Porter Stansberry: Dr. Paul, we could talk all day about what is it in human nature that seeks to be dominated and that seeks to be ruled.
Even if you go back and read the Bible, when the Israelites are wandering around the desert, they beg God to let them elect a king. And he says, “No, you don’t want to do that. He’ll end up enslaving your children and you’ll end up being his servants.” And they said, “No, no, no. We really want to have a king.” And so, I think Saul was the tallest guy in the tribe, so they made him the king.
And it just must be something inside human beings that’s part of our herd-like mentality. I see herd behavior in the markets all the time, and I have no idea why people don’t realize that the government cannot give them anything that it doesn’t first take from them. That’s just the most elemental economic truth. And yet when you tell people that, they’ll argue with you.
I remember Doug Casey was on the Donahue Show. It was like the forerunner of Oprah. And Donahue was talking to Doug Casey about medical policy. This is how long that Americans have wanted free health care, right? And Doug was explaining that somebody has to pay for health care. One member of audience stood up and said, “Well, I think the government should pay for health care,” and everyone cheered. And you could see Doug up on the stage just knowing how completely lost the audience was.
My biggest fear is not elections. And believe it or not, it’s not the collapse of the monetary system, because I think that’s just inevitable, and when something’s inevitable, you can hedge for it.
My biggest concern is the way that special interest groups have not only now been able to capture elements of Congress and elements of the administration, but they’re now able to actually affect significantly very powerful civil agencies.
My biggest concern is the way that special interest groups have not only now been able to capture elements of Congress and elements of the administration, but they’re now able to actually affect significantly very powerful civil agencies. The corruption of the FBI in particular just really scares me.
As you probably know, I was involved in a civil lawsuit with the SEC for almost 10 years. And when you get involved in a regulatory battle like that you realize it’s scary. These bureaucrats, they don’t care at all about what actually happened. They care about winning, and it becomes like a turf war. And the idea that they’re serving the public is absurd. They’re out there to advance their regulatory goals, whether that’s good for the country or good for people or not. And seeing that a law enforcement agency was behaving that way was really frightening to me.
Ron Paul: As you know, I think that is so true, and we talk about the bureaucrats and the Justice Department and the others. But when I looked at the members of Congress that I visited with each day, some of them are decent people and they’d talk and pretend nothing’s wrong. But I think they’re in many ways almost infected with sociopathy. They’re sociopaths. They don’t seem to have a conscience at all, or sometimes a brain.
But I think that it’s still worthwhile to have those conversations. Because someday when things get worse, I think there’s an opportunity. For example, I had favorable responses from college kids on what I thought were very liberal campuses. And I talked about how uncomplicated this was and how important it was for them to own their life, to run their life as they see fit, and then still have a better financial living by doing this.
And as far as I’m concerned, I think the libertarian message of non-aggression is a powerful message. And I think in a way, freedom and prosperity backfires on us because it just invites the bureaucrats and the government to distribute. Everybody thinks it’s the government, but then they use it and then they destroy it. And we’re in the process of that, so we might have to come down with fundamental reform on what our beliefs are.
I think that’s what the founders did. They were pretty well-informed and they, too, read the Old Testament about the danger of that. So I think that we’ll have that opportunity. I think there should be some enjoyment on this because talking about dire things, and if you are able to follow your advice and do well in the market, that’s another reason. But I still am just fascinated with the need for people to accept the principle of just giving up on aggression, that people should just take care of themselves. And it’s so wonderful, and that’s why I was delighted to join you in your investment advisory, because I knew you had those same beliefs.
Porter Stansberry: I agree with you completely, Dr. Paul. And Harry Browne was a very big influence on me as well and I had the good fortune to get to know him personally in the early 2000s. His book, How I Found Freedom in an Unfree World, has been kind of one of the guideposts for me.
And I admire so much your efforts to inform the public and to try to save the country from itself. And as you know, I’m a big supporter of you and of those efforts. I just never believed I had the capacity to do that. So what I’ve tried to do is teach individuals how to have this protection and this freedom and this wonderful life that’s available to them.
And I think that our message is very, very similar, but I’m directing it to one individual at a time and you had a very large platform and a big stage to tell millions of people this message. And if I’m not mistaken, you were by far the most successful libertarian presidential candidate we’ve ever had, so you’re very, very good at it. But I don’t think I’m cut out for public service, Dr. Paul.
Ron Paul: Well, I have an answer for that because after I give a talk, I could get a lot of people, often college kids, a little bit excited and they’ll come up – “OK, what do you want me to do?” And I’d say, “Whatever you want to do.”
You’re qualified to give good advice, and it just may be that the people that you deal with, your clients, are going to be likeminded, and I’ll bet you a lot of them are contributors to the cause of liberty as well. Of course I think there’s nothing wrong with taking care of yourself and protecting yourself. This is one reason why I like to be involved and promote the investments that will protect more and more people, because if there’s only 10 of us – it won’t take much to take over.
You’re reaching out to a lot of people. I think that’s beneficial and I think that would be helpful to all. So I want to thank you, Porter, for being with us today, and if you want to close out with a statement, that would be fine.
Porter Stansberry: I appreciate very much the opportunity to speak to your followers and I’m really flattered to be invited just to spend time with you anytime.
The one thing that I would tell you, Dr. Paul, about finance that I don’t think we covered here today, and that is just that over many years, I’ve had a lot of success at identifying companies that were being run so poorly that it was truly inevitable that they would fail, that there was not a possible way they could succeed. And I would point to the work I did at General Motors between 2005 and 2008, in addition of course to Fannie and Freddie, and there’s been maybe a dozen other names that we’ve keyed upon since then.
And I think that this trend toward investing in indexes and buying big baskets of stocks is mostly a very good thing and good in general for people. But I think that you’re really exposing yourself to some of the worst aspects of capitalism when you do that, because unfortunately there are still a lot of businesses that are being run for the benefit of the insiders and not at all for the benefit of the shareholders. And firms like mine, that’s really what we specialize in doing, is helping you sort that out.
So if you are an investor and you’d like to have some access to great independent research, I hope that you’ll check out Stansberry Research. And if you just want to buy gold and protect yourself and your family, I know that’ll work, too. But either way, I hope you will invest wisely and take care for yourself and your family.
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This conversation originally appeared on Dr. Ron Paul’s Liberty Report. Subscribe for updates on YouTube by clicking here.
