(Kitco News) - Former U.S. Congressman Ron Paul declared the United States is "totally bankrupt morally and financially," arguing in a wide-ranging interview with Kitco News that the nation's $1.9 trillion deficit is a "debt spiral" that will be "paid off with funny money" and that citizens should be "on our toes for something very, very big to happen."
Speaking on November 5, 2025, Dr. Paul analyzed a series of colliding economic and political crises. His comments came as the Federal Reserve injected $125 billion in emergency liquidity into the repo market, while simultaneously facing public criticism from the President's own Treasury Secretary, Scott Bessent, over a "housing recession."
Dr. Paul suggested the conflicting moves may be intentional.
"Maybe their strategy is to cause chaos," he said. "And in order for the people, you know, to just roll over and say, 'Hey, save us.'"
A "K-Shaped" Stagflation
Dr. Paul pointed to a slew of conflicting economic data released today as proof of this chaos.
While a report from ADP showed private payrolls unexpectedly grew by 42,000 in October, data from the real economy told a different story. According to a McDonald's earnings call this morning, "lower-income consumer traffic is declining by double digits," even as higher-income traffic grows.
Dr. Paul said this "K-shaped" economy is proof the headline data is a lie. "It can't be true," he said.
He argued that the Institute for Supply Management (ISM) report, also released today, confirms a stagflationary environment. According to that report, the Prices Paid Index soared to 70.0 while the Employment Index contracted for the fifth straight month to 48.2.
"That's the dilemma the financial markets have," Dr. Paul said, comparing the economy to a "drug addict... begging for another shot" of liquidity.
The "Debt Spiral" in Action
At the core of the crisis, Dr. Paul said, is the U.S. balance sheet. The nation is facing a $1.9 trillion deficit, according to projections from the Congressional Budget Office, while the ongoing government shutdown costs a reported $15 billion per week.
He argued that the Fed's $125 billion injection is not independent of this, but a consequence of the Treasury issuing massive debt to fund the deficit, which forces the Fed to provide the offsetting liquidity.
When asked about the shutdown and an ISM report classifying many government functions as "non-essential", Dr. Paul was blunt.
"That's good. I would put that up about 80% as being, being non-essential," he said.
He warned this "debt spiral" has only one ending. "We will eventually have to pay... the debt one way or the other," he stated. "Most... likely it'll be liquidated by being paid off with, uh, funny money. You know, just print the money".
"The Constitution is Anachronistic"
Dr. Paul's charge of a "morally bankrupt" system was most evident when discussing the major Supreme Court case being argued as the interview was taped.
The case centers on the President's use of the International Emergency Economic Powers Act (IEEPA) of 1977 to impose sweeping global tariffs. Challengers argue the Constitution gives the power to tax and tariff exclusively to Congress. According to legal analyses, the IEEPA law does not mention the word "tariff," and no previous president has used it to impose broad import taxes.
The administration argues the law's authority to "regulate importation" during an emergency is a broad enough power to include tariffs.
For Dr. Paul, this legal fight is a symptom of a deeper rot: Congress's willful surrender of its own power. He recounted a story from his time on the Foreign Affairs Committee when he motioned for a declaration of war, as required by the Constitution.
"They became hysterical," Dr. Paul said. "The chairman of the committee... said... 'That, that, that part of the Constitution is anachronistic. We don't even follow that part anymore.' That's, that's where the problem is".
On Gold: "My Guess is... We Don't Own It"
As a solution, Dr. Paul reaffirmed his belief in gold, but not without confronting the new investor reality. When asked why an investor should buy zero-yield gold when the 10-year Treasury now pays a "risk-free" 4.14%, he argued it's not a true "risk-free" rate.
He issued a stark warning about U.S. reserves. When asked about the stalled audit of Fort Knox, citing H.R. 3795, the Gold Reserve Transparency Act, he said, "I have no idea because you can't believe what they tell us. And the little bit of audit is all fake".
He concluded with a shocking theory: "My guess is that... that the gold, if it's there, we don't own it because gold is a lot of times used as leverage and [they] loan anything out and this sort of thing".
He ended with a final warning on the $4,000 gold price, quoting a post he made on October 10th. "It's 'Not The Golden Age' people were hoping for", he said, framing the high price not as a victory, but as a "fever-chart warning" of a currency crisis already in progress.
To see the full, in-depth interview with Dr. Ron Paul, watch the video Here.