Ron Paul: We Live in a Chaotic World of Malinvestment and Debt (Video)
Dr. Ron Paul shared his free market perspective of Federal Reserve policy with CNBC. Dr. Paul warned that the stability of the current financial system “depends on a psychological acceptance of this system.” He argued stocks and bonds will crash dramatically when the markets realize that ever-expanding debt and money printing have only stimulated malinvestment.
Of course, Dr. Paul’s warnings fall on deaf ears. The financial media continues to support the narrative that Fed policy is essential to economic growth. A CNBC article about Dr. Paul’s interview simply looks at the growth of the S&P 500 to conclude that “the Fed has not committed any obvious policy errors thus far.”
Highlights from the interview:
“I am utterly amazed at how these Federal Reserve Chairman reports can play havoc with the market. One word, what they say, what they don’t say, and who’s going to interpret it… It’s so far removed from somebody like myself who likes to think about true free markets. What the real interest rate is. Why people make certain decisions, and why people save money. We live in a chaotic world that’s totally unreal. People don’t depend on savings for their capital, they depend on the Fed…
“The Fed says the slightest thing about [how] maybe we shouldn’t print so much money until next week. All kinds of things can happen. What I see is total instability, a lot of malinvestment, a pyramiding of gigantic debt, and it has to be removed. Just think of how many months, if not years now, they’ve been trying to resolve the problem in Greece. They’re dealing with debt, and they’re trying to find out how’s going to pay it, pretending that they’re going to solve the problem. They ought to admit the debt gets liquidated. That is what is going to happen to this country. There will be an unwinding of this pyramid of debt and all the malinvestment…
“You don’t know the timeline on this. It could be tomorrow, it could be a month, it could be a couple years from now. It all depends on a psychological acceptance of this system. A lot of people who are still making a lot of money know this system is not going to last, but they figure, ‘If everybody else thinks it’s going to last, [I’ll] just keep owning bonds and buying stocks.’ Today they’re buying stocks, yet next week they may sell them all again. I don’t think there’s any way to know what the time is. But after 35 years of a gigantic bull market in bonds, they cannot reverse history. You cannot print money forever and deceive the markets forever. Eventually the markets will rule. It’s only a question of when that will happen…”
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