Rickards and Paul on Trump’s ‘Cabinet’ Government and the Coming Recession
Economist and author Jim Rickards and former presidential contender Ron Paul appeared on RT television recently to discuss their 2017 economic and political predictions. Rickards laid out his idea of Trump’s administration forming a “cabinet government,” that might work to decentralize executive power, which has become more concentrated over the last 15 years. Paul looked to another inevitable US recession fueled by runaway inflation and the bursting of economic bubbles artificially propped up by failed monetary policies.
Here are the time codes for each interview: Jim Rickards: 6:17-11:02; Ron Paul: 13:24-21:30.
Rickards said he sees Trump’s cabinet selection process will be driven by a business mentality rather than promises made or past relationships. It’s a style of governing Rickards compares to past US administrations of the 1950s and 1960s or within other countries today like the UK, Australian, and Canada.
“What I expect is that Trump will name a strong cabinet…I think Trump will wear his CEO hat since he’s not a traditional politician but a CEO. Good CEOs are delegators. They hire good teams. They put them in charge of different divisions. If they do well, they get promoted. If they don’t do well, they may get fired … So we might see something like cabinet government instead of highly centralized power. I think it’s very healthy.”
Paul explains how economic bubbles in the bond, housing, and other markets have been expanded by the Fed’s monetary policies. Such bubbles will burst over-valued assets, leading to an “inevitable correction” by the market.
The former Texas Representative also points out an obvious, but often overlooked, part of quantitative easing and low interest rates: increasing the money supply can’t ensure that supply is allocated to the best ends. “The Fed can create money and credit,” Paul states, “But it can’t control where it goes. It goes in bonds, it goes in stocks, it goes in housing … it goes in different places.” One of the major downfalls of a monetary policy that stifles free market impulses is that it distorts investments by removing risk.
“The recession will come,” Paul says. “The conditions have already been established for the recession … Since it’s all artificial, with interest rates sending the wrong messages, there’ve been a lot of investments made and prices made that have been artificial … if it’s artificial, it sets the stage of the inevitable correction for the mistakes. They can’t prevent it … but all they can do is build up more debt and more mal-investment, which eventually makes the bursting of the bubble that much worse.”
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