Ron Paul on the Stock Market: Delusions and the Madness of Crowds (Video)
Stock markets continue to surge higher on a seemingly endless upward trajectory. On Tuesday, the Dow Jones crossed the 23,000 mark for a time and closed just below that threshold at 22,997.
It almost seems like this can go on forever, but Ron Paul said it would eventually come to an end during an interview on CNBC Futures Now last week. He said it reminds him of “delusions and the madness of crowds.”
Of course, as Paul pointed out, even though we don’t know exactly when it will eventually crash, the market can’t go up forever. And Paul offered a sobering warning.
“My position is the longer it lasts, the bigger the bust.”
So what’s really behind the meteoric rise in stocks? Paul echoed what Peter Schiff and other contrarians have said – it’s a big bubble pumped up by central bank intervention.
There’s sure a lot of money out there. And there sure has been a lot of monetary inflation, and it’s looking where to go, and it’s been in bonds, in stocks, Bitcoin, real estate and all these other things. Someday, it’s going to go into the CRB, in commodities, in the price indexes and that’s when people will get nervous. It will end. It always does.”
The host asked Paul if he thought an increased pace of Federal Reserve rate hikes could pop the bubble. Paul said he thinks that’s why the central bank has been so hesitant to normalize.
I think they’re in a quandary. They’re in a total dilemma. I think what they’re doing is totally unmanageable. And everything they do contributes to malinvestment and distortion. And that’s because they control interest rates. If you control interest rates – keep them artificially low – everything is going to be distorted to some degree.”
Paul went on to say the world is in a place it’s never been before – totally engulfed by fiat currency. That threatens the dollar system the world economy is built on.
The dollar standard, I think, is under threat, because someday something else is going to replace it. Not tomorrow or the next day – it isn’t so much that something will come up that will be so much better as much as there will be a day when people will lose confidence in the dollar. And when you look at foreign policy events and some of the other things going on, I think we’re very vulnerable.”
Paul was reluctant to put a number on how far the markets could fall, but he said he wouldn’t be surprised by a drop of 50%.
I wouldn’t be totally shocked that it would go down that low.”
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