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Published On: Wed, May 8th, 2013

Ron Paul on the stock market record highs: ‘This is a house of cards’

Former Texas Congressman and staunch critic of the policies of the Federal Reserve, Ron Paul, previously criticized the news that came out of the Federal Open Market Committee (FOMC) meeting last week saying he was disappointed, but not surprised.

On Monday, Dr. Paul continued his examination of failed Fed policies to be continued and the present and possible future results in his latest “Texas Straight Talk”.

Ron Paul on House floor

You Tube screen shot

Paul reiterates the Fed plan to continue it’s buyback of  mortgage-backed securities and treasuries, “the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.

“Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.”

He then warns of the bubbles being produced by the Fed policy. “With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt.”

He also has dire warnings for the record-breaking stock market, calling it a “house of cards”, “The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal.”

Who’s making out on Fed monetary policy?

You and I? Naw. If you guessed Wall Street and the government, you’d be correct.

Paul states, “While Wall Street and the government take advantage of access to the Fed’s new “free” money, the Fed claims there is no inflation. But who hasn’t paid higher prices at the grocery store, the gas pump, for tuition, for insurance? It’s bad enough that household incomes have stagnated, but real purchasing power has declined so much that one in seven Americans, 47.3 million people, are on food stamps. Five million are collecting unemployment insurance with 21.5 million afflicted by unemployment according to the government’s own figures. That’s 13.9 percent — close to double the 7.5 percent unemployment number reported last week.”

Are we in a recovery? Again, naw.

“We are certainly not in a recovery. We don’t see the long unemployment and soup kitchen lines like in the Great Depression, but that’s just because the lines are electronic now”, Paul said.

Ron Paul reminds Americans what the solution is– the free marketplace.

  • Allow entrepreneurs the chance to create instead of stifling innovation with arbitrary regulations.
  • Allow interest rates to rise to equal the risks in the economy.
  • Allow bad debts to be liquidated so we can build on a firm foundation.
  • Stop printing money to benefit the government and big banks.
  • Restore sound money to the economy and the American people.

Will they ever listen?

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About the Author

- Writer, Co-Founder and Executive Editor of The Global Dispatch. Robert has been covering news in the areas of health, world news and politics for a variety of online news sources. He is also the Editor-in-Chief of the website, Outbreak News Today and hosts the podcast, Outbreak News Interviews on iTunes, Stitcher and Spotify Robert is politically Independent and a born again Christian Follow @bactiman63

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