By Andrew Moran
Over the past several days, the New York Stock Exchange has seen steep losses. Financial analysts say that it’s a market correction in the wake of China’s slowing economy. Although the Dow Jones opened up Wednesday’s trading session in positive territory, some say this turmoil isn’t over.
Former Texas Republican Congressman and three-time presidential candidate Ron Paul spoke with Newsmax TV on Tuesday and blamed the Federal Reserve and Congress for Black Monday’s market meltdown. The bestselling author of “End the Fed” said the two institutions were 99 percent responsible for the market crash.
The extreme volatility, says Paul, is there because the Fed is the one to create and maintain all of the market bubbles. The United States central bank creates the NASDAQ bubbles and the housing bubbles and whatever other market that needs bailing out, notes Paul.
A better solution for the Fed is to allow the market to correct itself and allow the liquidation of debt so prices can go back to normal. This should have been the policy of the Fed in 2007, 2008 and 2009.
“But no, we bail everybody out and it’s temporary, but eventually the Big One comes, and they can’t stop it,” said Paul.
Moreover, what market isn’t being hurt by Fed policy is being seriously affected by Congress and its policies of overtaxing and overregulating.
“Socialism fails always because you have wage and price controls, but we in the West have control of the economy and economic planning by pricing money,” he said. “So one-half of the economy, which is the money, is fixed so you have currency transactions and currency competition and then you have the supply of money and interest rates, and it’s a gross distortion because people have been fooled into thinking they’re saving.”
He touched upon his concerns over the “gross distortion” of the activities in the bond market since the early 1980s.
“We’re still at zero percent,” he told the news outlet “But eventually, the people will reject this and already you see some companies and debt like in Greece and some of our own municipalities turn sovereign debt, government debt, into junk and that eventually will happen.”
When the “Big One” happens then the greenback will lose its reserve currency status.
“It’s the manipulation of the reserve currency of the world, where we had tremendous benefits for dozens and dozens of years,” Paul said. “This is just a hint that there’s disequilibrium there and the market is demanding a correction.”
The solution, according to Paul: “You get rid of the malinvestment and get rid of the debt.”
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