Ron Paul: The Federal Reserve Blows More Bubbles

by Ron Paul

Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.

The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually 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.

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. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. 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.

In the meantime, real families are suffering. 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.

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.

It is not surprising the Fed has decided to hand the American people more of the same failed policies. But it is disappointing. We know what the real solution is: allow the marketplace to work. 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. Sound money is the bedrock for prosperity and the best check on big government and crony capitalism.

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  • Nadia

    Mr. Paul, you are a very rare type of a man: A man of high integrity which neither deceives his ideas for popularity, comfort or public opinion, nor sells himself for the same purpose. You have the courage to tell the truth-no matter how ugly it is-this is the hardest way of honesty. Because most of the people don’t like to hear the truth-they fear to face it, they don’t want to discover themselves as a part of that ugly truth. That is why they wow for smooth-talkers like Romney, Obama, Santorum, etc. They will give up their liberties ,freedom, dreams,their self in exchange for promises to think of them, to act for them, to secure them, to take responsibility for their lives-empty promises any way, because those smooth-talkers want just to cash in on the people, who don’t dare to be independent-thinking and responsible for every decision of their lives. I admire you deeply, Mr. Paul. I don’t believe in God-I believe in human mind and reason, but God bless you, Mr. Paul ! I am glad, that people like you still exist!

    • douglas

      Many Thanks for you, Baby Egg!

  • Unfortunately for you, God isn’t real and you are too stupid and brainwashed to understand Ron Paul’s motives and goals.

  • wRONg Paul’s ideas smell like dog farts and an ashtray full of cigarette butts

  • Time for all Patriots to join together. /watch?v=doXBhZlrPAg

  • EPIC OBAMA TAKEDOWN ————> watch?v=eUvDHEJH8Mw

  • obvious troll is obvious

  • It’s god’s gift that Ron Paul isn’t president. 🙂

  • Peasants don’t have rights – Stop bitching

  • Even your .government people and higher officials are not allowed this and are blind to this fact….they are denied just as you are are

  • Even your .government people and higher officials are not allowed this and are blind to this fact….they are denied just as you are are

  • They worship the devil create chaos in the world to divide you from knowing the truth! After all they have the money and the power to do so…..

  • The biggest deception to the world is they also hide behind your religion called the Vadican and all world leaders are controlled by this Nation robber….its been going on since Roam…they deceive the world very well indeed!

  • They own everything including your Universities…They rob the best knowledge and use it against you so they remain on top

  • NWO took over your government long ago and is funded by the Global Bankers who fund both sides of any war in order to take over any outcome… they are called Global Leaders

  • This is the man that should be your President!

  • No more dollar, no more Fed Reserve? What is the value of US bonds in a dollar collapse?

  • According to the Government Accountability Institute (GAI), Barack Obama has spent over 976 hours(40 days straight) on vacation and golf as the President. After that, AND his tyrannical, murderous policy making, almost half the nation still approves of him.
    We’re fucked.

  • all the sovereign wealth funds from China, Japan, South Korea, Taiwan, Hong Kong, Singapore, Brunei, UAE, and Saudi Arabia are pumping hundreds of billions of dollars into America’s stock market, bond market, and real estate market.

    their speculative hot money is making those bubbles. earlier this years, the sovereign wealth fund of my country had bought an office tower building in downtown San Francisco for $400 million.

  • Thanks for posting.
    Paul Krugman continues to believe in the madness of Keynes. And he gets all the press.
    The market always wins. Sound money is the way to prosperity and honesty in government.

  • Liberals Take Notes.