Ron Paul: The Federal Reserve Blows More Bubbles

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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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Ron Paul: Rand Paul and I Are about 99% the Same

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Geraldo Rivera: I’m very delighted to welcome back to the program the former Congressman from Texas, the former candidate for president of the United States, the father of someone who is talked about as a future candidate for president of the United States. The son is Rand Paul, the Kentucky Republican, the father is Ron Paul. How are you doing, Congressman, how’s life?

Ron Paul: Geraldo, I’m doing well, thank you.

Geraldo Rivera: I’ve read, with great interest, a couple of hours ago, that you have endorsed the candidacy of Mark Sanford, the former Governor of South Carolina, who is embattled in his race for the congressional seat in Charleston, South Carolina. What’s up?

Ron Paul: Well, he’s a good friend, I’ve known him for years, he was a good voter, and I thought he was the best candidate, so I decided to help him out while everybody else is piling on him.

Geraldo Rivera: So do you think he’s personal transgressions are irrelevant?

Ron Paul: No, I think they’re very relevant, I think some people will vote against him for that, and that’s okay. But if we always look for perfection in our candidates, we’d have a tough time finding them. I think he’s obviously the best candidate, and he certainly has his shortcomings, but I imagine all of us have some shortcomings somewhere along the way.

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Ron Paul: Washington Will Keep Spending until there’s a True Economic Crisis

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Neil Cavuto: With the threat rising almost as fast as the deficit itself: two guys in Boston accused of bombing the marathon, two guys in Canada accused of trying to bomb a train headed for New York, so those are two huge issues. The government is nearly 17 trillion dollars into collective debt hole, and there’s a new push to spend more to protect us despite that hole. So how do we deal with that? Former Texas Congressman and presidential candidate Ron Paul is on the phone. Congressman, they’re already saying we need to spend more to stop this, what do you say?

Ron Paul: Oh, keep doing it, bring it on, until we have to force ourselves into reality. It’s tragic, because we’re addicted. It is like a drug addiction, you can’t get off drugs, and the economy can’t get off spending. Just look at what they’re doing at the airports now with the pretending, they’re making little cuts, and then they emphasis it and amplify it by playing politics with it. So they’ll never cut spending, the Fed is there to monetize the debt, we’re going to continue to do this until there is a true economic crisis. So I don’t think what we had in 2008 and 2009 was very much, I think it’s going to get much worse, because we’re never lived in times quite like this when the whole world was inflating their currency and everybody had a paper currency and nobody is living within their means.

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