Former Congressman and presidential candidate Ron Paul pulled no punches in his recent interview on CNBC Futures Now. Paul made a strong case for the onset of depression-like conditions soon.
“I think it’s a very vulnerable position because when markets are destined to make big corrections … they don’t do it from the top, they do it from 10-15% down. So, we’re at that position.”
Citing economic problems ranging from artificially low interest rates and ballooning central bank balance sheets to trade tariffs, the former congressman stressed that understanding the conditions that caused the bubble is more important than identifying the pin that will eventually pop it.
“The precipitating factor will be that black swan — it’s coming. The situation is ready for it. It’s very precarious — the debt is too much, all the malinvestment is there.”
“You need a precipitating factor like Lehman Brothers …. But it might not be just an ordinary old-fashioned bank run … It could be international, it could be related to this tariff war we have going on.”
When asked if there was anything President Trump and Federal Reserve Chairman Powell could do to avoid the day of reckoning, his answer was clear.
“No … They actually believe they can find the neutral rate of interest. It’s a total fallacy. Nobody knows what that is … I’m predicting that they can’t solve this problem that is coming because interest rates are too low and they don’t have any room … they will go back to QE and they’ll pass out the money.”
How bad will it be?
“There’s no sign that it’s going to be mild … I think that it could be worse than 1929.”
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