Ron Paul: "What Has QE Wrought?"

Inequitable wealth distribution becomes a problem in an economy regulated by Federal Reserve mismanagement. The wealthy do get wealthier and the poor do get poorer when a currency is debased, with the middle class suffering the most. The ability of the special interests to influence legislation to benefit from the distribution of newly created money, is legendary. Think: “military industrial complex,” “free welfare benefits,” “bank bailouts,” and early access to an inflated currency. All these items play a significant role in the accelerating disparity of wealth distribution between the top 10 percent and rest of the people. These problems will worsen and fuel social conflicts and anger.

The inequity, not being fully understood, causes those who feel cheated to become angry and to start thinking about the false promises of the Socialists. This, along with the large number of economic Marxists who have inundated our government-run colleges, presents a problem that feeds into the anger. It doesn’t take a lot of searching to witness the anger in action on the campuses, as expressed by both students and faculties.

This conflict encourages envy and greed to flourish and justified with a sense of moral indignation. The greater the chaos, the easier it is for the Marxists to join in the fray and promote hate and destruction of cultural and traditional norms. It’s essential that the economic distortions, that arrived with the QE’s, as part of Keynesian economic planning, will need corrected to restore long- term economic growth. The full cost of decades of deficit spending must be paid for one way or another.

The problem of economic ignorance and misplaced good intentions will need to be addressed in order to steer a course that rejects the notion that unlimited government spending can be financed by the dangerous QE type of monetary inflation. This, sadly, will not be considered until the super bubble bursts and it becomes evident that the correction that has been avoided so far has become a necessity.

It is my opinion that the QE bubble is bigger than the Housing Bubble and the Dot Com Bubble combined. It is no easy task to correct for all the mal-investments and excessive debt and provide for all the unfunded liabilities. In the process of paying the piper, the country is destined to become much poorer, especially since a miraculous increase in productivity is unlikely in spite of the hoped-for benefits from the recently passed tax law. Economic, psychological and political pressure will prevent the changes in policy needed to deal with the huge complicated mess that the QE’s have generated. What we are experiencing is the climactic end of gigantic experiment with a fiat currency inflation, the size of which was never tried before.

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