Ron Paul: "What Has QE Wrought?"
Government’s monopoly over the creation of money is equivalent to counterfeiting and resulted from the fact that the people never liked to pay taxes for unnecessary wars and to provide benefits to the politicians and their friends. Though beneficial to the powerful few, the abuse and the inequitable distribution of wealth that resulted would inexorably stir anger and rebellion within the people, who demanded changes to the system.
It is true that nothing ever changes under the sun or with human nature. We today are approaching a political and economic crisis of enormous proportion as a consequence of this age-old phenomenon of abuse from a government financed by a modern-day monetary destruction of the economy with the QE’s dangerous experiment. It is more than a minor correction that is needed to deal with the huge excesses that today exists world-wide.
Many of the central planners in charge reassure us that the concern for a dangerous bubble existing is completely unfounded since the CPI is barely rising. Two points: 1) The CPI is rising faster than they will admit and 2) The CPI is not the tell-tale sign of a serious bubble forming. Many other bubbles and dislocations can exist as a consequence of creating trillions of dollars out of thin air. And there are quite a few:
- The housing bubble is back along with subprime loans.
- There’s an auto financing bubble encouraged by subprime loans for many customers.
- The stock market is in a bubble waiting to be pricked.
- The bond market is in a huge bubble as a result low or negative interest rates.
- Wall Street has inflated expectations that America is quickly being “Made great again.”
- Exaggerated trust exists in the dollar maintaining its reserve status for the foreseeable future.
- The unwinding of the Fed’s balance sheet and a move toward market rates of interest is a long way off.
- Deficit financing for the Military Industrial Complex will not be challenged before the QE bubble bursts.
- Saving for a rainy day or to make a future purchase is not considered sound policy. Unlimited borrowing is.
- Credit card debt is in a bubble.
- Student loan debt is in a bubble.
- Transfer payments to the dependent poor will never be cut. Instead, when the big bubble bursts these payments will skyrocket since the process will generate more poor.
- The medical care spending bubble has created a huge mess with misallocation of resources, runaway cost, and poor care. Corporate medicine must end and be replaced by a free market.
- Cultural Marxism’s influence on American college campuses is a dangerous “bubble.”
- The dollar is in a bubble.
- The unpayable pension systems: federal, state, county, city, involves trillions of dollars.
The unpayable debt bubble can only be held together by accelerating inflation and the liquidation of debt by currency debasement. This is a very dangerous economic and political solution that seems inevitable. The problem describes what happens to a bankrupt country refusing to live within its means. Instead of being reassured that things are going well because Wall Street is booming, it should be a warning sign that danger lies ahead and reveals the growing imbalance between rich and poor.