Ron Paul is known to be of a bit of a prognosticator of the negative.
But, that doesn’t mean he’s wrong when he warns Americans about what he fears is going to happen.
Right now Paul fears that we are sitting on the largest bubble the stock market has ever seen. And he’s convinced the high levels of spending, as well as the high levels of debt accrued over the past few years, could cause the bubble to pop quite soon.
If it happens, he fears the stock market will be cut in half.
In the process, people will lose everything and economic and social pandamonium will ensue.
What’s interesting about Paul’s predictions is many other indicators show the market is in a relatively safe situation.
If you were to look at how the stock market is performing you wouldn’t see too much of a reason to worry. The S&P 500 has come back to highs not seen in several months, the Dow is on its way up – positive for the first time in 2017 and then the Nasdaq is also on a tear.
But as Paul says, the national debt, as well as large amounts of unfunded private debt, have put the stock market on shaky ground.
Paul says “The Congress spending and the Federal Reserve manipulation of monetary policy and interest rates — debt is too big, the current account is in bad shape, foreign debt is bad and it’s not going to change,” he said.
Paul isn’t alone in his critique. A number of politicians have voiced concern over ballooning deficits, including current House Speaker Paul Ryan, who raised a warning on the nation’s debt in 2012.
Congressional Budget Office estimates that federal deficits will average $1.2 trillion a year from 2019 to 2028, according to its April economic outlook. Its 2018 deficit estimates rose by $242 billion over previous forecasts made in June 2017.
The federal agency said the revision was mainly owing to lower projected revenues tied to tax reform.
Of course, the economy is much better now than it was during Obama’s tenure.
And much of the success economically can be attributed to many of the moves Trump has made since being in office.
These include corporate tax breaks, tariffs that incentivize domestic production of goods, increased consumer confidence, and more investment in domestic businesses.
If Trump can continue to create policies that help improve the economy and curtail spending, it’s hard to imagine Paul’s predictions coming true.
But Paul isn’t confident this will happen.
Paul is not confident much will change to divert from the disaster he predicts.
“The government will keep spending, and the Fed will keep inflating, and that distorts things,” said Paul. “When you get into a situation like this, the debt has to be eliminated. You have to liquidate the debt and the malinvestment.
Paul reiterated his call on Thursday for a potential 50 percent sell-off on the stock market.