Ron Paul Discusses Contagion, Gold, Goldman And The Fed

The man who will soon be proven to have been right all along, Ron Paul, was interviewed on CNBC earlier discussing topics such as the Greek contagion, Goldman Sachs, surging gold and, of course, the Fed. Asked if this is just the beginning, the response is "Yes, this shouldn't surprise anybody, how long should we have been anticipating this? I have anticipated it since 1971, because the system that replaced Bretton Woods was an unviable system and this is proving the point, so this is the unwinding of the system and until we replace it with something you are going to continue to see this... You can't correct the problem of debt with creating more debt, expecting the Fed to endlessly create more money and credit. We are in for a lot more trouble as far as I can see." Can we grow our way out of this debt? "You'd have to cut taxes drastically and cut spending drastically. Politically you can't do that. People will resort to more spending, more deficits and more inflation of the money supply. If you see a GDP number go up, it is about equivalent to the money we have created - you don't have any more growth than the artificial stimulus of the money that we put in. We have not allowed the liquidation of debt, we have not allowed the elimination of the malinvestment still in the system."

Ron also says anger at Goldman should be focused at the Fed: "When the history of this time is written people will say - how in the world did they believe that a few people in a secret room can decide what interest rates should be, how much the money supply should be, who should fail, what worthless assets taxpayers have to buy. It is absolutely bizarre."

Lastly, Ron has a word of caution against those politicians who time after time vote to retain the Fed's secrecy: "The Fed is a big issue and those individuals in the Senate who votes against auditing the Fed, there will be a political price to pay for that just as much as those who voted for the bail out. Right now those who vote to enhance the Fed will get punished politically because the people are waking up and they realize that the Fed is the culprit."

Not surprisingly, Ron Paul is not too happy with the handling of the Vitter amendment. Yet Paul's conclusion is most insightful: "The markets are more powerful than governments, the markets are even more powerful than the Fed. We fixed the price of gold at $35 for years, but we knew the market couldn't sustain it. We knew the Bretton Woods agreement would break down. This is why we knew in 2000 that the dollar would crash in measurement toward gold."

Paul shuts up Becky Quick who makes fun of his bearishness on the market by saying he bought gold at $35, using the system against itself. "I am on a reserve gold standard, and I don't feel that badly about that, because my reserves are in pretty good shape, because I knew in 1971 that paper would lose its value. Now the gold surge recently as people are discovering that they are really printing money. You can expect a lot more price inflation."

Comments

[WaterWings]

engracado

[Rusty_Shackleford]

Love the Becky smack-down. 

Priceless.

[Common_Cents22]

http://www.gata.org/files/JPMorganGoldReport-05-11-2010.pdf

[MyFriendMises]

I was just looking at that myslf.  Got to love these companies.  They have all their bases covered.  No matter what happens they can say they were right all along.

[Temporalist]

Here is a telling statement from that JPM link:

"We see gold as an insurance policy for portfolios. We do not wish for
very high precious metals prices because that would indicate serious
trouble for other parts of the global economy. However we continue to
encourage investors to have some precious metals (or equities) in their
portfolios as a real hedge that is less likely to draw the negative attention
that short positions did in late 2008. And shouldn’t require government
backing if the writer of the hedge instrument can’t perform."

Italics theirs

They are scared of gold, they know it will ruin their scam, they only want their "clients" to know just enough that they feel secure.

[BlackBeard]

lol all of that just sailed right over Becky Quick's empty head.  Perhaps she wouldn't look so lost if she had a dick in her mouth.  I think her career would benefit from a move over to the West Coast for an audition with World Modeling Agency.

[ufamizm]

I'm a huge Ron Paul fanboi from way back. A politician he is not and he is the first to admit it. He says his main goal is to educate about economics and the Constitution. In this he has already been wildly successful. Too late, to save the current iteration of America, but those who will build on the ashes and tears soon to come will hopefully remember what they have learned.

[dark pools of soros]

they'll let Paul win once it already blows up - so instead of having him in place a decade or so ago to turn the tide, they'll make him the face to tell us all about how much we have to sacrifice to get out of this problem..   yet if we did a fraction of the sacrifice years ago we would be multiple times better off

such is the game of power and control

[pareeto]

"The economic warlords will bring this to an end, and not in the too distant future"... discuss