Ron Paul Says Next US Crash Will Be Comparable To That Of Soviet Union, Claims QE2 Is "Total Failure" And Fed Is A "Central Planning Cartel"

Tyler Durden's picture

Ron Paul has just stepped up his war of rhetoric with his nemesis the Archchairsatan Rudolf Vissarionovich von Bernankestein (because never before have we had a genocidal central planner hell bent on printing the world's fate out of a deflationary collapse), and in an interview with Larry Kudlow said what everyone who is watching the day after day melt up (and wondering what comes next) openly thinks: that when all is said and done, and there is no incremental vapor and no incremental HFT levitation effect, that the US collapse will be comparable only to that of the Soviet Union. Needless to say, we are confident he is optimistic. Some economic observations from Paul: "We have so much unemployment, it is so undercounted. The free market economists report that there is probably 22% of unemployment. They pumped in $4 trillion, they should have added a lot of jobs, but how much did it cost us, and that of course is the price inflation that will come. We are moving into another 30 year period where we are going to see a reversal of interest rates, and we are going to see a crashing of the bonds like we saw 30 years ago and it's going to last a long, long time. The Fed deserves the blame for the inflation, and for the unemployment." On the amount of damage done by the Fed: "I think it's unimaginable, it could be so devastating, and could bring a strong, worldwide run on the dollar. We are in uncharted territories. I think we will see changes in our economy and our country almost equivalent to the change that occurred in the Soviet system. I think it will bring down our empire, we won't be able to afford our welfare state, and we won't be able to afford taking care of the world." And as Zero Hedge suggested previously, Ron Paul believes that the Fed's policies will actually lead to a spike in unemployment when all is said and done. Lastly, on Ron Paul view of Bernanke's central planning:"One time when Greenspan was before the committee, I told him if you can make this fiat system work as if it is the market system working, you have repealed economic law. It is positively baffling that we as a country have accepted that one individual can control the economy... I'd like to get the monopoly power away from this cartel that pretends that they know how to run the entire economy."

Full clip:

And just in case the message was not heard loud and clear, Paul followed up earlier with some more thoughts:

QE2 is a "total failure," except for those folks who work on Wall Street," Rep. Paul says. "It hasn't done anything for Main Street; hasn't done anything to give us real jobs; hasn't done anything for people who are losing their houses."

As for inflation, "I think there's plenty," Rep. Paul says, citing "skyrocketing" commodity prices and rising food prices. One problem is the Fed's reliance on core CPI, which famously excludes food and energy and relies on hedonic adjustments. "They rig that number," he says. "[Bernanke] looks at government stats that are fudged to reassure him he doesn't have to do anything."

"We're trying to correct the massive problems we had this decade with more" of the same policies, he laments. "He's supposed to give us full employment and stable prices and we have neither. How did the Fed do?"

Rep. Paul says he'd support stripping the Fed of its dual mandate - full employment and price stability - as others in Congress have discussed. But he doesn't think it will do much good and continue to push for a full audit of the Fed and some "competition" for the dollar, as you'll see in part 2 of this interview.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LawsofPhysics's picture

TRANSLATION;  "Ron Paul states the obvious"

How is that debt ceiling vote coming Ron?

hedge accordingly.

TorchFire's picture

Yes it is obvious to us but there are 10s of millions who are being awakened by the more widespread discussion of these obvious circumstances.  I say bring on more purveyors of the obvious until the FED is on its' A$$.

LawsofPhysics's picture

Market fundamentals will force the issue.  Something again to sweeping dirt under a rug (shadow banking), eventually the pile of shit grows much too big to contain.  Investment chases returns, but this only works if capital is used wisely to create real value.  The financial sector of the economy is a cancer that the broader sectors of the economy can no longer sustain.

TorchFire's picture

I agree that the market is the only real cure, but it think it important that the FACTS concerning the deteriorating circumstances aren't hijacked by the financial sector and subsequently repackaged so as to cast blame elsewhere .... enabling the malfeasance of the banksters to continue unabated. 

Pladizow's picture

Must Read - Dymitry Orlov - Reinventing Collapse.

johnQpublic's picture

Must Read - Dymitry Orlov - Reinventing Collapse

 

exactly what i was thinking when i saw this...Orlov

Fish Gone Bad's picture

Ron Paul may be stating the obvious to readers of ZH, but the majority of people not have a clue.  I am so pleased that at least someone has the balls to state the obvious.

Sudden Debt's picture

AT LEAST THEY TRIED!!

 

and failed...

 

AND TRIED AGAINT BY BETTING THE HOUSE!!!!

 

and failed...

 

AND THEY'LL TRY AGAIN!!!!

 

May God protect us...

I think I need to buy a gun's picture

I saw this live the other night and started getting nervous after the 5 minute mark....not good.....

Popo's picture

Anyone got a YouTube link? Or an iPad friendly version? ....currently on the road...

In Fed We Trust's picture

Ron Paul should run with this campaign slogan:

 

2012  RON PAUL

OR BUST   2012

 

That would be the US being BUSTED.

That would be Ron is YOUR ONLY chance and even that is a hail mary.

 

In Fed We Trust's picture

Ron Paul should run with this campaign slogan:

 

2012  RON PAUL

OR BUST   2012

 

That would be the US being BUSTED.

That would be Ron is YOUR ONLY chance and even that is a hail mary.

 

In Fed We Trust's picture

You know why Kennedy was the best President we ever had?

His asassination.

Lets hope it dosn't happen to Ron, because he is the Best we have.

 

Sudden Debt's picture

I thought Bo Obama was the best you guys had?

 

 

 

Pure Evil's picture

Nope, Emperor Bernankenstien is the best we have. He is the living god, and Blankfien is doing god's work.

Go figure.

In Fed We Trust's picture

Ron Paul needs to run for President on this platform:

End the FED. Jail any living members.

Declare the mortagage itself as "illegal" based upon a conspired fraud that was set up upon us in 1913 by a foriegn banking cartel.

There fore the house you live in is free and clear.!

The new currency (Ron Paul Notes) will be backed by the combined equity in the housing market.

The bond holders/ banks will just be shit out of luck!

Rider's picture

 

Do not be hard on Ron, is very probable he will be "put away" in someway or the other pretty soon.

Ron Paul 1935 - 201X?

Freddie's picture

At least someone in Washington has the guts to speak up. 

Mr Lennon Hendrix's picture

My hope is that Ron Paul inspires America to take the Fed out back.  Come on America, give the Fed the boot, but not before the Major Banks are made to return every last penny to the "taxpayers" before they are made to collapse.  Yes, let them all fail!

jus_lite_reading's picture

Those be some fightin' words me boy.

Did he say, the Bernank uses "fudged numbers..."?

In Fed We Trust's picture

The thing that makes BernNake a damn good liar, is all the baby fat about his face.

 

It hides the twitching going on under neth with every lie spoken.

jus_lite_reading's picture

Hu do you think is the antichrist? ... WHY THE BERNANK OF COURSE!

Head for the Hills's picture

Obama is the antichrist.  That's why all that birth certificate crap.

His story begins and ends with the grave of a Jackal.

 

In Fed We Trust's picture

Not only should we give the boot but we should confiscate all Treasarys held by FED member cartle banks.

And if they are still living, they need to be locked up.

 

jus_lite_reading's picture

One of the few in ANYTHING with their head on straight.

On the other hand, BernankShalom is the biggest lying scumbag the world has ever seen. And that's saying a lot, when including all the scoundrel banksters on the planet. I'm sure God has a special place reserved for them.

TorchFire's picture

Give' em hell Dr. Paul!  We need 535 more like you

hambone's picture

Seems I (many) have a central question with only find one likley answer - Where will all the money to buy US T's at current rates come from if not the Fed (and have no negative impact on other asset classes)? Absent an organic answer, inflationary / hyperinflationary hedges seem the only answer?

The quick math - US now needs to roll and create about $5T annually in Treasuries ($3T rolling over/yr based on $15T debt @ 5yr average maturity + $2T in new issuance). That is $100B a week total. Fed "only" has $900B Jan through June w/ POMO and rollover (that's bout $50B a week). Who's going to buy the other $50B / weekly now through June...and then $100B+ weekly after that??? And at what rate? There are Trillions the second half of '11 and $5T+ missing in '12 at anything like these rates to keep this going w/o QE3 or interest rates (and interest payments) going substantially higher (like $750B/per anum interest cost at long term average of 5%)? If rates do increase to 5% average, total annual borrowing needs rise to $5.5T, etc. etc.

I'd think we can't do QE3 without making the world burn w/ inflation but can't not do QE3 without interest rate explosion eating 1/3rd+ of all tax revenue? Obviously I've completely missed something here because in my way of thinking either we're t-minus 4 months from interest rate shock in good 'ol USA or an impending March or April QE3(4,5) bigger than QE2 and unending flood of dollars round the world???

LawsofPhysics's picture

China and Brazil, but the average american is not going to like the terms.

jus_lite_reading's picture

This is what ZH and all the people with more than half a brain have been saying since this whole scam began -- QE will need to increase exponentially, infinitely larger each time around just to make payments on the debt itself. Once QE was put into action, there is no stopping it. Ever. Game over. Let's call their BS now. 

irishgurl4's picture

Nope, you haven't missed anything.  We keep printing the world burns, we stop printing the world burns.  Talk about painting yourself into a corner.

jus_lite_reading's picture

I prefer, they burn, we eat. If we let them continue, WE will be the victims.

hambone's picture

Oil = $100b

Ag's = all time and nearing all time highs

Debt = $14T + and growing so fast...either Fed monetizes all debt at below market rates at an increasing rate or interest rate shock for America

mortgage rates = passing 5% and major drag on housing prices / refinance activity

Inflation = massive overseas costs, wages, property bubbles via QE

Stagflation = US outcome (ramping costs, flat wages, high unemployment, falling home prices)

Feels we are on the precipice - can't go forward and can't go back and can't stay here???  Something wicked this way comes.

jus_lite_reading's picture

I believe that if we allow them to continue then things will get a lot worse. Sorry to say.

AbandonShip's picture

Thanks for posting Bernanke's report card HamBone.

 

Bernanke gets an "F"

WHAT GOOD ARE THE M-Fers?  WHAT GOOD???  They fail BOTH of their mandates (as Dr. RP stated).  WHY ARE THEY STILL IN POWER?   They should have been fired like Minnesota Vikings headcoach was mid-season.  Looks like we need to sit-in and protest in D.C. for 17 days to get some change.

StychoKiller's picture

The wheel is turning
and you can't slow down.
You can't let go
and you can't hold on.
You can't go back
and you can't stand still.
If the thunder don't get you
then the lightning will!

Small wheel turn by the fire and rod.
Big wheel turn by the grace of God.
Everytime that wheel turn round,
bound to cover just a little more ground.

-- Grateful Dead, "The Wheel"

In Fed We Trust's picture

How do you want your economy?

Extra crispy please!

Commander Cody's picture

Ultimately, the debt gets repaid aided by severe austerity measures (meaning much smaller government), or we default.  Neither is going to be comfortable to bear.  But it will happen, one way or the other, in time.

LawsofPhysics's picture

In order to repay the debt, taxes must be greater than expenses.  Right now, taxes don't even cover the interest.  All the time in the world won't be enough if we can't even cover the interest.  We could cut government spending to zero and we still need to raise taxes.

jus_lite_reading's picture

Which means there is one inevitable outcome to this mess...

LawsofPhysics's picture

In order to repay the debt, taxes must be greater than expenses.  Right now, taxes don't even cover the interest.  All the time in the world won't be enough if we can't even cover the interest.

Sean7k's picture

This is a ponzi without regulatory or market discipline. It is the perfect crime- until it isn't. There is no stopping it now, it continues until it fails. The fail will take down ever currency on the planet (which gives an indication as to how long it has to run) and it gives an idea of the degree of commitment by CB's around the world (total). 

You can play with every scenario, but the result is the same. Which might explain the CB's and biggest investors flight to all things golden. First, they might be trying to gain possession of all the hard assets available through property defaults, monopolies on seed banks (95% in the hands of five corpoations)- food, energy (oil, coal, nuclear) and then water (fresh) is the last one needed. 

With the possession of the vast majority of the wealth of the world in their hands, they merely need a global military capable of holding the best parts of it.

At that point, they can afford to lose enough population to manage their needs and wants and no more. Meaning: they can kill huge numbers of us serfs. They will keep the best skilled and most compliant. If you live, it will be in the wilderness.

Prepare accordingly.

hambone's picture

Sean,

you are a fucking lunatic...and you may be right.

Sean7k's picture

All the best lunatics are you know...:)

jus_lite_reading's picture

You may be a lunatic or the best forecaster knowsn to modern man

tsx500's picture

so Sean...aside from enrolling in a wilderness/survival skills course , how would u recommend preparing (investment-wise)   ?   strictly hard assets ?  food/energy stocks ?  personally i  think the macro scenario and future u describe/envision  is very accurate/possible .    

Yits and the Yimrum's picture

+100  that is the way it will go down, no doubt about it

Population Bubble's picture

We choose world-wide inflation!

Inflation is the best way to pop the people-bubble with the least damage to the US!  Likely it is part of the plan!

This is going to be a hard life from here on out, my friends.  A lot of people will die, especially in the lower 80% of the world-wide economy.  But all of us are in the top 20% and we can get through it!

Nine Pies's picture

You got it.  That's why it's called a slippery slope.  Once you step out, you may have no choice what's going to happen next.