Former Texas congressman, Dr. Ron Paul, says that the United States won’t be the exception when negative interest rates crush the economy. Dr. Paul is warning negative interest rates are coming, and the Federal Reserve cannot stop it.
“We will join the rest of them and go to total negative rates in hopes that that will be the solution,” Dr. Paul told CNBC’s “Futures Now” this week.
“We’ve never had as many currencies in negative interest rates. $17 trillion worth of bonds [are] in negative interest rates. It’s never existed before. And, that’s a bubble. So, we’re in the biggest bond bubble in history, and it’s going to burst.”
Dr. Paul, who is a former presidential candidate and vocal libertarian is well-known for his economic and stock market bubble warnings as well as his stance on small or non-existent government. He says that the Federal Reserve’s policies are powerless in this current bubble environment and that this week’s Fed meeting will not provide any kind of relief to Americans. He also says cutting interest rates again will not be the answer.
“You can’t predict exactly where the creation of credit goes,” said Dr. Paul.
“We have a ton of inflation with all that QE [quantitative easing]. And, every time you lower interest rates below market levels and create new credit, that’s a bubble.”
Dr. Paul admits that it’s impossible to predict when the markets will collapse and the bubbles will all burst.
“You don’t know this precise time. But you know it can happen,” he said.
“How do you sell a bond that pays a negative rate? Who’s going to jump up and down?”
And the U.S. is only going to be protected from an economic depression temporarily. The stock market will only insulate for so long before it’ll take hits too. Dr. Paul says central banks, which drastically lower interest rates destroy the pricing mechanism in financial markets, can’t stop the ultimate collapse.
“I don’t think anything even existed coming close to what we’re facing today,” Paul said.