The Federal Reserve has been managing the economy through “monetary manipulation,” causing malinvestment, and the over-accumulation of debt, said former congressman Ron Paul.
The end result is an overinflated stock market that could see a “violent correction”, as well as a monetary system on the brink of collapse, Paul said.
“I happen to believe it’s the biggest financial bubble in the history of monetary policy for the whole world. The correction is going to be pretty violent, and it’s going to be pretty bad,” he said.
The Federal Reserve has recently changed their inflation control mandate from targeting 2% to maintaining an average of 2%. However, neither of these are beneficial to the economy, Paul said.
“I don’t think that [the Fed] knows what they are doing, and they’re struggling, and they’re making the assumption that anybody who cares about finance, especially from a free market viewpoint, they figured nobody knows what they’re doing,” he said. “I’ve made fun of this 2% thing that’s been going on for quite a few years, because for me who believes in sound money, that the deliberate policy of our government is to steal 2% of the value of the dollar on purpose,” he said.
Additionally, the Fed’s mandate of looking at only inflation in consumer prices and not asset prices is not comprehensive, Paul said.
Paul doesn’t agree with the policy of passing stimulus checks to Americans. Although they have benefited many people in need, the policy will providing stimulus is equivalent to a tax.
“They never ask the question, who [funds] the government? Is it some dictator? Is it some elected body? They have to steal it, and they steal it by direct taxation,” he said.