Ron Paul predicts biggest economic crash ever when current bubbles burst

Former US presidential candidate and congressman Ron Paul has predicted that the biggest economic crash ever will hit the American economy which he says is full of “bubbles”.

Paul, the founder of the Ron Paul Institute for Peace and Prosperity, made the remarks in a recent interview with Russia Today (RT) while commenting on the US economy and the role the Federal Reserve System plays in it.  The RT website published the interview on Sunday.  

The liquidation of America’s fourth-largest investment bank, Lehman Brothers, in September 2008 almost brought down the global financial system. The collapse triggered an international economic crisis, which is considered by many economists as the worst financial crisis since the Great Depression of the 1930s.

The crisis played a significant role in a downturn in global economic activity that led to the 2008–2012 global recession and contributed to the ongoing European sovereign-debt crisis.

The effects of the 2008 financial crisis are still being felt in the United States and across the world. According to the Atlanta Federal Reserve's GDPNow, the American economy will grow only 0.9 percent in the third quarter.

“It’s just the beginning of a downturn, nothing’s really happened yet,” Ron Paul told Russia Today.

“Everything is misdirected because of the price of money. There are bubbles every place. You have a stock market bubble, you have still bubblemaking in housing when you see houses selling for $500 million, and you have a bubble in student loans,” he added.

“The bubbles are all over the place. This is the problem. I don’t see an easy way out. I think the markets are going to go down a lot more when you realize how serious this is. Actually we are doing better than the rest of the world but we’re in for trouble too because the world has never had a situation like this where a whole world endorsed a paper currency and had pyramiding of debt around the world by the reserve currency which is the dollar,” he continued.

“It’s the biggest bubble ever, so it’s going to be the biggest crash ever, but it remains to be seen exactly when that's going to hit,” he pointed out.

The Fed, the source of trouble

Dr. Paul has maintained strong positions against the military-industrial complex and the Federal Reserve, each of which he considers responsible for many of the ills afflicting the United States.

The basic source of the economic trouble is America’s central banking system, known as the Federal Reserve or the Fed, which cannot function in a real market economy, he said.  

“In a true free market economy you have to have people work, use what they need to live on and then save money, and that dictates interest rates and tells businessmen what they should do. Well, that isn’t the way it works anymore,” the veteran former politician said.

“The so-called capital comes from the Fed and they create it out of thin air. So everything is a mistake and everything is going to be volatile. You can do this for a while when the country is very very wealthy, and a currency is very very strong,” he added.

“But eventually people mistrust the government. They don’t pay interest, they have a huge amount of principal to pay, and corporations are deeply in debt, they borrow a lot of money practically for free and they buy up their stocks. It’s a mess. It’s artificial,” he pointed out.

“It has nothing to do with freedom, has nothing to do with free markets, and the sooner we realize this, the sooner we’ll get rid of central economic planning and especially look into the serious problems we get from the Federal Reserve System,” Dr. Paul concluded.

The Obama administration has given the Federal Reserve new powers to oversee the financial system and regulate it, but Paul believes there should be more transparency on the side of the government.

In 1983, the Texas Republican proposed legislation to audit the Federal Reserve, but it failed to gain much support at the time. 

However, in September 2014, the US House of Representatives, overwhelmingly approved similar legislation, authorizing the Government Accountability Office (GAO) to audit the Federal Reserve's board of governors.

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