After bloodbath, Ron Paul warns of 'next bubble burst'
Texas congressman assesses damage in wake of market plunge
Acting as a "central economic planner," the Federal Reserve is moving the U.S. economy from one market bubble to another, and the next one will be a disaster, Rep. Ron Paul, R-Texas, told Michael Savage on the "Savage Nation" national radio show.
After the collapse of the tech, housing and financial bubbles, Paul said, the "dollar bubble" will be next.
"That's going to be the big one," the Texas congressman said on the heels of yesterday's worldwide market plummet, which saw the Dow lose more than 500 points.
In response to the market bloodbath, Paul noted, investors are pouring money into treasury bills and dollars, "but that is a bubble, too."
"When the panic comes, and they leave the dollar and go into real assets, that's when the whole world knows that a new monetary system is on the horizon, because this one will not last," Paul warned.
Days like yesterday, he said, "are warning signs that that big crash is coming for the dollar."
Paul emphasized that along with Congress balancing the budget and stopping spending, the U.S. needs a new monetary system.
"The system is built on a monetary system where the Fed creates money out of thin air," he said. "You have to stop doing that, because that is what caused the deficits to pile on and the financial bubble."
Pointing to the bank bailouts, he said lawmakers "must allow bankruptcy to occur instead of bailing them out."
Instead, a new bubble was created, "and that's why these financial now are in so much trouble."
"All they were doing is sucking in all this money the Fed was creating," Paul said, "and the Fed was buying up all this debt. And guess what? The average person in the middle class suffered from that. They're the ones who lost their jobs and lost their houses."
Tending his roses
Savage pointed out that while many banks benefited from the so-called Troubled Asset Relief Program passed by Congress, known as TARP, there was no ultimate benefit to the economy.
"The average person didn't get that money," Paul affirmed.
Paul recalled pointing out to Fed Chairman Ben Bernanke that with the amount given to financial institutions and big corporations, "you could have given every single person in this country $16,000."
"But you gave it to the big corporations and it didn't help the economy," he told Bernanke. "It helped the big banks, but they're in the same trouble again."
Paul agreed with Savage that one needed fix is a raise in the Social Security retirement age.
"The money that was put in there has been already spent, so if you're going to salvage it, you're going to have to do that," Paul said.
The lawmaker also would like to give young people a chance to opt out of the government's retirement system.
"We talk about opting out of Obamacare, why shouldn't young people say, 'Look, government's not very good at giving me my insurance, whether it's medical insurance or retirement insurance?'"
Paul said that the young people he talks to "don't believe for a minute that this government is going to provide them with a retirement benefit when they're 65."
To offer that opt-out, he noted, there will need to be spending cuts in other areas.
Savage pinned blame for yesterday's market slide on Obama and congressional Democrats.
"The people were screaming, 'Balance the budget, cut spending, cut benefits.' No, he said the opposite," Savage told his listeners. "'Not only will we not cut spending, not only will we not cut benefits, but we're going to increase spending. We're going to raise the debt limit.'
"And Harry Reid went home to tend to his roses, Barack Hussein went back to the barbeque pit to slather some thick, greasy sauce on whatever they're cooking over there, and look what happened."
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