MOTHER OF ALL BUBBLES
Congress will not cut spending until either a critical mass of Americans demand they do so, or there is a major economic crisis. In the event of a crisis, Congress will try to avoid directly cutting spending, instead letting the Federal Reserve do its dirty work via currency depreciation. This will deepen the crisis and increase support for authoritarian demagogues. The only way to avoid this is for those of us who know the truth to spread the message of, and grow the movement for, peace, free markets, limited government, and sound money. This article originally appeared at the Ron Paul Institute for Peace and Prosperity. Copyright © 2019 by Ron Paul Institute. Dr. Ron Paul is a former member of Congress and former presidential candidate. While in Washington, D.C., he was one of the few voices advocating for limited government, individual liberty, and sound fiscal principles. He is the author of the No. 1 New York Times bestselling books The Revolution: A Manifesto and End the Fed .
Joseph Zidle, a strategist with the Blackstone investment firm, has called the government – or “sovereign” – debt bubble the “mother of all bubbles.” When the sovereign debt bubble inevitably busts, it will cause a meltdown bigger than the 2008 crash. U.S. consumer debt – which includes credit cards, student loans, auto loans, and mortgages – now totals over $14 trillion. This massive government and private debts put tremendous pressure on the Federal Reserve to keep interest rates low or even to “experiment” with negative rates. But the Fed can only keep interest rates, which are the price of money, artificially low for so long without serious economic consequences. According to Michael Pento, the Fed is panicking in an effort to prevent economic trouble much worse than occurred in 2008. “It’s not just QE,” says Pento, “it’s QE on steroids because everybody knows that this QE is permanent just like any banana republic would do, or has done in the past.”
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