By Keris Lahiff via CNBC
This market is in the �biggest bubble in the history of mankind,� Ron Paul told CNBC�s �Futures Now� last Thursday.
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�I see trouble ahead, and it originates with too much debt, too much spending,� Paul said.
Paul belongs to the Libertarian Party, a faction that emphasizes constrained government spending. He sees federal spending and monetary policy as dual forces inflating a market bubble.
�The Congress spending and the Federal Reserve manipulation of monetary policy and interest rates � debt is too big, the current account is in bad shape, foreign debt is bad and it�s not going to change,� he said.
Paul isn�t alone in his critique. A number of politicians have voiced concern over ballooning deficits, including current House Speaker Paul Ryan, who raised a warning on the nation�s debt in 2012.
The Congressional Budget Office estimates that federal deficits will average $1.2 trillion a year from 2019 to 2028, according to its April economic outlook. Its 2018 deficit estimates rose by $242 billion over previous forecasts made in June 2017. The federal agency said the revision was mainly owing to lower projected revenues tied to tax reform.
�We have a president who likes to spend. He is not concerned about the deficit,� said Paul.
To Paul the decision-making arm of the Fed is equally at fault in creating a market bubble.
�The Fed will keep inflating, and that distorts things,� Paul continued. �Now they�re trying to unwind their balance sheet. I don�t think they�re going to get real far on that.�
The Fed is more than two years into its rate-hiking cycle. In conjunction with rate hikes, the Fed is also unloading assets from its balance sheet, which expanded to $4.5 trillion during its post-financial crisis quantitative-easing program.
Paul is not confident much will change to divert from the disaster he predicts.
�The government will keep spending, and the Fed will keep inflating, and that distorts things,� said Paul. �When you get into a situation like this, the debt has to be eliminated. You have to liquidate the debt and the malinvestment.�
Paul reiterated his call on Thursday for a potential 50 percent sell-off on the stock market.
Excerpt from This is the �biggest bubble in the history of mankind and it�s going to burst,� Ron Paul says (CNBC)
