Ron Paul QE3 Predictions Are Already Proving to be CorrectSubmitted by LittleWing on Thu, 09/27/2012 - 12:30
by Robert Taylor on PolicyMic
It has been nearly two weeks since Federal Reserve Chairman Ben Bernanke announced that the Fed would engage in another round of "quantitative easing" (QE3) by purchasing $40 billion in mortgage-backed securities (MGS) a month for the indefinite future and would be leaving interest rates near zero for the next few years.
Longtime Fed opponent and the staunch critic of Fed monetary policy Ron Paul issued a statement the next day regarding Bernanke's actions.
"No one is surprised by the Fed’s action today to inject even more money into the economy through additional asset purchases, " Paul said. "The Fed’s only solution for every problem is to print more money and provide more liquidity. Mr. Bernanke and Fed governors appear not to understand that our current economic malaise resulted directly because of the excessive credit the Fed already pumped into the system."
It hasn't even been a month yet since the Fed made their QE3 announcement, but Paul's Austrian-based analysis would suggest that it will only continue to make things worse. By further devaluing the dollar, buying up near-worthless debt, and keeping interest rates near zero, the Fed is sending terrible signals to the economy while simultaneously not allowing the debt and malinvestment to be liquidated. Without this necessary correction, true economic production and growth can not be achieved. Paul's recommendation of a "strong dollar and market interest rates" is once again being unheeded.