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Is The Sky About To Fall -- Ron Paul Thinks So

Is The Sky About To Fall --  Ron Paul Thinks So

While some may call Ron Paul, father of presidential candidate Rand Paul, Chicken Little for his much talked about dire predictions of a looming currency crisis, economic devastation – total breakdown in the stock market, civil unrest, and general mayhem, some aren’t so sure people shouldn’t be listening.

Ron Paul’s predictions in an infomercial for Stansberry & Associates Investment Research, are so severe you might be tempted to get a bomb shelter in your backyard to hide until it’s safe to come out, if it will ever be.

But have no fear, Porter Stansberry has the book to save the day, America 2020: The Survival Blueprint and only for $49.50.

Remember though, Ron ranted years ago and yet the earth still stands. "Paul’s predictions don’t have merit. In particular his point about the Fed monetizing government spending is not true. That is, the Fed is not buying bonds from the Treasury with newly created money and thus there is no support for the assertion that hyperinflation is coming," says Louis Johnston, professor, department of economics at the College of Saint Benedict, Saint John’s University in St. Joseph, Minnesota.

However, there are those who laugh off the notion that Ron’s ramblings are meant to boost book sales. "Stansberry & Associates over the years have been known to make a small economic downturn a catastrophe," says Joseph Jones, a partner and economist with Economic Hedge, a consulting and forecasting firm. But he’s not dismissing Ron. "The Fed is propping up asset prices to pre bubble prices of 2001 and 2008. Financial stability is hinged on interest rates set below market rates thus causing malinvestment and proper malprudential policy requires a rate increase to stop the economy from overheating," explains Jones.

there is no support for the assertion that hyperinflation is coming

Jones says that as more countries are diverging from U.S. dollars in trade, increasing the likelihood of bank runs in the United States. "The run on the dollar will be spurred by out of country investors who recognize the U.S. dollar as the international reserve currency is no longer sound and a replacement will be in order.

What might a currency crisis look like? Normally, a currency crisis arises because the fiscal authorities are not able to generate sufficient tax revenues to fund desired spending levels. "When it reaches the point that external parties no longer purchase their debt, the country will begin to lose reserves (if it does not have independent monetary policy, for example, if it doesn’t have a central bank that can simply print more)," says Jeffrey Haymond, dean of the school of Business at Cedarville University.

When the reserves run out, the country defaults, like Greece effectively did. "If the country’s central bank prints more, the value of the currency falls relative to the rest of the world and they can no longer buy as many foreign goods due to high domestic inflation. Further, if the external debts were denominated in a currency other than the borrowing country (like Argentina promising to pay back foreign loans in dollars), then having your own central bank doesn’t help and you default," says Haymond.

Currency crisis are usually rooted in the fact that fiscal authorities run chronic imbalances, budget deficits and amass large external debts. If the borrowing country doesn’t grow fast enough to generate the sales via exports they don’t have enough foreign exchange to pay back loans. "They will lose reserves and then default. The impact is always a depreciated domestic currency, higher inflation, and lower standards of living," he adds.

Kevin George of market-guru.com, a provider of research and commentary for investing in stocks, says, "Today Ron may look like the boy who cried wolf, but in the next few years, Americans will realize his warnings were right and will seek out answers from those who are shouting their concerns from the sidelines."

George says the coming crisis won’t only take the form of a currency crisis, but general market turmoil. "This is a generational crisis that was delayed in 2008, only through the efforts of a global bailout to the tune of trillions of dollars. To understand the consequences of this effort, we have to consider that seven years after the downturn, Chinese growth is declining and Europe is caught in a deflationary debt-spiral – both of these were key drivers of global prosperity running into 2007 and the bailouts were intended to put a fire under growth in these regions," explains George.

No nation is immune to the implications of imprudent fiscal policy.

He says that the market is already showing what’s next as copper and oil, key signals of economic performance are in a deflationary trend, while investors are turning away from sovereign debt and pushing stock prices to record highs. "Market talk in the financial centers is about grave conditions for liquidity in bond markets and when the first crack comes, there will be a crash in bond prices as yields on risky government paper are pushed up from their unrealistic levels near zero. The Swiss devaluation was another ‘shock’ event which highlights that something is wrong."

Russ Field, who used to own and operate a Forex company, says he’s been researching for years what Ron Paul has been saying for years. "Everything changed a year ago that makes what he and others like Peter Schiff and Mike Maloney are saying not just conspiracy fodder." For one thing, he says he believes unemployment is really around 20%+, instead of around 5.4%. "The best way to figure this out is to correlate the economy to food stamps. Currently there are 96 million people on food stamps in the US, a higher percentage today than even the great depression. You have to question what is going on."

He’s skeptical, "Look at the U.S.’s GDP to debt ratio. If it wasn’t for the fact that the USA owns the printing press for the petrol dollar, the U.S. would have gone the way of Greece many months ago."

The bottom line says Haymond, "No nation is immune to the implications of imprudent fiscal policy. So while the specifics of Mr. Paul’s predictions may be questionable, he is right to bring to our attention the large risks our fiscal authorities are placing on our future."

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Anonymous   |     |   Comment #1
I'd like to see which of the debt-laden welfare states can come up with a stronger currency. As far as I know ISIS is the only country that backs its currency with gold, but coincidentally every country in the world is committed to destroying them. 
Anonymous   |     |   Comment #2
How can anyone be believed when compensated by a firm with a financial interest in what s/he says...who does s/he represent?  Conflicts of Interest are ripe. 
Anonymous   |     |   Comment #13
#2 Comment misses the point. The issue involved should absolutely NOT be decided by whether an individual may be influenced by a potential conflict of interest connected with a connection to book sales, etc., but decided by whether or not what an individual is saying is FACT-BASED and logical. In this case, given the actual high un-/under-employment (probably not too far, I believe, from around 1/2 of un-/under-employment in the Great Depression), and the number of those receiving direct government subsidies (i.e., "food stamps")...something is indeed threatening, regardless of whether someone recognizing this has a financial interest in sales of a book, etc.....
Anonymous   |     |   Comment #3
Jim Rickards is stating similar things, also selling a book,  What's scary after watching this video some of it makes sense. http://moneymorning.com/jim-rickards-coming-great-depression/
Romulus   |     |   Comment #27
Did you subscribe to this?  I read through what Mr. Rickards said on the promo. It looks like the book would be a good read...but after the stock market crash in 2008, I really hesitate to rely on any "experts" selling newsletters, etc.  Your opinion?
Anonymous   |     |   Comment #4
It seems that the current Government thinks that as long as the stock market is doing well, things will be ok. How long can the Federal Government keep propping up the stock market?
Anonymous   |     |   Comment #5
Anyone making rash claims, no matter how alarming, followed up by a sales pitch is very questionable to say the least.
Anonymous   |     |   Comment #6
Learn about M1 and M2 money supply.
Anonymous   |     |   Comment #7
Let's see what happens to the 4.2 TRILLION dollars on the FED's balance sheet. If it remains, or grows, in perpetuity then the FED is monetizing the debt. Serious economic growth is the only alternative and that ain't happening.   
Anonymous   |     |   Comment #8
There's no question America is on a very imprudent path.  But as to the timing of the inevitable collapse I have absolutely no clue.

One thing I do feel in my bones:  when the end comes there will be little or no warning.  The "powers that be" will do everything within their ability to hold things together, with bubble gum and string, right to the very end.  When it finally goes down, America will collapse rapidly into a cloud of dust like the house of cards it in reality has become.    
Anonymous   |     |   Comment #9
The doom-sayers always find something to make life more exiting, remember YTK, 12-21-2012, and number of other fallacies going back to Nostradamus. If certain people know the future, they certainly will not tell you, they will use that prediction to become extremely rich, I for one, do not believe it.
Anonymous   |     |   Comment #10
"Doom" might be too strong.  I'm not certain.  But I prefer to stay with "collapse".  "Doom", for some individuals, might suggest death.  But fiscal collapse does not result in everyone dying, though many might wish they were dead.  Life becomes much worse following a collapse.

Bloomberg has a short piece documenting the (at least) seven failures in Argentinian history to meet their legitimate obligations.  There is even a museum in Argentina "celebrating" these multiple fiascoes.  We don't know what America will be like following the collapse, because historically (but no longer) this country was operated in a sound manner.  Here is the piece regarding Argentina:


America was a far better country when Argentina was not for us an exemplar.  I can recall, years ago, when Senator Everett Dirkson famously said:

"A billion here, a billion there, and pretty soon it adds up to real money."

The idea of 20 trillion thankfully never even occurred to Senator Dirkson.  For that kind of "real money" we have needed the likes of both Bush and Obama, together with a spendthrift and irresponsible Congress America has never elected prior.
Anonymous   |     |   Comment #11
Well said, however, America seating on the crossroads of disaster with the national debt, you failed to mention that the democrats want unlimited debt ceiling and as Pelosi said: " We need millions upon millions of illegals to dilute the national debt ", without realizing that those millions upon millions illegals will bankrupt this nation because those millions upon millions are here to take and not give.
What the left forgot is that they come with an enormous price tag, like to educate, house, health-care, feed and provide forever benefits, since most of them are here to use our welfare system and not assimilate and be contributers.
Anonymous   |     |   Comment #12
I understand your desire to blame Democrats for our dilemma.  Certainly they have been major contributors to our woe.  But there is plenty of blame to go around.  Republicans today are hard on the heels of Democrats when it comes to fiscal irresponsibility.  Both parties are attempting, in essence, to "buy votes".  The Republicans of 2015 are only marginally more responsible than Democrats.  It's not enough difference to save us, even if Republicans were completely in power.  This is a key reason collapse is inevitable.  Neither party any longer can be counted upon to make the difficult decisions fiscal responsibility will impose.  Leaders of both parties regrettably care more about being in power than they do about doing what is right for America.
Anonymous   |     |   Comment #14
To #12, you can not defend the democrats by comparing them with the republicans, the democrats did and are still doing 10 times bigger damage than the republicans ever did to this nation. Unlimited debt ceiling is the democrat's mantra, unlimited illegal aliens and capitulate to all of the foreign enemies is the democrat's agenda, live it it or get rid of them.
Anonymous   |     |   Comment #15
Looks like #12 is a democrat, wag the tail to defend the undefendable democrats, nice try, nobody believes your mind set.
Anonymous   |     |   Comment #16
That's pretty funny.  I'm not often accused of being a Democrat.  But I do detest today's Republican leadership.  I belong to a group they dislike MUCH more than they hate Democrats.  I am a staunch Conservative.  Both the Democrats and the Republicans are far, far to my left.  I departed the Republican Party ten years ago, back when your boy Bush nominated Harriet Miers for the SCOTUS.  That was NUTS!  And Roberts has not worked out all that well, either!!  Your Republican party has moved so far to the left it is disgusting.  And the way Republican leadership supports Obama at every turn is equally disgusting!!  He deserves to be impeached!  From where I sit, setting aside a few Conservative Republicans who are barely tolerated by their own leadership, there is today scant little difference between Republicans and Democrats.  Both parties are driving America into a ditch.
Anonymous   |     |   Comment #18
#16, get more involved in politics, leaving one party or rooting for another one is not a solution to today's problems, undecided voters or voters staying home because their candidate did not make it to the ballot is a lame excuse for not voting..Look at the low info democrats voters, they all show up at 7AM on a voting day and they never miss to check the box for a D candidate, therefore, the more intelligent,the more choosy people never get behind one candidate or unite to 
counter balance the morons who always vote "D".
Romulus   |     |   Comment #17
What if?  Just what if this is Argentina when the currency when haywire?  What if this is Malaysia when the upper middle class (who couldn't get out) were eating out of the garbage heaps because their currency went crazy?  What do we do?  Really?  Wheel barrels of deutsch marks for a loaf of bread?  What good are our electronic CD's going to do us? I'm asking because I think the situation is serious.
Anonymous   |     |   Comment #19
I've been wrestling with this question for years.  I'm not intelligent enough to have come up with an answer.  This saddens me, but my cerebral limitations are what they are.  What is needed is a "store of value".  An FDIC-insured CD backed by a bankrupt country is not a store of value.  Gold?  I dunno.  Land/real estate?  Maybe, but only if things do not fall apart to the point where title is lost or a valuable home overrun and destroyed by the mob.  Something external to the USA?  Quite possibly, but what specifically?

I wish I had the answer to this.  The situation is, as you assert, serious . . but it is not yet acute.  I'm so stupid I don't even know when the guillotine is going to fall . . . just that it has to strike eventually, given how events in America are unfolding.  There is no such thing as a free lunch . . darn it!
Anonymous   |     |   Comment #20
Think about the bank closures, etc. until FDR closed the banks (why did he do that?)...then think of the absence of alternatives going down another path
Anonymous   |     |   Comment #21
Think land, I know few wealthy families, they all have 50% of their assets invested in land here and abroad. If the land is in a good area, it never loses values.and it never burns and it can not be recreated by earth again, you can solve many ifs and buts with land banking.
Anonymous   |     |   Comment #22
Land, that's one of the things the guy in post number 4 recommends
Anonymous   |     |   Comment #23
Land is good, but a prospective purchaser must bear in mind:

Land "eats";  you have to pay property tax on land

Land is subject to despoilment at the hands of illegal dumpers.  This is a consideration in particular regarding land you cannot personally oversee;  rural farm land, for example, which sits "out by itself".

Continuance (continuity) of land title depends on integrity of our civil society.  Depending how badly things break down, that is not guaranteed.  Also, land ownership is a matter of public record.  This facilitates seizure or encumbrance by a government hopelessly in debt.

Land is regardless worthy of consideration.  But if you go in, go in with eyes wide open.
William Hood
William Hood   |     |   Comment #24
"Land "eats";  you have to pay property tax on land"

exactly, as it is with "everything" you own that is worth anything and has a title. in other words even all your material possessions paid for in full are not "yours" if you fail to pay said tax's to the local/state or fed gov.

There is NO safe place, only IF you can live through the times while things are still "stable" and all "things" including the printed/digitized monetary system of the country are considered "safe" and people have the trust and faith in it will things continue on, other wise everything is subject to loss, weather through deflation, confiscation, theft , or war.

PS looks like my name is now used insted of my handle (Hoody), not that I care but strange.
Anonymous   |     |   Comment #25
#23, If the society disintegrates, there are no more property taxes, the ownership is established by yourself if there is no longer public record and you can defend it from confiscation by you being homesteader.
I would not worry about illegal dumping, you can re-dump it to some other empty county property for failure to enforce the illegal dumping laws. No government on earth can confiscate land without compensation, even in the event of war or eminent domain, if that ever happen, the civilization does not exists anymore and the money are irrelevant at that stage.
Anonymous   |     |   Comment #26
All, irrelevant nonsense!  If society disintegrates that low, possessing land will be the least of someone's worries.  Fight for the basic necessities for life will be the main concern.  I truly hope I never live long enough to see it.            
Romulus   |     |   Comment #29
Reading again through your posts & Mr. Richards about the Death of Money, it does seem that having some land is a good choice along with gold, silver and hard assets.  As a "little" person not trusting the "big" people any more it is just figuring out what those hard assets can be.  I do know that a bank can close its doors in your face or its web site in a moment. I do know that very quickly our paper money can vanish...to the big thieves... but then we have the problem of protecting hard assets from the little thieves...  I'm nervous because of Cyprus & now Greece & a very recent experience in a local bank.  I think we all are going to live to see it. Personally I don't like to suffer. I know the people on this site are smart so I'm trying to think out loud with some of you.
Concerned Citizen
Concerned Citizen (anonymous)   |     |   Comment #31
Cyprus, Greece and China... all collapsing economies.  America would have collapsed before they, except that we've got the reserve currency. A holdover from winning WW II that won't last forever. Indeed, if not for the fact that we have the strongest military in the world, and managed to back the dollar indirectly, with oil, when we ran out of gold, we would be up the creek without a paddle. As it is, we've been forced to run a protection racket that shields the Arab princes from the just anger of their populations. Supporting these despots, in the desperate effort to support the dollar with oil, has had a terrible side effect -- it created ISIS and the other "hate America" sentiment.  Yet, in spite of all the warning signs, American politicians continue to make impossible entitlement and military spending promises. They continue to bail out the corrupt businesses that financially support them, even though the crony capitalism and money printing will eventually destroy this country.

The Obama administration was throwing away the US gold reserve at something like 1,000 tons per year, even when the price was being suppressed down to $1,200 per ounce. Now, they've pushed it to $1,100 and to keep it there, they will throw away, maybe, twice that. How do I know this?  Because if you add up the numbers -- newly mined gold plus all the gold melted down from pawned jewelry and resales, the total supply is some 1,500 tons less than the demand in 2015, assuming demand continues at the same rate in the 2nd half as it did in the first half of the year. But, physical demand has gone up 40% since the first half. The paper players at COMEX, who probably work for the US government, have reduced prices even further, to less than $1,100, and that means the total tonnage required in the physical market will go up even higher!

There are two reasons the government is subsidizing this. First, it is a bailout to assist the banksters in escaping from huge paper short positions in gold before the price can no longer be held down. Second, they don't like the fact that the price of gold tends to be the "canary in the coal mine". It is used by a lot of financial analysts to determine whether the market is expecting total meltdown or benign results from the money printing and other shenanigans. If you ignore the manipulated paper gold market, and concentrate only on physical gold sales, the amount of gold being sold is setting all-time records. Demand is way up in 2015, even beyond the record demand levels in 2013. So, the canary in the coal mine really is telling us what is going to happen, in spite of the government-subsidized price suppression effort.

In other words, Ron Paul is 100% correct. Now is the time to buy our insurance, not after the crash. That is what gold is. It is not a bank account. It is not an investment designed to help you get rich. It is insurance. And, you don't buy insurance after a car crash. You buy it before. Even if the USA started its manipulation of gold prices, in 2013, with all the 8,100 tons of reserve gold it claims, we won't have any left in 2-3 years, at this burn rate. at all, to continue the charade, within two years or so.  That means that prices are headed way up, with or without the crash. But, the crash is coming, and that is what Ron Paul is warning about, and the reason the authorities are subsidizing bankster speculators in their manipulation of the paper gold prices reported by the news media.
Anonymous   |     |   Comment #34
Gold is a commodity. I suppose you bought gold in Sept. 2011 and want your money back.
Anonymous   |     |   Comment #40
No. But, I did buy it at $600 back in 2007, and I would be a buyer today...
Romulus   |     |   Comment #39
This sounds real to me...the post on gold being a store of value and insurance.
Anonymous   |     |   Comment #30
If I remember correctly, the sky was going to fall in the year 2000 also.
Bea Marino
Bea Marino   |     |   Comment #32
If our currency becomes worthless, what good does it do what we own.  If we have gold and need to sell it to survive, are they going to pay us in worthless currency?  If we own land, we will owe property taxes and can we pay them in worthless dollars?  What our government needs to do NOW is find a way to get us out of the debt we are in and protect our currency.  Until we do that, we are all doomed no  matter how many books Ron Paul sells. 

Many seniors (like ourselves) live in apartments mainly because we feel we can't handle the upkeep on property.  In our apartment if anything goes wrong we have maintenance people who are here either the same day or next to fix problems with no expense to us.  Everyone can't afford to hire gardeners etc. to keep up with even mowing the land.  I think if the worse does hit, it will take many, many Americans down no matter what they own.  We need to protect our currency!
Anonymous   |     |   Comment #33
Relax, take a breath and read the entire article.

We have the strongest, most vibrant economy in the world. People from every corner of the globe want to live and work here. Ask yourself why this is true and then look at the sky. It's a nice blue today.
Beao40 (anonymous)   |     |   Comment #35
Don't know what sky you are looking at but ours is black and about to burst into a lot of rain.   Our economy is like our weather.  Never know what we are in for no matter what the meteorologists spout.
Romulus   |     |   Comment #37
Re: #36 Beautiful & uplifting.
Romulus   |     |   Comment #38
Re: # 33 I'm happy for you that you're participating in the "pie".  It's hard to respond to your optimism. What I've been witnessing are the huge numbers on welfare & food stamps. What happens if they no longer receive their "subsidies"?  Riots? What happens when the banks refuse to return our CD deposits?  I've had to fight for my maturing ones at 1/2 the institutions this year. So the problem is about more than a currency collapse. There is a current malaise in the society. It's very difficult to even find people who will "read" letters. Yes, immigrants want in -- but on the lower economic end they get angry if they are forced to pay taxes & lose their subsidies.  On the middle to upper middle they bring in the lower & want us to support them.  I've seen it.  I know these people.  My illusions were shattered.  So yes, it is beautiful outside, but have ever been under attack by some of the ones who want in?  The streets of Calcutta are stark.  We don't like the homeless here.  Eliminate the social programs and we are in trouble...So printing more money and more money will probably be the continued strategy?  Right? Until it's worthless...
Anonymous   |     |   Comment #41
We may have the strongest and most vibrant economy, but that is only because all the others are in the sewer and ours is only in the trash heap. This "strong" economy is built upon the leftover pickings of winning WW II (ie: the reserve currency) and incredible quantities of money printing, leading to excess liquidity pushing prices up temporarily. It will crash and burn.
Anonymous   |     |   Comment #42
Planes fly, boats sail, cars move down the highway, people eat and yet it's over, we're finished, the end is near and I'm running for the hills...as soon as I find the best CD rate.

Give it a rest. The real danger is a major disruption of our electrical grid. If that happens and it lasts more than a month RUN for the hills. When facebook goes down the end is upon us!

As for economics, taxation and every other problem short of total nuclear war we can find remedies. That, in a nutshell, is our human story.