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-- -- Well the Fed saying today it will continue its bond buying program without giving any chances to win it might begin to actually they did give some hints about when they're gonna taper off and that's one reason the market tank -- While everybody's glued to what Bernanke says.
Our next guest has been saying end the Fed for years former congressman Ron Paul.
Joins me now the -- that doctor Paul great to hear from you again older enjoying retirement.
Yeah I am David like to talk beer so the first of all just a big general question what would the world like what -- the financial markets look like.
Without the Fed reserve.
Well first thing it could -- -- -- -- -- -- anticipation.
Two or three days or two or three weeks of waiting for something that happened an announcement that they had.
Then there wouldn't be sudden jumped up and out and I'm wondering what will happen tomorrow.
Because it wouldn't exist and you wouldn't hit.
Big markets smartly anticipate what he says because it does have an effect but it shouldn't have in a free market.
The markets has the right there probably wouldn't even be entirely any -- certainly would be future markets in currencies and you know when you -- gold standard.
There wasn't any.
But even and a free market.
Don't you need a lender of last resort I I had I had about all blocks of the Wall Street Journal the editor -- -- -- Robert -- light.
As as I did as well then he disliked a lot of what the Fed did BBC -- he said we need a lender -- when you have.
Banks you -- some sense of a surety that if you make a thirty year deal with them they'll be some lender of last resort if that bank goes under.
I think -- but he should be market oriented shouldn't.
-- that the lender gets the forty to print money out of thin air so if you had a free market the bank would get together.
In they would have a -- they would pay into it and then at the bank -- in the trouble they can come and get rescued but the states.
That there's a lender of last resort and they can print the money -- -- moral hazard they're going to take more risk and they certainly do and sometimes that works for a lot of years like it has.
The Bob -- to get too big and it becomes unstable and then -- person that you have these kind of trouble.
And certainly in the last five years -- that happens but where the mistake it's been made is they didn't allow the liquidation of debt because.
It encouraged bad investment bad debt in the deal -- this thing happened we do and we're we're doing with the pianist we're doing what we did in the depression now we're doing for five years.
-- were still sluggish economy the real problem that the they had -- -- right now.
It would have a pick next year everybody agrees oh you know it bloody -- going into a recession -- they can do lower interest rates.
Right well there's there's a more immediate concern and that is that interest rates are going up today we saw.
The ten year yields go up significantly by about 7% you think that is gonna continue to happen.
Oh yeah and I think that proves the point did disappoint you there at the time when the Fed loses control -- today he talked about -- -- under current conditions.
Let -- -- you know figured what it is -- their doctor Bob has that's a great question.
Has the Fed lost control of interest rates.
Well yes because all that talk today about yet foul rated if I need to go -- by more by these Q -- I'll do it the other.
Whatever is necessary but in the meantime it's great to have been going up and they went up significantly today.
In markets are more powerful I think back in the days when I -- the gold market in the early years.
-- They did the how our government could go -- very high dollar amount that for ten years we don't go by that I didn't -- about it but -- eventually in the market -- out.
Don't always manipulation just.
Historic market -- did all they balance that and accepted get out.
That market and wins out markets -- to deep late government always wanted him play.
Doctor -- it's going to be a limit short of killing the affair and a lot of people are looking at Ben Bernanke and his term is about to expire just better but agrees not going to be good for another term.
Paul Volcker kind of -- a slap down I want to read some what Paul Volcker said in his speech she gave on May twenty ninth he said the credibility.
Of the Federal Reserve its commitment to maintain price stability and its ability to stand up against pressing and partisan political pressures is critical independents can't.
Just be a slogan that's sort of slap down it's it's done in a gentlemanly fashion button but do you agree with the what Paul -- set.
Well -- -- sort of that I don't think it has anything to do it Bernanke and I think it has to do with with the system price stability -- interest rates stability all these things.
Are imaginary when you think the government officials -- the Federal Reserve and central banks can do that.
They're imagining that they can do think that only markets can do there and I think -- -- real interest rates and -- manipulation by the eventually.
The markets -- rule right now the market Elaine we're going to hire a conflict -- were down more than thirty years cycle on bonds.
In -- knew that the -- case can you imagine what they would do tomorrow then everybody would dump on.
But did not going to be up and down up and -- but I think I think we've turned the tide I think we're probably moving into a period time.
Maybe 1020 years that you're gonna be just dead really rising interest rates and as we did you know from the 67 to the -- Ron Paul who says the Fed has lost control of interest rates for a present Ron Paul doctor thank you very much for coming in appreciate it.
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