“The Fed needs to stop printing money to buy US government securities.”
-Ron Paul

Ron Paul on the monetary system, as he calls for a return to the gold standard.

This is one of his numerous nonsensical, inapplicable rhetorical outbursts on the monetary system on national television.

The lack of media criticism, by a media that will criticize anything any candidate says, is telling.

Particularly the financial press. To that point, I just saw a CNBC report that ended with a concern regarding what will happen this week when the ECB ‘removes the liquidity they added before year end.’

This ‘financial knowledge crisis’ dwarfs the ‘liquidity crisis’.

Meanwhile, 3 month LIBOR continues to fall and now yields about 50 bp less than it did before the Dec 18 meeting. The Fed sees this as an ‘easing of financial conditions’ and as taking away that much of the need to lower the fed funds rate. This is the opposite of what happened a few months ago when 3 month LIBOR did not go down when they cut the Fed Funds rate, which gave the Fed cause to further lower Fed Funds.

With various mtg products pegged to spreads vs 3 and 6 month LIBOR this also brings those rates down.


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One Response

  1. I like a lot of what Paul has to say, but his “Creature from Jeckell Island” schtick always reminds me that he is, indeed, a kook. But the real problem, as you say, is that no one seems to have enough of an understanding of the monetary system to call him on it. Judging by the rhetoric of all the other candidates, they have the same lack of understanding as Paul, they just don’t have the courage to actually act on it (thank God…)

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