Ron Paul: Our Inflation Problem Will Be Much Worse Than 1970s Style Stagflation
Alix Steel, The Street
Jun. 19, 2011
The Federal Reserve is like a drug addict, according to presidential candidate and Congressman Ron Paul, notorious for his hatred of the Fed and love of gold.
In a recent interview with TheStreet, Dr. Paul likened the Fed to a drug addict unable to stop printing money as no one wanted to go through the pain of withdrawl. The libertarian Congressman, however, believes that Congress will raise the debt ceiling before August 2nd despite that fact that the U.S. is more than $14 trillion in debt, with $275 billion of interest payments due in 2011 alone, according to TreasuryDirect.gov.
According to Erik Oja, U.S. banks analyst at Standard & Poor’s Equity Research, the Federal Reserve has committed, not necessarily spent, $14 trillion through its two rounds of quantitative easing programs, plus TARP and TALF, life lines for the financial system during the recession. Banks are holding excess reserves of $1.55 trillion and including their required reserves, their lending capacity is more than $1.58 trillion. As a result, if that money is loaned out then potential inflation is much higher than what is reported currently.