The Ex- Republican Congressman has some dire predictions for the U.S. economy and he has said that Americans should be ready for a 'painful correction' in the near future. Ron Paul, who has also been the presidential contender was speaking to CNBC when he made this startling statement. According to him, the consensus that the economy is steadily and stably improving may be quite inaccurate.
Correction may take place as early as October
Ron Paul believes that the correction could be upon the economy as early as in October. He has also predicted an escalation in gold prices to the tune of some 50% while he believes that the markets could dip by a whopping 25%. If indeed Paul's prediction does come true, the S&P 500 will go down to 1819 and gold would touch the $1867 mark per ounce.
Criticizes low- interest rate policy
In addition to pointing out that the economy is inaccurately being viewed as improving, Ron Paul has also said reiterated his stance that the policy of keeping interest rates subdued is not a step in the right direction. Paul has criticized the Federal Reserve for this policy stance in the past as well and he has made his opinion clear that the long term over which the rates have remained low has only added to the economy's woes.
Interestingly, the Federal Reserve has opted for a rate hike after almost a 10 year period now and there are many analysts who believe that this could be detrimental to the economy as well. Paul has not had anything positive to say about this move either. Continuing his severely critical opinion of the Fed, he has clearly stated that the Fed is 'incapable of knowing what to do' and hence he does not expect much good to come out of this.
Putting things in perspective, Paul's earlier doomsday predictions came about a year ago but the S&P 500 and the Dow have performed quite contrary to his expectations. the NASDAQ has had a particularly progressive showing during the period, moving into record range with ease. However, Paul's belief that this progress is temporary continues and he cautions that the rally will come to an abrupt end very soon. High levels of debt will be one of the major reasons for the economy to switch into a downward spiral soon, he says.