Dr. Ron Paul tells New Hampshire crowd inflation will hit 50 percent

June 13, 2011 by · Leave a Comment
Filed under: Opinion 

Let us hope Dr. Paul is not correct.  Deflation is a more likely outcome because our inability to service all the debt in the system.  If you cannot service the debt, you have to either default or restructure that debt.  In both cases it results in either a mild or major deflation as any assets that were using that paper to value them will now give less value, ie less price.  You have to look at how the system measures value and that is how you will see many of these concepts manifest.

We get this sort of inflation number if in response to the massive defaults, the Federal Reserve & Treasury decide to try and defend price levels and print dollar currency units to try and sustain prices.  It won’t work because the actual “real” value of assets is lower because that is based on cost, wages and available demand.  Only when asset prices are near their “real” value, a maneuver like quantitative easing (ie: money printing) works on a macro level.  Hopefully if the pressure really comes, they will make the right choice and let the debt default and we can restructure from there so we have real growth in the future.  We don’t need major corporate welfare in our economy.   Let the chips fall where they may.

Union Leader – Texas congressman Ron Paul on Friday predicted that inflation will hit 50 percent in the next couple of years, thanks to the massive debt the country has accumulated.  Paul, who spoke to admirers and Republican activists at a Manchester house party, said the inflation will act like default. Social Security checks will still be cut and interest payments will still be made, but the inflated dollars will allow the government to repay borrowed dollars with devalued money, Paul said.

“They cannot pay the debt,” he said. “I don’t think that means you shouldn’t try and work things out, but with the size of this debt it never gets paid.”  The national debt is about $14.3 trillion.  Paul spoke to about 150 people at the home of Ovide and Bettie Lamontagne, who are hosting receptions for candidates in the Republican presidential primary.

The Texas physician is the sixth candidate to appear at their Young Street home.  Paul ranked second, with 9 percent of support, in the latest CNN/WMUR New Hampshire Primary Poll, which was conducted in mid-May. He was a distant second to former Massachusetts Gov. Mitt Romney but ahead of popular names such as Rudy Giuliani, Sarah Palin and Newt Gingrich.

In remarks to the crowd, Paul praised the pro-liberty leanings of New Hampshire and joked that his slogan is on New Hampshire license plates.  As a candidate four years ago, Paul was shut out of some Republican primary debates, but he said his credibility has grown since then, in part because of numerous television appearances over the last three years.

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