Former Republican congressman and two-time GOP presidential candidate Ron Paul warns that stock-market dangers are “bigger than ever” and calamity looms, even if President Trump backs away from his tariff threat.
The Newsmax Insider suggests the real trouble stems from Federal Reserve policy and easy money.
"If the Fed continues on the things that they are sort of planning on doing, it's going to be a calamity," he said Monday on CNBC's "Trading Nation." "I think we have a greater distortion and a financial danger sitting out there bigger than ever before."
The former Republican Congressman from Texas alleges the Fed has made critical policy errors that have helped caused a "rigged economy."
"Everything is just very burdened with debt, and there's no stopping it," added Paul.
He says investors should not be shocked by a stock market plunge as deep as 50 percent.
According to Paul's latest prediction, the February pullback may be just a blip compared to what's ahead.
"The correction is going to be huge, and I don't think anybody can predict. But I think this correction we had in '08 and '09 wasn't allowed to really go its course and restore some sensibility to the market. I think that'll be a mild correction to what could happen," Paul said.
Wall Street opened higher on Tuesday as the prospect of talks between North Korea and the United States and increasing resistance to Trump’s proposed metals tariffs encouraged risk appetite among investors, Reuters explained.
North Korea is willing to hold talks with the United States on denuclearization and will suspend nuclear tests while those talks are under way, the South said on Tuesday after a delegation returned from the North after meeting leader Kim Jong Un.
Trump, in the first U.S. response, said on Twitter Tuesday: “We will see what happens.”
"Possible progress being made in talks with North Korea. For the first time in many years, a serious effort is being made by all parties concerned. The World is watching and waiting! May be false hope, but the U.S. is ready to go hard in either direction!" he also later tweeted.
The news added to early gains for U.S. markets, which have been recovering from a bout of concern over the possibility of a global trade war following remarks by Trump last week.
“When geopolitical environment is improving, there’s very much a risk-on sentiment,” said Fiona Cincotta, senior market analyst at City Index in London.
“I would not say that trade war fears are completely erased ... there are doubts that Trump will actually manage to push the trade tariffs through.”
Investor fears were eased after Trump’s threat of hefty tariffs on aluminum and steel was seen as a negotiating tool following his tweet on Monday that Canada and Mexico could avoid the tariffs if they ceded ground in the North American Free Trade Agreement (NAFTA) talks.
Top U.S. Republicans, including House Speaker Paul Ryan, urged Trump on Monday not to go ahead with the tariffs.
“There’s also a lot of pressure regarding the tariff - not only GOP, trading partners but also many business leaders in the United States,” said Peter Cardillo, chief market economist at First Standard Financial in New York.
Meanwhile across middle America, in the towns big and small that voted overwhelmingly for Trump, his most ardent, and financially comfortable, backers are opening stock-market accounts or beefing up existing ones, Bloomberg reported, citing interviews with more than a dozen advisers and brokers.
“I hear it every day,” said Jimmy Freeman, a financial adviser at Edward Jones in San Angelo, a city of some 100,000 that’s just east of the booming Permian Basin shale oil fields. “The market’s going up because of Trump. They all think it’s Trump.”
They were spurred on by a stream of presidential tweets crowing about, and taking credit for, the gains throughout 2017 and the strength of the economy, and they remain undaunted now as the rally sputters and the tweeting dissipates.
“It has really made a difference in attitudes,” said Jimmy Waggoner, an investment adviser with VisionPoint Advisory Group in Sioux Falls. So much so that in Covington, Rob Smith, an adviser at Edward Jones there, said he tries to tap down on the enthusiasm. “I dissuade people from thinking any specific politician or even event will have that much of a long-term positive or negative effect on markets.”
Ron Paul is a physician, author, and former Republican congressman. Paul also is a two-time Republican presidential candidate, and the presidential nominee of the Libertarian Party in the 1988 U.S. presidential election. His latest book is “Swords into Plowshares." For more of Ron Paul's reports, Go Here Now.
(Newsmax wires services contributed to this report).
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