In this setting, Paul, a former presidential candidate and vocal libertarian known for his financial and stock market bubble warnings, argues that the policies of the Federal Reserve are powerless. He does not think that the Fed meeting this week will provide any relief, as well as cutting rates will not be the solution.
For years, Paul has waved the red flag, warning that stocks will be hit once in a lifetime price fall of 50 percent or more. With bonds now being focused on yielding adverse prices, he indicates the risk of ballooning to invisible levels.
Yet, the timing of a crash is uncertain.
He said that this precise time you don’t understand but you know it’s possible. He also says that how are you selling a negative rate bond? Who will be jumping up and down?
Flashback October 2018
But what makes a year’s difference. Last October, Paul was concerned about the other extreme — when the 10-year benchmark Treasury Note yield rose to seven-year highs and hit 3.26 percent, generating inflation jitters.
Last October, Paul said to Futures Now that by looking at financial history, it can be quite well validated that there must be an adjustment when you inflate the currency, distort interest rates and live beyond your means and spend too much, and told that they have the greatest bubble in human history.
The 10-year return closed at 1.9 percent on Friday, the highest of level since August 2. So why is Paul warning that an epic bond bubble will burst into chaos if rates no longer exceed 3%?
According to Paul, the pricing mechanism in financial markets is destroyed by central banks that dramatically lower interest rates. Paul said he didn’t believe there was anything that came near to what they face today.