Against the background of high inflation and increasing interest rates, coupled with the rising cost of food, energy, and poor stock market performance, the question of whether or not the US economy is going into a recession has been at the forefront of discussions.
Speaking with Kitco News on August 9, 2022, Ron Paul, a former Texas Congressman, shared his skepticism about the ‘inevitable collapse’ of the US economy as he discussed the nation’s efforts to manage its debt.
Painting a bleak picture for the US economy, Paul stated:
I’m talking about an inevitable collapse of the economy because we won’t be able to afford it and that can come quickly. The downturn can be very, very vicious; it can be very, very fast.
Right now the inflation has occurred, the debt is there we’re not going to pay it off in a normal honorable moral faction fashion. So we are going to continue until the market wins, the market always wins and the market will say there will be a liquidation of debt.
Notably, Paul was unable to specify when exactly we could expect the economic collapse to occur.
We don’t know what the precipitating event will be. We don’t know whether it will start tomorrow or whether it will be a bankruptcy announcement, but the bubble is there, the debt is there and I would say the measurement of debt is the best way to tell how distorted it is the system is.
Nevertheless, he remarked that he would like to see the US government cut spending, balance the budget, and take steps to dig its way out of debt instead of piling on more.
When asked what the collapse would mean for the average US citizen, the first thing Paul mentioned was prices going up while living standards going down.
On a final note, he shared his pessimistic predictions on inflation and its impact on the living standards of the middle class:
What’s happening right now with the middle class and the poor is that the poor are out on the streets and the middle class can’t pay their bills,” he added, “It’s just the beginning.
The anti-inflation bill will have little impact on inflation
With a 51-50 vote, on August 7 the “Inflation Reduction Act” was passed on Capitol Hill and its announcement to the media was accompanied by enthusiastic applause.
However, despite this legislation being an “anti-inflation” bill, Paul predicts that its authorization and actions will have little to no impact on ongoing inflation. He stated:
The only way to pay off the debt, which is absolutely necessary over a period of time to get the market going again, is through inflation.
Ultimately, while Ron Paul’s forecasts for the future of the US economy can seem hopeless at the surface, only time will tell if they will become a reality.
Watch the interview: Former US congressman Ron Pauls warns US economy’s ‘inevitable collapse’