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Ron Paul Weighs In On Interest Rates
Posted March 20th, 2014
TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and silver prices were mixed on Thursday with gold rising on bargain hunting and short covering to $1,331.20 an ounce, while silver slipped a bit to $20.40 an ounce. A strongly rebounding dollar pressured the metals following Janet Yellen's response to a question asked in her first press conference as Fed chief. She was asked to explain what the Federal Open Market Committee (FOMC) meant when it said that there would be a “considerable” amount of time before rates would rise after the tapering of its quantitative easing (QE) program was completed.
TD Securities said that her response of "probably something on the order of around six months, that type of thing," now has the markets believing that the first rate hike could come before next summer. Investors interpreted Yellen's statement to be “more hawkish than expected,” even as she insisted that it meant no change in policy intentions.
“The market focused on two elements,” said Brown Brothers Harriman. “First, Fed funds at the end of next year are now seen at 1.0 percent (based on forecasts from Fed officials), up from 0.75 percent in December 2013, when the last projections were made. Just as importantly, at the end of 2016, Fed funds are seen 2.25 percent, up from 1.75 percent.”
Former Congressman Ron Paul, of Texas, doesn't believe the Fed should be able to control interest rates. "It's an illusion. I don't think any one individual knows how to plan the economy by manipulating interest rates," said Paul to CNBC.
"Interest rates are so important that if you give this power to one small group or one individual, there will be distortion." The Fed has a weak track record with its policy decisions, says Paul. "Sometimes you have housing bubbles, and sometimes you have housing busts," he added. "Then you have . . . bond bubbles. That's all [the] result of the manipulation of interest rates, which is my real objection to it," said Paul.
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