The United States is on the verge of "catastrophic economic crisis," said an American politician, former member of the US House of Representatives Ron Paul to CNBC channel.
From a policy perspective, the reason for this was the collapse of the dollar economic "bubble", that is, a situation in which large volumes of securities sold at a price that is far from the real, due to the high demand for them. Sooner or later, this bubble "bursts", what leads to negative economic consequences.
Despite the fact that, according to CNBC, the US dollar index, which reflects the dynamics of the US currency against a basket of currencies, reached its maximum in the last 12 years, it is, according to Ron Paul, does not mean that dollar is a strong currency. It is strong only in comparison with other currencies.
- It's not so much that the dollar is a strong currency but that other currencies are not better, - says the politician.
- Key indicators are in poor condition. When more than half the population barely making ends meet, we can say that the economy got uglier.
The former congressman was not able to predict when exactly the “collapse of the dollar bubble” will occur, but assured that it will happen "quickly and unexpectedly." The collapse of the dollar, and then the stock market, in his opinion, will come after the US Federal Reserve will raise interest rates, what, according to some analysts, could happen "later this year".
Ron Paul also noted that the psychological factor of confidence plays an important role in the assessment of the economic situation. Currently, there is no certainty that the United States worth investing, despite the strong market, according to the politician.
The US Federal Reserve had previously reported that in recent months the economy has been developing at moderate pace. The US agricultural industry conditions have deteriorated as a whole, and investment in drilling oil and gas wells declined too.
From a policy perspective, the reason for this was the collapse of the dollar economic "bubble", that is, a situation in which large volumes of securities sold at a price that is far from the real, due to the high demand for them. Sooner or later, this bubble "bursts", what leads to negative economic consequences.
Despite the fact that, according to CNBC, the US dollar index, which reflects the dynamics of the US currency against a basket of currencies, reached its maximum in the last 12 years, it is, according to Ron Paul, does not mean that dollar is a strong currency. It is strong only in comparison with other currencies.
- It's not so much that the dollar is a strong currency but that other currencies are not better, - says the politician.
- Key indicators are in poor condition. When more than half the population barely making ends meet, we can say that the economy got uglier.
The former congressman was not able to predict when exactly the “collapse of the dollar bubble” will occur, but assured that it will happen "quickly and unexpectedly." The collapse of the dollar, and then the stock market, in his opinion, will come after the US Federal Reserve will raise interest rates, what, according to some analysts, could happen "later this year".
Ron Paul also noted that the psychological factor of confidence plays an important role in the assessment of the economic situation. Currently, there is no certainty that the United States worth investing, despite the strong market, according to the politician.
The US Federal Reserve had previously reported that in recent months the economy has been developing at moderate pace. The US agricultural industry conditions have deteriorated as a whole, and investment in drilling oil and gas wells declined too.
