US interest rates become negative

Ron Paul warns that negative interest rates will crush the global economy.

The former Texas Republican Congressman believes that the United States will not be an exception.

"We will join the rest of them and adopt total negative rates in the hope that this will be the solution," he told CNBC's "Futures Now" channel on Thursday. "We have never had so many negative interest rate currencies." $ 17 trillion worth of bonds [are] in negative interest rates. This has never existed before. And it's a bubble. So we are in the biggest bond bubble in history, and it will burst. "

Paul, a former presidential candidate and libertarian known for his warnings about economic and stock market bubbles, says the Federal Reserve's policy is powerless in this environment. He does not believe that this week's Fed meeting will bring some relief and that the rate cut will not be the solution.

"You can not predict exactly where credit creation is going," said Paul. "We have a ton of inflation with all that EQ [quantitative easing]. And, every time you lower interest rates below market levels and create new credit, it's a bubble. "

Paul has been holding up the red flag for years, warning that a market crash of 50% or more over a single life would result in losses for equities. Bonds generating negative interest rates are now at the center of concern, suggesting that the danger rises to levels never seen before.

Yet, he is not sure of the moment of a collapse.

"You do not know that exact time, but you know it can happen," he said. "How do you sell a bond that pays a negative rate? Who will jump up and down?"

But what a difference a year makes.

Last October, Paul worried from the other extreme: the benchmark 10-year Treasury bond rate reached a seven-year high of 3.26%, which caused an anxiety of l & # 39; inflation.

"It can be pretty well validated by looking at the monetary history that when you inflate the currency, distort the interest rates and live beyond your means and spend too much, you have to make an adjustment," said Paul at "Futures Now" last October. "We have the biggest bubble in the history of humanity."

On Friday, the 10-year yield closed at 1.9%, its highest level since August 2nd.

So, why does Paul always warn that an epic bond bubble will burst the chaos if rates do not exceed 3%?

According to Paul, central banks, which significantly reduce interest rates, destroy the pricing mechanism in the financial markets.

"I do not think anything has existed that is close to what we are facing today," said Paul.

Warning