FOR COVER.
DAVID: RUN FOR COVER HE SAID.
FEDERAL RESERVE CHAIR ALAN
GREENSPAN ISSUING A STRONG
WARNING THAT THE PARTY'S OVER ON
WALL STREET PRINTER WALL STREET
PRINTER AND IS NOW HIS FORMER
PRESIDENTIAL CANDIDATE RON PAUL
WARNING ALSO ABOUT A CRASH.
YOU LOOK AGAIN -- TERRIFIC.
I KNOW THAT YOU AGREE WITH
GREENSPAN'S CONCLUSION, BUT I
SUSPECT YOU THINK IT'S FOR
DIFFERENT REASONS.
WHY DO YOU THINK THE MARKETS
ABOUT TO CRASH?
>> WELL, BECAUSE IT'S EXPANDED
TO MATCH.
BUT I AGREE WITH HIM.
YOU KNOW, WE BETTER GET READY TO
RUN.
I RAN A LITTLE BIT OF TRACK IN
SCHOOL I SUGGEST EVERYONE GETS
THEIR STARTING BLOCKS BECAUSE,
YOU KNOW, THE SCHOOL OF
ECONOMICS TEACHES YOU YOU CAN
SPOT WHERE THEY COME FROM TO
EXCESSIVE CREDIT.
TO WHICH YOU CAN TELL US WHAT
IT'S GOING TO COME AND TAKE A
SPECIAL EVENT.
I GOT TO THINKING I DON'T KNOW
WHEN THAT EVENT WILL BE, BUT THE
WAY I WAS WATCHING THE BUSINESS
TODAY, THERE'S BEEN A LOT OF
TALK ABOUT TOMORROW.
I SURE HOPE IT ISN'T TOMORROW
EVERYONE HAS TO BE THERE, BUT
THAT ONE THING WE DON'T KNOW.
I THINK A LOT MORE PEOPLE
WORRIED ABOUT THAT THAN JUST
MYSELF.
>> YOU KNOW, DR. PAUL COVER
THINK IT'S IRONIC THAT ALAN
GREENSPAN SHOULD BE TALKING
ABOUT FINANCIAL BUBBLES WHEN HE
WAS RESPONSIBLE FOR ONE OF THE
BIGGEST FINANCIAL BUBBLES IN
MODERN HISTORY OF WHAT THE CLOSE
ZERO INTEREST RATE POLICY IS.
WHAT WOULD YOU SAY TO HIM ABOUT
WHAT HAPPENED IN 2008 IN 2009
WITH THE REAL ESTATE BUBBLE?
>> I'D ASK A DIRECT QUESTION BUT
I WOULDN'T GET A DIRECT ANSWER.
WE OF COURSE HAD A LOT OF
DISCUSSIONS ON MATT AND HE DID
DO EXACTLY AS YOU SAID.
I REMEMBER WHEN BERNANKE CAME
IN.
THE ONE THING THEY SAID, THEY
WERE HEADING AT THE 07, 08 CRASH
AND HE KEPT SAYING, EVERYBODY
WAS SAYING AND AGREE THAT
INTEREST RATES HAVE BEEN KEPT
TOO LOW TOO LONG.
BUT THEN OF COURSE THE POLICY
WASN'T CHANGED, SO THEY SHOWED
THEY COULD EVEN DO BETTER.
THEY WENT TO THE KIWI AND THAT
REALLY WASN'T EXACTLY THE RIGHT
CORRECTION FOR AN INTEREST RATE
LOW RATE TOO LONG -- TOO LOW,
TOO LONG.
>> DR. PAUL, IS WONDERING
PARTICULAR VALUATION, IF YOU'RE
LOOKING AT THE MARKET OVERALL OR
EVEN LOOKING AT INDIVIDUAL
INDUSTRIES, IT DOESN'T SEEM LIKE
ANY OF THE VALUATIONS OF
COMPANIES ARE PARTICULARLY FOR
UP TO YOUR BUBBLY.
SO WHERE DO YOU SEE THAT
VALUATION CONCERNS THAT WOULD
PUT WITH THE BIG MARKET CRASH
ROOM HERE?
>> THAT'S THE WHOLE THING.
MAYBE THAT'S TODAY.
WHAT ABOUT TOMORROW.
IF YOU'D ASKED ME, I DON'T PAY
CLOSE ATTENTION TO PARTICULAR
STOCKS.
BUT IF YOU'D ASKED A FEW WEEKS
AGO ABOUT APPLE, SOUNDS TO ME
LIKE A PRETTY GOOD COMPANY.
THINGS COME UP IN ALL THE SUDDEN
THEY HAD TOO MANY CELL PHONES
AND PEOPLE SAY HOW ARE WE GOING
TO SELL THEM?
SO MANY DISTORTIONS THROUGHOUT.
IT ISN'T LIKE EVERYBODY'S GOT
SEPARATE BUBBLES.
EVERYTHING IS IN THE BUBBLE
BECAUSE OF THE INTEREST RATES
BELOW.
THE MOST IMPORTANT INFORMATION
AND INVESTOR CAN HAVE FOR ANYONE
WHO'S SAVING MONEY AND
BUSINESSES THE PRICE.
THE PRICE OF MONEY.
WHEN YOU DON'T HAVE SUPPLY AND
DEMAND LIKE IN SOCIALIZED
MEDICINE, THE SHORTAGES ARE
DRUGS, YOU CAN'T JUDGE THEM COME
YOU CAN MAKE THESE DECISIONS.
THAT IS WHAT HAPPENS WHEN YOU
HAVE THESE INTEREST RATE.
IT BREATHES INTO AT THE
DISTORTION.
TOO MUCH DEBT.
JUST LOOK, THERE'S TOO MUCH
DEBT.
THE PRICES OF BONDS OR RATHER
FROTHY AND I THINK THE PRICE OF
STOCKS VERY FROTHY ANONYMOUSLY
SOMEBODY THINKS THEY ARE OR THEY
WOULDN'T BE SELLING THEM AND WHY
ARE THEY CONCERNED DEPENDING ON
WHAT THE FED DOES TOMORROW, THEY
MIGHT MAKE A TRILLION DOLLARS
DECISION TOMORROW.
THAT IS HOW AMAZING I THINK IT
IS.
>> DR. PAUL COMMENTS KRISTINA
APPEARED AS QUICKLY I'M
CONFUSED, THOUGH.
ENCOURAGING THE FED TO GO AHEAD
AND YOU DO THINK THEY SHOULD NOT
BE ANY TYPE OF DOVISH PAUSE IN
2019?
YOU THINK THEY SHOULD REALLY GO
AHEAD WITH THOSE HIKES BECAUSE
LIKE YOU SAID FOR SO LONG YOU
SEEN INTEREST RATES RIDICULOUSLY
LOW?
>> THERE'S NO WAY TO KNOW A
CORRECT ANSWER FOR A SYSTEM THAT
HAS BEEN GROSSLY DISTORTED.
PEOPLE ASK ME ALL THE TIME, WHAT
WOULD YOU LIKE THE INTEREST
RATE?
>> I'VE NO IDEA WHAT THE
INTEREST RATES EXCEPT THEY OUGHT
TO BE AT THE MARKET.
NO MAN ON EARTH AND NO FEDERAL
RESERVE WORD COULD POSSIBLY GET
AN INKLING OF WHAT INTEREST RATE
SHOULD BE.
THIS HAS TO BE DECIDED BY
MILLIONS AND MILLIONS OF PEOPLE
IN TRILLIONS OF DOLLAR SUPPLY
AND DEMAND.
IT'S AN UNKNOWN.
THIS IDEA WE GO THROUGH THESE
GYRATIONS, WE FREQUENTLY LOOK AT
THE FED MINUTES IN THEIR
DECLARATION.
SOMETIMES THEY'LL LOOK FOR ONE
WORD.
THIS IS CHANGING HISTORY.
THERE WAS A TIME WHEN WE DIDN'T
HAVE A FEDERAL RESERVE BOARD
FEDERAL RESERVE BOARD AND THERE
WAS A TIME WHEN WE HAD A FEDERAL
RESERVE THAT COULD MANIPULATE
EVERY MINUTIA.
THEY'RE INTO ECONOMIC PLANNING
AND THEY ARE CONTROLLED.
THERE IS NO DOUBT.
THEIR MAIN MOTIVATION IS TO PUMP
UP THE STOCK MARKET.
THEY DID THAT WITH THE BOND
MARKETS, TOO.
BUT THE PRICES ARE TOO HIGH NOW.
AND THERE HAS TO BE A
CORRECTION.
YOU JUST CAN'T GO ON FOREVER,
YOU KNOW, DISTORTING THE MARKET
AND RUNNING UP THE DATA.
WE HAVE A GOVERNMENT INFLATION
THEY WILL HAVE TO CORRECT THAT.
>> DR. PAUL, JONATHAN HOENIG.
THANK YOU FOR BEING WITH US.
SEEN ALREADY THAT BANKS LOAN
MARKET, THESE HAVE BEEN CRACKING
JUST TERRIBLY.
A LOT OF THE INVESTMENT THAT HAS
HAPPENED DURING THE FEDERAL
RESERVE.
IF WE GET A CORRECTION, IF WE
GET A CRASH, WHAT IS THE MARKET
OR FROM THE PEOPLE BLAMING
BANKERS, BLAMING THE MARKET IN
THE SAME THAT WE NEED MORE
REGULATION.
EVERY TIME WE HAVE SOME KIND OF
A CRASH WHETHER IT BE
SARBANES-OXLEY OR ANY OTHER IS
TO GET MORE REGULATION OF
FINANCIAL MARKETS AND AS YOU SAY
WHEN A BUS.
HAD WE MAKE SURE THAT PEOPLE
UNDERSTAND THIS, THAT IT'S
CAUSING THE PROBLEM.
>> YOU KNOW, AND I THINK THAT'S
A CRUCIAL QUESTION AND THAT'S
WHY I LIKE TO THINK I SHOULD BE
IN THE EDUCATION BUSINESS TRYING
TO TEACH PEOPLE WHY THIS
HAPPENS.
BECAUSE IF YOU LOOK AT THE
DEPRESSION, IN THE 1920s, THEY
DID MAKE THE DECISION.
THEY LOOKED IN THAT IT WAS THE
GOLD STANDARD IN TOO MUCH
FREEDOM.
TOO MUCH FREE-MARKET CAPITALISM.
AND WHAT DID WE DO?
WE USHERED IN THE AGE OF FDR AND
ON AND ON.
THAT'S THE BIG QUESTION, WILL
THEY DO THAT?
THEY ARE MANIPULATING INJURIES.
BUT THIS DOWNTURN ISN'T GOING TO
BE TRUMPS ALL.
IT'S BEEN THE INFLATION PRIOR TO
THIS.
SO IF YOU DON'T LOOK AT THE
PROBLEM, MORE PEOPLE ARE LOOKING
AT THE FED NOW THAN THEY USED TO
AND THEY FEEL BETTER BECAUSE
THEY'RE LOOKING AT THE RIGHT
PLACE.