The Federal Reserve confirmed in a statement issued by the Federal Open Market Committee (FOMC) that it will continue with its aggressive $85 billion per month bond-buying initiative in order to stimulate the economy. The central bank hinted throughout the summer that it would taper its quantitative easing.
As most critics of the Fed agreed, this is a troubling sign that even the central bank believes the United States economy is in a mess and that if the Fed pulls its injection of money then the markets would drop due to the addiction that Wall Street has to easy money.
Former Texas Republican Congressman Ron Paul told MSNBC on Thursday that the Fed stimulus has made the economy even worse and will continue to do so because any devaluation of a currency is a bad thing.
“Bernanke’s literally saying we’re in bad shape, and yet the markets didn’t interpret it that way, because the markets are reflecting just that easy money going into stocks,” stated Paul. “It doesn’t help those 99 percent, or at least the large middle class and the poor, won’t help them one bit. I think it was a very, very bad, you know, announcement yesterday that the economy is a lot worse off.”
He added that it’s important for the U.S. to go cold turkey because it’s a necessary move for the country.
“There is no easy, there’s no political answer. It’s addiction. The people are addicted to spending. The politicians are addicted. The markets are addicted. And there’s no chance that they’re going to wean us off. And this is what Bernanke was saying yesterday,” Paul added.
Following the announcement, the prices of gold futures jumped nearly five percent to $1,367.70 on Thursday, the biggest gain since 2009. Goldbugs say that this is another sign that investors think the continuation of the monetary stimulus will lead to inflation.