08:44 GMT23 January 2021
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    The current US economic system is doomed to failure, Dr. Ron Paul notes; however, the problem is that the global economy is suffering from inconsistent financial policies and is heading toward stagnation and, possibly, a new global financial crisis.

    Former Republican congressman Dr. Ron Paul stresses that the current US economic system has serious flaws: it has nothing to do with genuine "free markets."

    "I am a champion of free markets, but not of the current system that we have today. I am highly critical of it, because it is designed to fail. It is designed to reward the rich; it is designed inevitably to destroy the middle class, and also to finance some of the worst things in government: all the deficits with the welfare state and for the warfare state," Paul told RT's Boom Bust show.

    The former Republican congressman argued that the crux of the matter is that the US has not got enough free markets. Incredible as it may seem, what the Americans have instead is a planned economy, a welfare state, inflationism, central economic planning by a central bank and a belief in deficit financing, he stressed.

    "What we need to go toward is property ownership, voluntary contracts and individual liberty in getting rid of the central bank," Dr. Paul emphasized.

    However, the US is not in a unique position with economic hurdles in the way of its further development.

    Nouriel Roubini, a professor at New York University's Stern School of Business, points out that both advanced and emerging economies have recently faced a slowdown.

    "Among advanced economies, the United States has just experienced two quarters of growth averaging 1%. Further monetary easing has boosted a cyclical recovery in the Eurozone, though potential growth in most countries remains well below 1%," he writes in his analysis for Project-Syndicate.org.

    Roubini notes that Japan's "Abenomics" is running out of steam, the UK is suffering from uncertainty over its potential Brexit, while other developed economies, such as Canada, Australia, Norway, "face headwinds from low commodity prices."

    Not everything is rosy in the garden of emerging economies as well, the American professor adds.

    "Potential growth has also fallen in both advanced and emerging economies… The rise in income and wealth inequality exacerbates the global saving glut (which is the counterpart of the global investment slump)…  Moreover, a protracted cyclical slump can lead to a lower trend growth," Roubini continues.

    The world economies have found themselves locked in a vicious cycle:

    "A cyclical slump reduced potential growth, and the reduction in potential growth prospects led to further cyclical weakness, as spending declines when expectations are revised downward," he explains.

    According to the economist, structural and market-oriented reforms could have saved the day, but they are especially unpopular if an economy is already is in slump.

    "Thus, for the time being, we are likely to remain in what the IMF calls the 'new mediocre,' Larry Summers calls 'secular stagnation,' and the Chinese call the 'new normal'," Roubini notes.

    "But make no mistake: There is nothing normal or healthy about economic performance that is increasing inequality and, in many countries, leading to a populist backlash — both on the right and the left — against trade, globalization, migration, technological innovation, and market-oriented policies," he warns.

    James Rickards, a lawyer, author, economist and editor of Strategic Intelligence, also suspects that there is something "rotten" in the world's economic system. In his April article for The Telegraph Rickards suggested that the world is teetering on the brink of a new financial crisis, referring to the global economy's 30-year cycles.

    "This does not mean the system will collapse tomorrow, but no one should be surprised if it does," Rickards noted, adding that what the global economy needs is a fundamental systemic reform.


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