Pt 3/6 Ron Paul  4/15/11 CSPAN

Robert Wenzel, Editor & Publisher of the Economy Policy Journal wrote a fine article “On the road with Ron Paul,” May 2, 2011. I will be posting portions of that article the next few days. Here is the third part:

We went on to discuss the current state of the dollar, price inflation and so on. I found his understanding of markets remarkably sophisticated. At one point, he said to me, “You know, these markets can all very rapidly just take off and the dollar can collapse and prices climb very rapidly.” For emphasis, he moved his hand horizontal and then quickly vertical.

In my many years of trading and talking to investors, one of the most difficult concepts to get across is how quickly markets can change and move dramatically. Most people tend to think of investments as trading within ranges or a slow move in one direction or another, not quite realizing that the moves at times can become very spectacular. Ron Paul seemed to understand this possibility very clearly.

I’ve written before that in watching the way Fed Chairman Bernanke deals with the money supply that he does not appear to have a lot of experience trading stocks. He seems to react to market moves at odd times. Ron Paul, on the other hand, seems to have a trader’s understanding of the markets, and an in depth understanding of how quickly markets can change.

At one point, Dr. Paul speculated with me as to how much Bernanke understood the tight box he is in, with the potential for serious price inflation, on the one hand, and the alternative being very high interest rates to stop the inflation. Dr. Paul said to me, “You know he may believe that it’s not as if he can say what he is exactly thinking, since if he really understood the problems, and said so, the markets would react dramatically.”

As we talked, he told me that interest rates may climb a lot quicker than Bernanke and other Fed members expect, because of the price inflation that is likely.