Inflation is actually creating a dangerous distortion in stock market

Last week, Dudley also floated the idea of the Fed creating its own digital currency at some point in response to the surging popularity of cryptocurrencies. For his part, Paul suggested the meteoric rise of digital money, particularly bitcoin, could also be a signal that will there’s a lot more inflation than people realize.

Yet “low” inflation remains from the spotlight for Fed policymakers, with government cost data remaining tame over the past all 5 years. Outgoing Fed Chair Janet Yellen has raised concerns about the trend — hence the bias to keep interest rates low.

Paul, however, suggested the data are misleading.

“from the ’20s, CPI [the consumer cost index] in addition to commodity prices didn’t go up, however the stock market went up,” he told CNBC.

The Fed “kept reassuring themselves ‘no inflation, no inflation. The CPI is actually not going up,’ however there was still a distortion — a bubble from the stock market, in addition to there was a pretty big correction at the end of the 1920s,” he said.

in addition to that will’s where Paul, a medical doctor in addition to former Republican presidential candidate, believes investors — as well as the Fed — could get blindsided. He’s been putting a lot of blame on the Fed for keeping interest rates low for so long.

“I think they see that will, however they don’t want to see that will. They don’t want to emphasize that will because that will would certainly say they’re doing something wrong,” said Paul. “They’re worried about how do you have more inflation? How can we get the prices to go up, in addition to stick that will to the average guy that will can barely survive?”

Paul can’t pinpoint when a plunge could happen. however he compares the current inflation environment to the Nasdaq bubble in addition to housing crisis, which ultimately caused a steep downturn from the stock market. This particular case, he added, may be no different.

“There will be a race to the exit,” Paul said.

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