Debt isn't curable by tinkering: Ron Paul

The inverted yield curve is raising concerns of a potential U.S. recession and has led to a debate over whether the Federal Reserve should cut interest rates more aggressively.

Continue Reading Below

“To look at the inverted curve and all of a sudden say ‘well if the Fed had done this or that,’ I think the inverted curve -- I am not the expert on this -- but I think that’s market driven," Former Rep. Ron Paul, (R-TX) told the FOX Business Network’s "Varney & Co. "I don’t think you can tinker with a few Federal Reserve policies and change that.”

Paul weighed in on the tensions between President Trump and Federal Reserve Chair Jerome Powell over whether to cut interest rates and how fast.

“They’re really tinkering on the edges, they’re not dealing with the fundamental problem of fiat currency and central banking, which facilitates big government, and it’s unmanageable and it ends badly,” Paul said.

Paul also had a dire prediction for the impact of that “tinkering.”

“It’s not a good scenario and I think we’re just seeing the cracks in the system, but it’s going to get worse.”

In the midst of recession concerns, economic critics are calling for use of the Modern Monetary Theory, which views currency as a public monopoly for the government. Despite calls for its use to pay for costly social spending, Paul says it is actually already happening.

“They call that modern, I call that old fashioned. And we’re involved already. And they are going to do it because there is no political appetite for doing what you have to do.”

Paul says they should be addressing the rise in spending.

CLICK HERE TO READ MORE ON FOX BUSINESS

“So, if we moved in my direction, you’d have to sort of cut back on spending. You’d have to cut back on the welfare system.”