Former Sen. Ron Paul said Friday he is concerned the Federal Reserve is "doing too much" through economic planning through the manipulation of money supply and interest rates, as the "one thing that pushes you over into socialism is when you regulate prices."
"That's true socialism," Paul told CNBC's "Squawk Box." "If it is in the monetary system, that's a socialist monetary system.
"The market is trying to tell us that they're all messed up and they can't manage it," he added.
Meanwhile, Paul said the situation is "insane," but he does think the matter is temporary.
"You know, the Fed is in there now, and there are trade negotiations and people feel good, but we don't even know how they're going to feel at the end of the day, let alone next week," Paul said. "It is up and down, and up and down. It is central economic planning, mainly through the manipulation of money and credit, and then we get into manipulating trade."
Paul added he does not like tariffs or sanctions, and he is starting to think that socialists "sort of have credibility.
"They're listening," he said. "It used to be they wouldn't get on TV."
"I think it is very dangerous in the moves we're doing," he added. "We're not willing to think about what we have to do we have to cut the spending, get rid of the deficit."
As a result, the economy might move in the right direction, but Paul said he does not think that will happen.
"I believe we're going to see a collapse that will force us to reassess the monetary policy and that will be very disruptive," Paul said.
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