In a large Dutch oven or heavy-bottomed pot over medium-high heat melt the butter or drippings. Add the onions and sauté while stirring frequently until they’re translucent and beginning to brown on the edges, about 6-7 minutes. Add in the meat 1 Tablespoon of paprika, 1 teaspoon of salt, and cook, stirring often, until the meat has a nice sear on the outside and is no longer pink on the inside, about 10 minutes.
Add in the bell peppers, and cook for 5-6 minutes, or until the bell peppers are softened. Add the remaining paprika, tomato paste, and garlic and stir constantly until fragrant and combined, about 1-2 minutes.
Pour in the beef broth and stir in the bay leaf and caraway seeds. Bring the mixture to a low boil and then reduce the heat to medium, cover, and simmer for 20 minutes. Add the carrots and potato, cover, and cook until the vegetable are tender, about 20 more minutes.
Remove the bay leaf, and season the goulash with salt and pepper to taste and serve with sour cream, minced parsley, and some nice crusty bread.