European Monetary Madness and Yellen’s Inconsistent Logic (Audio)
In his podcast yesterday evening, Peter Schiff shared his thoughts on the huge surge in the stock market over the past couple days. He also takes a look at the latest news from Switzerland. Just weeks after defeating an attempt to back the Swiss franc with more gold, the Swiss National Bank has set negative interest rates in an attempt to further weaken the franc. Finally, Peter digs back into Janet Yellen’s latest statements about the US economy and drop in the price of oil.
Highlights from Peter’s podcast:
“This two-day rally [in stocks] is over 700 points on nothing but central bank inflation, first from the Fed and then from the bank of Switzerland. This move by Switzerland I think has already back-fired. In moving the deposit rate into negative territory, traders are already speculating that the Swiss must know that European QE is coming next year, and they’re trying to prepare for it by making the franc as unattractive as possible, so people fleeing the euro won’t buy the Swiss franc. They’ll buy the dollar instead, or maybe gold.
“Gold prices did surge better than 2% in Swiss franc terms today. They were up less in dollar terms. We’re around 1180 in the Swiss franc price for gold. If we get through 1200, that’ll be a new 52-week high. That would also be a major, major break out. We could see an explosive move up in the Swiss franc price of gold. Probably, if that happens, we may very well break out in terms of the dollar as well…
“[Yellen] thinks that rising consumer prices are necessary for economic growth. She thinks they’re beneficial to consumers, because if she didn’t think rising prices were good, she wouldn’t be striving to use monetary policy to make prices go up. Yet she’s describing here… why she believes that falling gasoline prices are good for consumers. If that is the case, what makes gasoline different than any other price that is a component of the CPI? … I would like to be in that press conference and ask Janet Yellen for an example of a consumer good that she thinks a decrease in price would be problematic for consumers and the economy…
“The real answer is the prices that Janet Yellen doesn’t want falling are bond prices, stock prices, and real estate prices. Financial assets upon which the bubble economy is leveraged. Those are the only prices that Janet Yellen could identify as to where she sees a problem if the prices go down…”
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