US Economy Needs Capitalism & Real Recession to Recover (Video)
RT America hosted Peter Schiff and Mark Weisbrot from the Center for Economic and Policy research to discuss why the United States markets have been so volatile. While they both agreed that the US economic recovery has been poor, Weisbrot insisted that this is because the US government hasn’t done enough with its monetary policy. Peter, of course, argued that big government and a dovish Fed are precisely what have kept America from truly recovering from the Great Recession.
This market is all about the Fed. That’s the only thing that has been propping it up. If the Fed takes away the zero percent interest rates, this market is going to implode and we’re going right back into recession. That is the real story. That is what is hurting markets around the world. It’s the fear of higher interest rates. That’s propping up the dollar, that’s depressing emerging markets, that’s depressing commodity prices. This is the problem. But nobody believes or realizes that the Fed is bluffing…”
Highlights from the interview:
“All this scapegoating about China. This is not about China. This problem is made in America. It’s all about the Fed. The Fed inflated this bubble, and now they’re threatening to prick it. Everyone expects the Fed to actually raise interest rates. I’ve been saying all along that it has been a bluff, that there’s no way the Fed could raise rates, because if they did we would have another financial crisis – not just a recession and a bear market, but we would resume the financial crisis that they interrupted. This market is all about the Fed. That’s the only thing that has been propping it up. If the Fed takes away the zero percent interest rates, this market is going to implode and we’re going right back into recession. That is the real story. That is what is hurting markets around the world. It’s the fear of higher interest rates. That’s propping up the dollar, that’s depressing emerging markets, that’s depressing commodity prices. This is the problem. But nobody believes or realizes that the Fed is bluffing…
“The stock market is a bubble. The reason we haven’t had a real recovery, the reason that the average American is worse off today than he was when the recovery began is because the Fed hasn’t allowed a recovery. This cheap money, quantitative easing, zero percent interest rates is interfering with that recovery. Real economic growth comes from savings, capital investment, under consumption. None of that is happening. We’re getting a bubble. The Fed is diverting resources from Main Street to Wall Street. The last thing we need is what the other gentlemen just said. Our unemployment rate is actually much higher than the government claims, because we’re not counting all the people that have left the labor force, all the people that are working part-time jobs who want to be working in full-time jobs. We’re not going to turn that around until we turn the government around. That means we need smaller government. We need higher interest rates. We need to have a real recession in order to have a real recovery. I agree there are problems in Europe, but those problems are not caused by monetary policy being too tight or by government deficits being too small. We have too much government in Europe, and we have too much government in America. We have too much money printing. Interest rates are too low. What we need is capitalism. That’s what’s going to save Europe. That’s what’s going to save America. But unfortunately, we’re going to have to go through a lot more pain before we get a real solution…
“Europe has always had higher unemployment because of their rigid labor laws. That’s not something new. I don’t want a recession, because I enjoy pain. What I want is if I see a drug addict, I want him to go to rehab. You see a drug addict and you want him to take more drugs. I recognize that the guy’s got to get healthy. He needs to go through withdrawal so he can have a healthy life. You just want him to feel good. You want to give him more drugs. I know what ails this economy. It’s too much cheap money, it’s too much government, it’s too much regulation, it’s not enough real economic growth, and it’s too much bubble blowing by the central banks. We need to shrink government. We need to go back to sound money…”
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