Peter Schiff spoke with Graham Ledger about why the United States economy will only truly recover when the Federal Reserve completely abandons quantitative easing and zero-percent interest rates. Unfortunately, Peter thinks this is highly unlikely due to the political ramifications. Raising interest rates to normal levels right now would likely pop the current stock market bubble. If that happens while Obama is still in office, it will be much easier for a Republican to get elected. That’s exactly why Obama will likely pressure Janet Yellen to keep suppressing interest rates until after the 2016 elections.
Why did we have QE3? Because QE2 didn’t work. Why did we have QE2? Because QE1 didn’t work. We’re going to have QE4 for the same reason, and it’s going to make the problem worse, which means we’re going to have QE5. It’s not going to end until we have a complete collapse of the dollar.”
Currency traders have been blaming the weak first quarter GDP on poor weather. Peter Schiff argues that they’re going to have to start looking for new excuses, because April data is starting to trickle in and it doesn’t look good at all.
In his keynote address to the Mines and Money Hong Kong conference, Doug Casey shared his predictions for the future of the world economy and the mining industry. Casey is a well-respected economist and seasoned, expert analyst of the precious metals industry. His economic viewpoint aligns with Peter Schiff’s, and he believes that the astronomical levels of global government debt and paper currency are going to lead to a “Greater Depression.” What will be the ultimate fallout of this depression? The world will return to precious metals as the most reliable money.
There’s a good reason why gold is money. It’s the only financial asset that’s not simultaneously somebody else’s liability. This is a critical thing in a world as unstable as we live in today. You don’t want to hold somebody else’s liability, certainly not the liability of a bankrupt government or an idiotic and bankrupt central bank. So what are you going to hold? People are going to go back to gold.”
Ron Paul appeared on CNBC to warn that a US dollar currency crisis is inevitable. The host tried to zero-in on a specific time frame for a crisis, but Dr. Paul emphasized that the catalyst for such an event will be an unpredictable change in investor psychology.
Most of the time these things [currency crises] are unforeseen, and most of the time there is a psychological element and a panic. If you have unsoundness and there’s no foundation, [and] it’s just held together by confidence, what happens when the confidence is gone?”
The host’s insistence on a specific time frame is a perfect example of the very problem Dr. Paul lays out. Since the markets can move quickly, both investors and central bankers get caught up in a short-term mindset. The stock market becomes the barometer of economic health, and long-term effects of monetary policy are largely ignored. When those effects finally emerge, investors react quickly and drastically, because they did little to prepare. Dr. Paul points out that this is exactly the problem the world faces today – psychological factors play a larger role than economic fundamentals.
One proposed solution to Greece’s European debt problem is for the Mediterranean country to abandon the euro and resurrect its old currency, the drachma. In his April Gold Videocast, Peter Schiff explains why a new drachma would be ideal for Greek politicians, but a disaster for Greek citizens and creditors. Peter also reveals why the United States faces the same debt dilemma as Greece. There’s just one major difference – the US already has a currency it can devalue.
On Friday, Peter Schiff looked back at a week of market rallies. While the US dollar strengthened, so did gold. In fact, gold approached a 2-year high in euros. Combined with the ongoing negative US economic data, this leads Peter to believe that there is a solid bottom in the gold market. At the end, Peter briefly notes that Ben Bernanke’s memoirs are due for release. Peter explains why he thinks the book should be shelved in the fiction section at your local bookstore.
Marc Faber told Kitco News the same thing Peter Schiff has been warning — the United States economy is too weak for the Federal Reserve to raise interest rates in June. Faber believes that eventually the markets will wake up to just how ignorant and powerless global central banks are. When that happens, investors will abandon paper money and flee to precious metals.
While he’s reluctant to tell investors what to buy when, Faber does think that $1,200 is a “reasonably good” price point to start buying gold. Faber looks at gold investment as a long-term commitment. He started buying gold in the 1990s and continues to buy regularly.
In an interview on Bloomberg, former Morgan Stanley chief economist Stephen Roach tears apart the monetary policy of the Federal Reserve. Roach explains that Ben Bernanke has blatantly admitted that the Fed’s goal is to stimulate the economy by growing asset bubbles.
Roach’s indictment of the Fed and the US economy is severe, but he couches his language carefully:
We need to sort of wean ourselves from the temptation to juice up our asset markets to derive temporary satisfaction from bubble-induced economic growth.”
Translation: the Fed needs to get out of the way and stop manipulating the markets with quantitative easing and abnormally low interest rates. The worst part is that the Fed’s strategy only enriches the financial elite while forcing Main Street to deal with the real effects of secular stagnation.
The price of gold surged this week after the poor jobs numbers released last Friday. The yellow metal is now up about 3.5% in 2015, while the S&P 500 is up barely 1.5%. As usual, technical traders are now jumping on the gold bull wagon, at least temporarily.
In this short CNBC interview, precious metals analyst George Gero sees gold continuing to move higher, even if the US dollar remains strong. His reasoning? Markets around the world are going to show a renewed interest in gold as their currencies continue to lose value.
While Gero hints at fundamental demand supporting gold, CNBC’s analysis is mostly of short-term trends in precious metals. Traders now seem to take it for granted that the Federal Reserve will simply delay the interest rate hikes that the markets were expecting would begin in June. Of course, Peter Schiff has been saying all along that the Fed will not only delay rate hikes, but will probably forego them entirely and return to quantitative easing.
Last week, the March jobs data finally began to match the rest of the terrible economic data in America. While analysts are blaming the lower-than-expected non-farm payroll numbers on poor weather, the employment picture is actually worse than the first quarter of last year when the “polar vortex” swept through the country. In his latest video blog, Peter Schiff dissects all of this data and explains what it means for Federal Reserve policy going forward.