On his most recent Peter Schiff Show podcast, Peter broke down Janet Yellen’s recent testimony before Congress.
He focused on her apparent cluelessness about the state of the US economy and talked in depth about why the Fed won’t raise rates. He also noted that Yellen’s comments about the impossibility of stagflation seem to indicate she has no clue about Murphy’s Law – what can go wrong will.
Peter went on to reiterate a point he made on his recent appearance on CNBC – that the Fed will ultimately sacrifice the dollar on the altar of the stock market and that the US economy is heading toward a currency crisis.
Peter pointed out that somebody asked Yellen about Donald Trump’s comments regarding a Treasury default. She said, “Yes. It would be a real disaster if there was a haircut on US Treasuries.” Peter then zeroed in on the real looming disaster.
Janet Yellen said it would be a real disaster if there was a haircut on US Treasuries. That’s a disaster as far as the Fed is concerned. But the Fed thinks nothing about giving people a crewcut, in fact shaving them bald, when it comes to a haircut on the dollar…When the Treasury defaults, or there is a restructuring, the only people who are hurt are the people dumb enough to buy the Treasuries in the first place. But when Janet Yellen runs the printing presses non-stop, when we have massive inflation, or hyperinflation, everybody dumb enough to have dollars gets hurt.”
In an interview on the Keiser Report, author, investment banker, and credit analyst Chris Whalen talked about negative interest rates, calling them “chemotherapy for indebted nations.”
Whalen noted that more than half the world today is in negative rate territory. He said that after years of high, “risk-free” returns, now it’s time to give the money back. Of course, this has ramifications that should give us all pause:
The way I put it is a negative rate environment implies liquidation. It means we’re not building any more. It means we’re just going to consume all of the capital that’s left and then we’ll be done.”
Whalen went on to talk about the world of debt we now live in:
Last week, Jim Grant argued that the US manufacturing economy is flirting with recession, if it isn’t there already. He said the horse of speculation is ahead of the cart of enterprise. In other words, even though asset prices such as the stock market and real estate are rising, creating the illusion of economic prosperity, the actual underlying economy is a mess.
This reflects the views of a few other people like Peter Schiff and Mike Maloney who have argued that the US has already entered a recession. But by-and-large, these are voices crying in the wilderness. For the most part, mainstream analysts and government officials have not acknowledged the underlying problems in the economy. Even so, every once in a while, the truth leaks out through cracks in the mainstream narrative.
CNBC recently published an article by Pento Portfolio Strategies president Michael Pento arguing that a recession has already arrived:
While investors have been focused on the perennial failed hope for a second half economic recovery, they have been missing the most salient point: the US most likely entered into a recession at the end of last quarter.”
Dr. Doom says there is only one currency that will appreciate over time – precious metals.
Marc Faber recently appeared on RT’s Sophie Co. to talk about the world economy and what lies ahead. Currencies became a major focus of the discussion, with Faber arguing cash has historically been a bad investment because all paper currencies eventually lose their purchasing power:
My sense is that there is only one currency in the world that will appreciate and these are precious metals – gold, silver, platinum.”
Faber went on to say even the mighty US dollar will eventually fall:
In general, I don’t think that cash will be a very good investment in the sense that you have no interest at the present time, you have risks with the banks because banks can fail, and you have also a higher risk of expropriation…If you go back to say 1900, the major foreign exchange reserve currency was the British pound. Today it is a side-show. So I think over time, the US dollar will lose its importance.”
The CEO of one of the world’s largest gold mining companies says he expects gold supply to shrink over the next five years.
Gary Goldberg heads Newmont Mining. The company operates gold mines on five continents and employees more than 16,000 people. In an interview with Mining.com, Goldberg said he sees gold supply contracting in the near future as the gold market continues to expand.
Well, we have seen [the gold market] pop up a bit earlier this year off the back of higher investments in ETFs. We still see good demand for gold in China and in India. We see the medium- to long-term as being very good. I think you have seen a decrease in supply as there has been less investment in new properties. We are one of the few who are building two brand-new mines…Overall we see gold supply dropping by about 7% by 2021.”
All eyes have turned toward Great Britain with the Brexit vote looming this week. A lot of people are speculating about what Britain’s potential exit from the EU means for gold. Peter Schiff says in the long-run, it doesn’t really matter.
In his most recent podcast, Peter said he thinks gold will go up no matter what Britain does. The yellow metal is on the rise because of what is happening in the US, not in Europe – specifically what is happening with the Federal Reserve.
And what is happening with the Fed? Basically nothing. In fact, Peter said an alien invasion is more likely than an interest rate hike in July.
He went on to point out that interest rates are actually lower now than they were at the depths of the 2001 economic downturn after the dot-com collapse and 9/11. In other words, this so-called recovery is weaker than most recessions. If this recovery is weaker than your typical recession imagine what the next recession is going to be like.
The bottom line is all of this is good for gold.
We’ve had this pretty good run-up in the price of gold with everybody expecting the Fed to hike rates. You know, they’ve been dialing back when they believe those hikes are coming, but the anticipation is still for higher rates, just when. But imagine how much stronger gold is going to be when people no longer believe in the Tooth Fairy…they no longer believe that we are going to get higher interest rates and they start factoring in lower interest rates, they start factoring in quantitative easing. And not just factoring it in, but they have to absorb it because the Fed is doing it.”
Peter Schiff has said that the Federal Reserve created a phony wealth effect by pumping up stocks and other asset markets. In fact, analysis proves Peter’s contention, showing that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy.
In a recent appearance on CNBC’s Closing Bell, Jim Grant made this same case, explaining how asset prices such as stocks, bonds, and real estate have soared due to central bank monetary policy, while actual economic growth has remained stagnant. As he put it, the horse of speculation is ahead of the cart of enterprise:
I think with respect to the asset markets we can imagine a little kitten up at the top of a tree…We might label this kitten “stocks, bonds, and real estate. And one might imagines a fire-lady named, say Janet, at the top of the ladder saying, ‘Hey little fur-ball, how’d you get up that high?’ So central banks have coaxed and manipulated asset prices higher. They have succeeded not at all in coaxing or manipulating activity higher.”
Grant said the US industrial manufacturing economy is flirting with recession, if it’s not there already, and the Fed’s next move will be in the direction of more easing, not rate increases.
In the years leading up to the Great Recession of 2008, Peter Schiff warned it was coming.
Nobody listened.
Today, the same people are ignoring the signs that an even bigger crisis is on the horizon. Peter Schiff appeared on InfoWars recently and asked a very important question: when are people going to wake up?
They still don’t understand the gravity of the situation. They still have no clue how much damage has been done to the US economy these last seven years. They still have confidence, have faith in the Federal Reserve, have faith in the dollar, believe everything is going to be OK. And just they think, well, we’re at a little bump in the road. They don’t realize that we’ve run out of road, or the road has now come to an end and we’re going over a cliff.”
In his discussion with Alex Jones, Peter pointed to the many signs of an impending crisis. He speculated as to why the Fed hasn’t acted. And he blasted the politicians and pundits who continue to pretend that everything is OK with the US economy. Peter ended with a warning:
It’s going to be a dollar crisis. It’s going to be a sovereign debt crisis. And it’s going to bring this whole bubble-economy to its knees.”
Wall Street’s “bond king” said investors have lost faith in central banks, and called the Federal Reserve the “Zombie Fed.”
Jeffrey Gundlach made the comments in an interview with Reuters after safe-haven German Bund yields fell below zero on for the first time and global equity markets continued a precipitous slide:
Central banks are losing control and they don’t know what to do … just like the Republican establishment and Donald Trump.”
CNBC reported German 10-year sovereign bonds going negative for the first time ever on Tuesday:
At around 8.30 a.m. London time, the yield hit zero and briefly fell into negative territory as investors continued to flock to safe-haven assets. Bond prices and yields move in opposite directions and a negative yield implies that investors are effectively paying the German government for the privilege of parking their cash. By the end of the European trading day, the yield was still just in negative territory at negative 0.0020%.”
The Federal Reserve kicks off its Federal Open Market Committee meeting Tuesday. Just a couple of weeks ago, it was a foregone conclusion that the Fed would announce a rate hike during the meeting. But after the shockingly bad May employment report, most agree the interest rate increase is off the table.
In fact, Peter Schiff says this meeting is going to be a dud.
In his most recent podcast, Peter said the Fed will use the Brexit as the excuse as to why it is not going ahead with the rate hike, but that isn’t the reason at all:
Again, I just think all that stuff is an excuse. I mean, they’re really concerned about the US bubble-economy and the problems domestically, but they don’t want to acknowledge that. So, they want to rationalize it or blame things on problems abroad because that doesn’t play as badly at home.”
