The following article was written by South Carolina state Rep. Stewart Jones. The views expressed do not necessarily reflect those of Peter Schiff or SchiffGold.
The Federal Reserve just lowered interest rates for the second time this year and announced more quantitative easing by injecting even more US dollars into the market. The days of cheap money will soon come to an end, and I fear that many people won’t realize what’s happening until the rug is pulled out from under them.
Central bankers suffer from what some might call fatal conceit. They actually believe that if they tinker enough, they can come up with a policy that will work “just right.” Maybe we should call it the Goldilocks Syndrome.
But the truth is they don’t know.
By Alex Lemaire
When you think of a gold nugget, you probably imagine a chunk of the yellow metal that you can hold in the palm of your hand, but you would probably strain to even pick up some of the largest nuggets ever unearthed.
Here are the top five largest nuggets still in existence. There are others that were significantly larger, but they have been melted down.
We’ve written extensively about a push toward de-dollarization by countries like Russia and China and their desire to undermine the ability of the US to weaponize the dollar as a foreign policy tool. The global gold rush on the part of central banks is part of this movement.
And it’s not just countries like Russia and China. As fund manager Ronald-Peter Stöferle wrote in an article for the Mises Wire, Europe as also joined the de-dollarization party.
Christine Lagarde will take over the reins of the European Central Bank in November. The financial markets seem to love the pick. We should take that as a warning sign.
We focus most of our attention on the Federal Reserve. But other central banks around the world also contribute to global financial instability. For instance, the European Central Bank has injected trillions of euros into the EU economy with more than a decade of quantitative easing and interest rates below zero. And like Federal Reserve policy, all of this monetary stimulus has blown up giant asset bubbles.
Venezuela’s economy is in chaos. It’s gotten so bad that a year ago, video game money was worth seven times more than the Venezuelan bolivar. Meanwhile, the Venezuelan people have suffered horrible food shortages. Many people in Venezuela have turned to barter just to survive.
Not so long ago, left-leaning publications in the US were touting Venezuela as a socialist success story. Today, any attempt to point to Venezuela as socialist disaster will be met with the refrain, “That’s not real socialism!”
Apologists for socialism also blame the collapse of the Venezuelan economy on US sanctions. But as Jon Aldekoa explained in an article published on the Mises Wire and UFM Market Trends, actual data reveals it was indeed real socialism that wrecked Venezuela.
In a recent article, we explained how central banking wrecks the economy over and over again with its interventionist monetary policy. The Fed tinkers with interest rates and drives boom-bust cycles. But government also has a role to play in this drama. The policies pushed by politicians and bureaucrats help determine where malinvestments will show up in the economy.
The unholy alliance of central bankers, politicians and government functionaries always ends in economic chaos.
In the years leading up to the 2008 crash, the government tried to turn every American into a homeowner. Needless to say – it didn’t end well. This should serve as a warning for the current batch of politicians and bureaucrats. Sadly, it probably won’t.
We’ve covered the plight of the Venezuelan economy as it has plunged into chaos over the last several years. It’s gotten so bad that a year ago, video game money was worth seven times more than the Venezuelan bolivar. Meanwhile, the Venezuelan people have suffered horrible food shortages. Many people in Venezuela have turned to barter just to survive.
But Venezuela isn’t the only country suffering the effects of socialism. Cubans are currently enduring food shortages of their own as the country’s economy hurtles toward crisis mode.
Peter Schmidt has written extensively about the “Confederacy of Dunces” that helped bring about the financial collapse of 2008 and their “fatal conceit.” By fatal conceit, he means the arrogant belief that because of their superior intellect and education, they have the wherewithal to micromanage the economy.
One of the members of Schmidt’s “confederacy of dunces” is Lawrence Summers. He served as a senior Treasury Department official during the Clinton Administration and was at the center of enormous and easily discernible blunders in judgment that directly led to the crisis. But he has never taken ownership for the role he played and he continues to pontificate about economic issues.
In the following article, Schmidt uses Summers recent comments about one of Pres. Trump’s potential Federal Reserve Board nominees to highlight the fatal conceit of central planners.
After the stock market started to tank last fall, the Federal Reserve rushed in and saved the day – at least temporarily. Peter Schiff predicted this would happen. In fact, last December he said the Fed was about to initiate its last rate increase. But Peter also said the “Powell Pause” wouldn’t be enough. Just a couple of weeks ago, Peter reiterated that the Fed is about to cut interest rates again.
This isn’t mere speculation. Peter is basing these predictions on fundamental economic calculations. Central banks can stimulate the economy with easy money, but the boom can’t last forever. In an article published on the Mises Wire, economist Thorsten Polleit explains why the Federal Reserve-induced boom will eventually get exactly what’s coming to it.