Prior to the FOMC raising the Federal Funds Rate this week, the Atlanta Fed revised its estimate of Q1 GDP from 3.4% to 0.9%, an enormous downward revision that suggests Chairwoman Janet Yellen and FOMC authorities aren’t as data dependent as they claim. The serious lack of economic growth indicated by the downward revision should give the Fed pause, but that doesn’t seem to be the case, as Peter Schiff pointed out in his latest podcast.
The FOMC raised interest rates on Wednesday, with the decision coming on the heels of the Consumer Price Index data released Wednesday morning by the Bureau of Labor. The report shows an uptick in the price of consumer goods for February, a net gain of 0.1%. Although down from January’s 0.6% increase, a year-over-year look shows consumer prices have risen 2.7%, which is 0.7% above the Fed’s target rate of 2%.
The rising cost of most goods and services is in large part due to the failed monetary policies of the Fed. Money printing and quantitative easing have created runaway inflation, which is driving up prices for consumers.
In his latest podcast, Peter Schiff discusses the February Non-Farm Payroll Report and President Trump’s change in attitude towards the credibility of the data. During his campaign, Trump continually told his supporters the truth about the tanking US economy, characterizing the jobs statistics as phony data.
Ever since his election, however, he now considers these same numbers as credible indicators of the positive impact of his presidency and the general health of the economy. Peter shines a light on Trump’s hypocrisy, showing how current payroll numbers are essentially the same as those under Obama.
Ancient Babylonia is known as the “cradle of civilization,” because it helped develop many important parts of our modern society, from laws (Code of Hammurabi) to advancements in astronomy and architecture. It also helped establish rules and procedures that have influenced modern day banking institutions. A quick look back at Babylonian finance provides insights into the basics of how our financial systems work today.
This week, Trump announced the dawn of TrumpCare, his term coined for the replacement Republicans have built for the Affordable Care Act (ACA), initiated by Obama. The reaction from the entire country was less than desired from the White House, as both sides of the aisle criticized the newly proposed healthcare reformation plan. On top of that, Trump’s self-attributed growing markets may soon be at risk of halting as a rate hike is all but certain at the upcoming FOMC meeting. It, along with slow-to-get-rolling infrastructure plans, could decelerate the President’s market rally.
To understand the impact of inflation on the US dollar, it’s helpful to compare its purchasing power to gold over time. Fifty years ago, the dollar’s value was quite substantial, but over time artificially low interest rates and money printing by the Fed have helped erode the greenback’s potency. In contrast, gold’s unique ability to preserve wealth and purchasing power is easy to see when compared to the dollar over the same time period.
The following infographic shows the difference between two different savings scenarios:
- An American stores $3,500 in a safety deposit box in 1967 and takes it out in 2017.
- An American stores $3,500 worth of gold (100 oz) in a safety deposit box in 1967 and takes it out in 2017.
If each person then went on a spending spree, here’s what could they buy.
In his latest podcast, Peter Schiff explains how the Republicans’ newly unveiled repeal and replace plan for Obamacare will have many of the same failures as its predecessor. Having adopted the new moniker, “TrumpCare”, many mainstream Republicans are seeing the bill as an improvement over the Affordable Care Act. However, Peter sees it a little differently.
In his latest podcast, Peter Schiff looks at the latest moves in physical gold and gold stocks as a possible indicator that the market may be in the early stages of a bull run. A few weeks prior, Peter pointed out that gold stocks were selling off (down 4%) while the price of gold was rising at 2%, an inverse relationship that may signal a downward move in physical gold.
As we saw last week, that prediction came true with a correction in physical gold that sent prices down 3% or about $40 on Friday. Even though gold was down last week, gold stocks (GDX and GDJ) were overall positive. Monday also saw a decline in gold with a $9 drop and GDX stocks fell around 3.4%.
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Trump’s address to Congress might be a landmark event for his first 100 days. His softer, more focused tone inspired markets yet again. The Dow Jones climbed to over 21,000 as the President spoke on restarting the economy and pouring new money into military developments. But the question of will his cuts and spending increases keep the dollar from weakening still remains.
