The Federal Reserve bases its monetary policy decisions on where it thinks the economy is heading. The $64,000 question is how does it know? Or to put it another way, what makes us think a panel made up of a few economists and policy wonks can accurately predict the future and then make the “right” decisions?
During an interview on CNBC Squawk Ally, Jim Grant said we shouldn’t put this kind of faith in the Fed and that its monetary manipulations have created an environment of tremendous uncertainty.
I think people are too certain about things about which they should not be certain.”
Wall Street has been on a roller coaster ride over the last few months. If you listen to the pundits on the financial networks, you’ll hear the word “volatile” used over and over again. That word certainly seems to describe the current state of US stock markets and in a broader sense the economy. But during a recent interview on RT News with Rick Sanchez, Peter Schiff said it’s not that the economy is volatile. It’s actually a bubble. And we are on the verge of a bigger crisis than the one we went through in 2008.
After the worst Christmas Eve in the history of the stock market, the Santa Clause rally came late. Markets bounced back in the short trading week after Christmas. The Dow started with a 1,000-plus point gain, then dropped nearly 600 points the next day, before rallying late to close in the green.
The rally had some Wall Street pundits feeling giddy, but in an interview on RT America, Peter Schiff said the bubble has popped and this is exactly the kind of roller coaster ride you expect in a bear market.
The mainstream is starting to get a little bit nervous. As we reported yesterday, a CNBC interview with DoubleLine Capital founder Jeffrey Gundlach got the mainstream talking about the possibility of a bear market. There is also increasing concern about a looming recession. In a recent New York Times survey, almost half of the 134 CEOs polled said they thought the country could be in a recession by the end of the year.
Peter Schiff has been warning about a recession for months. In October, he said the recession that’s coming is going to be brutal. On Monday, Peter appeared on Fox Business with Lisa Kennedy to talk about the coming crisis and its political ramifications.
The mainstream has finally uttered the B-word.
I mean bear. As in bear market.
DoubleLine Capital founder Jeffrey Gundlach sparked mainstream talk of bears on Monday when he asserted that we have indeed entered a bear market during an interview on CNBC.
Peter Schiff appeared on RT America Friday to talk about the big stock market selloff in the wake of the arrest of Meng Wanzhou, a Chinese businesswoman accused of violating US sanction laws. The markets reacted negatively, fearing the arrest could derail apparent progress in the trade war.
Peter said Wanzhou’s arrest may have provided the catalyst sparked the sell-off, but it wasn’t the underlying cause.
This is a bear market. That’s why the market went down. If it wasn’t that, they would have found another excuse. If we were in a bull market, I think the market would have shrugged it off. So, we’re going lower.”
Peter Schiff appeared on RT Boom Bust earlier this week to talk about the trade war “truce” between the US and China.
The announcement that there was some progress in resolving the trade war during the G20 summit boosted stock markets on Monday (the day this segment was aired), but that lasted all of one day. The markets tanked on Tuesday as investors realized the “truce” really didn’t mean anything substantive. In the RT interview, Peter said we really need to keep our focus on the bigger picture, particularly the Federal Reserve and the dollar.
Peter Schiff appeared on RT Boom Bust last week and reiterated he thinks we have entered a bear market. In fact, what we’re seeing now is a deflating bubble.
Despite all of the warning signs, the mainstream is still convinced the “economic boom” will continue and the Fed will keep pushing interest rates up. As a result, the price of gold has stayed relatively low. But as Peter pointed out in his most recent Gold Videocast, their complacency is ill-advised, and gold is a mispriced asset. Now is the time to buy.