2016 State of the Union: The Most Clueless Ever (Audio)

In episode 130 of his Podcast, Peter Schiff discussed the State of the Union address, calling Obama’s speech the most clueless ever.

Peter breaks down all of the economic fallacies the president invoked during the SOTU, honing in on the fact that the president seems oblivious to the fact that we are about to head over an economic cliff. Instead he’s claiming victory over the Great Recession and acting like economy is great:

I think it will probably go down in history as the most clueless State of the Union Address ever, because all he talked about was how great the economy was, how we created all these jobs. He even had the chutzpah to take credit for reducing the budget deficit.”

Follow along with the complete transcript.

Well, last night I watched President Obama deliver his State of the Union Address and probably the only good thing about the speech was that I knew it was the last time he would give such a speech as president of United States. And, in fact, I think it will probably go down in history as the most clueless State of the Union Address ever, because all he talked about was how great the economy was, how we created all these jobs. He even had the chutzpah to take credit for reducing the budget deficit. I mean, the guy doubled the national debt during his presidency or by the time he leaves, the national debt would have doubled. So here you got a guy who added more debt to the United States than every president from George Washington to George Bush combined yet he’s taking credit for reducing the deficit.

But speaking about George Bush, at least when he gave his final State of the Union Address, he acknowledged problems brewing in the economy. He wasn’t blinded to what was going on. He actually acknowledged the concerns that were being addressed by American people at that time and he validated them. He talked about the stimulus plan that he had, which of course I disagreed with, but at least he knew the economy was in some trouble and he validated the concerns of the voters. He acknowledged that the economic growth was slowing and that housing was down. He didn’t even come close to preparing Americans for what was about to unfold by the middle of the year, the 2008 financial crisis.

In fact, when the president delivered that State of the Union Address, the economy was already in recession. The great recession had already started. Of course, the government hadn’t acknowledged it yet so his address was clueless in the sense that he had no idea just how precarious the state of the union actually was. We were on the precipice of this big cliff and we were about to go over it and he had no idea. He was still optimistic. Long-term, he was a little cautious given the slowdown in the economy and the slowdown in housing and he wanted to come up with some new government stimulus to try to circumvent or mitigate the slowdown. But clearly he didn’t foresee or warn about the severity of the problem but at least he acknowledged some problem.

In contrast, President Obama, I believe, that our economy now is poised on a much bigger precipice, we’re about to go over a much bigger cliff. The coming economic crisis is far worse, but rather than at least acknowledging that everything isn’t perfect and there’s some things to worry about, President Obama is completely clueless in claiming victory over the great recession, claiming that he’s restored economic health and vitality, that everything is great, there’s just a few little problems beyond his control because the economy is changing and he can’t help this change.

But what we do need is more government money for education, to train people for this new economy. We need a higher minimum wage. We need higher taxes on the rich but everything is great. So his State of the Union Address is on an order of magnitude, more clueless than anything that George Bush said when he delivered his address on the eve of the greatest economic collapse since the Great Depression. We’re now on the eve of a collapse even greater than the Great Depression yet President Obama is saying that everything is awesome. What President Obama did was to lecture the voters on why they have nothing to be concerned about. He basically said that anybody who thinks the U.S. economy is in decline is crazy, is clueless. I forget the exact word that he used but I thought he was talking specifically to me when he said stuff like that, or people who think like me.

And obviously, it’s the people who don’t recognize the decline in our economy, they’re the ones that are in denial or they have some kind of political agenda like the president. But what the president said is that if you think the economy is headed in the wrong direction, if you think America is in decline, you’re wrong. Everything is getting better. It’s just that the economy is changing. It’s changing. Because remember you voted for me and I promised change and see it’s changing. Yeah, it’s changing because it’s getting worse. That’s the change. But President Obama is talking about technology. He said that there’s this technological revolution going on and that’s the problem, because there’s this transition that we’re in now and so this is why you feel like you’re falling behind even though you’re not, because you don’t understand the changes that are going on, which is pure nonsense.

There hasn’t been a new technological revolution that began with the inauguration of President Obama. The technology revolution has been ongoing for decades now. It’s certainly progressing, but I would say it is no more transformative. In fact, it’s probably less transformative than was the Industrial Revolution. Machines put a lot more people out of work than computers, but we saw it expanding labor force back then although actually not for women. See, women left the labor force because their husbands started making so much money that the wives didn’t have to work. But real wages were rising.

See, the difference between the Industrial Revolution and the technology revolution is the Industrial Revolution took place in a free market economy. The information or technology revolution is taking place in a government-controlled economy, in a highly socialized economy. And the reason that so many people are suffering is not because the economy is changing, those types of changes are good. That’s progress. And progress has been ongoing in the free market. What’s changing is the size of government. The nature of government. We used to be a free market and now we’re not. So, the reason that there’s so much despair, the reason there’s so much poverty, the reason that the nation is in decline and that the president doesn’t want to acknowledge it, is because the government is responsible.

Now, one of the things that he said in his speech was that a rising standard of living is within our reach. It used to be in our grasp. We had a rising standard of living for generations until the government came in and screwed it up. And the only reason that it’s no longer in our grasp is because the government ripped it from our hands. That’s what happened. Yet, he’s promising to deliver us something that we used to have and that the government took away. When he was lecturing people about how great it is but they just don’t know it, how we’ve created all this jobs, record numbers of jobs.

Yes, we have created a lot of jobs under the Obama administration. The problem is we would have much better jobs and far more of them, had we not had the Obama administration. Of course, one of the other things that Obama doesn’t mention is a lot of the people who have jobs in the Obama administration don’t want them. They were retired and now they have to work because they can no longer afford to stay retired in the Obama economy. And, of course, a lot of the other jobs are part-time jobs and are low-paying jobs. We’ve created a record number of jobs for waiters and bartenders during the Obama administration. Problem is, a lot of these waiters and bartenders have college degrees and the loans to prove it. You think they want to be waiting tables? No. So the jobs that have been created are not the jobs that the people want, they’re the jobs that people have to settle for.

And of course, one of the reasons we’ve created so many jobs is because we needed a lot of part-time jobs to replace the full-time jobs that President Obama’s policies destroyed. But no, no, he doesn’t want to address that. He wants to tell everybody why if you think the economy is going in the wrong direction, you’re wrong. You just don’t realize how great you have it. So basically, you’re watching him and thinking about all the people who are listening to his speech. Think about the average American whose wages have been falling for the entire time Obama’s been president. They used to own a house and had home equity. Now, they lost their home and their equity and now they’re renting. And their rent has gone up every year the president has been in office except their salary has gone down. In fact, maybe they used to have a full-time job when Obama took office and now they’ve got two part-time jobs. And they’re working more hours but earning less money. Or maybe it’s a college grad who has an enormous amount of debt and he can’t get a job. And maybe he’s still living with his parents. Think about all these 30-year-olds who are still living at home with their parents and Obama’s telling them how great it is. And they can’t get jobs and they have massive amount of debt

And what about the parents of that 30-year-old? They’re listening to this speech too. And they’re like, “Why can’t my kid leave the nest? I wanted to be an empty nester and none of my chicks are leaving the nest”. How are they feeling? And they probably still have a bunch of debt. They have auto debt; they have mortgages if they still have their houses. They’ve got credit card debt, student debt. The ones that they don’t have is savings. People have nothing saved for retirement. Forget about retirement, people don’t even have money saved up for an unexpected auto repair. People don’t even have 500 bucks in the bank. People are living, not just paycheck to paycheck, but credit card to credit card. People are looking in the mail for some kind of offer where they can rollover one balance to another credit card. This is how people are living in this Obama economy.

He didn’t mention anything about the record number of people on food stamps, on disability, the collapse in the labor force. All these things have happened while Obama has been in office yet he doesn’t want to accept any responsibility for any of the problems. He wants to stand there and give this speech as if everything is great and the only thing left, the only unfinished business, is to raise the minimum wage, and maybe increase taxes on the rich. He also went after Wall Street for being reckless and he blamed Wall Street for the 2008 financial crisis.

And again, there’s no question that Wall Street was reckless. But why? They didn’t just become reckless for no reason. They became reckless because the Federal Reserve was reckless. They became reckless because the President and Congress were reckless. They were responding to the incentives that were being created from Washington, monetary incentives, regulatory incentive, tax incentives. So all of that, whatever Obama is blaming on Wall Street, he’s blaming government because it’s the government that created the conditions that led to the reckless activity on Wall Street. Had the government not interfered the way they did, had the Federal Reserve not slashed interest rates the way they did, then Wall Street wouldn’t have acted the way it did. In a free market, you don’t get that kind of behavior. A free market reins in that kind of behavior. There is a natural check and balance when people are motivated by the opposing forces of fear and greed. But when the government takes away the fear with subsidies and bailouts and Greenspan Puts or Bernanke Puts, they encourage it with too big to fail, stuff like that. Yes, you don’t have the normal tensions between fear and greed that are going to balance the economy. When the government takes away the fear of losing your bank deposit by insuring it, they create a moral hazard. Moral hazards aren’t existing in a free market. They exist in response to the government interference with the free market.

Of course, President Obama also mentioned that he thought the biggest threat to the planet was climate change and we have to do something about climate change. First of all, there’s nothing we could do about climate change, even if it is the threat that the president thinks it is. I doubt there was anything that we humans can do about it. If the Earth’s climate is going to change, it’s going to change. The climate’s been changing for billions of years and I doubt that anything we can do is going to interfere with Mother Nature’s plan for our climate. But the real threat to America is not coming from nature, it is coming from government. Particularly to America, it’s coming from our government. It’s coming from Barack Obama and his cronies. It’s the socialist policies, these big government policies, status policies. That’s the threat that Americans face and that’s man-made. We can actually do something about that threat. Maybe we can’t do anything about climate change, but we can do something about political change, that’s easy. The problem is we haven’t been able accomplish it. ]

He also talked about how the American economy is the envy of the world, like everybody is envying the American economy. He is so arrogant as to think this. First of all, maybe they’re a little bit jealous of the fact that we can borrow so much money and we never seem to have to pay any of it back, that we’ve got this endless credit line. Also, they may be jealous of the fact that we can consume all this stuff yet produce very little. We can run these huge trade deficits year after year after year because normal countries can’t get away with that. So we get away with a lot of stuff that other people can’t get away with but this is going to come to an end. And rather than being the envy of the world, I think our economy is going to be the laughing stock of the world. This whole economy is going to implode. That’s why I said that this could go down in history as one of the most clueless State of the Union Address because he talked about how sound our union is, how it’s in such great shape because he came in and it was a mess. But now that he’s leaving he’s fixed everything.

He hasn’t fixed anything. He took what was broken and broke it even more. And, of course, he had a lot of help from the Federal Reserve, he didn’t do it all by himself. When he went over all his accomplishments for Obamacare or student loans, he took the healthcare system that was a disaster and made it a much bigger disaster. How can anybody feel that they’ve accomplished something? Look at the cost of insurance when Obama was elected and look what it costs now. And not only the cost but the quality, you pay more and you get less. That’s his success? And to talk about student loan program, the government nationalizing the student loan system. Student loans have gone off the chart. If you think it’s a success that students have more debt than ever before yet at the same time have fewer employment opportunities than ever before. Yes, all these students that have graduated on these government loans, $100,000 in loans, all they can get is part-time jobs waiting tables or tending bar and the president wants to take a bow. And he wants to tell you, overly-indebted-college-educated bartenders, that if you think the country’s going in the wrong direction, you’re just wrong. It’s not going in the wrong direction, it’s getting better. You just don’t understand the change that’s taking place. The technological revolution is just a big change.

See, he didn’t do anything wrong, it’s just that the economy is changing. But we are on the verge of this massive economic collapse because so many people around the world actually believe the president. So many currency traders who have been buying up the dollar, they actually believe this nonsense. See, they actually think that the US economy has been recovering. Now, why do they think that? Because they just believe what the government tells them or they believe what Janet Yellen says or what Ben Bernanke says. Why don’t they listen to Alan Greenspan? Because he’s the one former Fed official that’s been saying things are bad. He’s saying, “We’re in a lot of trouble”. He’s not trying to sugarcoat everything the way Ben Bernanke is and the way Janet Yellen is. But for some reason, nobody wants to pay attention to Greenspan anymore, they just want to pay attention to Bernanke and Yellen because they say everything is great, that it must be. But they have a vested interest in saying everything is great because this is their policy. They own this recovery which means they own this recession.

Now, Alan Greenspan, he inflated the housing bubble, fine, and he doesn’t want to accept responsibility for the financial crisis because he caused that. But he’s trying now to distance himself from the next crisis that Ben Bernanke and Janet Yellen are causing. And so he’s speaking a little more candidly, but for some reason everybody is still hanging on to this idea that the economy is sound, despite the fact that there’s now overwhelming evidence, economic evidence and market evidence, that that is not the case. You’re seeing awful economic data everywhere but the Nonfarm Payroll numbers. And again, I’ve said before, those are lagging indicators and those numbers, there’s so much seasonality adjustments in there and birth-death assumptions, that they’re not even as reliable as all the other indicators that are flashing, “recession, recession, recession.”

But not only now do you have economic indicators, but you have the Russell 2000’s at a bear market, the transports are in a bear market. Most stocks are in bear markets and you have the major indexes, the NASDAQ and the S&P, they’re just in correction territory, but that’s because you have some of these huge stocks that everybody is gambling on that have been going up. But, history shows that people stay in denial for a long time. If you become wedded to a particular perspective and then there’s evidence that your perspective is wrong, you don’t just immediately give up the conviction that you’ve held. It takes overwhelming evidence.

I remember when the NASDAQ bubble burst, it burst in early 2000. The NASDAQ collapse, all these internet stocks started going bankrupt. So that happened but people were in denial for the entire year. It wasn’t until 2001 that the S&P and the Dow started to go down and then we went into recession. And I was saying, all throughout the 90s, not the whole 90s but ’98-’99 that when the internet bubble burst, that we would have a recession. Because I recognized how much economic activity was related to the wealth effect of all these people that were getting jobs in the dotcom industry and then were getting windfalls. And they were buying houses, they were buying cars based on their stock options. And I also knew that there were mom and pops all around the country who were getting rich gambling on dotcoms and they were spending those paper riches on vacations and new cars and big-screen TVs and stuff like that. So I knew that when the NASDAQ bubble burst, that it would usher in a recession but Wall Street was oblivious to that. When they saw the NASDAQ bubble burst, not only did they not think it was a problem for the market because they said, “Well, it’s just technology or it’s not even all of tech, it’s just internet”. They said that the overall market was fine. They said it’s not going to impact the economy because it’s such a small sector.

So they were completely in denial because, of course, they had a vested interest in maintaining their bullish outlook. And so, they just build up a wall that refused to acknowledge all this bad news. And at some point, maybe it was the events of September 11, but all of a sudden something happened and the markets collapsed and we went into recession.

Well, the same denial happened with the real estate market because when the subprime bubble burst, and even before it burst, a couple of subprime companies went bankrupt. There were all kinds of warning signs yet people still were oblivious. The Moody’s, S&P, they still had triple-A ratings on a lot of the subprime debt even though it was obvious, obvious, that there was a problem because the issuers were going bankrupt. And then you had Countrywide having all these huge problems and still people were oblivious. And then even after the subprime market collapsed, finally, most of these bonds still sported triple-A ratings or high credit ratings, they collapsed. None of them were downgraded because people were oblivious.

But even after it was an obvious disaster, what was the reaction in Wall Street or what was the reaction at the Fed? “Don’t worry about it, it’s contained. It’s just in subprime”. And clearly it wasn’t just in subprime. I said that over and over again, that it was the entire mortgage market that was in trouble. It’s just that subprime is where you saw it first. It was the most extreme example. It was the weakest link so it broke first but the whole chain was weak.

And now that’s what’s happening once again. All this overwhelming evidence that the economy is sick, that the market is sick and yet people, just like they did in 2000 or 2008, they’re ignoring it, they’re rationalizing it, they’re explaining it away. But before too long, they’re not going to be able to do this anymore, especially since it’s an election year. I think it’s going to be a bad tactic for the Democrats to try to just deny what the voters are feeling, to tell the voters they’re foolish and stupid for thinking things are getting worse, they don’t realize how good they’ve got it. I think if the Republicans can tap in to that anxiety about the future and the dissatisfaction that is obviously extreme.

That’s one of the reasons that Donald Trump is so popular. He’s not only just popular with Republicans, he’s also popular with a lot of Democrats, which is the reason that he might actually get elected if he gets the nomination. But if the Republicans are going to be tapping in to that voter frustration and discuss an affordable standard of living and if all the Democrats got is to try to tell them why they’re foolish, give them like a slap in the face, Patton-style, “Hey, stop crying. Everything is great.” That is not going to be a winning strategy. So they are going to have to start acknowledging the problems in a much bigger way and not just talk about how we’ve got to have the higher minimum wage because of too much technology. They’re going to have to acknowledge, just like Bush acknowledged in his State of the Union Address, although it’s too late for Obama to do it there, but they’re going to have to come up with a stimulus plan to revive this economy between now and the 2016 election.

And the Federal Reserve is going to be on board because Janet Yellen, I went over this in a previous podcast, she already admitted, she was asked a question, “What are you going to do if the economy is in recession in 2016?” And as far as I’m concerned, it will be. All the evidence says that it may already be and what did Janet Yellen say? Well, she said that while she doesn’t believe that we will be in a recession in 2016, her answer was, “If it turns out that we raised interest rates, we will lower them” which means back to zero. And then she said we would restart the asset purchase program because, in her words, “It worked so well before.” So in other words, even if we’re back in recession in 2016, Janet Yellen is not going to admit that QE didn’t work. Even if we’re back in recession, the minute the Fed try to raise rates, it doesn’t invalidate the cheap money policies that supposedly were validated by the ability to raise rates, if the minute you raise rates you’re right back where you started from.

She’s not admitting that it didn’t work, she’s just doubling down, or this case, tripling down or quadrupling down on the same failed policies. So that is what is coming. And that is what is going to yank the bottom out of the dollar. That’s going to be the big game changer. And then it’s going to get much, much worse for Americans because not only are they going to deal with a lousy economy, but they’re going to be dealing with a rising cost of living. Yes, the voters now are temporarily benefiting from all this insanity in the currency markets because they’re buying gasoline for cheaper or their food price. A lot of their prices are lower because everybody has all this false confidence. Well, when the false confidence is replaced by reality, when all the speculators who have been betting on this recovery find out that they bet wrong and now they’re going to start betting against it all at the same time and then the dollar drops to the floor, all these low prices are going to become high prices and this whole economy is going to kick into a whole new gear of misery for the average American.

There’s so much factually incorrect information and underreporting by legacy media today. Shouldn’t there be truth in media? Well, there is, truth in media. Recently, a novel thought is now a reality with truthinmedia.com led by award-winning journalist Ben Swan. Truthinmedia.com is the source for uninfluenced, reliable, fearless news where journalists pursue real questions, not conspiracies. Make truthinmedia.com your default browser’s homepage today and get breaking news and commentary that speaks the truth to power. It’s also where you can tune in to the Peter Schiff Show every week. Visit truthinmedia.com today. That’s truthinmedia.com. Access the truth in media RS feed by visiting truthinmedia.com/feed.

Attention listeners. I have an urgent message for you. We’re in the middle of a war. The global conflict is destroying the lives of millions without a single bomb being dropped. It’s called the international currency war and your bank account has been drafted to fight. The victims in this conflict are currencies, the dollar, the euro, the yen, the pound. They’re all heading to zero as irresponsible central banks compete to see who can print the most, the fastest. But there’s one form of money politicians and central banks can’t destroy, gold. Today, it’s more important than ever to understand the value of gold in your portfolio and to keep a close eye on major market developments. Subscribe to my monthly videocast and you’ll be the first to hear my latest analysis on gold investing and the currency wars. Visit goldvideocast.com right now to subscribe for free. I called the dotcom bust, then the housing bust and I advised clients to diversify into foreign equities and hard assets, while the rest of Wall Street laughed at me. Now, I want to keep you up-to-date on the next crisis that is brewing. My gold videocast also includes personal interviews I’ve conducted with other contrarian investors like Jim Rickards and Axel Merk. Gold has gone up 256% since 2003, but it has a lot further to go. Don’t miss the rally. You can prosper during this time of currency wars, but only if you stay educated. Get a free subscription to my gold videocast at goldvideocast.com.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!