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.
While investors often treat gold as a commodity, at its core, gold is money. Silver also has a long history as a monetary metal. But what about other rare metals? Could they serve as money as well?
In the following guest column, SchiffGold client Antony Pouros makes the case for platinum.
In the March 8 episode of the SchiffGold Friday Gold Wrap podcast, Mike Maharrey emphasized the importance of understanding sound economic theory. And as economist Frank Shostak explained, facts and figures aren’t enough to digest what’s going on in the economy.
In order to really make sense of the data one must have a theory, which stands on its own feet, and did not originate from the data. By means of a theory, one could scrutinize the data and could then try to make sense out of it.”
In a recent article published on the Mises Wire, economist Dr. Thorsten Polleit builds on this body of knowledge, explaining how central bank manipulations of interest rates not only distort the economy, the actually mess with our minds.
Ever since the beginning of the “Powell Pause,” Peter Schiff has been saying it won’t be enough.
If the Fed doesn’t want to upset the markets, soon it will be forced to go back to QE and zero percent interest rates.”
Peter isn’t alone in saying this. After the most recent FOMC meeting, Ryan McMaken at the Mises Institute echoed Peter’s message.
Put simply: the days of quantitative easing are back, and we’re not even in a recession yet.”
As you probably know, Warren Buffett has never been a fan of gold and has publicly disparaged the yellow metal on more than one occasion. About a year ago, he compared investing in gold and stocks, arguing that over the long term gold is an “unproductive asset” that “doesn’t produce anything.” So, why have it, unless you just want something to “fondle.” At the time, we argued that Buffet’s comments fall apart when you realize that gold is money. After all, I doubt you would ever hear him say “never hold cash because it’s an unproductive asset.”
Well, Buffet is at it again.