The war drums have quieted for the time being. But while the threat of a hot war seems to have diminished, economic warfare continues. President Trump announced another round of economic sanctions on Iran.
We have written extensively how about how the US weaponizes the dollar and uses it as a foreign policy tool. This is one of the reasons many central banks are buying gold. The flip side of that equation is also true. The US government uses the military to support the dollar – specifically by controlling oil resources.
As economist Thorsten Polleit pointed out, inflation has pernicious effects on the average person, while tremendously benefiting the chosen few. Inflation the money supply is a policy intentionally carried out by central bankers around the world. Polleit calls this an “inflation scam.” With the Federal Reserve signaling that it is willing to let the inflation monster run loose, you should be prepared to see the value of the dollar erode even further in the future.
In essence, inflation facilitates a transfer of wealth from the average Joe and Jane to the politically connected. You can’t talk about wealth inequality without pointing a finger at the Federal Reserve. After all, it is the central bank that generates inflation by effectively creating money out of thin air.
The Fed has indicated that it won’t hesitate to let the inflation Jeanie out of the bottle. As Peter Schiff put it in a recent podcast, the central bank is willing to resurrect the inflation monster that former Fed Chairman Paul Volcker slew.
Even if the Federal Reserve wasn’t set to allow inflation to run hot, it targets 2% inflation as a matter of policy. In simple terms, the central bank intentionally devalues your money by 2% every single year.
As economist Thorsten Polleit explains in an article originally published at the Mises Wire, inflation has pernicious effects on the average person, while tremendously benefiting the chosen few. Polleit calls inflation an “inflation scam.”
Stocks have pushed to record highs in recent weeks. If you read the headlines, you’d think it was all about optimism for a trade deal. Or maybe just some general bullishness on the US economy. But Peter Schiff has said that’s not the real reason stocks have continued to climb. In fact, there are a lot of things that should be causing them to go down, but only one thing causing them to go up — the Federal Reserve.
Did you now skyscrapers can predict economic crashes?
And the skyscraper index is flashing red.
As economist Mark Thronton explained in his book, The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century, the so-called Skyscraper Index has a remarkably accurate record signaling economic downturns dating back to the late 19th century.
On several podcast episodes, Peter Schiff has talked about the warning signs we’re seeing on Wall Street through the struggles of so-called unicorn companies.
Unicorns are privately held companies valued over $1 billion. Companies like Lyft, Chewie, Uber and WeWork were the darlings of WallStreet. Their IPOs were much-anticipated by investors. They are also the poster children for easy-money induced market mania, and their IPOs were crucial for maintaining the bubble.
In particular, the demise of WeWork’s much-anticipated IPO provides a good object lesson revealing the problems of the Federal Reserve’s easy-money policy.
The stock market keeps hitting new highs and employment reports continue to look good. President Trump and central bankers at the Fed like to point to this and tell us that the economy is doing good. But as Peter Schiff explained in his latest podcast, the markets aren’t making highs because the economy is good. It’s making highs because of the Federal Reserve’s easy-money policies.
Despite the fact that the economic data is deteriorating. Despite the fact that corporate earnings are falling, it is the Fed that is pushing this market to new highs by cutting interest rates, by indicating to the markets that they don’t have to worry about rate hikes no matter what happens with inflation. The Fed’s not going to raise interest rates. Oh, and by the way, they’re doing quantitative easing, and they’re going to print as much money as they have to keep the markets going up and to keep the economy propped up.”
In a recent article published at the Mises Wire, Ryan McMaken adds another layer of analysis. He says that despite the Fed’s positive rhetoric, it’s actually worried about liquidity and growth. In fact, McMaken believes it is operating from a position of fear.
President Trump recently took aim at the Federal Reserve once again, accusing the central bank of “holding back” America’s economy. The president was responding to a FOX Business Varney & Co. segment about negative interest rates in Europe and Japan.
Trump said the Fed should follow the lead of European and Japanese central banks into the world of negative rates.
According to Elizabeth Warren, we have a problem. And like every good central planner, she believes she can fix it.
In fact, Warren has made, “I have a plan for that,” a campaign slogan.
These people never learn. They try to micromanage the economy, create all kinds of unseen consequences, blame “capitalism,” and repeat the process.
Last week, Keynesian extraordinaire Paul Krugman called for more fiscal stimulus in the form of a “government investment program.” Mike Maharrey poked fun of him in his Fun on Friday column. But while it might be amusing to crack jokes at the expense of Keynsians and their obsession with both fiscal and monetary stimulus, the policies they promote are actually quite pernicious.
In fact, the do the exact opposite of what they’re supposed to.