Why Not Go All-In on Socialism? (Video)
Peter Schiff discussed the market expectations of a December rate hike from the Federal Reserve in his latest appearance on Alex Jones’ InfoWars. The two went on to discuss the real condition of the United States economy and why the US may soon be following Europe’s lead towards negative interest rates and more inflation. Finally, Peter made the case for electing Bernie Sanders in the 2016 Presidential Election:
By having Sanders as President, he’ll screw up the country so badly so quickly – and it’s already screwed up – that he might hasten a real revolution towards free markets, to abandon all this nonsense. All he wants to do is make the welfare state bigger. He wants to expand the socialist programs from the New Deal, from the Great Society. The stuff he wants to do would bankrupt America. But the problem is we’re already bankrupt. So why not go all-in on socialism so we know how bad it is, so we can puke it all out and start over again?”
Highlights from the interview:
“First of all, everybody is excited now about the fact that they believe the most recent minutes – the FOMC, Federal Open Market Committee, minutes basically guarantee a December rate hike. But if you actually read those minutes, they don’t say that at all. All they say is that a majority of the members believe that the conditions may be ripe for a rate hike in December, but they’re not sure; it depends on the data, and they’re going to make a decision in December. None of that, to me, sounds any different from the rhetoric we’ve been hearing all year long. So I don’t think it’s a sure thing. But I would say that it’s probably more probable that the Fed might actually move and do a quarter of a point – not a whole percentage point, but just one quarter of one percent, which is basically nothing. If the stock market is near record highs the day before that meeting, and it looks as if everybody is okay with this tiny rate hike…
“If [the media] is talking about a full percentage point, they’re probably talking about over the next year or two. Nobody is predicting that the Fed is going to raise rates by a full percentage point in December. I haven’t ready anybody predict that. But yes, there are people who think that over the course of the next year or two, we’ll eventually get rates all of the way back up to 1%, which was the lowest that they got under Greenspan. That’s where Greenspan stopped. That’s what gave us the housing bubble and the financial crisis. Now we have to raise rates four times, basically, to get back to that 1%. I think long before the Fed gets to 1% – if they actually start in December – we’re going to be back in an official recession or close enough to it that the Fed is going to have to stimulate.
“Think about it this way. We’ve just had the weakest economic recovery ever, and it’s been seven years. The typical recovery lasts maybe 5 or 6 years. So this is already a longer recovery than normal, despite the fact that ti’s the weakest recovery ever, and it’s required the most amount of stimulus by a long shot. We’ve never had so much stimulus to produce so weak a recovery. So if this recovery was so weak with zero-percent interest rates, imagine how quickly it is going to unravel if they start to raise rates. So if this recession resumes, they’re going to have to bring rates back down to zero. They’re going to have to do QE4. In fact, they’re going to have to get those helicopters out of the hangars, because this is going to take a record amount of stimulus to try to breathe some more artificial life into [the economy]…
“They’ve actually got negative rates [in Europe]. In fact, many of the government bonds now, if you buy a government bond in the Eurozone, you’re going to get back less than you paid. It really is a crazy thing that has gone on over there. I guess it can happen here too. That’s one of the reasons it is so dangerous, from their perspective, to raise rates, because they look that much more foolish when they have to cut them. But I do believe if they do raise rates slightly, they’re going to try to cover their tracks by leaving the door open, by saying, ‘Look, we just raised rates, but we can go either way with the next move. We may hike or we may cut, depending on the data.’ They’re going to stay data dependent, which again, I think is all just part of their show. I think they’re stalling. Because the data has been horrible. Ever since the Fed said they are data dependent, the data has been bad. The data would argue for easier money, not tighter money…
“I think [the economy] is very weak. Since the last time you and I spoke, we’ve had some horrible earnings at major retailers like Macy’s, Nordstrom’s, where sales have just collapsed. That’s following bad numbers from the Gap, from Walmart. If this is a recovery, why aren’t consumers shopping? If we really are creating all these jobs, why don’t the unemployed need to spruce up their wardrobes for their new jobs? I think the fact that spending is falling is a bad sign. All the manufacturing numbers are horrible. You’ve just got the housing numbers, but they’re starting to roll over. We just got a housing number this week that showed the fewest number of home starts in 7 months, so that’s starting to turn down…
“Yes, we still have 5% unemployment, but remember – recessions always begin when unemployment is low. Unemployment is high when the recession ends. Recessions don’t start because of layoffs. Layoffs happen because of the recession. When you’re just looking at unemployment, you’re looking in the rearview mirror and ignoring all the information in the windshield…
“Drag just came out this morning and he’s saying, ‘Look, I’m going to do whatever it takes to make sure we have more inflation in the eurozone.’ He’s looking at consumer prices. They’re rising in Europe. They’re just rising very slowly, and he wants them to rise more rapidly… Think about this. Why would anybody say that what we need is higher prices for our consumers? Draghi is specifically pointing to oil and saying these low oil prices are a problem. Why? The eurozone imports oil. They’re not producing a lot of oil in the eurozone. So why is it a bad thing when a European pulls into a gas station that he spends fewer euros on gas? Why is it a bad thing if his electric bill is lower? Or his heating bill…
“I do think that if [the Fed raises rates], it will be a one and done scenario. I do expect the dollar to sell off and gold to rise, finally – regardless of what they do. Which is why I think people should take advantage of this opportunity now to continue to move more money… Putting more money into countries overseas that aren’t making these mistakes. Putting more money into precious metals.
“You mentioned before the break about Bernie Sanders and his form of democratic socialism. Just putting the word ‘democratic’ in front of a bad word doesn’t make the bad word good, just because people vote for it. I can say I’m for ‘democratic slavery’ and that doesn’t make slavery good… In his heart of hearts, Bernie Sanders is a socialist. He doesn’t believe in the free enterprise system. He doesn’t believe in capitalism. Look at anything he used to write or stand for before he ran for president. He does not believe in the principles that we fought the American Revolution on. He embraces the principles that they fought the Russian Revolution on. But there’s an argument to be made that maybe Sanders could actually help. By having Sanders as President, he’ll screw up the country so badly so quickly – and it’s already screwed up – that he might hasten a real revolution towards free markets, to abandon all this nonsense. All he wants to do is make the welfare state bigger. He wants to expand the socialist programs from the New Deal, from the Great Society. The stuff he wants to do would bankrupt the country, bankrupt America, but the problem is we’re already bankrupt. So why not go all-in on socialism so we know how bad it is, so we can puke it all out and start over again?”
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Well, my view of U.S economic policy is that whatever is done regarding real interest rates, up or down or negative as is the case in Europe, it will be about as effective as weeing on a Forrest fire. The past 100 years of fiscal stupidity is a recipe for a very distasteful, bitter dish of pain and suffering, with a dash of national revolt thrown in the pot for good measure. 2008 was a 6.0 on the Reicter scale, the response by the powers that be was essentially like treating a cancer patient with two aspirin and saying don’t worry all is well. 2016/17 will be a magnitude 10.0 on the reicter scale, simply taking up where we left off previously. Unify family and friends by shedding light on this subject and get prepared now! OMO.
Govt’s want higher prices because they have all created taxes such as VAT & GST. Lower prices mean they collect less revenue
Don’t they want inflation in Europe because they are afraid a deflation spiral might take hold?
Next month a meeting in Peru. I hear this meeting may decide the fate of the greenback. More and more nations want away with the dollar. Russia just announced as with China they want alliance (with the yuan) getting China as a mighty trading partner. Hold onto them 401Ks my friend an those social security checks cause Uncle Sam is broke. And I guess you know what that means. Yes, BAIL, BAIL, BAIL OUT!