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Peter Schiff Throws a Bucket of Cold Water at the Economic Optimists

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Everybody seems bullish on the economy. Nobody is worried about anything, even though there is everything to be worried about. Peter Schiff said he feels like he’s in Alice in Wonderland. In his most recent podcast, he referenced a Morgan Stanley analyst interviewed by CNBC.

She’s unquestioningly bullish on every front. Everything is bullish. There is nothing at all to worry about. In fact, the only thing she said that anybody is worried about is that there’s nothing to worry about. It’s that things are so good, they’re wondering what are we missing. Maybe we should be a little bit worried because nobody is worried because everything is good. I mean, there are so many things to worry about. That is the reality. But they’re not worried about any of them.”

Peter said everybody has gone insane. Last week, he did an interview with Alex Jones and even Alex was talking about how everything is great under Donald Trump.

Speaking of Trump, in a speech during the economic summit in Davos, the president said we now have a “roaring economy” and we’ve come out of economic stagnation. The economy is booming thanks to him. Peter said everybody is eating this nonsense up.

Everybody believes it except none of it is true.”

GDP numbers released on Friday back Peter up. The economy in the fourth quarter grew at 2.6%. Peter said he doesn’t necessarily even believe the numbers because he thinks the government is understating inflation. But even taken at face value, 2.6% fell short of the 3.2% growth expected. If you average all four quarters last year, the number comes in at a rather modest 2.3%.

What was growth during the last four years of the Obama administration? It was 2.2%.

So, 2.2 is economic stagnation, yet 2.3 is a booming economy? I mean, come on!”

Peter pointed out that in 2014 the economy grew at 2.6% and in 2015, growth came in at 2.9%.

So, in those two years of economic stagnation, those two years we had a stronger economy than we have now when the economy is supposedly booming under Trump. So, nobody is worried about this dramatic slowdown that we’re experiencing. See, everybody is comparing 2.3% this year to the 1.5% the year before, and saying, ‘Wow! Look at all this economic growth that has been created under Trump.’  I mean, this is all an illusion.”

Peter also noted the expanding trade deficit. Earlier this month, he talked about how the twin deficits – trade and budget – could doom the stock market. During this most recent podcast, he said the expanding trade deficit is bad news for the dollar, which continues to sink. Last week was the sixth straight week that the dollar index declined. That hasn’t happened since 2010. In fact, this is the worst start to a calendar year for the dollar since 1987. And what happened in 1987? We had a booming stock market that ultimately crashed.

Just like 1987, nobody is worried right now. Noone is worried about the rising trade deficits. Noone is worried about rising interest rates.”

And interest rates are rising. Last week was the fourth straight week with an increase in bond yields.

Then there are the rising oil prices. That could certainly have an impact on the economy. The president is talking up an infrastructure spending bill. Where is that money going to come from? That means more debt.

The bottom line is that there is plenty to worry about. The optimism is misplaced.

Trade deficit: much bigger than expected. Bad news. GDP: much lower than expected. Bad news. Bad news on durable goods. So, a trifecta of bad economic data all swept aside so that everybody can say everything is great.”

The central bankers have built a house of cards. It looks really cool right now, but it doesn’t take much to send a house of cards toppling to the ground.

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