Federal Reserve Chairman Jerome Powell has become Pres. Donald Trump’s favorite scapegoat. As “his” stock market gets more and more volatile, Trump needs somebody to blame — especially during election season. The Fed chair makes the perfect target.
As we reported last week, China is dumping US debt. China’s holdings of US Treasuries fell for the third consecutive month in August. The Chinese shed another $6 billion in US debt, dropping its total holdings to $1.165 trillion. Over the last year, China’s holdings of Treasury bonds fell by $37 billion year-on-year.
But China has debt problems of its own. Local Chinese governments have reportedly piled up about $5.8 billion in debt. An S&P analyst called Chinese debt “an iceberg with titanic credit risks.”
Peter Schiff recently appeared on RT to talk about the US and Chinese debt.
In fiscal 2018, the national debt expanded by more than $1 trillion. According to data released by the Treasury Department, it was the sixth-largest fiscal-year debt increase in the history of the United States. A combination of increased spending along with shrinking revenues continues to expand the federal deficit and balloon the national debt.
GOP apologists insist the revenue shortfalls caused by tax cuts are temporary and economic growth spurred by tax relief will eventually turn things around. Tax relief is great, but without substantive government relief in the form of spending cuts, the promised economic growth won’t likely materialize.
Earlier this month, Peter Schiff wondered out loud if the twin deficits of government budget and trade could spark an October surprise. The month isn’t over yet, but it certainly hasn’t been a good one for stock markets.
The Dow is down 3.8% in October. And it’s the best performing of the stock indexes. The S&P 500 is down about 4.7% on the month. The NASDAQ has dropped 7.4%. Dow Transports have plummeted 8.3%. And the Russell 2000 has suffered a 9.2% decline. Now, if you want some good news, look at gold. It’s up about 3% this month. But all in all, there is a lot of gloomy news on Wall Street.
All of this doom and gloom led Peter to ask an important question in his latest podcast. How many canaries have to die in the coal mine before the mainstream wakes up?
In a podcast earlier this month, Peter Schiff talked about the “twin deficits” of national debt and trade. We’ve talked a lot about the federal debt spiral, and there has even been some discussion about it in the mainstream. But almost nobody is paying attention to the growing trade deficit. Peter is an exception. When the August numbers came out earlier this month, Peter noted it was the largest trade deficit in merchandise since the summer of 2008. And what happened right after the summer of 2008? The collapse of 2008.
The reason the trade deficit got that big is before the collapse, we had a bubble. We had a consumer debt binge where all the cheap money that was being created was feeding imports because Americans were taking their incomes, or their cheap money, and buying imported products. And so the big trade deficit was evidence of the bubble. And of course, the big trade deficits in and of themselves are unstainable.”
Antonius Aquinas has also taken note of the trade deficit. In the following article, he points out that tariffs aren’t going to make America Great Again. We need savings and investment, not a trade war.
Video games have come a long way. Amazing graphics. Multiplayer options online. Gold controllers.
Yes. You read that right.
Gold controllers.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
The US federal government posted the largest budget deficit since 2012 in fiscal 2018. Uncle Sam ended 2018 $779 billion in the red, adding to the ballooning national debt. The Bipartisan Policy Center called the Treasury report a “wakeup call,” noting that trillion dollar deficits during an economic expansion are a serious issue.
But not everybody is concerned. Peter Schiff appeared on RT this week to debate a socialist about the deficit.
On Tuesday, US stock markets rallied. The Dow was up over 500 points. That led a lot of people to conclude that the recent declines were just a correction. But as Peter Schiff pointed out in his most recent podcast, bear markets have rallies. Just because the market goes up a few days doesn’t mean we haven’t entered a bear market. The fact is — at this point we just don’t know.
But the dynamics are in place for a bear market. In fact, Peter has said the recession is obviously coming.
The US national debt increased by $1.27 trillion in fiscal 2018. If you expected the pace of borrowing to slow in fiscal 2019, you’ll be disappointed. In just the first 11 business days of the new fiscal year, the US government added another $138 billion of debt to the total. That brings the total national debt to a staggering $21.654 trillion — or as Wolf Street put it “debt out the wazoo.”
Meanwhile, the two biggest buyers of US Treasuries are in a selling mood.
