On Wednesday the Dow hit a historic high of 20,000. In response, Trump tweeted “Great!” a description that sounds contradictory to his campaign message that the stock market is a “big, fat, ugly bubble”. Peter Schiff points out this contradiction in his latest podcast along with an examination of the “pillars” propping up the US bubble economy: cheap money and low interest rates.
Trump’s reaction seems to suggest he was being politically expedient during his campaign or he doesn’t believe stocks are overvalued. More confusing is his appointment of Carl Icahn to a special advisory position. Icahn has been a vocal proponent of the coming economic recession for some time, criticizing the US economy’s lack of manufacturing.
David Stockman, former budget director for Ronald Reagan, appeared on Fox Business recently to discuss Donald Trump’s tax cut plans and the coming debt ceiling crisis he’s predicting this summer. Stockman doesn’t see tax cuts as a possibility given the nation’s current debt levels.
Stockman wants to dispel the myth that Donald Trump’s economic plans are analogous to Ronald Reagan’s. The two presidents are in “diametrically different positions,” Stockman believes. The biggest difference is the size of the national debt, which was relatively small at the time, provided economic cushion for exploring tax cuts and defense spending.
This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
From the gold and silver in Solomon’s temple to heaven’s streets of pure gold, there are more than 700 references to these two precious metals in the Bible. As relevant and desired as gold and silver are today throughout most cultures, they have a much older and timeless context within the Bible. When examining scripture, a reader can draw three critical characteristics about gold and silver: their divine origin, intrinsic value, and monetary quality.
Speculations on the implications of Trump’s economic plans are intensifying after his inaugural address on Friday. Peter Schiff deconstructed Trump’s speech in his latest podcast, focusing on the new President’s pledges to “Make America Great Again” by bringing back manufacturing or “Putting America first” by renegotiating trade deals with foreign countries.
Peter explains what real change would look like and what steps would need to be taken to jumpstart manufacturing after decades of easy money, trade deficits, expanding entitlements, and a bloated government.
As Trump takes office today, we look forward at the inevitable conflict to come between the President and the Fed. The tug-of-war may come thanks to the Fed’s target 2% inflation, the Fed’s lack of tech savvy, or something completely different.
Donald Trump and Janet Yellen Look to Be on a Collision Course
A New York Times article points out some interesting scenarios where President-Elect Trump’s economic policies may be at odds with the traditional stance of the Fed. The main sticking point may be in defining what amounts to a “growing” economy. Irwin said he sees a situation where Trump’s advisors may see the target 2% goal in GDP growth as inadequate, look instead to 3.5%-4%.
Only a few days after President-elect Trump’s comments talking down the dollar, Fed Chairwoman Janet Yellen has sent the greenback rebounding today with strong hints of multiple interest rate hikes “a few times a year” for the next few years.
Yellen and the FOMC raised the federal funds rate by a quarter point at December’s meeting where the Fed Chair said rising employment levels and edging inflation have lead to “considerable progress” for the economy. In response, gold prices fell from $1,161.84 to $1,141.77 as investors made moves into the greenback. At that time, Yellen had indicated that the committee believed a series of rate increases would be appropriate if economic trends stayed within acceptable ranges.
In podcast 221, Peter Schiff shows how Trump’s policies seem to be over before they even get started, and takes the New York Fed President to task for reckless advice to homeowners.
Peter said he sees the President-Elect’s recent comments to the Wall Street Journal about the overvaluation of the dollar as representing an unstated “falling dollar” policy—one that candidate Trump espoused his entire campaign.
The geopolitical uncertainty of Brexit and Trump’s approaching inauguration are sending precious metals on an early rally for the year.
Britain’s Prime Minister Theresa May is clarifying her plans to ensure the UK makes a clean break from the EU’s single market, expressing the desire to remain a “good friend and neighbor in every way,” according to Bloomberg. However, her diplomatic tone is also backed by warnings about any attempts to punish the UK for its decision to leave the European bloc.
Peter Schiff appeared on MSNBC’S “Up with Chris Hayes” with a panel of other experts and pundits to debate the Fed’s role in the housing bubble, Republican views on the economy, and the effects of inflation on prices.
Peter had a spirited exchanged with Karl Smith, Economics Professor from the University of Carolina, on the causes of the housing crisis. Smith took the typical stance of blaming complicated investment instruments for creating confusion in the market. Peter countered with the primary cause stemming from a combination of artificially low interest rates and Fannie and Freddie’s role in making cheap mortgages available to too many people who couldn’t afford them.
Fed Up Friday: Gold Still Strong Investment, Regardless of FOMC Direction
This week marked the full release of the 2011 FOMC transcripts, revealing troubling details from the meeting notes. As the Federal Reserve looks to see a big shakeup in 2017, gold is looking at a win-win situation. Learn more in this week’s Fed Up Friday.
Three Elements that will Stir Up the Fed in 2017
Trump’s administration represents a changing of the guard in Washington, and the Fed is not immune. Out of everything expected, a few key changes will really shake things up for the FOMC. First, in 2017 we’ll be getting 3 new voting members. Their records seem to lean more dovish than the counterparts they’ll be replacing, which may influence the number of rate hikes for 2017.
Second, the Fed’s plan shows that they don’t feel the need for fiscal policy to achieve their monetary goals. From their perspective, the nation has reached peak employment – (regardless of how many are actually underemployed) – and fewer barriers are in their way to increase inflation.
Finally, Trump will be selecting new members to fill two vacant slots on the Fed Reserve Board. That and Yellen’s term expiring in early 2018 should be the big moves for building a new monetary regime.