Peter Schiff: Greatest Economy in American History? Nonsense!
Donald Trump was in Davos talking up the US economy in his typically hyperbolic terms. He called it “the greatest economy we’ve ever had in the history of our country.” To hear the president tell it, you would think that America is experiencing some kind of economic boom that has never been experienced by anybody in all of history. In his most recent podcast, Peter Schiff called this “nonsense.”
Trump obviously knows nothing about American history. Because, to put the last three years in its proper context, this is nothing compared to the industrial revolution or what went on during the Gilded Age of American prosperity after the Civil War and before the First World War. That is the most prosperous period, certainly in US history.”
The reality is the economic experience now is barely different than it was under Presiden Barack Obama.
When Trump was campaigning, he called the US economy a black hole and claimed the American Dream was dead. He called the stock market a “big, fat, ugly bubble. Now he claims the American Dream is back — bigger and better than ever before. But the data just doesn’t back this up. The economy has basically continued on the same trajectory it was on when he was elected. And it’s still being driven by the same thing – easy money courtesy of the Fed.
But it’s not just Trump touting this message. The Republican Party and Wall Street are doing nothing to refute it.
They’re basically blessing these statements that we have this booming economy.”
During the speech, Trump claimed, “This is a blue-collar boom. Since my election, the net worth of the bottom half of wage earners has increased by plus-47% — three times faster than the increase for the top 1%.”
According to Federal Reserve data, the bottom half does hold more wealth. But when you look at where it started, the percent increase is much less impressive. The bottom half holds just 1.6% of the nation’s wealth, up from 1.1% when Trump took office. But it’s down from 2.1% in 2006. This is hardly a “boom.”
And as Peter pointed out, the net worth of the bottom half is actually negative when you factor in massive levels of consumer debt.
What they do have are lots of liabilities. The bottom half of American wage-earners, they have credit card debt. They have auto loans. Maybe they have student loans. They don’t have a big net worth that just went up by 47%.”
People who own stocks and perhaps real estate have seen their net worth rise.
But to say the president is responsible for an economic boom for the bottom half of wage earners — it’s nonsense.”
Trump also said that the median household income is the highest its ever been. Peter said that’s because more people in the household are working. In fact, more women are working in the US today than men. Peter said this isn’t a sign of a booming economy. It’s more likely a sign of economic distress.
What if the economy got so bad that kids had to drop out of school and start working? What if we had a big increase in child labor? Would the president want to brag about that? ‘We’ve got more kids working than ever before. More elementary school kids are dropping out so they can get jobs.’ I mean, it would be good if young people got jobs the way they used to so they could learn something about entrepreneurship and about work ethic and things like that. But to say that it’s a sign of prosperity that they’re required to work just so their family can pay the rent and put food on the table, that is not a good thing.”
Peter said one of the reasons men are not working is because many of the jobs that have been destroyed over the last several years are in fields that generally employ larger numbers of men. An AP report confirms Peter’s point. The labor market is dominated by the service sector and manufacturing jobs have shrunk as a percentage of the workforce.
Since we’re losing a lot of manufacturing jobs, more men are being put out of work. Women are more active in the service sector, in a lot of the lower-paying service-sector jobs — the type of jobs that were being created when Obama was president and those are the same type of jobs that are being created when Trump is president. So, that’s why the number of women working has surpassed the number of men working because the male-dominated industries have done so much worse than the ones that are more dominated by females, that were heavily represented by female workers.”
This flies in the face of the notion that there is a manufacturing boom. Data reported by the AP bears this out. For instance, the mining and logging industry, including oil and gas workers, lost 21,000 jobs in 2019. Out of the 1.1 million jobs created in the last six months, only 9,000 were in manufacturing.
Trump said that nobody is benefitting more from the US economy than the middle class. This is more nonsense. The people really benefitting are asset owners.
It is people at the very top end of the spectrum. The 1%. The people who have large stock portfolios. At least on paper, they’re benefitting. In reality, they’re not actually benefitting because this bubble is going to pop and whatever money they thought they had is going to go to money heaven.”
Peter also talks about Trump’s call for negative interest rates and the distinction between socialism and capitalism. In a nutshell, capitalism empowers people. Socialism empowers government.