Peter Schiff: The Media Has Flipped the Narrative on Trump
Last week, the yield curve inverted, with the yield on the 10-year Treasury falling below the yield on the 2-year for the first time in 12 years. This has historically been a good predictor of recessions. US stock markets sold off on the news, with the Dow shedding 800 points. As Peter Schiff noted in his most recent podcast, the mainstream also suddenly started talking about the possibility of an economic downturn.
As Peter put it, the media has flipped the narrative on Trump.
All of a sudden, a media, which was pretty much buying the booming economy narrative, now is questioning whether the economy is actually strong.”
Peter said Trump is now accusing the media of being involved in some kind of conspiracy to make the economy look bad. He’s basically saying that all of the negative economic data we’ve seen coming out is nothing but “fake news.”
Trump has worked himself into a political corner. His claim to fame is that he’s created the greatest economy ever. He has a vested interest in ensuring that the narrative continues. He won’t likely win a second term if the economy is in recession, or if stocks appear to be in a bear market.
If stocks are going down, if we’re in a recession, well then by his own standard, he is a failure. And if his presidency failed, then why should the public reelect him?”
When Trump was running for office, he said the numbers were fake – that the economy was worse than the data indicated. Now he’s saying the numbers are fake and the economy is much better than the data indicates.
Peter said that ironically, some of the best evidence that the economy is in trouble comes directly from the policies that Trump is demanding – particularly a 100 basis-point cut in the interest rate. As Peter pointed out, that would take the interest rate down to 1%. That was the level Alan Greenspan took interest rates down to during the recession after the dot-com bubble burst.
Donald Trump wants rates to be at 1% again. Well, if the economy is so great, why do we need to return interest rates to the level that we had during a recession following the bursting of a stock market bubble and the 9/11 terrorist attacks?”
In fact, we already have monetary stimulus with the recent Fed rate cut and the end of quantitative tightening. And as Peter noted, we also have massive fiscal stimulus. The US budget deficit for FY2019 has already eclipsed last year’s shortfall.
But that’s not enough for Trump. Now there’s all these rumors, and I’m sure they’re true, that the Trump administration is thinking of cutting capital gains taxes, having an emergency temporary payroll tax cut … that is a stimulus. That is a pure Keynesian stimulus. Why do we need more stimulus when we’ve got so much stimulus?”
Trump wants all of this stimulus and yet says we aren’t close to recession.
Well, this is a bunch of BS! Obviously, if we weren’t close to recession, the president wouldn’t be looking for monetary and fiscal stimulus to prop up the economy. Strong economies don’t need to be artificially propped up. It’s weak economies that need to be artificially propped up. I mean, you can’t have your cake and eat it too. You can’t claim that the economy doesn’t need a stimulus, but then advocate for a stimulus.”
The media is having a field day with this. It’s finally questioning the narrative.
It should be noted that Peter has been talking about a looming recession for months. Back in January, Peter was already saying “the recession is a done deal.”
Peter goes on to analyze the economics behind the looming recession and the political ramifications. Peter said that analysts and pundits who are now suddenly predicting a recession are right, but they still don’t realize just how bad it’s going to be.