Peter Schiff: Trump Has Turned into a Keynesian on Steroids
During a recent interview, President Donald Trump lamented the fact that we don’t have a bigger bubble and blamed Federal Reserve Chair Jerome Powell. Trump said that even though Powell was his pick, he “disagrees with him entirely.” He said that if it weren’t for the Fed, we’d have even stronger GDP growth.
Frankly, if we had a different person in the Federal Reserve that wouldn’t have raised interest rates so much, we would have been at least a point and a half higher. I’m not happy with what he’s done.”
As Peter Schiff pointed out in his podcast, this is the exact opposite of Trump’s position when he was campaigning. Now that he’s in the White House, Trump has turned into a Keynesian on steroids.
Remember, he criticized the Fed for being too easy under Barack Obama. That was the reason that he didn’t want to renominate Janet Yellen. His criticism of Yellen was that she was too loose, that she kept interest rates too low, that he wanted sound money. He wanted a change. I mean, there was a lot of talking, you know, Trump might take us back on the gold standard. He’s a hard money guy. Now, he’s lamenting the good old days of cheap money. He’s longing for more quantitative easing – for zero percent interest rates.”
Trump said that if the Fed had done the right thing – which used to be the wrong thing – the stock market would be 10,000 points higher right now.
As Peter pointed out, Trump didn’t run promising to pump up the stock market. As a candidate, he (accurately) called the stock market a big, fat, ugly bubble. He ran promising to “Make America Great Again” and to bring back good jobs – not keep the bubble inflated.
Now he just wants a higher stock market. He just wants more of what we had under Obama.”
Peter said that message just isn’t going to sell when Trump is running for a second term in 2020. He needs to appeal to the voters who got him elected – the voters who are struggling with debt and low-paying jobs and a rising cost of living.
Those struggles haven’t gone away. If anything, people are going to be struggling harder in 2020 when they go to the polls than when they went to the polls four years earlier in 2016.”
Peter brought up the fact that the US government set a budget deficit record for the month of May.
So, Donald Trump is out there upset that we didn’t get more monetary stimulus from the Fed. But we got record fiscal stimulus from Congress and the White House. I mean, how much stimulus does Donald Trump need? We’re spending more than ever before at the government. We’re borrowing more than ever before and Donald Trump is upset that we’re not printing more than ever before – that we’re not back at zero – that we’re not doing QE. I mean, if we’ve got this great economy, why do we need more stimulus from government than ever before? We’re already getting more fiscal stimulus than ever before and now Trump wants more monetary stimulus than ever before. Why does this economy, which is the greatest in US history, need more artificial stimulation from government and the Federal Reserve than ever before? Would anybody really have voted for Trump … if his prescription for making America great again was making the government bigger again?”
Peter said Trump is getting massive support from the Republican Party and yet if he had promised these policies during the campaign, he would have never even been nominated.
He would have been done. The reason that he won is that he promised Republicans smaller government, draining the swamp.”
Peter went on to explain what would have happened if Trump had gotten his way and the Fed had pivoted to looser monetary policy sooner.
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Photo by Gage Skidmore