Peter Schiff: What Is the Economy Going to Recover to?
A lot of people still seem to think at some point, Donald Trump will flip a switch and the government will start humming again. As Peter Schiff explained in his podcast Friday that’s not going to happen. The best we can hope for is recovering from a depression to the recession we were going to have anyway.
We got the monthly jobs report for March on Friday. It was bad. But not as bad as what we’re going to see in April.
The economy lost 701,000 jobs last month. That was the first contraction in the labor market in over a decade. The unemployment rate jumped to 4.4%. The monthly job losses were already close to the May 2009 financial crisis peak of 800,000.
Of course, we know from the weekly unemployment applications reported over the last two weeks that this is just the beginning of an epic labor market collapse. Over 10 million Americans filed for unemployment. That 701,000 is going to look pretty good compared to the April number.
As Peter said, it should be pretty apparent that when this is over, we’re not going back to normal.
This is not going to be a quick recovery. People keep talking about this, that’s it’s going to be this quick recovery. We can’t have a quick recovery. And when we recover, what are we going to recover to?”
President Trump continues to spin this fairytale that we had the greatest economy in history prior to the coronavirus. The narrative is he was forced to shut down this booming economy because of the coronavirus. Once the coronavirus threat passes, the economy is just going to start right back up again.
He still doesn’t realize the big, fat, ugly bubble that he inherited from Obama just got bigger, fatter and uglier, and that’s what the coronavirus interrupted. Or more accurately, pricked. It pricked that bubble. So, we’re not going to go back. The best that we can hope for is that we recover from a depression into a recession. That’s about the best we’re going to get. We’re going to go back into the recession that we were going to have anyway.”
The coronavirus pandemic just accelerated the process of an economic meltdown that was already in the making. A lot of businesses that were going to fail anyway are just failing sooner rather than later. Jobs that were going to be lost eventually are being lost sooner. The coronavirus was just gasoline dumped on a smoldering fire.
Meanwhile, the Federal Reserve and the US government continue to inject trillions of “stimulus” dollars into the economy. When the central bank and the government engaged in these kinds of policies in 2008, there was a lot of concern about deficits and the potential for inflation. In fact, it gave birth to the Tea Party movement. Today, it’s almost a unanimous opinion that it really doesn’t matter at this point. The situation is so bad that nobody objects. According to the mainstream, virtually nobody disagrees with the policy. Of course, a lot of people think it’s a bad idea, including Peter. He said the best thing they could do is nothing.
In fact, there is something better than doing nothing and that is cutting government spending. Actually doing the reverse of what they are doing now.”
Peter argued that government places a burden on the economy. In good times, the economy can absorb that burden. But when the economy goes bad, the burden of government becomes intolerable.
So, the best thing the government could do, if the government really wanted to help, the government could cut spending. The government could ease the burden that it places on the economy. And by reducing its spending, it will free up resources that the private sector can now use – resources that were previously being diverted to government.”
It’s important to remember that government spending always means taxation. It doesn’t matter if the government just prints the money.
The public still pays. It pays through inflation. It’s through a diminishment of their purchasing power. … There is no free lunch. Who is paying for this lunch? The American public.”
The government doesn’t have anything that it doesn’t first take.
The government can’t help somebody without first hurting somebody else.”