There seems to be some optimism in the markets that the end of the coronavirus shutdown is getting closer. There is also this persistent myth that the economy will just fire back up at the snap of a finger. Peter Schiff recently appeared on RT Boom Bust along with Christy Ai to talk about the markets and the pandemic. He said people are still far too focused on the pin and not the bubble that it popped.
The Federal Reserve keeps coming up with new and creative ways to get more people deeper into debt while simultaneously shielding banks from any risk.
As the coronavirus lockdown drags on and governments at every level enact more and more draconian measures, nobody seems to have an answer for what I believe is a most crucial question.
What’s the exit strategy?
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.
OK. I gotta be honest. Being effectively under house arrest isn’t very much fun. But it’s the world we live in now, so might as well make the best of it. I mean, I can at least still legally ride my bike. Not on the beach, mind you. But other than that, the outside isn’t completely off-limits.
Yet.
As the coronavirus economic lockdown drags on, there seems to be a lot of delusional thinking out there. Many people seem to believe that at some point, President Trump will snap his fingers and the economy will roar back to life. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey looks at the numbers and makes the case that this is actually the early stages of an unprecedented economic meltdown. Everything is not going to be fine. He also takes on the myth of the non-essential worker.
We just wrapped up the worst first quarter in the history of the US stock market. Think about that in context. Even during the dark days of the Great Depression, there has never been a worse start to a year for the US stock market than 2020.
Nevertheless, there are still a lot of people out there who think this is going to be a short bear market. As Peter Schiff put it in his podcast, that’s because they’re still fixated on the pin.
On Monday, the Fed announced QE infinity and by mid-week, Congress had agreed on a $2 trillion stimulus package to battle the economic impacts of the coronavirus. That launched us into a bizarro world where a weekly record of over 3 million unemployment claims led to a huge stock market rally. As Mike Maharrey put it in this Week’s Friday Gold Wrap podcast, ladies and gentlemen, we’ve been stimulated. So, what exactly did the Fed do? What are the long-term ramifications? And can it work? Maharrey talks about all this and more in this week’s Gold Wrap.
We now have QE to infinity and beyond.
On March 23, the Federal Reserve announced it will purchase an “unlimited” amount of US Treasuries and mortgage-backed securities. The Washington Post called the move “unprecedented” and said that it goes “much further than what the central bank did in the 2008-2009 crisis.”
Let me be clear upfront. I don’t think coronavirus is “just the flu.” I think the pandemic represents a significant health threat and could potentially overwhelm the healthcare system if the spread isn’t slowed. I think social distancing is wise. But I also think the draconian measures taken by governments that have effectively shut down the economy in many places may prove more deadly in the long run than the virus itself.
As Kerry Baldwin said, the economy is life-sustaining.
