So what are we to make of the continuing stock market climb?
Peter Schiff summed it up succinctly in a recent interview on Fox Business.
Well look, I think it’s a bubble.”
Trump said he was going to drain the swamp.
Apparently, the drain is clogged.
Trump picked another swamp creature to chair the Federal Reserve. Jerome Powell got the nod to replace Janet Yellen when her term as Fed chair ends in February. As Tho Bishop at the Mises Institute put it, “this means Trump will ensure that, while the stationary at the Eccles Building will change, the monetary policy guiding it likely will not.”
There’s a lot of optimism out there that passage of the Trump tax plan will juice the economy. Many analysts say tax cut optimism is one of the factors that continue to push stocks up, and that has created headwinds for gold and silver. But as we’ve pointed out, there are reasons to question this mainstream narrative.
Now some in the mainstream are even starting to question the mainstream narrative.
Last week, we asked an important question about Trump’s tax reform plan: Can it deliver?
Despite rampant optimism about tax reform, there are a number of problems. In the first place, it remains uncertain whether or not Congress can even get anything done. Second, as Peter Schiff pointed out, the plan as presented won’t likely create the economic growth it promises.
Peter focused on the fact that the plan isn’t truly reform. It’s tax cuts masquerading as reform. Then there is the issue that it promises to decrease revenue without actually cutting spending and shrinking the size of government. There is strong evidence showing high debt levels retard economic growth.
In a recent article published on the Mises Wire, economist Frank Shostak explains precisely why cutting taxes without accompanying decreases in government spending won’t spur economic growth over the long-term.
Speculation continues to swirl around the question of who President Trump will appoint as Federal Reserve Chair when Janet Yellen’s term comes to an end in February.
Trump will reportedly meet with Yellen this week to discuss the possibility of her staying on as the head of the central bank. During the presidential campaign, Trump was highly critical of Yellen, saying she is “obviously political,” and accusing her of “doing what Obama wants her to do.”
Obamacare repeal 3.0 went down in flames Tuesday. According to Bloomberg, opposition from three Republican Senators derailed the latest attempt to dismantle the Affordable Care Act.
Leaders decided the Senate won’t vote before Saturday’s deadline to use a fast-track procedure to keep Democrats from blocking a GOP-only bill. On Monday, Republican Senator Susan Collins of Maine added her opposition to that of GOP Senators John McCain of Arizona and Rand Paul of Kentucky, enough to sink the legislation in the 52-48 Senate.”
This raises broader questions: Can Republicans get anything done? Is there any chance of Trump pushing through his ambitious economic agenda?
The economy is essentially the same as it was under President Obama. The big difference is how President Trump is spinning it.
During a recent interview, Joe Rogan interspersed Peter Schiff’s comments with clips of Trump before and after the election. The resulting video vividly illustrates the difference between Trump the candidate and Trump the president. Peter said candidate Trump was telling the truth.
That’s what’s really bothering me about Trump is the hypocrisy, because when Trump was a candidate and he got elected because by and large he told the truth about the phony nature of the recovery. Obama was out there talking about how great things were, and Trump was like BS, it’s not that great.”
When we consider geopolitical risk, we tend to focus on things that are “out there.” We might think of military tensions between the US and North Korea, or war in the Middle East, or Brexit. But more and more, analysts are looking to the US as a significant source of geopolitical risk.