On Sunday, Peter recapped a stellar week for gold. He also provided an analysis of President Biden’s State of the Union Address and criticized Fed Chair Jerome Powell’s perspective on the economy.

Both gold and bitcoin hit records last week, with gold nearly topping $2200/oz and bitcoin trading above $70,000. Gold’s surge is driven by central bank demand abroad, but Bitcoin’s spike is driven mainly by ETF hype in the retail sector, which is less likely to last:

“For my money that’s the contrarian indicator: what the retail public is buying is generally what you want to sell, and what the retail public is selling is what you want to buy. The smart money is buying gold. The dumb money is selling gold and buying bitcoin.”

Gold continued to rise even as last week’s highly-anticipated government jobs report exceeded the most optimistic expectations. The report, of course, is suspect and should be accepted cautiously. Last month’s figures were revised downward by over 30%, and this month’s figures could be revised similarly:

“That number is highly likely to be revised much lower next month, which is exactly what happened to the January number, which was reported last month at 353,000 jobs. That was revised down to 229,000. About 120,000 jobs were erased. … That was a huge downward revision, and so given that and given the tendency to revise down just about every number that we’ve had, why does anybody even care what the original number is? Why celebrate a ‘beat’ that could be revised to a ‘miss’ next month?”

Even if the numbers are correct, the fact that this report deals with public sector jobs raises the question, does the economy need more government jobs?

“These are all related to government spending and the deficit, and they’re not goods-producing. But if you take healthcare, education, and government, that’s 71% of the jobs. We don’t need more government jobs. In fact, we have too many government jobs! We need to eliminate government jobs. We can’t afford them because we don’t have the money to pay for them.”

Peter pivots to address the second half of Jerome Powell’s congressional testimony last week, in which he denied that the Fed is facilitating government debt:

“That’s just a bold-faced lie. I mean how can he even say something like that, unless Powell doesn’t believe that buying treasuries is the same thing as loaning the U.S. government money? … When you buy U.S. treasuries you are loaning the U.S. government money. I mean, that’s exactly what you’re doing. … The Fed has loaned the US government seven and a half trillion dollars. The U.S. government owes the Fed seven and a half trillion dollars. I mean if that’s not a loan, what the hell is it?”

Powell also fundamentally misunderstands the purpose of the Fed’s political independence:

“I don’t like the fact that Powell refuses to answer any questions on the grounds that he can’t comment on something political—which is a complete distortion of the concept of an independent Fed. An independent Fed is not supposed to refrain from criticizing the government. That’s not why it’s independent. It’s independent precisely so it can criticize the government!”

In his address last week, President Biden chose to highlight issues abroad, like the war in Ukraine, rather than confront the true crisis America faces:

“[Biden] doesn’t really talk about the fiscal time bomb, the exploding national debt, the fact that interest costs now exceed the defense budget. This is a fiscal time bomb! We are very close to a major economic crisis. Biden needs to talk about what he’s going to do to defuse this bomb!”

Peter dismantles Biden’s claim that his administration has improved the economy and, most notably, created many new jobs:

“He wants to say that he’s created all these jobs. He didn’t create anything! These jobs were the jobs that were put on hold. At the same time, Biden says, ‘Trump lost all these jobs. More jobs were lost by Trump than any other president.’ Those are the same jobs that he claims he created! They weren’t lost. They were put on hold, and then when he comes into office, they’re taken off hold. But he’s distorting all this COVID stuff to try to make him look good.”

Biden’s plan to tax wealthier Americans is also misguided at best and destructive at worst:

“These tax hikes, even if they happen, would not produce any significant quantity of revenue to the government, and they may even backfire, which happens a lot when you raise the marginal tax rate. When you raise the corporate tax rate, corporations and high-income earners often rearrange their affairs in such a way to avoid those extra taxes, and it ends up backfiring, because one of the ways they may avoid those extra taxes is they don’t hire as many people. They’re not as productive as they otherwise would’ve been.”

Both Powell’s testimony and Biden’s speech reveal a startling fact: the economy is in the hands of incapable and woefully mistaken politicians. If they have their way, the economy will only get worse, and the common man will suffer.

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Peter Schiff: Biden Ignores Fiscal Time Bomb

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