GDP for Q2 came in far below expectation at an annualized rate of 6.5%. But despite being a big miss, 6.5% growth is still pretty solid — until you consider what it took to buy that growth.
As economist Daniele Lacalle pointed out, the Fed and the US government rolled out the biggest fiscal and monetary policy in history. All we got from it was a momentary sugar high.
The US government has pumped trillions of stimulus dollars into the US economy giving us a massive sugar high. It felt good at the moment, but after the initial rush, you always experience a crash.
It looks as if we’re already coming down off the high. May retail sales disappointed, dropping 1.3% after big stimulus-fueled gains in March and April. Meanwhile, over the last two weeks, weekly unemployment claims have jumped back above 400,000.
The economy is booming again – or so we’re told. Trillions in stimulus have juiced consumption and created the illusion of prosperity. But in truth, Americans are simply spending printed money on stuff they didn’t produce. Peter Schiff recently said America’s consumption economy is really a bubble
The problem is, economies can’t run on consumption. A vibrant, healthy economy needs production. Stimulus does nothing to boost production. In fact, it completely warps the production structure
The trade deficit in goods leaped to another record high in March as Americans continue to spend stimulus money printed out of thin air on products they didn’t produce.
The goods trade deficit surged 4.0% last month, hitting an all-time record of $90.6 billion. That tops the previous record of $88 billion set in February.
Joe Biden unveiled details of his $2 trillion-plus infrastructure plan complete with tax hikes. The claim is that this is going to strengthen the economy and create opportunity. Peter broke down the spending plan in his podcast and said it will do the exact opposite. It’s going to weaken the economy and destroy opportunity.
The latest Biden/Democrat stimulus bill is just the beginning. There is more government spending coming down the pike. That means more money printing. But Paul Krugman says not to worry. It didn’t cause a big jump in CPI last time and it won’t this time either. Peter Schiff talked about it in his podcast. He said when Krugman talks – nobody should listen.
Do you feel stimulated? Congress got the deal done on a $1.9 trillion stimulus package this week. But the markets continue to behave as if there is no inflation threat with all this borrowing, spending and money printing. On this week’s Friday Gold Wrap, host Mike Maharrey breaks down the stimulus bill. He tells you what’s in it and who will pay for it. He also talks about rising prices the mainstream can’t seem to find.
On Wednesday, the House gave final approval to coronavirus stimulus bill 3.0. For those keeping score at home, that brings total stimulus spending approved during the pandemic to $5 trillion.
So, what exactly is all of this money going to be spent on? And who is going to pay for it?
We’re told we’re on the road to economic recovery. The $1.9 trillion stimulus is all we need to get us over the hump. But the truth is, Americans started spending like they were over the hump months ago. In fact, American consumers high on stimulus have been on a spending spree since last summer. The Federal Reserve printed money. Uncle Sam handed it out. American consumers spent it on imported goods.
This isn’t the formula for a genuine economy. It’s the formula for a giant bubble.
On Wednesday, Federal Reserve Chairman Jerome Powell called for a “society-wide” commitment to reaching full employment, calling for “contributions from across government and the private sector.” He said getting people back to work would require “continued support from both near-term policy and longer-run investments.” He also dismissed concerns about debt saying the focus needs to be on the economy’s immediate needs. As Peter Schiff put it in his podcast, Powell handed the US Treasury a blank check.
