President Trump’s top economic advisor announced his resignation this week in the midst of a budding trade war.
Gary Cohn heads the National Economic Council. He was a “free trade” guy and generally opposed to high tariff policies. Most analysts think his resignation is a sign he lost the internal White House struggle over trade policy. Trump took the opportunity to promise he will replace Cohn with somebody “great.”
Cohn’s resignation gave Peter Schiff a different idea. Maybe we should just fire all of these government economists.
Just over a week ago, President Trump delivered the State of the Union speech. The president gave a speech with a decidedly optimistic tone. This was certainly welcome with the increasingly fractured and divided American political landscape. But it’s important to focus beyond the political theater and take a hard look at where the US economy really is and where it is heading. Unfortunately, the political rhetoric doesn’t always line up with economic reality.
Everybody seems bullish on the economy. Nobody is worried about anything, even though there is everything to be worried about. Peter Schiff said he feels like he’s in Alice in Wonderland. In his most recent podcast, he referenced a Morgan Stanley analyst interviewed by CNBC.
She’s unquestioningly bullish on every front. Everything is bullish. There is nothing at all to worry about. In fact, the only thing she said that anybody is worried about is that there’s nothing to worry about. It’s that things are so good, they’re wondering what are we missing. Maybe we should be a little bit worried because nobody is worried because everything is good. I mean, there are so many things to worry about. That is the reality. But they’re not worried about any of them.”
It seems Pres. Trump’s plan to borrow a Vincent van Gogh painting to adorn the White House went into the crapper. But it was a solid gold crapper – so the news wasn’t all bad.
The stock market has continued its upward trajectory through the first two weeks of the new year. In fact, the market has only seen one down day since Jan. 1. Peter Schiff appeared on The Street and opened things up with a bang, calling investors “Oblivious.”
Peter reiterated a message he’s been preaching on his own podcast for weeks – despite what you see in the markets, the US economy is heading for a major crash. We’re partying like it’s 2006 – oblivious to what’s lurking right around the corner.
Peter also talked about China’s decision to cut back or end the purchase of US Treasuries, the Federal Reserve, Trump’s economy and Bitcoin during the interview.
As the GOP tax plan wound its way through Congress, we argued that it is not going to create the kind of economic benefits promised without some reduction in the size and scope of government. We don’t just need tax relief, we need government relief. But there don’t appear to be any serious efforts to cut spending or to reduce the size of the federal government on the horizon. In fact, it looks like D.C. is hurtling in the exact opposite direction. With tax reform in the rearview mirror, Pres. Trump has set his eyes on a federal plan to “fix” America’s infrastructure.
This is a Keynesian boondoggle of epic proportions. And as Ryan McMaken shows in the following article originally published at the Mises Wire, it isn’t even necessary. We don’t need a federal solution to the infrastructure problem. Not for practical purposes. And not to “stimulate” the economy. In fact, the borrowing and money printing that will be necessary to finance whatever plan the politicians in D.C. come up with will compound the country’s economic woes.
After some gains last week, the dollar has shown weakness in recent days. In his most recent podcast, Peter Schiff said he thinks part of the dollar weakness is because the reality is starting to set in when it comes to tax cuts.
In the first place, it remains uncertain whether or not Congress can even get anything done. Obamacare repeal 3.0 went down in flames last month, and Republicans have shown few signs of being able to come together to pass significant legislation such as tax reform.
But as Peter pointed out, there is a more fundamental problem with the Trump tax cut proposal.