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Peter Schiff Warns "Americans Are In For A Rude Awakening"

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Peter Schiff Warns "Americans Are In For A Rude Awakening"

Via SchiffGold.com,



All eyes have been on the stock market in recent weeks as it has reflected the fears about the coronavirus-induced economic shutdown and the hopes of massive stimulus. It’s been quite a rollercoaster ride. But in his podcast on March 27, Peter Schiff said there’s an even bigger problem looming on the horizon that people aren’t paying any attention to

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– the potential destruction of the dollar. He said Americans are in for a rude awakening.



The Dow Jones finished its best week since the Great Depression with a 915.39 point drop. But even with that big plunge, the Dow was up about 13% on the week, all on the strength of the spectacular rally on Tuesday, Wednesday and Thursday. In fact, the Dow had a bull market condensed into three days. But Peter said it was not really a bull market. He called it a “vicious correction in a horrific bear market.” And he said that bear market is “a long way from over.”



But while most eyes are on the stock market, Peter said we’re missing a more significant looming bear market — the bear market we’re going to have in the US dollar.





Peter has already explained how the actions of the Federal Reserve and the US government has set the stage to devalue the dollar, saying the dollar is cooked. He said that with the central bank and government response to the coronavirus, hyperinflation has gone from being the worst-case scenario to the most likely scenario.



A bear market in the dollar can mask some of the other problems in the economy. Consider in the 1970s, the dollar fell by nearly 70%. That means that while nominal stock market losses in the decade weren’t terrible, the real losses were significantly larger.  It was a destruction of the value of US stocks and Peter said it’s going to happen again.



A plunge in the dollar means losses on all dollar-denominated assets — stocks, bonds, real estate. It also means price inflation and rising interest rates, which pushes down the value of bonds even lower. Peter said he thinks the dollar is going to be a lot weaker in this decade than it was in the 1970s.




I think the US is certainly starting off the decade in a much worse financial position.”






The main reason the dollar fell in the 1970s was because the US went off the gold standard. But the dollar remained the reserve currency, even though it was backed by nothing.




It got marked down, but it didn’t get knocked out.”




During the 80s, the US enjoyed the privilege of being able to issue the world’s currency without having to back it by gold.




That basically gave us a license to print and we’ve been abusing that ever since.”




Peter said this time he thinks the world is going to kick out the dollar as the reserve currency. If that happens, the dollar will just be another currency.




And that means Americans are going to have to have to abide by the same economic rules that govern everybody else. That means if we want to consume, we’ve got to produce. If we want to borrow, we’ve got to save. And Americans are going to be in for a rude awakening.”




Peter said this may well crush the retirement dreams of many Americans. With the erosion of the dollar’s purchasing power, retiring simply won’t be an option for many people.




Most Americans who are already retired, well, they’re going to have to go back to work. And the people who were planning on stopping working, well, they’re just going to have to keep working until they’re dead, basically. Unless you can do something now to protect yourself.”




Peter also talked about the passage of the massive stimulus bill. He said it’s possibly the most socialist bill ever passed. Basically, America is already a socialist nation.




Tyler Durden

Mon, 03/30/2020 - 14:52
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Peter Schiff: Hyperinflation Is Now The Most Probable Scenario

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Peter Schiff: Hyperinflation Is Now The Most Probable Scenario

Via SchiffGold.com,



March 23 was Peter Schiff’s birthday. It was also the day the Federal Reserve announced QE Infinity. So, Peter spent over three hours hosting a live videocast talking about the latest Fed moves, the potential impact on the economy and answering questions from viewers.



Peter said he was hoping to combat the rampant economic ignorance that

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is pretty much everywhere.




There’s probably one thing that is spreading right now throughout the country faster than the coronavirus and that is economic ignorance and misinformation. It’s all over the place. It’s gone completely viral … The best thing anybody can do to combat the virus of ignorance is to turn off their television sets or their computers and don’t listen to anything that is being said in conventional media, whether it’s a news-related channel or a financial channel, I can virtually assure you that every single thing that you’re hearing is wrong.”






Peter hammered on a number of central themes you won’t hear discussed in the mainstream. For one thing, the Federal Reserve and the US government are repeating the mistakes of 2008.



Peter reminds us that as the crisis unfolded in ’08, he warned that the policies of bailouts and monetary stimulus were a mistake and that they would lead to a bigger crisis in the future.




Well, welcome to the future.”




He also emphasized that this isn’t about the coronavirus. The virus pricked a bubble that was inflated long ago. The economic chaos we’re seeing today started long before the virus reared its ugly head.




Everybody wants us to go back to normal, the way things were before anybody heard the word coronavirus of COVID-19. But you know what? We weren’t normal back then. The economy was sick before the virus infected us. It was a bubble. There was nothing normal about that bubble. And the problem with bubbles is once they pop, they’re not going to reflate. You need a new bubble. You need a bigger bubble. That’s what the Fed did. They inflated the NASDAQ bubble. That popped. They inflated a bigger bubble in housing. That popped. And then they inflated a bubble in everything. Well, everything has already been in a bubble. There’s nothing left to bubble up. It’s over.”




Peter also warned about what’s coming down the pike with all of this money being injected into the economy.




They are going to unleash a tsunami of inflation.”






And people losing their money in this crisis is going to be the least of the problems.




What we’re going to suffer as an economy is far worse than losing your money. Because you know what’s worse than losing your money? Having your money but your money losing it’s purchasing power. That is the worst thing that can happen and that is what’s going to happen. Hyperinflation has gone from the worst-case scenario to the most probable scenario. And that means people have to act quickly to protect themselves.”




Peter spent a lot of time taking questions from viewers. This is a great opportunity to get some economic analysis you’re not going to see on CNBC or Fox Business.




Tyler Durden

Wed, 03/25/2020 - 19:50
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Peter Schiff: "The Real Crash Is Here"

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Peter Schiff: "The Real Crash Is Here"

Via SchiffGold.com,



On Wednesday, March, 18, Peter Schiff did a live episode of his podcast and took questions for over four hours.



In a nutshell, Peter made the case that the real crash is here. He covered a wide range of topics relating to the ongoing and ever-evolving coronavirus crisis.





As far as the mainstream narrative ou

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t there, Peter said, “Everybody has lost their minds.”




This is really the most idiotic thing I’ve ever seen. And, you know, the economy is about to implode. That much is pretty sure.”






Peter is not talking about the steps being taken to hunker down in an effort to slow the spread of coronavirus. He’s talking about what everybody is saying the government needs to do to address the economic downturn.



In 2007, Peter Schiff wrote a book, “Crash Proof: How to Profit from the Coming Economic Collapse.” He followed that up with “The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country.” He gave his second book that title because 2008 wasn’t the real crash.




It’s the one that’s about to happen.”




Peter said it took longer than he thought it would to get to this point. But here we are.




That bubble has now popped. Believe me. I had no idea that the pin to pop this bubble would be the coronavirus....



This pin has pricked the biggest bubble that the Federal Reserve has ever inflated. And now the air is coming out. And at this point, it doesn’t even matter what happens to that pin...



The damage is already done. The cat’s out of this bag. This bubble has popped. And there is a lot of air that’s going to come out of it.




One example of the craziness is the call for “helicopter money.” The term refers to giving money directly to individuals as if dropping cash on everybody out of a helicopter. As Peter pointed out, when Milton Friedman coined the term, it was a joke.




He was using it as an example of what not to do, about why Keynesian monetary stimulus doesn’t work. He said it’s a crazy, stupid idea. It’s like dropping money from helicopters. Because dropping money from helicopters doesn’t do anything. It’s just inflation. It just makes prices go up.”




We don’t need more money. We need more stuff.




Adding money doesn’t add anything of value. It’s just paper.”




Donald Trump has been comparing the coronavirus crisis to World War II. Peter made the point that in World War II, there weren’t any corporate bailouts.




Not only did people not get bailout checks from the government; the government tripled taxes.”




Last week, Peter asked the question: has the bond bubble just been pricked? It appears that it has. Bond prices are collapsing almost as fast as stocks. Now people are piling into the dollar.




The US dollar isn’t a safe-haven either. And the people who are buying US dollars are about to blow up and watch their purchasing power evaporate. Because we all assume the Fed can create as much money as it wants. That it can create tens of trillions of dollars.



Remember, we’re bailing out everybody. Bailing out the airlines. Bailing out the hotels. Bailing out the manufacturers. Bailing out the plane manufacturers. The automobile manufacturers. Bailing out the individual workers. This is bailout nation. We’re bailing out everybody. How can we bail out everybody? Who’s going to do the bailing? The government doesn’t have any money. It only has money that it takes from the people.”




Peter said the real crash that’s coming is a dollar crisis.




All the money the Fed is printing isn’t going to have value. It isn’t going to buy anything. Prices are going to skyrocket. And in fact, this coronavirus is accelerating that process because the coronavirus is reducing the supply of goods available to buy.”




This is the perfect storm for price inflation. We’ll have more money chasing fewer actual goods.




People are advocating the same monetary policies that have destroyed every country that has ever tried it.”




Peter addresses all kinds of viewer questions in this video. It’s worth taking the time to watch.




Tyler Durden

Thu, 03/19/2020 - 17:55
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Peter Schiff: They're Gonna Need A Bigger Rate Cut!

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Peter Schiff: They're Gonna Need A Bigger Rate Cut!

Via SchiffGold.com,



Stop and pause for a moment and think about what just happened. The Federal Reserve says the US economy is strong, but it just initiated emergency monetary policy last seen during the worst financial crisis since the Great Depression.





Something doesn’t add up.



The Fed cut rates

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50 basis points on Tuesday. It was the first interest rate move between regularly schedule FMOC meetings since the 2008 financial crisis. The Fed funds rate now stands between 1.0 and 1.25%.



The decision to cut rates was unanimous.



As the Wall Street Journal pointed out, this kind of Federal Reserve move has been reserved for “when the economic outlook has quickly darkened, as in early 2001 and early 2008, when the US economy was heading into recession.” The 50-basis point cut was the first cut of such magnitude since December 2008. Pacific Management investment economist Tiffany Wilding called it a “shock-and-awe approach.”



It may have been shocking, but the results weren’t awesome.



Stocks tanked anyway.



The Dow Jones closed down 785.91 points, a 2.94% plunge. The S&P 500 fell 2.81%.  The Nasdaq experienced a similar drop, closing down 2.99%.



Meanwhile, gold rallied, quickly pushing back above $1,600 and gaining over $50. Wednesday morning, the yellow metal was knocking on the door of $1,650.



Bond yields sank again as investors continued their retreat into safe-havens. The yield on the 10-year Treasury dipped below 1%.



In a press conference after the announcement, Federal Reserve Chairman Jerome Powell said the central bank “saw a risk to the economy and chose to act.”




“The magnitude and persistence of the overall effect on the US economy remain highly uncertain and the situation remains a fluid one. Against this background, the committee judged that the risks to the US outlook have changed materially. In response, we have eased the stance of monetary policy to provide some more support to the economy.”




Just the day before, Powell hinted at the possibility of a rate cut while insisting “The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity.”



Mises Institute senior editor Ryan McMaken pointed out that Powell’s statement sounds an awful lot like John McCain in September 2008 when he said, “The fundamentals of our economy are strong, but these are very, very difficult times.”



McMaken raises the crucial question: If fundamentals are so strong, why the need to enact the biggest rate cut in more than a decade?



And further, “If the Fed is slashing interest rates while ‘fundamentals are strong,’ what must it do when things aren’t so ‘strong?’ Negative rates and QE seem to be the logical next step.”



Of course, the Fed has been engaged in QE that it calls “not QE” for months already.



In his podcast Tuesday, Peter Schiff put it another way.




You shoot your bullets at Super Man and they bounce off his chest; then what do you do?”




Schiff said his first reaction was, “They’re going to need a bigger rate cut.”




Just like the guy from Jaws, ‘We’re gonna need a bigger boat to catch this shark,’ the Fed is going to need a much bigger rate cut if they want to stop this bear market.”






But Schiff said he doesn’t think there’s a big enough rate cut to do it.




I think the air is coming out of this bubble. As I said, the coronavirus was the pin. At this point, it doesn’t matter what happens to the pin. They could find a cure for the virus. It doesn’t matter. Once the pin pricks the bubble, doesn’t matter what happens to the pin. What matters is the air is now coming out of that bubble and that’s exactly what’s happening.”




From a practical standpoint, it remains unclear how an interest rate cut will solve the potential economic problems associated with coronavirus. It appears that the move was primarily intended to rescue the financial markets. This is not unlike the way the Fed moved when stocks started to tank in the fall of 2008. In a rather convoluted statement, Powell even conceded that rate cuts won’t address the specific economic issues raised by the virus.




A rate cut will not reduce the rate of infection. It won’t fix a broken supply chain. We get that. But we do believe that our action will provide a meaningful boost to the economy.”




The real worry for the Fed is that the stock market will pull the economy down with it. After all, the central bank built the economic “recovery” after the 2008 financial crisis on a “wealth effect.” Easy money pumped up asset prices and made people feel richer. If that wealth effect unwinds, the underlying economy will likely unwind with it.



[ZH: the market is already pricing in 50bps more rate-cuts in March...]





Schiff said another concern is the amount of debt built up in the economy going into the next recession. Normally, during an expanding economy, people pay down debt. But over the last decade, Americans have piled on debt. The federal government is running trillion-dollar deficits. Consumer debt is at record levels. Rising levels of corporate debt have even set off warning bells at the Fed.




So, if we have another economic downturn, that debt is a much bigger problem than its ever been in other recessions. It’s likely going to cause a worse financial crisis than the one we had in 2008. And so to try to keep that from happening, the Fed is cutting rates, because it wants to make it easier for people who have debt to service that debt. And it also wants to delay the recession it knows we can’t survive.”




The Fed simply doesn’t have the bullets in its arsenal to fight a deep recession. That’s why it is firing them know, hoping to hold it off. But Schiff said the best-case scenario is that they buy some time. To do that, they’re going to need bigger rate cuts.




Tyler Durden

Thu, 03/05/2020 - 10:15
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Peter Schiff: Printing Money Is Not The Cure For Cononavirus

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Peter Schiff: Printing Money Is Not The Cure For Cononavirus

Via SchiffGold.com,



In his most recent podcast, Peter Schiff talked about coronavirus and the impact that it is having on the markets.





Earlier this month, Peter said he thought the virus was just an excuse for stock market woes. At the time he believed the market was poised to fall anyway. But as it turns out, coronavirus has actually helpe

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d the US stock market because it has led central banks to pump even more liquidity into the world financial system.




All this means more liquidity - central banks easing. In fact, that is exactly what has already happened, except the new easing is taking place, for now, outside the United States, particularly in China.”






Although the new money is primarily being created in China, it is flowing into dollars — the dollar index is up —  and into US stocks. Last week, US stock markets once again made all-time record highs.




In fact, I think but for the coronavirus, the US stock market would still be selling off. But because of the central bank stimulus that has been the result of fears over the coronavirus, that actually benefitted not only the US dollar, but the US stock market.”




In the midst of all this, Peter raises a really good question.



The primary economic concern is that coronavirus will slow down output and ultimately stunt economic growth. Practically speaking, the world would produce less stuff. If the virus continues to spread, there would be fewer goods and services produced in a market that is hunkered down.




Why would the Federal Reserve respond, or why would any central bank respond to that by printing money? How does printing more money solve that problem? It doesn’t. In fact, it actually exacerbates it. But you know, everybody looks and central bankers as if they’ve got the solution to every problem. They don’t. They don’t have the magic wand. They just have a printing press. And all that creates is inflation.”




Sometimes the illusion inflation creates can look like a magic wand. Printing money can paper over problems. But none of this is going to fundamentally fix the economy.




In fact, if central bankers were really going to do the right thing, the appropriate response would be to drain liquidity from the markets, not supply even more.”




Peter explained how the Fed was originally intended to create an “elastic” money supply that would expand or contract along with economic output. Today, the money supply only goes in one direction — that’s up.




The economy is strong, print money. The economy is weak, print even more money.”




Of course, the asset that’s doing the best right now is gold. The yellow metal pushed above $1,600 yesterday. Gold is up 5.5% on the year in dollar terms and has set record highs in other currencies.




Because gold is rising even in an environment where the dollar is strengthening against other fiat currencies, that shows you that there is an underlying weakness in the dollar that is right now not being reflected in the Forex markets, but is being reflected in the gold markets. Because after all, why are people buying gold more aggressively than they’re buying dollars or more aggressively than they’re buying US Treasuries? Because they know that things are not as good for the dollar or the US economy as everybody likes to believe. So, more people are seeking out refuge in a better safe-haven and that is gold.”




Peter also talked about the debate between Trump and Obama over who gets credit for the booming economy  – which of course, is not booming.




Tyler Durden

Thu, 02/20/2020 - 08:50
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Eric Peters: Peter Navarro Was Right - Tariffs Have Spurred Growth, Not Hampered It

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Eric Peters: Peter Navarro Was Right - Tariffs Have Spurred Growth, Not Hampered It

Submitted by Eric Peters, CIO of One River Asset Management



“Conventional economic models ignore how Trump’s tariffs boost investment and national security,” wrote Peter Navarro, the President’s Director of Trade and Manufacturing Policy.



His Jan 13th WSJ opinion piece, like most things Navarro publishes, provide real insight into Trump

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policy/thinking. But Navarro is an annoying hothead, so most people dismiss him.



I’ve condensed his piece: “Critics of Trump’s transformational trade policies continue to insist that the tariffs are hindering rather than helping the boom. Yet with each new tariff the economy remains robust, wages continue to rise, and inflation stays muted (while the economic losses for China continue to grow).





Tariffs have spurred growth, not hampered it. Why have the gloom-and-doom forecasters been so wrong? The errors come from flaws in traditional economic models. Anti-tariff analysts typically rely on static "partial equilibrium" models. While a tariff on steel might boost employment in that industry, for example, the price of steel would rise for car makers downstream, which would then suffer lower production and fewer jobs.



Each tariff shrinks total employment, depresses wages, and increases inflation—or at least that’s how these forecasts typically go. Yet what is missing from these forecasts is a 'general equilibrium' analysis of tariffs, which would assess the whole economy, with a concomitant 'dynamic scoring' of their effects, to account for the new investment tariffs induce. Over time this tariff-induced investment, along with lower taxes and sensible deregulation, will boost growth and job creation. Higher domestic production will also help offset any price hikes from the tariffs.



Trump’s imposition of actual tariffs has made the threat of tariffs more credible, and a variety of tariff threats have borne robust results. In addition to missing the upside of supporting American industries, critics overlook the ways the US has suffered under open trade. Expanded trade with China in the 2000s contributed to the loss of tens of thousands of American factories and millions of manufacturing jobs and the hollowing out of many communities. What followed was an associated rise in the rates of divorce, drug addiction, crime, depression and death, particularly among blue-collar men no longer able to support their families at a decent wage.



The national-security externalities associated with Trump trade policy may be even more consequential. A case in point is the tariffs being used as leverage to defend America’s technological crown jewels from being forcibly transferred to Chinese companies—from artificial intelligence, robotics and autonomous vehicles to quantum computing and blockchain. These industries comprise the core of the next generation of weapons systems needed to repel threats from rivals like China, Russia and Iran.



One must ask the anti-tariff forecasters: Where are the benefits of a freer and more secure American homeland counted in your models? An honest, modern analysis of the Trump tariffs would acknowledge the widespread market distortions that currently disadvantage American workers, parse the complex ways tariffs affect trade partners’ behavior, appropriately discount short-term price impacts, and dynamically score the many long-term positive effects.




Tyler Durden

Sun, 01/19/2020 - 18:10


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Peter Schiff: Gold Climbs Wall Of Worry

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Peter Schiff: Gold Climbs Wall Of Worry

Via SchiffGold.com,



Gold surged above the $1,550 mark in the wake of a US airstrike that killed a prominent Iranian general and has hit levels not seen since 2010. Yesterday morning, gold was trading above $1,580...





As Peter Schiff put it in his latest podcast, the yellow metal is climbing a “wall of worry.”





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lockquote>

Clearly what we did heightens the risk in the Middle East and in particular with Iran...



The question is is the world a safer place? Is America in particular safer now that we took this guy out? And nobody knows the answer to that for sure, but the odds are probably not.”




Peter said that these things have a tendency to blow back with unintended consequences, just like everything the government does.




My initial feeling is because we took out this guy, the world is a little bit less safe than it was the other day. And the risk premiums have to go up, because the odds of some type of hot war in the Middle East go up.”




As with any conflict in the Middle East, this raises the possibility of a disruption to the oil supply. This is not good news for the US economy.




Sure, the US economy isn’t as vulnerable as it once was because we’re not importing as much as we used to. But consumers still have to buy oil. They still have to pay for things. Prices are already going up, and this is going to add upward pressure on already increasing prices, which is going to be a negative for people who have to buy energy, or buy things that are transported using energy, or things that are manufactured with energy. I mean, costs are going to be going up and this is a negative.”




Peter said this will also be a negative for the bond market. That raises the possibility that the Fed will try to offset those negative impacts by continuing quantitative easing to keep the inflation premium from pushing up long-term interest rates.





And of course, there is also a bigger safe-haven risk premium on the price of gold.




Gold isn’t just an inflation hedge. It is predominantly that. The main reason gold is going up is because of the Fed. But obviously, in a world where you have heightened geopolitical risk, which could adversely affect bond markets and stock markets, you would expect to see greater demand for gold as a hedge in your portfolio. And that’s why the price of gold was up better than $20 an ounce today (Friday).”




A Goldman Sachs note helped buoy gold saying bullion offers a more effective hedge than oil in this crisis.




History shows that under most outcomes gold will likely rally to well beyond current levels. That’s consistent with our previous research, which shows that being long gold is a better hedge to such geopolitical risks.”




A senior resource analyst at MineLife Pty in Sydney also talked up gold in an email to Bloomberg, saying, “gold has entered 2020 with strong momentum.”




When you factor in ongoing uncertainty with respect to US-China trade talks and heightened security issues with Iran, gold really is a no-brainer.”




Peter pointed out that gold was the number-one performing asset through the first two days into 2020. But interestingly, gold stocks were down Friday – even with a nearly $30 increase in the price of bullion.




We’ve had nothing but bullish news for gold stocks. We have a $30 move up in the price of gold. We have heightened geopolitical risk associated with gold. Yet the gold stocks have gone down. Why is that? Again, I think you’ve got a lot of fearful traders. There’s a wall of worry in this bull market. There’s a lot of skepticism in the gold rally, which I regard as being healthy. You don’t have a devil-may-care, throw caution to the wind type of attitude the way you have it in the S&P 500. People are nervous in the gold stock market.”




The last time we got to $1,550, gold had a pretty steep correction. Now we’re knocking on that door again and a lot of investors apparently think we’re not going to go all the way through. They anticipate a pull-back. Peter said, in effect, gold stocks are discounting the next pullback.




They’re assuming that the price of gold is going to sell off and so they are selling their gold stocks now in advance.”




Peter said that may well happen. There has always been strong resistance at $1,550. But he said even if we do, he doesn’t think it will be that drastic. And here’s something else you need to think about.




What if the gold speculators are wrong? What if we go through $1,550? What if there isn’t a pullback. What if the next pullback is from $1,600 or $1,650 back down to $1,550 or $1,575? What if there’s more to this gold rally than the gold traders believe? Well, if that is the case. If we end up with an up-move in gold next week, then we have a huge move for the gold stocks.”




And of course, the biggest factor pushing gold upward is the Fed. The central bank was the impetus behind the biggest increase in the price of gold since 2010 last year.



Peter wrapped up the podcast talking about the Federal Reserve and the minutes from the December FOMC meeting that came out Friday.




You can’t even understand the markets unless you understand the Fed.”





Tyler Durden

Tue, 01/07/2020 - 13:40


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Peter Schiff: The 20s Will Be An Explosive Decade For Gold

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Peter Schiff: The 20s Will Be An Explosive Decade For Gold

Via SchiffGold.com,



In 2019, gold had its best year since 2010. Peter Schiff appeared on the RT Dec. 31 and said he thinks the yellow metal should have done even better. And given the current economic conditions, he believes the 20’s will be an explosive decade for gold.




You know, the reason the US stock market went up this year is because the

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Fed surprised everybody by doing exactly what I had been predicting they would do. They aborted their feigned attempt to normalize their interest rates and shrink their balance sheet. They went back to rate cuts and quantitative easing. This is extremely bullish for gold.






Peter emphasized that gold should have been up a lot more in 2019, but he thinks it will catch up over the next several years — probably next year in particular.




Gold is going to be one of the best-performing assets classes, if not the best-performing asset class on the planet.”




Peter noted that gold made significant gains in 2019 despite a dollar that was relatively flat.




But the dollar is going to fall through the floor. That means gold prices are going to go through the roof.”




Peter said we are about to enter a new decade of stagflation  – low economic growth and increasing inflation. He said it’s going to be even worse than the stagflation we saw in the 1970s.




This is going to be more like an inflationary depression. So, this century, the depression is going to come a decade early. It’s not going to be the roaring 20s. It’s going to be a decade of inflationary depression in the United States.




As far as the trade deal goes, Peter said gold will go up no matter what the trade war sideshow yields. Regardless, the dollar is going to go down. That’s bullish not only for gold, but for commodities in general, including oil and agricultural products.



Peter emphasized that the Federal Reserve is going to ultimately take rates back to zero and increase the pace of quantitative easing. He pointed out that the unofficial QE the Fed launched last fall is already growing the Fed’s balance sheet faster than the official QE in the wake of the 2008 crash.




But all of this is going to shift into a much higher gear as this new decade plays out.”




As we move into 2020, Peter said economic growth will likely be slow and inflation will be higher than people believe.




The Fed’s not going to do anything about it. So, we’re going to have higher inflation. We’re going to have slower growth. I think we could see a push up in long-term interest rates as the dollar really starts to weaken. And that destroys the appetite for US dollar-denominated debt. So, if you have higher consumer prices and higher interest rates, that’s a negative for the economy. But it’s a positive for gold, because the Fed is going to try to rescue the economy by printing even more money, and all that’s going to do is stoke the inflationary fire. So, I think we’re going to see a big up move, not just in 2020, but probably for the remainder of this decade. You’re going to see the type of move we had in the first decade of this century. Remember, gold did really well from 2001 to 2010 timeframe. So, in the teens, gold really treaded water. This is going to be the next leg up and I think this is going to be an even more explosive decade for gold than the first decade of this century.”





Tyler Durden

Fri, 01/03/2020 - 11:54


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Peter Schiff: Powell Is Resurrecting The Inflation Monster That Volcker Slayed

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Peter Schiff: Powell Is Resurrecting The Inflation Monster That Volcker Slayed

Via SchiffGold.com,



Former Federal Reserve Chairman Paul Volcker passed away last week. Volker was appointed by President Jimmy Carter, but served most of his term under President Ronald Reagan. Volker was best-known for fighting inflation with interest rate hikes. At the peak, Volker pushed rates all the way to 20%.



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Peter talked about Volcker in a recent podcast, noting that he was credited with slaying the inflation monster that today’s Fed seems happy to resurrect.





Volcker took a lot of heat from officials in government for allowing rates to rise so high. Peter said that notably, Reagan was not critical of Volcker’s strategy.




Unlike Donald Trump, Ronald Reagan stood by Paul Volcker. He was his ally and he never criticized Volcker for high interest rates where everybody else was criticizing him, from Main Street, to Wall Street, to the Capitol, but Reagan stood by his Fed chairman.”




In hindsight, Volcker has a lot of respect. Peter said he was the last decent Fed chairman.




I wish he had been a little more critical of his predecessors, but there’s some kind of unwritten rule among Fed chairmen that you never speak ill about anybody who has the job after you. But I wish he had, because I’m sure he had some ill-will, he had some feelings that we were making mistakes, and he could have been more vocal in his criticism.”




Jerome Powell opened up his press conference at the conclusion of last week’s FOMC meeting with a tribute to Volcker. Powell talked about how the former Fed chair slew inflation. Peter called the tribute “ironic.”




As we are burying Paul Volcker, Powell is now helping to resurrect the high inflation. So, we’re bringing that back to life now that Paul Volcker has passed away. So, maybe he will rest in peace unless he’s going to end up rolling around in his grave based on all the inflation that is going to be ravaging the country.”




Peter noted that the post-FOMC press conference focused more on inflation than any other Powell has had. The Fed chair talked about low inflation, how we don’t have enough inflation and insisted we need more inflation.




Which of course is the opposite of what the Fed should be doing. The Fed should be saying, ‘We don’t have a lot of inflation. That’s great. And we’re going to make sure it stays that way.'”




After all, the Fed’s mandate is stable prices.



Ironically, we got the official CPI numbers before the Powell press conference and they were a bit higher than expected. Year-over-year, headline inflation is up 2.1%. And the core inflation number was up 2.3%.




So, we have inflation, both as measured by the core and the headline CPI that is running above the Fed’s 2% target.”




But as Peter noted, the Federal Reserve doesn’t really have a 2% target anymore. It has a “symmetrical” 2% target, which allows inflation to rise above 2%.




The Fed has already come out and said it wants to have higher inflation in the future to make up for not enough inflation in the past.”




During his press conference, Powell even talked about the “dangers” of inflation being too low. Keep in mind, whenever you hear somebody say inflation is too low, they are telling you your cost of living isn’t going up fast enough.




Then it really hits you – the absurdity of what they’re expecting you to swallow. But, of course, Wall Street swallows it … This stuff is a bunch of nonsense. People should see through this and start to question the irrationality of what the Fed is saying, to try to see through it to their real agenda, because the Federal Reserve knows inflation is bad. The Federal Reserve knows the cost of living going up is a bad thing.”




In truth, the last thing the Fed wants is higher inflation because the last thing it wants to do is actually fight inflation.



One reason the Fed has to keep pushing inflation up is to maintain inflation expectations. If the expectation of inflation falls, it will tend to naturally lower interest rates. So, why is that a bad thing? Because then the Fed won’t have “room” to cut if the economy goes south.




Think about the absurdity of that. I mean, we need higher interest rates now so that we can have lower interest rates in the future, but in the meantime, the Fed has been lowering rates. If the Fed wants higher interest rates, raise rates. What’s stopping them?




In truth, the only reason interest rates are as low as they are right now is because the Fed is artificially manipulating them. They should be a lot higher.




To say that we need extra inflation so that Americans can pay higher interest rates when they borrow money so the Fed can micromanage the economy in the event that we have a recession down the line, which of course we’re going to have. But of course, the Fed creates the recessions. It lights the fires that it then wants to take credit for putting out. But the whole idea makes no sense whatsoever.”




Powell also talked about why inflation isn’t going to rise above 2%, despite the strong economy, low unemployment and some wage growth. As Peter pointed out, these things don’t cause inflation. The Fed causes inflation by creating money out of thin air. The increase in the money supply is inflation. Rising prices are just a symptom. Peter said what’s really changed is the lag – the period of time between the creation of inflation and the increase in consumer prices. This has created a sense of complacency.



Powell has continued to say that the Fed will have to see a substantial increase in inflation before the central bank takes action and raises rates. There is no Volcker-like inflation fight in the cards. As Peter said in an interview on Fox Business, the Fed is willing to let the inflation genie out of the bottle. When that happens, it will be impossible to put it back in.



You fight inflation by raising rates. The bigger the inflation problem, the higher you have to raise rates. How can the Fed do that in this debt-riddled economy?




If they were to raise interest rates high enough to combat that kind of inflation, all hell would break loose. Everything would implode. It would make 2008, that financial crisis, look like nothing.”




Peter said he doesn’t think the Fed will really start fighting inflation until we have a dollar-crisis and the prospects of hyperinflation.



Simply put, Powell and Company are playing with fire. When you do that, you eventually get burned.




Tyler Durden

Tue, 12/17/2019 - 08:45


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Peter Schiff: This Is Going To End Very Poorly

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Peter Schiff: This Is Going To End Very Poorly

Via SchiffGold.com,



On Nov. 18, Peter Schiff appeared on RT Boom Bust to talk stock markets, trade war and Federal Reserve policy. He said that right now the Fed is doing a good job stimulating the bubbles, but ultimately, it’s going to end very poorly.



On the trade war front, there seems to be a lot of conflicting information and continual yo-yoing between pessimism and o

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ptimism. The Chinese seem less confident while White House economic advisor Larry Kudlow says a deal is close.



Peter said he thinks China is posturing for negotiations.






If you’re negotiating with somebody, you don’t want to admit that you’re close to a deal. You want to say that a deal is far away because that way you can try to extract more concessions from the other side and get a more favorable deal. So, I think when you hear the comments from China, that’s what the Chinese are trying to do.”




But Peter said he thinks President Trump has a different agenda.




I think Trump only cares about goosing the stock market. And he knows that every time he comes out and says that a deal is close, we have a deal, it’s going to be great, he gets another 100, 200 Dow points. That’s what he cares about. And so as long as the market is going to keep running every time he cries wolf, he’s going to keep crying wolf.”




Todd “Bubba” Horwitz was also on the show. He disagreed somewhat with Peter’s assessment. He said the reason the stock market continues to soar is because there’s no place else to go with your money today. Investors are chasing yield. He said the stock markets will come crashing down at some point, but nobody knows when. He also said Trump is right when he says the Fed could take rates even lower because interest rates in the US are higher than they are in Europe and Asia. He said we could borrow at a lot lower rate because we’re still “the best game in town.”



Peter said he disagreed with Horwitz completely and that there are lots of better places to put your money than the US stock markets.




I think the US stock market is dramatically overvalued. And the reason it is going up is because the Federal Reserve is creating money.”




Peter brought up the fact that the Fed has not only cut rates three times this year. It has also embarked on QE4. Investors expect QE4 to be like QE3, but there’s a big difference.




You see, when the Fed did QE3, investors were still foolish enough to believe that that was the last time they were going to do it. They actually bought the Fed when the Fed said they had an exit strategy, they were going to shrink their balance sheet; they were going to normalize interest rates. The markets were looking forward to that and they thought that what the Fed was doing was working. But it didn’t work. It was an abject failure. That’s why they’re doing it again. But soon the markets are going to discover that QE is permanent and that there’s never going to be a real reduction in the balance sheet. The balance sheet is going to grow into perpetuity and I think we’re going to have a dollar crisis. I think we’re going to have a sovereign debt crisis. I think this is going to end very poorly for people who have been enjoying the paper gains in this stock market bubble.




Peter said investors should get out of the US stock market before the bubble pops.




You mentioned precious metals. Gold is a much better place than the US stock market. I know that gold has been outperformed by the stock market over the last five, 10 years, but it hasn’t been outperforming gold since the beginning of the millennium. You know, gold is doing better than the Dow if you start in 2000. But I do think over the next five to 10 years, the price of gold is going to dramatically outperform the Dow.”




Peter also touched on the so-called independence of the Fed, saying the central bank has never been truly independent. It has always worked hand-in-glove with Congress and presidents, including President Trump. He said that’s why the Fed has been cutting rates and doing QE.




But it’s not stimulating the economy. It’s stimulating the bubble. That’s all that’s happening. And Donald Trump was correct when he attacked Janet Yellen for pursuing these tactics when Obama was president, and now … he’s criticizing Powell for not doing it enough. He wants negative rates. He wants even bigger QE. Because he doesn’t care about the US economy. All of this is counterproductive if you care about the US economy. All he wants is to make the numbers look better. He wants to get the stock market so he can claim that that proves that he has a successful presidency.”




*  *  *



The case for gold is strong. For more detailed analysis, download the SchiffGold report “Why Buy Gold Now” here.




Tyler Durden

Thu, 11/21/2019 - 08:12


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"The Bubble's Already Popped": Peter Schiff Warns "Ignore What The Fed Says, Look At What They Do"

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"The Bubble's Already Popped": Peter Schiff Warns "Ignore What The Fed Says, Look At What They Do"

Authored by Mac Slavo via SHTFplan.com,



Financial expert Peter Schiff says that people should ditch the dollar. And not just the dollar; all fiat currencies.  Instead, he says people should be buying gold, a “real safe haven” asset.





The real driver behind the rise of gold prices is the

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world’s central banks’ buying spree, says Peter Schiff of Euro Pacific Capital.




“All of this is very bullish for gold and so rather than simply selling bonds people should be buying gold because they need to get out of the dollar,” says Schiff. 



“In fact, they need to get out of the fiat currencies in general and seek a real safe haven – and that’s gold,” he adds.




Back at the end of October, Schiff has also said that the stock market bubble had already popped, according to RT. (fwd to 18:20)





The Federal Reserve planned to inject $60 billion per month into the U.S. economy which is showing signs of a slowdown.






“Just ignore what they say and look at what they do,” Peter Schiff of Euro Pacific Capital tells Boom Bust. 



“They are trying desperately to keep the air from coming out of this bubble but it’s not going to work,” he said, explaining that “The bubble has already popped.”






According to Schiff,




 “the only question is how fast is that air going to come out and when the market is going to figure out that the game is over, understand what the Fed has been doing, and the true nature of this bubble economy…”




What Could Pop The Everything Bubble?



Schiff also added that the most recent interest rate cut is a “desperate attempt to keep the air from coming out of the bubble, to maintain false consumer confidence.” Consumers are confident the economy is a disaster, he says, adding that they don’t have any money, they have lousy jobs, no savings, and are loaded down with debt.




“But, as long as they keep on borrowing money to buy stuff that they can’t afford with money they don’t have, for some reason they remain optimistic…” The Fed plays into this, Schiff says.





Tyler Durden

Sat, 11/16/2019 - 09:20


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New York Rep. Peter King Becomes 20th House Republican To Announce Retirement Plans

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New York Rep. Peter King Becomes 20th House Republican To Announce Retirement Plans

Long Island's Peter King has become the 20th House Republican to announce that he will not seek reelection in 2020.



King, a former chairman of the House Committee on Homeland Security, made the announce in a post on his Facebook page. In his post, the 14-term Congressman said he's tired of spending 4 days a week in Washington, and would like to spend more time at

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home in Seaford.






"This was not an easy decision," King added. "But there is a season for everything and Rosemary and I decided that, especially since we are both in good health, it is time to have the flexibility to spend more time with our children and grandchildren," he added. He added that his daughter's recent move to North Carolina "certainly accelerated my thinking."



King, who represents New York's 2nd district, serves on the House Homeland Security and Financial Services committees and was chairman of Homeland Security in 2005-2006 and again in 2011-2012. His district encompasses a swath of southern Long Island.



The wave of retirements is creating serious problems for GOP leaders, and suggests that the Republican leadership sees little hope of winning back the House in 2020.



According to the Hill, while most of the retirements involve candidates in 'safe' Republican districts, a handful, including King, occupy seats that are considered competitive. King's retirement isn't exactly a surprise: His name was put on a Democratic watchlist of potential retirements earlier this year.




Tyler Durden

Mon, 11/11/2019 - 07:00


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Peter Schiff: When Is The Market Going To Wake Up To This Con?

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Peter Schiff: When Is The Market Going To Wake Up To This Con?

Via SchiffGold.com,



As expected, the Federal Reserve cut interest rates another 25 basis points on Wednesday.



The mainstream read the post FOMC meeting comments to be relatively hawkish, saying Powell and Company seemed to indicate that future rate cutting is on pause.



Peter Schiff opened up his podcast reminding us that just one y

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ear ago, the Fed was raising rates and telling us it would continue to do so through 2019. It also claimed that quantitative tightening was on “autopilot.”




And they said this with a straight face. And everybody believed them.”






At the time, Peter was saying it wasn’t going to happen. He said the central bank would start cutting rates and relaunch QE. And here we are.



The central bank removed the phrase saying it was committed to “act as appropriate to sustain the expansion” from its forward guidance. This was widely viewed as a more hawkish stance. The Fed replaced that language, instead saying, “The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.” Powell was more emphatic during his press conference, saying bank officials “see the current stance of monetary policy as likely to remain appropriate.”



Of course, Powell again claimed that the Fed is not engaged in quantitative easing despite the repo operations and bond-buying program. He tried to draw a distinction between QE and today’s operations by pointing out that the central bank is buying short-term bonds today while it bought longer-term debt during QE.




This is really a distinction without a difference. I mean, who cares what the maturity of the bonds are?”




If the Fed was going to simply let the bonds fall off the books once they matured, the length of the term might be relevant. But Peter said that’s not what’s going to happen.




They’re just going to keep rolling these bonds over … This is another source of financing, of the Fed financing government debt. That’s quantitative easing. I mean, why did the Federal Reserve do QE in the first place? To keep interest rates lower than they would have been had they not done quantitative easing. And, by extension, to prop up asset prices.”




And why is the Fed doing what it’s doing today?




For the exact same reason. To keep interest rates artificially low, to suppress the cost of borrowing, to help out all debtors so they can make payments on their debt and to keep the stock market elevated, to keep real estate prices elevated.”




We also got the GDP numbers on Wednesday. Growth came in at 1.9%. That was better than expected. But a big chunk of that growth was consumer spending and a revived housing market. This was a function of Fed policy.




The Federal Reserve is basically doing now what it was doing then, for the same reason it was doing it then, except it doesn’t want to admit. Powell doesn’t want to say that the Fed is doing quantitative easing. The main reason is he doesn’t want to admit the economy needs it.




In fact, Powell keeps saying the economy is good.




Well, if everything is good, why do we need the emergency monetary policy when everything wasn’t good? When we were trying to get the economy out of a bad place, we did QE. And if it’s now in a good place, why are we doing it again? So, that’s why he wants to deny he’s doing it.”




When asked, Powell did admit that the current monetary policy is “accommodative.” Peter said it may even be more accommodative than it was when rates were at zero because inflation is higher. In fact. Powell admitted core CPI is finally above 2%. So, if inflation, even as the government measure it is above 2% and the Fed just dropped rates to 1.5%, we’re talking about negative real interest rates.




That is highly accommodative. I mean, why would the Fed be accommodating the strongest economy in the history of our country? Clearly, the reason Powell thinks we need so much support from the Fed is because he knows the economy is weak, that without the Fed’s help, it would implode. A strong economy doesn’t need the help of the Fed.”




Peter also talked about the fact that the Fed basically admitted that inflation is going to go a whole lot higher. Powell said the Fed would need to see a “really significant” and persistent move up in inflation before considering rate hikes. Basically, Powell conceded that the Fed wasn’t going to be vigilant about inflation. It is willing to let the genie out of the bottle. The question then becomes, how will it ever get the inflation genie back in the bottle? In short, it won’t. Think about what it took for Paul Volker to put the inflation genie back in the bottle in the 1980s. We saw 20% interest rates. Can you imagine that in this debt-riddled, overleveraged economy?




The only key is when is the market going to wake up to this game, this con. When are they going to realize the box the Fed has put itself in? That it is completely impotent when it comes to inflation-fighting? That it is all bark and no bite, and it basically, it’s not even barking yet? It’s only talking about the prospect of barking in the future, but it will never bite. And when the markets figure this out, the bottom is going to drop out of the dollar. Gold is going to absolutely go through the roof.”





Tyler Durden

Fri, 11/01/2019 - 16:25


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Peter Schiff: QE Is A Monetary Roach Motel

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Peter Schiff: QE Is A Monetary Roach Motel

Authored by Peter Schiff via SchiffGold.com,



This Is Not a Printing Press! (Or Is It?)

Rene Magritte’s 1929 painting “The Treachery of Images,” depicts a tobacco pipe with a caption that reads “Ceci n’est pas une pipe,” (French for “This is not a pipe”). Everyone who has taken a course in modern art knows that Magritte’s exercise in contradiction was meant to draw a di

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stinction between a real thing and a representation of that thing.





Perhaps we should send Federal Reserve Chairman Jerome Powell a beret and an easel as he is attempting a similarly surrealistic take on monetary policy.



On Oct. 8, the chairman announced a new, as yet unnamed, Fed program through which the bank will now buy regular amounts of short-term U.S. government debt. Seeking to counter the rumblings that a new form of quantitative easing would be seen as an admission that the economy may be in trouble, Chairman Powell asserted during the annual meeting of NABE on October 8, “This is not QE. In no sense is this QE.”



In other words, “Ceci n’est pas QE.”





The New York Fed put some meat on the bone by detailing that the program will buy $60 billion per month of Treasury Bills, at least through the second quarter of next year. (R. Miller & C. Condon, Bloomberg) In addition, at least through January 2020, the Fed will continue with $75 billion in overnight repurchases and $35 billion in term repurchases twice per week. (N. Timiraos & P. Kiernan, Dow Jones Newswire) As a result, it is estimated that the Fed’s balance sheet will reach roughly $4.2-$4.3 trillion sometime in Q2 2020. Of course, since the actual size of the purchases required to keep interest rates from rising could be much larger, the Fed’s balance sheet could be significantly larger as well.



The Fed even put out a Frequently Asked Questions page last week that among other things highlighted how the current moves differ from the original version of QE in 2008. It stresses that whereas the old version of QE was designed to spur economic growth in a sluggish economy, the current moves are simply designed to patch leaky financial pipes that are very much removed from the real economy. A statement on the FAQ page reads, “These operations have no material implications for the stance of monetary policy,” and should not have “any meaningful effects” on household and business spending or the overall level of economic activity. Instead, the Fed just wants to make sure there is enough cash sloshing around the system — because lately there hasn’t been.



But as the reliable American folk wisdom states: if something “looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.” In this case, Powell can call the new Fed program anything he wants, but it certainly quacks like QE.



As it was originally defined just a few short years ago, QE was the attempt by central banks to buy and hold government debt in an effort to pull down interest rates and inject liquidity into stressed financial markets. Okay, check and check. The only difference between then and now is that in 2008-2014 the Fed targeted the longer-dated end of the bond market, and this time it is targeting the shorter end…at least for now. But bond maturity length never figured much into the definition anyway, so that doesn’t really seem to matter.



Another distinction that Powell makes is that the current program is more modest in scope than the full-blown QE programs of 2009-2014, which added more than $4 trillion to the Fed’s balance sheet, according to data from the St. Louis Fed, (the vast majority of which it still holds to this day). And while it’s true that the $180 billion or so that the Fed has pumped into the markets over the last month is just a spit in the bucket compared to what it had amassed in the early part of this decade, please remember that the Fed has just started…give it time! $180 billion in one month is actually a much faster pace than what was seen at the height of the QE era (which topped out at $85 billion per month).



Should anyone really expect that the new program will end in the middle of next year as the Fed now suggests? It has never fully ended any of its prior stimulus plans, why would this one be any different? In fact, thanks to the Fed, the U.S. economy will be even more heavily indebted in eight months than it is now. So the Fed will be forced to buy even more debt to keep interest rates from rising in an economy even more vulnerable to higher rates than it is today. Like any drug habit, the more drugs you consume today, the more you will have to consume tomorrow to achieve the desired effect.



If we can agree that it makes no difference what we call the program, it is nevertheless important to focus on the differences between QE then and QE now. Back in 2009, the program was all about reliquifying the long bond market that had been decimated by billions of dollars of worthless subprime bonds. But a decade later, the home mortgage market is relatively calm, at least for now. Long-term interest rates are already rock bottom, and mortgage delinquencies are not currently causing panic in the banking system. Today, problems are popping up in a very different place, the very short-end of the bond market, particularly in the overnight “repos” where banks lend spare cash to one another on a very short-term basis.



As it turns out, the Fed’s $50 billion per month of bond sales, which began early in 2018 and ended in the second quarter of this year, drained liquidity from the overnight market at the same time increased government borrowing was sucking up all available cash. Last year’s tax cuts, combined with increased Federal spending, pushed this year’s deficit past $1 trillion for the first time since 2012. (G. Heeb, Markets Insider, 9/14/19) Deficits are currently expected to stay north of $1 trillion per year for the foreseeable future. That means more new government bonds than expected are likely to hit the market.



Contrary to his campaign promise, President Trump has actually shortened the maturity of the national debt. (US Govt. Finance: Debt, Yardeni Research, Inc., 10/10/19) Shorter maturities mean that more debt will need to be refinanced each month. Banks have dutifully bought those bonds, as they are often required to do by capitalization laws that were put in place since the Crisis of 2008. But this has not left enough cash to keep the overnight market well-lubricated.



This problem erupted into broad daylight just a few weeks ago, when yields on overnight bonds skyrocketed to 10% or more. Rates that high in an overlooked, but vital, part of the financial system could have caused the economy to seize up, so the Fed intervened with all guns blazing. It bought approximately $53 billion of overnight loans in just the first day of the crisis.



At that point, most market observers believed that the problem was caused by a confluence of temporary events that would last just one day, or maybe a week. But those hopes quickly faded, and we have been left with a crisis that now appears permanent. In light of this, it is not surprising that the Fed expanded its intervention into the short-end of the Treasury market. But don’t expect the problems to end there. The debt crisis is like a cancer that I believe will continue to spread. The Fed is out of miracle cures. In fact, it never had any.





This all reminds me of when Fed Chairman Ben Bernanke first introduced the QE program in 2009, stressing that that it did not constitute “debt monetization” (the situation where a government buys its own debt) because QE was “temporary” and the bonds that the Fed was buying in an emergency would be sold back to the market once the crisis abated. (Testimony before U.S. House Budget Committee, 6/3/09) At the time, I predicted, when virtually no one else on Wall Street did, that the Fed would never be able to sell those assets back into the market. It turns out, the Fed was only able to sell less than 25% of what it had bought before it encountered a crisis that forced it to scrap the whole process.



As I have said many, many times, quantitative easing is a monetary Roach Motel: Once central bankers check-in, they can never check out. For now, Chairman Powell is occupying a different room in this particular motel than had his predecessors. But rest assured, not only will he occupy that room, but I expect he will also be expanding into many more. None of the rooms will have a good view and all will have dirty linen.



The real question is when investors will get wind of the stench? The Fed has been successful in fooling the markets regarding the temporary nature of zero-percent interest rates, the efficacy of QE, and its ability to normalize rates and shrink its balance sheet. Had the markets not been fooled, the program would have produced a much different result. Its “success” was purely a function of the belief that the policy was temporary and reversible. The realization that it is neither could cause a flight from the dollar and Treasuries that could usher in a financial crisis far worse than what was experienced in 2008.




Tyler Durden

Tue, 10/22/2019 - 13:06


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Peter Schiff: The Party Is Over

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Peter Schiff: The Party Is Over

Via SchiffGold.com,



As Peter Schiff put it in his podcast, if the first trading day of the fourth quarter was a sign of things to come, bulls on Wall Street are in for a rough end to the year. In fact, Peter said the party is over and you don’t want to be the last one to leave.





The Dow was down 343.7 points and the Nasdaq shed 90 on a day that started

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out all sunshine and roses.




For a couple of days, the economic news wasn’t quite as bad as it could have been, or maybe some of the numbers actually were a little better or beat the numbers, and I think there was some idea that, hey, maybe the economy is not as bad as some people had feared, but then reality reared its ugly head at 10 a.m. when we got the ISM Manufacturing numbers.”




US manufacturing dove to a 10-year low. The ISM index of national factory activity dropped 1.3 points to 47.8 in September. That was the lowest number since June 2009 – as the US economy was emerging from the Great Recession. A reading below 50 signals manufacturing is contracting. The weak September number follows on the heels of a 49.1 print in August. Analysts had expected a bounce-back to 50.




Yet Donald Trump wants us to believe we have the greatest economy ever. How do we have the greatest economy ever when we have one of the worst manufacturing economies ever? Especially when it was manufacturing that was supposed to ‘Make America Great Again.'”




Instead, we’re back where we were during the Great Recession. Peter said the only thing this economy really has going for it is massive deficit spending.




What is driving US GDP is consumers spending borrowed money and the government spending borrowed money. That’s it. That’s the secret. Have a borrowing binge and spend a bunch of money to try to artificially boost GDP while the actual economy — the real economy — is imploding.




Most mainstream analysts blame the bad manufacturing number on the trade war. Peter said he thinks we’d probably have weak manufacturing without the trade war. In fact, the notion that the trade war could end soon may be causing a false sense of optimism. Peter said it may be a “buy the rumor, sell the fact” scenario if there is a resolution to the trade war and people realize it’s not a big deal.




Once we have a deal, the markets will have nothing to look forward to. I mean, what do they got? QE is already restarted. The Fed is already cutting rates. I mean, what is going to help this market? The only thing that’s out there that can help it is a trade deal. So, once we have a trade deal there is nothing that can help the market and the market’s going to go down.”




Peter said the real drag on the market is the collapse of the money-losing stocks. He’s talking about all these overvalued IPOs for money-losing companies. This is where you saw all of the speculative money. He called these companies, like Chewy, Uber and WeWork the poster-boys of this bubble. These stocks are the weak links in the chain. The weak links break first and the rest of the chain follows.




If investors are no longer willing to finance money-losing companies, if that type of speculative fervor has come to an end, this is a huge bell ringing on Wall Street, and it has massive implications, not only for the stock market, but for the overall economy.”




In a nutshell, these companies never bothered with making a profit. They were focused on the IPO. The strategy was to cash out on the backs of stock market investors who didn’t care whether or not the company was making money. They sacrificed profitability to deliver value to the customer in order to create a “sexy” story.




This was a great party while the party lasted but the party is now over.”






Where did all of this malinvestment come from?




Artificially low interest rates, cheap money sloshing around causing non-economically viable businesses to exist and to thrive.”




As Peter said, at some point, you have to pay the piper.




Tyler Durden

Thu, 10/03/2019 - 08:10


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Peter Schiff: We Have Global Currency Weakness; They're All Losing Value Against Gold

zerohedge News peter schiff have global currency weakness theyre losing value against gold All https://www.zerohedge.com   Discuss    Share

Via SchiffGold.com,



Several currencies have been strong against the dollar over the last couple of days, but as Peter Schiff said in his podcast, the biggest gainer wasn’t a currency at all. It was real money – gold.





Source: Bloomberg



Gold hit six-year highs on Monday and set records in a number of currencies. It continued to move upward the rest of the week, pushing above $1,500.




Any talk you hear in the media about the strong dollar simply by meas

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uring it against some currencies... You don’t have a strong dollar when the price of gold is rising the way it is. We have a weak dollar. It’s just that we also have a weak yuan and we have a weak euro and we have a weak yen, because all these currencies are falling against gold.”




Peter noted the all-time record highs for gold in countries like Australia and Canada – countries that mine a lot of gold.




It’s only a question of time now, and I don’t think it’s going to be that much time, before gold starts making an all-time record high in terms of US dollars as well, because we are now in a period of global currency weakness. All currencies are losing value when priced in gold.”






Source: Bloomberg



Peter said that currencies sink at different levels and currently the dollar is sinking more slowly than a lot of other currencies.




But it’s about to pick up the pace. The dollar is going to be sinking faster as the economic reality sets in.”




There has been a lot of concern about the drop in the yuan against the dollar. Peter said the real problem isn’t that the Chinese yuan is dropping. The problem is going to come when the Chinese currency begins to rise. And Peter said it’s going to rise a lot.





And he said the recent fall in the yuan wasn’t because the Chinese are manipulating their currency. It fell do to market forces. Most investors believe the trade war is going to hurt the Chinese economy and they are selling off the yuan. Trump is upset that the Chinese government did not intervene — that they actually refrained from manipulating the yuan higher than the market wanted to set it.



Peter said he does think the Chinese have manipulated their currency in the past, but said they aren’t really doing that anymore.




Which means the currency is going to appreciate when market forces start to move it in that direction.”




Peter went on to reiterate that the Fed is going to keep cutting rates, noting that Goldman Sachs has projected 75 basis points in cuts by the end of the year.




They’re looking for 75 basis points. We’re going to get 200 basis points. And the reason it’s 200 is because that’s how many we got. Because once they cut 200, now we’re at zero. And the fact of the matter is 200 basis points is not a lot of cutting when you’ve got a bubble this big, and when you’re going to try to reflate an even bigger bubble, you’re going to have to have a lot more ammunition than that, which is why the Fed is going to be going back to quantitative easing. But even that is not going to be enough because it’s going to produce an overdose.”




Also in this podcast, Peter analyzes the bear market rally in the US stock markets and makes the case that the US economy was stronger before we had a bunch of economic advisors – highlighting some of the absurdity coming from Larry Kudlow.


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