Saturday, September 12, 2015

The Last Thing That Fed Wants is a Rate Hike

Tuesday, September 8, 2015

US Dollar Bubble Is Going to Burst

The U.S. economy has plenty of problems, but China’s devaluation of its currency isn’t one of them, Peter Schiff, CEO of Euro Pacific Capital, told Newsmax TV.

However, the impending collapse of the US dollar should be getting all of the attention of investors, he warned Newsmax Prime.

China rattled global financial markets Tuesday by devaluing its currency — an effort, in part, to revive economic growth. The yuan's value declined 1.9 percent, its biggest one-day drop in a decade. The move could help Chinese companies by making their products less expensive in global markets. U.S. stocks plummeted, partly on fears about a worsening economic slowdown in China.

China doesn't let its currency trade freely in financial markets as the United States does. Instead, it links the yuan's value to the U.S. dollar. Then it restricts trading to a band 2 percent above or below a daily target set by the People's Bank of China. On Tuesday, the central bank set the target 1.9 percent below Monday's level — the biggest one-day change in a decade. It also made a technical change to give market forces more influence in determining the yuan's value: Its daily target will now be based on the previous day's closing value.

But Schiff said investors should be worried about the U.S., not China.

“China's economy is not failing and this is a small devaluation, 2 percent. The Chinese currency has increased in value dramatically over the past several years along with the US dollar. So this move was motivated not by the exchange rate between the yuan and the dollar, but between the yuan and all the other currencies because the dollars is in a bubble right now,” he said.

“The dollar is very over valued … and the dollar is a bubble,” he told Newsmax Prime. “This dollar bubble is going to burst,” he said.

“Our economy is in much worse shape than the Chinese economy. The Fed is going to be forced to admit this. They're not going to be raising interest rates, they're going to be doing QE4," he said, referring to a fourth round of quantitative easing.

"That's going to sink the dollar and then the Chinese are going to have to revalue their currency much higher in the future against the dollar and it's the dollar collapsing that's going to hurt the US. Not this recent move by China,” he said.

Schiff said the dollar has been propped up based on hope, based on hype, based on speculation.

“We have an enormous trade deficit with China. Obviously the Chinese economy is better than ours. They produce all the things that we can't produce. All the goods that Americans want to consume, they're made in China. We don't make anything the Chinese want to consume,” he said..

“Their economy is far more powerful, far more dynamic than the American economy. That's why we have these big deficits. But people believe in the myth of this US economy, they believe that this bubble is genuine, they made the same mistake in the late 1990s, they made the same mistake right before the financial crisis of 2008. They're making a mistake again,” he said.

"We're on the verge of a much worse financial crisis than the one we went through in 2008 and it's going to take the form of a currency crisis. You're talking about currency wars. American is going to win the currency war, which is a race to the bottom, and you don't want to win a currency war because a currency war is different from most wars in that the object is to kill yourself and unfortunately, we're going to succeed.”

- Source, NewsMax

Monday, August 31, 2015

Peter Schiff on the Fed, Rand Paul, and the Next Financial Crisis

"The bubbles are pretty much everywhere," says investment guru and radio host Peter Schiff, CEO of Euro Pacific Capital. "They are in the stock market, they are in the bond market, they are in the real estate market, they are in the U.S. dollar."

Schiff sat down with Reason's Matt Welch while at FreedomFest 2015 to discuss the dollar, his support of Rand Paul, and his argument that we are already living in another stock bubble.

"The mainstream—the investors, the government, central banks—they never see a crisis until after the fact. And then they go back and they say, 'Well nobody could have possibly predicted this. This was a complete random occurrence that had nothing to do with our policy,'" says Schiff. "They never understood the cause of the bubble that burst in '08. They didn't understand the Fed's role in creating it, so they don't understand that the Fed is simply exacerbating all the problems that everybody believes they solved."

Tuesday, August 25, 2015

Peter Schiff: We Are All Slaves

Alex Jones talks with Peter Schiff about the Civil War and they break down how what really came out of it wasn't the liberation of the slaves, but the turning all of America into one big federal plantation.

Friday, August 21, 2015

Why The US Dollar Will Collapse

Is the United States economy recovering - or are we being lied to by the mainstream establishment? Why has Gold recently hit a five year low despite long term predictions of it's rise in value? Are the government statistics on inflation accurate? What does the future hold for the US Dollar? Why has the Dollar strengthened and how will this play out in the long term? What does Peter Schiff think about Donald Trump and his recent success in the Republican presidential primary?

Also Includes: China economic situation, the Shanghai Stock Exchange Composite Index collapse, Puerto Rico debt default, gold repatriation, physical vs. paper gold holdings, the student debt bubble, the new real estate bubble, more quantitative easing, interest rates and what happens if you raise the minimum wage to $70,000 per year.

Tuesday, August 18, 2015

The US Economy is Doomed

While the Fed has discussed plans to raise interest rates this year as early as September, Schiff believes that the Fed will instead implement another round of quantitative easing.

"They are going to do QE4, they're going to do QE5, they're going to do QE's indefinitely until a currency crisis ends the party and they can't do it anymore. And that crisis is going to come," Schiff said. "That is what the drug addicts on Wall Street want. They want another fix, and I think the pushers are going to provide it, unfortunately."

To be sure, Schiff has made several other bold predictions, some of which, like his accurate call on the housing crisis in 2007, have come true. Others, like his claim that gold would go to $5,000, have not.

Still, Schiff remains resolute that the dollar will soon see its day of reckoning.

"You have all these currency speculators that have been fooled by the Fed's monetary magic," Schiff said. "[They] are betting the wrong way, and when they figure it out I think the bottom is going to drop out of the dollar."

By Schiff's reasoning, the U.S. economy is doomed.

"This economy will be in recession if the Fed raises rates, and it'll be in recession even if they don't raise rates," he said.

 - Source, CNBC

Friday, August 14, 2015

Peter Schiff: America is On a Race to the Bottom

With Tuesday's stunning announcement that the People's Bank of China would devalue the Chinese yuan about 2 percent against the U.S. dollar, China became the latest nation to join the global currency war. But according to outspoken market pundit Peter Schiff, China's too late, because the U.S. already has the inside track in the battle to debase its currency.

"America is going to win the currency war," Schiff said Tuesday on CNBC's "Futures Now." "I think we're going to win, but right now you have a dollar bubble."

The dollar bubble claims fly in the face of how the U.S. common currency has performed this year. The dollar index is up more than 7 percent year to date.

But according to the Euro Pacific Capital CEO, the Federal Reserve will hold off on raising rates as long as possible, and over time, that will cause the dollar to collapse...

- Source CNBC

Sunday, August 2, 2015

The Fed Considers a More Seasoned Approach

By: Peter Schiff

Just as the steady torrent of awful economic data, which began in the First Quarter and continued well into April and May, had forced many market analysts to grudgingly concede that 2015 would not see the robust economic growth that most had expected, the statisticians arrived on the scene like a cavalry charge and routed the forces of pessimism with a wave of their spreadsheets.

The campaign began in late April with some seemingly groundbreaking analysis by CNBC's Steve Liesman showing that over a 30 year time frame GDP data had consistently measured first quarter growth at 1.87%, which was far lower than the 2.7% rate averaged in the following three quarters of the year. He pointed out that the trend had gotten even more pronounced since 2010, when first quarter growth averaged just .62% and the remaining three quarters averaged 2.3%. The disparity caused Liesman, and others, to question whether first quarter data should be regarded as reliable.

The problem hinges on the efficacy of the "seasonal' adjustments that are baked into the GDP methodology. These filters are designed to smooth out the changes in spending, production, and consumption that occur over the course of the year. After all, business and consumers behave differently in December than they do in July.

When Liesman pressed the Bureau of Economic Analysis (the government entity that supplies the data) to explain his findings, the agency responded "BEA is currently examining possible residual seasonality in several series, which may lead to improvements in...the regular annual revision to GDP." We should understand "improvements" to mean changes that make first quarter GDP higher. A few weeks later the BEA provided some specifics saying methods for counting government defense spending and "certain inventory investment series" could be improved to help address the distortion. It promised to correct these deficiencies by July 30. It promised to correct these deficiencies by July 30. But to make sure that everyone understood that the help was definitely on the way, the BEA issued a blog post on May 22 in which it specified a number of areas in which it will eliminate what it calls "residual seasonality." This term should be accurately defined as "areas that we think should be higher."

As if on cue, the Federal Reserve itself waded into the debate with its own new study (released by the San Francisco Fed - Janet Yellen's former stomping grounds) that seemed to confirm and expand on Liesman's analysis and the BEA's concessions (makes one wonder if these campaigns are coordinated). Fed economists took a hard look at the disappointing .2% annualized first quarter 2015 growth, and determined that the seasonal adjustments that have been in use for years were insufficient to fully reveal the true health of the economy. When the San Francisco Fed added a second level of seasonal adjustments, it determined that Q1 growth should have been measured at 1.8% annualized. While that growth rate would not be considered strong, it is much closer to the 2.7%-3.0% that most forecasters had predicted at the end of 2014. No matter that the Atlanta Fed's "GDP Now," which was designed to be a more objective and contemporaneous measurement tool, was confirming near zero growth in Q1, many economists and media outlets jumped on the Fed study as proof positive that the economy is stronger than the pessimists portray.

In reality, few people actually understand how the complex and opaque seasonal adjustments really work (I know I don't). Fewer still have the patience to wade through the formulas to determine inefficiencies and potential remedies. This provides the statisticians with a good deal of convenient refuge against critics. But it's important to realize that unlike straight GDP measurement, which is ideally a strict accounting of spending, these adjustments can introduce an element of subjective institutional bias.

Government entities (and to a lesser extent media outlets) have many reasons to suggest that the economy is better than it really is. The Fed wants us to believe that its policies are effective; the Federal government wants us to believe that the economy is healthy, and financial media outlets depend on confident investors. I'm not saying that these biases are insidious or conspiratorial, but it does produce an environment where there is more emphasis placed on finding reasons to explain why GDP measurements are low, than there is to find reasons why it is too high. The subjectivity of the seasonal adjustments gives these biases room to run.

People understand that holiday spending juices GDP at the end of the year, and that post-holiday depletion and cold winters cause consumers to retrench. This causes them to try to compensate for the weakness in the first quarter. But there is no pressure for them to find reasons that GDP may be too high in December and May (when Christmas lists and pleasant weather should be encouraging shopping).

Given that, why do we really need seasonal adjustments in the first place? Yes December is different from July, but those differences persist every year. If we are looking at full year GDP, which is the measure that everyone is really after, why not keep a cumulative tally that we compare to prior years rather than prior quarters? Wouldn't this strip out a needless and opaque system of adjustments from a measurement system that is already overly complex to begin with? I believe the truth is the system is getting more complex because we want it that way. We prefer the ability to manipulate figures rather than allowing the figures to tell us things that we don't want to hear.

The real disconnect lies in the failure of the economy to grow, as most people assumed that it would, after the Fed's quantitative easing and zero interest rates had supposedly worked their magic. But as I have said many times before, these policies act more as economic depressants than they do as stimulants. As long as these monetary policies persist, our economy will never return to the growth rates that would be considered healthy.

In any event, many market watchers are grabbing at the San Francisco Fed report to conclude that Janet Yellen will raise rates this year, despite the weakness that the unadjusted GDP reports indicate. Such a conclusion is premature. I believe that the Fed wants us to think that the economy is strong, in the hopes that perception may one day soon become reality. If people think the economy is strong their optimism could influence their spending, hiring, and investing decision. As a result, optimistic Fed pronouncements should be considered just another policy tool; call it "open mouth operations." But I do not believe the Fed has any actual intention of delivering the rate increases that it may expect will damage our already weak economy.

- Source, Euro Pac

Friday, July 31, 2015

Peter Schiff Warns This May Be The First Bubble To Burst Without A Pin

It is well known that I don’t think much of the ability of government officials to correctly forecast much of anything. Alan Greenspan and Ben Bernanke have made famously clueless predictions with respect to stock and housing bubbles, and rank and file Fed economists have consistently overestimated the strength of the economy ever since their forecasts became public in 2008 (see my previous article on the subject). But there is one former Fed and White House economist who has a slightly better track record…which is really not saying much. Over his public and private career, former Fed Governor and Bush-era White House Chief Economist Larry Lindsey actually got a few things right.

Back in the late 1990s, Lindsey was one of the few Fed governors to warn about a pending stock bubble, and to suggest that forecasts for future growth in corporate earnings were wildly optimistic. He also famously predicted that the cost of the 2003 Iraq invasion would greatly exceed the $50 billion promised by then Secretary of Defense Donald Rumsfeld, a dissent that ultimately cost him his White House position. (But even Lindsey’s $100-$200 billion forecast proved way too conservative – the final price of the invasion and occupation is expected to exceed $2 trillion).

- Source, Peter Schiff via ETF Daily

Tuesday, July 28, 2015

Why the Peter Schiff Gold Price Target Is $13,000

A typical Peter Schiff gold forecast points to mounting government debt and "money printing" as evidence that someday, the fiat money system will be upended. At that point, people will pour into gold to stave off the rapid deceleration of the U.S. dollar's value.

A skeptic's typical Peter Schiff gold rebuttal will consist of questioning why, after U.S. debt has reached $18.3 trillion and the U.S. Federal Reserve has pumped $2.4 trillion in the banking system through three rounds of quantitative easing, the dollar is still stronger than it's been in recent history.

Quantitative easing is the process by which the Fed buys bank assets and credits them with newly created reserves in an attempt to bring down interest rates. But QE by itself is not an inflationary policy.

The reason why inflation, or hyperinflation for that matter, hasn't happened yet is that the U.S. economy hasn't entirely shrugged off the effects of a so-called "balance sheet recession."

In a balance sheet recession, households and firms use extra money to pay down debt, as opposed to making purchases on consumer goods. The classic definition of inflation as "too many dollars chasing too few goods" breaks down when the economy is not "chasing goods." Instead it's redirecting that money to reduce debt.

When there simply isn't enough economic activity and consumer loan demand is stifled, no amount of quantitative easing or government spending is going to get money moving around in a way that stokes inflation/hyperinflation.

But, there is another more sinister force brewing beneath all these policies that can help explain why gold is a valuable portfolio builder…

- Source, Money Morning

Saturday, July 25, 2015

What to Take Away from This Bold Peter Schiff Gold Prediction

Recent Peter Schiff gold forecasts predict the metal's rapid rise to a five-figure price tag -$13,000 long term, according to his gold investing blog. Schiff says the gold-price driver will be a hyperinflationary episode brought on by easy money.

Peter Schiff gold price predictions like this are typically predicated on gloom-and-doom forecasts of a dollar collapse and a financial meltdown.

This take on gold investing tends to attract skeptics. The gold skeptics are so dead-set on discrediting this caricature of gold investing – brought on by the Peter Schiff gold investing thesis – that they write gold off altogether as an asset for the paranoid investor.

This polarizes the investing world between gold bugs who think an economic collapse is imminent and gold bears who think the gold bugs are scare-mongering demagogues.

The truth about why gold matters lies somewhere in between.

You don't have to agree 100% with Peter Schiff gold predictions to appreciate the yellow metal's value. Regardless of which "side" you're on, gold is an important part of a portfolio.

- Source, Money Morning

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