Trump Puts QE4 in Play

Stock market in the U.S. continued to grind higher today, although I still believe that this is a bear market rally. The Dow added a little better than 40 points; the NASDAQ up about 47, so a bigger percentage gain there. 

The S&P was up about 13 points. This was following the release of the March Nonfarm Payrolls numbers - aka the Jobs Report. There was a lot of hope that we would see a rebound in the month of March. 

Remember, in February, they initially reported just 20,000 jobs created, which was well short of what had been expected. It was probably something close to 200,000 jobs. 

And the consensus for March was for 170,000 jobs and we actually got 196,000 jobs.

- Source, Peter Schiff

Rare WWII World War Steel Penny Old Coin Collection

Peter Schiff: Democracy has Failed, Not Capitalism

I agree that wealth inequality is a problem, but it is a problem that is created by government - created by the Federal Reserve. 

I was warning years ago, when the Federal Reserve first launched Quantitative Easing, that this was going to happen! 

This policy would only benefit assets at the expense of the overall economy. I've been warning about this for years. The government is doing this, not the market. 

So, yes, I want the government to do something about wealth inequality by getting out of the way. I want Capitalism to do something about inequality. 

Now, of course, there's always going to be inequality - that's part of capitalism. 

People are not going to be equal, because peoples' contributions are not equal. 

What is not normal right now is the extent of the disparity. That extreme inequality is not a function of Capitalism. If we enjoyed Capitalism, there would be less inequality.

- Source, Peter Schiff

Silver Dollar USA Old Original Pre 1921 Morgan Dollar

Peter Schiff: US Economy Not As Strong As Wall Street and the MSM Pretend

Economist Peter Schiff joins me to talk about assertions that he’s “bad for TV”, Jerome Powell’s recent rate capitulation, the state of the gold market, why he thinks the gold standard will eventually come back, why the dollar will collapse, the sorry ass state of the financial media, the Joe Rogan podcast and his take on Trump and the Russian collusion story.

- Source, Quoth the Raven

We're Not Borrowing Ourselves Rich, We're Borrowing Ourselves Broke

Peter Schiff has been saying that despite the recent stock market rally and all of the optimism about an end to the trade war, a recession is a done deal. There is plenty of economic data to back up despite the recent economic growth. In his most recent podcast, Peter Schiff said that while the GDP number might look pretty good, the growth is unsustainable because it's all built on debt.

Last week, we got the first look at Q4 GDP. It came in slightly stronger-than-expected with a rise of 2.6%, on an annual basis. That compares to trade expectations of a rise of around 2.2%. If that holds, total 2018 GDP may well come in at Trump's target of 3%. This would be the biggest GDP number since 2005.

But Peter put this into a little different perspective. Consider this: in 2005, the national debt increased by $554 billion. That borrowing "purchased" 3.5% economic growth. In fiscal 2018, the national debt increased by $1.27 trillion. That's more than double the debt increase of 2005.

So, we had to add a lot more debt in 2018 to buy not as much growth as a much smaller amount of debt in 2005. So, the takeaway from that is this is unsustainable because the growth came at a heavy cost. We had to increase the amount of debt that we had by a lot more than the percentage that the economy grew."

And of course, it's not just government debt. Household debt is also at record levels.

As Peter put it, "We're not richer because of this economic growth."

If your debt is growing faster than your economy, then you're not getting richer. You're getting poorer. You would have been better off without the debt and without the growth … We're borrowing ourselves into poverty. We're not borrowing ourselves rich. We're borrowing ourselves broke."

There's another problem with the growth in Q4 2018. It may well have come at the expense of growth in Q1 2019. Mike Maharrey talked about this in last week's Friday Gold Wrap podcast, noting that US wholesale inventories posted their largest gain in more than five years. Inventories are factored into GDP. That likely gave Q4 a boost. But a pileup of goods in warehouses means people aren't buying.

The consumer spending number for December released last week bears this out. It was down 0.5.

Meanwhile, personal income was up. This could mean Americans are saving. If so, it would be the first time that's happened at this level since the Great Recession.

Analysts are trying to figure out what the numbers mean. Peter had a pretty simple explanation. Americans have stopped spending because they're broke.

They've already borrowed so much money to pay for the spending of the past that they're just done. That expression, 'Shop 'till you drop,' well, maybe a lot of Americans have finally dropped and they're no longer shopping."

This could be a bad sign that Americans are at the end of their rope...

- Source, Seeking Alpha

Peter Schiff: Powell Puts It to Congress

This year Fed chairman Jerome Powell made his obligatory visit to Capital Hill, where he spoke to Senators and Representatives about monetary policy.

Of course, this really just amounts to a press conference for Democrats and Republicans to either talk up the economy or talk down the economy, depending on who's got the White House. 

Trump is the President, so you have a lot of Democrats trying to talk about why the economy is actually weak and trying to get the Fed Chairman to say something negative about the economy, or negative about President Trump. 

And, of course you have the Republicans trying to get Powell to validate how great the economy is, and how Trump's policies are helping the economy.

- Source, Peter Schiff