This article was originally published on The liberty Beacon. You can read the original article HERE
Fed Policy Is Backfiring — Peter Schiff
By Peter Schiff | SchiffGold
Earlier this week, Peter joined Mark Mitchell on his podcast for a conversation on economics and monetary policy. They dive into the economic challenges facing the United States, focusing on structural issues like inflation, debt, and currency devaluation. Peter draws attention to the overlooked surge in gold prices, contrasting it with Bitcoin’s media spotlight, and discusses unrealistic promises by politicians on both sides regarding tariffs, tax cuts, and economic growth.
To start, Peter and Mark point out the Fed’s plan to reduce long-term interest rates has backfired, leading said rates to rise even higher:
“I thought that the catalyst for the next move up in long-term rates would be the Fed reducing short-term rates. Part of the reason for this reduction in short-term rates was to try to bring down longer-term rates, particularly mortgage rates, because people are having a hard time paying these inflated home prices with normal mortgage rates. … But it backfired. As we’re talking this morning, the yield on a 10-year treasury is now at 4.3%, which is 60 basis points higher than it was when the Fed cut rates by 50 basis points.”
Even 4.3% isn’t high enough to flush out decades of malinvestment. Just like a fever burns out a virus, the economy needs high interest rates to properly allocate investment:
“Artificially low interest rates are part of the problem underlying the economy, and they are having very negative effects on the allocation of resources– malinvestments. This is doing damage. We’re not saving enough; we’re borrowing and spending too much. Part of the solution to fixing what’s broken in the economy is to let interest rates go up. They actually need to be higher than they are right now. But the problem is, we have so much debt that we can’t afford it.”
Recent jobs numbers are not optimistic, even though most government statistics probably understate the problems facing the economy. Peter explains that he looks at the year-over-year increase to the national debt, a metric he finds more reliable than headline statistics:
“The CPI is a lie. The unemployment rate is a lie. All these government numbers are designed to create a false picture of prosperity that does not exist. They understate inflation, overstate growth, understate unemployment, understate the deficits. You can’t believe the information that comes out of the government.”
The government ignores bad data, and the media ignores gold’s record-setting year, choosing instead to focus on Bitcoin’s mediocre performance:
“They completely ignore it [gold]. Maybe because it’s making a record high almost every day, so there’s nothing new about it. But when gold is doing this, it’s very significant. It’s sending a clear signal that the Fed is making a mistake, that the rate cuts are a mistake, that inflation is going to be a lot higher. … I’ll be watching financial news as gold hits a new high, and not only will they not discuss gold’s significant new high, they’ll go on and on about Bitcoin making a one-month high.”
Peter hopes Donald Trump wins the rapidly approaching election, but urges realistic expectations about his policies, especially because of the incentives politicians face on the campaign trail:
“That’s what he’s promising. ‘Just elect me, and everything’s going to be great. Immediately, we’re all going to be so rich; it’s going to be crazy. And I’m going to collect trillions from the Chinese, and, you know, it’s all going to be great.’ But it’s not all going to be great—that’s the problem. And that’s going to be a problem for the administration because they set the bar so high, the expectations are so high. You kind of want to under-promise and over-deliver, but it’s hard to do that when you’re running for office.”
How would we really make America great again? Start by slashing wasteful spending, then abolish the income tax:
“We can’t go back to the system we had before the income tax unless we dismantle all the programs that we now have because of the income tax, which I’m all for.
Get rid of Social Security, get rid of Medicare, get rid of Obamacare, shrink the government back down to its pre-1913 size. And that would really make America great again!”
___________
(ORGINAL)
_________
Get Peter Schiff’s most important gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates. Interested in learning how to buy gold and buy silver? Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!
**********
Header featured image (edited) credit: WP open card/Powell. Emphasis and pictorial content added to article by (TLB)
••••
••••
Stay tuned tuned…
••••
The Liberty Beacon Project is now expanding at a near exponential rate, and for this we are grateful and excited! But we must also be practical. For 7 years we have not asked for any donations, and have built this project with our own funds as we grew. We are now experiencing ever increasing growing pains due to the large number of websites and projects we represent. So we have just installed donation buttons on our websites and ask that you consider this when you visit them. Nothing is too small. We thank you for all your support and your considerations … (TLB)
••••
Comment Policy: As a privately owned web site, we reserve the right to remove comments that contain spam, advertising, vulgarity, threats of violence, racism, or personal/abusive attacks on other users. This also applies to trolling, the use of more than one alias, or just intentional mischief. Enforcement of this policy is at the discretion of this websites administrators. Repeat offenders may be blocked or permanently banned without prior warning.
••••
Disclaimer: TLB websites contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, health, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.
••••
Disclaimer: The information and opinions shared are for informational purposes only including, but not limited to, text, graphics, images and other material are not intended as medical advice or instruction. Nothing mentioned is intended to be a substitute for professional medical advice, diagnosis or treatment.
This article was originally published by The liberty Beacon. We only curate news from sources that align with the core values of our intended conservative audience. If you like the news you read here we encourage you to utilize the original sources for even more great news and opinions you can trust!
Comments