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Saturday, February 18, 2017

Peter Schiff : The Economy Handed Off To Trump Is Like A Hand Grenade & It's Getting Ready To Go Off

Transcript : today we have a returning 0:26 guest Peter Schiff peter is the chairman 0:28 of ship gold CEO and chief global 0:30 strategies of your pacific capital here 0:32 is one of the few forecasters who 0:34 accurately predicted the 2007 0:36 housing-market collapse and subsequent 0:38 2008 financial crisis and peers with us 0:40 today to talk about what is happening in 0:42 the economy Peter welcome back to the 0:44 exponential report spotlight 0:46 oh and thanks for having me back and 0:49 thanks for being here 0:50 I wanted to start off with the economy 0:51 of one Obama was leaving office he said 0:54 he was handing Trump this strong 0:56 incredible economy when you look at the 0:59 economy with retail gdp employment has 1:02 you really actually handed him a strong 1:04 economy know he is handed him a bubble 1:07 or maybe a hand ready 1:09 that's the power to you about to go off 1:11 here I mean this is the biggest bubble I 1:13 think anybody has ever had any president 1:16 did you guys think that George Bush has 1:18 a misfortune of inheriting the bubble 1:21 that we had under clinton and of course 1:23 the the manufacturer that bubble was 1:26 more Alan Greenspan and Clinton himself 1:28 but the prosperity that we enjoy under 1:32 Clinton was phony and the bubble burst 1:35 shortly after bush change in town and 1:38 then what happened was the Federal 1:40 Reserve inflated a larger bubble in the 1:42 real estate market to numb the pain from 1:45 the bursting of the dot-com bubble and 1:48 that bubble burst while trunk was 12 1:52 Bush was still in office and so it 1:54 looked as if I Obama had inherited a 1:58 mess and made it better but what he did 2:01 is he inherited a mess and now made a 2:03 bigger mess right he we have the biggest 2:05 bubble ever being reckless monetary 2:07 policy that we pursued under Bernanke 2:09 and under Yellen is far worse than 2:12 anything done under under Greenspan and 2:16 so the prosperity as bad as it was under 2:19 obama was completely phony it was all 2:22 artificial based on inflated asset 2:25 prices but it really didn't trickle down 2:27 to the average guy with the average 2:29 American software under the Obama 2:31 didn't see that's why trunk and the 2:33 current president because this was just 2:35 they say is financial recovery rather 2:38 than a recovery in the real economy but 2:42 this bubble is about to burst you have 2:43 inflation out really starting to 2:45 accelerate today we got the CPI 2:48 year-over-year we have a two-and-a-half 2:50 percent increase and that's what the 2:52 government will admit if they're 2:54 admitting two-and-a-half believe me it's 2:55 a lot higher than that but inflation is 2:58 is rising and defendants way behind the 3:01 curve and we have so much debt now if 3:03 they can't raise interest rates to fight 3:05 inflation so it's going to keep on 3:07 getting higher wages are going nowhere 3:09 so real wait you're going to be falling 3:11 and eventually you're going to start to 3:13 see a big off to uptick in unemployment 3:15 as this all mirage advantages and people 3:19 see this so-called recovery for what it 3:21 is so Trump wants to try to fix all of 3:24 this he wants to spend more money he 3:27 wants to borrow to create jobs to help 3:30 the infrastructure will this actually 3:32 help the economy by borrowing more money 3:35 no we can't fix this by going deeper 3:37 into debt we can't fix it with more 3:40 government spending what we need to do 3:42 is cut government spending dramatically 3:45 and a lot of the debt needs to be 3:47 defaulted on because it's impossible to 3:49 repay it and you know because we need 3:51 higher interest rates that is the must 3:54 we're never going to have a recovery 3:55 unless we have higher rates and i'm not 3:57 talking about the Fed raising rates from 3:59 a half percent to record the percent we 4:02 need normal interest rates we need five 4:04 six seven percent we need a interest 4:07 rates that reflects the true amount of 4:09 savings indebtedness economy we need 4:11 interest rates high end up to encourage 4:14 people to save money in the bank so that 4:17 small business can actually get capital 4:20 that it needs to expand and grow and so 4:23 with chocolate talking about is trying 4:25 to preserve the bubble we need to let 4:28 the bubble pop I mean he's also talking 4:30 about bringing jobs back here and 4:33 manufacturing at this time when he's 4:35 he's out there talking to many different 4:37 corporations and their promising to 4:40 bring all these jobs back to the US I 4:43 mean is it really possible to 4:45 bring all these jobs back when they've 4:47 been you know offshoring them all this 4:49 time 4:49 no I mean not now back to what there's 4:52 no factories for them to work in the 4:55 whole supply chain has been dismantled 4:56 and we don't even have workers who are 5:00 qualified to do the work show in the 5:03 long run 5:04 can we resurrect our manufacturing 5:06 industry and and bring jobs back 5:08 yeah we can but it's going to take a 5:10 long hot it's not like gonna happen 5:12 during the trump presidency 5:14 maybe he can lay the foundation to 5:16 enable that to happen over a longer 5:18 period of time but this is going to be a 5:19 process but we can't even begin the 5:21 process until we start dismantling much 5:24 a government we need to shrink 5:25 government so we can have a lower tax 5:27 environment that we need to rebuild our 5:31 savings so we can make the capital 5:33 investment that are necessary to bring 5:35 these jobs back so we we need higher 5:37 interest rates we need to allow asset 5:39 prices to call calm down 5:41 stock prices have to go down whilst a 5:43 price that we go down bond prices have 5:45 to go down we have to go through a 5:47 cleansing recession without the 5:49 government interfering in the market n 5:51 to rebalance the economy so they can 5:54 have a healthy real economic growth not 5:57 just another bubble so you talked a lot 6:00 about the debt I mean that the United 6:02 States worried about 20 trillion 6:04 continually moving up we have about 200 6:07 trillion of unfunded liabilities and you 6:10 know everyone keeps talking about you 6:12 know can we sustain this debt 6:14 I mean how much longer can we go 6:16 sustaining this debt as it continually 6:19 moves up 6:20 I mean can we go any further than this 6:22 well you know the reason that the Fed or 6:24 one of the reasons that interest rates 6:26 have been so low is because we could not 6:28 sustain the debt were not for these low 6:31 interest rates the debt is so large that 6:33 servicing it would be impossible if the 6:36 Fed were to normalize rates which is why 6:39 that hasn't happened and that's why you 6:41 don't even though inflation is well 6:42 above their so-called two percent target 6:44 the set is not out raising rates or if 6:48 they do it's going to be by a tiny 6:49 amount because they recognize this but 6:52 at some point even a tiny interest rate 6:55 is going to be too large for our common 6:58 to bear 6:58 you know and meanwhile other costs are 7:00 going to be going up as a result of all 7:02 the money that's already been printed 7:03 energy costs are going to go back up 7:06 you promise you're going back up 7:07 insurance taxes the cost of living is 7:09 already rising even without the cost of 7:12 dexter is rising but as interest rates 7:14 rise that is going to crush this economy 7:17 because of the added cost of servicing 7:20 the debt and and then I also think if we 7:23 get any kind of physical stimulus under 7:25 the Trump administration if we do get a 7:27 tax cut if we do get additional 7:30 government spending on infrastructure 7:31 the military or the border which sends 7:35 our deficits much higher that's going to 7:37 accelerate the collapse because i don't 7:40 think the appetite is there you know 7:42 among our foreign creditors to finance 7:45 all this to loan us the money is back to 7:47 anything if you look at countries like 7:49 China like Japan like Russia I like 7:53 Saudi Arabia these have been our biggest 7:55 lenders they want their money back 7:58 they're shrinking they're letting their 7:59 Treasury portfolios are the qualities so 8:03 the set is gonna have to step off if 8:06 unless unless they want interest rates 8:08 skyrocket they're going to have to print 8:10 a lot of money and buy a lot of bonds 8:12 and you know that's the beginning of the 8:13 end now in Europe we see there's many 8:15 countries out there like the UK France 8:19 Italy and others who are looking to most 8:22 likely leave the EU if these countries 8:25 start to leave the EU will this what 8:27 happened effect will have on the US on 8:29 the dollar 8:30 i meanwhat look we'll just be a ripple 8:32 effect that will hit the United States 8:34 well i don't know i mean you know and at 8:37 some point there may be a number of 8:39 states that want to leave the united 8:40 states that mean you know just about any 8:42 state would be better off if it were 8:44 independent because it would no longer 8:46 be obligated for each share of the 8:48 national debt i was down you know and it 8:51 would no longer be obligated to pay 8:52 federal income tax or any any taxes but 8:55 you know a lot of the European nations 8:57 think they'd be better off without the 8:59 European Union you know what 9:01 pretty soon Germany might be among that 9:03 because the Germans are going to be 9:05 complaining inflation in Germany is now 9:07 the highest and 45 years and in going 9:09 higher and the Germans don't like this 9:12 they don't like this kind of monetary 9:13 policy so I don't know how things are 9:15 going to play out in the short run but i 9:17 do think the euro is headed higher 9:19 against the dollar because i do think 9:21 that the european central bank is going 9:23 to have to abandon its quantitative 9:25 easing program much sooner than the 9:27 markets expect and I also think that the 9:29 u.s. is going to go back to the easy 9:32 I'll when the markets don't expect that 9:34 at all i think that that is going to be 9:36 boarding it's great hiking campaign even 9:38 in the face of rising inflation and even 9:41 if it doesn't aboard it even if he keeps 9:43 raising race he's not going to raise 9:46 them enough to cause real interest rates 9:48 to actually rise I think real 9:50 inscription going to fall in fact if you 9:52 look at real interest rates today they 9:54 are lower right now than they were 9:56 before the first rate I so that is not 9:59 actually moved up race because they've 10:01 risen baby bump them up so slowly that 10:03 they've actually you further into 10:05 negative territory on a real base now I 10:08 want to talk about the set in a minute 10:09 but I eat mentioned germany and that 10:11 just brought I just thought of the 10:12 Bundesbank where their repatriating the 10:14 gold about 300 times from the Fed and 10:16 they just completed that and they 10:18 repatriated the gold faster than 10:20 expected 10:21 why do you think they wanted their gold 10:24 back and why did they accelerate the 10:25 process 10:26 well I think they wanted it within their 10:28 own border just so they have I mean the 10:30 United States has a checkered history 10:32 when it comes to the goal and we made it 10:34 illegal for our own citizens to own gold 10:36 we also default it on our obligations to 10:39 table because up until 1971 if you were 10:43 in Germany and you have $35 said owes 10:47 you an ounce of gold that gold was on 10:50 deposit in Fort Knox 10:52 but if you brought them $35 out to the 10:55 Federal Reserve rates they had to give 10:56 you announce the goal that was our 10:58 commitment and then we default on that 11:00 promise and we pay no goal for our notes 11:03 so i think that Germany appreciates the 11:06 financial predicament the United States 11:07 is in and doesn't want to leave its 11:09 goals you because what if things get so 11:12 bad in the united states that need to 11:13 see that goal was a national emergency 11:15 we just so you know we needed you know 11:17 and and what is what is Germany could do 11:19 about I mean acha and then academia 11:21 declare war on us so they would just be 11:24 you know Sol 11:25 so I think to not have that problem they 11:28 just decided you know what this is our 11:30 goal and this is you know we need this 11:32 gold and we're not gonna take any 11:33 chances so let's bring it back to 11:35 Germany where we can protect it and know 11:37 that we own it now when the Germans had 11:39 received the gold there was some talk 11:41 about how the labeling on the gold was 11:44 different suggesting that maybe the Fed 11:46 really didn't actually have the gold and 11:48 they were getting it from other areas 11:50 well again is the US government that has 11:52 the goal i don't know that i don't know 11:54 that the Fed has goals as the component 11:57 of its balance sheet i think pretty much 11:58 the only thing defend has his treasuries 12:01 and mortgage-backed securities but the 12:03 United States government supposedly owns 12:05 a substantial gold reserve our and the 12:10 question is do we actually have all that 12:12 goal that we claim to have and you know 12:15 I don't know right i mean i don't know 12:17 if you can trust the numbers i'm not 12:18 sure the last time there was an 12:20 independent audit of our gold exactly 12:22 never been one you wrote an article 12:24 about the stock market and the US dollar 12:27 and you wrote that one is going to crash 12:30 can you just explain what you mean by 12:31 that well I mean the stock market is 12:34 extremely overvalued and it will crash 12:36 eventually unless the dollar crashes 12:39 instead right because the only way that 12:41 the Federal Reserve can prevent a 12:43 substantial decline in the stock market 12:44 is to you print a lot of money 12:48 I just make sure that the dollars 12:49 declines instead of the stock market but 12:51 that means that the real value of US 12:53 stocks is going to come crashing down 12:56 one way or another either it's because 12:59 the Fed does the right thing and 13:01 aggressively raises interest rates and 13:04 allows the stock market crash or because 13:07 the Fed does the wrong thing and doesn't 13:09 raise rates on wrestler doesn't raise 13:11 him at all or cut rates and launches qe4 13:13 and so instead of the stock market 13:16 crashing the dollar crashes but that 13:18 means that the real value of stocks go 13:20 down and a good way to measure the stock 13:22 market is in the price of gold and you 13:24 let's say right now the Dallas were a 13:26 16-ounce the bold somebody that really 13:28 stood out was 20,000 and goals about 13:32 1,200 about 16 ounces 13:34 well let's say the stock market 13:38 I get cut in half then it's worth eight 13:41 ounces of gold or you know the stock 13:43 market state of saying that the price of 13:44 gold could double and now it's worth it 13:46 out 13:46 alright so you know in terms of gold its 13:49 markets going wait out and believe me i 13:51 think it's going a lot lower than 80 I 13:53 think we're going to see he 13:54 unprecedented decline in the the gold 13:59 price of the doubt maybe not 14:00 unprecedented but maybe as big as a 14:02 decline in the nineteen thirties or the 14:05 nineteen seventies when the Dow went 14:07 down to about one ounce of gold having 14:09 been as high as 20 outs the golden teeth 14:11 then having fallen to one else it's just 14:13 that you know shoes thought I remember 14:16 watching them and listening to you back 14:18 in 2006-7 and you talked about the 14:21 economy coming down and here we are in 14:24 2017 and when this economy finally 14:28 collapses 14:29 what is the everyday person going to 14:32 experience because we saw what happened 14:34 in 2008 what's going to happen with jobs 14:38 and the the credit industry and and food 14:41 what do you see coming well I think 14:43 you're going to see a substantial 14:44 increase in the cost of living 14:47 I mean that's coming so Americans are 14:49 really going to feel this in a way that 14:52 they have in the past it's not just know 14:54 the value of our house going out it's 14:56 going to be the cost of heating the 14:58 house going up that this be love the 15:00 electric bill of making repairs obtain 15:03 your your homeowners insurance 15:05 I mean everything is going to get more 15:07 expensive I and you know this is going 15:10 to be a big problem for average 15:13 Americans relation with jobs for those 15:15 who were retired and trying to live off 15:17 some kind of fixed income business going 15:20 to be a very disruptive economic 15:22 downturn it is going to deliver a 15:25 substantial decline in the standard of 15:29 living of the vast majority of america 15:31 in a way that we have an experienced 15:33 before 15:34 so when you say the increase of course 15:36 of living i mean you're talking about a 15:37 couple dollars or you are you talking 15:39 about prices of like bread going up to 15:41 thirty forty fifty dollars 15:43 who well I don't know about that would 15:45 be hyper inflation but I i can see that 15:48 even under a better case scenario i can 15:51 see 15:51 over a period of a few short years 15:53 because of living rising fifty to a 15:57 hundred percent as far as you know your 15:59 basic necessity you know food energy 16:02 stuff like that you know and you know 16:04 the price of goods that you might be on 16:06 the shelves in walmart has the things 16:08 that we import you know whether it's 16:10 because we impose tariffs and help you 16:12 know help you and poses hardship on 16:15 ourselves or just because the dollar 16:18 falls significantly at so that's the 16:21 import prices go off but in for prices 16:23 if they rise by fifty percent or hundred 16:26 percent over a period of a few years 16:28 that is anesthetist substantial increase 16:31 in in the cost of those products so what 16:34 will be said to at this point when 16:36 things start to deteriorate in the 16:39 economy what actions do they have 16:41 well i think its first they'll just 16:42 throw gasoline on the fire because 16:44 that's all they know right they will 16:45 respond weekend economy by printing more 16:48 money but that's just going to make 16:49 things worse but at some point hopefully 16:52 they'll get religion 16:54 it probably won't be Janet Yellen let's 16:56 see who we were 16:58 Trump points to replace her but if we 17:00 get the right kind of guy you know maybe 17:03 we'll do the right thing but you know 17:04 doing the right thing is going to be 17:06 very problematic a very painful very 17:09 difficult politically I you know it 17:12 never is I mean swallowing 17:13 bitter-tasting medicine is not going to 17:15 be popular you know with the people who 17:17 are asked to swallow you know even in 17:19 their promise that eventually it's going 17:21 to work you know nobody knows that's for 17:23 sure 17:24 all we know is you know they don't want 17:25 this bad taste in their mouth right now 17:27 they found the promise that maybe in the 17:29 long run it it will be better if you 17:31 know there are many individuals out 17:33 there where they're saying that the 17:35 dollar will no longer be the world's 17:37 reserve currency anymore do you see a 17:41 currency that will replace the dollar 17:43 some people are saying the SDR now I 17:46 don't see another currency i think that 17:48 the world was foolish to have made the 17:50 dollar reserve in the first place I mean 17:53 goal should be to reserve you don't want 17:56 to make another irredeemable fiat 17:59 currency the reserved for another year 18:02 the interval CI turns it's like it's 18:04 like having over 18:05 deserve it all then we need to be on a 18:07 have a real monetary system which means 18:09 we need actual money not just use fake 18:12 money substitute so I don't think that 18:14 there's another currency that will 18:16 replace the dollar nor do I think there 18:17 should be a currency to replace the 18:19 dollar 18:19 I think reserves should be gold and 18:23 money should paper currency should be 18:25 backed by gold and that's it and no one 18:28 country should have some kind of special 18:30 privilege to be able to write checks 18:33 that nobody ever cash 18:34 I mean we've been able to run these 18:36 massive trade deficits year after year 18:39 after year because we've had the reserve 18:42 currency and we shouldn't have been able 18:44 to do that and yes it is it was 18:47 beneficial in the short run because we 18:48 got to live beyond our means but 18:50 involved allowed our economy to evolve 18:54 in a way that is very unhealthy in the 18:56 long run I mean we are going to suffer 18:57 dramatically for all the past benefits 19:01 that we had as a result of being the 19:03 issue of the reserve currency when we 19:05 could no longer do that then we can no 19:06 longer pay for imports with with with 19:09 training press when we need to export to 19:11 pay for imports 19:13 I mean this is going to be a masterclass 19:15 Peter thank you very much for being on 19:17 the x 22 report spotlight once again how 19:19 can people see your work 19:21 well you know I do my own podcast they 19:24 can listen to a month ship 19:26 website they can also hear them on my 19:28 youtube channel to look for Peter ship 19:30 and just put them up on youtube as well 19:32 people should go to my company website 19:36 for your pacific capital your packs off 19:38 tom also ship I put up a lot of 19:42 commentary their people should also be 19:44 invested with me if you want to take 19:46 advantage of these trends if you want to 19:47 stop it from what's going to happen you 19:50 know when you see things in advance we 19:51 if you see the situation where the crowd 19:54 of got laws whether we know like the 19:56 dot-com bubble or he profited from the 19:58 subprime market when that first in the 20:01 housing market when you see its trade 20:03 where everybody's lost consensus is 20:05 wrong 20:05 there's a lot of money to be made when 20:07 you bet against that trade and I think 20:09 the profits are going to be huge for the 20:10 people who actually understand what's 20:12 going to happen and have their money in 20:13 the right country the right assets and 20:16 so people can you talk to my rep 20:18 that is that your pacific capital and 20:21 what everybody should do is listen to 20:22 this everybody should own some gold and 20:25 the easiest way to do that go to a 20:26 website gold money got off a goldmine 20:29 com 20:30 buy yourself some gold using that 20:32 website basically you know you pay half 20:34 percent over spot best deal you're gonna 20:36 find you can take physical delivery 20:38 whenever you want but in the meantime 20:40 they'll give you a free debit card you 20:42 can spend your golden same way you would 20:44 spend your dollars that were sitting it 20:46 in a savings account and more and more 20:49 merchants are going to be signing up 20:51 overtime on this platform it's a country 20:54 ecommerce platform using gold it's like 20:56 a paypal with gold and I think a lot of 20:58 merchants as inflation really heats up 21:00 not only here but all around the world 21:02 people are going to want to get paid in 21:04 gold 21:05 they're going to want to invoice their 21:06 customers are going to want to get gold 21:07 and so that's what's only gonna happen 21:09 here this is going to be commerce and 21:11 people will be able to literally opt out 21:13 of the banking system using gold money 21:15 put themselves on a gold standard you 21:18 can earn gold you can you can spend in 21:20 goals you could save a goal you can just 21:22 get out of banking system and then 21:24 you're not going to have to get 21:25 clobbered with this inflation and it's 21:27 so cold is the website and 21:30 just need to learn about it open up an 21:31 account 21:32 Peter once again thank you very much for 21:34 being on the spotlight in my place

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