Money manager Peter Schiff says the economy is not near as good as you have been told. A year ago, former Federal Reserve President Richard Fisher said the Fed “injected cocaine and heroin into the system” to basically prop it up. Is that kind of easy money policy going to continue? Schiff says, “Why would you expect a junkie to do anything else, especially when they haven’t acknowledged the problem that they have. They still think this is all medicine. They don’t realize how toxic it is. Yes, I expect them to continue that. The fact that the Dow is at 20,000, that doesn’t reflect a healthy economy. That reflects a bubble. The U.S. economy was not healthy in the late 1990’s during the Tech Bubble. It didn’t reflect economic health in 2007 when the financial crisis was right around the corner. It just reflects financial engineering and bubble blowing. U.S. stocks are very expensive. Candidate Trump got it right when he called it a big fat ugly bubble, and it’s bigger, fatter and uglier now. The fact that he’s President doesn’t change it from a bubble to a bull market. It’s still a bubble, and the air is going to come out one way or another. Either the U.S. stock market is going to crash or the dollar is going to crash. Either way, the real value of U.S. stocks is coming way down, and people shouldn’t own them.”
On the dollar, Schiff says, “The Fed is going to try to keep interest rates as low as possible because we have so much debt that these artificially low rates are the only way we can service it. So, the Fed, I think, is willing to sacrifice the dollar to keep propping up the bond market. Even if we launch QE4, it may not have the effect on the bond market that prior round of quantitative easing had. They may lose control of the long end of the bond market. And certainly when it comes to corporate bonds or muni bonds, or any bonds that are not being monetized, rates are going a lot higher. . . . I think the dollar is going to tank.”. . . In order for the Fed to keep the air from coming out of this bubble (in bonds), they will have to sacrifice the dollar.”
Where does that leave hard assets like gold? Schiff contends, “Gold stocks were the best performing stocks in 2016, and they are already the best performing stocks in 2017. I think the bear market in gold and gold stocks ended at the end of 2015. It’s a new bull market. I think the big gains we got last year are just a small down payment on the gains we are going to get in the years ahead. Very few people are positioned properly.”
Schiff goes on to say, “Donald Trump is not the cause of these problems. We’ve got a giant wound that we’ve got a band-aid on. Nobody is really looking at the wound because it is hidden by this band-aid, and it’s getting worse, and worse and worse. Maybe Trump will peel back that band-aid, and we actually get a good look at how bad we are wounded. . . . I think this has gone on so long and the bubble has gotten so big . . . . We did not get to celebrate the Dow 20,000 party, but I think that we are going to have the last laugh and do the most celebrating when the bottom drops out of the dollar and reality sets in.”
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.