Federal Reserve

IMF Chief: ‘Optimistic’ About U.S. Economy While Stronger Dollar, Higher Interest Rates ‘Worrying’

Yesterday I caught the following on the website of Agence France-Presse. AFP reported:

International Monetary Fund chief Christine Lagarde on Sunday voiced optimism for US economic growth under President Donald Trump but warned it could herald trouble for the rest of the world.

“From the little we know, and I will insist on the little we know, because this is really work in progress… but from the little we hear, we have reasons to be optimistic about economic growth in the United States,” Lagarde said at the annual World Government Summit in Dubai.

Lagarde predicted tax reform and more investment in infrastructure were both likely under Trump…

“Now that’s the good news,” said Lagarde. “The more worrying news, if you will, is that it will have consequences on the rest of the world, and we are seeing it.”

She highlighted the strength of the dollar against other currencies, predicting a hike in interest rates regulated by the Federal Reserve.

“That’s a tightening that will be difficult on the global economy and for which economies will have to prepare,” said Lagarde.

(Editor’s note: Bold added for emphasis)

Hmm. Could the Federal Reserve use Lagarde’s concern regarding higher U.S. interest rates making things “difficult” for the global economy as one reason not to raise rates next month?

The other weekend, Euro Pacific Capital CEO Peter Schiff claimed in his YouTube vlog:

The reason the Fed didn’t give a clue that it might be raising rates in March, is because it has no intention of doing so.

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Source:

“IMF’s Lagarde ‘optimistic’ about U.S. economy.” Agence France-Presse. 12 Feb. 2017. (https://www.yahoo.com/news/imfs-lagarde-optimistic-us-economy-104123263.html) 13 Feb. 2017.

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Monday, February 13th, 2017 Crash Prophets, Currencies, Federal Reserve, Fiscal Policy, Government, Infrastructure, Interest Rates, Spending, Taxes Comments Off on IMF Chief: ‘Optimistic’ About U.S. Economy While Stronger Dollar, Higher Interest Rates ‘Worrying’

Peter Schiff Predicts Resumption Of Dollar Decline, Gold Rally This Week

It’s been a while, but Euro Pacific Capital CEO Peter Schiff added a new entry to The Schiff Report YouTube vlog on Saturday. Schiff, who correctly-called the housing bust and economic crisis last decade, talked about a number of subjects, including his belief that the Federal Reserve has no intention of raising rates in March, “a lot” of dollar selling is coming, and the gold rally will resume. From the video:

The reason the Fed didn’t give a clue that it might be raising rates in March, is because it has no intention of doing so…

I think the trade deficits are going up. I think the budget deficits are going up. Certainly to the extent that we get some tax cuts. We continue to get more government spending. If we get more government spending under Trump on the military, on the border, on infrastructure. Rising trade deficits. Rising budget deficits. Rising inflation. All of this is going to be a big negative for the dollar. And of course, everybody was so loaded up long the dollar, I think the people who own the dollar- there’s a lot of dollar selling that’s coming. And I think the dollar bulls are going to end up losing a lot of money…

Since the beginning of this year the Dow is barely up more than 1 percent. You can contrast that to the price of gold which is up 6 percent so far this year. Look at gold stocks. Gold stocks are up 17 percent as a group so far in 2017. 17 percent. Everybody’s talking about the Dow. No one’s talking about gold stocks. In fact, gold stocks were the number one performing sector last year, by far. Wasn’t even close. And they’re already by far the number one performing sector this year. But nobody really wants to talk about it…

I think we’re going to see a resumption of the dollar decline and gold rally next week…


“Rising Unemployment Is Just The Excuse The Fed’s Been Waiting For”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page. A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Schiff’s latest book…

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Monday, February 6th, 2017 Commodities, Crash Prophets, Currencies, Federal Reserve, Fiscal Policy, Government, Inflation, Infrastructure, Investing, Military, Monetary Policy, Precious Metals, Spending, Stocks, Taxes, Trade Comments Off on Peter Schiff Predicts Resumption Of Dollar Decline, Gold Rally This Week

Bix Weir Predicts 2017 Derivatives Implosion, Trump To Crash System Then Rebuild

“Donald Trump’s prediction that the U.S. economy was on the verge of a ‘very massive recession’ hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations…

‘I think we’re sitting on an economic bubble. A financial bubble,’ he said.”

-Reuters.com, April 3, 2016

Precious metals and financial expert Bix Weir recently appeared on former network/investigative correspondent Greg Hunter’s latest project, Greg Hunter’s USAWatchdog.com (“Analyzing the News to Give You A Clear Picture of What’s Really Going On”). In an interview published Tuesday, Weir warned of a coming derivatives implosion and dropped a bombshell when he predicted U.S. President Donald Trump would crash the system, then rebuild. From the exchange between Hunter and Weir:

HUNTER: Isn’t this the year we get the derivatives implosion?
WEIR: Oh definitively. People keep saying, “Well, if Greece leaves the EU, it’s not going to affect the rest of Europe.” Yes it will. It will destroy all the debt based on Greek bonds. It will destroy all the banks- Deutsche Bank, great example. If Deutshce Bank goes, J.P. Morgan goes, Citbank goes, all the banks go. And then the derivative implosion happens. And that’s alway been kind of the home-built nuclear bomb in the financial system is the derivative market- the hundreds of trillions, quadrillions, in derivatives that are so dependent upon third-parties staying in business. Because they are the counter-party to Deutsche Bank, and Citibank, and J.P. Morgan. Once one large derivative holder goes, they all go. We almost saw it in 2008. I think we’re real close to it again. I think Trump is going to push that ticket…
HUNTER: Do you think that we’re close to this derivatives explosion, this implosion, right now? Do you think it’s this year?
WEIR: I do think it’s this year. I think it can happen at any moment. I think Trump has long said that we’re in some huge bubbles and they’ve got to pop. He doesn’t want them popping after he’s fixed half the things in America. So, I would assume he’s going to pop them very soon, in the first few months of his administration. And we’re into that now. There are certain people that I know he needs to get in place. Because the popping of this bubble- this is the big mother of all bubbles.
HUNTER: So he is rushing to get his people in place so he can execute his plan. You’re saying he has a grand plan. That things aren’t just going to happen willy-nilly. You’re saying he’s going to get his people in place and he’s going to force the collapse, the reorganization.
WEIR: Yes. But it’s not his grand plan. This is the plan of the “good guys” that I’ve been talking about…
HUNTER: So why do you think we’re close to an economic reset, an implosion, a derivatives problem, the whole system resetting, changing, whatever. Why do you think we are close?
WEIR: Well, I know that Donald Trump is in charge of the exchange stabilization fund. So it’s basically he has the keys to ending this market rigging game. And once you end the market rigging game, then you can’t support the stock market. And everything has to go to its true fair market value, with real trades, no more derivatives. So Trump can do it. The question is, “Does he want to?” And it’s not just Trump. It’s the people who are behind Trump. I call them the “good guys.”
HUNTER: The Pentagon.
WEIR: Well, there’s people at the Pentagon. Within the military. Patriots. Going back since the sixties a lot of these guys are looking for a little retribution on the “bad guys” taking out Kennedy. But all this goes back to- what does Trump want to do? Trump and his people. Do they want to fix things? Go down that road to starting to fix things with the bubbles still there, with the Fed still printing money. Or, does he really want to fix them. Which means you crash the system first, and then you rebuild. I think it’s the latter. I think he’s trying to get people in place, and then he will crash the system and rebuild.


“Bix Weir-Trump Will Crash System Then Rebuild”
YouTube Video

Weir, who has a presence on the Web at RoadtoRoota.com, recommends selling “anything that has a third-party between you and your hard asset” like stocks and bonds, and buying Bitcoin (“get it out of the system”), gold, and silver- particularly silver. He concluded:

If you’re looking to make money, silver and Bitcoin- you can’t go wrong.

(Editor’s note: Bold added for emphasis)

I’d heard of Bix Weir before, but never read/listened to anything by him before. Very interesting, to say the least.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Thursday, February 2nd, 2017 Banking, Bonds, Business, Crash Prophets, Currencies, Derivatives, Europe, Federal Reserve, Government, Military, Monetary Policy, Money Supply, Precious Metals, Recession, Stocks, Wall Street Comments Off on Bix Weir Predicts 2017 Derivatives Implosion, Trump To Crash System Then Rebuild

James Rickards: ‘Fed Will Have To Go Dovish’ And Bonds, Gold Will Rally

Back on December 27, James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author appeared on CNBC TV’s Squawk Box (Asia) and made this prediction about Trump’s first term in the Oval Office:

I definitely see a stock market correction, perhaps a disorderly one… I’m not sure the Fed is ready to cut rates yet. But I expect it will raise rates in March. I think that’s on track. But beyond that, we’re going to go into a recession or the stock market is going to have a very severe correction. Either one of those will cause the Fed to back-pedal.

On January 12, James Rickards elaborated on this forecast on The Daily Reckoning website. He informed readers of “Be Prepared for a Violent Fed Reversal”:

My short-term expectation is the Fed will raise rates in March. My intermediate-term expectation is that the market is going to be disappointed with the stimulus, the Fed tightening is going to be at the wrong time, the stock market’s going to “fall out of bed,” the economy’s going to slow down, and the Fed will have to go dovish.

At that point you’re going to see rallies in bonds, rallies in gold, and a decline in the stock market…

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Source:

Rickards, James. “Be Prepared for a Violent Fed Reversal.” The Daily Reckoning. 12 Jan. 2017. (https://dailyreckoning.com/be-prepared-violent-fed-reversal/). 23 Jan. 2017.

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Tuesday, January 24th, 2017 Bonds, Crash Prophets, Federal Reserve, Interest Rates, Investing, Monetary Policy, Precious Metals, Recession, Stimulus, Stocks Comments Off on James Rickards: ‘Fed Will Have To Go Dovish’ And Bonds, Gold Will Rally

Ron Paul: ‘We’ll Have A Downturn And Then That Will Be A Real Challenge For The New Administration’

Former Texas congressman and two-time Republican presidential candidate Ron Paul was on the CNBC TV show Futures Now last week speculating about the economy under the new Trump administration. Here’s what Paul thought about President Trump’s plans for the beginning of his term:

Well, it’s hard to dissect as many people have discovered because some days I hear one message and other days I hear a different message. But what I think comes through generally speaking is that there’s going to be a lot more spending. It doesn’t sound like he’s bashful about spending. He doesn’t seem to be very concerned about the deficit. And with this massive increase in infrastructure as well as the military, I think there’s going to be a lot more spending. I think the debt is going to be much bigger. I think that it will put more pressure on the Fed. I think there will be more monetizing of debt. And everybody has to think about what generally comes about when the economy is manipulated by the Federal Reserve- you have good times, and then you have to have bad times to compensate for the artificially good time. So we’ll have a downturn and then that will be a real challenge for the new administration.

(Editor’s note: Bold added for emphasis)


“Ron Paul: A ‘downturn’ will happen under Trump”
CNBC Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Monday, January 23rd, 2017 Crash Prophets, Debt Crisis, Federal Reserve, Fiscal Policy, Government, Infrastructure, Military, Monetary Policy, Monetization, Recession, Spending Comments Off on Ron Paul: ‘We’ll Have A Downturn And Then That Will Be A Real Challenge For The New Administration’

Inflation Rises At Fastest Pace In 5 Years

It’s been some time since a Survival And Prosperity post focused on inflation.

I suspect I’ll be blogging about it more in the coming months.

Jeffry Bartash wrote on MarketWatch this morning:

Inflation rose in 2016 at the fastest pace in five years, as rising rents and medical care and higher gas prices put a squeeze on consumers.

The consumer price index jumped 0.3% in December, the government said Wednesday…

A string of sharp gains since late summer helped drive up inflation by 2.1% for the full year, marking the biggest increase since a 3% gain in 2011

(Editor’s note: Bold added for emphasis)

Bartash added:

For now it doesn’t look like inflation will wane soon. Gas prices rose again in January and many economists predict that aggressive stimulative measures by the new Trump administration could lead to even higher inflation

(Editor’s note: Bold added for emphasis)

Jeffrey Sparshott added over on The Wall Street Journal website late this afternoon:

The latest figures- driven in part by an uptick in energy prices- suggest a four-year stretch of historically low inflation could be ending

While details remain uncertain, the president-elect has pledge lower taxes and more infrastructure spending. That could lead to faster economic growth and accelerating inflation

(Editor’s note: Bold added for emphasis)

As to what this might mean for interest rates, Fed Chair Janet Yellen spoke to the Commonwealth Club of California this afternoon. Ann Saphir reported on the Retuers website:

With the U.S. economy close to full employment and inflation headed toward the Federal Reserve’s 2 percent goal, it “makes sense” for the U.S. central bank to gradually lift interest rates, Fed Chair Janet Yellen said on Wednesday…

The Fed chief said that she and other Fed policymakers expected the central bank to lift its key benchmark short-term rate “a few times a year” through 2019, putting it near the long-term sustainable rate of 3 percent

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Bartash, Jeffry. “Inflation climbs at fastest pace in 5 years, CPI shows.” MarketWatch. 18 Jan. 2017. (http://www.marketwatch.com/story/inflation-climbs-in-2016-at-fastest-pace-in-5-years-cpi-shows-2017-01-18). 18 Jan. 2017.

Sparshott, Jeffrey. “U.S. Inflation Gauge Tops 2%, Supporting Fed’s Plan to Raise Rates.” The Wall Street Journal. 18 Jan. 2017. (http://www.wsj.com/articles/u-s-consumer-prices-up-2-1-in-december-from-year-earlier-1484746534). 18 Jan. 2017.

Saphir, Ann. “Fed’s Yellen says ‘make sense’ to gradually raise interest rates.” Reuters. 18 Jan. 2017. (http://www.reuters.com/article/us-usa-fed-yellen-idUSKBN1522VH). 18 Jan. 2017.

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Wednesday, January 18th, 2017 Commodities, Employment, Energy, Federal Reserve, Government, Health, Housing, Inflation, Infrastructure, Interest Rates, Monetary Policy, Stimulus, Taxes Comments Off on Inflation Rises At Fastest Pace In 5 Years

Robert Shiller On Trump, Economy: ‘He Might Do Something Good’

Nobel Prize-winning economist Robert Shiller was on CNBC TV’s Squawk Box yesterday talking about the state of the U.S. economy and the potential impact President-elect Donald Trump might have on it. The Yale University professor- who correctly called the dot-com and housing busts of the last decade- told viewers:

Well, the economy is looking strong. But at the expense of still near-zero interest rates. So it’s not normally healthy. And it relies on an institution, and Janet Yellen, that’s none too friendly with Donald Trump. So, I think it’s just a very uncertain time…

Regarding a “Trump Effect,” Dr. Shiller observed:

I think Trump is for many people an inspiration. He’s pro-business. Think big. Live large. That’s Trump. And to some extent that communicates to homebuyers as well as other investors… We’re in a revolutionary time. We don’t know what Trump is going to do. We know one thing- he’s got tremendous self confidence. And he doesn’t believe experts. Or he doesn’t just routinely believe them. So we’re going to see some big changes. It’s not just monetary- whether they raise interest rates another 50 basis points. It might be something more fundamental that comes up about how the Fed is even designed…


“Trump exciting ‘animal spirits’ in housing: Robert Shiller”
CNBC Video

Shiller also added this:

I didn’t vote for Trump. We’ve got him. Let’s hope for the best. He might do something good.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Thursday, January 12th, 2017 Banking, Business, Crash Prophets, Federal Reserve, Government, Housing, Interest Rates, Investing, Monetary Policy Comments Off on Robert Shiller On Trump, Economy: ‘He Might Do Something Good’

Jim Rickards: ‘We’re Going To Go Into A Recession Or The Stock Market Is Going To Have A Very Severe Correction’

Marc Faber isn’t the only “crash prophet” who realizes the financial environment U.S. President-elect Donald Trump could inherit is significantly different than what Ronald Reagan encountered in 1981. Back on December 5 I blogged about James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, who was on RTÉ Radio 1 (Ireland) the prior week informing listeners of the following:

Less regulation, lower taxes, and a lot more infrastructure spending. This was Ronald Reagan’s playbook. This is what Ronald Reagan did in 1981 with a lot of success. But there are big differences, reasons to believe Trump will not be as successful. Namely because when Reagan came in, the U.S. debt-to-GDP ratio- the amount of debt relative to our economy- was 35 percent. Today it’s almost 105 percent. Reagan had inflation of 20 percent. Trump has it close to zero. In other words, Reagan had a lot of tailwinds– inflation had to come down, interest rates had to come down, he had fiscal space to run up the debt. Trump has headwinds

(Editor’s note: Bold added for emphasis)

Last Tuesday, Rickards appeared on CNBC TV’s Squawk Box (Asia) and made this prediction about Trump’s first term in the Oval Office:

I definitely see a stock market correction, perhaps a disorderly one Martin. I’m not sure the Fed is ready to cut rates yet. But I expect it will raise rates in March. I think that’s on track. But beyond that, we’re going to go into a recession or the stock market is going to have a very severe correction. Either one of those will cause the Fed to back-pedal.

(Editor’s note: Bold added for emphasis)

CNBC anchor Martin Soong asked his guest, “What is it going to take to cause these two outcomes- what’s the trigger going to be?” Rickards replied:

First of all, it’s already happening. There’s basically a head-long collision coming between perception and reality. So what’s the perception? The market’s rising on the Trump reflation trade. So, Trump wants to cut taxes. Steve Bannon’s talking to his advisors about a trillion dollars of infrastructure spending, cutting regulations. So all these things are viewed to be highly stimulative. So that’s why the market’s going up… But with the Fed, they’re thinking of two things. Number one, they believe in the Phillips Curve… With unemployment at 4.6 percent and that kind of stimulus coming, they know monetary policy acts with a lag- they want to get out ahead of inflation. So they’re on track to raise rates. By the way, they want to raise them anyway independent of this because they’ve got to raise them so they can cut them in the next recession. So the Fed’s on track to raise. The market expects stimulus. But here’s the point. The stimulus is not going to come. Congress has already said tax cuts have to be revenue neutral- that’s going to take away the stimulative effect. They’re going to balk at more spending. We have $20 trillion of debt. A 104 percent debt-to-GDP ratio. So we’re not going to get this trillion dollars of spending. And we’re in the eighth year of an expansion Martin. Keynesian stimulus- if it works at all, it works at the beginning of an expansion or in a recession. Not after 8 years. You don’t get much bang for the buck.


“Fed to reverse course by year-end: Expert”
CNBC Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Tuesday, January 3rd, 2017 Crash Prophets, Debt Crisis, Employment, Federal Reserve, GDP, Government, Inflation, Infrastructure, Interest Rates, Investing, Monetary Policy, Recession, Spending, Stimulus, Stocks, Taxes Comments Off on Jim Rickards: ‘We’re Going To Go Into A Recession Or The Stock Market Is Going To Have A Very Severe Correction’

Peter Schiff Predicts Gold ‘Going A Lot Higher’ As Trump Fed Draws From ‘Well Of QE’

In a post yesterday about Swiss-born investment advisor/money manager Marc Faber, I noted that the the publisher of the monthly investment newsletter The Gloom Boom & Doom Report reportedly told atendees at a recent investment conference that the U.S. economy “is not doing well” and that he predicted U.S. President-elect Donald Trump will be a “Keynesian” and money printer. This reminded me of an appearance last week by fellow “crash prophet” Peter Schiff on the CNBC TV program Futures Now in which the economist, financial broker/dealer, and author talked about a Federal Reserve under a Trump administration. Schiff warned viewers:

I think they’re going to go back to the same monetary stimulus that failed and is the reason that Donald Trump was elected. A lot of people believe that simply electing Donald Trump solves all the economic problems that are the reason that he was elected. But the problems haven’t been solved and they can’t be solved unless we’re willing to bite the bullet and allow a painful economic restructuring that is going to be necessary to pave the way for real economic growth. But I still think we’re going to go back to the “well of QE.” And that we’re going to get more stimulus. We’re going to get another quantitative easing. And I still believe that the Fed might reverse course and start cutting rates again, even as inflation accelerates…


“Huge bond bear market just beginning”
CNBC Video

The CEO of Euro Pacific Capital mentioned earlier in the segment that “inflation is accelerating at a much faster pace than the Fed is nudging up interest rates.” Within such an environment, gold could shine. Schiff added:

Gold benefits from inflation. The only way that you might undermine gold with inflation is if you have a Paul Volcker-style reaction from the Fed where they agressively raise interest rates to try and restrain it. And that’s not even conceivable that we could do that due to the enormity of the debt that we have. So if people understand that yes, we’re going to get more inflation, but there’s nothing the Fed can do about it but make the problem worse, then people see that there’s a lot of reasons to be buying gold. And certainly 1,200 has acted as pretty solid support. So the fact that we pulled back from 1,320-1,330 on the eve of the Trump victory back down to this support I think provides a good buying opportunity for people to buy more gold. Because I do think it’s going a lot higher during the Trump presidency.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page. A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Thursday, December 1st, 2016 Commodities, Crash Prophets, Debt Crisis, Federal Reserve, Government, Inflation, Interest Rates, Investing, Monetary Policy, Money Supply, Precious Metals, Stimulus Comments Off on Peter Schiff Predicts Gold ‘Going A Lot Higher’ As Trump Fed Draws From ‘Well Of QE’

Donald Trump Inheriting A ‘Poisoned Chalice’?

I’ve had this suspicion for some time now that whoever won the 2016 U.S. presidential election is very likely inheriting a “poisoned chalice.”

When I launched Boom2Bust.com, “The Most Hated Blog On Wall Street,” on Memorial Day weekend 2007, I started warning readers of a coming U.S. financial collapse.

After moving on to Survival And Prosperity in 2010, I came to believe the economy/larger financial system had already entered a long, drawn-out descent before the eventual crash.

That downward trajectory would be punctuated by crises like what reared its ugly head in the autumn of 2008.

Financial types were quick to label the recession at the end of last decade as the “Great Recession.”

This “nattering nabob of negativity” thinks it’s only a matter of time before a “Greater Recession” strikes, fueled by Washington and the Fed “kicking the can down the road” and having too few bullets left when that “road” inevitably runs out.

President-elect Trump is also aware of the possibility of such economic upheaval.

Bob Woodward and Robert Costa reported on The Washington Post website back on April 2, 2016:

Donald Trump said in an interview that economic conditions are so perilous that the country is headed for a “very massive recession” and that “it’s a terrible time right now” to invest in the stock market, embracing a distinctly gloomy view of the economy that counters mainstream economic forecasts…

Trump has for months contended that the U.S. economy is in trouble because of what he sees as an overvalued stock market, but his view has grown more pessimistic of late and he is now bearish on investing, to the point of warning Americans against doing so.

“I think we’re sitting on an economic bubble. A financial bubble,” Trump said. He made clear that he was not specifying a sector of the economy but the economy at large and asserted that more bullish forecasts were based on skewed employment numbers and an inflated stock market.

“First of all, we’re not at 5 percent unemployment. We’re at a number that’s probably into the twenties if you look at the real number,” Trump said. “That was a number that was devised, statistically devised to make politicians- and, in particular, presidents — look good. And I wouldn’t be getting the kind of massive crowds that I’m getting if the number was a real number.”

(Editor’s note: Bold added for emphasis)

Yet Trump, as President-elect of the United States, chooses to accept the potential “poisoned chalice,” from which he might be forced to drink from during his tenure in the Oval Office as the current economic expansion grows long in the tooth.

Consider the following from Jeffrey Sparshott in The Wall Street Journal’s Real Time Economics blog this morning:

Donald Trump is poised to inherit one of the longest-lived economic expansions since the World War II era. Barring any sudden shock or sudden acceleration, the president-elect will also take office during the weakest

The economy has been growing for more than seven years, ranking the expansion the fourth-longest since 1949 (when quarterly data became available). If economic expansion continues through Mr. Trump’s first term, it will be the longest.

While gross domestic product, a broad measure of economic of output, is advancing, it’s been at the slowest rate on record for an expansion

(Editor’s note: Bold added for emphasis)

I’d like to think Donald Trump and the Republicans could turn this ship around and avert economic disaster.

I, for one, would only be too happy to be proven wrong about my prediction of a “Greater Recession” and eventual collapse.

But I fear the damage may already be done.

So much so that the incoming White House might want to level with the American people about what might be in store for them from an economic standpoint.

Otherwise, the public will have less of a fighting chance of weathering the financial storm should it hit.

Not to mention opponents of a Trump administration will try hard to pin the blame on them for a painful event previous administrations played a big part in creating.

One need only look at Illinois where Republican Governor Bruce Rauner (only 22 months in office) is facing the same baseless charges for decades of mismanagement perpetrated by those across the political aisle.

President-elect Trump has his work cut out for him as the economy is concerned. The billionaire businessman seems to be up for the challenge, and America will know soon enough if he can pull off yet another amazing feat.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Costa, Robert and Woodward, Bob. “In a revealing interview, Trump predicts a ‘massive recession’ but intends to eliminate the national debt in 8 years.” The Washington Post. 2 Apr. 2016. (https://www.washingtonpost.com/politics/in-turmoil-or-triumph-donald-trump-stands-alone/2016/04/02/8c0619b6-f8d6-11e5-a3ce-f06b5ba21f33_story.html?hpid=hp_hp-top-table-main_trumppresidency-7pm%3Ahomepage%2Fstory). 11 Nov. 2016.

Sparshott, Jeffrey. “The U.S. Economy President Donald Trump Will Inherit, in 11 Charts.” Real Time Economics. 11 Nov. 2016. (http://blogs.wsj.com/economics/2016/11/11/the-u-s-economy-president-donald-trump-will-inherit-in-11-charts/). 11 Nov. 2016.

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Friday, November 11th, 2016 Bubbles, Employment, Federal Reserve, Fiscal Policy, GDP, Government, Investing, Monetary Policy, Political Parties, Preparedness, Recession, Recovery, Stocks Comments Off on Donald Trump Inheriting A ‘Poisoned Chalice’?
Survival And Prosperity
Est. 2010, Chicagoland, USA
Christopher E. Hill, Editor

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