Monetary Policy

Peter Schiff: ‘Economy Is Careening Towards Recession Right Now’

Yesterday, “crash prophet” Peter Schiff added a new entry to his YouTube video blog- The Schiff Report. The CEO/Chief Global Strategist of Euro Pacific Capital warned viewers that the U.S. economy is heading towards recession. Schiff- who correctly-called the bursting of the housing bubble in addition to the 2008 economic crisis- began his video blog entry by talking about Federal Reserve Chairman Janet Yellen saying Wednesday interest rates would be kept low for a “considerable time”:

Now, in my mind, what the Fed really means by “considerable” period is indefinitely, or forever. Because I don’t think the Fed can raise interest rates. In fact, I don’t even think they can end QE without precipitating a recession. And I think they’ve already set those balls in motion. And I think the economy is careening towards recession right now. The Fed just hasn’t figured that out yet. But the Fed certainly doesn’t want to help push it over the edge by raising rates. So it has to stall, so it comes up with this “considerable” period…

So how much time is going to transpire between the end of QE, which is scheduled to end now in, I think, six weeks? How much time will transpire between the end of QE and the next crisis, the next recession? See, I don’t think there will be enough time for the Fed to even begin the next set of rate hikes…

So if the economy can barely grow, with all the QE, what’s going to happen when you take it away? And again, all this growth is phony- it’s not real growth. But in order to have the phony growth, you need the QE. You take the QE away, you take the phony economic growth away, and you are right back in recession…

And so, whatever Janet Yellen and the Fed, whatever they’re saying now about how confident they are that they might be able to raise interest rates after some considerable period of time- but we don’t know what that means- it’s all based on their rosy assessment of the economy that isn’t going to materialize. The economy is going to rollover back to recession before the first rate hike ever comes. And so it’s not going to come because now they’re going to have to ramp the QE back up. And maybe at that point the people will figure out the box that we’re in. If they figure out that it’s interest rates at zero forever, and the only question is how much QE can the Fed do but it can never raise rates, then the bottom drops out of the dollar.

Schiff concluded yesterday’s vlog entry by calling the Fed’s bluff:

So again, all this is talk. They’re not going to shrink the balance sheet. They can’t. They’re not going to raise interest rates. Because they can’t. And before it comes, before this considerable time period comes to an end, we’re going to be back in recession or we’re going to be close enough to recession that the Fed feels compelled to take action to stimulate the economy. And how is it going to stimulate the economy? Well, rates are going to still be at zero. The only way to stimulate it is to ramp up the QE that she just tapered back. And how much is she going to have to ramp it up to? I think it’s going to be more than the original $85 billion. Maybe $100 billion, $150 billion per month.


“Yellen Barks on Rates, But Will Not Rise”
YouTube Video

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

(Editor’s note: I am 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 presented herein.)

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Jim Rickards Suspects China Behind Gold Price Manipulation As It Buys Metal To Hedge Against Dollar Devaluation

Euro Pacific Capital CEO and Global Strategist Peter Schiff just got done interviewing Jim Rickards, an American lawyer, economist, investment banker, and best-selling author. Rickards, who released The Death of Money: The Coming Collapse of the International Monetary System, this spring, spoke with Schiff about the global gold markets. What he had to say about China and its steady accumulation of physical gold (reserves now totaling close to 4,000 tons, Rickards speculates) was extremely interesting. Some might say shocking. From the exchange:

Now there’s been a lot of speculation the reason they’re doing this is they want to launch a gold-backed yuan currency to defeat the dollar. That’s not going to happen. That’s not even close. The reason is that the yuan’s not ready to be a reserve currency because they don’t have investable assets. There’s no rule of law. There’s no mature bond market in China. But what they are doing, is creating a very simple hedge position… So you’ve got $4 trillion of paper reserves, most of them U.S. dollars. You can’t dump them. If you’re going to try and sell a fraction… the Treasury market’s big- it’s not that big. If they try and do something more aggressive, the President of the United States can actually stop them just by freezing their accounts. So what you do is buy up a pile of gold. So now, the Chinese want a stable dollar. They would love a stable dollar. But if the U.S. tries to devalue the dollar, tries to cheapen the dollar through inflation- remember, every 10 percent of dollar inflation is a $300 billion wealth transfer from China to the United States. So if you cheapen the dollar with inflation, they lose money on the paper, but they make money on the gold. So they’re building a hedge position. They’re not done yet.

I’ve heard it claimed before that China is accumulating gold to back the renminbi. But Rickards says this isn’t the case. Even more eye-opening than the dollar hedge theory was something he said later on in the interview:

The gold manipulation, by the way, is so blatant at this point, if I were the manipulator I’d be embarrassed… The question is, who’s doing it? And people like to point a finger at the Fed and maybe through the BIS- they have a hand in it. But my number one suspect is China for the reason you mentioned, Peter. If you’re out to buy 3,000 tons, you don’t want the price to be high yet. Maybe later you do. But for now you want the price to be low.


“Interview: Jim Rickards & Peter Schiff Discuss Global Gold Markets [Full Discussion]”
YouTube Video

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

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Peter Schiff On Direction Of Interest Rates, Housing, And Gold

Last Friday, “crash prophet” Peter Schiff added a new entry to his YouTube video blog- The Schiff Report. The CEO/Chief Global Strategist of Euro Pacific Capital warned viewers that the Federal Reserve is bluffing about raising interest rates. Schiff- who correctly-called the bursting of the housing bubble in addition to the 2008 economic crisis- also touched on the direction of the residential real estate market and gold. On interest rates and housing, he pointed out:

The risk is that the Fed doesn’t tighten at all, which is exactly what’s going to happen, because they can’t tighten. If the Fed actually tightens, the recovery is over. The recovery that is supposedly giving them the confidence to raise rates- it can’t exist if they raise rates. In fact, if the Fed could raise rates, they would have already raised them. I mean, it’s been over five years. They’re still at zero. And they’re saying rate hikes are a year way maybe. Why? If the economy is recovering, why can’t the Fed raise rates? Because if the Fed raised rates, we’d be right back in recession. Because it’s a phony recovery. That’s what people have to understand. It’s not real. It’s only here as long as the Fed can artificially sustain it, which she might. The minute they raise interest rates, that party’s over. The stock market’s going down. The real estate market’s going down.

And by the way, we had a plethora of negative numbers all week for the housing market. You could put a fork in this phony housing recovery, because it’s done. The market is going down. Housing prices are heading back down. Housing activity is slowing. I think a lot of layoffs are coming in construction because this market’s grinding to a halt…

The Fed is bluffing. This is all bark and no bite. It is impossible for the Fed to raise interest rates. If they could do it, they would have already done it. If they raise interest rates now, they destroy the very recovery that the low interest rates created. The problem is, if it isn’t a real recovery, it’s phony. If it was real, it wouldn’t need the Fed to support it. The only reason it does need the Fed’s support is because it’s imaginary. It’s phony. Because the actual economy is getting worse.

What the Fed is doing to goose the stock market, and the real estate market, to create this phony wealth effect, is undermining legitimate wealth creation. All the money we’re borrowing to spend is interfering with legitimate, genuine economic growth. And we’re just digging ourselves into a bigger and bigger hole…

The problem is, we’re going to have the next recession, and the Fed’s still going to be at zero. They’re still going to have this bloated balance sheet. And again, it’s not that the Fed is never going to raise rates. They’re just not going to do it voluntarily. They’re not going to do it as a decision. They’re not going to do it until they have to. And it’s not going to be a strong economy that’s going to force them to raise rates. Because I don’t care how strong the economic data is- they ain’t going to raise rates. And it doesn’t matter how bad the inflation data is- they’re still not going to raise rates. They’re not going to raise rates until the dollar collapses. Until foreigners no longer want to hold the dollar, because they understand the predicament that the Fed is in. They understand that it is QE forever. That it is all just talk. There is no exit strategy. There never was. Because exit is too painful. This is the end game of QE. This is the all in. This is the overdose.

On gold, Schiff predicted:

Janet Yellen is not going to wage war against inflation. She has already surrendered to inflation. It’s just that a lot of people haven’t figured that out yet. So, because people think that Janet Yellen might raise interest rates sooner rather than later because of inflation, they sold gold. If they knew the truth, that Janet Yellen isn’t going to care about the inflation, that’s she’s just going to let it get worse because she is too afraid to challenge inflation for fear of what it will do to the economy, to the stock market, to the housing market, the job market. So she is going to allow inflation to not only continue, but accelerate. And that is what’s good for gold.


“Ending QE is Bad, Not Ending it is Worse”
YouTube Video

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Jeremy Grantham: ‘Severe Market Decline Is Not Imminent’

I just got finished reading the latest quarterly letter from British-born investment strategist Jeremy Grantham. As usual, the founder and former chairman of Grantham, Mayo, Van Otterloo & Co. (GMO)- which oversees $118 billion in client assets- penned a good one. Note what Grantham- who individual clients have included current Secretary of State John Kerry and former Vice President Dick Cheney- had to say about claims that stocks are in a bubble and/or on the verge of a major correction. From “Summer Essays”:

My recent forecast of a fully-fledged bubble, our definition of which requires at least 2250 on the S&P, remains in effect.

At the end of the trading day Monday, the S&P 500 stood at 1,939- 311 points below “bubble level.”

Grantham argued:

The economy, despite its being in year six of an economic recovery, still looks in many ways like quite a young economy…

Perhaps the single best reason to suspect that a severe market decline is not imminent is the early-cycle look that the economy has.

Still, Grantham- who became widely known for his April 2007 declaration about the first worldwide bubble in history occurring which covered all asset classes- doesn’t discount another bubble being formed. From his section entitled “Post Script”:

In early July, Janet Yellen made an admirably clear statement that she is sticking faithfully to the Greenspan- Bernanke policy of extreme moral hazard. She will not use interest rates to head off or curtail any asset bubbles encouraged by the extremely low rates that might appear. And history is clear: very low rates absolutely will encourage extreme speculation. But Yellen will, as Greenspan and Bernanke before her, attempt to limit only the damage any breaking bubbles might cause. Well, it is a clear policy and in my opinion clearly wrong. I had thought that central bankers by now, after so much unnecessary pain, might have begun to compromise on this matter, but no such luck, at least in the case of the Fed. The evidence against this policy after two of the handful of the most painful burst bubbles in history is impressive. But not nearly as impressive as the unwillingness of academics to back off from closely held theories in the face of mere evidence. This affirmation of moral hazard – we will not move to stop bubbles, dear investors, but will help you out when things go badly wrong – should be of great encouragement to speculators and improve the odds of having a fully-fledged equity bubble before this current episode ends.

(Editor’s note: Bold added for emphasis)

You can read the entire quarterly letter (.pdf file) on the GMO website here.

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Peter Schiff On Gold: ‘We’re Going To Have A Big Rally Probably Beginning Here In The Second Half Of 2014’

It’s been a little over a month since I last blogged about “crash prophet” and head of Euro Pacific Capital Peter Schiff. But tonight, I’ll be talking about the first-ever installment of Peter Schiff’s Gold Videocast (which replaces the monthly Peter Schiff’s Gold Newsletter). Schiff, who also heads up Euro Pacific Precious Metals, told videocast viewers on July 9:

I think that the sellers have been exhausted in the gold market, and the buying continues. And when we run out of sellers- again, there’s only one direction for the price of gold. And I think once all of these speculators that have been shorting gold discover that their premise is wrong- that we’re not going to get this vibrant recovery. And that we’re not going to get less QE, we’re going to get more. That we’re not going to get rate hikes, but the Fed is going to keep interest rates at zero in order to prop up this phony, bubble economy that they’ve inflated. You’re going to have to see this mad rush from all the short sellers who are going to be anxious to buy back their money losing positions. But that’s going to be a lot more difficult, because there’s not going to be a lot of gold around. Because a lot of the gold that was liquidated in the second half of 2013 is not going to be available for sale in the second half of 2014. That gold was probably purchased by entities that never intend to sell it.

So I think we’re going to have a real short squeeze and we’re going to have a big rally probably beginning here in the second half of 2014. But maybe gathering momentum as the year comes to a close.

Schiff, who is credited for calling the U.S. housing bust and 2008 economic crisis, added:

I expect the price of silver to rise. Other precious metals- platinum- and commodities in general are all responding to the inflation that the Fed is creating to prop up this phony economy. All the while denying that inflation is a problem.


“Gold Videocast: Gold’s 2014 Half-Time Report”
YouTube Video

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Jim Rogers: Some Currencies, Real Assets Could Shine When Coming Bust Arrives

Enough about Chicago already. Let’s talk money.

Last time I blogged about well-known investor, author, and financial commentator Jim Rogers, he shared this warning regarding the ocean of liquidity that’s been created by unprecedented money printing via the world’s central banks:

When it ends, we will all pay a terrible price.

That was the end of May. And now?

Disturbingly, he’s singing the same tune.

Elena Torrijos reported on the Yahoo! Finance Singapore website yesterday:

He doesn’t know when the party is going to end, but he believes when it does, “we’re all going to suffer very, very badly”. He said the US would also fare worse than it has in previous economic setbacks because the country’s debt is now so much higher than before.

“So the next one [economic bust] is going to be much worse… so be worried, be careful and be prepared,” he warned.

Everybody should have a game plan, he said. “Learn how to cut back if you need to, even learn how to sell short. Short sellers are going to earn a lot of money the next time around,” he pointed out.

(Editor’s note: Bold added for emphasis)

The Singapore-based Rogers suggested certain currencies could initially offer refuge when the “bust” arrives. Torrijos added:

He believes some currencies are going to do well in that time of turmoil. “The Chinese renminbi, for instance, will probably continue to do extremely well over the next few years. I even own the US dollar at the moment. The US dollar is a terribly, terribly flawed currency, but at the moment I own it because when the turmoil comes many people will flee to what they see as a safe haven,” he said.

When invariably central banks start printing money to pump prime their economies, he’s not sure which currency he’d flee to. “Maybe the renminbi, maybe gold, probably real assets, because once the floodgates open even more, the value of paper money everywhere is going to go down a great deal,” he said.

(Editor’s note: Bold added for emphasis)

What about commodities- something with which the former investing partner of George Soros is so closely identified with? Back on December 3, 2013, Rogers appeared on The Lang and O’Leary Exchange, a Canadian business news television series which airs weekdays on CBC Television and CBC News Network. He told host Amanda Lang:

This is going to end badly. We’re all floating around on a sea of artificial liquidity right now Amanda. This is not going to last. No, no. And when it ends, the bull market in commodities will probably end too. But, the bull market in a lot of stuff will end.

(Editor’s note: Bold added for emphasis)

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

Source:

Torrijos, Elena. “Jim Rogers reveals his Singapore investment strategy.” Yahoo! Finance Singapore. 14 July 2014. (https://sg.finance.yahoo.com/news/jim-rogers-reveals-his-singapore-investment-strategy-153319907.html). 15 July 2015.

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CNNMoney Poll: 63 Percent Of Americans Believe Most U.S. Children Won’t Be Better Off Than Their Parents

Long-time readers of Survival And Prosperity might remember this bit about American kids possibly not turning out to be “better off” than their parents. I blogged on September 21, 2011:

Back in 2006 when I was working at a suburban fire department, a battalion chief came into my office, saw the local paper on my desk, and asked, “Did you read that piece about how kids these days might be the first generation who won’t be better off than their parents?” I replied, “Yeah, it was depressing.” The fire officer confided, “That stuff scares me. I’m worried they might be right about that.” I’d be concerned too, especially if I were the parent of a couple of young kids like this chief was.

I was reminded of that exchange when I read the following from Tami Luhby on the CNNMoney website yesterday:

The American Dream is impossible to achieve in this country.

So say nearly 6 in 10 people who responded to CNNMoney’s American Dream Poll, conducted by ORC International. They feel the dream — however they define it — is out of reach.

Young adults, age 18 to 34, are most likely to feel the dream is unattainable, with 63% saying it’s impossible. This age group has suffered in the wake of the Great Recession, finding it hard to get good jobs.

Younger Americans are a cause of great concern. Many respondents said they are worried about the next
generation’s ability to prosper.

Some 63% of all Americans said most children in the U.S. won’t be better off than their parents. This dour view comes despite most respondents, 54%, feeling they are better off than their own parents…

(Editor’s note: Bold added for emphasis)

According to Luhby, the poll came from telephone interviews with 1,003 adult Americans from May 29 to June 1, 2014.

I’m really not surprised by the findings of this survey. Besides an ugly employment picture, middle-class incomes are stagnating and the cost of living is rising (despite what the government and its shills say).

Here’s something else I mentioned in that September 2011 post. It’s from Annalyn Censky- also on the CNNMoney website:

It’s official. The first decade of the 21st century will go down in the history books as a step back for the American middle class.

Last week, the government made gloomy headlines when it released the latest census report showing the poverty rate rose to a 17-year high…

But the data also gave the first glimpse of what happened to middle-class incomes in the first decade of the millennium. While the earnings of middle-income Americans have barely budged since the mid 1970s, the new data showed that from 2000 to 2010, they actually regressed.

For American households in the middle of the pay scale, income fell to $49,445 last year, when adjusted for inflation, a level not seen since 1996.

And over the 10-year period, their income is down 7%

(Editor’s note: Bold added for emphasis)

Are middle-class wages still stuck in reverse today? From a September 17, 2013, post on the Free exchange blog (The Economist website):

THE Census released new figures on income and poverty today… They’re both grim and unsurprising. In 2012 the real median household income in America was flat relative to 2011 and down considerably from the pre-recession level

(Editor’s note: Bold added for emphasis)

So is the American Dream impossible to achieve anymore?

I don’t think so. But I predict many of the kids today and possibly future generations will find it significantly more difficult to realize the Dream due to the self-serving and ill-advised fiscal and monetary policies carried out by the adults of the last few decades to the present time.

By incurring trillions of dollars of debt during this time period, we’ve screwed a good number of our kids and future Americans.

Here’s hoping yours won’t be employed as a servant to the Chinese or whoever the next hegemon is in the coming years…


“Chinese Professor”
YouTube Video

Sources:

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

Luhby, Tami. “The American Dream is out of reach.” CNNMoney. 4 Jun. 2014. (http://money.cnn.com/2014/06/04/news/economy/american-dream/index.html). 6 June 2014.

R.A. “Stagnation for everyone.” Free exchange. 17 Sep. 2013. (http://www.economist.com/blogs/freeexchange/2013/09/incomes). 6 Jun. 2014.

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Peter Schiff: ‘We Have An Entire Economy That Is Supported On A Foundation Of Bubbles’

Tonight I watched Peter Schiff’s presentation at the MoneyShow Las Vegas back on May 12, 2014. The CEO and Chief Global Strategist of Euro Pacific Capital shared his current assessment of the U.S. financial landscape in “Too Big to Bail: Why the Next Financial Crisis Will Be Worse Than the Last”- as well as where he thinks we’re heading. Schiff warned attendees:

There is no economic recovery in the United States at all. There is no evidence of an economic recovery. The U.S. economy is in far worse shape than it was on the eve of the 2008 financial crisis. We have never been in as worse shape as we are right now. But they say, “Whoa! But the stock market went up.” Yeah, of course the stock market went up. You print enough money, you can make the stock market go up. Yes, the Federal Reserve succeeded in reflating the stock market bubble. But that’s all that it did. That isn’t evidence of a strong economy. Stock prices went up from 2002 to 2007. Does that mean we had a sound economy? No. We were on the verge of a complete implosion. The main difference though between the stock market bubble that we have today and the one that blew up, let’s say, in 2000, is that fewer individuals are participating. This is the bubble for the 1 percent. This is for the hedge funds, the private equity guys… The overwhelming concentration of buyers are very wealthy people. The average American is not participating in the stock market to the extent that he was in the 1990s. And so the Fed is not getting the boost to consumption that you would normally have from the wealth effect because a lot of people aren’t feeling the effects of the wealth because they don’t own stocks.

The same thing is happening in the real estate bubble, which the Fed has managed to reflate. The difference again between the real estate bubble we have now and the real estate bubble that popped in 2007 is again- the average American isn’t participating. Home ownership rates are at 19-year lows. You have hedge funds and private equity companies that are buying up real estate. Last month, I think 43 percent of all the properties purchased in America were purchased for cash. These are not typical Americans buying houses to live in. These are investors buying houses to flip, buying houses to rent out. This is not a healthy market. It is an extremely speculative real estate market thanks to the Federal Reserve.

So the Federal Reserve has managed to reflate two bubbles simultaneously.

And of course, the biggest bubble of them all is the bubble in the bond market.

So we have an entire economy that is supported on a foundation of bubbles…


“Peter Schiff at Las Vegas Moneyshow 2014”
YouTube Video

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Peter Schiff Warns Of Coming Inflation, Accompanying Propaganda

“Crash prophet” Peter Schiff sees inflation getting worse in America. And with it, Washington, the Fed, and the mainstream media spinning rising prices as something that’s beneficial for the general public. The Euro Pacific Capital CEO and Chief Global Strategist added a new entry Tuesday on his YouTube video blog The Schiff Report, and warned viewers of the following:

It’s going to get worse. And, what is the Fed going to do about it? Because the problem is, no matter how high that inflation number gets, they can never admit it’s a problem. Because if they admit that it’s a problem, they’ve got to do something about it. But they can’t do anything about it. Because if they want to fight inflation, what tools do they have? Just one. They’ve got to raise interest rates, which means they’ve got to end quantitative easing. And in order to raise interest rates, they’ve got to start selling their bonds and their mortgages back into the market. That will collapse the real estate market, collapse the stock market, send the economy into a sharp recession, and bring about a financial crisis worse than 2008. So because they can’t do that, they can’t do anything. So they’re going to have to tolerate inflation, no matter how high it gets. They’re going to have to convince us that it’s good for us, no matter how high it gets. They’re going to say, “Oh, well, maybe it’s transitory,” “It’s because of the weather,” “Oh, you know, we had such low inflation for so long, we need a few years of higher inflation to even it all out.” Who knows what kind of excuses Janet Yellen is going to come up with to rationalize why whatever the inflation number is- no matter how high it is- it’s always going to be a good thing?

But I wonder if the media- if the guys at Bloomberg or the guys at The New York Times or the AP or the Financial Times- will ever see through this charade. Will they ever see through this smokescreen and come out and call the Fed out on this? Will they ever say, “You know what, we’ve got too much inflation- this is not good. Do something about it.” And when the Fed doesn’t do something about it, that’s going to be a big problem for the dollar. Because that’s when people realize that this is QE Infinity, that inflation is never going to stop, that the dollar’s value is going to erode away in perpetuity. That’s when the bottom drops out of the market. That’s when the real crisis comes in. Because now the dollar really starts to cave, and puts more pressure on the bond market. That means the Fed has to print a lot more money. A lot more dollars that nobody wants to buy the Treasuries that nobody wants to keep the market from collapsing. That accelerates the inflationary spiral, and puts the Fed in a real box. Because then, it just can’t print the dollar into oblivion. It can’t turn it into monopoly money. Then it has to slam on the breaks. Then it has to really jack up interest rates. Not just a few hundred basis points- ten percent, fifteen percent, twenty percent. Paul Volcker style. Of course, the medicine won’t go down nearly as smoothly as it did back then. Not that it was so great tasting- we had a pretty bad recession in 1980. But that’s nothing compared to what we’re going to go through, because we have a lot more debt now than we had then- it’s not even close. We don’t have the viable economy. We don’t have the trade surpluses or the current accounts surpluses. And we don’t have a federal government that has a long-term financing on the national debt. It’s all financed with T-bills. And we have all these adjustable rate mortgages. We have all these corporations, individuals that are so levered-up. We’ve got all these student loans and credit card debt. We have all this stuff that we didn’t have back in the 1980s that we’re going to have to deal with- thanks to the Fed.


“Media Reports Rising Food Prices as Positive News”
YouTube Video

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

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Marc Faber: ‘Next Step’ Is For Stocks, Bonds To ‘Go Down At The Same Time’

Swiss-born investment advisor/fund manager Marc Faber, who became famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash and for predicting the 2008 global financial crisis, was on the phone with CNBC’s Squawk Box yesterday morning. Dr. Faber warned viewers:

I don’t think that the economy is recovering at all. We have in emerging economies a slowdown, export growth is non-existent, and now- and I have been writing about this now for the last two years- we have geopolitical problems A, in Ukraine and B, in East China Sea…

(Editor’s note: Bold added for emphasis)

The publisher of the monthly investment newsletter The Gloom Boom & Doom Report added this about stocks and bonds:

Since the beginning of the year, the stock market has basically done nothing… but long-term bonds are up 12 percent in terms of total return. Now I believe the next step will be that both stocks and bonds will go down at the same time

(Editor’s note: Bold added for emphasis)


“Dr. Doom’s big bear parade”
CNBC Video

So what does “Doctor Doom” recommend then?:

I don’t see any assets that are terribly attractive. Now, the most under-appreciated asset is cash. Nobody likes cash. Now, on cash, for the next 10 years you will earn precisely zero. In fact, you will lose money, because Mrs. Yellen- she’s a money printer like all the others- and she will make sure that the dollar continues to depreciate in real terms. For the next 6 months, maybe cash is the most attractive… For the next 6 months, opportunities will come along all the time

(Editor’s note: Bold added for emphasis)


“Faber: Cash most underappreciated asset”
CNBC Video

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Peter Schiff Predicts Gold Going Higher Than $5,000 An Ounce

Peter Schiff, the CEO and Chief Strategist over at Euro Pacific Capital, appeared on the CNBC TV show Futures Now on April 15. Schiff, who correctly-called the U.S. housing bust and Great Recession, told viewers:

I’ve been buying gold for the same reason for the last decade, and it’s because central banks are creating too much money, there’s too much inflation, interest rates are too low, and so I want to store my purchasing power in something that central banks can’t print. Meanwhile, during that time period, gold has gone from under $300 an ounce to a high of $1,900. We’ve pulled back. I think we are headed much, much higher, because they are not going to stop these presses. They are going to run them in overdrive…

I don’t know the time period. They’re just going to trend higher. They’re going to go a lot higher. I’ve said $5,000. They’ll go higher than that.


“I’m Off Base, You’re Not Even in the Ballpark!”
YouTube Video

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Peter Schiff Predicts Future Fed Moves

Peter Schiff of Euro Pacific Capital released a new entry Monday on The Schiff Report YouTube vlog. The “crash prophet” talked about a number of financial topics, including future activity by the U.S. central bank. Schiff predicted:

I think that with the weakening in the stock market, the softness we’re seeing now in the real estate market- with the fact that we’re going to be getting weaker jobs numbers in the spring that cannot be rationalized away based on the weather- the Fed is going to have come forward at some point and acknowledge which should have already been obvious. That they were mistaken. They were overly-optimistic on their assessment of the economy. That for whatever reason they’ll come up with an excuse to save face- they can blame it on some external factor- but the Fed is going to have to come out and they’re going to have to halt the tapering process, and ultimately reverse it.

How much time there will be between the pause and the reversal?

I don’t know. I don’t think it will be more than a couple of meetings, at best. But that’s what’s coming….

Schiff, who correctly-called the U.S. housing bubble and subsequent burst along with the 2008 global economic crisis, went on to speculate what all this might mean for gold and stocks.


“Warmer Weather’s Failure to Stoke Jobs Chills Stocks”
YouTube Video

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

(Editor’s notes: I am 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 presented herein)

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Peter Schiff: No Recovery, Just An Illusion Of Prosperity

I first started paying attention to Euro Pacific Capital’s Peter Schiff just prior to picking up his book Crash Proof: How to Profit From the Coming Economic Collapse (now Crash Proof 2.0, second edition) shortly after its early 2007 release. While some of the calls he made in that controversial text are still playing out, others have already come to fruition.

Subsequently, Schiff has been given credit for correctly-calling the U.S. housing bubble and its burst, and the 2008 global economic crisis.

Being one of Survival And Prosperity’s “crash prophets,” his latest investment recommendations are chronicled on this blog. As are his economic analyses and forecasts as well.

Here’s a recent breakdown of what Schiff sees going on with the U.S. economy and larger financial system, courtesy of a March 21 commentary entitled “Debt and Taxes” that’s posted on his Euro Pacific Capital website:

The last few years have proven that there is no line Washington will not cross in order to keep bubbles from popping. Just 10 years ago many of the analysts now crowing about the perfect conditions would have been appalled by policies that have been implemented to create them. The Fed has held interest rates at zero for five consecutive years, it has purchased trillions of dollars of Treasury and mortgage-backed securities, and the Federal government has stimulated the economy through four consecutive trillion-dollar annual deficits. While these moves may once have been looked on as something shocking…now anything goes.

But the new monetary morality has nothing to do with virtue, and everything to do with necessity. It is no accident that the concept of “inflation” has experienced a dramatic makeover during the past few years. Traditionally, mainstream discussion treated inflation as a pestilence best vanquished by a strong economy and prudent bankers. Now it is widely seen as a pre-condition to economic health. Economists are making this bizarre argument not because it makes any sense, but because they have no other choice.

America is trying to borrow its way out of recession. We are creating debt now in order to push up prices and create the illusion of prosperity. To do this you must convince people that inflation is a good thing…even while they instinctively prefer low prices to high. But rising asset prices do little to help the underlying economy. That is why we have been stuck in what some economists are calling a “jobless recovery.” The real reason it’s jobless is because it’s not a real recovery! So while the current booms in stocks and condominiums have been gifts to financial speculators and the corporate elite, average Americans can only watch from the sidewalks as the parade passes them by. That’s why sales of Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors. Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt, which at some point in the future must be repaid

(Editor’s note: Bold added for emphasis)

“Which at some point in the future must be repaid”

Good luck trying to get your average American in 2014 to wrap their head around that crucial concept.

Once again, I agree with Schiff’s observation of what is going on all around us.

“Illusion of prosperity” is a fine choice of words here, and makes sense that I find a fine economic blog by the same name good reading.

As certain as the “Big One” will eventually hit California, so must our nation’s “financial reckoning day” arrive for all this debt we’ve accrued for some short-term “prosperity.”

You can read Schiff’s entire commentary on the Euro Pacific Capital website here.

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

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Milestone: Survival And Prosperity Reaches 2,000 Posts

Yesterday was a milestone for Survival And Prosperity:

2,000 posts have now been published on the blog

Not bad considering the weblog was started a little less than three-and-a-half years ago.

My previous flagship blog, Boom2Bust.com, “The Most Hated Blog On Wall Street,” only reached around 1,500 posts.

I think a little celebration is called for, don’t you?


“Clerks Dance”
YouTube Video

There’s lots more blogging to be done. Washington and the Fed has managed to “kick the can down the road” this far, and while the economic picture might look rosy to many for a bit longer, I’m still not deviating from that prediction I made back on Memorial Day Weekend 2007 about a U.S. financial crash.

In fact, I believe we’ve already started into the descent. And gradually, the U.S. economy and larger financial system that is weighed down by tremendous debt and steered by greed, arrogance, and incompetence will eventually crash hard.

That being said, America has been here before (Great Depression). And I do see the country getting back on firm economic ground again. But only after the excesses off a multi-decade debt binge are effectively purged.

No “doomsday,” but definitely a “financial reckoning day.”

In the meantime, it’s probably wise to take advantage of the present situation to prepare for what I see is in store for the country down the road. Whether that means finding a line of work that’s more stable or acquiring more income to preserve one’s standard of living in hard times, it’s something one may want to look into and take action on while it’s still possible to do so. Of course, individual circumstances vary. Still, improving one’s self-sufficiency- even incrementally- can make a big difference in an emergency or major crisis. It’s something our predecessors in this great nation of ours understood and practiced, but unfortunately has fallen by the wayside in modern times.

Survival and prosperity. That’s what this blog continues to be all about.

Christopher E. Hill
Editor

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Peter Schiff: ‘Bernanke Bubble’ Will Pop Early In Janet Yellen’s Term, Ringing In Dollar Collapse

Euro Pacific Capital CEO and Chief Global Strategist Peter Schiff added a new entry Friday on his YouTube video blog The Schiff Report. Schiff, who correctly-predicted the U.S. housing bubble’s pop and 2008 economic crisis, warned viewers of a collapse in the U.S. dollar instigated by another bubble deflating. From Friday:

What happened two years into the Bernanke term is Alan Greenspan’s bubble blew up. Now, of course, Ben Bernanke, he was part of it, because he was at the Fed for part of Alan Greenspan’s tenure, and so he went along with the bad policies. But the “Greenspan bubble” blew up on Ben Bernanke. The same thing is going to happen again because the “Bernanke bubble” is bigger than the “Greenspan bubble.” The monetary policies pursued by Bernanke were far more reckless than the ones pursued by Greenspan. And therefore the bubble is much bigger. And therefore the damage to the economy when it pops will be much bigger. So just like it hit the fan when Bernanke was at the Fed, it’s going to do the same thing on Janet Yellen’s watch. We’re going to have another crisis early in the Yellen term that will be bigger than the crisis that we had early in the Bernanke term, and Wall Street and the government are equally unprepared. They will be equally blindsided. In fact, I think they will be blind-sided even more. Because if you go back to the Greenspan period, there were more doubters, there were more people like me back in 2004, 5, 6, 7, who were critical of Alan Greenspan and who were expressing that criticism or that skepticism by buying gold and doing various things to hedge themselves against inflation. There’s not that many of us left. There were some critics of Ben Bernanke early on, and as gold up to 1,900. Yes, critics were buying gold and anticipating problems in inflation. No more. Most of those voices have been silenced. In the last year or so, the doubters have become believers. Everyone is cheerleading Bernanke and welcoming Janet Yellen into the Fed anticipating nothing but sunny skies ahead. Nobody really understands that all of the problems that they believed Ben Bernanke solved, he simply exacerbated. The U.S. economy is in worse shape than it was when the financial crisis started. We have bigger problems, and therefore the next financial crisis will be worse. The thing that is going to be different about the next crisis, is I believe it will be a currency crisis…

Instead of being the end of the dollar’s decline, the next crisis will be the beginning of the dollar’s collapse. And I will anticipate that the dollar will continue to weaken until that crisis starts. Because as 2014 unfolds, we’re going to get more data like the December jobs data that is going to disappoint and call into question the validity of this recovery, which I believe is an illusion, and not a reality.


“An Imaginary Recovery Does Not Create Real Jobs”
YouTube Video

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

(Editor’s notes: Info added to “Crash Prophets” page; I am 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 presented herein.)

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Christopher E. Hill, Editor
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