Peter Schiff: Rate Hikes on the Horizon?
Peter’s back to recap the last week in markets and economic news. This episode starts with April’s dismal stock performance and also discusses Jerome Powell’s most recent appearance. Peter wraps up the episode by recounting the Bitcoin debate he participated in on Friday.
Peter notes that April’s losses in the stock market were in part created by doubt about the Fed’s future rate cuts:
“The reason for that was heightened talk not just about the Fed not cutting rates, but for the first time, I heard people discussing the possibility that the Fed might have to raise rates, that the next move may in fact be a hike and not a cut. Now that‘s the first time that I’ve heard any mainstream discussion of that possibility. … I’ve been saying that that is the correct policy. If the Fed really is data-dependent, and if the Fed really wants to fight inflation, based on the data, they should resume their hikes.”
Despite this possibility, markets are unduly optimistic. The Fed’s historical record is not very successful, even decades ago when America’s fiscal health was much better:
“The markets believe that the Fed is going to succeed. This is pure nonsense! I look back at the inflation statistics for the 40 years before the 2008 financial crisis— so 2008, 2007, going back to 1968, those 40 years— there were only 3 years where inflation was 2% or lower. The average inflation rate over those 40 years was 4.8%. … If the Fed wasn’t able to come close to 2% during those 40 years, why does anybody think it’s going to come anywhere near it over the next 30 years?”
Fed Chair Jerome Powell still refuses to criticize federal fiscal policy, despite the apparent need for rate hikes:
“Not only is he allowed to do it, he’s really required to do it! That’s the whole point of an independent central bank— so you can criticize the government when it makes a mistake, not hide behind your independence and fail to criticize the government. Paul Volker was Congress’s biggest critic!”
After stock prices plummeted last week for large companies like Starbucks, Peter sees the declines as a sign of future stagflation:
“I think that this is the beginning of a trend. I think Starbucks is going to have a hard time with sales in the stagflation environment that Jerome Powell doesn’t want to acknowledge. And Starbucks wasn’t the only company! I remember Clorox came out and warned it had a big drop. Remember Peloton! Peloton missed as well.”
Peter also mentions some highlights from his Bitcoin debate on Friday. He argues again that “Know Your Customer” (KYC) and anti-money laundering (AML) regulations are primarily used to prevent tax evasion, not violent terrorism:
“If they can catch a few terrorists, ok fine, that’s the icing on the cake. The cake is tax evasion. That’s what all these governments are trying to prevent when they require all these AML KYC rules at banks. How many terrorists do you think there are in the world? Out of a hundred people, how many of them are going to be a terrorist? Very few. … I don’t think there was ever a point where a terrorist tried to deposit money at my bank.”
U.S. tax policy has strayed quite far from that of the country’s Founding era:
“The country was founded by tax protesters. The country was founded by people who didn’t want to pay a tiny tax to the British crown! There’s no way King George would’ve ever imposed an income tax on the colonists. He would never do something that draconian. No! He’s talking about excise taxes. Taxes on tea, taxes on stamps, little things! We had a whole revolutionary war because of those tiny little taxes. … No government has the right to take half of what somebody earns.”
While Peter agrees on a lot with his debate opponent Erik Voorhees, they still disagree on Bitcoin’s importance to the free market movement:
“I just don’t think that Bitcoin is part of the solution. Ultimately, it’s going to be part of the problem. Part of the solution to reigning in government is a return to sound money, a return to real money, and unfortunately, Bitcoin doesn’t fit that bill. But gold does.”
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The Fed Is Already Political
Discourse about the Federal Reserve is frequently full of myths, dishonest framing, and outright lies. Listen to a press conference by Chairman Jerome Powell or read an article from a major outlet’s lead Fed correspondent and you’re bound to hear at least a few. For instance, it’s common for the financial press to characterize the Fed’s current conundrum as “walking a tightrope.”
It’s said that the Fed is working to guide the economy along without tipping it over into either high inflation on one side or a recession on the other. The last couple years, we’re told, saw the economy wobble too far toward the inflation side, with the Fed now attempting to pull the economy back to the thin line of stability without tipping over too far and plunging into a recession.
But anybody who actually understands what causes recessions can tell that this framing is, at best, incredibly misleading. The Fed doesn’t prevent recessions, it directly causes them. These days the tightrope analogy contributes to the myth that, while difficult, a recession is possible to avoid. It isn’t. All the Fed can do is delay and amplify the painful correction that earlier monetary policy made inevitable.
Another myth that has been getting more attention in past weeks is that the Fed as an organization is separate from, above, or independent from politics.
The attention follows a Wall Street Journal report alleging that members of former president Donald Trump’s team are drawing up plans to give the president more power over the Fed should Trump win the election this November. Reporters cite an internal ten-page document that argues the president should be consulted on interest-rate decisions and have the authority to fire Fed chairs before their term is up. These plans sparked panic about a politicized Fed and provoked responses from several concerned economists.
It is absurd that this needs to be spelled out, but the Fed is already a political organization. It was established by an act of Congress in 1913. Two decades later, Congress consolidated much of the Fed’s power in Washington, DC, and set up the position of chairman, who is appointed by the president and confirmed by the Senate. It also created a single committee—most of which is also appointed by the president and confirmed by the Senate—to direct open market operations for the entire country. Then in 1977, Congress passed another bill requiring the Fed to pursue specific policy goals.
So, a bunch of politicians created an organization and consolidated its power in Washington, DC, where a committee of government officials appointed and confirmed by politicians directs monetary policy for the entire country according to policy goals defined earlier by other politicians. And we’re supposed to consider this organization to be nonpolitical.
Moreover, the idea that the changes Trump’s team might be considering would represent a categorical change to the structure of the Federal Reserve is crazy. Fed chairs already consult with current presidential administrations through the Treasury Secretary. It’s not as if the Fed is isolated from the ambitions of the executive branch.
The real risk, from the establishment’s perspective, is not that Trump will turn the Fed into a political organization but that he will expose the fact that it already is one.
From the outset, the Federal Reserve System has represented the politicization of money and banking in the United States. It allows the government to finance its preferred programs with newly printed money and to manipulate the entire structure of the economy with centrally planned interest rates. This is great for politicians, government bureaucrats, and politically connected businesses that get the new money early. But it traps the rest of us in a recurring nightmare of unnecessary economy-wide booms and busts along with devastating, culture-destroying permanent price inflation.
The illusion of an independent, nonpolitical Fed is critical to keep the scam going.
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Denver Sets Up Hotline For Residents to Volunteer to Host Migrants in Their Homes
The city of Denver is encouraging residents to take in destitute illegal aliens and has even set up a hotline for people who want to volunteer to house them.
A charity called Hope Has No Borders “began pairing migrant workers and their families with hosts in Colorado in late 2023. Now, with help from the United Way, getting paired up is a simple phone call away by dialing 211,” Fox31 Denver reported Saturday.
But instead of well-off limousine liberals taking them in, the burden has fallen to struggling families.
The report details how Erin Lennon, “a single mom with a spare bedroom”, gladly took in a family of four Chilean illegals after noticing them camping out in airports and on the streets because all the shelters are over capacity.
Lennon’s young son “was nervous at first about the idea of taking in strangers,” but she claimed, “Some of the greatest things that, you know, that you do or have done, has been involved with some risk.”
This illegal alien housing initiative has been rolled out in several blue cities nationwide.
For example, because of Massachusetts’ “right to shelter” laws, homeless illegals began taking residence in the Boston Airport, leading Governor Maura Healey (D) to ask citizens to take them into their homes.
One Boston liberal took in a Haitian migrant family and delighted in the fact that they provide cooking services for her.
“This is great! It’s like having your own personal chef!” she told NBC10 Boston in February.
And under Michigan’s “Newcomer Renter Subsidy” program, “eligible” households can receive up to $500 every month in taxpayer money to house illegal alien “newcomers.”
Denver began begging residents to take in illegals earlier this year as the sanctuary city enacted budget cuts in wake of the influx of 40,000 illegals, costing taxpayers $180 million.
AstraZeneca Pulls COVID Vaccine After Admitting Rare Side Effect
In yet another damning development for the ‘safe and effective’ crowd, AstraZeneca has announced the worldwide withdrawal of its Oxford-AstraZeneca vaccine, branded as Vaxzevria, due to a rare but serious side effect. This decision marks the end of the vaccine once hailed as a “triumph for British science” by Boris Johnson and credited with saving over six million lives, The Telegraph reports.
The pharmaceutical giant voluntarily withdrew its “marketing authorization” in the European Union earlier this week, with similar actions expected soon in the UK and other approving countries. The move, described by the company as driven by “commercial reasons,” coincides with the availability of newer vaccines designed to combat emerging variants.
That said, the timing of the withdrawal follows months of intense scrutiny over a rare side effect. In a recent High Court document, the company admitted that Vaxzevria could, in very rare instances, cause Thrombosis with Thrombocytopenia Syndrome (TTS), which has been linked to at least 81 deaths in the UK. Despite these admissions, AstraZeneca maintains that the decision to pull the vaccine is unrelated to the ongoing legal challenges or its potential side effects.
“We are incredibly proud of the role Vaxzevria played in ending the global pandemic. According to independent estimates, over 6.5 million lives were saved in the first year of use alone and over three billion doses were supplied globally,” the company said in a statement. “Our efforts have been recognised by governments around the world and are widely regarded as being a critical component of ending the global pandemic.”
The European Medicines Agency has begun the process to formally withdraw the vaccine, reflecting an expected move away from monovalent vaccines, which target only the original COVID-19 strain. Marco Cavaleri, head of vaccines at the agency, emphasized that this is a standard procedure for vaccines that are no longer in use.
Legal experts and victims, however, see the withdrawal as a vindication of their long-held concerns over the vaccine’s safety. “To those who we represent, all of whom have suffered bereavement or serious injury as a result of the AstraZeneca vaccine, this decision to withdraw marketing authorisation, ending the usage of the AstraZeneca vaccine in the EU, will be welcomed,” said Sarah Moore, a partner at Leigh Day, the law firm representing many of the claimants.
“It will be seen as a decision linked with AstraZeneca’s recent admission that the vaccine can cause TTS, and the fact that regulators across the world suspended or stopped usage of the vaccine following concerns regarding TTS.”
Victims and their families have reported a range of severe reactions, from fatal thrombosis to lasting disabilities, sparking a debate over the adequacy of vaccine safety monitoring and compensation for vaccine injuries.
Kate Scott, whose husband suffered a permanent brain injury after receiving the vaccine, expressed mixed feelings: “AstraZeneca’s Covid vaccine no longer being used in the UK or Europe, and soon the rest of the world, means no one else will suffer from this awful adverse reaction,” she said. “They say it is for commercial reasons, but maybe it’s because it can no longer be seen as being within the acceptable safety parameters, with 445 confirmed cases of VITT, 81 of these fatal in the UK alone.“
The government’s vaccine damage payment scheme has been criticized for not providing sufficient compensation, prompting calls for reform. “This is an important regulatory step, but still our clients remain without fair compensation. We will continue to fight for the compensation our clients need and campaign for reform of the vaccine damage payment scheme.,” Moore added.
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‘Jobs Are No Longer Hiring’ — Financial Analyst
In a video posted May 1, Jeff Snider of Eurodollar University broke down the disastrous state of the economy from the perspective of job availability – a key indicator of the financial health of a society.
“American workers know that there are no jobs to go to, so they’re no longer quitting in the same fashion they had been,” Snider said. “Remember the ‘great resignation’? Yeah that’s a long-distant memory. Workers know that if they lose their job or choose to leave their job, it is very tough going out there.”
Snider discussed how statistics are being misrepresented to make the economy seem rosy when it’s actually never been more dreary.
“We get so many anecdotes and even mainstream stories about confusion over how the jobs number looks really good on paper, how the statistics come out like payrolls and suggests the jobs market is booming, labor, employment, everything is just terrific, except when you actually talk to people, especially anyone who’s been unfortunately laid off, or someone who’s looking for a job, it’s an entirely different picture,” he said.
The economic analyst discussed the dismal numbers related to the hiring and quitting of workers.
“While the government only reports on job openings and labor turnover, the only number that anyone pays attention to is the first one, job openings, but it’s not worth your time, the one you need to focus on and pay very close attention to, that’s hires,” Snider said.
He gave some examples of mainstream news articles chronicling the tribulations of accredited and experienced workers who cannot find work anywhere, despite their credentials.
“It seems like the only places that are actually hiring, outside of maybe a state and federal government, some government agency, is waiters and bartenders, you have to go to Starbucks in order to get a job, except maybe no longer Starbucks,” he said.
The analyst then reported on the recent earnings of the big coffee chain, indicating that even the food-service giant is seeing a ‘challenging operating environment’ where customer levels are falling in the ‘deteriorating economic outlook’, according to the Starbucks earnings report Snider read.
He discussed how consumers are becoming ever more discriminating with their spending as price pressures increase.
“This is not an inflationary economy, this is an economy that is absolutely struggling, and we can feel it in so many different ways,” Snider said.
He laid out why the economy is not genuinely inflationary. He said it’s because there is not an offset of income. Rather the situation is so bad because people are not earning more, yet prices are going up in order for businesses to just stay afloat.
Snider then discussed how even the restaurant industry, an area that had been doing relatively well over the last few years, is now seeing financial trouble on the horizon. Hiring freezes, decrease in sales and potential layoffs in the near future are all taking place in the industry.
He laid out how this is not a U.S. problem, rather a global crisis that did not originate in the U.S., but has migrated here since 2020.
Snider also discussed how the economy is locked into a self-multiplying doom loop.
“Now consumers are buckling, in large part because companies are experiencing a weak environment and are having to take substantial steps in order to control their own costs, which has led to a prolonged hiring freeze already, which has only made the consumer situation even worse,” he said. “And we’re getting locked into that vicious cycle.”
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Nonstop Mass Migration Mayhem and Tragedy In Mexico
As the hordes of foreigners continue to make their way to Biden’s America, mayhem and tragedy befall many of them while they are still in Mexico.
Here are four recent examples.
SEVERAL HUNDRED FOUND IN STOREHOUSE
In the state of Mexico, police discovered a group of over 200 abandoned non-Mexicans crowded into a storehouse, waiting to be taken to the U.S. border.
“In the storehouse 208 persons were located: 10 minors, 28 women and 170 men of Egypt, Cuba, India, Palestine, Nepal, Venezuela, Honduras, Guatemala, Ecuador, Afghanistan, Syria, Iran and the Dominican Republic,” Milenio reported.
Localizan a más de 200 migrantes en una bodega de San Vicente Chicoloapan #Edomex ahí permanecían mientras llegaban camiones para trasladarlos a la frontera.
— Daniel de Rosas (@danielderosastv) May 3, 2024
Les dieron alimentos y bebidas, se espera en las próximas horas sean deportados a sus países de origen. pic.twitter.com/pi7LUUGwkq
MEXICANS COMPLAIN ABOUT ILLEGALS CAMPING IN THE STREETS
Even in Mexico, there are xenophobic people who don’t appreciate the benefits of diversity!
Tuxtla Gutierrez is a city in the state of Chiapas, which borders Guatemala. Some residents don’t want foreign illegal aliens camping in their streets, according to Mexican media.
“Inhabitants of the Lomas de Venado neighborhood in Tuxtla Gutierrez, Chiapas, request authorities to relocate the migrants, whom they say have been arriving and camping in the streets for weeks,” Milenio reported.
THREE SALVADORANS LEFT DEAD IN HIT AND RUN
In the southern Mexican state of Oaxaca, on the Panamerican Highway, three Salvadorans passing through Mexico never made it to the U.S. because they were hit by a truck.
“Three Salvadoran migrants died and another foreigner was wounded after being hit by a trailer of a double tractor-trailer….the presumably responsible driver of the accident escaped without helping the affected,” Milenio reported.
The article explains why more migrants are walking along the highway: “The impossibility of advancing in a bus on their way to the northern border of Mexico obliges thousands of migrants to walk on the edge of the highway, risking, as in this occasion, their life.”
The “impossibility” mentioned in the piece could refer to the crackdown on migrants in Mexico. But the fact that “thousands” are walking on the road shows plenty are still getting through.
?? Se registró un accidente en el que migrantes fallecen sobre la carretera a La Venta, a la altura del puente de Tolistoque. pic.twitter.com/pZ8WA6DeVs
— GPSnoticias (@GPS_noticias) April 27, 2024
THREE VENEZUELANS FALL OFF TRAIN AND DIE
In Nazareno, a town in the northern state of Durango, three Venezuelans fell off a train and died.
“Two Venezuelan migrant girls, 2 and 4 years of age, fell from a moving train and lost their lives in the community of Nazareno… while a young man of 18 years of age who also fell from the train car was taken to a hospital alive, but lost the battle upon receiving medical attention,” Milenio reported.
Just how exactly did this happen?
“According to early versions of what occurred, a group of migrants had gotten off the train to eat in this town located south of Lerdo. When they saw the train beginning to move a little they decided to board the train car. The parents of the girls struggled to board the train with the help of the young Venezuelan who was on top of the car. In a moment the train made an abrupt movement just when they were passing the girls up, which made them lose their balance and the three fell from a height of about six meters.”
Who can be blamed for this tragedy?
The Biden administration invited them.
Mexico allowed it.
The parents chose to make the trip.
In the words of a reader in the comments section: “If you don’t want these types of accidents to occur, stay in your countries!”
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