Whistling Past the Graveyard: Peter Schiff Talks Stock Market and the Economy

Whistling Past the Graveyard: Peter Schiff Talks Stock Market and the Economy from Schiff Gold

The stock market has continued its upward trajectory through the first two weeks of the new year. In fact, the market has only seen one down day since Jan. 1. Peter Schiff appeared on The Street and opened things up with a bang, calling investors “Oblivious.”

Peter reiterated a message he’s been preaching on his own podcast for weeks – despite what you see in the markets, the US economy is heading for a major crash. We’re partying like it’s 2006 – oblivious to what’s lurking right around the corner.

Peter also talked about China’s decision to cut back or end the purchase of US Treasuries, the Federal Reserve, Trump’s economy and Bitcoin during the interview. 

Highlights from the Interview

“Investors are oblivious. They are really whistling past the mother of all graveyards. This is the best start since 2006. And of course, people who were buying stocks in 2006 had no idea of the magnitude of the financial crisis that would hit the market in 2008. Well, the same people are even more clueless today, because the crisis that we’re heading for is going to be much, much bigger – much worse – than the one in 2008.”

“Remember, we count on the Chinese to roll over the debt as it matures. And so if they don’t buy any more, that means they are going to let their Treasury bond holdings mature. Where are we going to get the money to repay the Chinese? We don’t have that money. We have to get it from the Federal Reserve. But according to the Fed, they’re not buying Treasuries either. And if the Chinese stop buying, why would anybody else buy?”

“Interest rates are going way up, and people are oblivious to what that means. Because we have more debt than ever before in this country. You know, we had a crisis in 2008 because we had too much debt. Now we have much more. So the economy is in much worse shape. It is very vulnerable to a backup in interest rates. The whole justification for the stock market bubble is based on the fact that rates are low. But what if they’re not low anymore?”

“If interest rates go up, the government can’t afford to pay interest on the national debt, which is exploding. Corporations can’t afford to pay interest on their debt. Individuals can’t afford to pay interest. The states can’t afford to pay interest. I mean, nobody can afford interest rates if they go up.”

“The problem for individuals is even though they are going to get a tax cut, they’re going to spend that money on gas, they’re going to spend it on food, they’re going to spend it on insurance. So, they’re not going to have anything left over to buy anything extra. They’re just going to pay more for life’s necessities.”

“I think people are overestimating the benefit of the economy to the tax cuts, and they’re ignoring the drag on the economy of rising interest rates.”

“The economy is a lot weaker than people think and they’re being blindsided by all this hype. You know, Donald Trump was right when he was a candidate. It’s a big, fat, ugly bubble. And now it’s a lot bigger, fatter and uglier than it was back then.”

“I think the Fed is going to actually expand its balance sheet. I think they’re going to surprise the markets with QE4. Because I think interest rates are going to be rising so much that the Fed is going to panic. The Fed is going to try to halt the increase in interest rates because it knows it will usher in another financial crisis.”

“I think the US dollar is going to hit an all-time record low against the yuan this year.”

“Before the inflation is going to show up at the grocery store, or at the gas pump, it showed up in the stock market, in the bond market, in the real estate market, but ultimately it is going to go into consumer prices.”

“I do believe that no matter how high Bitcoin goes, it’s ultimately going near zero. Whether it goes all the way to zero or just gets close enough, it’s not going to matter. The losses are going to be enormous for people who are buying Bitcoin now. Even if they temporarily have some paper profits, the market is going to implode.”

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Peter Schiff

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for more than twenty years, he joined Euro Pacific in 1996 and served as its President until December 2010, when he became CEO. An expert on money, economic theory, and international investing, he is a highly sought after speaker at conferences and symposia around the world. He served as an economic advisor to the 2008 Ron Paul presidential campaign and ran unsuccessfully for the U.S. Senate in Connecticut in 2010.