Peter Schiff: Look Beyond the Trade War (Video)
Peter Schiff appeared on RT Boom Bust earlier this week to talk about the trade war “truce” between the US and China.
The announcement that there was some progress in resolving the trade war during the G20 summit boosted stock markets on Monday (the day this segment was aired), but that lasted all of one day. The markets tanked on Tuesday as investors realized the “truce” really didn’t mean anything substantive. In the RT interview, Peter said we really need to keep our focus on the bigger picture, particularly the Federal Reserve and the dollar.
Peter started off by saying that any benefits we see in trade war negotiations will be the result of Trump basically backing down.
First of all, the only benefit that we’re going to have is to the extent that Trump completely backs down and walks away from the trade war, because all he’s done right now is delay the day of reckoning. Basically, he was threatening to punch everybody in the face on January 1st and now he’s saying, ‘Well, I may hold off on punching you for another 90 days.’ So, you know, the only benefit people derive is from the fact Trump backs down.”
Peter went on to say the president doesn’t seem to understand the dynamics.
It’s America who’s benefitted at the expense of China because we’ve been getting this huge trade deficit. We get to consume all these things that we don’t have to pay for. But there are certain American exporters, like the farmers, who have been doing a lot of business with China, and they can get caught in the crossfire here, but what we need is more exports to China, but the Chinese government can’t force Chinese consumers and Chinese companies to buy American products. What Americans have to do is make the products that the Chinese want to buy. That’s the only way we’re going to export.”
While the mainstream focuses on what the trade war reprieve might do for the stock market, Peter continues to focus on the bigger picture. He said he thinks stocks will continue lower. He said the only thing that is going to blow air back into the market are actual Fed rate cuts.
It’s not just about the Fed kind of pulling back on some of the future rate hikes. I think it’s going to take an actual cut. I think the Fed is going to have to go back to zero if they want to try to blow more air into the stock market bubble.”
Peter said he doesn’t think Trump will follow through on additional tariffs, calling it “a bluff,” but this isn’t what we should be focusing on.
Eventually, he’ll probably take that off the table. But I think what is going to ultimately help commodity prices and some of those stocks is going to be a drop in the dollar. In fact, I think a precipitous decline in the dollar is coming when traders really understand where the economy is headed, which is into a worse recession than the one we had in ’08 and ’09, that the Fed is not going to keep raising rates, that they’re going back to zero, that they’re going to do another round of quantitative easing that’s going to be larger than the first three combined. And when the dollar really starts to fall, that’s what’s going to stoke global demand for all these commodities, than then the prices are going to go way up.”
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