Peter Schiff: Governments Just Make a Bad Situation Worse
Last week was a rollercoaster ride on Wall Street. In the midst of market madness, Peter Schiff appeared on RT Boom Bust to talk about a range of subjects from the Fed’s move to cut rates, to coronavirus, to the impact of Super Tuesday and presidential politics on the markets, to government ineptitude.
He started out the interview reiterating a point he’s made over and over again over the last few months. This market is all about the Fed and it’s always been all about the Fed.
That’s the only thing propping it up.”
Peter called the big stock market gains last Wednesday a bit of a “relief rally” after Joe Biden made a strong showing on Super Tuesday and it appears less likely that Bernie Sanders will win the Democratic Party nomination.
Even though people gave him a very small chance, if any chance at all of actually winning, the fact that he could win, because anything can happen if he was on the ballot, it would be disastrous for the economy and the stock market, I think the markets maybe started to price in some small probability of a Sanders victory, and today I think that’s been priced out. I think his path to the White House is pretty much shut down, The establishment has coalesced around Biden. Everybody is dropping out and endorsing him.”
Peter said Biden isn’t going to be good for the stock market either.
One of the big economic concerns about the coronavirus is the disruption of supply chains. China is reportedly trying to incentivize people to go back to work. Could this result ins a “second wave” hit in China? Peter said he doesn’t really know the situation on the ground in China and he’s not a doctor, but as an economist, he thinks the central banks have jumped the shark.
I think they’re making a mistake. I don’t think they have the correct remedy for this disease. I think the Fed, in particular, made a mistake with the rate cut. I think they’re going to be making more mistakes. I think we’re going to be bringing rates to zero. And I think even governments to the extent that they feel the need to artificially stimulate the economy, you know, sometimes things go wrong. Sometimes you have problems. And when the government thinks you have to come in — you know, doctors take a Hippocratic oath to do no harm. It’s unfortunate that governments and central banks don’t take the same oath because they feel they have to do something. But generally what they do makes the situation that they’re supposedly trying to fix, makes it even worse.”
Given that coronavirus isn’t likely going anywhere anytime soon, what does this mean for the markets? Will the markets just quit caring? Peter said what’s going on in the markets isn’t just about coronavirus.
Remember, the US market was substantially overvalued before anybody heard the word coronavirus. So, the market needs to come down. So, it was going to come down anyway. Coronavirus may be the excuse, but the market is going to go down.”
Meanwhile, everybody is trying to figure out what the government can do to stimulate the economy. Peter said he’s heard people say it needs to get cash in people’s pockets.
Look, the government doesn’t have any cash. All it can do is take cash from one person’s pocket and put it into somebody else’s pocket. That doesn’t stimulate the economy. It distorts the economy. And of crouse, a lot of times, the central banks just create money to stuff it in everybody’s pocket. But then all that does is destroy the purchasing power of the money people already have in their pockets. So, the government can’t do anything.”
Peter said there is one thing the US government could do when it comes to coronavirus – lighten the FDA requirements on pharmaceutical companies working on vaccines and cures.
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