The stock market is booming on news of successful coronavirus vaccines but the rally isn’t really about a cure for Covid, says economist Peter Schiff. It is being driven by the government and central bank policies, he insists.
According to the veteran stockbroker, the problem is that the government’s “help” really isn’t helping. In fact, it has made a bad situation much worse.
The Dow Jones Industrial Average was up 11.8 percent last month, having its best November since 1928. The S&P 500 and the NASDAQ also had their best months since the big rebound in April from March lows.
“This is all a bubble,” Schiff explains in his podcast, pointing to the deep damage done to the economy by the government response to coronavirus. He notes that 17 million US households are behind on rent or mortgage payments, and nearly six million Americans say they are at risk of eviction in the next few months.
“The markets are not lower because of Covid. In fact, they’re higher. And the reason the markets are higher, and the reason they’ve rallied since the vaccine, has got nothing to do with Covid. It’s all because of the Fed. It’s all because of other central banks, not just the Fed, but it’s the way central banks have responded to Covid,” Schiff says, noting that their prescription to cure coronavirus is to print trillions of dollars out of thin air.
The reason the US is in so much trouble now is because the government has intervened so much in the economy and pumped in so much artificial stimulus. “And so, at this point, the greater damage to the economy is not the damage from the virus itself, but the damage from the monetary and fiscal policy that was put in place to supposedly numb us from the pain of the virus. So, that doesn’t go away. The cure for Covid doesn’t do anything to cure that problem. In fact, that problem is now self-perpetuating and is going to get bigger and bigger and bigger,” Schiff says.
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