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Portfolio LLC Founder Lee Munson and Euro Pacific Capital CEO Peter Schiff debate the economy’s outlook.
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-- with very couldn't be more different points of view about everything for the economy the stock market.
Lead Munson is founder and chief investment officer -- portfolio LLC and Peter Schiff is CEO and chief global strategist at Euro Pacific Capital gentlemen.
Thanks so much for joining us -- let me start what do you think the economic indicators are showing that we're moving in the right direction.
I do and I think that you have to look at what's been happening since.
The bottom of the market back in March you know nine.
We were at the deficit spending of almost 11%.
Back then.
And last year we were close to 8% so we are spending less and that's important for the stock market because people are concerned that -- the US government spends less money that's gonna derail the economy they already have been spending less money and the market continues going higher corporate profits continue to move up.
Our right now Peter I know he said about ten things there that you're gonna disagree -- what it is pick on one which is the growth of the economy.
Jamie Dimon -- who is pretty much of a realistic Jamie Dimon sees the economy getting better he he's against regulation against.
Bigger government like you and I are but he does see the economy getting better growing at 3% is Jamie Dimon an idiot I mean he's he's a pretty Smart guy know.
He may not be an idiot but he's wrong about the economy -- wonder what Jamie Dimon was saying about the economy 2007.
I'm jury thought it was growing quite nicely bag then he was wrong then.
And he's wrong now -- the economy is not recovering it's getting sicker the Federal Reserve and -- congress are preventing a real recovery.
A real recovery would mean we spent a lot less consumers would be spending less.
Government would be spending less interest rates would be a lot higher would be saving our money we've been that investing would be paying off debt we'd be producing you see the trade deficit coming down on the current count that's a coming down.
None of this is happening all we're doing is delaying the -- -- with QE and you mentioned earlier whether or not QE3 was coming.
And fortunately it is coming.
And if again if it doesn't come we're gonna have a collapse much worse than 2008 but unfortunately that's part of the cure we have serious structural imbalances that need to be corrected and an order correct them.
The banks are gonna have a hard time the Glover is gonna be forced to dramatically cut spending may be -- restructure the debt.
-- and what about that what's wrong with the Apocalypse Now theory.
Well you know I'm really not into -- radical and getting serious -- level Peter have to say because it is a warning for us change our ways.
But the bottom line is that we have been changing her ways -- and just look at you know.
Just take a look at gold and take a look at the S&P 500 from those march -- back in 2009.
Look at -- chart you know basically they've gone up together they've had basically the same performance only the S&P.
Really has you know providing you know they make things there's real things.
Every so concerned about jobs everybody's concerned are -- the right jobs I would say we have to start someplace and it's great to talk about what could happen into the future if we don't do these things but the bottom line.
We are cutting we'll -- I didn't.
-- really amazing how you can argue.
We've -- our ways and and if you don't we add jobs and I think the art works if we get out if we add more jobs are just -- -- don't produce Howard deeper in debt we're actually it's actually counterproductive -- sure if you overlay -- chart because we know that yeah.
I'm John teeters on the exact directed -- -- -- work.
If you overlay at gold chart with the S&P 500 for the last ten years you you have huge returns in gold you're making nothing in the S&P.
Recently the S&P has gone up but I mean this is just you know a long term bear market in terms of the stock market in gold -- -- -- no that's gonna continue -- you say things are getting better but do you do not -- deny that the American dream is starting year old business throughout the government getting involved in taxing yet.
From here to eternity do you deny that it's harder to achieve the American dream -- -- debate.
Well I think -- you know I wouldn't do I.
First of all.
It's easier to start a business taxes are lower than they were 2030 years ago if an easier enjoy the same attacking and tax code is a lot bigger the regulatory code is a lot bigger.
But what about -- taxes are gonna -- go free market.
-- actually about -- the bottom lines but -- and look at this time please go out the last hundred years when we've gone up in marginal tax rate.
And you know six out of the last ten times the market went up the year before and the year after taxes were raised as I think that we update can separate out.
With Peter's talking about which is a long term call.
With the type of -- he's not enough laughter wrong.
I martyr healthy it's a short term it's -- short term problem it's a little what are you -- If you're a lot of Peter -- -- right on the ten year what went over the what -- we gonna do if interest rates spike up I mean look at the yield on the tips -- you know they're they're they're going at a negative rate.
I even know I think the CPI -- understates inflation inflation is a huge problem that costs a lid is gonna go up what are we did do with a massive debt finance would T bills if short term interest rates spike up to five or 10% what are we gonna do.
Because they're not because there's a global.
Shorts what do you mean they're not free assets and everybody wants to talk about look at treasury you'll -- that for quite frankly.
We can change our ways that we can you -- we can viable GM needs the business center but we need treasury hit.
I understand there's inflation but he's too many people who want this risk free assets because you're right up -- there's slow growth and so that would -- pre register is are there treasury into the Fed is not always a -- range right.
-- I don't think hey we started we believe we only have time for one more response Peter.
You go ahead treasuries are not risk free that's the problem and would people realize just how risky treasuries are nobody is gonna wanna hold -- that is the problem.
-- months and leadership by the way -- nobody is buying a volt right now not many people anyway that's part of the problem I now you guys good this AF thank you very much terrific.
