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Peter Schiff, Euro Pacific Capital, on why he believes the economy is already contracting, and what, if any, impact the 2012 elections will have on th...
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Stock exchange this Monday morning.
Now that's most of the economic news lately been lousy.
Weak employment numbers GDP growth a -- only more than 1% a ripple last week showing manufacturing -- -- contraction.
A we headed for another recession or all we may be already in -- Joining us now is Peter Schiff from Euro Pacific Capital.
Lot of -- this morning via the we are going to be in recession in the year 2013.
Regardless of who wins the election.
That's pretty much the backdrop to the market action today what are you side.
-- -- Why they were in a recession right now look at that the that if second quarter revised GDP numbers from last week the government claims that the economy is growing at one point 3%.
But they also claim that inflation is and realizing out at one point 6%.
If inflation is actually 3% right now and not one point 6% the economy is already contracting and you're talking about the Dow Jones this morning being off.
In terms of gold today it's actually down in fact the Dow is now worth less than seven point eight ounces of gold that's down more than 80% since the bear market began twelve years ago and so.
That it's not that the stock markets going up it's not the value of our money is going down.
That's interesting -- -- -- return -- the original question though look at you say it if we are in a recession already.
Then in 2013.
Does -- get much looks I'm looking for timeframe.
On the real spiral down here.
Well it's gonna get worse it's gonna get a lot worse when interest rates finally respond all this inflation.
By rising and then we go over the real fiscal McClellan -- -- -- -- interest rates going up the party's over I hate to instructed you know I'm -- about this but look.
You that you -- the -- -- when interest rates start to rise does the Fed just print a -- more money.
To keep those interest rates down on treasury security as well -- in my old Mario -- we're gonna gonna rise is because of all the money the Fed is printing you see when the Fed prints money it actually makes bonds less attractive.
Not more attractive because it did bases the currency in which they're denominated -- it is short run yes it helps the bond market but only if you're Smart enough to sell it's the people were bailing out of bonds and selling to the Fed that benefit from Q week.
Anybody who's holding bonds is gonna be left holding the back.
A little -- on this program are gonna do an editorial saying that we all in another bubble.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- are you an agreement with me -- with this is a bubble in treasuries.
-- course it's a bubble it's the biggest bubble and it's not just treasuries it's actually a bubble in government.
Government is enormous because they can borrow all this money so cheap.
So you have a government bubble and it's reflected in the bond market and in the dollar.
So -- the dollar that's a bubble along with treasuries and it's all gonna burst and his whole phony economy that is built on consumption financed spending.
Both in the private sector and through the government is gonna come crashing down it's a bigger house of cards now that no one we erected part of the financial crisis is no way down to is that I mean -- look I don't know how this thing ends I don't know -- -- the bubble I don't know I'm not Smart enough to know that.
But you'll basically site that is no wait now this is well while there's no easy way out noted -- there's going to be a lot of my humor I don't -- -- -- there's that there's.
There yet there is the correct way out and then there's what we're doing.
We're trying to -- -- inflate our way out of it and we're -- inflate our way into something worse what we need to do do is admit as a nation that were insolvent we need to restructure our -- we didn't dramatically shrink government spending reform the tax code and allow the market to repair the damage that the government has inflicted on the economy what we -- that we have -- allocations of resources we don't have enough savings -- all of enough production we have too much speculation all of that is because the Fed keeps force feeding.
Cheap money into the economy because it thinks -- -- -- jobs eye socket -- -- anything but disaster.
-- -- -- -- -- The difference between us and we've had this argument before law.
Is -- no politician.
Can get elected to don't -- If they want to get them and take the pain immediately I know if I have this argument before no politician can get elected doing that well we're out of time Peterson -- -- -- -- can expect.
Become black -- jog or to get up from -- -- Peter -- good luck.
