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ECB Opens The Door To More QE – Ep.114

  • This is the first podcast I’ve been able to record since the death of my father, Irwin Schiff, who passed away on Friday
  • If you’re interested in learning more about him and the circumstances surrounding his death, I would encourage you to read my commentary, “The Death of a Patriot
  • There also links to many other articles written about him on my Facebook page
  • You can also find on my YouTube channel, my father’s debate for the 1996 Libertarian Nomination for President
  • You can also find on the internet a video he created called, “The Secrets of a Tax Free Life
  • He died in jail because of his political beliefs and for standing up for his Constitutional rights
  • While in prison, my father got insufficient medical care, he lost all his teeth, lost his eyesight and eventually died of cancer
  • In my father’s case, even if he were wrong, the penalty should have been a civil case
  • My father was steadfast in his beliefs, and did not want to be released unless he won his appeals
  • The Dow was up more than 300 points today
  • The strength came from the ECB, as Draghi suggested that the ECB was considering expanding QE
  • The ECB is trying to talk the euro down
  • The ECB did not actually do anything, they just jaw-boned the markets with the idea of more QE
  • This was a euro story – the dollar was only up against the euro
  • The New Zealand dollar was up 1.3% against the U.S. dollar
  • Gold was up 2% in terms of euros
  • Silver was up .15 in dollars despite the big jump in the dollar index
  • This lays more foundation for the Fed not to raise rates
  • At some point, I think the Fed will another round of QE
  • The reason Draghi suggested QE was over fears that inflation is too low
  • It is running at .9%, but according the ECB, the holy grail is 1.9%
  • Draghi was asked why he is spending so much money to raise inflation when he earlier said that low inflation is good for purchasing power
  • How does the ECB think they can pinpoint inflation to exactly 1.9%?
  • Draghi’s answer was that low inflation makes debt harder to repay
  • What Draghi is saying is that it doesn’t reduce debt enough
  • Why is it good to transfer wealth from creditors to debtors?
  • He also said that with low inflation, real wages will rise
  • Why is this a problem? Because the government artificially boosted wages in the first place expecting inflation to mitigate their true effect in the economy
  • What’s really too high is not so much wages as labor costs, due to government mandates
  • We want workers to have higher wages in a free market based on their productivity
  • All that is undermined in the ECB’s quest to generate inflation
  • Draghi also questions the accuracy of is numbers
  • Central bankers are trying to prop up the stock market and the government
  • The real debt the central banks want to wipe out is government debt
  • This is not what central banks are supposed t do, they’re supposed to be independent
  • Another reason the U.S. market might have been strong is because of all the weak economic data that came out
  • Housing was stronger than expected, but everything else was pretty weak
  • The Chicago Fed National Activity Index, which was -.41 came in at -.37 – back to back bad months
  • Also leading economic indicators experience their biggest drop in almost 3 years to -.2
  • Last month was also revised down
  • Also the Kansas City Fed Manufacturing Index negative again
  • Bloomberg’s economic expectations index is at its lowest level since 2013
  • All these indicators suggest recession on the horizon
  • This is music to the ears of Wall Street traders because it means the Fed will continue to play the cheap money tune
  • I don’t think the smaller countries that don’t have debt problem will follow the Pied Pipers of inflation down the primrose path
  • I think you are going to see a big drop in the dollar
  • There are currencies that are gaining strength and will continue to gain strength especially with the Fed has to come clean
  • The Fed is still bluffing that they can raise rates, but eventually the markets are going to call that bluff