Peter Schiff, president and CEO of Euro Pacific Capital, recently explained that the economic issues that Donald Trump got elected to fix will be the same matters that he will be unable to solve. With this in mind, Schiff thinks it’s a case of too little, too late for so-called Trumponomics.
Speaking in an interview with CNBC late last week, Schiff stated that Trump was able to muster support from millions of Americans because he pledged to cut taxes and boost spending in certain areas. But, according to Schiff, many of Trump’s policies will do more harm than good to the economy.
Citing trade and budget deficits and inflation, Schiff said that Trump “doesn’t want to tackle, for political reasons, the real problems that are underlying the economy.”
In order to pay for Trump’s extravagant public spending initiative, the Federal Reserve, says Schiff, will have no other choice but to return to its popular weapon: easy liquidity to pump-prime the Trump economy.
“We’re going to have to do even more quantitative easing (QE),” Schiff averred. “The Fed is going to have to reverse and cut interest rates, and it’s not going to create economic growth, but it is going to put pressure on inflation that is already now above what the Fed supposedly says is its supposed target.”
Despite the surging stock market, Schiff argues that the U.S. central bank will need to concentrate on how to finance Trump’s growing budget deficits.
All of these are ingredients to a potential financial crisis that could mirror or be bigger than the economic collapse of 2008.
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