President Donald Trump and the Republicans are taking credit for everything good that is happening in the U.S. economy right now. Will they take the blame when everything goes sour? Unlikely.
And that is the problem with government, says Peter Schiff, CEO of Euro Pacific Capital, who explained on a recent podcast that Republicans lose credibility when the bubble pops and the market spirals out of control.
“Just because you’re a Republican, you don’t have to claim that anything that’s done by another Republican is great in order to make the Democrats look bad,” he said.
“Because ultimately that comes back and bites you because you lose all credibility when the economy turns down and you’ve been gushing over how great it is and how successful the Republican president is. And when it turns out it was just a bubble, it was just an illusion and when the bubble bursts and the illusion is replaced with a harsh reality, well you’ve got nothing and it makes it easier for the other side to scapegoat capitalism for the problems and hold out more government as the solution.”
Schiff made an excellent point, though, about President Donald Trump using a “Trump tariff put.” This means that Trump will pay attention the stock market, and once he sees the tariffs have a negative impact on the market, he will lower the tariffs and everything will be grand again.
It’d be a vicious cycle.
“In other words, there’s this put. So, it’s heads the market wins, tails, nobody loses, right? Because as long as the tariffs aren’t doing any damage, the markets keep going up, but if the tariffs turn out that they do damage, well they get rid of them and the market resumes going up, even if it has temporarily gone down,” he stated. ”
So, that is the ‘Trump put,’ just like the ‘Greenspan put’ we had, which became the ‘Bernanke put’ and the ‘Yellen put,’ whether or not there is a ‘Powell put’ beneath the market – the idea was, hey, if the market ever falls, the Federal Reserve is going to slash rates to make it go up again. So, you can’t lose. Even if the market goes down, you’re going to get bailed out, whether it’s by the Federal Reserve or whether it’s by Donald Trump.”
Here is the entire podcast:
Leave a Comment