The Peter Schiff Show Podcast

Trump said Government was Too Stupid When Donald Trump was originally elected President, I was out there warning, that budget deficits under the Trump Presidency are going to be huge.  Donald Trump never ran as a fiscal conservative or a Libertarian.  He didn't say government was too big, he just said it was too stupid. He promised just to be smarter. He didn't say he would make government smaller, only that he would make it more efficient. He would do a better job of using big government than politicians who have held the office before him. Trump Promised More Spending So it was my feeling that a Trump Presidency was going to result in increasing the budget deficits that would be necessary to finance a bigger government.  Also, Donald Trump never promised to cut government spending; cut entitlements.  In fact, he promised the opposite.  He promised not to touch entitlements, to allow them to continue to expand. He promised to spend more money on the military, more money on our vets, more money on infrastructure, more money to build a wall.  So I knew all of this would result in bigger deficits. "Gentlemen's Agreement" to Raise the Debt Ceiling But now, my suspicions have been confirmed. Now we have news that Donald Trump has basically made a "gentlemen's agreement" with Chuck Schumer to repeal the debt ceiling completely. There has been some debate again about raising the debt ceiling, we have this charade every year or so, where everybody pretends that they might not raise the ceiling and they raise it anyway.  We had a similar political theater going on until Donald Trump cut a deal with the Democrats to extend the last suspension of the debt ceiling for another 90 days. That's when we found out that they had also been working on this deal to eliminate the ceiling altogether. Never Really Paying Off Bills In recent years, the political spin has always been that lifting the debt ceiling is the politically, fiscally responsible thing to do.  That America always pays her bills, and because we always pay our bills, we have to raise the debt ceiling. Ironically, they have it backwards.  The reason they have to raise the debt ceiling is because America never pays her bills. If we paid our bills, we wouldn't have any debt. Debt Ceiling was a Brake on Government Spending What government wants to do is to continue to not pay the bills; to continue to borrow the money so that we can pretend to pay the bills.  And the obstacle to increase debt is the debt ceiling. Of course, we always raise that ceiling every time we approach it, but the fact that the ceiling is there, must provide some type of brake on government spending.Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Threats from Hurricane Irma and North Korea After a long holiday weekend the DJIA fell 234 points this Tuesday.  Finally we have some kind of negative reaction in the stock market to the bad news.  Over the weekend we got news that North Korea had successfully tested a hydrogen bomb, and now we know that Hurricane Irma, which is now listed as a category 5 hurricane, is one of the biggest, if not the biggest hurricane ever in the Caribbean. Anything Can Happen It looks like it is going to go right by Puerto Rico; for those who may be concerned about me, I am Connecticut now, so my family and I are not on the island, but we certainly have property there and we are also very concerned about our neighbors and the people of Puerto Rico. It is not likely to be a direct hit, but anything can happen.  It is projected to pass Puerto Rico Wednesday afternoon. Irma Threatens Caribbean Islands on Heels of Hurricane Harvey The people of the Virgin Islands are going to suffer a similar fate.  There are other Caribbean islands that will not be as fortunate; the hurricane is going to go right over them.  Who knows where it is going to go after that? There is a state of emergency in Miami, in the keys, from Key West all the way to Key Largo. It is a massive hurricane with lots of potential damage on the heels of Hurricane Harvey. We're Broke And you know what? We're broke. Harvey is almost a $200 billion price tag, and I don't know what Irma will be, because the government will have to bail out Puerto Rico and the U.S. Virgin Islands. There is no way the government can deny them relief - they are American citizens.  There was a lot of opposition to a Puerto Rican debt bailout but no one will be against giving money to Puerto Rico as a result of the hurricane. Hurricane Aid for Puerto Rico instead of a Bailout In fact, this could end up being a bonanza for Puerto Rico. They could end up getting a massive amount of aid all disguised as hurricane aid. They are talking now about power being out for 4-6 months in parts of the island because the government has so under-invested in the infrastructure - the government-owned power company.  Maybe Puerto Rico will get a bunch of money in order to re-build that infrastructure as part of the hurricane bail-out money. So money they could not get from Congress because of fiscal troubles may come through another channel.Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Nonfarm Payroll Report Fails to Impress Today is the first Day of September; and since it is the first day of a new month, and it is a Friday, we got the nonfarm payroll report. The consensus forecast was about 180,000 jobs.  The number came in at 156,000, well below the consensus. To make it worse, they revised down the prior 2 months by about 20,000 jobs each. The unemployment rate notched up from its 16-year low.  When Donald Trump, the candidate called 5% unemployment the greatest hoax on the American people, well, it's got to be an even greater hoax, now that it is 4.4%. Donald Trump's Huge Reversal I just put up a video on my YouTube channel, Donald Trump's Huge Reversal. I juxtaposed a lot of clips of Candidate Trump with President Trump. Candidate Trump talked about how terrible the economy and how the numbers are so phony and now he is embracing those same numbers, and of course it is the same with the stock market, calling it a big, fat ugly bubble. The stock market today continued to strengthen throughout the week, including in the aftermath of this weaker than expected nonfarm payroll number. Some Silver Linings Labor force participation held steady at 62.9, still very low. Average hourly earnings, which happened to be up .3% last month, the biggest gain we've seen in a while, in August it was up ,1% ; vert meager increases in average hourly earnings.  A lot of that may have to do with the higher minimum wages - just talking about minimal amounts of money here.  The average work week actually ticked down from 34.5 hours  to 34.4 hours, so Americans working slightly more hours and getting barely more money. Is This The Beginning of a New Trend? This was a relatively weak report; there were 2 bright spots; there was that there was a decline in government workers and a better than expected increase in manufacturing. We did see an increase of 36,000 manufacturing jobs; a lot more than the expected 9,000. We do have a 2-month jump in manufacturing jobs. The question is, "Is this the beginning of a new trend?"Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

$1,300 Was a Coiled Spring Beneath the Market We've been flirting with that $1300 level all year; I've been talking about all the resistance that was up there and every time the price of gold got near $1300 it was met with a tremendous amounts of selling, there was a lot of supply.  But as I have been saying on this podcast, the demand was building. It was a coiled spring beneath the market. The channel was narrowing.  The distance between the $1300 resistance and the support kept getting narrower and narrower.  I thought it was only a matter of time before we exhausted that supply and broke through that psychological $1300 level. The Rally Held Firm All Day Gold is up about $18-19 on the day; we closed at about $1310.  Finally, I think, there were people who were worried it wouldn't hold that level, people were thinking that we would sell off so we wouldn't quite get a close above $1300, we'd just get a trade above $1300. But the rally held firm all day long.  We actually closed on the highs of the day. In fact, as I am recording this, the price of gold is taking another jump.  Maybe it is the missile North Korea fired that went through Japanese airspace.  We're tacking on another  $10-11; we're now trading above $13.20. The Dollar Is Now a Risk Asset The dollar continued its weakness.  It is one of the reasons that gold continues to be strong. The dollar index made new lows today, down around 92.20, and looking at the action so far in the early evening. The dollar is not benefitting at all from this flight to quality. We're seeing a big rise in the Japanese Yen, a big rise in the Swiss franc.  Those are the go-to currencies.  The dollar is now a risk asset. People don't buy the dollar when they're worried, they sell the dollar when they're worried. Even the Chinese Yuan - new high for the year. Gold Now Going Up in Terms of Everything Of course gold, now, is not only rising in terms of dollars, but finally rising in terms of everything. Gold is going up in yen terms, it's going up in Swiss franc terms, even though those currencies are rising as well.  This is a key factor, and I think now that we have cleared out that resistance, there are a lot of people who thought there is no upside in gold.  Well they're about to find out just how much upside there is.    Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

The Joe Rogan Experience Podcast I appeared the Joe Rogan Experience Podcast while on my trip this week to the West Coast. I first appeared on his show about 3 years ago, and since then the popularity of his podcast has really exploded. A couple of million have already listened to my most recent appearance.  I was on for 3 hours and I did almost all of the talking. Huge Reaction to Minimum Wage Discussion If you look at the YouTube video you'll see a tremendous amount of reactions, both positive and negative, which is a far greater reaction than the show usually gets. I could have set the record on thumbs down but I got more than 3 times the number of thumbs up. If you read the comments, many people are attacking me for being "mean" because I am against the minimum wage. Why Am I Against the Minimum Wage? This is the typical liberal reaction when they encounter someone who disagrees with the liberal agenda. They think I am out of touch, that I don't understand, I'm heartless, and they get so upset at me because they think I am a really bad guy. After all, only a really bad guy would want to exploit poor people by paying low wages. It would not dawn on them to think about why I am against the minimum wage. Against Government Mandated Unemployment I am not against people earning money; I am against mandated unemployment. I am against the government preventing people from acquiring the skills that would enable them to earn a lot more than the minimum wage in the future.  Liberals don't consider any consequences - it's all about how good they feel about themselves. "Who actually cares about the consequences of this law, just as long as I can feel morally superior to anyone who doesn't support the minimum wage law?" For Entry-Level Jobs that Provide Value to Employer I did explain that, but apparently it went right over their heads. I am trying to explain that the minimum wage law leads to more unemployment because it causes people with low skills to lose the opportunity to move up in the workforce through entry-level jobs that provide value for the employer.      Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Economic Ignorance I happened to watch a YouTube video Politicon 2017 Live Stream Schapiro vs Uygur and I want to address only the part of the discussion which was about taxes.  Ben Shapiro did a good job, but a much stronger case should be made about Uygur's statements which were economically ignorant. False Logic One of the points that Cenk Uygur made during the debate is that high taxes are good, that we have more prosperity with higher taxes, and lower taxes are bad for the economy. In his opinion, if the government takes money from the people who earn it and gives it to the people who don't earn it, everybody is going to be better off, including the people who are being taxed.  He cited the 1950's as an example of U.S. economic prosperity, concluding that because income tax rates were 91% America was wealthy. This false logic.  it is like eating a banana during a rainstorm and concluding that eating bananas causes rainfall. The '50's and '60's Marked the End of American Prosperity In fact the reason we were prosperous in the 1950's and 1960's is not because of high taxes during those decades, but how low they were taxed in the decades before that. Ben Shapiro's response to Uygur was that we won WWII and the rest of the world was decimated, which is true, but not an accurate response.  The 1950's didn't just occur spontaneously. Tax Rate Was Zero We were wealthy and a mighty power before WWII.  The standard of living in the '50's and '60s was a product of the 19th century, and the early 20th century when we had no taxes at all.  The reason we created such a strong middle class was because we had no taxes. After the end of the civil war, from 1870 - 1913, which was the introduction of the income tax, the income tax rate was zero. That's the time of the industrial revolution. That's when all the immigrants were coming to America - the 1880's the 1890's, the 1900's.  That's when all 4 of my grandparents came here. There were no taxes and massive economic growth when the tax rate was zero. Camel's Nose Under the Tent When they started the income tax in 1913, the top bracket was 7%. That's still very low,  Initially they wanted to cap it at 10% and the reason they didn't is the objection was that the cap would encourage lawmakers to raise it to 10%. Unfortunately, they didn't cap it, and of course this was the camel's nose under the tent and the minute you had an income tax, congress couldn't resist the temptation to raise it.  Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Press Wants Freedom of Speech as Long as It Fits Their Agenda One of the few rights left to us in this country is the freedom of speech.  If we don't defend speech that we find offensive, someone else will find your speech offensive and move to silence you.  Political correctness, is evolving into the Thought Police via the mainstream media. In particular, President Trump's reaction to the events in Charlottesville is being portrayed as a defense of White Nationalists over Black Lives Matter. Nothing is President Trump's remarks supports this story.  President Trump, in the lobby of Trump Tower, was subjected to an inquisition by the Press, who intended to entrap the President and further their agenda to mischaracterize him and anyone who supports him. Disrespecting Donald Trump and the Office of the President I know very few members of the Press respect Donald Trump; this is clear.  But they need to respect the office of the Presidency.  Could you imagine members of the Press treating President Obama the way they are treating President Trump? Can you imagine the cries of racism? Of course, no member of the Press would dare show that type of disrespect to President Obama. Condemning Violence on Both Sides President Trump is refusing to denounce only the violence perpetrated  by the White Nationalists without also mentioning that the Black Lives Matter group, who assembled without a permit, also engaged in violence.  The Left is saying that President Trump has not denounced the White Nationalists enough. What the President said was that he was condemning the violence on both sides and that angered the left. They hold that the President should only condemn violence committed by the White Nationalists. That would be hypocritical. Background on the Event To give you a little background, the park, formerly named Robert E. Lee Park, was re-named Emancipation Park and the city was going to tear down the statue of Robert E. Lee that had presided over that park. So there was a local protest that the statue was coming down.  It was coming down regardless of local protests. A local group wanted to protest the fact that this was happening. This group eventually got a permit although it was initially rejected. So they engaged in a legal protest to exercise their First Amendment rights. The counter protesters, who came in from out to town did not have a permit landed first physical blow. Freedom of Speech is there for the Offensive Ideas Are the ideas that the White Nationalists offensive?  Yes.  But it doesn't matter, because that is Freedom of Speech. It is there because of the offensive statements.  See, nobody cares if you say something that makes everybody happy and doesn't offend anybody - you don't need freedom to do that.  The scenario that the left is trying to spin and the media is playing right into it is that America is afraid to go anywhere near anything that would draw the ire of the politically correct thought police. We have a very tenuous grasp on the right of freedom of speech, and there is no doubt in my mind that this right is going to go.  Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Speculative Asset Bitcoin is a digital risk asset, not a currency. If you own bitcoin you have an asset, but it is not a safe haven. A safe haven is an asset that is not likely to go down in comparison to another speculative investment.  Bitcoin has been extremely volatile; it happens to be going up, but the price is based on speculation.  Does anybody believe that bitcoin has less downside risk than the stock market? Not a Currency Bitcoin is not used as currency.  They trade in bitcoins for dollars or euros or yen to buy things, but very few legal goods and services are priced in bitcoin.  Because the price is highly volatile and backed by nothing, it can not be used as a currency. It is being used as an asset.  The number of top retailers who accept Bitpay is diminishing, not increasing. Merchants will try to make it easy to trade bitcoin for currency which would then buy goods and services.  Most people who own bitcoin are not spending them; they are hoarding them because they think they are going to keep going up. Just Noise At the end of the day, the realized gains from speculation in bitcoin are going to be overshadowed by the speculative losses. All the rest of it is just noise.  The realized profits will be concentrated on a small group of people, whereas the realized losses will be dispersed among a larger population. Reversing the Consequences Bitcoin will end up achieving the opposite of its original goal, which was to challenge the power of central government, to disrupt money, that is would rein in government and have real commodity money in the same way FedEx upended the Post Office or Uber upended taxis. This is going to give more power to government, because when digital currencies collapse, the central bankers will say, "We told you so! This is what happens when you allow the free market to do what government should do.  When the free market creates money it leads to disaster.  You have to stick with currencies backed by government. " No Joke The original currencies that were created by the private sector, and not by government were issued by banks and backed by gold. Today, the private sector could issue digital currency backed by gold just like paper currency backed by gold. What gave the paper currency value was the gold backing. If any bank tried to issue paper currency backed by nothing, it would have been laughed out of existence. It would have been a joke, except now it's not a joke. People actually want digital currency backed by absolutely nothing.        Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Fire and Fury Not Strong Enough Donald Trump's saber-rattling against North Korea continues. Yesterday the President was asked to clarify his statement about the "fire and fury" and he came out and said that that wasn't strong enough; he was really sugar-coating it. What he really means is something worse - if anything his statement was not strong enough. Again, today Trump issued another threat that N. Korea had better be careful, if they say anything if they will regret it big time, so the level of rhetoric is rising. A Legend in Trump's Mind He was talking about the booming economy, the stock market at record highs, employment surging, all these jobs coming back. He is spinning this ridiculous phony story about a recovery that doesn't exist.  Just as I pointed out he took credit for building up our nuclear armament to a level higher than it has ever been - all this is happening, unfortunately, in Donald Trump's mind. Volatility Up There was a big down day in the markets; it dropped over 200 points yesterday; there was a small bounce back today  - the Dow was up about 14, not a major recovery, But if you look at the Vix, which is a measure of fear, a measure of volatility, it was near the lows, below 10 mid-week and it spiked all the way up to 16 yesterday, which is the highest it has been since April. It looks like it is above a key moving average on a weekly chart, so that shows a heightened risk in the market. Dollar No Safe Haven Interestingly enough, the dollar index closed near the lows of the day, just at around 93 even.  It is down on the week.  In fact, this is the lowest weekly close for the dollar index for the entire year. Now, you would expect the dollar to have some kind of a safe haven bounce with all of the saber-rattling - all of the worries about nuclear war.  Typically, you would get money going into the dollar. I guarantee you, if the circumstances were the same a year ago,  there would have been a big rally in the dollar this week. But not now.      Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy

Elimination of Deductions for State and Local Tax - "SALT" Tax reform is the one remaining 2018 Republican campaign issue, and the argument over "SALT", or the elimination of deductions for state and local taxes. In general that would be state income tax or state property tax. In some states that do not have income tax, you are allowed to deduct your sales tax, although that is a more complicated deduction. In the wealthier states on both coasts, tax payers rely on those deductions. The Mortgage Tax Deduction Restricts the Free Market No one wants to get rid of the home mortgage deduction, but that is a much better deduction to eliminate, as it does more damage to the economy. The politically popular mortgage interest deduction is aimed at altering behavior, rather than to let the free market work independently. The real beneficiary of the mortgage tax deduction is not the home buyer but the house seller. There are many predominately Democratic states with high taxes but I don't buy argument in favor of eliminating that deduction. Why Should the Federal Government Subsidize the State Government? The argument is, why should the Federal government subsidize state government?  If a state wants to have a high income tax, then, its citizens get to deduct that income tax from their Federal taxes and therefore, they don't feel the full burden of the tax, because some of it is absorbed by the Federal government. As a result of this, tax payers in high tax states are more receptive to those high taxes because they get a tax break on their Federal tax returns. If they could not deduct these taxes, there would be a bigger pushback on the state level. Federal Government Taxing Unearned Income If we are going to have an income tax, we have to tax the actual income. For example, if you earn $100,000, and let's say you live in a state with a flat 10% income tax, then they pay $10,000 in taxes. Did they earn $100,000 for $90,000? I would say they earned $90,000. Now if the Federal government does not want to give a deduction on the state income tax, they should not tax you on income you never earned.  I don't think that's Constitutional. You can't be taxed on money that didn't come to you. The money paid to the state in taxes is not a voluntary donation. It is taken by force. No Double Tax If you go back to the origins of the first Federal income taxes exempted tax paid to the states, it was because the Federal government respected the sovereignty of the states to tax the people first. If you allow the Federal government to ignore state taxes, theoretically they could place an income tax so high that you would have nothing left between the state and Federal tax burden. I would not allow the government to double tax anything, because it is diminishing the power of the state. Defer Income Tax to Employers Here's another thing that no one in Congress is addressing: the states can get around this. Let's say they pass  a law that says you can't deduct your state income taxes from your Federal income tax.  In the previous example, the taxpayer pays taxes on $10,000 he never earned. What if the state then repeals the state income tax on wages and salaries and in its place, imposes a payroll tax on employers? So that, instead of an employee getting paid $100,000 and paying $10,000 in taxes, the payroll tax causes the employer to pay a state tax that would then reduce the salary of the employee by that much. That payroll tax would be deductible for the employer as an expense. So all the states would have to do is change the way they tax wages and salaries and the net effect would be no change for the individual worker.  This would deprive the Federal government of all the extra money they think they are going to get by removing the state income tax deduction.    Our Sponsors:* Check out Avocado Green Mattress: https://avocadogreenmattress.com* Check out Boll & Branch: https://boilandbranch.com/SCHIFF* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.comPrivacy & Opt-Out: https://redcircle.com/privacy