Monday, January 12, 2015

Economic recovery supported by Fed

The dollar’s always strengthening because people expect the Federal Reserve to do things that it’s not gonna do, and because they have confidence in the legitimacy of the U.S. recovery, but the recovery is here only as long as the Fed is supporting it. And it’s not a real recovery, it’s a bubble masquerading as a recovery, but if the Fed is not blowing more air into it, it’s going to deflate, and people don’t understand that, at least the analysts, but you know, if you look at actual Americans who are living in the supposed recovery, from their vantage point, there is no recovery. Right?

People are worse off – the average American is worse off today than when the recovery began five or six years ago. If it was a legitimate recovery, that would not be the case. There’s never been a recovery where people are worse off at the end of the recovery than at the beginning.

And what did we recover from? We got sicker. People’s incomes are down, their net worths are down, you know, people are losing good jobs and they’re having to settle for lousy, low-paying part-time jobs. 

This is not a recovery other than just looking at GDP, but GDP doesn’t tell the whole story. And, of course, I don’t even necessarily trust the GDP numbers because I don’t trust the source and I don’t trust the government’s inflation measure because the GDP only goes up if you believe that inflation is as low as the government claims, because they have to adjust the nominal GDP numbers for the inflation rate that they say exists, and if inflation is really 1.5% a year, then the GDP is growing by 2% a year. But if inflation is really, you know, 3.5% a year, then the economy’s not growing. And most Americans, you know, from their personal experience, would say that inflation has got to be, you know, closer to 3.5% than 1.5%. In fact, if anything, it’s probably even higher.

Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009