Peter Schiff: "Brexit Is Just What The Doctor Ordered"

Tyler Durden's picture

Submitted by Peter Schiff via Euro Pacific Capital,

Janet Yellen should send a note of congratulations to Nigel Farage and Boris Johnson, the British politicians most responsible for pushing the Brexit campaign to a successful conclusion. While she’s at it she should also send them some fruit baskets, flowers, Christmas cards, and a heartfelt “thank you.“ That’s because the successful Brexit vote, and the uncertainty and volatility it has introduced into the global markets, will provide the Federal Reserve with all the cover it could possibly want to hold off on rate increases in the United States without having to make the painful admission that domestic economic weakness remains the primary reason that it will continue to leave rates near zero. 

For months the corner that the Fed has painted itself into has gotten smaller and smaller. It continues to say that rate hikes will be appropriate if the data suggests the economy is strong. Then its representatives continually cite (arguably bogus) statistics that suggest a strengthening economy, which cause many to speculate that rate hikes are indeed on the horizon. But then at the last minute the Fed conjures a temporary reason why it can’t raise rates “right now,” but stresses that they remain committed to doing so in the near future. But each time they conduct this pantomime, they lose credibility. Sadly, Fed officials are discovering that their supply of credibility is not infinite, even among those who would like to cut them a great deal of slack.

But the Brexit vote saves them from all this unpleasantness. Now when critics question the Fed’s unwillingness to deliver on the suggested rate hikes, given what they believe to be a strong economy, all the Fed needs to do is point to the “uncertainty” that will be in play now that the world’s fifth largest economy is disengaging from the European Union. And since this process is bound to be long, messy, and fraught with uncertainties (as there is no precedent for a country leaving the EU), this will be a handy excuse that the Fed will be able to rely on for years.

Brexit could also place severe strains and uncertainties on the global currency markets. The fear of financial losses could encourage investors to seek safe haven assets like gold and, at least for now, the U.S. dollar. Given that there is already much concern that the dollar is valued too highly against most currencies, and that this has created imbalances in the global economy, any surge in the dollar that results from Brexit may have to be fought by the Federal Reserve through lower interest rates and quantitative easing. This would rule out the potentially dollar-strengthening interest rate hikes that they supposedly planned on delivering. So as far as Janet Yellen is concerned, the British have given her the gift that keeps on giving.

On another level, the vote in the UK illustrates the fundamental inefficacy of the monetary and financial policies that have been implemented by the world’s dominant central banks and central bureaucracies. For years, global elites have been telling us that deficit spending, government regulation, and central bank stimulus is the best way to cure the global economy in the wake of the 2008 Financial Crisis. To prove these points, elite economists associated with the government, academia, and the financial sector have pointed to all kinds of metrics to show how their policies have been successful. But the man on the street perceives a very different reality. They know that their living standards have fallen, their cost of living has risen, and that their job prospects have deteriorated. They see a loss in confidence and economic stagnation when they are being assured the opposite.

This disconnect has fueled anti-establishment sentiment on both sides of the Atlantic. In the United States, it has given rise to the insurgent candidacies of both Donald Trump and Bernie Sanders. The unexpected successes of both reflect a deep distrust of the establishment. Such discontent would not be in play if the positive stories being told by the elites had made any resonance with rank and file voters.

The same holds true with the unexpected strength of the anti-EU voters in Britain. The “Remain” camp had the support of virtually all the elite members of the major UK political parties, the media, and the cultural world.  In addition, foreign leaders, including President Obama in a state trip to England, harangued British voters with warnings of economic catastrophe if the British were to make the grave error of defying the advice of their “best” economists.

Given all this, poll numbers that suggested the vote could be close had been dismissed. The elites, as evidenced by recent drifts in currency and financial markets, had all but assumed that British voters would fall into line and vote to remain. Instead, the people revolted. After having been misled for so many years by the very elites who urged them to remain, the rank and file finally asserted themselves and voted with their feet.

British voters may not know what they will get with an independent Britain, but they knew that something was rotten, not just in Denmark, but all over the European Union. The same holds true in the United States. Until our leaders can paint more realistic pictures of where we are and where we are going, we should expect more “surprises” like the one we got yesterday.

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waterwitch's picture

No argument there!

 

Son of Loki's picture

Schiff is both "Awesome" and "Robust"!

 

 

... unlike world economic growth.

Boris Alatovkrap's picture

Interest rate is never rise - do not be fool. Oh, sure, central bankster and ecommunist is talk much about maybe is rise next quarter, next year, but when time is finally come to turn off spigot to fast easy money, facade is fall away and reveal toothless washup whore stumble through back alley look for next fix of easy money while siphilis is eat away at spinal tissue to next level of crazy. Or is something like that!

blue51's picture

Damn Boris ! Thanks for that nasty visual, so close to bedtime .lol

VegasBob's picture

Boris wrote: "...reveal toothless washup whore stumble through back alley look for next fix of easy money while siphilis is eat away at spinal tissue to next level of crazy."

Are you describing Hitlery Clinton?

Clowns on Acid's picture

Yellen is not far away from that description..... y'know once she takes out her false teeth and lifts the black meshuganah skirt to reveal the cottage cheese thighs and midrift.

nmewn's picture

Boris nails it, Brexit gives the communist Yellen all the cover she needs to keep interest rates exactly where they are.

With massive (world-wide) "government assistance" & debt loads they will never rise, it is the end result our current "socio-economic" model, everyone will be equally miserable except government patrons (EBT patients & the scavenging elites) until both are repudiated.

nibiru's picture

Yup. True.

 

"Janet is here to just create this headline porn and markets are excited enough to carry on with 'new gospel' every time she opens her mouth.

It's ridiculous. She, by far can be the knight in white armor and rather would cut the rates down to NIRP just like Draghi and Kuroda - to bail out cronies than she is really interested in following logic. Anyways her increasing rates would push the economy into recession - it's just matter of time not 'if'.

http://independenttrader.org/was-the-last-euphoria-the-harbinger-of-rate-cut-and-qe-in-the-us.html"

Boris Alatovkrap's picture

You are assume too much about role of Central Bank Chairsatan. Job is not to make economy better, but is to line pocket of member bank. PLease, get that into head!

divide_by_zero's picture

Yep, Think Winnie said it best

 

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery. -Winston Churchill

Umunhum's picture

Peter Schiff for Treasury Secretary

DownWithYogaPants's picture

I'd like to shake Shiff's hand and thank him for his dad let alone his truth telling.

RudeDog2's picture

I met Schiff at a seminar in '14.  Schiff is the real deal.  Real smart, well spoken, very charming in person.  He's make an excellent Treasury Secretary

DownWithYogaPants's picture

You don't want the poor guy going bald and jumping out a window do you?  

Why do you wish such hell on him?

GUS100CORRINA's picture

NO ARGUMENT HERE ... THIS KIND OF EVENT IS GOING TO SHAKE THINGS UP A BIT ... THIS EVENT MAY START A GLOBAL REVOLUTION AGAINST THE ESTABLISHMENT. PEOPLE HAVE INDEED HAD ENOUGH OF THE BUREAUCRATS.

PEOPLE WHO WERE AGAINST THE BREXIT ARE GOING TO REALIZE THAT BREXIT IS A BETTER LONG TERM SOLUTION.

Wile-E-Coyote's picture

Denmark???? What have they done to anyone!!

Tic tock's picture

."if a suicide note was a country..."  ,toby ziegler

DownWithYogaPants's picture

All rot appears to start in Denmark.

DaBard51's picture

OTOH, the Fed could very slowly normalize.... say, 10bp a quarter.  Every quarter.

 

 

 

When nine hundred years old you become, look this good you will not.

JackT's picture

Suck the blood from the sacrificial scapegoat.

blue51's picture

Like maybe , all the gold  that some think has been going to China, has been going to London ? Didn't Ukraines and Libya's gold reserves go to London , for " safe " storage. Iraqs ? Saudi gold that was in Switzerland went missing too. Hmmm..Gold backed GBP , when the Euro goes poof ? Nah. I still say the Brexit went to easy, and the Big Players don't leave such matters , to a vote by commoners. 

Bring the Gold's picture

that's the 64 Quadrillion dollar question. Why? It takes awhile to through does it not? Crush their economy as an example then re-instate EU membership? Go global with a "White Knight" global "trade act" ala the TPP on steroids? Perhaps a rift among elites? I've heard whispers of fractures deepening for years. Again, if so why?

km4's picture

British voters may not know what they will get with an independent Britain, but they knew thatsomething was rotten, not just in Denmark, but all over the European Union. The same holds true in the United States. 

SPOT ON !

Ned Zeppelin's picture

Pretty much on the money.

logicalman's picture

Hopefully this will be a WTFU moment for a lot of people.

Paul Kersey's picture

These fucking banksters win, even when they are supposed to be losing:

"JPMorgan posted record foreign exchange trading volumes overnight following the UK's historic decision to leave the European Union.

The firm on Friday expects to do three times the normal daily volume, according to a memo to staff from CEO Jamie Dimon.

He said that at one point, the firm processed 1,000 trading tickets per second."

thesonandheir's picture

Wait until Deutsche Bank collapse and JP Morguean suddenly become aware of 'counterparty risk'.

 

 

Fiat Envy's picture

If the rumours are true they are massively short the markets.  This could be their bailout.

Fiat Envy's picture

If the rumours are true they are massively short the markets.  This could be their bailout.

thinkmoretalkless's picture

If anyone expects they are going to get an honest answer out of the likes of BO, Hillary or other elites they will be sorely disappointed. Their lust for power and control is only superseded by their ignorance. They will have to be confronted and knocked to the curb as the British voters demonstrated last night.

Mini-Me's picture

Is he saying that Uncle Sam might be lying to us?  It's inconceivable!

ebworthen's picture

Tear it all down.  Central Banks and their Bankster masters, along with their Political Lackeys in Brussels, U.S., and the World over need to be pilloried and burned in the Public Square.

I wasn't born in the 20th Century to become a Serf in the 21st; fuck you people to Hell and back on a rail with a splintery broomstick up your asses!

VegasBob's picture

Hitlery on her broomstick?

Kina's picture

I love how Freedland at The Guardian is all sulky over Brexit.

Hey, Dumbfuck, Freedland, look at your own name arsehole

Freed-land

Pumpkin's picture

You really must ask yourself, why was this allowed to happen?  They kill presidents and start world wars.  This is what they wanted.

opport.knocks's picture

I am not sure one way or another yet. This could just be an opening move in a series of scripted events. The haste of Cameron's exit was suspicious. The lack of serious pushback by TPTB, as happened after the Greek referendum, is also odd, given the closeness of the vote.

If the Central Banking cartels crush their economy like they have Venezuela or Brazil when they went off script, then it will be evident that the plan is to make an example of them to scare the rest of Europe into submission.

GreatUncle's picture

Boris Johnson / Farage should be demanding instigating article 50 both very quiet?

. . . _ _ _ . . .'s picture

Cameron had to resign for five reasons:

1) He can't lead considering his position on Brexit, as he said.

2) His leaving delays the process.

3) It gives him credibility - "falling on his sword", as it were.

4) So that the new government is not bound by the referendum.

5) It's a good time because everyone forgot about his involvement in the Panama Papers.

 

They'll prolly' have a toast in his honour at White's Club later tonight.

Kina's picture

Well all they have done is left something to come back to what they were. Britain before any of the EU crap.

Why the confusions, Britain was an independant country for hundreds of years.

Lynn Trainor's picture

Would be extremely happy to learn that Peter Schiff has a connection with Trump and will be high in his adminstration.