Peter Schiff: Trump 'Out-Democrats' Democrats On Stimulus

Via SchiffGold.com,

Last week, President Trump tweeted the rug out from under stimulus when he announced that negotiations were going to be cut off until after the election. The markets immediately tanked. But Trump quickly reversed course.

As Peter Schiff explained in his podcast, the president is now in the process of out-Democrating the Democrats on the stimulus issue. Peter said the Republicans lost the argument the moment they conceded stimulus is “good” for the economy.
Peter said the fact that the markets tanked the moment Trump tweeted that there would be no stimulus until after the election came as no surprise. As he put it, the markets know who butters their bread.

The Fed has already said they’re not printing more money until the government sells more bonds. In other words, the Fed is on hold with additional monetary stimulus until Congress comes through with additional fiscal stimulus so that the Fed has more bonds to monetize.”

When the markets fell on Trump’s initial tweet, Peter said the markets could well continue to tank unless the Fed came to the rescue or Trump called uncle. Well, Trump called uncle. He threw out an olive branch to Nancy Pelosi saying he was still willing to consider a smaller stimulus, including another round of$1,200 checks, $25 billion in airline relief and paycheck protection program funds. That kickstarted negotiations again and the Republicans quickly began to bid themselves up.

Trump economic advisor Larry Kudlow talked up the strong recovery on the one hand while simultaneously arguing for more stimulus.  He said the president was willing to consider up to $1.8 trillion. Keep in mind, he initially started at $1 trillion.

The fact that we need all this artificial support is an admission that the economy is weak. That’s why it needs all this help. You can’t say we’ve got this really strong economy, but then say it needs a government crutch in order to support it. I mean, either the economy is strong, in which case it doesn’t need stimulus, or it’s weak and it needs stimulus.”

Of course, stimulus doesn’t even make a weak economy strong.

It actually makes a weak economy weaker by addicting it to stimulus.”

When Ben Bernanke first rolled out QE in 2008, it was touted as an emergency measure. He assured us that it was temporary. He said the Fed was not monetizing the debt and it would sell all of the bonds it was buying once the crisis passed. Of course, that never happened. Now QE has become the first line of defense. Peter said the reason the economy now needs this “emergency” tool constantly is because the central bank used it in the first place.

The Fed so crippled the US economy by giving it the QE crutch that now the only way it can limp along is with that crutch. If you take that crutch away, you know, and the economy completely implodes. It collapses. So, we didn’t cure the economy by coming in with QE. We just created a bubble that is addicted to ever-increasing doses of that monetary heroin.”

Peter said that since Trump was so quick to put stimulus back on the table, we didn’t have any follow-through on the big sell-off when he said he was ending negotiations. In fact, stocks rallied on Thursday and Friday last week on stimulus hopes.

Peter said he wasn’t surprised Trump pivoted. We were always going to get more stimulus. The US government and the Fed will keep stimulating the economy by draining it of its life-blood until they completely destroy it by killing the dollar.

On Friday, Trump was on the Rush Limbaugh Show and said, “I would like to see a bigger stimulus package, frankly, than either the Democrats or the Republicans are offering.” He added that hew as going in the “exact opposite” direction from his earlier stances.

Peter said he wonders if we’ll eventually end up right back at the $3 trillion the Democrats originally demanded.

I knew the Republicans lost the argument the minute they accepted the false doctrine that stimulus is good.”

After all, if you believe $1 trillion printed out of thin air will help the economy, why not $3 trillion?

Peter said the Republicans could have at least been honest and said, “We recognize that this stimulus will hurt in the long-run, but we’re willing to make that sacrifice for some short-run relief because things are so bad.” But that’s not what they did. They went out and claimed stimulus was good and the deficit spending would help the economy.

And so the minute they said that — they lost — basically, were arguing the Democrats’ point that government spending helps the economy, that deficits don’t matter, that printing money doesn’t matter, that we can have all the government we want. We don’t even have to pay for it as long as the Federal Reserve prints the money. So, the minute they accepted the Democrats’ argument, they lost.”

Peter said this runs counter to Trump’s promise to “Make America Great Again.”

You can’t make America great again by doing more of what caused her not to be great in the first place. It was all this reckless deficit spending, it was the big growth in the size of government – more spending, more taxes, more regulation – that’s why America lost her greatness. That’s why Donald Trump ran on a platform of making America great again. But now he’s governing based in the same policies that caused America to lose her greatness in the first place.”