Economic advisor Peter Schiff has long been warning of the false stability and phony prosperity we are seeing the markets. He’s now saying that since the elections, it is about to get much worse, as a divided Congress means even bigger deficits.
It’s difficult to imagine the United States government spending even more money than they already do. But Schiff says this is the new reality under a politically divided Congress, according to Seeking Alpha. The blue wave, which turned out to be more like a blue ripple, will force gridlock in the government, which is great news for anyone favoring smaller government and less interference in their everyday lives by the sociopaths claiming the right to rule over them. But a divided government also means larger deficits because Democrats don’t want to do anything about the government’s spending problem.
Peter believes that president Donald Trump will actually do substantial harm to the economy by working with House Democrats to pass some kind of economic stimulus in 2019. That major disaster will see the economy begin to slow down.
I think the next fiscal stimulus is going to be more of a spending stimulus – an infrastructure plan. Just more money spent to kind of prime the pump Keynesian-style.” –Peter Schiff
This wouldn’t be at all out of character for the Trump, either. He talked frequently about an enormous infrastructure plan during his campaign. He certainly wouldn’t have much trouble convincing Democrats that this level of spending is a good idea. The Republican-controlled Senate might be a little tougher sell, but Trump likely raised his stock among Republicans with the elections and will probably have even more pull than he did during his first two years.
I think Trump is going to try to position himself as a guy that can cross the aisle and work with the other side, especially going into the 2020 elections… so we’re probably going to get big increases in government spending.” –Peter Schiff
That’s horrific news considering the Federal Reserve has plans to continue to raise interest rates too. Schiff also said that he feels that there may some middle-class tax cuts to help relieve some of the economic pain, but those won’t impact the broader economy.
“In other words, these tax cuts won’t even create the appearance of growing the economy. They’re simply going to grow the debt and lead to higher inflation. It is going to feed the stagflationary fire that will be burning. This is going to be negative for the dollar. This is going to be positive for gold. This is going to be very positive for investments outside the United States.” –Peter Schiff
Schiff also warns that the household debt situation, which is worsening in the United States, will play a role in the next economic downturn.