Trump Should Envy Germany’s Fiscal Discipline, Not Europe’s Monetary Freak Show
Lost in the cacophony of absurd self-aggrandizing on Wednesday was Donald Trump's dismay upon learning about Germany's historic zero coupon 30-year bond auction.
"So Germany is paying Zero interest and is actually being paid to borrow money", an incredulous Trump tweeted of the sale.
At this point, it's safe to say the president feels righteously aggrieved each and every time he stumbles on a statistic from the European fixed income market, where the list of mind-boggling factoids grows by the
“The result is inflated asset prices with no impact on the real economy….” Pretty much describes the last decade here in MAGA-land.
H, have you listened to any of Peter Schiff’s recent podcasts? What do you think of the progression of events that he is predicting will happen…from what I’ve been hearing..this is what I think he is predicting 1) fed is going to cut rates to 0% 2) having 0% rates won’t be enough so they are going to do QE 4 which will be the latest QE yet… 3) This time inflation is going to show up causing bond yields to drop because with higher inflation binder holders will not want negative real yields. 4) Increase in yields will cause anyone loaded up on debt (including the government) to start to feel the pain. 5). Not know what else to do, Fed will do QE 5…which will just make the problem worse.. 6) Dollar will crash resulting in hyper inflation
The way to protect yourself is to invest in precious metals and foreign assets
I think i’ve mentioned this before, but I don’t listen to Peter Schiff. Peter may well be a nice enough guy, but he’s notorious for being a broken record. I’m not at all trying to dissuade you from listening to him (seriously, i’m not – he has a large following and there’s some value there), but he’s not somebody that I, personally, take very seriously.
Also, the dollar is not going to crash resulting in hyperinflation. That is 100% ridiculous and even if it wasn’t, that should never be an excuse for buying gold. Gold is a portfolio hedge and an inverse real yields play (until it’s not, which is usually when real yields rise far enough, fast enough to spook risk assets, triggering a flight to safety, in which case gold can actually rally as real yields rise). That’s all gold is. It isn’t an “inflation hedge” — that’s a happy historical coincidence based solely on mankind’s affinity for it. There are a lot of things we have a finite supply of. Why aren’t they safe haven assets too? What about gold makes it any more intrinsically valuable than something else there’s not an infinite amount of?
Getting back to the dollar “crash” thing, this is one subject I’ve been over a lot here… it’s not clear what a dollar “crash” would even mean, right? what would it “crash” against? the dollar can weaken, but the dollar cannot “crash”, really. it would have to “crash” against something else, and there is exactly nothing other than food, bullets and fuel (and not necessarily in that order) that people would want in a scenario where the dollar becomes worthless.
that is, if the dollar ever really “crashes”, nobody is going to be worried about the price of a shiny, inert metal that can’t be eaten or burned for fuel (i.e., gold). and people are going to forget about crypto currencies literally overnight because if the dollar crashes, it means the entire world is probably on fire (figuratively or literally) and nobody is going to want to hear about your thumb drive with digital tokens on it.
and i’m only half joking. if the dollar were to truly “crash”, then it’s all over. it’s time to clean out the local Gas-N-Go and fight your neighbors for what’s left on the shelves at Walmart and Sam’s. the only thing gold bars will be useful for is as a blunt object to beat somebody over the head with on the way to stealing their food and fuel.
Thanks. It’s good to hear this scenario repeated once in a while
Good point. So what prevents the US government from having 10 trillion a year budget deficits and printing 100 trillion in QE programs?
I envy Germany’s willingness to limit their policies to what is “consistent with the constitution.”