The Peter Schiff Show Podcast

Presidential Tweets Express Anger at the Fed

The catalyst today was more tweets from President Trump where he is expressing anger, not only at the Federal Reserve, and at the ECB and at the Bank of China, because he is accusing both Europe and China of being currency manipulators; taking advantage of us by weakening their currencies. He's saying that a weak currency gives you an advantage.  It doesn't.

Strong Currency Provides Trade Advantage

When it comes to trade, it is a strong currency that gives you the advantage because trade is all about imports.  How do you get more stuff for your own citizens, and the way you pay for that stuff is by exporting. But the goal is to export as little as possible and to import as much as possible.  If you're a buyer, you always want to pay the least and get the most. So you pay for stuff when you export because you're using resources to produce stuff for other people. But you're not producing stuff for other people because you're charitable, you're trying to earn the money to buy stuff for yourselves that other people made.

Is Trump Firing Back?

Having a strong currency is a huge advantage because it means you can claim a greater portion of the global output. Because the dollar has been so over-valued thanks to the generosity or the stupidity of our trading partners, Americans enjoy greater consumption than what would otherwise be available to them if we were limited by our own collective production. So we actually have the advantage. But by calling out China and the ECB for deliberately weakening their currency, you would think that Trump may want to fire back.

Weakening the Dollar

Donald Trump doesn't control the Fed, but the Treasury Department can intervene in the foreign exchange markets. Maybe, if Donald Trump really believes that these other countries are deliberately weakening their currency and if he has no control over the Fed but he does have control over the U.S. Treasury, he can have the Secretary of the Treasury intervene, go into the Foreign Exchange Market and start dumping dollars, trying to drive the dollar down so that we can reclaim the advantage.  At least the way he looks at it.

 

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Presidential Tweets Express Anger at the Fed

The catalyst today was more tweets from President Trump where he is expressing anger, not only at the Federal Reserve, and at the ECB and at the Bank of China, because he is accusing both Europe and China of being currency manipulators; taking advantage of us by weakening their currencies. He's saying that a weak currency gives you an advantage.  It doesn't.

Strong Currency Provides Trade Advantage

When it comes to trade, it is a strong currency that gives you the advantage because trade is all about imports.  How do you get more stuff for your own citizens, and the way you pay for that stuff is by exporting. But the goal is to export as little as possible and to import as much as possible.  If you're a buyer, you always want to pay the least and get the most. So you pay for stuff when you export because you're using resources to produce stuff for other people. But you're not producing stuff for other people because you're charitable, you're trying to earn the money to buy stuff for yourselves that other people made.

Is Trump Firing Back?

Having a strong currency is a huge advantage because it means you can claim a greater portion of the global output. Because the dollar has been so over-valued thanks to the generosity or the stupidity of our trading partners, Americans enjoy greater consumption than what would otherwise be available to them if we were limited by our own collective production. So we actually have the advantage. But by calling out China and the ECB for deliberately weakening their currency, you would think that Trump may want to fire back.

Weakening the Dollar

Donald Trump doesn't control the Fed, but the Treasury Department can intervene in the foreign exchange markets. Maybe, if Donald Trump really believes that these other countries are deliberately weakening their currency and if he has no control over the Fed but he does have control over the U.S. Treasury, he can have the Secretary of the Treasury intervene, go into the Foreign Exchange Market and start dumping dollars, trying to drive the dollar down so that we can reclaim the advantage.  At least the way he looks at it.

 

Trump Driver is Suing the Trump Organization

On thing I talked about on the Joe Rogan podcast was a story that broke the same day of my last podcast, which I thought was very interesting.  It was about Donald Trump being sued by his former personal driver, who still works for the Trump organization, by the way, he's worked there for over 25 years until Trump became President and got a tax-payer provided driver, he had to pay his own driver.  I think the guy was getting a $70K/year salary, which to me seems about right.

Diver Claims He is Due Overtime

The driver sued the Trump organization because he claims that he was due overtime, and he didn't get paid overtime. Now he's worked for the Trump organization for 25 years.  He has known his pay all these years and never once complained and now after 25 years he wants to use the labor laws to retroactively force the Trump organization to give him a pay hike.

Terms and Conditions of Employment

First of all, he is not an hourly employee.  It's not like he is punching a clock and the organization asks him to work overtime. According to the article I read, the driver needed to be on call for Trump something like 10-11 hours a day. Maybe 55 hours a week he was on call in case Trump needed him. That does not mean he was driving all that time; he just had to be accessible to Trump. He couldn't go on a vacation or leave town, but he could watch a movie, he could read a book, he could trade stocks on the internet, he could do whatever he wanted.  He had plenty of free time between times he drove for Trump. He knew exactly what the deal was and he chose to work under these conditions.

What happens in America is that employees like to go back in time and re-write the deal more favorably to them. If this driver did not like the terms of his employment, he had two options:

* He could have gone to Donald Trump and said, "I'm working on call 10 hours a day - that's more than a normal 8-hour job, you're paying me $70K/year, If you want me to be on call that many hours, you need to pay me more money. Then Trump would have had two options - pay more money or find another driver.

* If the driver did not like his employment conditions of that job, the compensation package, the amount of hours he had to be available, he was free to drive for somebody else.

 

 

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Trump Driver is Suing the Trump Organization

On thing I talked about on the Joe Rogan podcast was a story that broke the same day of my last podcast, which I thought was very interesting.  It was about Donald Trump being sued by his former personal driver, who still works for the Trump organization, by the way, he's worked there for over 25 years until Trump became President and got a tax-payer provided driver, he had to pay his own driver.  I think the guy was getting a $70K/year salary, which to me seems about right.

Diver Claims He is Due Overtime

The driver sued the Trump organization because he claims that he was due overtime, and he didn't get paid overtime. Now he's worked for the Trump organization for 25 years.  He has known his pay all these years and never once complained and now after 25 years he wants to use the labor laws to retroactively force the Trump organization to give him a pay hike.

Terms and Conditions of Employment

First of all, he is not an hourly employee.  It's not like he is punching a clock and the organization asks him to work overtime. According to the article I read, the driver needed to be on call for Trump something like 10-11 hours a day. Maybe 55 hours a week he was on call in case Trump needed him. That does not mean he was driving all that time; he just had to be accessible to Trump. He couldn't go on a vacation or leave town, but he could watch a movie, he could read a book, he could trade stocks on the internet, he could do whatever he wanted.  He had plenty of free time between times he drove for Trump. He knew exactly what the deal was and he chose to work under these conditions.

What happens in America is that employees like to go back in time and re-write the deal more favorably to them. If this driver did not like the terms of his employment, he had two options:

* He could have gone to Donald Trump and said, "I'm working on call 10 hours a day - that's more than a normal 8-hour job, you're paying me $70K/year, If you want me to be on call that many hours, you need to pay me more money. Then Trump would have had two options - pay more money or find another driver.

* If the driver did not like his employment conditions of that job, the compensation package, the amount of hours he had to be available, he was free to drive for somebody else.

 

 

Misguided Tweet About Pfizer

Another misguided tweet that came out today from the President had to do with drugs:

Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!

So here's the President, threatening businesses for raising prices; for making a profit.   If Obama were calling out big business like this, the Republicans would be all over him, or if Hillary Clinton were saying this:"You don't understand capitalism! This is an assault on private enterprise!"

Trump's Protectionism Tolerated by Republicans

But Trump says it and it's no big deal.  Can you imagine if Hillary Clinton had launched these recent tariffs? Can you imagine the backlash by the Republicans? "This is terrible, the President doesn't understand capitalism; the President doesn't understand free trade; this is going to backfire; this is going to lower our standard of living; this is going to raise prices!"  The Republicans would be all over Hillary Clinton.  They would have been all over President Obama. Republicans have generally been known to be in favor of free trade.  It's the Democrats who wanted some protectionism because they wanted to protect workers.  They think free trade will lower wages, hurting the blue collar worker. So you would generally associate Democrats with protectionism. The Republicans wanted to be Free-Traders.

Get Rid of FDA Red Tape

Now, of course, since President Trump is advocating protectionism, the Republicans don't want to attack him because they are blindly loyal to the party. So now he's bashing Pfizer and other private companies for "gouging" the consumer, just raising prices for no reason.  This is all misplaced. I agree that drug prices are too high; they should be a lot lower. It is not that Pfizer is rising prices for no reason. One of the reasons drugs are so expensive is the FDA. This is something President Trump can do something about.  He is the President.  The FDA is a Federal agency. Why not get rid of all that red tape?  It takes an average of 10 years and $2.6 billion for a drug company to develop a drug and get it to market. The drug has to recoup those costs when they finally get a drug to market.

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Misguided Tweet About Pfizer

Another misguided tweet that came out today from the President had to do with drugs:

Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!

So here's the President, threatening businesses for raising prices; for making a profit.   If Obama were calling out big business like this, the Republicans would be all over him, or if Hillary Clinton were saying this:"You don't understand capitalism! This is an assault on private enterprise!"

Trump's Protectionism Tolerated by Republicans

But Trump says it and it's no big deal.  Can you imagine if Hillary Clinton had launched these recent tariffs? Can you imagine the backlash by the Republicans? "This is terrible, the President doesn't understand capitalism; the President doesn't understand free trade; this is going to backfire; this is going to lower our standard of living; this is going to raise prices!"  The Republicans would be all over Hillary Clinton.  They would have been all over President Obama. Republicans have generally been known to be in favor of free trade.  It's the Democrats who wanted some protectionism because they wanted to protect workers.  They think free trade will lower wages, hurting the blue collar worker. So you would generally associate Democrats with protectionism. The Republicans wanted to be Free-Traders.

Get Rid of FDA Red Tape

Now, of course, since President Trump is advocating protectionism, the Republicans don't want to attack him because they are blindly loyal to the party. So now he's bashing Pfizer and other private companies for "gouging" the consumer, just raising prices for no reason.  This is all misplaced. I agree that drug prices are too high; they should be a lot lower. It is not that Pfizer is rising prices for no reason. One of the reasons drugs are so expensive is the FDA. This is something President Trump can do something about.  He is the President.  The FDA is a Federal agency. Why not get rid of all that red tape?  It takes an average of 10 years and $2.6 billion for a drug company to develop a drug and get it to market. The drug has to recoup those costs when they finally get a drug to market.

"Bring on the Trade War!"

Today is Jobs Friday, but before I get to the jobs report, I want to talk a little bit about the escalation of the trade war,  In fact, some stories I'm reading are that the trade war began today, or last night.  A lot of the tariffs are finally being imposed.  The market reacted positively; the Dow was up 100 points today.  The NASDAQ was up 100 points as well, which is percentage-wise a much bigger increase - 1.34% move - so who cares about a trade war?  "Bring it on! America is going to win the trade war because we've got the least to lose because we've got the biggest deficits.

Dollar Sold Off Despite Trade War and Jobs Number

The dollar, meanwhile, sold off today. The dollar index closed at 94, barely held the 94 handle.  It traded below briefly, despite what many people consider a stronger Nonfarm Payroll report. So, the dollar went down despite the beginning of the trade war and despite the supposed strong jobs number. To me, the dollar topped out at 95; I expect us to crack below 94 next week, and if we break below 93, if we get into the 92's I am pretty sure the rally is over, technically speaking and we're heading for new lows relatively quickly.

Who is the Industrial Powerhouse?

Let me get back to the trade war that we are supposedly going to win.  One of the most interesting things about it, is when you look at the goods each side is imposing tariffs on.  When you look at that, you can see which country is the industrial powerhouse and which country is a third world country masquerading as an economic power. Here are the goods made in China that Trump wants to tax the American citizens on:

Aircraft tires

Scales

Nuclear reactors

Cranes

Boat motors

Bulldozers

Aircraft engines

Boring machines

Aircraft engine parts

Construction vehicles

Air & gas compressors

Oil & gas drilling platforms

Combine harvesters

Plows

Industrial heating equipment

Chicken Incubators

Dairy milkers

Plows

Livestock equipment

Machinery for processing meats

Paper making machinery

Machinery for molds, cements

Printer & copy machine parts

Machinery for glass products

Printer & machinery for making rubber

Industrial ovens

Industrial magnets

AC & DC generators

Lithium batteries

Electric transformers

Radar & radio equipment

Equipment for circuit breakers

Television parts & video recorders

LED's

Electronic traffic signs

Trains & rail parts

Large vehicles

Diesel cars & trucks

Motorcycles

Helicopters

Microscopes

Airplanes

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"Bring on the Trade War!"

Today is Jobs Friday, but before I get to the jobs report, I want to talk a little bit about the escalation of the trade war,  In fact, some stories I'm reading are that the trade war began today, or last night.  A lot of the tariffs are finally being imposed.  The market reacted positively; the Dow was up 100 points today.  The NASDAQ was up 100 points as well, which is percentage-wise a much bigger increase - 1.34% move - so who cares about a trade war?  "Bring it on! America is going to win the trade war because we've got the least to lose because we've got the biggest deficits.

Dollar Sold Off Despite Trade War and Jobs Number

The dollar, meanwhile, sold off today. The dollar index closed at 94, barely held the 94 handle.  It traded below briefly, despite what many people consider a stronger Nonfarm Payroll report. So, the dollar went down despite the beginning of the trade war and despite the supposed strong jobs number. To me, the dollar topped out at 95; I expect us to crack below 94 next week, and if we break below 93, if we get into the 92's I am pretty sure the rally is over, technically speaking and we're heading for new lows relatively quickly.

Who is the Industrial Powerhouse?

Let me get back to the trade war that we are supposedly going to win.  One of the most interesting things about it, is when you look at the goods each side is imposing tariffs on.  When you look at that, you can see which country is the industrial powerhouse and which country is a third world country masquerading as an economic power. Here are the goods made in China that Trump wants to tax the American citizens on:

Aircraft tires

Scales

Nuclear reactors

Cranes

Boat motors

Bulldozers

Aircraft engines

Boring machines

Aircraft engine parts

Construction vehicles

Air & gas compressors

Oil & gas drilling platforms

Combine harvesters

Plows

Industrial heating equipment

Chicken Incubators

Dairy milkers

Plows

Livestock equipment

Machinery for processing meats

Paper making machinery

Machinery for molds, cements

Printer & copy machine parts

Machinery for glass products

Printer & machinery for making rubber

Industrial ovens

Industrial magnets

AC & DC generators

Lithium batteries

Electric transformers

Radar & radio equipment

Equipment for circuit breakers

Television parts & video recorders

LED's

Electronic traffic signs

Trains & rail parts

Large vehicles

Diesel cars & trucks

Motorcycles

Helicopters

Microscopes

Airplanes

Market Closed Early for July 4th Holiday

The U.S. stock market closed early today, ahead of tomorrow's Fourth of July holiday when the markets are of course closed and Americans are out celebrating Independence Day, the birth of the nation, July 4, 1776.  I love the Fourth of July as a holiday; it is purely American.

Framers of the Constitution Risked it All

One of the problems I have with the Fourth of July is that it makes me feel both good and bad about what happened on July 4, 1776.  I am honored to have been born in a nation that was conceived in liberty and I think about the sacrifices made by the people who signed their names beneath John Hancock's name to that document. These men risked it all to put their names on the Declaration of Independence, committing treason against the British government.  If we had lost that war, the King would have killed our founding fathers, as traitors.

The American Experience is Unique and Privileged

So you think back on the accomplishments and the sacrifices that were made and the incredible republic that our founders created.  I'm proud that, but at the same time, I'm sad that it has all been lost.  We no longer have the nation that our founders created for us. We have lost all that it means to be an American. It used to be so special to be American, based on the type of nation that we were, and the type of individuals that Americans were; what it meant to be an American, how unique and privileged it was.

The Role of Government in America

And today, even though the American economy is regarded as at the top, a lot of that is a function of debt and it's all an illusion. The difference  between an American and any European these days is not nearly as great as it was. If you have never read the Declaration of Independence, and I am sure most of you probably had at some point, you might want to take another look at it, and give the entire document a read.  I am going to read just a part of the second paragraph, because this is the most important aspect to understand the essence of what America is supposed to be, and what the American government is supposed to do.  This is important because there are all these Socialists out there who want to re-define America - Democratic Socialism.  This paragraph helps you understand the role of government in America.

We Hold These Truths to Be Self-Evident

Governments can have different roles in different countries, but in America, there is a certain role that government is supposed to have. It had it for a long time, but it no longer fills that role:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, —

 

 

Our Sponsors:
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Market Closed Early for July 4th Holiday

The U.S. stock market closed early today, ahead of tomorrow's Fourth of July holiday when the markets are of course closed and Americans are out celebrating Independence Day, the birth of the nation, July 4, 1776.  I love the Fourth of July as a holiday; it is purely American.

Framers of the Constitution Risked it All

One of the problems I have with the Fourth of July is that it makes me feel both good and bad about what happened on July 4, 1776.  I am honored to have been born in a nation that was conceived in liberty and I think about the sacrifices made by the people who signed their names beneath John Hancock's name to that document. These men risked it all to put their names on the Declaration of Independence, committing treason against the British government.  If we had lost that war, the King would have killed our founding fathers, as traitors.

The American Experience is Unique and Privileged

So you think back on the accomplishments and the sacrifices that were made and the incredible republic that our founders created.  I'm proud that, but at the same time, I'm sad that it has all been lost.  We no longer have the nation that our founders created for us. We have lost all that it means to be an American. It used to be so special to be American, based on the type of nation that we were, and the type of individuals that Americans were; what it meant to be an American, how unique and privileged it was.

The Role of Government in America

And today, even though the American economy is regarded as at the top, a lot of that is a function of debt and it's all an illusion. The difference  between an American and any European these days is not nearly as great as it was. If you have never read the Declaration of Independence, and I am sure most of you probably had at some point, you might want to take another look at it, and give the entire document a read.  I am going to read just a part of the second paragraph, because this is the most important aspect to understand the essence of what America is supposed to be, and what the American government is supposed to do.  This is important because there are all these Socialists out there who want to re-define America - Democratic Socialism.  This paragraph helps you understand the role of government in America.

We Hold These Truths to Be Self-Evident

Governments can have different roles in different countries, but in America, there is a certain role that government is supposed to have. It had it for a long time, but it no longer fills that role:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, —