by Peter Schiff, GoldSeek:
The Federal Reserve's Quantitative Easing program, which lasted from the end of 2008 to October 2014, was specifically intended to push up asset prices by lowering long-term interest rates and reducing financial risk. This provides a good explanation why the stock market gained nearly 200% from the bottom in March 2009 to October 2014 despite the fact that the U.S. economy persistently performed below expectations during that time.
Many people, myself included, argued that once the stimulus was removed stock prices would have to fall. Two and a half years later that has yet to occur. Although U.S. stocks are no longer rocketing upwards like they were during the QE era (the S&P 500 is up just 19% since the program wound down completely in November 2014), they have yet to experience any type of meaningful correction. Certainly market observers sense danger, but with the Federal Reserve cavalry always ready to ride to the rescue (as they did in January of 2016), markets have been free to drift upward.
Right up until his election, Trump argued, correctly in my view, that statistics suggesting economic strength, such as the employment or GDP reports, were fake news designed to hide the truth of a faltering Obama economy. He similarly argued, also correctly in my view, that stock market gains were evidence of a "big, fat, ugly bubble" created by the Fed in order to bail out Obama's bad economic policies. But the day after the election, all that changed. Now he claims that the very same statistics (which haven't moved much over the past year) are proof of his success. Gone are the claims that employment and GDP reports are fakes. Similarly, he has fully embraced the 18% rally on Wall Street since right before his election as proof of his deft economic stewardship. The fact that he is placing his own neck clearly on the chopping block does not seem to deter him at all.
The President's gambit does present the Federal Reserve with a huge opportunity to exert political power. There can be little doubt that Trump does not enjoy tremendous support from the members of the Fed's Open Market Committee, who are generally drawn from the center to the center-left of the economic spectrum