Yesterday, August 25, 2015, the United States’ stock market again fell over one percentage point and this morning (as of this writing) the future value index indicates some stabilization. The futures often gyrate wildly before the market open, so it is unknown at this early hour how the market will open this morning or conclude for the remainder of the week. So far this year, the Dow Industrial Average is down over 12 percent and the recent massive decline began on August 19, 2015. Rather than look in the mirror at the U.S. government’s own economic policies, politicians have been quick to place blame on China. Similar to when we look for blame for a flu outbreak or other disease, our government quickly, and often wrongly, puts blame on the doorstep of Communist China. While politically convenient for politicians to misdirect attention on the other side of the Earth for our economic woes, it does not change the facts that our own economic policies are mostly to blame.
Republican presidential candidate Donald Trump tweeted on Monday, “As I have long stated, we are so tied in with China and Asia that their markets are now taking the U.S. market down. Get smart U.S.A. Markets are crashing–all caused by poor planning and allowing China and Asia to dictate the agenda. This could get very messy! Vote Trump.” Hypocritical or uninformed U.S. politicians have been blaming the Chinese government for manipulating their currency as one of the main reasons for the U.S. stock markets recently decline; however, the U.S. government constantly manipulates the U.S. Dollar. The U.S. government also manipulates the U.S. stock market, decides at what price Americans will borrow money and decides how much inflation tax Americans citizens will need to bear. And the mainstream media, acting as the U.S. government’s propagandists, continue to manipulate the minds of Americans so that blame is seen as being due elsewhere rather than in our own backyard.
Hedge fund operator Peter Schiff has warned that it is the Federal Reserve “spooking the markets, not China.” This past weekend, Schiff reminded his listeners through his radio show, that it is the Federal Reserve that primed the U.S. stock market to rise over 2,000 points in two months as Federal Reserve of St. Louis President, James Bullard mentioned the possibility of QE4. “QE” (quantitative easing) is what the Federal Reserve has been doing in three large rounds (QE, QE2, QE3) which has been the prime reason for the stock markets rise in recent years. The stock market’s rise has little to do with true success and instead has more to do with the “heroin” the stock market has been hooked on the last several years.
On yesterday’s Neil Cavuto’s “Your World” program on Fox News, Swiss America CEO, Craig Smith, spoke about blame being here at home, rather than placing full blame on China. He said, “If we want to all of a sudden follow the bouncing Trump because Trump the other day attacked China because of our financial woes, then I guess we’ll all take this position [that China is to blame]. But if you are a free market economist and you believe in the free markets, China is merely trying to do what is best for their economy.” Smith added that when China devalued their currency by 3.5 percent “we didn’t see the [U.S.] market fall apart right away. This has nothing to do with the Chinese. We’re in a global slow down. America is going to slow down. Look at corporate profits that are being forecast for the next quarter. They are going to go negative; we’re in a world recession.”
Appearing last night on Fox Business’ Kennedy show, former Republican Congressman Ron Paul said, “To say China caused all this is misleading, it goes back to the issuer of the reserve currency of the world, and that is our Federal Reserve system.” Paul went on to say, “I blame the Fed [Federal Reserve] for the bubbles and the market causes the collapse of the bubbles, so yes, the Fed is responsible. You can’t have that distortion and financial bubbles without a Federal Reserve printing money because this sends a bad message, it pretends there’s a lot of saving, they manipulate interest rates and people do dumb things, like overbuilt and over-invest. It’s contagious and then the market says ‘It’s really out of wack, you can’t sustain this debt, it eventually eats away at production and you have to correct things. So, what he market wants is the deflation, they want to get rid of the bad debt and get rid of the bad investments. Nobody likes that because politically that is not acceptable and you can’t get anything through like that in Congress. And besides that, not too many people in Washington understand the business cycle from the Austrian perspective.” Paul said that he would like to see the U.S. end its Federal Reserve system and felt it would happen in time through self-destruction and not through our legislative process. Paul concluded on the subject saying, “Once it is seen as a total failure, central banking as we know it today will have to end.”