Today's job report revealed continued weakness in the U.S. economy and provides clear evidence that prior efforts to stimulate with deficit spending, absurdly low interest rates, and a series of government programs designed to support the housing and automobile markets have failed to create any meaningful forward momentum.
The report qualifies as a major disappointment for just about everyone except those desperate for the government to launch another expensive and futile round of "stimulus." No doubt economists and administration officials will use the dismal results to argue that the prior stimuli were simply too small to jolt the economy back to life.
If the Obama Administration takes the bait, which it seems very likely to do, the United Sates is in danger of losing the confidence that other heavily indebted countries are striving to regain. Not insignificantly, in recent days the dollar has sold off from its recent highs, and has fallen in tandem with the stock market, a reversal of a pattern that we have seen for much of the year.
Any new stimuli, in the form of greater deficit spending, or the extension of the home-buyer's tax credit, should be considered economic sedatives rather than stimulants.
Working off the economic imbalances that resulted from prior stimuli will be difficult enough, adding on additional debt burdens will only make the task harder. What we really need to grow our economy are less government and consumer spending, fewer regulations, lower taxes, more savings, increased capital investment, greater industrial production, and higher interest rates. Unfortunately government stimuli are preventing these positive developments from taking place and hindering any chance we have of a meaningful recovery.
Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.