LIZ: DOW JONES INDUSTRIALS DOWN
ABOUT 299 POINTS RIGHT NOW.
OKAY.
YOU HAVE HEARD OF GIRLS GONE
WILD?
HOW ABOUT FED GONE CRAZY?
PRESIDENT TRUMP SAID IT, HE'S
TAKING AIM AT THE FEDERAL
RESERVE, PUTING THE BLAME FOR
THE MARKETS PLUNK THAT WE SAW
YESTERDAY OF 831 POINTS ON THE
DOW SQUARELY AT THE FEET OF THE
CENTRAL BANK.
ALL RIGHT.
A LIVE CHECK OF THE DECEMBER FED
FUNDS FUTURES WHICH INDICATE THE
ODDS OF A RATE HIKE, THIS IS FOR
DECEMBER, SHOW THEY'RE NOT FAR
AT ALL FROM WHERE THEY HAVE BEEN
THE PAST MONTH.
RIGHT NOW, THEY ARE AT 71.5%
CHANCE OF A RATE HIKE.
PAST COUPLE OF WEEKS, THEY HAVE
BEEN AROUND 80, 79.
IF THAT FOURTH HIKE OF THE YEAR
COMES TO PASS, ARE STOCKHOLDERS
DOOMED OR IS IT TOO LATE TO SAVE
INVESTORS EITHER WAY?
JOINING ME, ANDY BRENNER, WHO
SAYS THE FED IS DOING WHAT IT
THINKS IS NECESSARY TO KEEP OUR
ECONOMY AFLOAT AND PETER SCHIFF,
WHO SAYS THE BEAR MARKET HAS
ALREADY BEGUN.
PETER, PRESIDENT TRUMP CALLED IT
A CORRECTION, BLAMED THE FED.
IS IT A CORRECTION OR A BEAR
MARKET AND SHOULD HE BE BLAMING
THE FED?
>> WELL, ALL BEAR MARKETS START
OFF AS CORRECTIONS.
I THINK THIS ONE IS PROBABLY A
BEAR MARKET.
IT'S LONG OVERDUE.
DONALD TRUMP SAID THAT THE FED
HAS GONE CRAZY.
HE'S WRONG.
THEY DIDN'T JUST GO CRAZY.
THEY HAVE BEEN CRAZY FOR A LONG
TIME.
IT WAS CRAZY TO LOWER INTEREST
RATES DOWN TO ZERO.
IT WAS EVEN CRAZIER TO LEAVE
THEM THERE AS LONG AS THEY DID.
THE ONLY SANE THING THEY HAVE
DONE IS TO RAISE THEM BACK UP.
BUT WHAT IS CRAZY IS FOR THE FED
TO BELIEVE THAT THEY CAN RAISE
INTEREST RATES WITHOUT PRICKING
THEIR OWN BUBBLE WHICH WHAT IS
THEY HAVE DONE.
THIS IS A BIGGER BUBBLE THAN THE
ONE THAT BLEW UP IN 2008 AND THE
CRISIS THAT IS GOING TO ENSUE IS
GOING TO BE FAR LARGER.
YOU MENTIONED EARLIER IN THE
SHOW THAT HEY, IN THE PAST,
PEOPLE WERE ABLE TO PAY HIGHER
INTEREST RATES.
THAT WAS TRUE BECAUSE WE DIDN'T
HAVE ALL THIS DEBT.
THANKS TO THE FED, AND CHEAP
MONEY, WE HAVE MORE DEBT THAN
EVER BEFORE, INDIVIDUALS,
CORPORATIONS, THE GOVERNMENT IS
LOADED UP WITH DEBT AND AS
INTEREST RATES GO UP, THAT DEBT
IS UNSERVICEABLE.
LIZ: ANDY BRENNER, LETS
SPECIFICALLY TACKLE WHAT THE
PRESIDENT SAID.
HE SAID THE FED IS LOCO.
IN FACT, HE SAID THE FED IS TOO
STRINGENT.
HE NOW SUDDENLY DOESN'T WANT THE
FED TO TIGHTEN RATES ALTHOUGH IN
2016, DURING HIS CAMPAIGN, HE
SAID THIS IS ALL POLITICAL,
JANET YELLEN, THE FED CHAIR, IS
KEEPING RATES SUPER LOW TO MAKE
PRESIDENT OBAMA LOOK GOOD, MAKE
THE STOCK MARKET LOOK GOOD.
TOTAL REVERSAL HERE.
FED'S GOING CRAZY AND THEN HE
EVEN SAID I'M NOT GOING TO FIRE
CHAIR POWELL, I'M JUST
DISAPPOINTED.
I MEAN, THE FACT HE EVEN SAID
THAT, THAT REALLY KIND OF,
PEOPLE LOOKED ASKANCE SLIGHTLY
BUT YOU TELL ME SPECIFICALLY ON
THIS ISSUE OF THE PRESIDENT
BLAMING THE FED FOR YESTERDAY'S
CORRECTION, WHERE DO YOU STAND?
>> FIRST OF ALL, THE PRESIDENT
CAN'T FIRE POWELL.
HE'S PROBABLY ONE OF THE FEW
PEOPLE IN HIS ADMINISTRATION
THAT HE CAN'T --
LIZ: I THOUGHT HE COULD.
I THOUGHT FEDERAL RESERVE ACT,
THE PRESIDENT CAN REMOVE
GOVERNORS FOR CAUSE.
>> THEN THAT'S NEW TO ME.
AS FAR AS I KNOW, HIS TERM IS --
LIZ: GO AHEAD, ANDY.
>> AS FAR AS RATES, PETER IS
SOMEWHAT RIGHT IN THAT THE FED
HAS BEEN RAISING RATES AND YOU
KNOW, AS FAR AS OTHER THINGS, I
THINK THE FED HAS NEVER SEEN A
BALANCE SHEET UNWIND AND RAISING
THE RATES TOGETHER AND I THINK
THAT'S CAUSING THE RISK PREMIUM
IN THE MARKETS TO RISE AND I
THINK THAT'S HURTING EQUITIES.
I DISAGREE WITH PETER ON A BEAR
MARKET BUT I DO THINK A
CORRECTION 10% TO 12% TO 15% IS
COMING, IT IS IN THE CARDS.
I THINK THE MIDTERMS WILL KIND
OF REDUCE THAT, AND I THINK AS
WE GET TOWARDS YEAR END.
THE PRESIDENT IS CLEARLY TRYING
TO GET A SCAPEGOAT HERE AND
THAT'S THE FED.
THE PRESIDENT KNEW EQUITY
MARKETS ARE HIGH.
HE'S A MARKETS GUY HIMSELF.
HE HAS BEEN TRADING MARKETS BACK
AND FORTH OVER HIS 40-YEAR
CAREER.
I THINK HE'S RIGHT IN SOME
RESPECTS AND WRONG IN OTHERS IN
CRITICIZING THE FED.
LIZ: THE PRESIDENT ALSO I
BELIEVE BROUGHT THIS UP.
HE SAID IT'S HURTING ME
PERSONALLY.
I OWE $300 MILLION TO DEUTSCHE
BANK.
I'M PAYING A HIGH INTEREST RATE.
HE WAS COMPLAINING, MAKING IT
LIKE HE'S FEELING TO QUOTE
ANOTHER PRESIDENT, I FEEL YOUR
PAIN.
TELL ME WHERE THIS ALL GOES.
YOU REALLY BELIEVE THIS IS A
LONGER TERM ISSUE AND THE START
OF A BEAR MARKET AFTER WHAT HAS
BEEN THE SECOND LONGEST
EXPANSION IN HISTORY.
>> YEAH.
WELL, MORE IMPORTANT THAN A BEAR
MARKET, IT'S A RECESSION.
THIS IS A BUBBLE, NOT JUST IN
THE STOCK MARKET, BUT THE ENTIRE
ECONOMY.
SO THE FED HAS DISTORTED MORE
THAN JUST MARKETS.
THE PROBLEM IS THIS RECESSION IS
GOING TO BE FAR MORE PAINFUL AND
FAR DEEPER THAN THE ONE WE HAD
IN '08 AND '09 BECAUSE IT'S ALSO
GOING TO BE ACCOMPANIED BY
RISING CONSUMER PRICES.
I THINK AS AMERICANS LOSE THEIR
JOBS, THEY ARE GOING TO SEE THE
COST OF LIVING GOING UP RATHER
DRAMATICALLY, SO THIS IS GOING
TO MAKE IT PARTICULARLY PAINFUL.
BUT ONE OF THE THINGS I THOUGHT
WAS FUNNY THAT TRUMP SAID IS
THAT HE WAS CRITICIZING THE FED
FOR RAISING RATES TOO QUICKLY
BECAUSE HE SAID THAT HE WOULD
RATHER HAVE TIME TO PAY OFF DEBT
FIRST AND HE WAS NOT REFERRING
TO HIS OWN DEBT, BUT TO THE
NATIONAL DEBT.
BUT THE PROBLEM IS, TRUMP IS
EXPLODING THE NATIONAL DEBT,
KNOWING THAT THE FEDERAL RESERVE
WAS GOING TO RAISE INTEREST
RATES.
HE SIGNED ON TO TAX CUTS AND
SPENDING INCREASES.
THAT IS THE WORST THING TO DO
WHEN INTEREST RATES ARE GOING
UP.
YOU DON'T WANT TO GO DEEPER INTO
DEBT.
YOU TRY TO PAY DOWN DEBT.
THE ONLY WAY TO PAY DOWN DEBT IS
TO RUN A SURPLUS.
LIZ: I REMIND YOU, YOU VOTED FOR
PRESIDENT TRUMP.
NOT THAT I NEED TO REMIND YOU.
GO AHEAD, ANDY.
>> ONE THING, I DON'T SEE
RECESSION ON THE HORIZON.
LIZ: NOR DO I.
>> WITH UNEMPLOYMENT LOW, I'M
WILLING TO GIVE YOU A CORRECTION
BUT THAT'S AS FAR AS I'M WILLING
TO GIVE YOU.
INTEREST RATES STILL ARE
HISTORICALLY LOW.
YEAH, THERE'S A LOT OF LEVERAGE
IN THE SYSTEM AND I CAN SEE A
LOT OF BAD THINGS HAPPENING.
I'M MORE CONCERNED ABOUT WHAT'S
HAPPENING OVERSEAS.
EMERGING MARKETS ARE DOWN 25%,
EUROPEAN MARKETS ARE DOWN 15%.
CHINESE MARKETS ARE DOWN 27%.
THERE ARE A LOT OF BAD THINGS
HAPPENING.
I THINK WE ARE GOING TO BE OKAY
BUT YEAH, I WILL GIVE YOU A
CORRECTION.
THAT PART, I'M WILLING TO GIVE
YOU.
LIZ: PETER?
>> YEAH, THOSE MARKETS ARE ONLY
DOWN BECAUSE EVERYBODY THINKS
THE FED'S GOING TO KEEP HIKING
RATES AND SHRINKING ITS BALANCE
SHEET.
YOU SHOULD BE BUYING THOSE
MARKETS.
THE FED IS EVENTUALLY GOING TO
DO AN ABOUT-FACE.
IF YOU DON'T THINK A RECESSION
IS COMING, LOOK AT THE AUTO
SECTOR.
LOOK AT THE HOME BUILDERS.
THEY ARE ALREADY FLASHING
RECESSION.
LOOK AT THE FINANCIALS.
THIS IS ONE OF THE LONGEST
ECONOMIC EXPANSIONS EVER.
IT HAS REQUIRED THE GREATEST
AMOUNT OF MONETARY STIMULUS TO
PRODUCE IT.
IT'S A GIGANTIC BUBBLE.
THIS WHOLE THING IS BUILT ON A
MOUNTAIN OF DEBT.
AS INTEREST RATES GO UP, THE
THING COLLAPSES.
AS THE DOLLAR GOES DOWN, THE
COST OF LIVING IS GOING TO GO
UP.
WAIT UNTIL YOU SEE HOW EXPENSIVE
THINGS ARE GOING TO GET IN THE
UNITED STATES, ESPECIALLY WITH
THESE TARIFFS.
THEY ARE JUST GOING TO ADD TO
THE INFLATIONARY PRESSURES THAT
ALREADY EXIST.
LIZ: WE ARE GOING BACK DOWN.