Polish Central Bank Joins 2015 Rate Cutting Party – Ep. 58
The Peter Schiff Show Podcast
Peter Schiff
4.6 • 5.9K Ratings
🗓️ 5 March 2015
⏱️ 21 minutes
🧾️ Download transcript
Summary
* Poland became the 21st country to lower interest rates this year
* New record low to 1.5%
* Polish economy is strongest in three years
* Growing faster than the U.S. economy
* Policy conundrum: what is inflation target?
* Low inflation stimulating Polish economy
* Yet Central Bankers look to illogical Keynesian textbooks
* Where is the evidence that deflation is undermining the economy?
* There is no magical point where a good thing becomes a bad thing
* If they overcompensate and weaken the economy, they will be raising interest rates on an already weak economy
* Poland could afford to raise rates, however, if this policy fails, because their debt is low
* U.S. debt is so high, we can't afford to raise rates in order to support the dollar
* When inflation picks up in the world and other central banks raise rates, the dollar will decline
* The Fed will be unable to curb inflation because we can't afford to service our debt
* Ultimately this will precipitate a currency crisis when it becomes apparent that the Fed has run out of options
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Transcript
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| 0:00.0 | The Peter Schiff Show. |
| 0:09.1 | So today Poland became the 21st country to lower interest rates thus far in 2015. |
| 0:19.7 | The Polish Central Bank lowered its interest rate to a new record low 1.5%. |
| 0:27.3 | It was a 50 basis point cut from 2%. |
| 0:31.5 | It makes me think of maybe a joke how many Polish central bankers does it take to reduce interest rates? |
| 0:39.4 | I don't know the answer to that question. |
| 0:42.4 | However many there were on the central bank's committee, they effectively lowered rates to 1.5%. |
| 0:52.3 | The interesting thing about the rate cut is it comes against the backdrop of a very strong economy. |
| 1:01.4 | The Polish economy is the strongest it's been in three years. |
| 1:06.7 | In fact, I think GDP growth for the most recent year trailing is 3.1%. |
| 1:16.2 | So the Polish economy is growing faster than the US economy. |
| 1:20.6 | The US economy hasn't grown at 3% in a long time. |
| 1:24.6 | The fastest rate of growth in the Obama administration was 2.5% in 2010. |
| 1:30.6 | So the Polish economy is currently growing faster than the US economy yet the Polish central bank |
| 1:38.6 | decided to lower interest rates to 1.5%. |
| 1:46.8 | Now why do they do that? |
| 1:49.0 | Well it's all because inflation is too low. |
| 1:53.2 | And I'm reading an article from Bloomberg which typically writes these type of articles. |
| 2:01.5 | One section, the title of the article in case anybody wants to find it is Poland's easing |
| 2:07.0 | maybe over after unexpected half point cut. |
| 2:11.0 | And there's a section entitled policy conundrum. |
| 2:18.6 | And I read a little bit from you. |
... |
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