The printing presses are firing up all over again… err, at least the digital ledgers are, anyway.
Financial expert and infamous goldbug Peter Schiff was interviewed by Fox Business from the floor of the U.S. Stock Exchange.
Schiff warned viewers that “everyone is preparing for the wrong outcome with the U.S. economy.”
That outcome? The financial world has been waiting with feverish anticipation for “the big day” when the Federal Reserve finally raises interest rates – a quiet move big enough to shift economic tectonic plates.
But contrary to conventional wisdom about when the Federal Reserve will raise interest rates, and thus turn the page on a new era of the economy, Schiff says they can’t and won’t raise rates anytime soon – though they should have several years ago.
It didn’t happen months ago when many expected it. It won’t happen now in September, and likely not for a long time.
Because the Federal Reserve can’t raise rates without collapsing the bubble economy.
“I was saying they weren’t going to raise rates. Not because they shouldn’t, but because they can’t, because they will prick this bubble economy that they worked so hard to inflate,” Peter Schiff told Fox Business.
Instead of letting certain markets fail as they should have, they were propped up by the Fed. And these zombie banks and businesses have been sucking life out of the real economy – at great expense to average people.
“The economy has never been good. We’ve really been in a recession, I think, for the entirety of the recovery. I think the policies that the Federal Reserve has used to prop up the stock market and the real estate market have hurt the real economy. That’s why things are actually getting worse. But on Wall Street, yeah, things look good. But if the Fed takes away those monetary supports, we’re going to be in a bear market. We’re going to be in a deeper recession. We’re going to resume the financial crisis that was interrupted by this monetary policy.”
“The problem is that when the Fed was breathing life, or breathing air, into the financial markets, it was sucking it out of the real economy. That’s why we haven’t had a recovery. But everybody who thinks that the Federal Reserve policy succeeded, there’s no success here. There’s no success until you raise interest rates and shrink your balance sheet. And the Fed can’t do that. That’s why rates have been at zero for seven years. Why didn’t they raise them two or three years ago?”
And things are sure to get worse before they get better…
The job of easy money isn’t done, and its inflation risks are still way over the horizon. August’s employment report makes that clear, just as the Fed nears its big day. […] sometime around the Fed’s third quantitative easing program in 2012, the purpose of easy money moved from supporting once-more stable markets to the still-shaky real economy.
But the real truth is that the system who created this illusion isn’t about to burst its own bubble, and doesn’t know how to land the thing without a spectacular and shocking crash.
The Fed has little choice at this point but to print ever-greater quantities of money, and inflate the stock market and the broader artificial appearance that all is normal and well. According to Schiff:
“The Federal Reserve caused all the problems that led to the 2008 financial crisis, and now they’ve made them all worse. So all they can do is keep interest rates at zero.
They’re setting up for another round of quantitative easing. People who think the Federal Reserve is finished printing money – they’re just getting started.”
Schiff claims some investors are buying into the U.S. dollar because they are expecting the Fed to reduce its balance sheets and increase interest rates. But nothing could be further from the truth.
“QE4 is coming, and you want to get out of U.S. assets, take advantage of the face that other people have no idea what the U.S. economy is really going to do, what the Fed’s going to do, and by foreign assets when they’re on sale. You can buy foreign stocks, you can buy commodities, and yes, you can buy gold.
Hold on for as long as you can to whatever makes the most sense to you.