Yellen Admits Interest Rates Could Stay at Zero Forever (Audio)

Just as Peter Schiff predicted, the Federal Reserve did not raise interest rates yesterday. In fact, in the press conference following the Federal Open Market Committee meeting, Janet Yellen admitted to a reported that it is not impossible that the Fed might hold rates at zero forever.

Peter discusses this news, the movement of the gold price, and the latest economic data in his podcast published yesterday.

Janet Yellen actually believes that if the Fed wanted to keep interest rates at zero forever that they actually could. I’m willing to rule out that possibility. There is no way that interest rates are going to be at zero forever. Not even close. They’re not even going to stay at zero until the end of this decade. There is going to be a currency crisis that forces the Fed to raise rates…”

Highlights from the podcast:

“Today we got the official answer from Janet Yellen [regarding a rate hike], and the answer was, ‘No.’ For the 54th consecutive time, the Federal Reserve has left interest rates unchanged at zero. What I think is even more amazing than the Fed left them at zero, but that in the Q&A that immediately followed the official announcement, Janet Yellen admitted that she could not rule out the possibility that interest rates would stay at zero forever. The only reason this came up is because a reported asked her if the Fed may be trapped at zero forever. Because the Federal Reserve, among the excuses that it used for not raising interest rates, was problems or concerns about the overseas markets or overseas economies. Which, of course, now opens up a grab bag of excuses for the Fed to conveniently pull out to explain why it’s not going to raise rates…

“This is all a bluff, all a con, to pretend the economy can withstand the rate hike by talking about their intention to do it, but never actually proving the economy can’t withstand higher rates by raising them. I said, ‘Look, they’re always going to look for an excuse.’ And now they’ve found one. Now it’s problems in the global economy. They also mentioned these problems may spill over into the domestic economy…

“The only thing really amazing is that the market still believes her. Or maybe they’re just pretending to believe her. Maybe I’m not the only one to figure this out. When are they going to stop pretending? The question is who is going to stop pretending first? Is the Fed going to stop pretending they’re going to raise rates, or is the market… going to stop pretending that they believe her? …

“I’m not making this up. She actually said this. I wonder if anybody other than me is going to be reporting about it. This reporter asked her a question: ‘Is it possible that we can never raise rates? That we are trapped at zero forever?’ … Janet Yellen basically answered this reporter’s question by saying, ‘Well, we don’t think we’re in that situation. That’s not our highest probability outcome.’ But then she said, ‘I have to be honest. I can’t actually rule it out.’ I almost fell out of my chair. She can’t rule it out? Why not? How come she can’t rule it out? The question was, ‘Will interest rates be at zero forever?’ Does Janet Yellen not understand the meaning of the word forever? … She can’t rule that out? If she can’t rule that out, she can’t rule anything out…

“What else does this tell you? I think it is a window into the psyche of the Fed chairman. Obviously, she must be concerned that rates are going to be at zero for a long time, because she can’t even rule out that they’re going to be at zero forever. That means she’s probably not thinking about raising them in October or December, if she can’t rule out never raising them ever. But also, it allows you to think or understand that Janet Yellen actually believes that if the Fed wanted to keep interest rates at zero forever that they actually could. I’m willing to rule out that possibility. There is no way that interest rates are going to be at zero forever. Not even close. They’re not even going to stay at zero until the end of this decade. There is going to be a currency crisis that forces the Fed to raise rates…

“Of course, everybody is still pretending that everything is great. ‘Okay, the Fed didn’t raise rates in September. Is it going to be October? Is it going to be December? Hey, maybe they’re going to wait until March of next year.’ In fact, Janet Yellen mentioned that there are some FOMC members that want to raise rates before the end of the year. There are some that want to wait until next year. And there are some that want to wait later. Which means there are still some FOMC members now that don’t even want to raise rates until 2017 or beyond. There is no indication that anything has changed…

“I think ultimately what the Fed is going to have to do to stop this correction from becoming a bear market – they’re going to have to officially take these rate hikes off the table. What is it going to take to do that? We’re going to have to have more bad economic news, but most of the bad economic news is already coming out gets ignored by the markets…

“Gold did not surrender its gains today. It wasn’t an explosive gain, but it was up abut $13, about the high of the day. But gold was up about $20 yesterday. So I think it was a 2 day rally, because yesterday the markets started anticipating that the Fed would not hike… Interestingly enough, the dollar was also pretty weak on the day…”

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