All Fed Decisions Are Made for Political Reasons (Video)

Peter Schiff made his regular appearance on InfoWars last Friday. Guest host Paul Joseph Watson talked with him about the Federal Reserve’s rate hike decision and gold’s price movement in response. They also discussed the destruction of the American middle class, the ill effects of minimum wage laws, and the role the Fed will play in the 2016 election:

I think the only basis that they [the Fed] makes decisions on is political. I think that determines every move that they make. That is the sad reality. Janet Yellen is a very partisan democrat. She believes in big government and the big government policies of the New Deal and the Great Society. She wants to see the president’s party stay in power. I’m sure she wants to see Hillary Clinton as our next president, and she believes that Hillary Clinton will reappoint her as Fed Chairman. “

Highlights from the interview:

“The Fed was talking about the fact that it was going to raise rates later in the year; that they thought the economy was going to be strong enough so it would be appropriate to raise rates before year end. Of course, the analysts were expecting the rate hikes to come a lot sooner. People thought they would have done it at least 2 or 3 times by now. But the Fed kept passing; kept talking about how they’re data dependent. All of a sudden, they got to December. There’s two weeks left in the year. Rates are still at zero. I think they thought that if they didn’t raise them now, they would lose their credibility. It would prove that the economy was too weak to withstand a rate hike. So I think to try to create a false sense of confidence and to try to save some of their credibility, they raised interest rates by a token amount in a symbolic gesture to try to save face and create confidence. It’s backfiring on them as I thought…

“I think it could be negative [by 2018]. We could have a negative sign before the nominal rate before the end of next year. The Fed doesn’t understand the impact of its monetary policy. The Fed has done tremendous damage to the economy over the past 7 years. Now as they’re trying to remove the stimulus, all the damage is rising to the surface. The Fed is expecting this recovery to continue. The recovery is over. We’re in the beginning of the next recession…

“Gold was up before the [rate hike] announcement… We’re not getting a big selloff, which is what everybody had been forecasting. What I’ve been saying is it was going to be a buy the rumor, sell the fact. Gold has been falling for years on anticipation of this rate hike. Now that we’ve got it out of the way, I think gold is going to get bought, not sold. In fact, the anticipation is not going to live up to the hype. I believe it’s a one and done. I believe the market is going to sense this as the US stock market starts to fall, as the economic data continues to come out weak… I think you’re going to start to see a lot of buying in the gold market. How quickly it’s going to begin is hard to say, but I think there’s a lot of upside potential in gold. I think most of the downside risk is already gone…

“We’ve really lowered the bar on the definition of middle class. Middle class lifestyle in America used to be something that the rest of the world couldn’t even aspire to. If you remember the sitcom the Brady Bunch… Mike was an architect. He had a job, and his wife Carol didn’t have a job. She stayed at home; she worked with charity events; she worked with school events. One thing she didn’t do was the housework, because they had a full-time live-in maid name Alice. And they were able to support six kids. That was middle class. They had two cars… That was middle class life in America. Your dad worked; your mom didn’t; you had a housekeeper; you had lots of savings; you had no debt. Today, you’re talking about that family of 3. The reason it’s 3 is because they’re too broke to have any more kids; one is all they can afford. You probably have the husband and wife both work, and together they’re probably making $40,000 a year. They’re probably up to their eyeballs in debt…

“If you want to see what happens when you have a huge increase in minimum wage, you can look at places like American Samoa. We increased their minimum wage years ago, and we decimated their entire economy. We plunged them into a depression. Unemployment went up to 30%. It was practically zero before the minimum wage hike. Inflation skyrocketed too. You can look at what happened in Puerto Rico years ago when we did that. In fact, Puerto Rico today has a much higher unemployment rate than America, because the minimum wage is effectively much higher there, because the average pay scale in Puerto Rico is lower…

“I think the only basis that they [the Fed] makes decisions on is political. I think that determines every move that they make. That is the sad reality. Janet Yellen is a very partisan democrat. She believes in big government and the big government policies of the New Deal and the Great Society. She wants to see the president’s party stay in power. I’m sure she wants to see Hillary Clinton as our next president, and she believes that Hillary Clinton will reappoint her as Fed Chairman. Thats what she wants. She probably sees herself as a member of the Obama administration, just as Ben Bernanke admitted that he saw himself as a member of the Bush administration…”

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