Chinese and US Markets Crashing for Same Reason (Video)

Peter Schiff told Newsmax TV what he thinks is behind the big drops in the United States stock market recently. Unlike the mainstream financial media, Peter doesn’t think China has anything to do with yesterday’s volatility. Instead, he believes the markets are starting to wake up to the fact that the Federal Reserve is propping up the financial markets with its stale and destructive monetary policy.

[When] the year began, we were divided between two camps: those that thought the Fed would move in March and those that thought they would wait until June. They were both wrong. I was the only one that was saying the Fed won’t move at all in 2015, because they can’t do it at all without pricking their own bubble…”

Highlights from the interview:

“The fundamentals are driving this [downturn in the markets], and it’s not China… The media is blaming this on China. The Chinese market is going down for the same reason that the US market is going down. It’s not that China is causing our market to go down. Both markets are responding to the Federal Reserve’s threat to raise interest rates. It’s the Federal Reserve that’s been propping up the US economy, and more specifically the US markets to the detriment of the US economy. But the Fed was propping up our markets with quantitative easing and zero percent interest rates. They’ve already ended quantitative easing. They’re threatening to end zero percent interest rates. And if the Fed takes away the props, the market is going to implode. It’s not just the 580 points we dropped today, or the 530 on Friday, or the 350 on Thursday – we have thousands and thousands of points to surrender if the Fed is actually going to follow through with its threats to raise interest rates.

“Now, I think they are going to back away. I think the Fed is going to call off the rate hikes. In fact, I don’t think they ever planned on raising rates. I think the whole thing was a bluff – the markets just haven’t figure that out yet. I think the Fed’s going to come back with QE4. It’s going to hurt the real economy, just like QE3, 2, and 1 did. But it is going to blow some air back into the stock market bubble…

“People are already pushing back their expectations. I think Barclays came out today. They had been in the camp that the Fed was going to raise rates in September. Now they’re looking at March 2016. Look, the year began – we were divided between two camps: those that thought the Fed would move in March and those that thought they would wait till June. They were both wrong. I was the only one that was saying the Fed won’t move at all in 2015, because they can’t do it at all without pricking their own bubble…

“Gold is up 80 bucks in the last two weeks, but it’s not getting the safe haven flows, because people still haven’t figured out what it is they have to flee. They’re still buying the dollar. Although, over the last week, they’re buying the euro. They’re buying the Swiss franc. They’re buying the Japanese yen. The only currencies against which the dollar is now rising are commodity-linked currencies or emerging market currencies. The game is changing. But ultimately people are going to move to gold, especially when they figure out it is zero percent interest rates forever, and we’re getting another round of quantitative easing…“

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