Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Former Fed Governor: Fed Is Not Data Dependent; It Is Propping Up Asset Markets (Video)

  by    2   4

Earlier this year, Peter Schiff picked up on something few reported on when a former Federal Reserve president admitted the central bank created a phony wealth effect by pumping up stocks and other asset markets through its monetary policy. Several months later, analysis proved this was true, showing that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy.

Today, the Fed continues to focus on propping up asset markets. Even a former Federal Reserve governor admits this is the case. Kevin Warsh appeared CNBC’s Squawk Box on Thursday and said the Fed isn’t really “data dependent” in the sense that it is looking at the overall economy. It is really market dependent.

They look to me asset price dependent more than they look data dependent. When the stock market falls like it did in the beginning of this year, they say, ‘Oh, we better not do anything.’ Stock markets are now at career highs. I suspect when they meet over the course of the next 10 days they will suggest, ‘Oh, now they look like they can be somewhat more responsible.’ I don’t like changing policy meeting to meeting based on data, or even with what the S&P 500 is doing. I like making it based on what’s happening on the real side of the economy, and that has not been very convenient over the last six to nine months.”

Warsh went on to make another point that Peter has been harping on for months – the US economy isn’t in very good shape, and the Fed simply can’t raise rates.

The bad news is the real side of the economy in the US has deteriorated since September; quarterly earnings will now be down six quarters in a row. That’s the first time that’s happened outside of a recession. The Fed had a long window to tighten policy, to raise rates – 2013, 2014, 2015, and it strikes me they missed that wide-open window.”

Warsh’s comments lend credibility to a prediction Peter made on CNBC last month: the Fed will ultimately sacrifice the dollar on the altar of the stock market leading to a full-blown currency crisis.

Highlights from the interview:

“I must say I find their decision making in the last six or seven months puzzling…It is not obvious what their strategy is. I know…they say they’re data-dependent. I don’t know exactly what that means.”

“They look to me asset price dependent more than they look data dependent. When the stock market falls like it did in the beginning of this year they say, ‘Oh, we better not do anything.’ Stock markets are now at career highs. I suspect when they meet over the course of the next 10 days they will suggest, ‘Oh now they look like they can be somewhat more responsible.’ I don’t like changing policy meeting to meeting based on data, or even with what the S&P 500 is doing. I like making it based on what’s happening on the real side of the economy, and that has not been very convenient over the last six to nine months.”

“In the darkest days of the crisis, when markets were falling, I have to admit getting asset prices up, trying to get markets up…nothing wrong with that. We’re supposed to respond to financial crises. That was seven and eight years ago. This preoccupation with your show, and with the Bloomberg screen, and with stock prices…that is not the right worldview for central bankers at a time like this.”

“The bad news is the real side of the economy in the US has deteriorated since September; quarterly earnings will now be down six quarters in a row. That’s the first time that’s happened outside of a recession. The Fed had a long window to tighten policy, to raise rates – 2013, 2014, 2015, and it strikes me they missed that wide-open window.”

Get the latest economic news and its impact on the gold market. Subscribe to Peter Schiff’s Gold Videocast

“I wouldn’t have raised rates in December. I find it odd that you had a window of two-and-a-half, three years with the supply side of the economy doing better, corporate revenues increasing, profits increasing, an economy that wasn’t great, but at least going in the right direction. I would have been much more worried in December than they.”

“Why is it that they [the Fed] are so worried about touching the balance sheet? Because they think that is what’s keeping asset prices up.”

“I would say the Fed’s policies have been running against capital investment, discouraging real investment in property, plant, and equipment, and software for several years.”

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Peter Schiff: Household Debt Highest In Nation’s History

In a recent interview, Peter Schiff was featured on Real America with Dan Ball. 

READ MORE →

New Peter Schiff Video: Inflation Rises, Bitcoin ETFs, and the Final Gold Shakeout

Peter released a brief video addressing the looming resurgence of inflation. Ironically, on the back of disappointing inflation numbers, gold witnessed a dip below $2000 on Tuesday due to higher-than-expected CPI data.

READ MORE →

Peter Schiff: This Will Send Gold Off to the Races

Peter Schiff recently appeared on the Commodity Culture podcast to talk about gold. He said that while gold has done relatively well this year despite significant headwinds, we haven’t seen anything yet. Once the markets realize inflation is here to stay, gold will be off to the races.

READ MORE →

Peter Schiff: Bidenomics Is Putting Lipstick on a Pig

Peter Schiff recently appeared on Real America with Dan Ball to talk about the state of the US economy. He described it as a disaster and said Bidenomics consists of putting lipstick on a pig.

READ MORE →

Peter Schiff: Joe Biden Doesn’t Have Anything to Take Credit For

Most mainstream pundits characterized the November jobs report as a “Goldilocks” report. Job growth was strong enough to support the “soft landing” narrative but not so strong it might scare the Fed into raising interest rates again. President Joe Biden used the report to boast about his economic achievements. But according to Peter Schiff, Biden […]

READ MORE →

2 thoughts on “Former Fed Governor: Fed Is Not Data Dependent; It Is Propping Up Asset Markets (Video)

  1. Andrew says:

    Article summary: Peter shift was right-again

    • James says:

      He will ultimately prove to be correct. It’s just a matter of when. His is the lone voice of reason in a caucophany of BS. Laugh now, because not many will be laughing when the wheels come off.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now