Markets Are Prepared for Wrong Outcome in US Economy (Video)

A couple weeks ago, Peter Schiff joined Fox Business on the floor of the New York Stock Exchange to discuss the possibility of the Federal Reserve raising interest rates. He shared his candid opinion that investors should avoid US stocks and look to foreign markets and gold.

Remember, when the year started you had two camps. Those that thought the Fed would hike in March and those that thought they would hike in June. Both camps were wrong. 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 they worked so hard to inflate…”

Highlights from the interview:

“Remember, when the year started you had two camps. Those that thought the Fed would hike in March and those that thought they would hike in June. Both camps were wrong. 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 they worked so hard to inflate…

“The economy has never been good. We’ve 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. On Wall Street, yes, 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 when the Fed was breathing life or air into the financial markets, it was sucking it out of the real economy. That’s why we haven’t had a recovery. Everyone who thinks the Federal Reserve’s 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? …

“They should raise rates right now and let everything collapse. We needed a deeper financial crisis in 2008. We had to clean out the bad debt. A lot of companies that should have failed were propped up. Now they’re going to fail again with only bigger debts. The problem is we never really had a recovery, because we never had a real recession. The Federal Reserve caused all the problems that lead 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…

“I’m still avoiding the US stock market, even though I think the Fed will save it. Ultimately I think this dollar bubble is going to burst. I think the real values are offshore. Meanwhile, for the last several years, everybody who has believed the Fed’s bluff that they’re actually going to raise rates and shrink their balance sheet – they’ve all bought the dollar, they’re putting downward pressure on commodities, pressure on the emerging markets. But everyone is preparing for the wrong outcome, because the Fed cannot raise rates without collapsing the US bubble economy. So they won’t. They’re going to come back with more quantitative easing… [QE4] is coming and you want to get out of US assets. Other people have no idea what the US economy is really going to do…”

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