There Is No Economic Recovery and the Fed Knows It (Video)
Peter Schiff spoke to CNBC Europe yesterday about the true state of the United States economy and why the Federal Reserve will likely never raise interest rates.
The transcript of Peter’s answers:
“If you look at all the economic data that has come out for October, November, now we’re getting some for December, it is very weak. It is all way below expectations. It suggests Q4 [GDP growth] might be in the low 2’s. It might even have a 1 handle. So that is a rapid deceleration of that number. If you actually look below the surface, why did we have the 5%? A good portion of it was due to a big build in inventories, because businesses also believe in this recovery, so they’re stocking up on merchandise that they believe they’re going to be able to sell. I think they’re going to be disappointed in the holiday sales, and that’s not going to bode well for Q1…
“Yeah, [we’ve created] 200,000 part-time jobs. These are not really high-paying jobs. A lot of the people that are taking those part-time jobs don’t even want them. People in their 60s and 70s who are retired are being forced to take part-time jobs just to pay their electric bills. Then a lot of younger people who need full-time jobs have to settle for part-time jobs. You can’t really build an economy on these low-paying, part-time jobs…
“There were a lot of bulls in 1999, there were a lot of bulls in 2007. Look, consumers are not in good shape. The savings rate today come out. It hit a new low for the year. Look at what’s happening in the housing market, the numbers have really been abysmal, so that market is rolling over. Remember, this whole recovery is built on a foundation of asset bubbles. Those bubbles will deflate without the Fed. So far the stock market is defying that, but I don’t know how much longer the rally can go without the Fed’s support. The Fed is pretending that it can raise interest rates without the economy going back into recession. I don’t see how that’s possible…
“It’s impossible to have a legitimate recovery as long as the Fed is artificially stimulating with quantitative easing. I believe they are going to delay [raising rates] indefinitely. If this was a legitimate recovery, if the Federal Reserve actually had confidence in this recovery, they would have raised rates years ago. Or they would just raise them right now. But they can’t. All they can do is talk about raising rates. Why don’t they just do it? It’s because they’re afraid of pricking this bubble, because it’s the biggest one ever.”