Peter Schiff: June Rate Hike Immaterial; Rate Cuts and Quantitative Easing Up Next (Video)
Will the Federal Reserve raise rates in June?
Peter Schiff says it’s immaterial.
Peter appeared on CNBC’s Fast Money and created a firestorm when he said he sees this as a repeat of what happened at the end of last year and suggested everybody knows the Fed is at the end of its tightening cycle.
You know, the Fed launches a trial balloon, they raise the possibility of a rate hike, and they wait to see how the markets react. And the markets are basically acting positively, just like they did in December last year. Everybody was convinced there was a rate hike, but the markets were rising anyway. And I think it was the increase in the markets that gave the Fed the false confidence to actually raise rates. But as soon as they did, the markets sold off. We had the worst start to a year in history, and I think the same thing will happen if they raise rates in June. I think the market is going to sell off. I think gold is going to rally again. And I think the dollar is going to sell off. Because these rate hikes are too little too late.”
In fact, Peter thinks by the end of the year, the Fed will have to start taking it all back, and eventually launch another round of quantitative easing.
The CNBC hosts tried to push Peter into a corner, touting how great the stock market has done over the last several years. Peter fired back, arguing that what we’ve seen is really just a giant asset bubble, not unlike the housing bubble the precipitated the most recent crash.
Highlights from the interview:
“I still think the odds favor another punt. The [the Fed] say they were data dependent, and if you actually look at the data that’s come out since the last FMOC meeting…most of the data has gotten worse. Certainly the jobs data has been worse. But most of the economic data, including most of the economic data we got this week, was well below expectation. So, I don’t see a second quarter rebound and that was contingent. The Fed said, “Well, if the economy improves and the job market improves, we might raise rates.” Well, neither are improving. In fact, it’s more likely they are going in the other direction.”
“I think this is a repeat of what happened late last year. You know, the Fed launches a trial balloon, they raise the possibility of a rate hike, and they wait to see how the markets react. And the markets are basically acting positively, just like they did in December last year. Everybody was convinced there was a rate hike, but the markets were rising anyway. And I think it was the increase in the markets that gave the Fed the false confidence to actually raise rates. But as soon as they did, the markets sold off. We had the worst start to a year in history, and I think the same thing will happen if they raise rates in June. I think the market is going to sell off. I think gold is going to rally again. And I think the dollar is going to sell off. Because these rate hikes are too little too late. Everybody knows that the Fed is ending its tightening cycle. Whether it makes one more quarter point hike or not is immaterial. Because by the end of the year, they’re going to have to take all this stuff back; they’re going to be cutting rates; they’re going to be doing QE4.”
“The Fed is going to have to reverse course and start backtracking. I think we already are in a recession…I think when they go back and revise the numbers…I think the data is going to reflect we’ve been in a recession. They never know you’re in a recession until you’re almost finished with it.”
“I was warning about the housing bubble years before it burst. I was warning about the financial crisis for years before it burst. So, plenty of people on CNBC were making fun of me in 2006 and 2007. ‘Peter, you’ve been talking about that for years and nothing is happening.’ Then everything collapsed.”
“What I’ve been saying is everything the Fed has done since the financial crisis has made the underlying problems that caused that crisis worse. So, because of that, we are on the verge of a much worse economic crisis. We are more addicted to cheap money now than ever before. There have been more mistakes, more malinvestments. This is the biggest bubble the Fed has ever inflated, and the ramifications will be much more enormous when it pops.”
“I do believe the Fed will put a floor beneath the market by printing money. But the ultimate collapse is in the dollar. It hasn’t happened yet, but the Fed is going to sacrifice the dollar.”
“That’s what we do. We print money because we can’t repay our debts.”
“Puerto Rico is broke. We all know that. But it was broke two years ago. It was broke three years ago. Why didn’t anybody care? The creditors kept lending them money even though they were broke. Well, eventually people wake up and they realize the debtor is broke. America is more bankrupt than Puerto Rico.”
“[The Fed] felt they were in the catbird seat right before the financial crisis. Do you think there was a single person on the Fed that had any concern about the housing market? About the mortgage market? They were blind as a bat. Janet Yellen was the leader of the deniers. She thought everything was great, there was nothing wrong, and we were around the corner from a complete collapse. They have no track record of predicting anything.”
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I’m getting dejavu, its 2008 all over again and this guy arguing with Peter Schiff with the worlds worst memory will rush headlong into this next crash, clueless, or more likely in complete denial of the horrendous economic circumstances that even the most blindly optimistic couldn’t deny if they actually opened their eyes – I’m sure he’ll also be front row centre for the next super bubble having learnt no lessons whatsoever from this era of economic lunacy.
I love that comment “you got any of those”
The clown that was arguing with Peter seems to be heavily invested and long. If the economy was so perfect why are we so worried about a 1/4 rate hike. Why not just go with a half or one percent and go back to normal rates? Peter is more right than any of you. Had you bought gold at 250.00 you would be up 500%. I don’t recall many people other than Peter stating that. You made fun of his call gold 1000.00. Not so funny now is it? Oh yeah we forget so easily.
They are Masters of illusion.I don’t think they have got any other way,they will increase rates.Everything is now based on lies , they simply bluffing , nothing left for them. They buying more time , but one day we will see emperor naked.
CNBC stands for Clueless notwithstanding Basic Conclusions. It is fun to see Peter schiff out think him.
I wonder if they legalized pot at the fomc meetings… because that’s the only logical reason they arrive at these dollar trashing decisions.
The real tragedy is the baby boomer gen. is WELL into the retirement phase. Everyone is desperately looking for yield to pay benefits and it’s not there. So we they’re going to push the stock market up or they’re going to buy gold or a combination of both.
I listen to a lot and im new to this. I am a single mom with not a lot of money. Im concerned about my kids future. I was told to buy gold bullion and American eagle. Which advise would you give me to purchase?
Veronica, yeah you can buy either or both. I suggest both. If you buy for physical delivery you need a good safe place to store it. You often hear people say physical delivery is best because bullion banks/dealers can go bankrupt or there is the possibility of government confiscation if things go really bad (I think both are not very likely). If you use a bullion dealer do your homework as best you can, I use one here in Australia that was founded in 1980 and haven’t found any historical problems. Ask questions about audits to make sure they’re not selling bullion/metal they don’t have. Keep in mind if buying and storing at bullion banks that silver is more expensive to store than gold simply due to its larger size. You can also buy “unallocated” silver and i think gold but this is part ownership of part of a larger block which some consider riskier as it would be technically easier to oversell metal that they don’t really have. Schiff Gold would be a good place to start looking as I believe Peter Schiff to be honest with a very good reputation (I’m not involved with his company) Good luck, I think you’ve made a great decision, precious metals are a smart move.
There will be no hike BUT the stock market will continue to rally. It’s all about the least stinky place to park big money in a sovereign debt crisis. Gold’s moment has not yet come and I will not consign more than 10% of my wealth in this direction. Black gold (fertile land with water), collectibles, and cash are on the list. It will finally rally when all confidence in government is lost – when those defaults finally kick in. We are headed for deflation NOT inflation. Demographics alone will consign us to 2 decades of slow, grinding growth.