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There Is No Way the Fed Will Raise Rates Significantly Today (Video)

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Marc Faber spoke with Bloomberg TV this morning to explain why he thinks the Federal Reserve will take no significant steps towards raising interest rates when its meeting concludes today. Like Peter Schiff, Faber predicts the Fed will not commit to any steady schedule of rate hike increases and that a fourth round of quantitative easing is just around the corner.

They cut interest rates to zero in December 2008, so in three months time we will have the anniversary of almost seven years of almost zero interest rates. What I’m saying is that this has created a lot of distortions in the system, and I believe we’re going to pay for it…”

What has seven years of zero-percent interest rates done to the US economy? Find out in our free special report: Why Buy Gold Now?

Highlights from the interview:

“I know exactly what they [the Fed] will do today. They will either leave rates where they are, or increase a quarter of a percent. I think they will probably do nothing… Number two, I think the damage has already happened. People simply don’t remember that Greenspan deliberately created the Nasdaq bubble. Then the bubble burst, then deliberately – and this is written in statements – created the housing bubble in the US, built on credit. The credit bubble in the US burst and produced essentially the greatest recession crisis since the Great Depression of the ‘30s. But people say, ‘Mr. Bernanke saved the system in 2008, 2009.’ And yes, indeed. They cut interest rates to zero in December 2008, so in three months time we will have the anniversary of almost seven years of almost zero interest rates. What I’m saying is that this has created a lot of distortions in the system, and I believe we’re going to pay for it…

“One of the problems with these artificial low interest rates is the following. We all know that one of the problems is the size of governments in the Western world. They have become larger and larger within the economic system. This was enabled essentially by very low interest rates, because the governments could borrow more and more money. In the US, for the last 10-15 years, the interest payments on the government debt have not gone up, although the government debt is up three times. Because the government pays less and less on its outstanding bonds and paper, treasuries, they essentially didn’t suffer from it…

“I think precious metals are relatively attractive. I believe we are going to see QE4. I like gold, I like platinum, I like silver. I think even if they increase rates a little bit here, it’s not going to be a trend. What would really be surprising for investors if the Fed said, ‘We are going to go from one quarter of a percent to 1.5% in, say, 12-18 months time. And we’re going to stick to this policy.’ But that they will not do. They will say, ‘We will increase a quarter of a point or nothing. We are data dependent.’ Based on the US, there is an argument where rates could go somewhat higher. Based on international economic developments… there’s no way to increase rates at the present time…”

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4 thoughts on “There Is No Way the Fed Will Raise Rates Significantly Today (Video)

  1. jrj90620 says:

    Wonder why so many people think the Fed is some kind of independent agency,that is going to do something to hurt the economy.The Fed is the enabler of govt spending and deficits.The only way the Fed is going to act responsibly,is when they are forced to do it,by a crashing Dollar.It’s coming.

  2. Richard Bazany says:

    How can the Fed raise rates and risk a stronger dollar when China and Russia are devaluing with the hope that China’s Yuan will join the SDR bucket as a reserve currency in Sep 2016 and Russia is eying establishment of a regional current for the Ruble? What effect do you see from a further Yuan devaluation by China with a stronger dollar? How does this affect their chances to be added to the SDR bucket and how will it affect the municipal bond market? i.e. price, liquidity and new issue marketability.

    If this situation drives gold up further and increases demand for physical gold and silver what will happen to the “paper gold” prices as physical gold demand increases and the “paper” market when it can not deliver physical gold?

  3. Steve says:

    I am amazed that this ship is still sailing. I think its time to take out another loan.

  4. lenj says:

    Ever sense I saw Peter Schiff get taken off the air by CNN, right in the middle of the interview, I thought that guy much have a hard time walking dragging [email protected]!!s like those. But guts aren t everything, being right is. And it is a certainty that when everyone is saying crap and you are saying trueths people go with the crowd. you guys are right again

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