Whole World Has Been Fooled by the Fed’s Con (Video)
CNBC Asia spoke with Peter Schiff last night. The anchors acted surprised when Peter suggested the Federal Reserve is pulling a “long con” on the global markets when it comes to its monetary policy. The Fed wants people to believe that a rate hike is coming, but Peter argues that a fourth round of quantitative easing is what we will actually see. How should investors prepare? Buy non-dollar investments and hard assets, like gold and silver.
I’ve been positioning myself in non-dollar investments… I think gold looks like it has probably put in a bottom. We’ll have to see… I do expect a spectacular reversal when people figure this out. It took a while for the people who were buying subprime mortgages to realize that what they were buying was worthless. But eventually the bottom dropped out of the market, and I expect the same thing to happen again when people figure out the truth behind the US economy and what the Federal Reserve is actually going to do – not what they’re pretending they’re going to do.”
Follow along with this transcription of Peter’s responses:
“The US economy is slowing considerably, and earnings have been under pressure. My guess is they will continue to be under pressure. The real story, of course, is the Federal Reserve. As I expected, it did not raise interest rates when they met last week. But I think what’s got the market nervous is that they still don’t realize that the Fed is still only pretending to raise rates, because Janet Yellen still left an October or maybe a December rate hike on the table. At the same time she talked about how worried she was about the global economy…
“The Fed wants to pretend that the economy is actually strong enough to withstand the rate hike, but they don’t want to actually raise rates and prove that it’s not. The Fed wants everybody to believe that what they did worked and we have a real recovery. But we don’t. We have a bubble that is dependent on zero-percent interest rates. So the Fed can’t raise interest rates without pricking the bubble, and they don’t want to do that. But they can’t acknowledge the truth, so the game is just to pretend you’re going to raise rates, but keep making up excuses why you don’t do it. The market hasn’t figured this out yet…
“They’re going to do QE4 for the same reason they did QE3, the same reason they did QE2. They’re never going to stop, just like a drug addict doesn’t stop taking drugs. This is what the Fed is going to do. But people still don’t understand. That’s what’s hurting the global economy. It’s what’s undermining emerging markets, emerging market currencies. Because everybody believes the Fed. They don’t realize that the Fed is just putting on a show to pretend that their program actually worked. But the US economy is sicker than ever thanks to the Fed. If the Fed were actually to deliver on the rate hikes that everybody thinks are coming, we would have a worse financial crisis than 2008…
“I’ve been positioning myself in non-dollar investments. Of course, as the dollar has been rising, the foreign investments that I hold have been falling in value in terms of dollars. I also own gold. Gold is starting to move up. I think gold looks like it has probably put in a bottom. We’ll have to see. It was stronger today. It was up again this morning. Gold stocks, on the other hand, are the cheapest they’ve ever been. They’re down on the lows. They had a horrible day yesterday [Tuesday], and even though gold was up today more than it was down yesterday, gold stocks were down again. So I’ve been buying those, and they’ve been going against me. But I do expect a spectacular reversal when people figure this out. It took a while for the people who were buying subprime mortgages to realize that what they were buying was worthless. But eventually the bottom dropped out of the market, and I expect the same thing to happen again when people figure out the truth behind the US economy and what the Federal Reserve is actually going to do – not what they’re pretending they’re going to do.”
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