Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Fed Rate Increase Flimsy Way to Build Consumer Confidence

  by    0   0

Prior to the FOMC raising the Federal Funds Rate this week, the Atlanta Fed revised its estimate of Q1 GDP from 3.4% to 0.9%, an enormous downward revision that suggests Chairwoman Janet Yellen and FOMC authorities aren’t as data dependent as they claim. The serious lack of economic growth indicated by the downward revision should give the Fed pause, but that doesn’t seem to be the case, as Peter Schiff pointed out in his latest podcast.

“If anything, you’ve had a collapse in [economic] growth estimates since the last time the Fed met. Yet that collapse in GDP forecast has not done anything to alter the Fed’s path because they’ve ignored all of the data, and they raised interest rates yet again.”

The rate increase now brings the current target range to 0.75 -1.0%, a number so far from any market-set rate it’s still worthless for anyone looking to earn anything from their savings.

The Fed’s decision to raise rates is still another attempt to instill false hope into consumers that the economy is getting better. But more and more consumers are becoming aware of the reality of sluggish wages and an increase in prices.

“People are tapped out. People are not spending money because the economy is weak. Prices are rising, but their incomes are not,” Peter explained.

Peter also criticized Janet Yellen’s comments about shrinking the Fed’s balance sheet. When asked about it, Yellen stated it would begin winding down the balance sheet until the rate normalization process is “well underway.” When asked to clarify what the term meant, the Chairwoman wasn’t able to give specific levels of interest or a general timeline.

Beginning with the 2008 crisis, the Federal Reserve began quantitative easing, meaning it began purchasing large quantities of Treasury securities and US-backed mortgage securities. The buying frenzy expanded the Fed’s balance sheet from $900 billion to $4.5 trillion.

Yellen’s hesitancy to define a timeline or standard for “well underway” is another example of how the Fed keeps its data dependency murky enough to wiggle out of any attempt to hold it accountable. Because higher interest rates mean higher payments on the national debt and possible default on US loans, the Fed is understandably reluctant, but it can’t telecast that reluctance or motivation. Instead, it continues to feign interest in raising interest. Yellen claims she’s waiting for stronger economic data to give FOMC members confidence, but it’s consumer confidence that she’s actually hoping to create with too-little-too-late rate increases.

 

scam-2-sm

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Peter Schiff: The Bond Yield that Could Break the Camel’s Back

Ten-year bond yields have hit their highest level since July 2014. Meanwhile, the stock market has gone up about 45%  since that time. Contrast that with earnings that have increased just 6%. As Peter Schiff pointed out in his most recent podcast, a lot of the justification for that increase in stock market valuation has been […]

READ MORE →

Housing Bubble 2.0

We’ve written extensively about the stock market bubble blown up by artificially low interest rates and Federal Reserve quantitative easing. But stocks aren’t the only asset bubble out there. In fact, 2017 may go down as the year of the bubbles. And the new housing bubble is one that seems to be floating under the […]

READ MORE →

Fundamentals Look Good for Silver in 2018

All kinds of factors impact the price of precious metals, but supply and demand are the most fundamental. With that in mind, the stage seems to be set for silver to have a strong year in 2018. According to the Silver Institute 2018 Market Trends report, the silver market faces growing demand and shrinking supply […]

READ MORE →

Global Debt Growing Three Times Faster than Global Wealth

Global wealth increased to a new record of $280 trillion in 2017, according to Credit Suisse Global Wealth Report 2017. That seems like pretty good news until you consider global debt is increasing nearly three times as fast. Related

READ MORE →

Crypto Crash Sparks Rush into Gold

The crypto crash earlier this week sparked a run to gold. Regulatory concerns set off the panic. Bitcoin fell below $10,000 for a time, and other cryptocurrencies saw precipitous drops. Crypto markets appeared to have stabilized Thursday morning, with Bitcoin back up over $11,000. The sudden plunge served as a reminder of the extreme volatility […]

READ MORE →

Comments are closed.

Free Newsletter & Notification of Special Deals
RSS Feed
LINKEDIN
YouTube Channel
YouTube Channel
Google+
Google+
https://schiffgold.com/key-gold-news/fed-rate-increase-flimsy-way-build-consumer-confidence
Call Now