Peter Schiff: First Rate Cut on the Road to Zero
The Federal Reserve cut interest rates for the first time in over a decade Wednesday. And Jerome Powell left the door open for future cuts.
Peter Schiff broke it all down on his most recent podcast, saying this is the first interest rate cut on the short road to zero.
During his press conference after the FOMC meeting, Fed Chairman Jerome Power tried to straddle the fence. In the process, he ended up mixing his messages.
Powell called the 25 basis point cut a “mid-cycle adjustment.” When asked about future cuts, the Fed chair left that door propped open, saying “As the committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.”
About midway through the Q&A session, Powell said the Fed wasn’t embarking on a long rate-cutting cycle like it would during a recession. But then he backtracked and sounded a little more dovish later on.
Let me be clear: what I said was it’s not the beginning of a long series of rate cuts. I didn’t say it’s just one or anything like that. When you think about rate-cutting cycles, they go on for a long time and the committee’s not seeing that.”
Of course, when the Fed pivoted to the “Powell Pause” last December, most analysts weren’t expecting a rate cut down the road. And here we are.
Peter Schiff predicted all of this. During his podcast, Peter called this the first step on the road to zero. And he said it was going to be a pretty short road.
Powell claimed the Fed was cutting rates as an insurance policy to ensure problems in the global economy don’t spill over into a healthy US economy. Peter called this a load of BS.
Either he is lying, or he’s a complete idiot. And I tend to believe it’s the former. And the reason he is lying is becuase if he told the truth, he would scare the sh** out of the markets.”
Peter reiterated something he’s been saying all along — a 25-basis point cut isn’t going to cut it. To underscore this point, he noted that the Dow fell over 3oo points after the announcement. But Peter said Powell was right when he said this wasn’t the beginning of a long easing cycle. That’s because it won’t take long to get to zero.
It doesn’t have a lot of ammunition to cut rates, and so I think we’ll get to zero relatively quickly. And we’ll stay there until the Fed completely loses control of this thing.”
Keep in mind the last two times the Fed started cutting rates a recession quickly followed.
Peter said he thinks the stock market will continue to trend downward until the Fed significantly softens the position that it took today.
He reiterated that it’s clear Powell is lying about this just being a temporary measure in a good economy.
The fact that there was so much contradictory statements made by Powell during this conference, I mean, it’s obvious that he’s lying, he’s making up excuses because he’s trying to pretend the economy is great, but he’s cutting rates anyway. So, he’s trying to defend, really, a ridiculous story. He contradicts himself. If you’re being honest, it’s easy not to contradict yourself because you just tell the truth. But when you’re lying, you weave a very tangled web. One lie contradicts another lie because you can’t keep your story straight. And that is the position he was in.”
Listen to the whole podcast for more analysis on the Fed’s latest move and what may lie ahead.