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

Peter Schiff: Nobody Is Going to Buy the Fed’s BS the Next Time Around

  by    0   1

During its FOMC meeting last week, the Federal Reserve took 2019 rate cuts completely off the table. It said it will freeze bond sales from its $3.8 trillion balance sheet later this autumn. In other words, balance sheet normalization is pretty much a done deal. Peter Schiff has predicted this would happen. He said from the beginning if and when the Fed tried to normalize rate, it would have to abort the process.

And here we are.

But as Peter explained in his most recent podcast, the Fed still isn’t being honest about why it’s done a monetary policy 180. It’s making excuses.

As I predicted, they are not telling the truth. The markets can’t handle that. The Fed is not telling the markets, ‘We’re not raising rates because the economy is imploding because of all the debt that was accumulated when we kept rates so low. Now we can’t raise them. Or we can’t continue to shrink the balance sheet because the budget deficits are blowing out of control.'”

Indeed, the federal government spent itself into an all-time record deficit in February. Think about that. That means the government is running bigger deficits than it was during the Great Recession.

If we are running these enormous budget deficits now – before the recession – imagine how much greater they’re going to be during the recession. The Fed can’t add fuel to the fire by competing with the Treasury. The Fed can’t keep unloading bonds at the same time that the Treasury is selling them like they’re going out of style.”

Peter said he thinks that by the time Trump leaves office, he will have set deficit records for every single month in the calendar year. He said the only good news – at least for Republicans politically – is that the next president will have to run even higher deficits.

Which is why we’re going to have a sovereign debt crisis and a currency crisis.”

Given the enormity of these deficits and the ever-upward spiraling debt, the Fed has no choice but to call off the tightening. You can’t raise interest rates in an economy built on piles of debt. But the Fed can’t tell the markets that. They will have to figure it out on their own. So far, they seem pretty clueless. But eventually, they will and that’s when the bottom is really going to fall out of the dollar.

When the Fed has to go back to zero, which it will be doing relatively soon, when the Fed has to go back to quantitative easing, nobody is going to believe that it is temporary again. Nobody is going to buy the Fed’s BS about how interest rates are going to stay low only temporarily and then we’re going to normalize them, and we’re going to shrink our balance sheet. We’re not monetizing the debt. After the recession is over we’re going to shrink our balance sheet back down to where it was before the recession. No one’s going to believe that. They couldn’t shrink a $4 trillion balance sheet. They won’t be able to shrink an $8 trillion balance sheet. If they couldn’t raise rates when the national debt was $22 trillion, they sure as hell can’t raise them when the national debt is $30 trillion.”

But at this point, the markets haven’t figured this out. Peter said they don’t really want to.

They don’t want to admit I was right from the beginning – that the Fed checked us into a monetary roach motel and there’s no way to ever check out. But I do believe the markets are going to figure this out, whether the Fed admits it or not – during the next recession.”

Peter pointed out the inverted yield curve, widely seen as a warning sign for a recession. But he pointed out that the spread between 10-year Treasurys and 30-year Treasurys remains positive and is even widening. He goes on to explain why this next recession is actually going to feature stagflation. He also covers some of the recent economic data and touches on the Mueller report.

Gold IRA Rollover to 401k

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Gold Finishes Q2 at Highest Level in Over 8 Years

Q2 was one heck of a quarter for US stock markets. But in his podcast, Peter Schiff called it a “phony rally.” The real bull run to watch is gold. The Dow Jones just wrapped up its best quarter since 1987. The S&P 500, finished out its best three-month run since 1998 during the dot-com […]

READ MORE →

Peter Schiff: V-Shaped Recovery Narrative Falling Apart

Over the last couple of months, we’ve been arguing that we won’t see a dramatic “v-shaped recovery.” Even if we cure COVID-19, it won’t cure the economy. But the mainstream has remained optimistic. In his podcast Friday, Peter Schiff points out some of the ways the whole v-shaped recovery narrative is falling apart.

READ MORE →

Peter Schiff: The Milkshake Theory Is All Wet — There Will Be No Dollar Rally

A lot of people still have faith in the dollar. Some people even believe the dollar is set to rally. Santiago Capital CEO Brent Johnson is one of those people. He bases his dollar bullishness on what he calls “the milkshake theory.” In his podcast this week, Peter Schiff explained why the milkshake theory is […]

READ MORE →

Peter Schiff: Why Is Gold the Last Safe Haven Standing?

Gold took out the April highs and rose to the highest level in 8 years on Tuesday. The rally in other safe have assets has stalled in recent weeks, but gold has continued to rise. Why is gold the only safe haven left standing? Peter Schiff explained in his podcast.

READ MORE →

Peter Schiff: Are We Close to Exhausting the Bull Market in Stocks?

On Friday, the Dow Jones was up around 400 points early in the day, but closed down just over 200 points. Meanwhile, gold had a solid rally that held up. The yellow metal was up about $20 on the day. Could this be a sign of things to come? In his podcast over the weekend, […]

READ MORE →

Comments are closed.

Call Now