During a Feb. 14 interview with CNBC, legendary economist and Euro Pacific Capital CEO Peter Schiff made a bold claim about the U.S. Federal Reserve.
“They’re going to go back to QE,” said Schiff.
QE, or quantitative easing, is a fiscal policy in which a central bank creates new money in order to buy government bonds and ultimately stimulate the economy – the Fed’s way of addressing the 2007-09 financial crisis.
Schiff’s reasoning: Rampant inflation in the United States is just around the corner, and it’s going to soar faster than the interest rate increases by the Fed.
Liquidity moves markets!Click here to learn how you can follow the money.
“Inflation is headed up not just on a producer level but on the consumer level, and inflation is going to be rising at a pace that is much faster than any rate hikes that we might get from the Fed. So real rates are going to be falling even if the Fed raises nominal rates,” he said.
This inflation will cause the Fed to “raise interest rates as slowly as they can possibly get away with and at some point they’re going to have to come up with an excuse why they’re going to stop raising rates and why they’re going to cut rates again and why they’re going to go back to QE,” said the investment broker.
Moreover, Schiff believes that this imminent surge in inflation may actually be the fault of the central bank…
Peter Schiff: Fed Is to Blame for “Lackluster Economy”
The best-selling author chastised the Fed for slashing interest rates in the first place and leaving them low for so long – ultimately leading to a weaker economy.
“[The economy] is a problem. That’s why Janet Yellen is so reluctant to raise rates. That’s why she’s barely moved them up over the last few years, because she’s afraid of the consequences when she tries to remove this unprecedented accommodation,” Schiff noted.
When a national economy is weak, Schiff added, the stock market booms and is propped up at artificially high levels.
Stocks, experiencing the second-longest bull market in history, are trading at record highs.
About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.
Disclaimer: © 2017 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.
The post Peter Schiff: Fed Will Revert Back to QE, No Matter What Yellen Claims appeared first on Money Morning – We Make Investing Profitable.
Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.