Economist Peter Schiff expects a worse financial crisis than 2008 – says: “Future rate hikes are pointless now” – Economics
Economist Peter Schiff has warned that the current financial crisis will be worse than 2008. “Future rate hikes are pointless now,” he insisted, adding that any impact would be more than offset by the Fed’s quantitative easing.
Financial Crisis Warning by Peter Schiff
Economist and gold bug Peter Schiff shared his outlook for the US economy in a series of tweets this week. He explained that when the government “imposed many new banking regulations after the 2008 financial crisis, we were reassured that what is happening would never happen again”. However, he argued:
One reason for the 2008 financial crisis was too much government regulation. Therefore, this crisis will be worse.
“It’s different this time. When the 2008 financial crisis hit, the dollar rose and gold fell. This time it’s the other way around… That’s because investors are realizing that the high inflationwhich should have happened ten years ago, will now be hit even harder!” said the economist.
“The Fed caused the financial crisis of 2008 and 2023,” Schiff claimed, claiming he predicted both because he “understood the consequences of the Fed’s policy mistakes.” He added that he “started predicting the current financial crisis back in 2009,” but at the time he didn’t know “how long it would take for it to happen.”
Schiff went on to explain that the Fed’s quantitative easing (QE) is back. “Last week the Fed’s balance sheet expanded by $300 billion, wiping out 4 months of QT [quantitative tightening] in a week. The balance sheet could reach a new high by the end of the month. Rate hikes don’t matter. Inflation will be much higher thanks to bank bailouts,” he said. His comment follows the Federal Reserve and the US government unveiling measures to bail out the failed Silicon Valley Bank and Signature Bank last Sunday.
The economist continued:
The Fed waged a two-pronged war on inflation, rate hikes and QT. The Fed has now reversed the fire and is conducting aggressive quantitative easing. If QT was designed to lower inflation, QE will raise it. Future rate hikes are pointless now as any impact is more than offset by QE.
“As I have warned for years, if the Fed allows a worse financial crisis than 2008 to take its natural course without bailouts for banks or their customers, the Fed will only come close to meeting its 2% inflation target,” he said. Referring to the recent bailouts of major banks, he concluded: “The Fed has opted for bailouts and abandoned the fight against inflation.”
Do you agree with Peter Schiff? Let us know in the comment section below.
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Source: Crypto News Deutsch
