No Rate Hike Was Obvious, Says Peter Schiff
Janet Yellen and her cronies at the Federal Reserve didn’t fail to raise interest rates because of global economic turmoil—they never planned for one to begin with. Anyone convinced they’ll see a rate hike soon is out to lunch. Or at least that’s according to Peter Schiff, the famous contrarian investor.
Peter Schiff is a financial commentator that frequently appears on business talks shows. His views are considered outlandish by the mainstream, but Schiff correctly estimated that the Federal Reserve would fail to raise interest rates this year.
“We are stuck at zero [percent interest rates], this is a gigantic bubble,” said Schiff. “The last the Fed wants to do, unfortunately, is prick it, but the air is coming out all by itself.” (Source: Peter Schiff on Fed’s next move, CBC, September 22, 2015.)
Peter Schiff claims the U.S. economy is doing far worse than the Federal Reserve will admit. Their job, he says, is to try and bolster confidence in the market. But their actions, namely the failure to raise interest rates, is evidence to the contrary.
Peter Schiff Says Fed Unlikely to Raise Rates Soon
Even the very serious pundits are starting to listen to what Peter Schiff has been saying. They concede Schiff may have a point, because he is not laying claim to some grand conspiracy at the Federal Reserve. Their sin is one of ineptitude.
“They use the excuse of global markets, or the global economy, but that had nothing to do with the Fed’s decision,” said Schiff. “That was simply their excuse not to do what they never had any intention of doing, because they can’t.” (my emphasis)
Overall, Peter Schiff’s argument boils down to a very simple point. Seven years of monetary stimulus gave the illusion of an economic recovery. Janet Yellen and the Fed hoped real growth would fill the gap, giving them enough cover to scale back the easy money.
But that growth never arrived. And now the Federal Reserve is holding up the market with both hands, trying desperately to prevent another crash. As such, Peter Schiff argues we will see another round of quantitative easing.
“Just keeping rates at zero is not enough, it’s not enough to support this market,” said Schiff. “The market, unfortunately, is going to want another dose of quantitative easing, and that is exactly what Janet Yellen is going to deliver.”