Peter Schiff, a top Libertarian financial analyst, provides one more argument on why a U.S. stock market crash is inevitable. He argues that the Federal Reserve knows well that the U.S. economy is weak, but it pretends it’s strong in order to help Democratic frontrunner Hillary Clinton enter the White House in November.
“I would caution people against investing in U.S. stocks because I think the dollar is going to fall out faster than U.S. stocks rise,” he said in an interview aired on CNBC, advising investors to pour their funds into markets outside the U.S. “that have the wind at their back.” (Source: “Fed Undermining Living Standard to Bail Out Government Debt and Prop Up Inflated Markets,” YouTube, March 30, 2016.)
Schiff argued also that the U.S. stock market is only up in U.S. dollars, but it’s down in almost every other currency in the world.
“Our standard of living is going down; our debt is going up; the U.S. economy is in a lot of trouble and the Fed doesn’t want to admit it because Obama wants to pretend that everything is great and so the Fed doesn’t want to peddle the fiction,” Schiff, the one-time Senate candidate, said.
The U.S. Dollar Index, which tracks the greenback against a basket of six currencies, has dropped nearly six percent since it reached a high of 100.51 in December.
The three major U.S. stock indexes have rebounded from the losses they incurred at the beginning of this year and are now just a few points below their all-time highs they recorded in mid-2015.
This year only, the greenback has weakened 10% against the Brazilian real, seven percent versus the Russian ruble, and 4.8% against the Singapore dollar.
Schiff blasted central bankers for “printing money.”
“The reason central banks want to print money is to bailout overly indebted governments and to prop up inflated asset markets, but all of this undermines legitimate economic growth and rising living standards,” he said. “What we need… is more production, with falling prices so that people can have a higher standard of living; but right now, the biggest enemy of higher living standards are governments and central bankers.”
And because Fed policymakers, he claims, are sure about the frailty of the U.S. economy, they are not going to hike interest rates “at all in 2016.”
“They pretend it’s strong but they can’t raise rates because they know it’s weak,” said Peter Schiff, head of Euro Pacific Capital.
The Fed decided in mid-March to leave its benchmark interest rates between 0.25% and 0.50%. It also projected only two rate hikes this year, down from the four rate hikes it projected in December, when it lifted rates for the first time in more than nine years.
In late March, Fed Chair Janet Yellen said the U.S. central bank would be cautious while raising rates as global risks remained, including uncertainty over China’s economic growth and cheap oil prices.
Financial markets forecast a 30% chance of an interest rate hike at the Fed’s June policy meeting, a 50% chance of such a move in September, and a 64% probability at the December meeting, Reuters reported on Friday, citing CME Group’s FedWatch. (Source: “U.S. job market flexes muscle; Fed still seen on hold,” Reuters, April 1, 2016.)