Peter Schiff, the top Libertarian economic forecaster, believes the U.S. economy is on the verge of economic collapse.
In response to the coming recession, Schiff told RT on Friday that he expects layoffs will start sometime this year. (Source: “Fed Hoping to Will Recession Away With False Optimism,” YouTube, March 11, 2016.)
The recession, Peter Schiff argues, started late last year. Whoever succeeds President Barack Obama will inherit an even bigger recession than the one Obama inherited from his predecessor, President George W. Bush.
“Normally, employers don’t lay people off because they think a recession is coming,” Schiff, the head of Euro Pacific Capital, said. “When they get surprised by a recession, that’s when they start to lay off. So, I think the layoffs are gonna come. They’re gonna come this year and you know there’s only so many part-time workers that American businesses are gonna be able to hire.”
The world’s largest economy added a better-than-expected 242,000 jobs in February, while the unemployment rate held steady at 4.9%, matching an eight-year low, the Labor Department reported earlier this month. Economists were expecting 190,000 new positions and no change in the jobless figure.
Schiff noted that corporate earnings are under pressure, retail sales are collapsing, and jobs are going to be the final factor to break.
The three major U.S. stock indexes are still in the red and have been since the beginning of the year, trying to pare losses. Meanwhile, gold is 2016’s best-performing investment thus far, as investor concerns over a global economic slowdown continue to intensify.
Schiff blasted the U.S. government and the Federal Reserve for not acknowledging the existence of a recession.
“The government doesn’t admit you’re in a recession until it’s almost over,” he said. “They’re hoping to create a bunch of false optimism and maybe will the recession away.”
He pointed to the Fed’s quantitative easing (QE) program, or bond-buying program, as the reason behind the recession.
“I was calling it monetary heroin in the beginning because I knew that the hangover would be horrific and that’s exactly where we are now,” Schiff said. “The Fed has tried to take away the monetary heroin and now there is withdrawal and we’re in recession.”
Earlier on Friday, former Fed chairman Dick Fisher told CNBC that “we injected cocaine and heroin into the system” to enable a wealth effect.
Schiff dismissed the mainstream narrative that welcomed the most recent jobs data, arguing that the bulk majority of jobs that were added last month were part-time and minimum-wage jobs, not full-time and high-wage positions.
He argued that many Americans now work for minimum wage, including heads of households and college graduates.
“This is why you’ve got the popularity of [presidential candidates] Donald Trump or Bernie Sanders,” Schiff said. “It’s all the people that used to have full-time jobs that have now left the labor force or have a lousy part-time job they are going to these rallies for Sanders or Trump.”
“It’s the angry white males,” he said. “In fact, most Americans today are poorer.”
Trump is the frontrunner in the Republican presidential race, while Sanders is the chief competitor to Democratic presidential hopeful Hillary Clinton.
“You’re going to see the unemployment rate move up [later this year],” Schiff told his host. “But by then of course we’re gonna be knee-deep in this recession, maybe even neck-deep.”