Economist Peter Schiff Expects Worse Financial Crisis Than 2008 — Says ‘Future Rate Hikes Are Now Pointless’
Economist Peter Schiff has warned that the current financial crisis will be worse than in 2008. “Future rate hikes are pointless now,” he stressed, adding that any effect would be more than offset by the Fed’s quantitative easing.
Peter Schiff’s Financial Crisis Warning
Economist and gold specialist Peter Schiff shared his outlook for the US economy in a series of tweets this week. He explained that when the government “introduced a host of new banking regulations in the aftermath of the 2008 financial crisis, we were assured that what is happening now will never happen again.” However, he claimed:
One of the causes of the 2008 financial crisis was too much government regulation. That’s why this crisis will get worse.
“This time it’s different. When the financial crisis began in 2008, the dollar rose and gold fell. This time it’s the other way around… It’s because investors understand that the high inflation that should have hit ten years ago will hit even harder now!” the economist suggested.
“The Fed caused the financial crisis of 2008 and 2023,” Schiff said, arguing that he predicted both because he “understood the consequences of Fed policy mistakes.” He added that he “began predicting the current financial crisis back in 2009”, but at the time he did not know “how long it would take for it to erupt”.
Schiff also clarified that the Fed’s quantitative easing (QE) is coming back. “Last week, the Fed’s balance sheet increased by $300 billion, wiping out 4 months of QT. [quantitative tightening] a week later. By the end of the month, the balance may reach a new high. Raising rates doesn’t matter. Inflation is moving much higher thanks to bank bailouts,” he said. His comment followed last Sunday when the Federal Reserve and the US government unveiled bailouts for bankrupt Silicon Valley banks and Signature Bank.
The Economist continued:
The Fed waged a double war against inflation, rate hikes and QT. Now the Fed has reversed course and is pursuing aggressive quantitative easing. If QT was designed to reduce inflation, QE will raise it. Future rate hikes are now meaningless as any effect would be more than offset by QE.
“As I have been warning for years, the only way the Fed can get close to meeting its 2% inflation target is to let a worse financial crisis than 2008 run its course, without the help of banks or their customers.” – he said. Referring to the recent bailout of the big banks, he concluded: “The Fed has opted for bailout and abandoned the fight against inflation.”
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