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Economist Peter Schiff has warned that the current financial crisis will be worse than in 2008. “Future rate hikes are now meaningless,” he stressed, adding that any effect would be more than offset by the Fed’s quantitative easing.
Economist and gold rusher Peter Schiff shared his outlook for the US economy in a series of tweets this week. He explained that when the government “introduced many new banking regulations after the financial crisis in 2008, we were assured that what is happening right now would never happen again”. However, he argued:
One reason we had the financial crisis in 2008 was too much government regulation. That is why this crisis is getting worse.
“This time it’s different. When the 2008 financial crisis started, the dollar rose and gold fell. This time it’s the other way around… That’s because investors realize that the high inflation that should have hit ten years ago will hit even harder now! thought 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 to hit.”
Schiff further explained that the Fed’s quantitative easing (QE) is back. “Last week the Fed’s balance sheet swelled by $300 billion, wiping out 4 months of QT [quantitative tightening] for a week. At the end of the month, the balance may reach a new high. Price increases do not matter. Inflation is heading much higher, thanks to bank bailouts,” he detailed. His comments came after the Federal Reserve and the US government unveiled measures to bail out failed Silicon Valley Bank and Signature Bank last Sunday.
The economist continued:
The Fed fought a two-pronged war against inflation, rate hikes and QT. The Fed has now reversed the fire, and is doing aggressive QE. If QT was designed to lower inflation, QE will increase it. Future rate hikes are now meaningless, as any effect will be more than offset by QE.
“As I have warned for years, the only way the Fed can come close to achieving its 2% inflation target is to let a financial crisis worse than 2008 run its course, without bailouts for banks or their customers,” he relayed. Referring to recent bailouts of major banks, he concluded: “The Fed chose bailouts and surrendered the fight against inflation.”
Do you agree with Peter Schiff? Let us know in the comments section below.
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