Ahmed Ali Financial analyst Peter Schiff has sounded the alarm that the Federal Reserve has misjudged the potential of a recession, urging people to move away from the U.S. dollar. He emphasized that the American currency is being undermined, and underscored its decreasing purchasing power. “Instead of combatting inflation, the Fed has only added fuel to the fire,” Schiff stated.
Peter Schiff Alarms Over Deterioration of U.S. Dollar
Following the Federal Reserve’s announcement of a 0.25 percent increase in interest rates, economist and gold advocate Peter Schiff issued a series of warnings on Wednesday.
Schiff, responding to the Federal Reserve Chairman Jerome Powell’s assertion that the Fed no longer anticipates a recession for the U.S. economy, made his views clear on Fox Business Wednesday:
The Fed’s recession predictions are misguided. A recession is inevitable. Indeed, it will be quite severe… Inflation will intensify, not improve.
“Regardless of the government’s misleading representation… the actual rate of inflation is over five percent,” Schiff insisted.
Addressing Powell’s remarks on rate reductions, Schiff posted a tweet saying: “Powell just acknowledged that the Fed will initiate rate cuts way before inflation reduces to 2%. That’s a significant confession that is favorable for gold and unfavorable for the dollar and Treasury bonds.”
Following the rate increase announcement, Schiff highlighted that the Dow Jones Industrial Average “concluded positively for the 13th consecutive day, marking the longest victory streak since 1987.” He further explained: “We all remember the outcome of that year. Investors overlooked the climbing interest rates, a declining dollar, and burgeoning budget and trade deficits until suddenly those issues became pertinent.” In a subsequent tweet on Thursday, Schiff expressed his view: “Despite the Fed’s rate increase yesterday, U.S. financial conditions have relaxed. The dollar and bond yields are declining, and stocks are on the rise. Softer conditions have already driven oil prices close to $80, with more potential for increase. The Fed, instead of tackling inflation, has sparked it off.”
When asked which investments are most suitable given the current situation, Schiff suggested: “You should avoid owning any Treasury bonds, even short-term ones. You should possess actual money, that is, gold, [and] you should have dividend-yielding stocks that aren’t in dollars — those outside the United States.” He underlined:
You must move away from the dollar since that’s what’s being eroded. That’s what’s losing buying power.
“You should focus on assets that are sensitive to inflation,” he added. “That includes basic materials, energy, agriculture… You should be invested in assets that will profit from the market being caught off guard by higher-than-expected inflation and long-term interest rates.”
Schiff has previously cautioned against the U.S. dollar. In April, he echoed similar advice, alerting that the USD’s status as a reserve currency is under threat. Earlier this month, Schiff stated that the Federal Reserve has already succumbed to the inflation battle, though the markets are yet to realize this. He also cautioned that all banks are destined to fail. The previous month, the analyst stated that the U.S. dollar will slump far more than Treasury Secretary Janet Yellen has anticipated, noting that Fed Chair Powell is “extremely concerned” about a financial crisis.
What are your thoughts on Peter Schiff’s ominous warnings about the state of the economy? We invite your comments below.
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Frequently Asked Questions (FAQs) about Peter Schiff’s warning on U.S. Dollar
What is Peter Schiff’s warning about the U.S. Dollar?
Peter Schiff, a renowned financial analyst, has warned that the U.S. Dollar is being undermined and losing its purchasing power. He urges individuals to move away from the dollar as he believes it is being destroyed by the Federal Reserve’s policies.
What is Peter Schiff’s opinion on the Federal Reserve’s stance on a potential recession?
Peter Schiff believes that the Federal Reserve is mistaken in their outlook about the potential for a recession. He argues that a severe recession is indeed imminent, contrary to the Fed’s predictions.
What is Schiff’s advice on investments considering the current economic situation?
Schiff suggests avoiding any Treasury bonds, even short-term ones. Instead, he recommends owning real money such as gold and investing in dividend-yielding stocks that aren’t in U.S. dollars — specifically, those outside the United States. He also advises focusing on assets that are sensitive to inflation, like basic materials, energy, and agriculture.
Has Peter Schiff made similar warnings before?
Yes, this is not the first time Peter Schiff has warned about the U.S. Dollar’s state. In April, he made a similar recommendation and has consistently cautioned that the USD’s status as a reserve currency is under threat due to the Federal Reserve’s inflation management policies.
More about Peter Schiff’s warning on U.S. Dollar
- Peter Schiff’s views on the Federal Reserve and U.S. dollar
- Federal Reserve’s Policies
- Current State of U.S. Dollar
- Understanding Inflation
- Impact of Inflation on Investments
