Economist Peter Schiff believes that the current financial crisis could be worse than in 2008. He said that the attempt by the Federal Reserve (also known as “the Fed”) to increase interest rates will not make any difference since they will cancel it out with their plans to give more money/cash to people and businesses, which is called ‘quantitative easing’.
Peter Schiff Predicts Inflation with Government Irresponsibility
Peter Schiff, an economist and supporter of gold, recently talked about his expectations for the US economy. He said that after the 2008 financial crisis, the government made a lot of rules to make sure tough times like this wouldn’t happen ever again. But Peter mentioned that these regulations were one of the causes of the 2008 crisis and it will likely make this crisis even worse.
The economist said this time is different from 2008 when the financial crisis started. Before, dollar was valuable and gold was not, but now it’s the other way around. This is because investors think that the inflation which would have happened a decade ago will be even worse than expected!
Peter Schiff said that the Federal Reserve (Fed) caused a financial crisis in 2008 and 2023. He predicted this to happen because he knew what would happen if the Fed made some wrong decisions. Peter also mentioned that he started warning people about an upcoming financial crisis back in 2009, but wasn’t sure how long it will take for the effects of these bad decisions to show up.
The Fed recently did something called quantitative easing (QE) where a lot of money is pumped into the economy. Last week, $300 billion was added to their balance sheet in just one week, which wiped out four months’ worth of QT (quantitative tightening). The U.S. government and the Federal Reserve then saved two banks – Silicon Valley Bank and Signature Bank – on Sunday by bailing them out with more money. This means that inflation is likely to go up due to this extra cash being poured into the economy.
The economist was saying that the US government was fighting an economic battle on two levels – by raising interest rates and reducing money in the system (QT). Now, they have reversed their actions and are giving out more money then before (QE), which affects inflation differently than when they were lowering it. Furthermore, future decisions to raise interest rates will not be effective as QE will provide too much of a counterbalance.
Peter Schiff warned that without any help from the Fed, such as bailouts for banks or their customers, it would be very difficult for the Fed to reach its goal of 2% inflation. Recently, some major banks were given bailouts. Therefore, Peter lectured that because of this bailout, the fight against inflation will not go well. Do you agree with him? Let us know what you think in the comments!