Economist Peter Schiff Warns Fed Action Could Lead to Market Crashes – This week, gold bug and economist Peter Schiff continued to discuss the U.S. economy and the Federal Reserve’s efforts to reduce inflation. Concerning the future of the U.S. economy, he tweeted on Saturday, “There are two possible outcomes.” He described one of the outcomes: “The Fed succeeds in returning inflation to 2%. Stocks, bonds, and real estate all crash, ushering in a massive financial crisis and severe recession that includes government defaults & spending cuts.”
Next, he discussed the second possible outcome, writing, “Or the Fed pivots before inflation returns to 2%. If the Fed pivots, either to avert a financial crisis, or in reaction to one, inflation will soar, the opposite of what was experienced after the 2008 financial crisis. This time instead of running toward the dollar, the world will run away from the dollar.”
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Schiff also tweeted on Friday, “Everyone knows about the high inflation of the 1970s that didn’t end until Volcker got serious in the early 1980s. But during the ten years from 1982-1992, the average annual CPI rise was 4.43%. The Fed didn’t get inflation back down to 2% until after the 2008 financial crisis.”
On social media, the gold bug frequently comments on the state of the U.S. economy.In September, he issued the following warning: “Inflation is here to stay, and will get much worse despite rate hikes, due to over a decade of inflationary monetary and fiscal policy. This is very bearish for the dollar and bullish for gold.” Schiff noted: “The days of sub-2% inflation are gone.”
In addition, he emphasized in August that the United States is facing a massive financial crisis that will be much worse when defaults begin. In May, he predicted that the U.S. economic downturn would be “much worse than the Great Recession.” Schiff recently reached a settlement with Puerto Rico’s financial regulator and agreed to liquidate his Euro Pacific Bank without admitting wrongdoing.
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