During his keynote speech at the Vancouver Resource Investment Conference, Peter Schiff said we are at the beginning of the end.
The Fed appears to have paused interest rate hikes in order to save the stock market.
The markets have reacted positively and a lot of analysts seem to think we’re out of the wood.
But Peter traces the moves of the Federal Reserve all the way back to the first rate hike of December 2015 and shows how the central bank has put us on a path toward a financial crisis that will be bigger than 2008.
Peter insists he’s been right about what would happen all along, it’s just taken us a little longer to get here than he expected.
Highlights From the Speech
“I have been forecasting that the Federal Reserve would not be able to complete its rate normalization process since before they raised rates for the first time.”
“I still believe if Hillary Clinton won that election, which was widely expected, I think it would have been one-and-done. I don’t think the second rate hike would have taken place had Hillary Clinton won.”
“I think that had Hillary Clinton won, the stock market would have tanked. The conventional wisdom before the election was that if Trump won it was going to be a disaster for the stock market, but if Hillary Clinton won, the market was going to like it. Well, Trump won and the market went way up, the opposite of what was expected. I believe that had Hillary Clinton won, the market would have gone down. Also the opposite of what had been expected. And I believe the US would have entered recession much sooner.”
“The reason that I originally said that I did not expect the Fed to raise rates again was because I knew that raising rates was the first step in a journey that they could not finish, that in their attempt to normalize rates, the stock market bubble would burst and the economy would reenter recession.”
“Normalizing interest rates when you’ve created an abnormal amount of debt is impossible.”
“I knew all along that at some point, that would be it, you know, the straw that breaks the camel’s back. I didn’t know how many rate hikes the bubble economy could take, but I knew there was a limit. And I still knew that there’s no way they were ever going to get back up to normal or neutral. Whatever that number is, it ain’t 2%.”
“Everything that the Federal Reserve built up based on cheap money was starting to implode as the cheap money was being withdrawn.”
“The US economy is built for zero. It’s not working at 2% and you’re starting to see that.”
“We’ve just created a massive amount of inflation. Quantitative easing is just a euphemism for inflation. That’s what inflation is — expanding the money supply. Printing up money and buying government bonds is the definition of inflation. The Fed has been inflating like crazy.”
“How can you look at the US economy that has more leverage now than ever before and say there’s no sign of excess leverage? How can you look at the biggest financial bubbles that have ever been inflated and say that there’s no bubbles? The bubble that we have no is bigger than the one that popped in 2008.”
“People forget that in a bull market, the corrections are when the market is going down. That’s the correction. But when you’re in a bear market, the correction is when the market is going up.”
“The Federal Reserve created a correction in a bear market by coming to the rescue of the stock market, by calling off the rate hikes.”
“The problem is it’s not the future rate hikes that were going to push the economy into recession, it’s the past rate hikes. They’ve already guaranteed it.”
“The recession is coming anyway; it doesn’t matter that the Fed stopped hiking. And the bull market is over and the bear market is going to continue.”
“People are going to realize that we checked into the monetary roach motel that I talked about from the beginning and that there’s no way out, and then the dollar is going to fall like a stone.”
“When they find out that it’s never over and it didn’t work. then there’s going to be nothing propping up the dollar and it’s going to drop like a stone, the price of gold is going to take off, and the recession that we’re entering into, which is going to be an inflationary recession, is going to be worse than what we now call the Great Recession.”
“You need to anticipate what is going to happen. Because I think that what they have already done should be enough to show you where they’re going. The fact that they had to abort the process at two, two-and-a-quarter, that fact that they were forced to do such an about-face. that should tell you … If you thought that they could do it, that should be the first warning bell that says, ‘You know what? Schiff was right all along. Maybe it’s taken longer than we might have thought to play out, but this is the beginning of the end.”