According to Peter Schiff, the chief global strategist at Euro Pacific Capital, it was a “huge mistake” for the Federal Reserve to cut interest rates last month. Schiff says there is no way for the Federal Reserve to stops the United States from going into a recession.
“They never should have taken rates to zero in 2008 and held them there for 7 years,”the veteran economic analyst told RT. “Zero interest rates and quantitative easing have created problems in our economy that will take generations to fix. However, the healing will never get underway if the Fed goes right back to zero (which is where they are headed).”
According to Schiff, it’s impossible to build a viable economy on the back of artificially low interest rates. “All it accomplishes it to push up asset prices, creating bubbles and malinvestments that hurt the economy. Relying on low interest rates for growth makes it certain that recessions will ensue when monetary policy tightens,” he added.
Runaway government debt and the Trump tariffs provided the final push to tip us back toward an inevitable recession, Schiff said. He added: “the Fed is not causing the recession; they are just unable to delay it any longer.” Unfortunately, if interest rates are “allowed” to rise organically to levels that reflect a healthy economy, the interest payments on government debt will sink the government and that’s exactly why President Donald Trump is desperate for artificially low interest rates.
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