Peter Schiff: Less Loose Fed Monetary Policy Isn’t Tight Fed Monetary Policy
There’s been a lot of talk about the Federal Reserve tapering its asset purchases. Peter Schiff talked about it during his podcast, saying even if the Fed does getting around to tapering, that doesn’t equate to a legitimately tight monetary policy. Furthermore, any tapering today sows the seeds for its own destruction.
The minutes from the July Federal Reserve meeting came out last week. They revealed the Fed is starting to talk about tapering asset purchases later this year. That sent stocks lower as traders continue to anticipate Fed monetary tightening. The hardest-hit sectors were economically sensitive cyclical stocks and anything that was part of the reflation trade.
Peter said there was really nothing new in the minutes.
The Fed did not reveal anything that hadn’t already been revealed by other FOMC members in their various talks.”
Nevertheless, according to all the experts, the Fed is Johnny on the spot. It is now tightening. And because it is tightening, inflation is no longer a concern.
Peter said the markets are reacting to this anticipated tightening cycle in the same way they have to past tightening cycles without appreciating the difference between this tightening cycle and those that preceded it. In fact, it’s hard to call the Fed’s next step a “tightening cycle.”
So far, the only thing that has happened during this cycle is that the Fed has talked. That’s it. It’s all talk and no action.”
Peter conceded that the central bank may well taper and slow down quantitative easing.
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