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Peter Schiff: Fed to Hike Rates Until 'Gigantic Bubble' Pops

(Sergdibrova/Dreamstime)

By    |   Friday, 16 November 2018 11:49 AM

Investment guru Peter Schiff told Newsmax TV that the Federal Reserve’s strategy of hiking interest rates into the stratosphere will only push America into a recession when the “mother of all bubbles” finally pops.

“The economy is a gigantic bubble,” the Euro Pacific Capital CEO recently told “The Income Generation Show.”

“The Fed is likely to keep nudging rates higher. They're oblivious to what's going on. They have no idea that we're facing an economic crisis worse than 2008. We are looking at a stock market decline and a housing decline. In fact, this housing bubble is bigger than the one that burst in 2007-2008,” Schiff told host David Scranton.

Schiff predicted more Fed rate hikes “until they see the economy in recession, until they see the bear market in stocks and the collapse of real estate prices.”

Schiff predicted central banks will “then they will do what they've always done. They will slash interest rates, they will launch QE 4 and they will expect to bailout the economy like they did before. Except they're going to be surprised because it's not going to work. It's not going to be the third time's the charm, it's going to be three strikes and you're out.”

Schiff predicted that after a fourth round of quantitative easing, the dollar is going to collapse and the only prices that are going to go up are consumer prices: the price of goods and services that Americans buy every day. “The cost of living goes up, the American standard of living will come crashing down,” he predicted.

“We're headed to a recession. I think it's going to be worse than the 2008 recession, the one we call the Great Recession,” he predicted.

“The difference is with a Democratic Congress, the stimulus that we're likely to get will include a lot more government spending. And the tax cuts that we get next time we'll probably targeted to lower-income and middle-income earners, so they will be more inflationary than the ones that we had before,” Schiff said.

“The only good news for [President Donald] Trump is instead of blaming the recession on the Federal Reserve, he can also try blaming it on the Democratic House of Representatives. I think the next election is going to be not about who gets credit for the blooming economy but who gets blamed for the bust,” Schiff said.

Schiff blamed the U.S. central bank for all of America’s economic woes.

“They've been blowing successive bubbles since [Former Fed Chair Alan] Greenspan was around. They blew up the dot-com bubble and that popped and then they blew up the housing bubble and that popped. Now they have a bubble in everything. This is the mother of all bubbles and when it's pops, there is no larger bubble that's going to take its place. We're finally going to have to pay the piper for all these bubbles and believe me if we've run up quite a tab,” Schiff said.

As for what investors can do to find shelter from the looming storm, Schiff suggests looking beyond U.S. borders to foreign assets. “Undervalued foreign stocks that pay good dividends,” he explained

He also suggested on gold and silver as “excellent” inflation hedges. “I think inflation is going to break out worldwide, not just in America. It'll be particularly pronounced in America but other nations are going to experience it. So you need to have gold and silver in your portfolio,” he said.

Schiff thinks the next recession will be unique in that it will be “particularly severe” in the U.S. “I think the emerging markets are actually going to see their economy strengthened as the dollar collapses in the U.S. recession because it's been a strong dollar that has been hurting the emerging markets. They're going to get relief when the dollar falls.”

"The Income Generation" airs on Newsmax TV every Sunday at 10 am ET.

© 2019 Newsmax Finance. All rights reserved.

   
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Economy
Investment guru Peter Schiff told Newsmax TV that the Federal Reserve’s strategy of hiking interest rates into the stratosphere will only push America into a recession when the “mother of all bubbles” finally pops.
peter schiff, fed, rates, bubble
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2018-49-16
Friday, 16 November 2018 11:49 AM
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