Tags: Schiff | financial | crisis | Fed

Schiff: US Will Suffer 'Much Bigger' Collapse Than Russia Because of Fed

By    |   Tuesday, 06 January 2015 11:57 AM

The U.S. economy and financial system will soon face a crisis, thanks to excessive easing by the Federal Reserve, predicts Peter Schiff, CEO of Euro Pacific Capital.

"We're going to have to have a crisis on a much bigger scale than the one that's going on in Russia right now," he tells Newsmax TV's "America's Forum" show.

"We're not going to get a repeat of 2008, because the Fed is not going to allow that kind of crisis. If they raised interest rates, that's exactly what would happen. We'd have a worse financial crisis than 2008."

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To prevent that, the Fed will refrain from raising interest rates and will instead launch another round of quantitative easing, Schiff predicts.

"But the consequence of that is going to be a currency crisis, a run on the dollar, a run on the U.S. bond market, which is going to be substantially worse, a much bigger disaster, far more painful to endure than any type of financial crisis that would have resulted from an increase in interest rates," he explains.

"But it's going to be that crisis that will force major change. Hopefully it's going to be major change for the better, but there's always a chance there could be major change for the worse."

So how should investors deal with this crisis?

"There's nothing we can do. We can't prevent it. This disaster is going to happen," Schiff says. "The only thing you can do is try to mitigate the damage to yourself, try to have your own assets invested properly."

The means investors should own "assets around the world, own gold."

As for the plunge of oil prices to 5 ½-year lows and the recent stock market correction, "oil prices and the stock market are both going down for the same reason," he notes.

The Fed created "a phony recovery on a foundation of quantitative easing and zero percent interest rates," Schiff argues. "Those policies are theoretically coming to an end, and the asset bubbles that they supported are running out of air."

That explains the declines in stock and oil prices, Schiff asserts. "Without quantitative easing we're going to have a bear market in stocks, we're going to have real estate prices going down. All these markets are going to be coming down."

As for the economy, monetary policy is the key. "The U.S. economy won't recover until the Federal Reserve gets out of the way, until they allow interest rates to rise and allow the economic carnage that would result from that," Schiff maintains.

"What we need to do is have the recession that the Fed cut short. We need to let interest rates go up, let stocks go down, let real estate go down, let big banks fail. We need to clean house, we need to let speculators lose money, and we need to force the federal government to dramatically reduce its size."

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The U.S. economy and financial system will soon face a crisis, thanks to excessive easing by the Federal Reserve, Peter Schiff, CEO of Euro Pacific Capital, tells Newsmax TV.
Schiff, financial, crisis, Fed
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2015-57-06
Tuesday, 06 January 2015 11:57 AM
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