The debate as to whether or not the Federal Reserve will hike interest rates lingers on, at least until the next Federal Open Market Committee (FOMC) meeting. The general consensus is that the United States central bank will raise interest rates in September, and possibly again in December. But some are skeptical because of the recent tidal waves occurring in the global stock market.
Peter Schiff, CEO of Euro Pacific Capital, told Kitco News that he doesn’t think the Fed is actually even considering hiking rates for the first time in nearly a decade.
“I think they know that if they raise rates, everything is going to collapse and they’re going to have to cut rates back to zero and look like complete fools,” said Schiff.
The solution the Fed should undertake is to allow the markets correct themselves and not intervene, which is something they have done since the economic collapse with quantitative easing and bailouts. Schiff added that perhaps the entire reason for this rate hike drama is because of market perceptions.
“They never actually committed to [raising rates], it’s just the markets that have made that assumption,” he said. “The Fed has not gone out of its way to correct that assumption, but I think that’s by design.”
When asked about gold, Schiff said that when the Fed decides not to raise rates then that will be the time that the yellow metal will experience a dramatic liftoff. “I think it’s going to be spectacular.”
At the time of this writing, gold is trading in negative territory at $1,126. The yellow metal is down year-to-date from around the $1,300 mark.
The entire video interview can be viewed below:
The should fire Yellen and put Schiff in her place.