Economists and financial experts expect the Federal Reserve to increase interest rates next month for the first time since 2006. How much Janet Yellen and the Federal Open Market Committee (FOMC) will hike rates are unknown. If it does decide to raise rates then it’ll likely be around 25 basis points. But is such a move a realistic one for the United States economy? Not so, says one prominent contrarian investor.
Writing in an op-ed on Real Clear Markets over the weekend, Peter Schiff, CEO of Euro Pacific Capital, opined that the “corrupt” economy can’t survive any sort of rate hike because it has been addicted to near zero rates for so long. He warned that markets won’t be able to handle even the smallest of rate hikes.
“Since we have had the monetary wind at our back for so many years, at least a few have begun to question our ability to make economic and financial gains against actual headwinds. But in reality, the tightening cycle that the forecasters are waiting for actually started last year,” he wrote. “Sadly, the markets and the economy are already showing an inability to handle it.”
Schiff explained that most of the financial minds predict the Fed will increase rates to two percent or more, but he believes interest rates will come nowhere close to that level. In fact, according to Schiff, any positive interest rates “would be enough to stop this economy cold.”
“Years of negative rates have so corrupted our economy that I believe it is now fully addicted and cannot survive under any other condition,” he stated. “Since this historically weak recovery is already decelerating, one might expect the removal of stimulus could cause the next recession to start quicker and be far deeper than any experienced in the past.”
He added that the Fed may understand this so the next easing cycle could start sooner and the monetary stimulus could be bigger than what anyone believes.
The FED will not raise interest rates until after BHO BOZO is out of office. They know that the World economy is headed for a recession.