Peter Schiff: ‘Inflation is headed up’ on both producer, consumer level

Rampant inflation in the United States is just around the corner, warns one financial guru. And you’re already beginning to see signs of this in many different areas of the economy as well as on a consumer and producer level.

Speaking in an interview with CNBC, Peter Schiff, president and CEO of Euro Pacific Capital, explained that inflation is going to soar and going to be faster than the interest rate increases by the Federal Reserve.

“Inflation is headed up not just on a producer level but on the consumer level and inflation is going to be rising at a pace that is much faster than any rate hikes that we might get from the Fed. So real rates are going to be falling even if the Fed raises nominal rates,” he said.

“I think the dollar ultimately is going to drop substantially so I think you’re going to see a bigger drop in the price of stocks.”

Schiff stated that the U.S. economy is weak and that is the reason why stocks are surging to record highs. He blamed the U.S. central bank keeping rates so low as the cause for a lackluster economy. When a national economy is weak, he averred, the stock market booms and is “propped up at artificially high levels.” However, Schiff adds, this is what undermines the actual economy that so many Americans participate in.

Moreover, Schiff believes that this is the reason why Donald Trump was elected as both the Republican nominee and as president of the United States.

“I think I’ve been correctly bearish on the U.S. economy ever since the Fed began this ridiculous monetary experiment. That’s why Donald Trump was elected president. If the economy was in good shape, not only wouldn’t he have been elected, he wouldn’t have been the Republican nominee,” he said.

The bestselling author also chastized the Federal Reserve for slashing interest rates in the first place and leaving them low for so long.

“It is a problem, that’s why Janet Yellen is so reluctant to raise rates. That’s why she’s barely moved them up over the last few years because she’s afraid of the consequences when she tries to remove this unprecedented accommodation,” Schiff noted.

“I mean nothing at all changed. What’s appropriate and what the Fed is going to do are two totally different things. The Fed is going to raise interest rates as slowly as they can possibly get away with and at some point they’re going to have to come up with an excuse why they’re going to stop raising rates and why they’re going to cut rates again and why they’re going to go back to QE.”

Schiff reiterated previous comments that even if the central bank does raise rates it will “ultimately reverse course.”