Peter Schiff Warns Fed is Bluffing with Rate Hike

While traders obsess over the timing of the Fed’s next rate hike, Peter Schiff has a simple message for Wall Street: don’t.

On CNBC’s “Trading Nation,” the outspoken investor said the central bank is “bluffing” and instead of waiting for a rate increase, traders should have their sights set on another round of quantitative easing.

“We are addicted to zero percent rates,” he said. Schiff says that raising rates would “pop” the stock and real estate bubble that the Federal Reserve has created through its low-rate policies. And that would send the U.S. economy into a catastrophic recession. By his reasoning, the Fed will do anything to prevent stocks from falling. In fact, he sees more stimulus ahead.

“I think they’re going to do another round of quantitative easing,” added Schiff, CEO of Euro Pacific Capital. But according to Schiff, even another round of easy monetary policy won’t be able to stop what he calls an impending crisis.

“When the dollar finally does collapse based on our failure to raise rates and our launching QE4, it’s going to be that kind of inflation and currency crisis that will ultimately force the Fed’s hand,” he said. “That’s when we’re going to be in some real trouble.”

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza