The US Federal Reserve leaning toward rate cuts indicates that it is trying to keep the air from coming out of the stock market bubble, according to Euro Pacific Capital CEO Peter Schiff.
He told Boom Bust that the US is heading for recession regardless of what the Fed does with rates.
“This isn’t even a good economy, it’s a bubble. Powell (the chair of the Federal Reserve) doesn’t seem to understand that. He thinks the economy is doing OK, it’s not. The economy today is in worse shape than it was before the collapse in 2008,” said Schiff.
The strategist explained that the Fed has inflated a much bigger bubble this time than it did prior to the last crash. “The longer we succeed in kicking the can down the road, the greater the imbalances grow as a result of this bubble and the more painful it is when the air comes out.”
Schiff, who predicted the 2008 financial crash, says “the coming recession is going to be inflationary.” According to him, it will be stagflation except it’s going to be recession, not just stagnation, “аnd the inflation rate is going to be far higher than it was last time in the 1970s.”
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