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Peter Schiff warns Fed policies could crush US dollar

GrafaGrafa2024/09/17 02:00
By:Liezl Gambe

Peter Schiff, an economist known for his advocacy of gold, has warned that the Federal Reserve's upcoming policy moves could have severe consequences for the U.S. economy. 

He believes the Fed is about to repeat its past mistakes by cutting interest rates and possibly returning to quantitative easing, a strategy he says could lead to a sharp decline in the dollar and a resurgence of inflation.

Schiff expressed his concerns on social media, saying, "The Fed is about to prove it learns nothing from its past mistakes. 

On Wednesday, it will cut interest rates despite the fact that rates are still too low. 

This will be followed by a return to QE, another repeat mistake that will engender more debt and send consumer prices soaring." 

He warned that such actions could weaken the dollar, making U.S. debt easier to repay but diverting trade deficits into asset purchases rather than treasuries.

He also pointed out that while rate cuts may not significantly lower borrowing costs for most, mortgage rates might have already hit their lowest point and could be moving higher. 

"The Fed will return to QE to try to stop the rise," Schiff explained, adding that this could "crush the dollar and reignite inflation."

Schiff further noted the potential for a more extensive economic downturn, with a declining dollar potentially triggering a rally in commodities and increasing inflationary pressures. 

He highlighted the vulnerable state of the U.S. economy and the financial difficulties facing American consumers, warning that the nation might be on the edge of an economic collapse or runaway inflation if the Fed continues on its current trajectory.

"The U.S. economy is historically weak, and consumers have never been in worse shape than they are right now," Schiff said, warning that without a change in direction, the country could face severe economic repercussions.

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