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Fed has ‘no stomach’ for doing the right thing of raising rates as crisis ‘worse than 2008’ looms – Peter Schiff

Fed has ‘no stomach’ for doing the right thing of raising rates as crisis ‘worse than 2008’ looms – Peter Schiff
With the US Federal Reserve expected to cut interest rates for the second time on Wednesday, Euro Pacific Capital CEO Peter Schiff has discussed with RT’s Boom Bust what the move will bring to US economy.

“The Federal Reserve has been artificially suppressing interest rates particularly since the 2008 financial crisis. By keeping interest rates artificially low, they’ve created a bubble much bigger than they popped in 2008,” the analyst said.

Earlier this week, the Fed made an emergency injection into the banking system to prevent interest rates from rising, which amounted to between $50 billion and $70 billion, according to various estimates. According to Schiff, this signals that the situation is spiraling out of control.

“They created $50 billion or $70 billion out of thin air to supply the credit that the market needed. But what happens next time? What happens if we need $100 billion? What happens if we need a trillion?” he asked.

Schiff believes that what the market really needs is to go through “painful” times of recession and eventually increase the rates, as this is what the market needs. However, this is unlikely to happen.

“The Federal Reserve has no stomach for doing what’s right, so they will cut interest rates because that’s what the addicts on Wall Street demand. So we’re not gonna have a real recovery, we’ll try maintain this bubble,” the analyst told the Boom Bust host.

For more stories on economy & finance visit RT's business section

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