The US Economy Needs To Rebuild From The Ground Up

Peter Schiff spoke with Graham Ledger about why the United States economy will only truly recover when the Federal Reserve completely abandons quantitative easing and zero-percent interest rates. Unfortunately, Peter thinks this is highly unlikely due to the political ramifications. Raising interest rates to normal levels right now would likely pop the current stock market bubble. If that happens while Obama is still in office, it will be much easier for a Republican to get elected. That’s exactly why Obama will likely pressure Janet Yellen to keep suppressing interest rates until after the 2016 elections.

Why did we have QE3? Because QE2 didn’t work. Why did we have QE2? Because QE1 didn’t work. We’re going to have QE4 for the same reason, and it’s going to make the problem worse, which means we’re going to have QE5. It’s not going to end until we have a complete collapse of the dollar.”

 

Follow along with this transcript of Peter’s responses:

“I think [the Federal Reserve will raise interest rates], but not for some time and not until after there is a currency crisis that forces the Fed’s hand. The Fed has been bluffing an exit strategy, and they’ve been talking about raising interest rates for five or six years now. The reason they talk about it is because they can’t do it. If they actually raised interest rates, then we would have to deal with the consequences of their bad monetary policy. What the Federal Reserve has done with their cheap money and quantitative easing is they have inflated the mother of all bubbles. If they raise interest rates, they will prick it, and we will suffer an even worse financial crisis than 2008…

“We’re going to see a repeat of 2008 [if the bubble bursts], only on a grander scale. We’re going to see a stock market collapse. We’re going to see a real estate market collapse. We’re going to see the banks in trouble again. When interest rates go up, it’s not only going to be people who took out sub-prime mortgages that are going to pay – the US government won’t be able to pay interest on the Treasuries when interest rates go up. So we’re going to be in a situation where we’re going to have to default…