There is no question the US economy is
heading toward recession, according to Peter Schiff, chief global strategist at
Euro Pacific Capital. He says it was a “huge mistake” for the Federal Reserve
to cut interest rates last month.
“They never should
have taken rates to zero in 2008 and held them there for 7 years,” the veteran broker told RT. “Zero interest rates and
quantitative easing have created problems in our economy that will take
generations to fix. However, the healing will never get underway if the Fed
goes right back to zero (which is where they are headed).”
According to
Schiff, it’s impossible to build a viable economy on the back of artificially
low interest rates. “All it accomplishes it to push up asset prices,
creating bubbles and malinvestments that hurt the economy. Relying on low
interest rates for growth makes it certain that recessions will ensue when
monetary policy tightens.”
A
sustainable economy can only grow on the foundation of market-set interest
rates, says Schiff, who predicted the 2008 financial crash. According to him, “the Fed is not causing the recession;
they are just unable to delay it any longer.”
Source: RT