Tags: Schiff | Fed | stimulus | economy

Peter Schiff: Fed Will Add Even More Stimulus, Not Less

Friday, 24 May 2013 08:14 AM

By John Morgan

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Peter Schiff likes fighting the crowd — the president of Euro Pacific Capital believes the Federal Reserve will be forced to pump even more artificial dollars into the monetary system, not less, in a bid to keep the whole economy from crashing down.

In the meantime, Schiff said the United States is continuing to export its financial problems to the rest of the world.

In an interview with Index Universe, he noted that American debt is worthless. "It doesn't really matter what kind of rating Moody's or S&P put on it. Anybody who doesn't see that it's junk probably deserves to lose money," he said.

Editor's Note:
Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

"There is no way the U.S. government can pay its bills; it’s not even remotely possible."

According to Schiff, the Fed has exacerbated U.S. financial ills with quantitative easing (QE) and monetary stimulus.

"[P]eople who talk about the Fed taking away the punchbowl are wrong. The Fed is not going to do that," he told Index Universe.

"Unfortunately, it's going to keep spiking the punch. The $85 billion a month is not enough to keep this phony economy from imploding. The Fed is going to have to increase the size of its monthly QE."

The soundest course would be for the Fed to unwind its ultra-loose monetary policy and let the chips fall where they may, according to Schiff.

"If the Fed withdraws the stimulus, the economy will be in a worse recession than in 2008 and 2009. That doesn't mean the Fed shouldn't do it But had the Fed done the right thing in 2008, we wouldn't be in this situation."

Still a gold bug, Schiff used the metals recent weakness as an opportunity to buy more gold.

"The fundamentals have never been better for gold. The fact that there’s so much negativity in the mainstream investor community and the media, I think, is an excellent sign," he explained. "The gold market kind of stagnated after the speculators jumped on board in the last year or two — we haven’t really made new highs. And now that we’ve gotten rid of all that dead weight, the market is clear to make new highs."

Minutes from the latest Fed policy meeting and testimony from Fed Chairman hinted the Fed's bond-buying program could be trimmed back in coming months, MarketWatch reported.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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