Peter Schiff criticizes Jerome Powell's 'misguided' optimism, warns of 'disastrous consequences' even more than the 2008 global financial crisis – iShares Tips Bond ETF (ARCA:TIP)
Federal Reserve headed by jerome powellindicated it is leaning toward three rate cuts this year, and with the annual rate rise of the personal consumption expenditure index in February, economists Peter Schiff warned on Friday that the central bank may be wrong in its thinking.
Inflation is alive and kicking: While the Fed claims inflation is moving toward its 2% target, gold's rally to more than $2,200 per troy ounce shows inflation is going in the other direction, Schiff, formerly of Twitter, said. Said in the post. The market is a far more reliable indicator than the Fed, he said, adding, “If the Fed really relied on the data, the rising price of gold would cause interest rates to rise.”
The economist said personal spending rose 0.8% month-on-month in February, much more than the 0.3% rise in personal income. He said a 0.3% monthly increase in personal consumption expenditure had mitigated the impact of inflation on prices.
“Falling real wages have forced consumers to borrow more and drain their savings to pay higher prices to buy fewer goods,” he said.
Schiff also pointed to another data point to back up his claims. He said the CRB commodity index has gained 12% so far this year and could end 2024 with a 50% gain, as opposed to a flat performance in 2024.
“Is explosive growth in commodity prices in 2024 consistent with low #inflation and falling CPI?”. He asked.
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Big mistake? In a separate post Thursday, Schiff said the upcoming Fed rate cut could mark the central bank's “biggest policy mistake ever,” proving the former Fed chair right. arthur burnsWhich notoriously allowed inflation to run out of control.
On Friday, the economist said, the price rise is a “clear signal” that current monetary policy is too loose and the planned rate cut is a mistake.
“The Fed will ignore this warning because it is more concerned about saving the government. And #inflation than banks,” he said.
Schiff's loose monetary policy comments came against the backdrop of the fed funds rate hitting a 22-year high of 5.25%-5.50%.
He warned of a crisis even worse than the 2008 global financial crisis, which was triggered by a housing market boom and an increase in subprime loans that became mostly delinquent. Financial institutions that held mortgage-backed securities in their portfolios suffered losses, culminating in the collapse of Lehman Brothers and Bear Stearns.
Schiff said, “Powell's current optimism over the state of the U.S. economy is even more misguided than (Ben) Bernanke's optimism over the economy during the months before the 2008 financial crisis.”
“We are now on the brink of far more devastating financial and economic consequences.”
in the market, iShares Tips Bond ETF tipThe index, which tracks inflation-protected U.S. Treasury bonds, closed 0.04% higher at $107.41 in Thursday's session. Benzinga Pro Data.
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