Economist Peter Schiff expects a lot of further banks to fail, warning that “ nobody’s money is secure in any bank. ” He stressed “ When the Fed sets interest rates too low and prints a lot of money it unleashes heavy inflation, creates tremendous economic imbalances that affect financial crises and depressions when the bubbles burst. ”
Peter Schiff on Inflation Tsunami, Financial Crises, Depressions, and Bank defeats
Economist and gold bug Peter Schiff talked about the U.S. banking crisis and where the U.S. economy is headed in an interview last week on One America News Network.
Citing “ the mess that the Fed produced by keeping interest rates so low for so long, ” Schiff clarified that it allowed banks to load up on “ low yielding, overpriced long-term debt, treasuries, (and) mortgages. ” also, he stressed that the government and regulators push banks “ into these securities with favorable accounting treatment for government securities or anything guaranteed by the U.S. regime. ” He warned:
A lot more banks are going to fail. This is just the reality.
Remarking on the Federal Deposit Insurance Corporation (FDIC) contemplating how they might tweak the coverage for regional banks after several major banks failed, Schiff suggested “ How about abolishing the FDIC and letting the free market handle banking? We’d have a much additionally solid bank system if depositors knew that their deposits could be lost at a bank that was reckless and took a lot of threats, and also those banks would be under competitive pressure not to take those kinds of threats. ”
Noting that the source of the U.S. banking crisis is that “ We socialized the banking industry, ” Schiff elaborates “ We’ve similarly socialized interest rates because the Federal Reserve is like a Polit Bureau. They pick an interest rate rather than permitting the market to discover the appropriate rate. ” The economist opined:
When the Fed sets interest rates too low and prints a lot of money in order to make that possible, it unleashes massive inflation, creates tremendous economic imbalances that result in financial crises and depressions when the bubbles burst. That’s where we are right now.
Schiff added “ I suppose the Fed is going to have to unleash so important inflation to try to prop up all these banks, and the U.S. government, which is similarly insolvent. That's going to unleash runaway inflation. That's the real problem. ” He cautioned:
Nobody’s money is safe in any bank, because even if your bank doesn’t fail, it’s going to be bailed out through inflation. So, you might not lose your money, but your money will definitely lose its purchasing power.
Regarding the Federal Reserve boosting interest rates by 25 basis points at their rearmost Federal Open Market Committee (FOMC) convocation, Schiff stated that it isn't enough to bring down inflation but “ it is enough to produce further problems for the banks and anybody differently that has debt that they've to service. ”
He clarified that a lot of companies and people, especially those who own commercial real estate, took out short-term loans at very low rates some years ago. As those loans mature, they can not afford higher payments. “ They've lower revenue, and now their interest expenses are rising, ” Schiff described. In addition, numerous companies that borrowed in the junk bond market aren't crossing to be capable to afford to service their debt at the new rates once these bonds mature, he remarked, emphasizing:
So, the bulk of this financial crisis, which just got started, is in our future. We’re just at the tip of a huge iceberg right now.
Regarding where people should set their money, Schiff advised “ pick up out of the dollar. Get out of banks, and pick up something real, whether it’s gold, silver, or foreign stocks. You have to seem for a port in the storm because this is an inflation tsunami. ”
(Kevin Helms, Bitcoin.com, 2023)