by Peter Schiff, Schiff Gold:
Federal Reserve Chairman Jerome Powell took his dovish message to the masses during a recent 60 Minutes interview.
Powell continued to talk about “patience” and reiterated that the Fed “does not feel any hurry” to push rates any higher. He also said the interest rate is “roughly neutral” at this point, calling the current 2.25-2.5% rate “appropriate.”
Powell continued to say the US economy is generally strong and emphasized the shift in monetary policy is primarily due to a slowing global economy.
The only difference is the market hadn’t completely collapsed. In fact, at the last meeting, the Fed was not only not patient, they were hiking rates. They were interested in hiking rates more. But they have the quantitative tightening program, the shrinking of the balance sheet that was on autopilot. Why did they take it off autopilot? And not only did they take it off autopilot, but why are they saying they are going to wind it down so that we finish the reduction this year? ,,, Well, the only thing that changed is the stock market. They clearly came to the rescue of the stock market.”
Powell covered a number of other subjects during the 60 Minutes’ interview and made some questionable claims. He said, “our system is vastly more resilient and strong than it was before the financial crisis,” and that while we have not “repealed the business cycle,” … “I would say there’s no reason why this economy cannot continue to expand.”
Powell seems utterly oblivious to the fact that it is the very Fed policies he continues to promote that cause the business cycle.
As Peter has been saying, we are going down the exact same path we went down prior to the 2008 crash. In a recent debate with Louis Navellier, Peter reiterated that he thinks the Fed will be forced to cut rates and eventually relaunch quantitative easing. But this time around, it’s not going to work like it did in 2001 and 2008. It won’t be able to reinflate the bubbles.
I don’t think it’s going to be third time’s a charm. I think it’s going to be three strikes you’re out. I think when the Fed goes back to zero and goes back to quantitative easing, I think the bottom is going to drop out of the dollar, and that’s going to lead to a currency crisis and a sovereign debt crisis that’s going to be much worse than the financial crisis we had in ‘o8.”