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Economist Peter Schiff Warns Fed Action Could Lead to Market Crashes, Massive Financial Crisis, Severe Recession

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Gold bug and economist Peter Schiff says there are two possible outcomes of the Federal Reserve’s action on the U.S. economy. One outcome leads to “a massive financial crisis and severe recession” as stocks, bonds, and real estate crash. In the second outcome, “the world will run away from the dollar,” the economist stressed.

Peter Schiff on U.S. Economy: Two Possible Outcomes

Gold bug and economist Peter Schiff continued to share his view on the U.S. economy and the Federal Reserve’s efforts to bring down inflation this week. Regarding where the U.S. economy is headed, he tweeted Saturday that “There are two possible outcomes.” Describing one of the outcomes, he detailed:

The Fed succeeds in returning inflation to 2%. Stocks, bonds, and real estate all crash, ushering in a massive financial crisis and severe recession that includes government defaults & spending cuts.

Moving on to discuss the second outcome, he wrote: “Or the Fed pivots before inflation returns to 2%. If the Fed pivots, either to avert a financial crisis, or in reaction to one, inflation will soar, the opposite of what was experienced after the 2008 financial crisis. This time instead of running toward the dollar, the world will run away from the dollar.”

Schiff also tweeted Friday: “Everyone knows about the high inflation of the 1970s that didn’t end until Volcker got serious in the early 1980s. But during the ten years from 1982-1992, the average annual CPI rise was 4.43%. The Fed didn’t get inflation back down to 2% until after the 2008 financial crisis.”

The gold bug regularly comments on the state of the U.S. economy on social media. In September, he cautioned: “Inflation is here to stay, and will get much worse despite rate hikes, due to over a decade of inflationary monetary and fiscal policy. This is very bearish for the dollar and bullish for gold.” Schiff noted: “The days of sub-2% inflation are gone.”

Moreover, he emphasized in August that the U.S. is facing a “massive financial crisis” that “is going to be a much bigger crisis when the defaults start.” In May, he warned about an economic downturn in the U.S. that “will be much worse than the Great Recession.”

Schiff recently settled with Puerto Rico’s financial regulator and agreed to liquidate his Euro Pacific Bank without admitting to any legal wrongdoing.

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Do you agree with Peter Schiff about the U.S. economy? Which outcome do you think is more likely? Let us know in the comments section below.

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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.




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