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IPFS News Link • Federal Reserve

Peter Schiff: The Fed Is Losing The Inflation Fight

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The catalyst for that selloff was tough talk from several Federal Reserve officials and an increasing expectation that the central bank will raise rates again in June. As Peter Schiff explained in his podcast, everybody thinks the Fed is going to win the inflation fight because it is going to be even tougher. In reality, they are talking tougher because they are losing the fight.

On Thursday, Dallas Fed President Lorie Logan said she's concerned that "much too high" inflation is not cooling fast enough to allow the Fed to pause its interest-rate hike campaign in June.

The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren't there yet."

While the stock market shrugged off the tougher Fed talk, the dollar strengthened, gold fell and the short end of the bond market also sold off.

If the FOMC does raise rates next month, it will push the Fed funds rate to between 5.25 to 5.5%. As Peter pointed out, this would drive rates above the peak of the last cycle back in June 2006.

We will be above the interest rate level that precipitated the 2008 financial crisis and Great Recession. Except the difference is today that we have so much more debt than we did back then. Everybody has a lot more debt — the government, corporations, individuals. So, that level of interest will do far more damage today than it did in 2007. And we know how much damage it did then because we had the financial crisis of 2008. So, the financial crisis that has already begun in 2023 is going to be much worse than the one that we had in 2008."