Many analysts link the recent record of the Wall Street Dow Jones index with optimism for a vaccine against COVID-19 and the transition of government in the US. However, US economist Peter Schiff assures that the rally is due only to the “villainous” actions of the Fed and predicts a “gloomy economic future” for the US.
Wall Street’s broadest stock indicator, the Dow Jones Industrial Average, crossed the historic level of 30,000 points for the first time on November 24.
Although many analysts linked the big rally to optimism for COVID-19 vaccine trials and white house consent to the U.S. government transition, Schiff said in his podcast that the real reason the market went up is the Federal Reserve.
According to the American economist, the real villain is the Fed and “must be responsible for the consequences of the explosion of the bubble it inflates.”
Schiff explained that with lower demand for US Treasury bonds, the buyer will be the Federal Reserve.
“Treasury is going to sell its debt directly to the Federal Reserve because the Federal Reserve is the only one fool enough to buy it,” said the economic analyst.
In comments to Sputnik, Peter Schiff opined that Democrat Joe Biden’s presidency in the United States is not going to change anything in economic terms for the country.
“To fix America’s economy, Biden needs to substantially reduce government spending, cut regulations, revoke Obamacare, reform rights, and restructure national debt. The Fed needs to lower its balance sheet and raise interest rates. Since none of this will happen, the short-term future for the US economy is bleak,” he said in statements to the agency.
Meanwhile, the coronavirus, according to the economist, is not the problem of the economy, but “the stimulus of the Federal Reserve and the printing of money that is making the economy sick.” And the coronavirus vaccine is not going to change it, he said.
“The Federal Reserve will follow the same misguided monetary policy going forward as it did in the past, regardless of what happens with COVID-19. It will continue to make the same mistakes until a US dollar crisis finally forces them to stop,” Schiff said.
According to the analyst, the real burden on the economy is not COVID-19, but all the debt that the economy accumulated as the Federal Reserve tried to fight this infection.
“Even after the disease goes away, the cure is going to last and it is going to continue to hurt because we have accumulated all this extra debt, because the balance of the Federal Reserve is now much larger because the stock market bubble is so much bigger because the housing bubble has taken on new strength,” Schiff said on his podcast.
And of course, “the US economy is going to be less efficient in this post-COVID world as US companies still have to cover the costs of being able to prepare for the next shutdown or the next virus to emerge,” added.
The Federal Reserve currently holds a record percentage of America’s debt.
Last week, Fed data showed another $ 67.7 billion added to the balance sheet. It is now at $ 7.243 trillion. Meanwhile, the money supply increased by $ 172.4 billion, notes the schiffgold website.
“That’s why the US dollar is so weak. And it’s going to get a lot weaker. (…) So, if you hide in U.S. Treasury bonds, you’ll be destroyed. That’s not a safe haven. The real safe haven would be real money, which would be gold,” concluded Peter Schiff.