Peter Schiff : Powell Admits Inflation Is Headed Much Higher

As expected, the Federal Reserve cut interest rates another 25 basis points on Wednesday. The mainstream read the post Federal Open Market Committee meeting comments to be relatively hawkish, saying Powell and Company seemed to indicate that future rate cutting is on pause. Peter Schiff opened up his podcast, reminding us that just one year ago, the Fed was raising rates and telling us it would continue to do so through 2019. It also claimed that quantitative tightening was on "autopilot." And they said this with a straight face. And everybody believed them." What Powell said: We will need to see a significant increase in inflation before we increase interest rates. What Powell insinuated: "That 5%+ inflation currently being experienced is just a figment of your imagination." What Powell's statement really means but can't say: "The global financial/banking system is wrecked, and we can't raise rates without catastrophic consequences." Welcome to The Atlantis Report. The Fed Slashes Interest Rates for 3rd Time - As expected, the Federal Reserve cut interest rates today. This is the third rate cut of this cycle. We're now down to 1.5%. But of course, what everybody has to remember is a year ago, when the Fed was hiking interest rates, the forecast from the Fed was that they were going to continue to increase rates. They were supposed to have another 3 or 4 rate hikes in 2019. And, of course, a year ago, as the Fed was hiking rates, they were still shrinking their balance sheet, and they were going to continue to shrink it. They were talking about auto-pilot. They were going to continue to do $50 billion/month of quantitative tightening. And they said this with a straight face. And everybody believed them. Not a Surprise to Me - Of course, everybody except me and maybe a few other people out there in the financial media. But I was telling anybody who would listen - which was not that many people in the mainstream, but certainly the people who listen to my podcasts, that none of this was going to happen. I said that the Fed was going to have to stop hiking rates, and that they would be cutting rates in 2019, and that not only were they going to prevent quantitative tightening, that they were going to have to go back to quantitative easing. And that's precisely where we are. A Distinction without a Difference - Although, Jerome Powell went out of his way - I think the first thing that he said when he made his prepared remarks - was to reassure everybody that what the Fed was doing now, with its repo program was not quantitative easing. He drew a distinction between what the Fed was doing when it was doing QE and what it is doing now when it is not doing QE. The main difference had to do with the maturities of the debt that the Fed was buying. He said that when they were doing QE, they were buying longer-term government bonds, but that now, they're buying shorter-term government bonds, and so, therefore, it's not QE. But this is really a distinction without a difference. At the time, Peter was saying it wasn't going to happen. He said the central bank would start cutting rates and relaunch QE. And here we are. The central bank removed the phrase saying it was committed to "act as appropriate to sustain the expansion" from its forward guidance. This was widely viewed as a more hawkish stance. The Fed replaced that language, instead of saying, "The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate." Powell was more emphatic during his press conference, saying bank officials "see the current stance of monetary policy as likely to remain appropriate." Of course, Powell again claimed that the Fed is not engaged in quantitative easing despite the repo operations and bond-buying program. He tried to draw a distinction between QE and today's actions by pointing out that the central bank is buying short-term bonds today while it bought longer-term debt during QE. This is really a distinction without a difference. I mean, who cares what the maturity of the bonds is?" If the Fed was going to simply let the bonds fall off the books once they matured, the length of the term might be relevant. But Peter said that's not what's going to happen. They're just going to keep rolling these bonds over. This is another source of financing of the Fed financing government debt. That's quantitative easing. I mean, why did the Federal Reserve do QE in the first place? To keep interest rates lower than they would have been had, they not done quantitative easing. And, by extension, to prop up asset prices." And why is the Fed doing what it's doing today? For the exact same reason. To keep interest rates artificially low, to suppress the cost of borrowing, to help out all debtors so they can make payments on their debt and to keep the stock market elevated, to hold real estate prices elevated." We also got the GDP numbers on Wednesday. Growth came in at 1.9%. That was better than expected. But a big chunk of that growth was consumer spending and a revived housing market. This was a function of Fed policy. The Federal Reserve is basically doing now what it was doing then, for the same reason, it was doing it then, except it doesn't want to admit. Powell doesn't want to say that the Fed is doing quantitative easing. The main reason is he doesn't want to accept the economy needs it." In fact, Powell keeps saying the economy is good. Well, if everything is okay, why do we need the emergency monetary policy when everything wasn't right? When we were trying to get the economy out of a wrong place, we did QE. And if it's now in a right place, why are we doing it again? So, that's why he wants to deny he's doing it." When asked, Powell did admit that the current monetary policy as "accommodative." Peter said it might even be more accommodative than it was when rates were at zero because inflation is higher. In fact. Powell admitted core CPI is finally above 2%. So, if inflation, even as the government measure it is above 2% and the Fed just dropped rates to 1.5%, we're talking about negative real interest rates. That is highly accommodative. I mean, why would the Fed be accommodating the most robust economy in the history of our country? Clearly, the reason Powell thinks we need so much support from the Fed is that he knows the economy is weak, that without the Fed's help, it would implode. A strong economy doesn't need the help of the Fed." Peter also talked about the fact that the Fed basically admitted that inflation is going to go a whole lot higher. Powell said the Fed would need to see a "really significant" and persistent move up in inflation before considering rate hikes. Basically, Powell conceded that the Fed wasn't going to be vigilant about inflation. It is willing to let the genie out of the bottle. The question then becomes, how will it ever get the inflation genie back in the bottle? In short, it won't. Think about what it took for Paul Volker to put the inflation genie back in the bottle in the 1980s. We saw 20% interest rates. Can you imagine that in this debt-riddled, overleveraged economy? The only key is when is the market going to wake up to this game, this con. When are they going to realize the box the Fed has put itself in? That it is completely impotent when it comes to inflation-fighting? That it is all bark and no bite, and it basically, it's not even barking yet? It's only talking about the prospect of barking in the future, but it will never bite. And when the markets figure this out, the bottom is going to drop out of the dollar. Gold is going to go through the roof absolutely." Schiff also says, “I think gold is undervalued relative to where it should be because so many people have too much confidence in central banks and fiat money. They don’t realize they need to own gold. I think they are going to come to that epiphany soon, and when they do, the price of gold is going to explode. . . .Gold is going to be money again. There is no question in my mind that is going to happen.” Peter Schiff also predicts President Trump will not get re-elected but not because of impeachment, but the failing economy. Schiff says, “The trade deficits are bigger than they have ever been. They are bigger than they were under Obama. Manufacturing is already in recession, and it will be deeper in recession by the time the election comes. The numbers are the worst they have been since 2009. Most blue collar voters who voted for Trump in 2016 will be worse off in 2020. They will have more debt, and they will have lower real wages if they even have jobs. Now, who are they going to take a chance on, some socialist Democrat who is promising to punish the rich and take their money and give it to them?” It's so crystal clear: Powell has no idea - he is a mere pawn. Those most responsible for getting us to this point know the whole system will implode but don't care when: they are insulated - tails they win, heads you lose. They obviously prefer for things to go on as 'normal' for as long as possible, but they have farmed us for so long, they know how to wait out the storm, rinse and repeat. They rely on one inexhaustible human trait: greed. There will always be patsys who will work like dogs, sacrifice anything, even their souls, to climb the greasy pole of the rigged system. These sociopaths are the hired guns, the enforcers that shield the elite and keep the rest of us in line. There is too much corruption that will never be addressed (tried & sent to prison ) that I doubt America will ever return to the greatness we once were. The things we once were great at were off shored & are not coming back. I don't see the corrupt Mainstream media changing because they are all one & the same corrupt mind – belief & thought process & just like banking they live for fraud & swindles & subversion Peter Schiff is the best place for accurate, real-world economic information from a free-market perspective. Everyone should listen to his podcasts. Peter Schiff is a man ahead of his time. He foresaw the last major crisis, and after he is proven right again on a much bigger mess that is coming, his name will become a household word. Anyone who makes as many predictions as he does from week to week is undoubtedly going to be wrong on some of the more minor details, but his general message is going to be born out, as it was in 2008. He has been a force for good, exposing scam artists, and he is a voice for Liberty. God bless Peter Schiff.







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