Peter Schiff, no one rings a bell view, meaning there is no warning when there is a top or bottom in the markets or when the fight is over, was put forward in his latest podcast.

“Last week we got the mother of all bells coming from England,” Peter Schiff.

Peter Schiff was not referring to Big Ben but the Bank Of England’s swift pivot from easing to tightening. 

Peter Schiff’s no one rings a bell view refers to the Bank of England throwing in the towel

So the BoE calculated that remaining in the inflation ring would have led to more serious consequences. 

“It gave up its inflation fight to rescue its pension funds and bond market,” said Peter Schiff.

“The Bank of England was the first major central bank to blink in this global game of chicken,” he said. 

Peter Schiff referred to the BoE move to QE as “very significant.” 

“Last week we got the mother of all bells coming from England”

PETER SCHIFF

The double speak of central bankers underscores Peter Schiff’s no one rings a bell view

The QE bell was wrung but was drowned out by the central bank’s doublespeak.  

“Up until the announcement, Bank of England Governor Andrew Bailey was just as hawkish as Jerome Powell. The Bank of England raised interest rates from 0.1% last December to roughly 2.25%, including a 50 basis point rate hike in August. It was the largest BoE rate hike in 27 years,” said Peter Schiff. 

“He was talking tough about how resolute the Bank of England was to fight inflation. They’ve got the highest inflation in Europe. It’s way above their 2% target. It’s a double-digit number. It’s above 10%.”

Bailey even said he was committed to bringing down inflation no matter the cost, and said he was willing to endure some pain, just like Jerome Powell.

Well, that was all a bluff because we got some pain overnight, and Bailey folded like a cheap suit

And instead of quantitative tightening, they’re back to quantitative easing. The rate hikes are probably permanently on hold because the Bank of England refused to allow a potential crisis to unfold as a result of rising interest rates,” he said. 

“Up until the announcement, Bank of England Governor Andrew Bailey was just as hawkish as Jerome Powell”

PETER SCHIFF

Peter Schiff explained that the BoE faced a systemic crisis, an illiquid bond market, insolvent pension funds, and a collapsing GBP.   

Peter Schiff explained to top up the collateral on these bonds with some funds needing to raise cash. But due to the speed of this crisis, many funds were caught out and forced to liquidate their most liquid assets, long-term bonds or gilts, causing prices of bonds to fall even more.

Peter Schiff no one rings a bell view means not to expect policymakers to flag trouble ahead.

So to stabilize bond prices, the BoE stepped in to buy long-term bonds, creating artificial demand and propping up prices, thereby suppressing yields. 

“In simple terms, instead of raising pension contributions or cutting pension benefits to deal with their shortfalls, pension managers took the easy but reckless way out and borrowed money” – Peter Schiff

“This pension problem isn’t exclusive to the United Kingdom.

Pension systems worldwide face the same issue, including in the United States

When interest rates fall to zero, bond holdings in pension funds don’t generate as much interest income. Pensions need this income to pay benefits. So, to boost their income, pension funds borrow money at low-interest rates to buy new long-term bonds using existing bonds as collateral. They make up for lower yields by holding more bonds.

But when interest rates rise, the value of their bond portfolio collapses even as the interest on their debt rises,” he said. 

“All of the pension funds that had borrowed short, to buy long-term bonds were getting crushed because the value of the bonds they owned was collapsing, and the cost of servicing the debt was soaring, and they were in a position where they were going to get margin calls. Those margin calls were going to force an already collapsing bond market to fall even more, and that would have wreaked havoc throughout the United Kingdom,” said Peter Schiff.

Peter Schiff no one rings a bell view is a wakeup call, highlighting the precarious state of pensions

“In simple terms, instead of raising pension contributions or cutting pension benefits to deal with their shortfalls, pension managers took the easy but reckless way out and borrowed money.

On top of that, the newly elected British prime minister rewarded voters with a big tax cut that threw even more gasoline on the inflationary fire.

Great Britain was looking at a potential crash in the bond market, and the Bank of England rode in to save the day,” he said. 

“The Federal Reserve is also bluffing. It’s only a matter of time before their bluff gets called” – Peter Schiff

“The Bank of England folded. They pivoted. They decided to launch a new QE program. Remember, yesterday they were committed to quantitative tightening. Now they said they will buy whatever it takes,” added Peter Schiff. 

Here comes the crux to Peter Schiff no one rings a bell view;

“You can’t fight inflation and maintain an orderly market because the markets have been propped up by inflation. So, if you’re going to fight inflation, you’d better be prepared for a disorderly market. And until yesterday, the Bank of England was bluffing that they were. But now that their bluff has been called, they have to show their cards, and they’re holding nothing. And so, inflation won,” said Peter Schiff. 

The Federal Reserve is also bluffing. It’s only a matter of time before their bluff gets called,” he added.

Peter Schiff said he expects Jerome Powell to make the same decision as Andrew Bailey.

“I don’t care how much he wants to bark about being tough on inflation. At the end of the day, he will not bite. The Fed is a paper tiger and it will fold just as quickly as the Bank of England when they’re confronted with an actual crisis,” he added.

So if a collapse happens it will not be when central banks do QT but rather QE. They’ll announce QE X billion per month, and the market will sink, then QE 2X billion and QE 3X the market will keep sinking.