Peter Schiff sees a disaster in the making, and given his track record of correctly forecasting the 2008 financial crisis, a credit crisis, he could be bang on the money.
Peter Schiff warned about an imminent subprime mortgage crisis back in 2006 to 2007 at a time when most were ridiculing him.
Most financial and economic crises have their roots in the debt market and, with public deficits of nearly all G7 economies taking a moon shot, financed with central bank money creation and artificial low-interest rates, a sizable debt crisis is brewing.
“Peter Schiff warned about an imminent subprime mortgage crisis back in 2006 to 2007 at a time when most were ridiculing him”
WEALTH TRAINING COMPANY
Waning confidence in sovereign debt as supply exceeds investors’ demand is why Peter Schiff sees a disaster in the making
As a partial US government shutdown plays out, it likely ends with the Fed creating more currency so the government can remain solvent and pay the bills.
So a bloated, unproductive public sector economy kept on life support of cheap finance is sending shivers up bond investors’ spines.
The end game is a hyperinflationary depression or a deflationary depression, which is why Peter sees a disaster in the making
But hyperinflation would be the nuclear detonation in the multi-trillion dollar treasury market and the meltdown of the USD, reserve currency and US hegemony.
“a bloated, unproductive public sector economy kept on life support of cheap finance is sending shivers up bond investors’ spines”
WEALTH TRAINING COMPANY
Peter Schiff sees a disaster in the making, with the pain falling mainly on households and businesses
“Some animals are more equal than others,” George Orwell.
Our fifty cents worth is that financial policymakers will maintain their chokehold on the economy with restrictive monetary policy until they get inflation to where they want it, even if it means a deflationary depression.
If that call is correct, then treasuries could be in deep discount territory, the best-performing asset going forward.
Meanwhile, the Fed implements selective easing with the banks getting emergency funding at preferential rates to prevent a bank panic.
Moreover, the federal government gets cashed up again to pay the bills.
“Fast forward, mortgage rates are approaching 8%, and the average credit card interest rate is close to 21%” – Wealth Training Company
Peter Schiff sees a disaster in the making and sees no beautiful deleveraging
“In a nutshell, the economy is buried under trillions in debt. The cost of the debt is rising. The economy simply isn’t built to handle an even moderately high-interest rate environment,” he said.
What is going to push us over the edge, according to Peter Schiff?
The rise in interest rates as the bond market continues to collapse.
But the Fed can halt rising yields as they please with QE:
Bond yields are now at the highest level since before the 2008 financial crisis, with the yield on the 10-year Treasury approaching 5% (currently 4.56%). The last time it was that high was in 2001.
There is one big difference between then and now. In 2001, the national debt was $3.3 trillion. Today, it is over $33 trillion.
We have a lot more debt now than we had back then. So, this is a much bigger problem.” governments, municipalities — they’ve all issued a tremendous amount of debt over the last 15 years.”
It is all by design, which is why Peter Schiff sees a disaster in the making
The central bank wanted to stimulate the economy. With that goal in mind, they held interest rates close to zero for nearly 15 years. People were incentivized to borrow and spend. So, they took advantage of the cheap money and levered up. Fast forward, mortgage rates are approaching 8%, and the average credit card interest rate is close to 21%.
