Accusing The Fed Of Mispredicting, Economist Peter Schiff Believes A Recession Could Be Even Worse

Economist and gold observer, Peter Schiff. (Photo; Doc. Cryptonews)

JAKARTA - On Wednesday, July 25, economist and gold watcher, Peter Schiff, issued a series of warnings following the announcement of a 25 basis point interest rate increase by the Federal Reserve.

In response to Fed Chair Jerome Powell's statement that the Fed no longer predicts a recession for the US economy, Schiff emphasized that the Fed was wrong in its forecasts. He believed that a recession would happen and it would even become a full-blown recession. In addition, Schiff cautioned that the actual inflation rate was much higher than the government reported, even exceeding five percent.

Schiff also commented on Powell's remarks on rate cuts, stating that the Fed plans to cut rates even before inflation drops to 2%. According to him, this means big support for gold and is a negative signal for the dollar and Treasuries.

Despite the rise in interest rates, the Dow Jones Industrial Average closed higher for a 13th straight day, in its longest winning streak since 1987. Schiff cautioned that 1987 was a year that ended in bad news for the market, after investors initially shrugged it off. rising interest rates, depreciating dollar exchange rates, and growing budget and trade deficits.

Schiff suggested that in the current environment, the best investment is to own gold and dividend-paying stocks outside of the United States. He stressed getting out of the US dollar as its value continues to decline and its purchasing power decreases.

According to him, investments that are sensitive to inflation such as raw materials, energy, and agriculture will be profitable amid market conditions that have been surprised by higher inflation and higher-than-expected long-term interest rates.

Schiff has previously issued similar warnings to exit the US dollar and choose safer investments, such as gold. He also stated that the Federal Reserve had lost its war against inflation, but the market had yet to realize that. Under the current circumstances, he feels confident that the US dollar will decline further and fears a possible financial crisis.