Schiff on the Latest Rate Cut: Powell Should Listen to Greenspan

Peter joined Fox Business on Wednesday to comment on the Fed’s newest rate cut and analyze the central bank’s precarious position going into the holidays. As with the last rate cut, Peter criticizes loosening monetary policy when inflation is far from under control, and he explains why the bond market isn’t going to play nice with Powell and the FOMC.

To start, Peter highlights the laundry list of warnings the economy is sending to the Fed. Past Fed chairs, like Greenspan, at least knew when to listen:

First of all, I think the Fed stopped hiking rates prematurely so that was a mistake, and cutting them now is an even bigger mistake. Look, inflation is too high. It’s at least 50% above the Fed’s target and headed up. That calls for higher rates. Gold at $4,000 is screaming that the Fed is too loose, and it needs to hike rates. Back when Alan Greenspan was Fed chair, he said he used gold as a barometer of whether or not he had the right interest rate, and he said if gold was at $400 it meant he was too loose. So what does $4,000 mean?

Just like last time, lower short-term rates are going to counterintuitively lead to climbing long-term rates. The markets aren’t buying the Fed’s perspective: