Schiff on Palisades Gold Radio: Fed Returns to QE While Metals Climb

Last week, Peter joined Palisades Gold Radio to argue that the recent Fed moves mark a return to balance-sheet expansion and that the implications for bonds, the dollar, and precious metals are profound. He walks listeners through the mechanics of what the Fed is doing, the risks of yield-curve pressure, why he thinks the current gold rally is only beginning, and how an ever-growing debt burden compounds the problem.

He starts by saying the headline rate cut misses the real story: the Fed quietly resumed quantitative easing and is expanding its balance sheet again, which changes the policy landscape and market incentives:

Well, more significant than the rate cut was the announcement that we’re basically back to quantitative easing. Now, the Federal Reserve didn’t officially say what they’re doing is a new QE program, but that’s exactly what it is. The Fed announced that it’s going to purchase $40 billion worth of T-bills over the next month to expand its balance sheet, and that on an ongoing basis, it’s going to continue to buy T-bills to continue to grow the balance sheet. So it just stopped quantitative tightening. And as soon as it stopped, it went right into quantitative easing.

He then warns listeners about the next phase of the Fed’s playbook: rate cuts only control the short end, but pressure on long-term yields could force a form of yield-curve control that’s dangerous for bondholders and for savers: