Name: This Is Where the U.S. Economy Is Headed
Uploaded: 2016-05-13
Duration: 3 min 14 s
Description: Peter Schiff, CEO of Euro Pacific Capital

All right, Steve Gandel here from Fortune Magazine. I'm here with Peter Schiff, CEO of Euro Pacific Capital, renowned economist. Tell me what's gonna happen to the economy now. What do you think, where are we? Continue to expand or headed for recession? Well I think we're probably already in a recession, not just headed for one. And I think the recession that's just begun is actually going to be greater than what we're now calling the Great Recession. So we might have to rename that one because this one is going to be worse. And if you thought the expansion was bad, wait until you get a load of this next recession, because this was the weakest expansion in the history of expansions. Now, I should say You have typically been bearish. You were right on call in the financial crisis. You've been bearish for a little while. Why are you bearish now versus two years ago? Well, because it's all part of the same problem. The reason I'm bearish now is the same reason I was bearish then. All the problems that led to the financial crisis of 2008 that I correctly understood in advance None of those problems have been solved. In fact, every one of those problems have been exacerbated by the very institution, the Federal Reserve, that caused them in the first place. So it's because I understood what the Fed did wrong, that's why I've been [ UNKNOWN ]. It's all the people who were surprised by the financial crisis, because they never understood the problem. They're the ones that think the problems' been solved even though they've been exacerbated. What will the fed do now, and what should the fed do now? Well unfortunately, what they will do is more of the same. I think they are going to abort the tightening campaign. I think that it was one and done. And the next move by the fed is to reduce rates to zero. They may even go below zero. We will see. I think they're going to reintroduce the quantitative easing program, QE4. I think that's going to cause the balance sheet, which is now about four and a half trillion, to skyrocket to new levels. But they're just doubling down on the same mistakes. But I think this is going to be the end of it. I think this is going to be the overdose of stimulus. You know, this is all like a drug, it's like monetary heroin. Well, like any drug, eventually if you take too much of it, you can die of an overdose. And that's where I think we are. We're on the verge of an overdose. And what's going to die is going to be the US dollar. But the market doesn't see this coming, right? I mean, Wall Street isn't predicting this? No. They were oblivious last time. And they're just as oblivious now. They're all positioned wrong. Why do you think this year is already starting off That's probably the worst year in the last 18 for hedge funds, because they have no idea what's gonna go on. Just like they were surprised by the O8. Now they were a few people that got that right and they made some money. And there were a few people that are get it right this time. But the vast majority has no idea what's about to happen, especially the FED. Because if you remember, Janet Yellen. When she was at the Fed and she was in San Francisco during the housing bubble in 2005, 2006, she was as clueless as anybody. She said there was no housing bubble. Anybody who thought there was didn't know what they were talking about. And she said, even if she was wrong and housing prices went down, which she did not expect, it wasn't even gonna hurt the economy. So this is who's running the Fed. And she's just as oblivious to the real state of the economy today, as she was in 2005 and 2006, when she was a big cheerleader. Right, so okay, so if we head into a rough patch, we'll be able to say you saw it coming? I did, and it's not gonna just be a rough patch, this is the quick sand of rough factors. Thanks Bert, thanks for doing this. Thanks for talking to us. Sure.

Peter Schiff, CEO of Euro Pacific Capital