Friday, January 31, 2014

Another Slipshod Prediction from Peter Schiff

If rates of consumer price increase actually start rising enough to move the official CPI gauges, as Peter Schiff has long been predicting, then the Fed will not only have to continue tapering but also start raising rates. Major inflationary episodes are associated with rising rates. In the late 1970s, the Fed repeatedly raised its benchmark lending rate until Paul Volcker finally got ahead of rising consumer-price inflation by jacking up the effective Federal Funds rate to 20% by 1981. 

Implicit in Peter's call for more monetary loosening is an expectation that the CPI won't rise above the Fed's target of 2%-2.5%.

The Fed began tapering in spite of Peter's prediction (November 18, 2013) that it wouldn't. If the Fed continues to taper this year and doesn't reverse course as he's now predicting, then I'd suggest it's time for Peter to get out of the prognostication industry. And if he doesn't, then everyone reading this should just stop paying attention to his predictions.


  1. What makes you think that the government is honest about the CPI? Watch Peter's video about actual costs of things over the years vs. what the CPI reports. There's evidence that inflation is much higher than they admit.

  2. Yes, the CPI has been fudged for decades and so are the unemployment figures. As Mark Twain said, "there lies, damned lies, and statistics." For years the Soviets produced statistics that demonstrated the productivity of their wretched economy. Anyway, the Fed's money printing have not produced hyperinflation because the central bank is still paying banks to not to lend money. QE has coincided with a spike in bank reserves at the Fed. This is quite an anomaly because historically banks have preferred to lend to fullest extent of their reserve requirements in order to earn interest on the money they create out of thin air. As far Peter Schif's predictions, he is not a mind reader. The problem with Federal Reserve system is that puts decisions that should be left to marketplace into the hands of fallible and corruptible human beings. Interest rates should be determined by the market ie savings rates not a monetary politburo. Anyway, the tapering off announced by the Fed is probably just more smoke and mirrors. Who knows what these crooks are doing behind the scene. We still don't know how much money they created since 2008 to bail out the international banksters.

  3. I too have grown weary of self promoters like Schiff, but in fairness, the inflation really IS being exported to other nations, and will eventually be reality here, as faith in the dollar continues to decline.

  4. Hard to see how inflation can be exported. American dollars chase American goods, even when they're in the hands of foreigners.

    1. How can that be true while America has a huge trade deficit?

  5. Petrodollars. With oil sales denominated in greenbacks, foreign countries are forced to accumulate dollars in their central bank which they then pyramid their own currencies hence inflation. Of course we have inflation at home but it is much lower than otherwise would be the case. The US Treasury also has a sweetheart deal with the Saudis whereby they recycle their petrodollars in USG bond purchases and military hardware. All the parties profit. The Saudi royal family stays in power and Uncle Sam can continue it spendthrift ways.

  6. Peter Schiff you shard a great inspirational video with us. thanks for sharing with us.