Economist and gold bug Peter Schiff has issued a stark warning that the Federal Reserve is on the verge of repeating past policy mistakes. He explained that the Fed's expected actions, particularly rate cuts, "will be followed by a return to QE, another repeat of the mistake that will create more debt and send consumer prices soaring." "This will crush the dollar and reignite inflation," Schiff warned.

Peter Schiff warns that Federal Reserve policies will crush the dollar and rekindle inflation

Economist and gold bug Peter Schiff has been sharply critical of the Federal Reserve’s upcoming policy moves this week, focusing on the expected interest rate cut and the possibility of a return to quantitative easing (QE). On Monday, Schiff stated on X:

''The Fed is about to prove that it has learned nothing from its past mistakes. On Wednesday, it will cut interest rates even though they are still too low. Next up is the return of QE, another repeat of the mistake that will create more debt and send consumer prices soaring.''

He argues that as the dollar falls, US debt will become easier to repay, but the increase in the supply of dollars will shift the trade deficit to asset purchases rather than Treasury bonds.

Schiff continued by addressing the practical impact of these policies on borrowers, particularly in the mortgage market. “It’s unlikely that the upcoming rate cuts will actually lower interest rates for most borrowers. Mortgage rates, for example, have likely bottomed out and are headed higher. The Fed will return to QE to try to stem the rise,” he explained in a follow-up post on X, predicting:

''This will crush the dollar and fuel inflation.''

Schiff also pointed out that these measures could fuel a broader economic slowdown, as seen in the falling value of the dollar, which could trigger a major spike in commodity prices and increase inflationary pressures in the coming years.