"Fed rate cut is an economic disaster": Peter Schiff
The gold-promoting economist thinks that "the game is over for the Fed" and that the measure will not save the United States from a recession.
He highlights the fall of the dollar and the rise of gold as the main effects of the measure.
He fears that the Fed's policy will generate a new rise in inflation. After learning of the interest rate cut measure announced by the Federal Reserve (Fed), the American economist Peter Schiff announces a gloomy future for the United States economy.
Schiff explained his position through a message on X with which he warned of a deeper recession and growing inflation that - in his opinion - will put the United States government in check. As expected, the Federal Reserve gave in to the markets and reduced the interest rate by 50 basis points," he wrote. He added that this level of cut will not prevent problems from re-emerging, especially "in an economy that is just cooling down."
The economist believes that the Fed's measure is a mistake in monetary policy, since rate cuts usually imply a return to what is known as "quantitative easing" (QE). This defines a series of economic measures that seek greater liquidity by encouraging greater spending by the private sector and facilitating access to credit from the banking system. This includes cutting interest rates.
"Analysts who claim that the stock market is not discounting a recession because it is trading near historic highs still do not understand it," he commented before pointing out that investors know that although quantitative easing usually generates increases in the markets, it is an indicator of recession.
