The Monetary Roach Motel

In August, Peter Schiff was a guest speaker at The Jackson Hole Summit, a gathering of free-market activists warning of the dangers of overreaching central banks and irresponsible monetary policies. The Summit coincided with the official central bank conference held every year in Wyoming.

Peter’s speech was titled “Monetary Roach Motel: There Is No Exit from the Fed’s Stimulus”, and he reprised his consistent message of how the Federal Reserve created the economic problems it is pretending to solve. Peter also spent some time exposing Janet Yellen’s terrible track record as an economic forecaster.

Highlights from the speech:

“I’ve been saying for years that the Fed has been bluffing about raising interest rates, because the Fed wants to pretend that its policies were a success. If it raises interest rates, it will prove that they were a failure… When the financial crisis took just about everybody by surprise, the conventional wisdom was, ‘Okay, the US economy has been crippled by this crisis, and we need the Fed to save us, to provide us with some kind of crutches that we would use temporarily until we got over the pain.’ Of course, that puts aside the fact that it was the Fed that crippled us in the first place, but everybody thought that the Fed was going to save us. What were the crutches that were supposedly going to help us? One was zero percent interest rates. And the other was quantitative easing…

“They didn’t give us crutches. What the Fed did was knock the legs out from under the economy. They severed our actual legs and replaced them with these prosthetics of quantitative easing and zero percent interest rates. If the Fed takes those away, the stump of the economy is going to come collapsing down…

“You have two camps. You have people who think the Fed should raise interest rates right now: ‘The economy is strong enough, let’s raise rates.’ Then you have the other camp that says, ‘No, no, no. The economy needs more help. It’s not quite strong enough yet. We need to keep interest rates at zero.’ Both camps are wrong. The Fed needs to raise interest rates right now. Not because the economy can take it, but because it can’t. Again, it is a bubble that needs to be popped. The sooner we pop it, the better…The Fed didn’t save us from the financial crisis. They simply interrupted it…

“If she [Janet Yellen] couldn’t see [the housing bubble] crisis coming, why would anybody expect her vision to be any better now? The truth of the matter is the last crisis was created by the Fed. And so is this one. They’ve created it by doing the exact same thing…

“Janet Yellen actually said, ‘We are going to shrink the balance sheet down to $1 trillion by the end of the decade.’ Yeah, good luck with that. It hasn’t shrunk at all since she made that promise about a year ago… How are you going to raise interest rates now that you’re so addicted? How much more debt do we have today than we had seven years ago? How much painful is it going to be to try to service that debt if interest rates go up? The truth of the matter is interest rates have to stay at zero, because that’s all we can afford…

“2015 is probably going to be the slowest year of GDP growth of the entire so-called recovery. And interest rates have been at zero for the entire year… A lot of the [economic] numbers coming out are so bad that we haven’t seen numbers this low outside of a recession. Remember, the Great Recession, which began in December 2007 – I was doing TV shows, debates with people in mid-2008 about whether we were heading into a recession. We were already in one. And most people thought there was none on the horizon, including the Federal Reserve…”

Reprinted from SchiffGold.com.