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Euro Pacific Capital CEO Peter Schiff on the outlook for the economy and inflation and what the Federal Reserve will do next.
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The Fed says we're done announcing today they'll be suspending the three year long campaign to rescue the economy with quantitative easing.
This is Ben Bernanke and company lowered their forecasts for economic growth joining me now a man who says QE3 is all but certain and going to fail to.
Peter -- CEO of Euro Pacific Capital and the author of how an economy grows and why -- crashes Peter great to see you again.
-- -- Are -- -- have run a comment for Bernanke and they get you to comment.
The most blew me away with this shot on headwinds listen to this.
We don't have a precise read on why.
This.
Slower pace of growth is is persisting.
One way to think about it is that.
May be some of the headwinds that have been concerning us like.
You know weakness in the financial sector.
Problems in the housing sector balance sheets and deleveraging -- some of these headwinds may be.
Stronger more persistent than we thought.
So -- how is it that the that the head of the Federal Reserve the top money guy in Washington doesn't know why the economy is slowing down.
Yeah he he doesn't have a a good a read on anything in fact historically.
Ben Bernanke is probably one of the most reliable contrary indicators in that whatever he thinks is gonna happen.
The opposite will come true and you know I think his current forecasts -- on the US economy are not gonna be the exception to that rule I think that.
-- -- is going to be a lot weaker that he thinks unemployment is gonna be higher and more importantly inflation is going to be a lot higher.
And I wish -- -- somebody at that press conference would have been astute enough to ask him.
What the Fed's policy response would be if unemployment gets worse but inflation continues to move above its target what's the Fed gonna do then.
Well I want to show our viewers here a chart of the Fed Funds rate and inflation inflation is on fire right now consumers.
Really getting hammered and you mentioned that boy what happens if if the job -- continues tire we get inflation to stagflation.
What is the solution and are you convinced that the Federal Reserve can do anything about it.
Well the Fed is there that is responsible for -- quantitative easing it easing is by definition inflation its printing money monetizing debt.
That was the feds been doing I mean are -- economy is overdosing.
On quantitative easing but I think we're gonna do it again because that's all the Fed knows now it might not label it quantitative easing but you know quantitative easing by any other name is get a state just as bad.
And and that's what he's gonna do and proof that he's lied if you if you listen to what he said at this a press conference.
He said that he thought that oil prices would fall and that falling oil prices would bring down the core CPI.
Now a few months ago when oil prices were rising.
He said that rising oil prices we're gonna bring down the core CPI because he said that people will spend more money on oil.
And therefore they'll have less -- to spend on things in the core so he's he's he's got it both ways I mean what's next.
You know it's a stable oil price is -- prices going sideways that's also gonna bring down the core CPI.
We need -- you -- heater could not lying is -- is possible he doesn't know.
And that's really the more frightening scenario you're -- -- doesn't know the -- -- -- -- quite well.
Either he's a liar he's ignorant -- mean those are two possibilities but the guy got a sixteen -- not as SATs that's a lot higher than I got your.
He really has -- let me tell you.
Being able to predict this economy as a very tough thing and it's frightening name to made at some well smartest people who know the most about in downturns in the economy -- not find -- well Asian.
-- may be it's tough for Ben Bernanke as he doesn't understand basic economic but there are a lot of people understand Austrian economics like me.
Are pretty -- the economy is actually quite easy the problem is he's trying to find directions with a broken caucuses compasses always -- -- -- so he never -- at the right conclusion but you know I think that.
I give a little bit more credit I think he he kinda knows if you if you and you played that clip.
He stammering he starters when he talks he looks very nervous to me he looks like a god is hiding something.
When you re establish a find out he's not a slick is New York theater are right is that they don't -- about -- that I want is being honest.
I know we are.
-- -- about Mohamed Al -- -- today the head of Pimco very important guy says that the war he runs the world's biggest bond fund predicts that Greece would fall.
Default on its debt.
Greece is done do you agree.
Well in Greece -- restructure its debt that's the right thing to happen.
And without a bailout that is exactly what's going to happen there's no way Greece can repay its bills just like there's no way America can repay its analyst.
But I have a feeling that there might be a bailout coming for Greece because I think the European politicians will make the same mistakes is American politicians that they're all the other all trying to get reelected nobody cares what they -- to that to their countries but I think the bigger issue people keep saying.
Is America the next Greece I think Greece is just the first America Greece is just a smaller version of us.
And I think once the world stops you know focusing on the problems in Europe.
They're gonna then focus on the much bigger problems here in United States are we the next Greece.
What is that there there there there first US where the real deal they're just -- the warm up.
Now boy.
You have to be happier if there's something going wrong in your life -- getting and you -- happy pill or something theater.
Well you know I'm not happy about what's happening in my country but I'm happy to have the opportunity to at least explain -- -- the truth a good to your audience.
I think it's a good way to state it thanks for coming on appreciate your time -- -- thank you Peter.
Are.
