Peter Schiff has been saying that even though the stock market is on a slow downward slide, the biggest problem is actually in the bond market. Last week, Schiff warned us to be wary of the calm before the storm, and this week, he said most, including the Federal Reserve, are oblivious to the upcoming crash, according to zerohedge.com.
The yield curve is flattening, we can see we are in similar situation (if we count interest rates of bonds 10y – 2y Treasury) we can check on the picture.
Just consider the deficits as well. The federal government is running 100 billion USD per month budget deficits – and this is during a supposed economic expansion. What’s going to happen when we hit a recession? And of course, rising interest rates just compound the problem. As Treasuries come due, the government has to replace them with higher interest rate bonds. This expands the deficit even further, according to zerohedge.com.
Also compounding the problem is the money printing scheme the Federal Reserve has taken to. Why in the world would any rational person assume inflation will remain low?
Schiff then discussed Minneapolis Fed President Neel Kashkari, who said they (the elite globalists that run the Federal Reserve) can’t find any signs of an impending crisis. He said there are no warning signs at all.
“Well, of course, that’s exactly what they said in 2007 and 2008. In fact, even when there was the mother of all warning signs – the crash of the subprime market – the Fed looked at that and said, ‘That’s nothing. It’s contained.’ We’re not worried about that.’ So the Fed has already proved when it comes to warning signs and seeing them in advance, they’re like Mr. Magoo. They have no idea what’s going on. And in fact, just like Mr. Magoo, they create all kinds of havoc all around them as they blindly move through the economy having no idea what’s going on, and there’s just all kinds of carnage.We are headed for a massive financial crisis.”
When we look at the fact of bonds become a big problem, which can cause a big crisis, we need to think about the possibility of respond „everything is alright “. The biggest bankers and analytics surely know about this issue, but they don’t want to spread a panic, because it could have some horrible consequences.
Schiff has yet to change his mind: we are headed for some major problems in the economy and most are unaware and unprepared.
Source: Thomson Reuters Datastream & HORAN Capital Advisors