Since the summer, financial experts continued to repeat themselves that the Federal Reserve was going to taper its $85 billion per month bond-buying initiative this month. Fed Chairman Ben Bernanke kept hinting at it and even noted that it might not taper its quantitative easing program if the economic data didn’t support such a move.
Despite the warnings, CNBC, CNN and Bloomberg talking heads kept telling viewers it was going to happen and the cuts were going to be somewhere between $10 and $20 billion, citing financial institutions like Goldman Sachs and Barclay’s.
In that desert of ignorance, there was only one financial expert telling the media that the nation’s central bank was not going to taper. For those who cannot believe it, Capital Liberty News posted a recent video titled “Peter Schiff was right – ‘Taper’ edition” that highlighted his comments – his remarks can also be read in this article from Economic Collapse News.
With a strong majority of economics and market professionals forecasting a tapering of Fed stimulus, how did so many get it wrong and so few got it right? Well, ideology for one and understanding the issue at hand is the other reason.
It should be noted that it wasn’t just Schiff promoting the concept that the Fed wouldn’t taper, it was many other libertarian, Austrian economics adherers and central economic planning critics who understood that the central bank couldn’t roll back its inflation-inducing policy because the fundamentals of the economy are unsound.
Right now, it’s costing $85 billion per month to keep the Dow Jones at its current level. Since the economic collapse in 2007 and 2008, markets have relied heavily on the injection of heroin, er, stimulus. It’s akin to what former Reagan budget director David Stockman stated earlier this year: if the Fed were to go fishing for two weeks and close up shop then the markets would collapse because they wouldn’t know where to get its monthly fix.
The United States is in the biggest bond market bubble in its history. Indeed, Fed officials are blind and near-sighted when it comes to forecasting bubbles and long-term economic trends – Fed Chair frontrunner Janet Yellen didn’t think there would be a severe economic downturn prior to the Great Recession.
Here is what Schiff had to opine late last year in a video:
“The Fed’s long-term forecasting, particularly when it comes to seeing a crisis in advance or a bubble, like the stock market bubble or the real estate bubble, is horrible,” stated Schiff. “So if they couldn’t see the stock market bubble and they couldn’t see the real estate bubble, should we be surprised that they can’t see the bond bubble or what’s going to happen when it bursts or what’s going to happen when the dollar collapses.”
Essentially, everything is debt on debt and there is no genuine equity left in the market anymore. This is definitely the greatest bubble ever perpetrated on the American people and everyone seems to have complete apathy, until the day of reckoning occurs that is.
Of course, Schiff hasn’t been 100 percent correct on everything – not everyone is perfect and the Federal Reserve continuing this grand illusion has befuddled many of those who have been correct thus far, like Marc Faber and Jim Rogers.
For instance, by now Schiff projected that gold would be at around $5,000 per ounce and silver would be at $250 per ounce. This hasn’t happened yet. With the Fed expanding the money supply (inflation) and the cost of goods and services rising (price inflation), it is inevitable that precious metals will continue to go upwards and the value of the U.S. dollar will persist in its path of erosion.
When will the next “Peter Schiff was right” video be released?