has issued a stark warning about the US economy and criticised the Federal Reserve's decision to keep its benchmark federal funds rate unchanged at a current range of 4.25% to 4.5%, as per a report.During Fox Business' "The Claman Countdown", Schiff told host Liz Claman that the "biggest takeaway is that Powell basically admitted that they have no idea what’s going to happen," quoted Fox Business. He said, "They don’t really know what’s going to happen to consumer prices. They don’t know what’s going to happen to employment," and added, "I don’t even think their forecasts are educated guesses so much as wishful thinking," as quoted in the report.
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Schiff, who is the chief economist at Euro Pacific Asset Management, said that he thought inflation will be "a lot higher" than the Fed expects and that the US economy will be "a lot weaker," as quoted by Fox Business. He also said that the "big problem" for inflation is "all of the inflation chickens that the Fed has been releasing for more than a decade are coming home to roost," as quoted by Fox Business.He went on to predict that the United States will experience
stagflation "with a recession and much higher inflation happening at the same time, really complicating the defense ability to try to do something about either problem," as quoted in the report. The economist also warned that America is on the path to "runaway inflation" that could become "
hyperinflation," quoted Fox Business.Schiff explained that lower interest rates will not help the US economy, and even said that it was the "cause," as per the report.
He suggested that, "The solution involves much higher interest rates," adding, "Now, I understand that’s going to be very painful, given the economy that we’ve created, built on a foundation of cheap money," quoted Fox Business.
The economist pointed out that "It means stock prices come down, real estate prices go down, companies fail," adding, "There’s going to be bankruptcies. There is going to be defaults. There’s going to be a protracted recession, probably a much worse financial crisis than 2008, but all that has to happen because the alternative to that is even worse," as quoted in the report.
He criticised the Fed for keeping interest rates unchanged and said they are relying on "wishful thinking," as per Fox Business report.
He expects inflation to be much higher than the Fed is forecasting.
