Inflation Leads To Bubbles
NEW YORK, NY – Investor and financial expert Peter Schiff appeared on The Kudlow Report Wednesday to argue that more inflation will not help the U.S. economy. The segment focused on Federal Reserve policy and how they have no exit strategy from their $85 billion dollar a month in bond purchases.
WATCH: Is the party over for bonds?
Kudlow asked Schiff, “since when does higher inflation promote better economic growth?” Schiff responds, “It doesn’t, it retards it. This is a ruse. They don’t want more inflation to help the economy. It’s not going to help the economy.”
The Federal Open Market Committee reasoned that the Fed continues to stimulate because, “The recovery in the housing sector slowed somewhat in recent months. They blamed the slowdown on fiscal policy, and the government shutdown. “Taking into account the extent of federal fiscal retrenchment over the past year, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy,” the committee said.
Kansas City Fed President Esther George dissented over the decision not to taper quantitative easing and cited the risk the Fed’s stimulus might create financial imbalances and could cause long-term inflation expectations to increase.
In the interview below, Schiff is challenged about whether the government really wanted to create asset bubbles. He responded that the government doesn’t want to deal with the pain from any potential pullback of debt monetization and inflation.
