Economist Peter Schiff warns that the current banking crisis is the cusp of a much worse financial crisis.” If you try to deny it, it will be much, much worse,” he stressed. Citing the Federal Reserve’s recession forecasts, he warned: “Normally, the Fed doesn’t predict recessions. So if they could actually foresee this recession, it would likely mean it would be massive.”
Peter Schiff, speaking of banking crises, financial crises, and recessions
In a recent interview with Trader TV Live, gold bug and economist Peter Schiff warned that the current banking crisis is not over and that a worse financial crisis will follow.
Schiff explained that “everybody is talking about the banking crisis,” but “nobody wants to call it a financial crisis.” He exclaimed: “No, this is a financial crisis; the 2008 financial crisis was also a banking crisis, if we don’t forget that the banks failed. And the economist stressed:
This is the cusp of a crisis. If we try to counteract it, we will make it much, much worse.
He compared the current crisis to the subprime mortgage crisis, pointing out that the Federal Reserve is saying: “It’s only a couple of banks. It’s just Silicon Valley Bank or Signature Bank or one more bank that has failed. It’s like when the subprime mortgage crisis happened, nobody wanted to admit that it was a mortgage crisis. They just said, “Oh, this just settled on a handful of subprime mortgages. Don’t worry, it’s no big deal, it will settle down soon,’ and they said: ‘This is nothing, it’s no big deal. But Schiff insisted:
It’s a big deal. It’s not nothing.
On the possibility of major banks failing, Schiff said: “Those banks are also insolvent. They just can’t let them fail because they are too big to fail, which means they have to print a lot of money to keep from going under.” Still, he warned that for the federal government to bail out the depositors of Silicon Valley Bank and Signature Bank while not bailing out the smaller banks “would create a run on these smaller banks,” and stressed that “it would create a big problem.”
Regarding the Fed minutes released on Wednesday, Schiff tweeted: “According to the recent minutes, the Fed no longer expects a soft landing, but a mild recession…What makes the Fed think the recession will be mild?” He continued:
Normally, the Fed does not predict recessions. So if they could actually foresee this recession, it would probably mean it would be massive.
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