Quite a few bears think that they should or that they will. I believe that they should, but I don’t think that they will forgo the eventual rate hike.
“In my view, the Fed will not increase interest rates this year,” he told CNBC’s “Squawk Box,” pointing to dollar strength and recent disappointing economic data. “The economy simply [is] not taking off, so I don’t see there will be an interest rate increase.” – Mark Faber
“The U.S. economy is sicker than ever,” said Schiff. “And the Fed is going to launch QE4 for the same reason they launched QE3, 2 and 1. They’re going to try to stimulate the economy. Now that they stopped QE, the air is coming out of this bubble.”
And according to Schiff, if the Fed does raise interest rates later this year, the outcome will be catastrophic. “I think without QE4, we will be back in recession,” he said. “It’s going to be horrible. There’s going to be a worse financial crisis than 2008.”
I agree with the views above. The underlying US Economy is sick and on the verge of recession. With that in mind, the bears above are forgetting two things. First, the FED needs to re-load on their recession fighting tools before the next one hits (we are almost there). And second, the FED is a reactionary force. Meaning, it has always been behind the ball in terms of reacting to various economic developments. I don’t think that will change now.
