Economist Peter Schiff Warns of Impending Collapse of US Banking System
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Summary: Peter Schiff, an economist and gold bug, has been sounding alarm bells about the potential for a U.S. currency crisis, economic depressions, and the debt ceiling deal reached by Congress to prevent a U.S. government collapse. The impending Federal Reserve meeting on June 14 is the focus of much anticipation.
Economist and gold bug Peter Schiff is back with more gloomy forecasts for the US economy. In a tweet sent on Friday, he claimed that the Federal Reserve had destroyed the American financial system and that it would collapse without government action.
Schiff tweeted:
“Bank of America pays just .05% interest on savings accounts and nothing on checking accounts. But the Fed funds rate is 5.25% and the real inflation rate is much higher. The Fed destroyed the U.S. banking system. It’s insolvent and would collapse without government backstops.”
The economist’s warnings concerning the health of the American banking system weren’t new.
In a March tweet, he wrote:
“The U.S. banking system is on the verge of a much bigger collapse than 2008. Banks own long-term paper at extremely low interest rates. They can’t compete with short-term Treasuries. Mass withdrawals from depositors seeking higher yields will result in a wave of bank failures.”
Dire Future for the U.S financial System
The issue of increasing interest rates has also been brought to light by other persons. Most notably Elon Musk, CEO of Tesla and SpaceX. The billionaire blamed the U.S. Treasury and the Federal Reserve in May for the massive interest rate gap between money market accounts (Treasury Bills) yielding about 4.5 percent and bank accounts paying less than 1 percent.
Furthermore, Schiff cautioned that the Federal Reserve was contributing to inflation by paying the bank bailouts in March. When the United States government bailed out insolvent Signature Bank and Silicon Valley Bank. Therefore, the financial crisis did not help reduce inflation but instead made it much worse.
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Moreover, as of late, Schiff has been sounding alarm bells about the potential for a U.S. currency crisis, economic depressions, and the debt ceiling deal reached by Congress to prevent a U.S. government collapse. The impending Federal Reserve meeting on June 14 is the focus of much anticipation.
