Peter Schiff Warns of Impending Bond Market Crash in the US
Peter Schiff, CEO of Euro Pacific Capital, recently issued a dire warning about the potential for the largest bond market crash in US history. According to Schiff, entities across various sectors, including governments, corporations, landlords, and families, that rely on low-cost debt for financial stability will face severe consequences as the bond market crashes. Additionally, Schiff argues that any attempts by the Federal Reserve to intervene could worsen the situation by causing inflation.
The Unsustainable Rise in Interest Rates
In a recent episode of “The Peter Schiff Show,” Schiff highlighted the unsustainable rise in interest rates as a major factor leading to an inevitable collapse of the US economy. The national debt has skyrocketed to over $33 trillion, making the economy highly vulnerable to even slight increases in interest rates. Schiff asserts that a severe financial downturn or stock market crash is not a matter of if but when.
Main Triggers and Warning Signs
One of the main triggers for the looming crisis is the continuous increase in interest rates, particularly in the faltering bond market. Bond yields have reached their highest levels since before the 2008 financial crisis, with the 10-year Treasury yield nearing 5%. Schiff also criticizes the mainstream financial media for underestimating the severity of the situation and warns about the unstable ground of low-interest rates on which the entire economic system has been built.
Rising Interest Rates and Abnormal Yield Curve
Schiff points out that all types of interest rates are climbing, including mortgage rates approaching 8% and average credit card interest rates nearly at 21%. With credit card debt exceeding $1 trillion, he cautions against an economy reliant on easy borrowing. He also highlights the abnormal yield curve as another red flag, indicating systemic issues facing the economy, with long-term yields not aligning with current short-term rates.
Hot Take: The Impending Bond Market Crash
Peter Schiff’s warning about the impending bond market crash in the US raises concerns about the financial stability of various entities that rely on low-cost debt. Schiff argues that attempts by the Federal Reserve to intervene could exacerbate the situation by causing inflation. With interest rates continuing to rise and bond yields reaching their highest levels since before the 2008 financial crisis, there are clear warning signs of an inevitable collapse. The unsustainable rise in interest rates and the unstable ground of low-interest rates highlight the vulnerability of the US economy. It’s crucial for individuals and organizations to be prepared for the potential consequences of this impending crash.
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