By Greg Hunter’s USAWatchdog.com
The stock market sold off nearly 800 points (Tuesday) on a day when the Federal Reserve gave the biggest interest rate cut since the 2008 financial crisis. It was a surprise .5% cut to a key rate that should have boosted stocks. Instead, the market tanked–hard. Economist and money manager Peter Schiff says, like in the movie “Jaws,” when they see the monster Great White shark they have been hunting, a freaked out crew member says, “We need a bigger boat.” Schiff says, like in Jaws, “The Fed needs a bigger rate cut,” to fight a monster economic problem.
Schiff says, “The Fed is not cutting rates because of the coronavirus.” Schiff explains, “What the Fed is worried about are two things. One is the stock market. The stock market is falling. . . . The market is going down, and the Fed is worried about the reverse wealth effect of deflating this bubble. It’s not cutting rates to stop the coronavirus. It is cutting rates to stop the stock market from falling. It wants to blow air back into the bubble. . . . The other thing they are worried about is the debt. Because of all the rate cuts and all the cheap money policies of the past, we are so massively loaded up with debt now in the federal government, state and local governments, consumers and corporations. We have so much debt that if we have another recession, we have another financial crisis because people can’t pay their bills. They can’t service the debt. The Fed is trying to get out in front of that by cutting rates to ease the burden of servicing debt. So, really, what the Fed is worried about is deflation of their own bubble.”