The Next Financial Crisis Is Coming… And This One Has No Bailout

Following the Federal Reserve’s unanimous 12-0 vote to raise its policy rate 25 basis points, Fox Business host Liz Claman brings together BNY Investments chief economist Vincent Reinhart and Euro Pacific Asset Management’s Peter Schiff to break down new Fed Chair Kevin Warsh’s first rate decision. Schiff argues the hike is too small and too late to contain inflation, noting the Fed was backed into a corner after months of hawkish signaling and that a single 25 basis point move will not derail rising prices. He points to the 40-year bond bull market that ended in 2020 and argues rates are still historically low relative to $40 trillion in federal debt, meaning the bond bear market has years left to run. Schiff also warns the housing market is now a bigger bubble than 2008, that 30-year mortgage rates above 7% will keep climbing, and that the next financial crisis could take the form of a sovereign debt and currency crisis rather than a bank bailout. JP Morgan’s move to raise its prime rate to 7% and an roughly 850-point Dow decline underscore the market’s reaction to the Fed’s decision.

Chapters:
00:00 Guests Join After Fed Move
00:33 Unanimous Vote No Leaks
01:41 Schiff Too Little Too Late
03:14 Warsh Inflation Message
04:03 Prime Rate Hits Consumers
05:18 Housing Bubble And Bond Bear
06:56 Market Wrap And Thanks