Peter Schiff Was Right - Taper Edition

 

Over the last few weeks, as the overwhelming majority of economists, reporters, and Wall Street insiders expressed certainty that the Fed would begin to taper its QE program, I did my level best to make the public understand that the Fed would do no such thing. As a result, last week's "surprise" announcement provides us with fresh confirmation that most market pundits remain clueless about the true state of our economy. I knew, as they seemed not to, that the Fed is caught in a stimulus trap that will require them to keep the monetary spigots wide open. For my efforts I was treated to another round of snickers, eye rolls, and outright dismissals. You would have hoped that they would have learned better by now.

 

Fortunately all their dazzlingly wrong predictions are caught on tape. In retrospect it makes for hilarious viewing. Click below to view. 

 

 

Unfortunately, they have failed to learn anything from their mistakes. The same pundits that were revered before their colossal miscue are still afforded equal respect. The markets still believe the popular consensus that a Fed taper will arrive in October, or maybe by January at the latest. In contrast, I believe that we are now stuck in a state of permanent QE.   But these views remain in the lunatic fringe. How many more times will the markets have to get it wrong before an alternate reality is considered?   In the end it will not be the Fed that voluntarily tapers by easing up on the monetary gas pedal, but an adverse reaction in the currency and bond markets than forces the Fed to slam on the breaks.