Peter Schiff Anticipates No Further Interest Rate Hikes Amid Middle East War — Warns ‘Crisis Is Assured’

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Economist Peter Schiff compared the attack on Israel to 9/11, calling it “the beginning of a bad situation.” He highlighted several factors that will weaken the U.S. economy, which he described as “already structurally weak.” The economist stressed: “The U.S. can’t even afford peace. It certainly can’t afford war.” Warning that Fed policies could “unleash run-a-way inflation, an implosion in the dollar, bonds, and the economy,” he cautioned: “Crisis is assured!”

Peter Schiff Says ‘Crisis Is Assured’

Economist and gold bug Peter Schiff discussed a number of topics affecting the U.S. economy on social media platform X and in his podcast, live-streamed on Monday, including the potential economic ramifications of the war in the Middle East.

Commenting on the attack on Israel, the economist described: “This is like September 11th for Israel.” He added: “What did America do as a result of 9/11? We didn’t just shrug it off, no. We had the ‘war on terror,’ we had all sorts of stuff that happened. And then we went into Iraq where we got Saddam Hussein even though he had nothing to do with 9/11. We still ended up having a war against Iraq anyway.”

Schiff stressed that following 9/11: “It wasn’t like it just ended. It was the beginning of a lot of things that happened.” The gold bug opined:

So I think this is the beginning of a bad situation unfortunately.

“None of this is going to be pretty in the short run. It’s all going to be problematic. It’s going to destabilize the region. There already is a lot of tension there,” he continued.

“Everybody is underestimating the impact that we’re going to see here. First of all, wars are expensive. They cost money. They come at the expense of civilians, production, to the extent that we have to divert resources,” Schiff detailed. “Any Keynesian economist who tries to tell you that it’s good because it boosts the GDP, again, they don’t know what they are talking about.”

While noting that “War is expensive,” Schiff emphasized that “Even without a war, we are broke.” He added:

Anything that happens over there with Israel, we’re going to get dragged into it. We’re going to be funding it. It’s going to be increasing our deficits, more fiscal stimulus which is inflationary, and that it is going to result in bigger deficits and more money printing — all of this just accelerates the problem now.

Overall, the economist cautioned: “All of this is going to weaken the U.S. economy and I think it’s already structurally weak.” He emphasized: “What’s happening now in the Middle East, with Israel and the Palestinians and Iran, potentially just escalates all the problems. I mean, we can’t afford peace let alone war.”

Moreover, Schiff does not expect the Federal Reserve to hike interest rates further, stating: “We’ve got war in the Middle East, so the Fed can’t raise rates with all that uncertainty out there. And maybe they’ll have to cut rates.”

On Wednesday, he wrote on X: “What’s missing from the ‘higher, for longer’ interest rate narrative is that it’s actually ‘much higher, forever.’ The days of ZIRP [zero interest rate policy] are over.” He further opined:

If they return it will unleash run-a-way inflation, an implosion in the dollar, bonds, and the economy. Either way, crisis is assured!

Schiff’s repeated warnings include a massive crisis, a rush to exit the U.S. dollar, and dire consequences of Fed policies. He firmly believes that a U.S. dollar collapse is on the horizon and predicts a more severe financial crisis than the one experienced in 2008. “Future rate hikes are now pointless,” he also said, adding that any effect will be more than offset by the Fed’s quantitative easing.

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