Peter Schiff On Why U.S. Monetary Policy Is 'Monetary Heroin'

The Federal Reserve is going to continue to print money until the next crisis, according to Euro Pacific Capital CEO Peter Schiff.

Schiff was recently a guest on Benzinga’s #PreMarket Prep, where he explained why the Fed is merely providing air for financial bubbles in stocks and real estate rather than supporting the real economy.

“They are supporting the growth of the government,” he said. “They are supporting excess profits on Wall Street, but they are actually stifling the legitimate economic growth that might otherwise help Main Street.”

A Phony Recovery

In the nature of this “phony” recovery, he said, those who own a lot of stocks are better off.

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People who work for a living are far worse off because most wages have not kept pace with increasing costs for basic necessities like food and energy. Additionally, many people have lost full-time jobs and are either working a part-time job or out of work altogether, leaving them with less purchasing power than before.

Schiff said that while money printing and quantitative easing may be boosting the stock market and propping up government spending, it’s doing less for the actual economy than if the Fed did nothing at all.

Monetary Addiction

He said the Fed should stop doing these things all together, but there will be a lot of damage. Schiff referenced the struggles of an addict who suddenly stops taking drugs.

“It’s not going to be a painless situation when we give up these government narcotics -- monetary heroin -- but it’s going to have to happen, because the more we take this drug, the more damage is being done to the economy and the risk is, of course, that eventually we overdose on it, which is the destruction of the currency and a runaway inflation,” he said.

The more time that passes before the current policy is aborted, Schiff said, the harder it will be. But opposition to the short-term pain and consequences of ending the policy is what’s keeping the Fed from “doing the right thing.”

Check out the full interview here: Follow Brianna Valleskey on Twitter: @bri_valleskey.

Posted In: Top StoriesTrading IdeasInterviewEuro Pacific CapitalFederal ReservePeter SchiffQuantitative EasingWall Street