As the Federal Reserve prepares to announce a cut in interest rates, renowned economists like Peter Schiff are sounding the alarm over the potential impact on the US dollar's status as the global reserve currency. Explore the implications for Bitcoin and the crypto world.
In two days, the Federal Reserve (Fed) will unveil its decision on interest rates. While investors and crypto enthusiasts hope for a cut, economist Peter Schiff has serious concerns. A fervent advocate for precious metals, he warns that this decision could undermine the US dollar’s status as the world’s reserve currency.
“The Fed has made many mistakes, but history will likely remember this upcoming rate cut as the greatest,” he prophesizes. According to Schiff, this first cut would be followed by others, signaling a return to expansionary monetary policy. Contrary to current expectations, Schiff would recommend raising rates to counter inflation that’s understated in official reports.
In August, consumer prices in the United States rose by 2.9% year-over-year, while the labor market showed signs of weakness with 264,000 new unemployment claims per week. According to Schiff, these indicators should push the Fed to raise rates, not lower them.
“Inflation is much higher than what official reports indicate. This requires an increase in interest rates,” he insists. The economist advises investors to turn to gold and silver to protect themselves against the dollar’s loss of value.
Peter Schiff makes no secret of his aversion to Bitcoin. According to him, the rising power of gold and silver should penalize the leading cryptocurrency, which he sees falling to as low as $75,000.
Meanwhile, the European Central Bank (ECB) has maintained its key interest rate at 2%, which is 2.5 percentage points below that of the Fed. This decision contrasts with the concerns expressed across the Atlantic.
In summary, the Fed faces a delicate choice: yield to pressures to lower rates and potentially weaken the dollar, or resist and face criticism about a struggling American economy. With the stakes at hand, its decision could well mark a historic turning point.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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