The World Is Awash In Record Levels Of Quantitative Easing (Podcast)

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By Samuel Bryan

The Federal Reserve stayed pat on interest rates in its most recent meeting, but speculation continues to percolate that the central bank will possibly raise rates in September.

Peter Schiff has been saying for months that the Fed won't raise rates. He reiterated this on his most recent podcast. (Scroll down to listen to the full podcast.)

The Fed continued to say that they believe the economy is evolving in a way that will warrant gradual rate hikes. And of course, by gradual they mean no more rate hikes…So they raised rates once in December and they haven't raised rates since. That's about as gradual as you can possibly get. I mean, if a snail was raising rates they would have blown past Janet Yellen…I think, again, the rate-hiking cycle ended when they raised rates. It began when they started talking about tapering. That was the whole rate cycle, and whether people want to admit it or not, we are now in the easing cycle."

In fact, Peter has said on numerous occasions the next move for the Fed will be lowering rates back to zero and launching another round of quantitative easing.


If the actions of central banks in the rest of the world serve as any example, Peter will certainly be proven right because the world is awash in QE. In fact, Reuters reported that the amount of quantitative easing is at record levels:

Eight years after the global financial crisis and years after the US and British central banks stopped their quantitative easing bond-buying programs; the amount of QE stimulus being pumped into the world financial system has never been higher. The European Central Bank and Bank of Japan are buying around $180 billion of assets a month, according to Deutsche Bank, a larger global total than at any point since 2009, even when the Federal Reserve's QE program was in full flow."

And amount of QE is expected to increase even further.

All of this extreme central bank monetary policy is one of many reasons to buy gold.

ABN Amro analysts expect the European Central Bank to increase quantitative easing to 100 billion euros per month and extend the program by nine months to the end of 2017. JP Morgan predicts the BOJ will up its QE by 25% to $960 billion annually. Just yesterday, Japanese Prime Minister Shinzo Abe announced a $265 billion economic stimulus package. The plan will reportedly include 13 trillion yen in "fiscal measures.

The ECB and BOJ aren't the only central banks jumping the QE train. With Brexit a reality, many analysts also expect the Bank of England to resume its bond-buying program. Barclays projects up to $197 billion in extra easing. As Reuters pointed out, the global economic outlook doesn't show any signs of improving and that means QE will likely continue indefinitely:

These are among the most aggressive forecasts. But with world growth struggling to avoid an effective recession and inflation still below official target rates in many countries, central bank balance sheets are about to get bigger."

ZeroHedge put it more bluntly:

The monetary policy beatings will continue until morale improves."

It seems highly unlikely the Fed will swim against the swift-running QE river and actually raise rates. Peter's projections appear a whole lot more realistic.