Economist Peter Schiff has cautioned that the present banking crisis is the cusp of a much worse financial crisis. “It’s going to get much much worse if you are going to try to dismiss it,” he stressed. Citing the Federal Reserve’s recession forecast, he warned: “Normally the Fed doesn’t forecast a recession. So if they can actually see this one coming, it likely means it will be massive.”

Peter Schiff on Banking Crisis, Financial Crisis, and Recession

Gold bug and economist Peter Schiff warned in a recent interview on Trader TV Live that the current banking crisis is not over and a much worse financial crisis will follow.

Schiff explained that “Everybody has talked about a banking crisis” but “nobody wants to refer to it as a financial crisis.” He exclaimed: “No! This is a financial crisis. The 2008 financial crisis was also a banking crisis unless people forget it was the banks that were failing.” The economist stressed:

This is the cusp of the crisis. It’s going to get much much worse if you are going to try to dismiss it.

He compared the current crisis to the subprime mortgage crisis, noting that the Federal Reserve is saying: “It’s just a couple of banks. It’s just Silicon Valley Bank or Signature Bank or the other one that failed. That’s like when the subprime blowup first happened, nobody wanted to admit that it was a mortgage crisis. They just said: ‘Oh, it’s just contained to these handful of subprime mortgages. Don’t worry about it, nothing to see here, it’s no big deal, it’ll just blow right over … That’s exactly what they are saying now: ‘This is nothing, it’s no big deal.’” However, Schiff argued:

It is a big deal. It’s not nothing.

Regarding the likelihood of big banks failing, Schiff said: “Those banks are insolvent too. It’s just that they’re too big to fail so we won’t let them but that just means we have to print a lot of money to prevent them from failing.” Nonetheless, he cautioned that the Federal government rescuing depositors of Silicon Valley Bank and Signature Bank but not smaller banks “is going to create a run on these small banks,” emphasizing: “That’s going to create a huge problem.”

Commenting on the Fed minutes that were released on Wednesday, Schiff tweeted: “According to its recent minutes, the Fed no longer expects a soft landing, but a mild recession. What makes the Fed think the recession will be mild?” He continued:

Normally the Fed doesn’t forecast a recession. So if they can actually see this one coming, it likely means it will be massive.

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