Peter Schiff: Federal Reserve won’t hike interest rates to ensure Democrats

Information provided by the Federal Open Market Committee indicates a likely path will be a 0.25 percent rate hike every other meeting, or about 1 percent over the next year.

Over the next two years, the USAeconomy will likely expand at a 2.5 to 2.8 percent, but in the years beyond, the pace could be much stronger if a new president got behind tax reform and fixed the distortions imposed by Obamacare and excessive regulation in the manufacturing and financial sectors.

Many correlated-setups continue to exist, but one of the clearest trading-themes is the continued stance on additional QE from Europe and Japan. We don’t know that yet – all that we have is evidence as to why they should (based on the general economist’s point-of-view) and what markets are expecting. Gold has rebounded from a five-year low in July as turmoil in emerging markets, slower growth in China and patchy U.S. economic data reduced the prospects for tighter monetary policy by the Fed. Yet we remain in a low growth, low employment environment, in which domestic policy makers, having shed the extraordinary budget deficits and ended Quantitative easing, are still unable to restore normalized interest rates. What are we missing to the big picture?

When Will The Fed Rates? Statistics show 350,000 workers dropped out of the labor force only last month! However, shortly after, Janet Yellen, the Chair of the Federal Reserve, suggested that the Fed may still raise the federal funds rate before the end of 2015.

The currency pledge carries weight given that it brought together a cross-section of countries producing 40 percent of the world’s global economy output.

The stock market rallied after September’s labor numbers showed just 142,000 jobs were added, which were short of the 203,000 estimate. The metal rose to a 3-1/2-month session high of US$16.08 a day earlier and has gained about 9.5% so far this month.

Paul Ryan, a top Republican lawmaker in the House of Representatives, said the weak turn in the economy should be a wake-up call for Washington to reform the national economy with new tax laws, free trade agreements and policies to get people off welfare. The non-interest-paying asset, which has benefited from years of ultra-low USA rates, has fallen almost 4 percent this year on expectations that the Fed will move to increase rates for the first time in almost a decade.

However, even if those who oversee and manage central banks were as “pure” and benevolent as angels only wishing to do good for mankind with no ulterior self-interested motives or temptations, the monetary and banking system would still constantly run the risk of suffering from the same boom-bust cycles that we see in our world today.

“This takes October completely off the table and… obviously it makes December questionable as well”. Platinum ticked higher, while palladium was trading near its highest since June. Meanwhile, this interest rate dilemma will keep traders, bankers, lenders, borrowers, journalists, analysts and mere news-consumers gripped to see how Yellen and her team will adjust the sails. Naturally biased towards a holistic approach.