Peter Schiff warns U.S. economy heading into recession as debt soars, bank stocks collapse

The Federal Reserve will slash interest rates and the United States economy is on the cusp of a recession, says Peter Schiff, president and CEO of Euro Pacific Capital, in a new YouTube video.

Last week, Schiff alluded to weak performances in the manufacturing and services sectors are signals that a recession is coming (if it hasn’t already). He added that even the financial sector is warning of a recession.

One of the signals that a recession coming? The big banks are trading at or near 52-week lows.

The bestselling author of “Crash Proof” stated that many of financial institutions have seen their stock values plunge by about half, and heading towards 2008-2008 lows.

“All these banks that were too big to fail when we bailed them out are now much bigger and they’re going to fail again, especially if the Fed continues with its rate hikes, which is another reason why it’s not,” he said.

Schiff further explained that the only way the Fed can save the U.S. economy is to cut interest rates. The Fed, says Schiff, may go as far as instituting negative interest rates (SEE: Will negative interest rates dominate monetary policy in 2016?), which is something a handful of central banks have done in recent months, including the European Central Bank (ECB) and the Bank of Japan (BOJ).

“Not only do I think the Federal Reserve is not going to raise rates any more, but they’re actually going to lower them. And they’re not going to stop at zero, “Schiff added. “We already have the Bank of Japan now with negative rates. They joined the ECB. The Fed’s going to be next.”

Will this help gold? Yep.

The precious metal falling or stagnating for the last few years, notes Schiff, is based on the notion that the economy is doing well again and the Fed is going to shrink its balance sheet.

“Nothing could be further from the truth,” he states.

“The balance sheet is about to blow up. We’re going to go up to $10 trillion. The national debt just surpassed $19 trillion officially. It’s going to be $20 trillion by the time Barack Obama leaves office, maybe more.”

A weakening economy, concludes Schiff, will help see gold prices make new highs in 2016.

Reprinted with permission from Economic Collapse News.