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A prominent economist and vocal Bitcoin (CRYPTO: BTC) critic Peter Schiff criticized the Federal Reserve’s role in inflation and advocated a return to the gold standard. His comments came amid calls for rate cuts by Nobel laureate Paul Krugman.
What Happened: Schiff took to X to express his views on the current inflation situation and the role of the Federal Reserve. He suggested that the solution lies in eliminating the Fed and returning to the gold standard.
“#Powell warned Congress that eliminating the #Fed risked high future #inflation. But inflation was much higher after the Fed was established than before. The key is to not only eliminate the Fed, but to go back on a #gold standard. We don’t want to hand Congress a printing press,” Schiff wrote.
On the other hand, Krugman, a Nobel Prize-winning economist, suggested that the Federal Reserve should consider cutting rates at the next meeting. “A truly data dependent Fed would be cutting rates at the next meeting,” Krugman wrote on X.
He pointed to the Cleveland Fed nowcast, which puts June core PCE at 2.4, well below the Fed’s projection for the end of 2024.
Why It Matters: The U.S. Consumer Price Index slowed more than expected in June, indicating progress towards the Federal Reserve’s 2% inflation target. This has raised expectations for an imminent interest rate cut.
Last month, the average increase in a basket of goods and services measured by the Bureau of Labor Statistics was 3% compared to June 2023, slightly cooler than economist forecasts of 3.1%. The June report marks the third consecutive decline in the inflation rate, a trend not observed since May 2023.
However, some experts have expressed doubt about the likelihood of rate cuts based on the inflation numbers. Blu Putnam, former chief economist at CME Group, suggested that the Federal Reserve may not cut interest rates based on the lighter inflation numbers.
Despite this, a chorus of economists, including Krugman, predicts that the Federal Reserve will soon begin cutting interest rates following the latest cooler-than-expected inflation report. President Joe Biden also highlighted the positive developments in a White House press release, stating that the report shows significant progress in fighting inflation.
Furthermore, Federal Reserve Governor Lisa Cook emphasized the Fed’s readiness to respond swiftly to any significant changes in the unemployment rate, highlighting the central bank’s vigilance in monitoring economic indicators.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
Posted In: $BTC
