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Peter Schiff Says Fed's Treasury Buying Plan Is Just QE5 in Disguise: 'Still Inflation'

MarketDash Editorial Team
1 day ago
Peter Schiff isn't buying the Fed's explanation for its Treasury purchases, calling it quantitative easing by another name while Wall Street analysts celebrate a "Goldilocks" economy.

The Federal Reserve just cut interest rates and announced it's getting back into the Treasury-buying business, and economist Peter Schiff is not having it. While most of Wall Street is celebrating what they're calling a "Goldilocks" moment for the economy, Schiff sees something far more troubling: quantitative easing dressed up in technical jargon.

Calling Out QE5

Schiff wasted no time responding to the Fed's decision on social media platform X, focusing specifically on the central bank's plan to buy T-bills "on an ongoing basis." His take? This isn't some neutral liquidity operation. It's QE, plain and simple.

"QE by any other name is still inflation," Schiff declared, rejecting the Fed's framing of the purchases as a technical liquidity stabilizer. He's betting this policy won't achieve what the Fed hopes. Instead of pushing long-term interest rates down, Schiff predicts they'll actually rise.

And he doesn't think the Fed will stop here. "It won't be long before the Fed expands and extends QE5 to longer-dated maturities," Schiff warned. He ended his critique with a pointed question aimed at investors: "Got gold?"

Wall Street's Optimistic Take

Schiff's gloomy outlook couldn't be more different from the mood among institutional investors right now. Following the 25 basis point rate cut, Jeffrey Roach, Chief Economist for LPL Financial, declared that "Goldilocks is here."

Roach pointed to the Fed's updated Summary of Economic Projections, which shows higher growth expectations paired with lower inflation forecasts for 2026. In his view, this proves the Fed is successfully threading the needle on its dual mandate of stable prices and maximum employment.

Gina Bolvin, President of Bolvin Wealth Management, agrees. She sees the Fed transitioning from inflation-fighter to risk-manager, trying to steer the economy toward a soft landing without "oversteering" and tipping into recession.

The Mechanics Behind the Controversy

So what exactly has Schiff so worked up? The Fed plans to purchase roughly $40 billion per month in shorter-maturity Treasuries through what it calls "Reserve Management Purchase Operations."

Bill Adams, Chief Economist for Comerica Bank, explains these purchases are designed to smooth out volatility in short-term funding markets. But Adams also highlighted some challenges ahead: the Fed is working in what he called a "data vacuum" because of delayed economic releases, and there's uncertainty looming with Chair Powell's term ending in May 2026.

Chris Zaccarelli of Northlight Asset Management struck a cautionary note despite the current optimism. While the mood is positive now, that "rose-colored" outlook might fade if investors realize the path to lower interest rates will take longer than they're hoping.

Markets Keep Climbing

For now, though, investors seem pretty content. The S&P 500 index has climbed 17.35% year-to-date, while the Dow Jones index returned 13.36% and the Nasdaq Composite surged 22.68% over the same period.

On Wednesday, both the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 indexes respectively, closed higher. SPY was up 0.66% at $687.57, while QQQ advanced 0.41% to $627.61.

The question is whether Schiff's warnings will prove prescient or whether Wall Street's Goldilocks narrative holds up. Time will tell if this Treasury buying program is the benign technical adjustment the Fed claims or the inflationary policy Schiff fears.

Back to News

Peter Schiff Says Fed's Treasury Buying Plan Is Just QE5 in Disguise: 'Still Inflation'

MarketDash Editorial Team
1 day ago
Peter Schiff isn't buying the Fed's explanation for its Treasury purchases, calling it quantitative easing by another name while Wall Street analysts celebrate a "Goldilocks" economy.

The Federal Reserve just cut interest rates and announced it's getting back into the Treasury-buying business, and economist Peter Schiff is not having it. While most of Wall Street is celebrating what they're calling a "Goldilocks" moment for the economy, Schiff sees something far more troubling: quantitative easing dressed up in technical jargon.

Calling Out QE5

Schiff wasted no time responding to the Fed's decision on social media platform X, focusing specifically on the central bank's plan to buy T-bills "on an ongoing basis." His take? This isn't some neutral liquidity operation. It's QE, plain and simple.

"QE by any other name is still inflation," Schiff declared, rejecting the Fed's framing of the purchases as a technical liquidity stabilizer. He's betting this policy won't achieve what the Fed hopes. Instead of pushing long-term interest rates down, Schiff predicts they'll actually rise.

And he doesn't think the Fed will stop here. "It won't be long before the Fed expands and extends QE5 to longer-dated maturities," Schiff warned. He ended his critique with a pointed question aimed at investors: "Got gold?"

Wall Street's Optimistic Take

Schiff's gloomy outlook couldn't be more different from the mood among institutional investors right now. Following the 25 basis point rate cut, Jeffrey Roach, Chief Economist for LPL Financial, declared that "Goldilocks is here."

Roach pointed to the Fed's updated Summary of Economic Projections, which shows higher growth expectations paired with lower inflation forecasts for 2026. In his view, this proves the Fed is successfully threading the needle on its dual mandate of stable prices and maximum employment.

Gina Bolvin, President of Bolvin Wealth Management, agrees. She sees the Fed transitioning from inflation-fighter to risk-manager, trying to steer the economy toward a soft landing without "oversteering" and tipping into recession.

The Mechanics Behind the Controversy

So what exactly has Schiff so worked up? The Fed plans to purchase roughly $40 billion per month in shorter-maturity Treasuries through what it calls "Reserve Management Purchase Operations."

Bill Adams, Chief Economist for Comerica Bank, explains these purchases are designed to smooth out volatility in short-term funding markets. But Adams also highlighted some challenges ahead: the Fed is working in what he called a "data vacuum" because of delayed economic releases, and there's uncertainty looming with Chair Powell's term ending in May 2026.

Chris Zaccarelli of Northlight Asset Management struck a cautionary note despite the current optimism. While the mood is positive now, that "rose-colored" outlook might fade if investors realize the path to lower interest rates will take longer than they're hoping.

Markets Keep Climbing

For now, though, investors seem pretty content. The S&P 500 index has climbed 17.35% year-to-date, while the Dow Jones index returned 13.36% and the Nasdaq Composite surged 22.68% over the same period.

On Wednesday, both the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 indexes respectively, closed higher. SPY was up 0.66% at $687.57, while QQQ advanced 0.41% to $627.61.

The question is whether Schiff's warnings will prove prescient or whether Wall Street's Goldilocks narrative holds up. Time will tell if this Treasury buying program is the benign technical adjustment the Fed claims or the inflationary policy Schiff fears.