The prominent economic advisor Peter Schiff has issued an unwelcoming announcement blaming the government action in the financial sector. Schiff updated the Twitter community on March 18, arguing that adopting strict regulation has prompted the collapse of leading financial providers in the US.
He argued that the current financial crisis battling the banking sector is similar to the 2018 economic depression. In his tweet, Schiff argued that the implementation of tougher regulation has triggered banks to record poor performance.
Relationship between Government Regulation and Economic Stability
Recently, the Fed injected $300 million to support the bankrupt financial providers in the US. The move by the Fed has challenged the financial watchdog to develop the corrective actions to address the current economic crisis.
Besides the steps the regulators took, experts on economic matters have joined forces to develop a suitable solution to address the financial crisis in the US. Based on the economist’s findings on the fallout of Silicon Valley, Silvergate and Signature banks, the team revealed that over 190 banks in the US are facing a similar challenge.
The economist argued that most banks in the US are at a high risk of depositor-driven fallout. In their remarks, the economist decried that the monetary policy issued by the regulators have adversely affected the value of investments such as bonds and mortgages.
The current economic situation corresponds to the 2018 financial crisis that plunged most housing providers into liquidity crutches.
Impact of Government Regulation on the Financial Sector
Revolving around Schiff’s March 18 tweet, he blamed the government regulation for impacting the current economic situation. He recalled the 2008 economic depression that obliged the regulators to adopt new banking policies to address the financial concern.
He argued that too much government intervention in the financial sector has negatively affected banks. Schiff urged the regulators to invest in formulating neutral policies that create a balance between the financial providers and regulators.
He lamented that the tougher regulation in the US compelled Schiff to sunset his Puerto Rico-based bank in 2022. In his last July tweet, Schiff argued that the regulators lacked supporting evidence of the closure of his bank.
He stated that the unfavorable banking regulations had inspired millions to shift to the decentralized finance platform. Schiff stated that the quest for financial independence has challenged most developing and developed countries to be pro-crypto.