Peter Schiff

(Getty Images photo)

Euro Pacific CEO Peter Schiff says the Federal Reserve's promise not to raise interest rates for two years will inflict untold harm on the U.S. economy.“It was bad enough that the Fed held rates far too low, but at least a fig leaf of uncertainty kept the most brazen speculators in partial paralysis,” Schiff writes in Forbes.“But by specifically telegraphing policy, the Fed has now given cover to the most parasitic elements of the financial sector to undertake transactions that offer no economic benefit to the nation.”Specifically, says Schiff, the move will encourage banks to borrow money at zero percent from the Fed, and then use significant leverage to buy low yielding Treasurys at 2 to 4 percent.“The result is a banker’s dream: guaranteed low risk profit,” Schiff says. “In other words it will encourage banks to lend to the government, which already borrows too much, and not lend to private borrowers, whose activity could actually benefit the economy.”“By committing to keep (rates) near zero for the next two years, the Fed has actually lengthened the time Americans will now have to wait before a real recovery begins,” he says.Boston.com reports that preliminary data showed the Thomson Reuters/University of Michigan consumer sentiment index had fallen this month to lower than it was in November 2008, when the country was deep in recession — and the Fed’s move may have inadvertently invited prospective borrowers to put off large purchases.