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Fed has turned U.S. into a 'roach motel': Peter Schiff

Why gold is your safest and best bet: Peter Schiff

Hawkish comments from Federal Reserve officials this week have some investors looking to sell stocks. But according to one long-time Fed critic, the Fed will never hike rates.

"If the Fed tries to raise interest rates we will have a worse financial crisis than the one they caused in 2008," Peter Schiff told CNBC's "Fast Money" traders on Wednesday. "They're going to talk as if they can raise rates because they don't want to admit that this is a bubble. But they don't want to let the air out."

The CEO of Euro Pacific Capital argues that the Fed's quantitative easing policies, which brought interest rates down to zero, have turned the U.S. economy into clients at a sort of "roach motel," dependent on low rates to survive, while simultaneously unable to grow because of those same low rates. And now, according to Schiff, the only way Janet Yellen will be able to save the market from another collapse is by cutting rates once again.

"Once they check us in, they can never check us out. And that's what they're finding out right now," he said.

Following December's 25 bps hike, stocks have violently fluctuated in a range between 2081 and 1810 on the S&P 500 — only finding footing in recent weeks.

Schiff says the U.S. economy is currently in the midst of a recession that could eventually be even more devastating than the Great Recession of 2008. By his work, the official start of said recession was either at the end of 2015 or early 2016, the same time the Fed decided to raise rates.

"Whoever replaces Barack Obama is going to inherit a worse recession than the one that he inherited from Bush," said Schiff. "We're off to the worst stock market start in history, so I doubt the Fed wants to repeat that and [hike] again in April."

But there is one place Schiff is confident any move from the Fed will withstand: Gold.

"What happened the last time the Fed raised rates? Gold went way up. So if the Fed does that again and the stock market tanks, gold's going to get the safe haven bid," said Schiff. "If you bet against the Fed and bought gold in 2000 when it was under $300 an ounce, the Fed is one of the main reasons it's now more than $1,200 an ounce."

Of course, Schiff has made similar claims in the past, many of which have yet to come to come to fruition.

But Schiff stands by his theory that gold will eventually trade up to $5,000.

"If you bet against the Fed and bought gold in 2000 when it was under $300 an ounce, the Fed is one of the main reasons it's now more than $1,200 an ounce [today]."