July 21, 2012. New York. If you ever watch CNBC or Bloomberg, you’re familiar with Peter Schiff. For years, he’s been making periodic appearances with accompanying economic predictions and market news. Often, his warnings go unheeded and network personalities merely question his anti-establishment sentiment. But his warnings have proven correct in the past. Now, he’s warning America that economic doom is on the horizon.
Economist Peter Schiff. Image courtesy of Euro Pacific Capital.
Peter Schiff is the CEO and Chief Global Strategist for Euro Pacific Capital. He’s not a fortune-teller. He’s an economist. But he’s one of those rare economists that repeatedly tells it like it is, no matter how much people don’t want to hear it. He’s in the business of making money, so his predictions carry much weight. And as he’s learned, even when correct, if the global powerbrokers push the other way, it can make the right bet wrong. Now, he’s issued his biggest warning yet, not just to investors, but to the American people.
In an interview with Yahoo Finance this week, economist Peter Schiff details his warnings to the American people. When asked if the impending US financial collapse will be worse than 2008, Schiff pulls no punches.
“It’s going to be a lot worse, specifically because of what the government did to artificially stimulate the economy in the aftermath of the 2008 financial crisis,” Schiff warns, “Because the government came to the rescue by printing a lot of money, bailing out the banks, propping up the housing market, racking up trillions of dollars of additional debt so we could consume more stuff that we couldn’t afford and pay for with borrowed or printed money. All we did was delay the day of reckoning. But in so doing, we exacerbated all of the problems that make that day of reckoning necessary.”
Speaking to the timing of the coming economic collapse, Peter Schiff is less clear. “Knowing exactly when something is going to happen is harder than knowing that it will happen,” Schiff admits, “But we’ve got a much bigger collapse coming, and not just of the markets, but of the economy.” He goes on to describe his vision of America’s tomorrow. “It’s like what you’re seeing in Europe right now, only worse,” Schiff summed up.
A detailed prophecy
When Yahoo Finance pressed for specifics regarding what this coming economic collapse would look like and what Americans can expect, the financial strategist rambled off a number of steps he sees the US government taking over the coming months, and the terrible results they will continue to produce.
Peter Schiff explains:
“I would say, the US economy continues to weaken towards the end of the year and the FED ultimately comes through with QE3 (quantitative easing 3). It doesn’t work in the sense that it’s not going to strengthen the economy. But it will weaken the dollar. As the dollar weakens, it’s going to put upward pressure on import ../../../articles/q32012/economist-peter-schiff-warns-of-us-financial-peril/prices_ raw material prices. That_rsquo.css;s going to cause margins to be compressed in the US. Businesses will respond by reducing capacity, laying-off workers and raising prices. So you’re going to see increasing unemployment and inflation. That’s also going to put more pressure on the budget deficit. That’s going to widen, both because the government’s collecting less in revenue, spending more, and ultimately interest rates are going to rise. That’s going to cost the government more money to finance the debt that we already have. As the economy weakens further, we’re going to get more QE, which means more pressure on the dollar to go down. And the cycle continues until eventually, we have an all-out or full currency sovereign debt crisis.”
The US financial anomaly
This isn’t the first time Peter Schiff has gone public with warnings of monetary disaster. Almost immediately after the US Treasury began printing money to solve the US economic collapse, he began warning of hyper-inflation. While Schiff’s math was correct and printing money by the truckload day and night should cause the devaluing of the US dollar, it just hasn’t happen. We’re not paying $20 a gallon for gas, or $10 a gallon for milk, yet.
In the voo-doo economic system the world uses now, the US dollar actually did drop massively in value. The only problem was that the entire world’s currencies crashed in value simultaneously. The world’s money is not backed by gold or silver any longer. It is backed by “faith and credit”. And the United States still retains the full faith and credit of most of the world. As many pundits have explained, “The US dollar is simply the least worst.”
Peter Schiff warns that the US may see European-style austerity. As national economies are crashing around Europe because their country’s credit has been maxed out, governments have been forcing budget-cutting measures on the people, resulting in regime changes and sporadic riots. Schiff believes America is probably headed down that same road.
In response to a crashing US dollar and spiking interest rates, Schiff sees two possible government responses. “That’s when we hit our real fiscal cliff, when either we’re going to have to slash, I mean slash government spending massively across the board, restructure out debts including not paying one hundred cents on the dollar for US Treasuries, be honest with people who are on entitlements like Social Security and Medicare. They’re not going to get the benefits they’ve been promised. Government workers are going to have to take a pay cut. Many of them are going to have to get different jobs in the private sector. Banks are going to fail. People are going to lose money. Not only investors, but depositors are going to lose money as well. The housing market is going to fall again. We’re going to have to allow Fannie and Freddie to go bankrupt next time, as well as the FHA, and not bail them out.”
Offering a second option, Schiff explains, “Alternatively, we can bail everybody out, pretend that we can print our way out of the crisis. And instead, we have run-away inflation or hyper-inflation, which is going to be far worse than the collapse we would have if we did the right thing and just let it all implode.”
Peter Schiff offered the exact same scenario in 2008. Only, Democratic and Republican legislators, along with President Obama, were united in kicking the problem a couple years down the road. With near trillion dollar bailouts for the big banks, big insurance, unions and local governments, national leaders from both sides of the aisle haven’t fixed anything in those four years, only put the nation trillions of dollars further into debt.
Where to put your money
Explaining that the coming crisis may be out of the FED and Treasury’s hands and at the mercy of global market forces, Schiff gives advice on where Americans may want to put their hard-earned investments. “The worst place to be is US Treasuries or any dollar-denominated debt instrument,” he warns, “The longer the maturity, the more you’re going to lose.” Putting it plainly, he continues, “Anything in dollars. Even if you’ve got dollars stuffed in your mattress, you’re going to lose because they’re not going to buy you what you expect.”
When pressed for specific suggestions, Schiff gave the following recommendations:
- Bonds – Sell. The longer-term, the worse off you’ll be.
- Stocks – Buy/Hold. But buy carefully, choosing companies that are exporters from the US or have a global footprint.
- Gold/Silver – Buy. A must-buy and a tremendous opportunity right now.
For more information on Peter Schiff’s economic warning, read his recent book, ‘The Real Crash: America’s Coming Bankruptcy’. Buy it right here and support Whiteout Press at the same time.
To see Peter Schiff in person, attend Paul Festival next month. Held August 26-28 in Tampa, Paul Fest is a 3-day music and liberty festival to pay tribute to Congressman Ron Paul and the Liberty movement he’s inspired. Peter Schiff will be one of the many prominent speakers at the event. For more information, visit PaulFestival.org.
Order Peter Schiff’s new book right here!
The Real Crash: America’s Coming Bankruptcy
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