Peter Schiff Says Inflationary Depression Has Already Begun

Almost four years ago to this date, in August 2006, Peter Schiff offered his take on the economy, and he painted a bleak picture very few believed, that real estate prices would crash and consumers in America would start to save again.

That and more happened, and the president of Euro Pacific Capital has once again made a dire prediction of where he sees the economy going in a recent interview.

Even though a lot of media attention has gravitated towards deflation, Schiff will have none of that, as he sees what he calls the worst type of depression beginning, and that is an inflationary one.

When asked where he saw the economy now, Schiff responded:

"We're in the early stages of a depression now. It's going to be a horrific experience for average Americans who are going to watch their standard of living plunge. The cost of living is going to escalate dramatically. We are going to see soaring prices for the basic necessities of life, like energy, clothing, and other things. Education and health-care costs are going to continue to spiral out of control. Millions of more Americans are going to lose their jobs, and all of us are going to lose our freedoms and our rights. As the government gets bigger, it tries to end the crisis; but its policies are creating, perpetuating, and making it worse."

When asked what needs to be done to fix the economy, Schiff added, "We have to stop stimulating. We have to shrink the government and cut government spending dramatically. The reason the economy is so screwed up is because government regulations and subsidies have created a slowing economy. They have prevented market forces from operating the way they need to be. They have prevented an efficient allocation of resources. We need to rebuild our manufacturing base. We need to reindustrialize. We can't do that without the resources, without the savings, without the investment.

"They've created a nation of spenders, speculators, and consumers, and they've destroyed the savers, producers, and the investing class that built this country. We're moving from a market-based economy to essentially a planned economy. We're abandoning capitalism and embracing socialism. That's a recipe for disaster."

Schiff recommends getting out of U.S. dollars altogether. He says people need to flee U.S. bonds and Treasuries, and look more toward emerging markets and commodities.