U.S. Will Win Currency War, Rest of Us will Suffer

In a currency war that is escalating, over time there is no doubt the U.S. will eventually come out the winner, in the sense that it will lose more of its value than competing currencies, which will devastate the economy.

Peter Schiff, CEO of Euro Pacific Capital, said this:

"There is a currency war going on," Schiff said at the Inside ETFs conference. "The irony of a currency war which makes it different from other wars is the object is to kill itself. Unfortunately, I think the U.S. is going to win the currency war."

"We're broke. We owe trillions. Look at our budget deficit, look at the debt to GDP (ratio), the unfunded liabilities," Schiff added. "If we were in the euro zone they would kick us out."

Since the Federal Reserve is artificially propping up the U.S. economy, it's only a matter of time before the negative consequences kick in, led by the ongoing debasement of the U.S. dollar.

Schiff also rightly notes the consumer price index isn't made to measure inflation, but rather to hide it through manipulation. He calls the CPI a "total fraud." Schiff says other similar indexes are just as fraudulent as the CPI.

Recommendations from Schiff are to continue to hedge inflation and global uncertainty and unrest with precious metals, especially gold.

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.

Peter Schiff: Government Bubble Bursting

In a recent interview on Sound Off Connecticut, Peter Schiff said the government bubble will burst, and when it does, the bond market will collapse and hyperinflation will follow soon afterwards.

Schiff also stated that “The bigger the government gets, the weaker the real economy gets,” and of course he's correct. Just look at Greece as an example of that truth.

All the government does is rob from the productive and redistribute to the unproductive. Government can't produce anything, and the larger it gets, as Schiff says, the weaker the real economy becomes because it takes away from investment capital and becomes a part of consumption, which produces nothing.

Keeping interest rates low will "destroy the value of" the dollar, said Schiff, and that will result in hyperinflation, which could bring chaos to the country.

Paul Krugman Clueless on China ... and Everything Else

Peter Schiff in talking about Paul Krugman - who doesn't have the right to be called an economist - asked for the Nobel Prize committee to take the medal back for stirring up issues with China that will end up doing the U.S. great harm.

Schiff calls out Krugman on calling for an economic war with China, where Krugman believes China no longer purchasing Treasuries is a winner for the U.S. and devastating to China.

But if China were to sell its existing debt or refuse to buy any more, the Fed would be forced to again ramp up the printing presses and throw more money at the problem, which even Krugman admits would cause the value of the U.S. dollar to fall; something he thinks would be good for all of us.

That would drive up prices for American consumers, although it would temporarily help American-made products to be more competitive on the world stage.

Consequently, the standard of living for most Americans would plunge, while the Chinese standard of living would continue to rise. That doesn't sound like a winning hand for America, and it isn't.

The Chinese would start to have their domestic prices lowered while their own factories would do the majority of the supplying of those goods.

Commodity prices in that scenario would also fall steeply, making it easier and cheaper for China to produce products to serve their people.

Being a fading Keynesian, all Krugman can think of is printing money will solve all economic problems. The idea of transferring that thought stupidly to the Chinese monetary situation is reckless and ignorant. No wonder Schiff is calling for the Nobel Prize committee to take the medal back from Krugman.

Of course he should never have received it in the first place.

Peter Schiff Warns U.S. Dollar Bulls

Peter Schiff on U.S. Dollar in 2010

Peter Schiff recently stated there is nothing more accurate than dissecting the fundamentals of a government to ascertain the value of its currency, and in the case of the U.S. dollar, that doesn't point to a reason those who are bullish on its strength should continue to be.

Very quickly the seemingly endless bearishness toward the U.S. dollar ended because of the sovereign debt crisis in Greece and the resultant plunge in value of the euro.

Now that it seems to be on relatively solid footing for now, the inherent value of the U.S. dollar should emerge again, and that should continue downward in Schiff's opinion, based on the continuing policies of the U.S. government which undermines its value.

In an extraordinarily short time Schiff notes, the sentiment concerning the fall of the U.S. dollar gravitated toward the euro, something he said, as far as how quickly it happened, he had never seen before in his life.

Schiff believes there will soon be a huge sell-of of the greenback, and once there is more of a surety concerning Europe, there is no reason people would hold onto the U.S. dollar, as it still remains a flawed currency.

Peter Schiff on U.S. Dollar in 2010