Peter Schiff, economist, best-selling author, and CEO of Euro Pacific Capital, believes a U.S. dollar crisis is underway.
“The dollar is very overvalued…and the dollar is a bubble,” he told Newsmax Prime on Aug. 11. “This dollar bubble is going to burst.”
Indeed, less than two weeks after Schiff’s interview, the U.S. dollar index, which measures the greenback against a basket of currencies, has retreated 2.1% to 93.063 for a fourth-straight loss.
And U.S. markets are getting rocked with a major sell-off – last week finished out as the worst for stocks in four years…
Many blame the surprise China yuan devaluation for the sell-off.
“When you look at the immediate import [the yuan devaluation] had on currencies – you get a sense as to why people are very, very frustrated with China,” Jon Huntsman, former U.S.ambassador to China, told CNN on Aug. 16. [Editor’s Note: For a full explanation of the Chinese currency devaluation and its effect on the dollar, click here…]
But Schiff has a completely different take.
He believes investors should be worried about the United States, not China…
Peter Schiff: Fed to Blame for U.S. Dollar Crisis, Not China
“China’s economy is not failing and this is a small devaluation, 2%” Schiff said. “The Chinese currency has increased in value dramatically over the past several years, along with the U.S. dollar. So this move was motivated not by the exchange rate between the yuan and the dollar, but between the yuan and all the other currencies because the dollar is in a bubble right now.”
Schiff went on to say the dollar has been propped up on hype and speculation. And the U.S. Federal Reserve is to blame – not China.
“Our economy is in much worse shape than the Chinese economy. The Fed is going to be forced to admit this,” Schiff said. “They’re not going to be raising interest rates; they’re going to be doing QE4. That’s going to sink the dollar, and then the Chinese are going to have to revalue their currency much higher in the future against the dollar, and it’s the dollar collapsing that’s going to hurt the U.S. Not this recent move by China.”
“We’re on the verge of a much worse financial crisis than the one we went through in 2008, and it’s going to take the form of a currency crisis. You’re talking about currency wars. America is going to win the currency war, which is a race to the bottom, and you don’t want to win a currency war because a currency war is different from most wars in that the object is to kill yourself and unfortunately, we’re going to succeed.”
Currency Wars: China fired a shot heard ’round the world Aug. 11, stoking fears of what could become the ugliest of all currency wars. In a surprise move, the country massively devalued the yuan 2% – its biggest one-day devaluation in 20 years. China’s yuan devaluation will have more than just that immediate impact – it gives the country unprecedented, long-term control over the U.S. dollar. Here’s how China has managed to place the U.S. dollar on puppet strings…
Full article: Peter Schiff on U.S. Dollar Crisis: “The Dollar Bubble Is Going to Burst” (Money Morning)