In an interview with GoldSeek on April 14, outspoken economist Peter Schiff issued a dire warning to investors.
According to Schiff, a new housing bubble, an overvalued stock market, and President Trump‘s proposed stimulus plan will send the U.S. into extreme panic at some point in the near future.
In fact, Schiff thinks these catalysts will combine to cause an “inflationary maelstrom” that will “wipe out entire generations of retirees” who have their nest eggs invested in the market.
Let’s take a look…
Schiff Sees a New Kind of Echo Bubble
This new housing bubble – coined an “echo bubble” by some economists – is something we’ve warned you about before.
However, “[t]his bubble is different because it’s an institutional bubble,” said Schiff. “You have record ownership of single-family homes by hedge funds and private-equity funds. They bought these things up in ’09 or ’10 or ’11, and their plan was to rent them out for a while and then sell them to other tenants.”
Here’s the problem…
“The tenants are now broke,” said Schiff. “They’re unemployed — they have credit card debt, auto debt — they can barely afford to even rent the houses!”
However, this housing bubble alone won’t crash the economy, according to Schiff.
He believes what could cause chaos is the fact that this subprime housing debt is also concentrated in delinquent auto and student loans, putting over $4 trillion at risk.
The Stock Market Is a Joke
“The U.S. stock market rally is ending,” said Schiff. “It’s a bubble that is going to deflate.”
“We are not getting the Obamacare repeal, we are not getting the comprehensive tax reform, I mean we are not getting anything and still the stock market has not surrounded any of the gains from the Trump rally that was based on the expectation of a bunch of things that will not happen. What is going to happen is a recession!” wrote Schiff on his blog April 12.
However, according to Schiff, the real impetus that will topple this economy has already begun…
Trump Will Erode the U.S. Dollar
“The dollar is now at a 15-year high and has been rising for eight years,” said Schiff.
The United States has seen this before…
“This looks a lot like 2001, when the dollar was so high and then the stock market crashed and brought it down.”
However, the Euro-Pacific Capital CEO predicted one event that would cause a much worse effect than the stock market crash of 2001…
President Trump’s fiscal stimulus plan, which was unveiled last month.
“Financing the proposed fiscal stimulus plans could double the federal spending deficit, eroding the purchasing power of the U.S. dollar,” said Schiff.
And that, according to Schiff, will be devastating for retirees.
“Five years from now, you won’t have any retirees left! They will all be back in the workforce. They will be too broke to be retired!”
Full article: Peter Schiff Warns This One Event Will Wipe Out Entire Generations of Retirees (Money Morning)