Money manager Peter Schiff says don’t believe the so-called “Brexit” was the real cause of the recent chaos in the financial markets. Schiff explains, “If the global financial system and the markets were healthy, ‘Brexit’ would be a non-event. I mean what difference does it make in the scheme of things if the UK is not part of the EU? In a healthy economy, it would just shrug it off, but because we have anything else but a healthy financial system, it’s all a gigantic bubble. It’s a house of cards. That’s how fragile it is, and it’s all propped up with cheap money, negative interest rates and quantitative easing. Everybody is confident that the central banks and politicians can keep these bubbles in the air that they are juggling. Now, all of a sudden, something goes wrong that they didn’t expect. It shows that the government is losing control, and this is the wake-up call. This is what has everybody so scared. This is the match that ignites the powder keg, but the powder keg was there all along.”
So is the Fed going to start more easy money and printing money because of the current financial chaos? Schiff says, “It may be the excuse because they were going to do it anyway. The market is now pricing in a higher probability of a rate cut than a rate hike, but I said that back in December. When the Fed first raised rates (December 2015), I said the next move is likely going to reduce them and not a second hike. Now, the markets are coming around to my way of thinking, but it took Brexit to get them there. I said back then it didn’t matter how we got there, the fact is, we are going there. The Fed was just looking for an excuse to save face. The real reason the Fed is going to cut rates is because this bubble economy can’t survive with even the smallest of rate hikes. So, it’s the fundamental problems in the U.S. economy that are worrying the Fed. It doesn’t want to admit that. It doesn’t want undercut its own credibility because it’s pretending it saved us. It doesn’t want to undercut Obama and Clinton because they are pretending we have this legitimate recovery. So, now they have a face saving excuse to do what they were going to do anyway. They will launch QE4 and cut rates and say there is nothing wrong with our economy. It’s because of the problems with the global economy.”
On gold and the dollar, Schiff says, “The big moves in gold are happening not in the dollar, but foreign currencies. Look at the Pound Sterling. You saw a 20% jump in the price of gold in two days. That is unprecedented in the UK. That is a huge loss of purchasing power of the Pound in gold terms. I think you are going to start seeing these losses in all these fiat currencies. Once the carry trades are finished unwinding their bad bets, and the fundamentals reemerge, what is happening right now is not bullish for the dollar. If this is what is going to enable the Fed to admit it’s going to cut rates and do QE4, this is very negative for the dollar. So, once the dust settles, the dollar is going down. If you are still in the dollar, this is your last chance to get out.
Schiff goes on to say, “This is going to be a huge crisis. Alan Greenspan was on CNBC saying this is the worst thing he has seen in his career. He’s not talking about what has already happened. He’s talking about what is about to happen. He understands how screwed up the economy is because he helped screw it up. . . . One of these days, you are going to see gold moving up at $100 clips routinely when people really perceive the dangers in the fiat world and come to grips with how much money these central banks are going to print. None of them have any integrity to honestly default, so they are going to take the coward’s way out and print.”
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.