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Peter Schiff: The Shot Not Heard Around The World
Submitted by Peter Schiff via Euro Pacific Capital,
China’s recent move to devalue the yuan has sent shock waves through the global financial markets and has convinced most observers that a new front in the global currency wars has begun. The move has caused many observes to envision a new round of competitive devaluations around the globe in which the race to the bottom will intensify. In this scenario they envision that the U.S. dollar will solidify its standing as the only strong currency. This misses the point entirely.
In the past, most of the action in the "currency wars" had been focused on the efforts that many nations undertook to prevent their currencies from rising against the U.S. dollar, which itself was being weakened by a perpetually easy Federal Reserve and persistently negative U.S. trade and budget deficits. But with the dollar now strengthening significantly, the Chinese government has become concerned that the yuan, which has remained largely tethered to the dollar, had become too strong against other currencies, particularly its primary trading partners in Asia and the Pacific. To remain competitive locally, it decided to ease the tether to the dollar and instead let its currency float more freely. The purpose and implications of this significant pivot has largely escaped the U.S. media. In reality, the move raises the likelihood that the yuan will rise significantly when the dollar resumes its long-term bear market, not that it will remain weak forever.
It is surprising how quickly market observers ascribed the recent losing streak on Wall Street to jitters over the 2% yuan devaluation. The development provided a convenient excuse for those who continue to deny that any economic weakness in the U.S. is chronic and self-generated. But why should America be so concerned with a small drop in the yuan? After all, we have supposedly done quite nicely for ourselves economically even while currencies like the yen and the euro, and all the other major currencies around the world, have fallen more than 20% against the dollar since May of last year.
In truth, the U.S. markets had been selling off for days before any change in policy from Beijing became remotely clear. With U.S. economic data deteriorating, corporate earnings falling, and 95% of economists forecasting a rate hike in the next few months, a sharp sell-off of already wildly valued stocks could be considered a logical development that needs no overseas explanations. But given that this is a reality that no one prefers to acknowledge, the yuan devaluation comes at a convenient time.
The last round of the currency wars began around 2010, when pronounced dollar weakness resulting from the Fed’s Quantitative easing experiment and the Federal government’s annual trillion dollar plus deficits had caused the dollar to fall sharply against most other major currencies except the yuan, which did not rise because the Chinese were enforcing a peg against the dollar. To affect the linkage, China had to accumulate trillions of U.S. dollar reserves, with the added benefit to America of keeping a lid on long-term interest rates and consumer prices, that would not have been there absent China’s help. As a result, many currencies gained value against the dollar and yuan simultaneously. Faced with such scary prospects, many countries devalued to keep things in equilibrium; hence the race toward the bottom.
In contrast, I believe this time around Beijing was forced to act because the continuously surging dollar had been bringing the yuan along for an unwanted ride upward. This resulting movement against other currencies was not driven by fundamentals and put China at a disadvantage against its local trading partners.
By letting their currency float more freely, their principle concern was not their exchange rate with the dollar, which had remained largely fixed, but their exchange rates with currencies like the Japanese yen, the Australian dollar, the euro, the Canadian dollar, and other emerging market currencies in Latin America and South East Asia. This shows where the Chinese are placing their priorities.
While making its devaluation announcement, Beijing said that it wanted its currency “to reflect fundamentals” and to no longer simply mirror the movement of the dollar. It acknowledged the fact that its peg to the dollar was problematic and that it wanted a better, more natural mechanism. This is the key to understanding the announcement: The Chinese are preparing for a time in which the financial world does not spin in orbit around the dollar. Such a reality must make us think about the future.
Perhaps the Chinese feel as I do that the current dollar rise has all the earmarks of a classic bubble. After all, a major part of the dollar rally over the past year has been the hollow beliefs that the U.S. economy has fully recovered and that the Fed, in 2015 and 2016, will be able to raise interest rates and shrink its balance sheet substantially even while the world’s other major central banks continue to deliver stimulus. If they see the fallacies that I do inherent in these naïve assumptions, they may be sparing a thought or two as to their best course of action if the dollar bear market resumes, as it surely must.
What will happen if current trends continue and the U.S. economy slips back toward recession? Any sober reading of the current economic data, which shows anemic investment, minimal productivity growth, barely positive GDP growth, wage stagnation, and falling labor participation, should allow for the strong possibility that recession is looming in the U.S. If it occurs, or to prevent it from occurring in an election year, the Fed will be forced to immediately shelve its tightening plans (if it even has any) and instead deliver another round of QE. When that occurs the confidence that inspired the dollar’s rise will prove to have been misplaced, and the rally nothing more than another Fed-induced bubble.
By decoupling from the dollar now, China is sending a message that it may be prepared to let it fall later. This means that when the dollar starts to fall in earnest, China may not be there to catch it. This will also mean that the biggest foreign buyer of Treasury bonds will likely be sitting on its hands when deteriorating U.S. finances force the Treasury to begin issuing trillions of new bonds annually. So when the U.S. needs China’s help the most, it will be unwilling to provide it.
In the absence of a Chinese backstop that the U.S. has for too long taken for granted, when the dollar resumes its decline, the fall will be much more pronounced. This will also generate significant upward pressure on both U.S. consumer prices and interest rates that was absent five years ago, when Chinese buying provided a huge cushion to the U.S. economy. In fact, data indicates that China is already paring the amount of Treasuries held in reserve. That means a full blown dollar crisis may not have been averted, but merely postponed, with the dire warnings of U.S. hyperinflation potentially coming true after all.
The move may also rekindle to the Chinese appreciation for gold as a safe haven asset as the yellow metal has surged in yuan terms over the past few weeks. Increased buying in China indicates that this may indeed be the case.
Given the importance of gold to the typical Chinese investor, the yuan/gold exchange rate may become more important globally than the gold/dollar rate.
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I still don't understand why the real inflation isn't showing up as of yet.
That's the MONEY problem explained here>>
https://biblicisminstitute.wordpress.com/2015/08/14/when-money-is-the-pr...
Misses the point? Whore your value down as much as possible to "make yourself attractive to the investors"? I think the world is duped by the Fed.
I wonder if Peter Schiff has considered the fact that the chinese gov. is in a bind:
Citizens have invested heavyly in the stock market, which is still overvalued. However china .gov can not let the stock market fall too much. A better alternative is, to let the yuan fall, so the chinese people will not feel the brunt of loss so distinctively, foreign investors will lose more and China becomes more competitive. Brillant strategy!
Inflation can always be blamed on "greedy capitalists, hoarders, and speculators" and the general population is so stupid that they believe it. How many people actually understand what the Fed did with QE and how it was directly responsible for oil going from $38 to $110, gasoline going from $1.75 to $4.50, and food prices doubling over a few years? How many people understand that the Fed is the reason why they have to take out that $450K mortgage or pay $2,000/mo for that one bedroom apartment? They know what Kim Kartrashian and Caitlyn Jenner had for lunch today.
Or .... You can just f-ing lie about inflation like every other piece of data.
WWW.chapwoodindex.com
I listen to every podcast from Schiff...why doesn't anyone else????
https://www.youtube.com/user/SchiffReport/videos
fucker has always known what he's talking about as far as I'm concerned.
Schiff is annoying as shit but more importantly thoughtful and thinking independently and he may be right...I still think he, like most, are missing the the foundational shift of why central banks stepped in and will have no reprieve...core populations are declining globally and organic public debt as the substitute for failing organic growth is maxxed out. It's only gov printing and QE of everything from here to maintain centrally determined demand.
I try to offer the details showing why China and likewise the US have met the same fate...and seemingly have formed like answers just as Japan did a decade earlier.
http://econimica.blogspot.com/2015/08/chinas-collapse-is-last-straw-of-global.html
Regardless, seems well worth the time to listen to Schiff.
we are at fridays burger on saturday. bring it fwd, damn the future...
The dollar used to be backed by gold. Then it was backed by oil (the Petrodollar). Now you say it's been backed by the CNY? If we lose that peg we're truly fvcked.
Ja, the only reason why the USD has survived 2008, is because essentially the PRC and the RF have floated it. Only because they had a lot of U.S. "paper" and since then have converted that "paper" to hard assets. This time around, no life line. So ja, we are essentially FUBAR ..
Now there is something more to understand about the PRC. A very important date on Sept. 7, 2006. A very important opportunity missed. Everyone was informed. And Russia, the RF is more key than most want to acknowledge. A matter of $30 billion can go a long way if invested properly ..
http://wantarevelations.com/2014/01/wanta-plan-macro-financial-economic-...
Just to fantasize for a moment... A currency war breaks out or something breaks down and Trump is in office. He goes toe to toe w/China and inflationn explodes and people flock to hard assets like gold or farmland. Trump would be the least likely president to go after your gold.
That is a fantasy. Trump will never be allowed to be president. Next idea.
Considering a plastic jug of Folgers coffee is little more than half the size it was two years ago but the price has increased a bit, one might conclude they are simply hiding it, ala, air in the bag of chips or one less olive in a jar style.
Inflation is very real, just obfuscated. Good thing we are paying attention. Don't you just lurv Kim's big ass?
Who is this Kim you speak of?
My chicken balls have also gotten a lot smaller
LOL, damn!
QE was simply absorbed into the banking, equity and bond markets and replaced lost capital. ZIRP is actually quite deflationary. Lower rates require less capital, savers have been zeroed out- No earnings for banks to pay out on. The velocity of money has dropped off the table. Inflation numbers are gerry rigged- inflation is bad- probably around 9%- so I don't see much change anytime soon. http://www.chapwoodindex.com/
Right now, like I've been saying for years- Japan is the precedent. All of these bankrupt countries are still able to simply service their debt with interest payments- there is no way in hell they can ever remove the principal. How long does the game go? I don't fucking know.
That's what we all want to know.
Tell you what capitulation is coming, fear porn is at its height, balls are blue, shaft is raw, the end is near, Schiff is right again...
Repo Truck in the form of Agenda 21 is coming.
https://www.youtube.com/watch?v=ipKHqY7uxSg
15 min 2015-Agenda 21 recap with Rosa Koire and others (which they are fighting in court). This is probably the most important issue in America. Halting Agenda 21 should be at top of list.
How long? Consider How long the fucking Greeks held out. U.S. GDP is 75x bigger. And we can print $$$$
We also can put on a pretty good riot. I wouldn't look to Greece, I'd look to Egypt. It'll be quick when it comes. Real estate in urban centers will be scrap. Secession will be swift. What do you think Jade Helm is all about?
and imo nobody is really prepared for what will actually happen. some think they are, but they are in for a rude awakening. a good pair of boots, a backpack and skill of the land is the best bet.
i'm putting my bet on a retired green berett or seal...
My bet are on the cockaroaches living in Mom and Dad's basement.
The odds are long but the payout will make me 'fiatly rico'.
--A.Hedge .
They don't have our military budget.
My Theory: The yawning weath gap is pushing all the extra dollars into investments, rather than into commerce. So you get asset price inflation, but not real inflation.
This is why I think income and investment should be taxed the same.
Income shouldn't be taxed at all.
Because inflation is being cancelled out by the extinguishing of bad debt. Remember, debt is money in our screwed-up system. What you will see even more of is inflation in the things you need and deflation in the things you don't.
http://www.theburningplatform.com/2014/11/14/debt-propaganda-and-now-def...
http://www.theautomaticearth.com/2012/01/how-to-build-a-lifeboat/
Because the FED knows every trick in the book - US has gotten away with paying ZERO interest on their debt - in fact they pay less than ZERO because the FED has linked inflation or CPI to their debt - China pays between 4-6 % nterest on their debt - The FED won't raise interest if they intend to keep this PONZI scheme afloat !
The DESPERATION in the currency war is obvious in the explosions in China. The other SHOCK WAVE (besides the one mentioned in the interview) is the one after the second explosion in China which can be seen clearly in the following video>>
https://biblicisminstitute.wordpress.com/news-with-views/
Hyperinflation wont be happening anytime soon - Deflation will be the word of the day when it starts collapsing just like the US during the Depression of the 30's.
Pussy junkstaz ought to crawl out from the rusty dumpster and 'splain their votes. Start with "liquidity trap".
- Ned
Hyperinflation is the successor to deflation. It's the result of the Central bank's response to deflation and the general loss of confidence in the subject currency which causes rapid increase of money velocity. First deflation, then hyperinflation.
Right, because it is the BRICS that are expanding and growing in population and manufacturing.
The U.S. and most of the West are has-been's who have sold off their productive capacity while pushing birth control, abortions, and allowing easy illegal immigration to keep labor rates for service work low for the elites while bleeding out their middle class with hollow promises and ever increasing living expenses.
The U.S. and Europe are toast; China is just applying some butter.
Merchantiliest opportunists. Both American/Globalist and Chinese.
When the fixed exchange rate made Chinese production profitable the Party and Globalist Coroporate Elites embraced it.
The Yuan/US$ Peg was instituted and enforced while it was useful.
Now it is becoming burdensome to both parties to some degree and so it is amended.
As circumstances evolve it will either be further amended or discarded -to suit the Oligarchs within or doing business with China.
Think about the future? What's that? Can't see one, don't know what one is, must not have one. Sorry, we're all of "future" around here.
sounds correct.... timing however, maybe an issue... given the stakes, this could take several years....
NOT the quarter to quarter BS
place your bets.. and hedge accordingly
I was with the article until the end. China is lightening up on USD Treasuries in order to balance outward flows and maintain their new peg. There is no evidence of anything more than that.
Hard to tell what they are doing.Whatever it is, they are trying to control it every step of the way.
Baby steps, to an unknown goal, maybe truly floating with no peg.
And the US ends up the BAGHOLDER while China has the GOLD. And the factories, of course. Excellent observations, Mr. Schiff!
" And the factories, of course. "
Those factories and ports can be rendered useless in a weekend.
Go watch that port warehouse fire video for an idea as to how fast it can all be rendered a smoking heap.
The Chinese are preparing for a time in which the financial world does not spin in orbit around the dollar. Such a reality must make us think about the future.
If this is true, and the time of the dollar is nearly up, then a lot makes sense. Should the USA lose the special privilege of dollar as reserve currency imparts to it, then the USA will strike back with all it's power to restore it's place. The slide to global war and mass terror that the Washington Neocons are feeding, that will excellerate to global war. The power to print dollars and use them all over the globe to buy what the USA wants, to feed it's super power status. The Washington eiltes will not go quietly, they will react to any threat to king dollar, and their power.
If the US Dollar goes down, then the Washington crowd will burn the fucking world down with it.
World War $$$
Sorry, but I doubt it. The US, while able to spy on people, is not prepared for a war against an advanced adversary. The next war will be cyber. The monetary battle is moving pawns.
emp shock waves would render the us helpless and are virtually unstopable. jmfo
Evidently the US is not prepared nor has the will to win a war against a 10th Century adversary.
- Ned
As soon as China can withstand a substantial drop in U.S. imports or a palatable loss in U.S. teasuries then they will exit the dollar and it willl be game over. As China diversivives from the U.S. and as they increase their gold holdings... they are moving toward a time where they don't need the dollar or the U.S. as a buyer of goods... we can only hope that enough of their oligarchs have made enough investments in the U.S. to not kill the goose that lays the golden egg... but then there is Russia.
b/4 you get to giddy about china, read this....
http://davidstockmanscontracorner.com/the-great-china-ponzi-an-economic-...
Great point! I agree!
Pluto has just entered China's 2nd House (Mao's founding), where it will do mortal damage to the world's biggest Ponzi-scheme.
China is not "forever"; this will be just another interlude in hundreds of years of fractionalized, warlord-dominated, regional hegemonies contending with one another.
China is ungovernable, except by ruthless force & deception, which breeds the next episode of chaos.
Schiff writes as if he already has decided what will happen, so he fits the facts to his theories. They may be true of course, but I am more interested in an analysis of what is happening right now.
The Asian mercantislist exporters are sending us lower prices in exchange for internal inflation in their home countries. China cannot stand by and watch themselves get underpriced, hence the move to devalue.
Gosh, I though the peg of the Yuan to the $$ was a good thing? Maybe not so much ….
It is hard to make the case that the dollar is ready to crash versus other currencies in the near term (12 months). Longer term, maybe yes, but it is going to take a while.
sschu
Yeah like we need more Chinese junk from Walmart -at same prices we could get if made in America, but the Jew middleman and retailer doesn't get exorbitant markup and profit
To the best of my knowledge, Sam Walton was a Prespy.
You are not seriously suggesting that we could make the stuff sold at Wal-Mart (where I seldom shop) in the USA at the same price/cost as made in China? Really?
sschu
Yeah like we need more Chinese junk from Walmart -at same prices we could get if made in America, but the Jew middleman and retailer doesn't get exorbitant markup and profit
The customers make the decisions. The retailers work to do the best they can given the customer decisions.
If the customer decides on price alone - so does the middle man.
But you can cut out the middle man - all you need to do is order 100 pairs of pants at a time Buy in volume.
The corrupt USA has to mutate the price of real money, gold, so they can continue to use their phoney, corrupt paper money. That's one biggie that's happening right now. This isn't something that Peter Schiff is "making up" to fit his story line. You can watch it on COMEX every day. Known as "naked short sales". Illegal. Sanctioned by the big boys. Ignored by the regulators and policy makers. Designed to have you poo-poo real money and accept the phoney substitute. Anything it takes for you to accept that the printed money has real value. Anything it takes to discredit gold. The manipulators will fail. You get to decide where you stand when this happens. Choose wisely.
Fractional Reserve banking is fraud - the banks are insolvent - they don't have most of your money anymore - it's gone - they only have a 'fraction' of it !!
Exactly! Schiff has been spouting global hyperinflation for a long time and using any argument to support that view. In reality, the huge debt everywhere and QE-supporting overproduction, i.e. producers are not forced to go bankrupt and outta business, virtually means that deflation is the constant threat to the global economy. This until TSHTF and then when producers are really out of business then and only then will hyperinflation be a threat because some stuff won't be available at any price.
"but I am more interested in an analysis of what is happening right now."
You mean underlying chaos?
And you're disappointed that Schiff can't paint a made-to-order picture for you?
Schiff has alwasy been predicting the collapse of the dollar, and maybe that will happen someday.
Given where the world is right now with the strong dollar and a deflationary environment it is difficult to see how this occurs, for a while at least.
The dollar will collapse relative to what right now? Yuan? Oil? Gold? Euro? Rupee? Yen?
We face some serious deflation before the dollar collapses.
sschu
dollar will suck, but it will suck less than the others, and I like the longer time line as well. Lotta' adjustments need to be made vs. overnight failures.
"...and maybe that will happen someday" Not "maybe". It has to happen. It is mathematically impossible to continue forever. History shows we don't have much time left.
The dollar will collapse relative to what right now?
It's no mystery: real money.
By real money I assume you mean gold. Of course the dollar buys more gold by a long shot than it did 4 years ago.
So yes, they manipulate the price of gold. But gold has a long way to go before we can start calling the "collapse" of the dollar.
Deflation for now, inflation (probably) in the future. When is anyone's guess, but they can keep this going for a lot longer than we think.
sschu
This is real fear porn.
HA HA! You mean Zerohedge? or just this article? :-)
Think there was a "Zero Hedge" type of publication around writing warnings when these countries experienced hyperinflation? Austria - 1922. China - 1943. France - 1795. Germany Weimar Republic - 1920. Hungary - 1945. North Korea - 2009. Phillipines - 1944. Singapore - 1942. Yugoslavia - 1989. Zimbabwe - 2007. If the same warnings appeared in print in these countries, what would people have called the warnings? Fear porn? Because WTF folks, IT ACTUALLY HAPPENED! OK, OK, I get it. The US has a debt of 108% of GDP, runs the printing presses 24 hours a day, has put interest rates at zero or nearly zero for years, fudges reported economic numbers, and precious metal prices are manipulated while regulators turn their heads. The US continues to spend like there is no tomorrow, borrows a huge amount of the annual budget and hasn't had a balanced budget since Clinton. It's regulating businesses out of business, and has chased manufacturing, the real wealth creator, overseas. But everything is fine, RIGHT? It's all going to be fine because it's the good old USA! USA! USA! Good luck, optimists.
Ugh. I like Peter Schiff but he really has to deal with the massive debt deflation we're experiencing due to the extensive private sector debt. This is the effect:
https://research.stlouisfed.org/fred2/series/M2V/
Huge retraction in the velocity of money.
In this following chart you need to subtract the blue line from the red line but ... http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical-chart
Notice that after the beginning of 2009 the total debt decreases even while the public sector debt increases dramatically. This means the private sector debt was falling THAT MUCH FASTER.
Welcome to debt deflation. There's a lot more to go. We're all singing this now: https://www.youtube.com/watch?v=mgekmOqCFTU
Thank the banks: A loan for every business and family, and a business and family for every loan.
ZH task now is not to panic when dollar/Yuan goes to 7, because then it will fall to 5, then 4... If I see panic when it goes to 7, I'll lose my faith entirely on this website (if and when the yuan rises thereafter)
China has the " eye of the tiger" The U.S. has the eyes of a bat. China stealthfully stalks the prey. The U.S shows up in orange vests wearing calogne. Whom do you suppose will fill the pot ?
http://www.zerohedge.com/news/2015-08-13/1300-tiger-penis-800k-snipers-c...
what your zip code round eye?
Whom do you suppose will fill the pot ?
Well, I know who will be smoking it. And it will not be the Chiese. But they will also miss out on all that cannabinoid medicine. Which could cut our medical bills by a trillion dollars a year if fully exploited.
Peter Schiff:
2005: "The US Dollar's Days as the World's Reserve Currency are Numbered"
2005: "The Dollar Breaks Down"
My Favorite, Especially in Time:
September 2008: "Last Gasp of a Doomed Currency"
(For those Paying Attention, this was PRECISELY when "King Dollar" was Bottoming, and Began Basing for the Bull Market we are Now in)
2012: "The Dollar's Lucky Streak"
"Nuff Said".
you say that as if the story's already over.
hang on tight - the punchline is coming soon!
I agree with you Livermore...
Many similar forcasters with Peter Schiff have been as far off in timing as he has been with the same type of forcasts... but lets remember one HUGE fact that we have all been experiencing over the last 7+ years...!
The great majority of sane economic people (like many of the posters on ZHedge and Schiff) Never - Ever thought the FED would go THIS Crazy with Printing(QE) and Rates and loading corrupt scam DEBT on their ballance sheet as they have to the tune of TRILLIONS... and now the FED has actually completely destroyed the economic and financial base of the USA... To save what... The Big Banks... ??
Crazy does not even cover it !!
Schiff will be right in the fullness of time.. but by then we all will be to numb to care...
so...
BOYCOTT... with your time, money and withdraw support is all we can do...fom corruption, fraud and evil where ever you find it.
Never Say Die.... Laddies...
http://www.middletownbiblechurch.org/christia/frog.gif
Peter Schiff is one of the most sane, lucid and visionary analysts out there.
Once again he has hit the bullseye. Profoundly important groundwork continues to be laid by both Russia and China, looking toward a dollar-less future.
yes chinamen, buy gold!! I never much whining when swissy went off dollar or when ECB printed like hell.... stop bitchin about the chinese...
hope china buys another 10000 tonnes this year....place the order.
America will declare war on its own people first.
The China and Russia wars are financial, and we got no weapons, only empty threats
The war will be local, 'cos they won't fight back, and won't fight back dirty.
Actually, of course, war was declared 8 years ago, starting with the middle class and savers.
Yes! It is the american middle class the green Nazis wish to destroy!
The US dollar won't fail before the yuan/ruble IMO. USA despite all the doom and gloom is still the predominant military power in the world and the US dollar is still pegged to oil. The problem lies in the US budget/trade deficit really. There is no way the USA will be able to fund its implicit/explicit liabilities going forward at current USD valuations which means either capital investors will have to take writedowns to make the financial system viable with the reality of the new US tax base under a no growth economy OR they will print to cover their interest payments and then change the definition of the dollar to avoid hyperinflation. Those are really the only 2 ways to kick the can of hyperinflation down the road. My guess is the government make the latter choice since our oligarchical masters have never been ones to take a haircut that didn't invovle the people chopping off their heads. It's a scramble to buy real assets until it goes pop one way or the other.
"change the definition of the dollar"... do you mean devalue?
"change the definition of the dollar" ==> "fundamentally transform."
In essence for the original dollar holders yes, there is no way around it. People do not realize how fucked north america is going forward.
Theoritically it is possible to fix the economy but the reality is it will never happen because there is no political will to do so. Politicians answer to the corporations and those with enough influence to get a seat at the table. Democrat/Republican the distinction it doesn't matter. They give the illusion of choice when 1 party exists. Do you think any politician in the right mind would consider tackling social security reform, other pension reform, medicaide reform, student debt reform, foreign aid reform and across the board future cutbacks? Once you have dealt with the implicit costs, then you have to deal with explicit costs of balancing a budget and then deal with paying down the debt, and then figuring out how to manage the trade imbalances. It would require increased personal/capital and corporate/business taxation. Look at today, the corporations lobby for tax breaks or have lawyers figure out loopholes. That leaves it to the general populace to pay. EVEN if you could force the rich to pay more taxes capital is so liquid they will just hide it offshore or move out of the USA.
I mean go back 20+ years NAFTA, CAFTA and whatever form the next TTP bill takes have all gutted domestic manufacturing/traditionally middle class jobs that went along with it so the economy is shot. Businesses realize it and with all the QE intervention since 2008 little to nothing has gone into CAPEX with all of economic entities buying back stock to hit whatever target managment has for bonuses or to increase the value of existing holdings. (stocks go higher, MOAR dividends!). Even if a plan could be drawn up it might take 15-20 years to fix the economy. What you are witnessing is a gutting. A gutting of the economy, a gutting of the the wealth of individuals. It is the largest transfer of wealth in the history of mankind. From those who know and design the rules of the game from those who have been taught not to understand.
The reality is the only course of action is inflation. If you raise interest rates you cripple the economy and the abilitiy to service debt. The only way out of this mess is to inflate the debt away. Inflate the costs away. So there will be inflation followed by a "revaluation" or really "devaluation" of the US dollar. There will be social turmoil and strife. Then whoever pops up on top of the heap of bodies will change the definition of a dollar. The ratio might be 10-1, 5-1 but people's wealth will be consfiscated. Unless you own items that cannot be deflated it's a terrible event to happen. I have spent too much time thinking of the scenarios but this is the one I see most likely to happen. I hope to god it does not happen this way. But as someone once said, hope in one hand, shit in the other and see which one fills up faster... If my future children and grandchildren laugh at my foolishness at accumulating so much silver/gold in a happy healthy world 25+ years from now I will be so greatful.
Schiff is just like the rest of us stackers, he is gonna be wrong until the day he is right and that will be one day to late for the naysayers!
Strong $ means low commodity prices and low inflation for America whilst inflation may appear in countries that cannot control their depreciating exchange rates and are dependent on $ imports...
Here is where Peter misses. The fact is that it sucks all over the world and everyone knows it Peter. The US econmy sucks yes. But the Buck is rising. And Peter sees it as a contradiction and beats his head against it. Commodities and metals have taken a beating. Look at your charts Peter. And believe what you see. Check your premises. You thought a de-peg would send the dollar reeling down. I did not. And you think its because traders have gone nuts. But its all relative peter in the end when it comes to assets. You will see your money one day. However, not any time soon.
Posting your thoughts 4 times doenst make them more convincing.
Here is where Peter misses. The fact is that it sucks all over the world and everyone knows it Peter. The US econmy sucks yes. But the Buck is rising. And Peter sees it as a contradiction and beats his head against it. Commodities and metals have taken a beating. Look at your charts Peter. And believe what you see. Check your premises. You thought a de-peg would send the dollar reeling down. I did not. And you think its because traders have gone nuts. But its all relative peter in the end when it comes to assets. You will see your money one day. However, not any time soon.
Here is where Peter misses. The fact is that it sucks all over the world and everyone knows it Peter. The US econmy sucks yes. But the Buck is rising. And Peter sees it as a contradiction and beats his head against it. Commodities and metals have taken a beating. Look at your charts Peter. And believe what you see. Check your premises. You thought a de-peg would send the dollar reeling down. I did not. And you think its because traders have gone nuts. But its all relative peter in the end when it comes to assets. You will see your money one day. However, not any time soon.
Here is where Peter misses. The fact is that it sucks all over the world and everyone knows it Peter. The US econmy sucks yes. But the Buck is rising. And Peter sees it as a contradiction and beats his head against it. Commodities and metals have taken a beating. Look at your charts Peter. And believe what you see. Check your premises. You thought a de-peg would send the dollar reeling down. I did not. And you think its because traders have gone nuts. But its all relative peter in the end when it comes to assets. You will see your money one day. However, not any time soon.
100% on the spot. Buy gold, silver and in particular PM's mining stock that are at bargain price.
Peter Schiff is Jewish. It is a wonder there is so much positive commentary about his opinions around here.
https://www.youtube.com/watch?t=87&v=W9hFeHDJAIU
About half the U.S. Dollars in existence are held outside the U.S. as reserves by foreigners for purchasing things like oil that can only be purchased with dollars. This means that they are suffering a large part of the losses associated with the inflation caused by our money printing.
This, along with the fact that we don't have to pay so much in exchange rates, is why the dollar's status as the reserve currency is such an advantage.
So, if the dollar loses that advantage, what is going to happen to all those dollars being held by foreigners?
They will come flooding back into the U.S. where they can be spent.
Effectively doubling the money supply here quickly.
And approximately doubling prices here, seems to me.
What a load of crap. Their currency has been undervalued for years and now they inflate it even more and claim this is more reflective of reality? No, they did it to pump up their export market, same as it ever was. Please don't turn the Chinese into some kind of 3-dimensional chess playing strategic geniuses when they are just playing classic checkers.
Another thing:
I've read that about 29% of the dollars being spent by the U.S. Federal govt is printed money. This means that the holders of dollars here and abroad are effectively helping to pay this 29% because of the inflation this money printing is causing.
Foreigners then are helping to pay the cost of our govt because of the dollar's status as the reserve currency.
You can be sure this really pi$$e$ them off, especially people like Russia's Putin.
China recycled their excess dollars won in mercantilist trade. These dollars bought TBills. This action raised Tbill price and drives interest rates down.
Those recycled dollars are then spent back into the U.S. economy, often on MIC and Welfare. The dollars then spin out to buy more Chinese crap.
Rinse cycle repeat.
To acquire dollars from Chinese Merchants, state banks print new Yuans and buy/swap/trade for dollars. This then puts new Yuans into China's economy, and drives the price of Yuans down.
China was a currency manipulator from the beginning, with the objective of growing their economy quickly on the basis of imported knowledge. Wall Street was part of the gambit, in order to take rents on wage arbitrage.
China price is always just under the Western price, and the pricing scheme is a function of money manipulation. Money VOLUME matters, and its volume relative to goods and services is part of the pricing mechanism.
China can keep their Yuan lower than the West because they are sovereign and can print as many as they need to. Since their economy now has manufacturing and the ability to actually produce, then their Yuan is backed by productivity.
All this talk about China's markets, as if markets are the real predictor of China's economy. Hypnotized humans ...markets are a reflection and imperfect..they are manipulated and have distortions.
China had to peg to dollar within a Window shortly after 2008 collapse. They were being blamed as a currency manipulator, and the peg window was to divert blame. Again, success ---- does the western press ever talk about China as a manipulator?
The FED is probably buying Chinese equities.
Everything is so screwed
SCHIFF HAPPENS (to be right, again). And that Great Sucking Sound you just heard was American JOBS Disappearing (again) as the Repubic Hairs get set to Take Over with the next Election SICKLE. Anybody following the currency news knows that China has been propping America's ass up like a porno star -- and now that she is ready to BUST -- China is pulling out. That is to say, that America is getting ready to be a BEAST of a BEAR Market. Anyway, Truth be told, the YUAN is not the ONE to watch or worry about. India's RUPEE is what we better watch. It may just be the Future Reserve Currency of the world.