Money Show 2013 - Peter Schiff

Peter Schiff's talked was called "The Wrong Path: What Canada Should Learn from US Markets". He is CEO of Euro Pacific Capital Inc.

There are rumors that the US economy is recovering and so tapering will happen. This is not true. The US economy is not recovering and QE has not worked and has been like a sedative.

The rising of the debt ceiling must happen because the US cannot handle debt. The threat is that the debt ceiling must be raised so that the US can continue to pay their bills and if this does not occur the US will default. The threat is if we cannot borrow then we cannot pay out debts. The US government is running a Ponzi scheme. If the US paid their bills, the US would not have debt.

China has $2 Trillion in US debt and to get paid might have to loan the US $2 Trillion. The debt ceiling is really self-imposed. The problem is if creditors will not loan more. The US debt will probably be handled by inflation. The US says it will taper, but he feels that they will not because they cannot. When QE was stated they had no exit plan. QE1 did not work so they had QE2.

Peter Schiff says he warned about the subprime crash. He felt that the Fed would re-inflate and a bubble was his worry. Apparently he warned about this in an earlier in a book. QE2 lead to the "Twist" and this lead to QE3. Bernanke monetized the debt by buying Fed bonds. No Treasuries are redeemed, they are always rolling over. Tapering is not an exit it is buying less by the Fed. As soon Bernanke said he would taper, interest rates went up.

The US is not in a real recovery. The debt is growing faster than the GDP. The US government cannot afford current interest payments. So they certainly cannot handle rising interest rates. It is impossible for the Fed to wind down QE. The biggest buyer of US bonds is the Fed. The rising debt ceiling is good for gold. The US cannot taper, but something will happen.

The US creditors could decide to sell. However, the world feels that it must prop up the US because they the US buy their stuff. But the US is giving them US$ not stuff for their stuff. They get nothing of value. They will wake up sometime. The US is exporting inflation when they export money.

The unemployment in the US is lower because labor participation rate are low. More and more are claiming disability and therefore not counted as unemployed. If someone gets a McDonald job they are not counted as unemployed.

The US has an artificial economy based on QE. He thinks the US$ will drop and this will send up US interest rates. The ultimate crash will be much worse than 2008. He thinks that Yellen will print money until it is worth nothing. The rest of the world will boom when the US$ crashes and no longer sells goods to the US that the US cannot pay for.

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