Economist Peter Schiff Warns the US Dollar Will Crash — Says ‘We’re Going to Default’ – Economics Bitcoin News

Peter Schiff, economist and author of the warning that the U.S. will crash has warned. Noting that the U.S. is “in a much bigger fiscal mess than Great Britain,” with a much bigger debt problem, Schiff stressed: “Can we possibly repay this debt? It is impossible. It is not possible to repay the debt. So, what’s going to happen? We’re going to default.”

Peter Schiff discusses the U.S. dollar crash

Gold bug and economist Peter Schiff shared his outlook for the U.S. dollar in a podcast titled “When This Sucker’s Rally Ends, the Dollar Will Crash,” published Saturday. The U.S. faces major challenges that could lead to the collapse of the dollar.

The U.K. is worried about its growing debts, Schiff stated. The country’s debt-to-GDP ratio is around 85% and former Prime Minister Liz Truss “threatened to send British debt to GDP even higher,” the economist described, noting that “investors rightly dumped the pound.” However, he added: “They sold pounds for dollars … The irony is they were buying dollars despite the fact that the United States has an even bigger debt problem.”

U.S. debt now exceeds $31 trillion, and in fiscal 2022 the deficit was $1.38 billion. Schiff explained that the U.S.’s debt-to-GDP ratio is more than 125%. He explained that the ratio rises to 140% when you add state and local debt.

We’re in a much bigger fiscal mess than Great Britain. So, selling pounds and buying dollars because you’re worried that Britain has too much debt is jumping from the frying pan into the fire.

Schiff stressed that it is ridiculous that people bought U.S. treasuries as a safe haven, adding that it is also absurd to sell a country’s currency due to debt problems and buy dollars when the U.S. has even more debt.

“In the U.K. pretty much all the debt is on a national level. They don’t have the states like we do and they don’t have all the municipalities, so we have so many levels of debt,” he pointed out. He argued that all governments finance themselves using the same tax base.

They want to take the blood of all those same turnips. Americans are bankrupt. There is no money. Can we repay the debt? It is impossible. It is not possible to repay the debt. So, what’s going to happen? We’re going to default.

Schiff Sees Two Possible Options for the U.S. to Default

The economist proceeded to detail that there are “only two possible ways we can default — the honest way and the dishonest way, but either is a disaster if you own U.S. treasuries.”

Schiff continued: “The honest way is just to admit that we can’t pay and we default. We restructure the debt and we tell our creditors.” However, he believes that politicians do not have the integrity to do it, noting:

They’re going to take the coward’s way out. They’re going to print. They’re going to inflate the debt away … It’s crazy for anyone to believe that the Fed is going succeed in reducing inflation back down to 2%. It can’t succeed.

The Federal Reserve raising interest rates will only make the problem worse, he warned. His statement echoes a warning he made recently that the Fed’s action could lead to market crashes, a massive financial crisis, and a severe recession.

Schiff also tweeted Wednesday: “The U.S. merchandise trade deficit unexpectedly jumped by 5.7% in Sept., as imports rose by .8% and exports fell by 1.5%, breaking a five-month streak of falling trade deficits.” He concluded:

The dollar’s weakness is causing future trade deficits to increase, which will cause the dollar further to plummet.

Do you agree with Peter Schiff’s prediction about the U.S. Dollar crashing? Leave your comments below.

Kevin Helms

Kevin is a graduate of Austrian Economics. He discovered Bitcoin in 2011, and has been an advocate ever since. His main interests are in Bitcoin security, open source systems, network effects, cryptography, and intersections between economics, cryptography, and Cryptography.