Peter Schiff Suggests Ways to Preserve Wealth
Jeff Macke interviewed Peter Schiff of Euro Pacific Capital to get his views on the dovish Fed’s policy of providing virtually free money. Schiff indicated it hurts seniors who live off interest and also said it damages the U. S. economy by preventing it from restructuring.
Schiff said the Fed doesn’t care about the long-term health of the economy but just wants to, “keep the music going until the next election.” When Macke suggested the Fed was apolitical, Schiff retorted that the problem is that the Fed is very political.
Schiff said if the Fed had raised interest rates more aggressively in 2002 to 2004 the housing bubble would have burst much sooner than it eventually did in 2008, and wouldn’t have done nearly as much damage. He added that the Fed knew there was a housing bubble but didn’t want to “upset the apple cart,” and tried to nurture the bubble because it was good politics. He said the Fed was making the same mistake again, but doesn’t want to raise rates and bring the problem forward. Schiff added the Fed is just postponing the problem for a later date, but it will make the crisis much worse.
When Macke questioned what could be done to “get them off the dime,” Schiff said we need a truly independent Fed and take away a lot of its powers. He said we also need a Fed that understands economics and money and have read the constitution because the people there now, including Ben Bernanke, really are clueless about money, inflation, the business cycle and how it works. Schiff added the Fed still believes in the “nonsense” of Keynesian economics and the notion that you can print your way to properity and more government solves problems.
Schiff said if we can get rid of the Federal Reserve and frame things as designed in the Constitution around sound money and have a much smaller government we would have a much more prosperous America.
When Macke asked Schiff if retirees were forced to take on more risk, he mentioned their speculation in the long-term bond market and high priced stocks, which was incredibly risky and could end disastrously. He said investors should get out of the dollar completely and focus on three things:
1) Buy gold and silver,
2) Buy high dividend paying foreign stocks,
3) Buy bonds denominated in foreign currencies
Schiff commented further on the riskiness of U. S. dollar denominated bonds and strategies he’s using to invest in foreign bond markets.