Peter Schiff joins the CNBC talking heads panel on Fast Money September 8, 2010. (Video follows excerpts and commentary)
As usual, Schiff is a bull on gold and precious metals commenting that silver “is going a lot higher.” Though he didn’t have a specific number in mind, he sees a likely and continued uptrend that can reach levels much higher than where it is today. “I think silver is going to go, ultimately, fifty dollars an ounce, a hundred dollars an ounce, who knows how high it can go?” forecasts Schiff.
When asked what sort of time frame he expects for silver to reach these levels, Schiff’s response closely mirrors our own view on when we can expect a significant move in precious metals and other essential commodities like food and energy:
It could happen very soon. It all depends, I think, on when you really have a collapse in the dollar. I think the dollar index, which is trading a little bit above 80, I think it’s headed down to 40. Whether it gets there in two years, three years, I don’t know. It just depends on when the world wakes up and figures out what’s going on. I mean the United States right now is completely powerless to prevent runaway inflation.
It is our view that not only have the major powers in the world like China, Russia and Europe woken up, but they are very well aware of what is going on. The Europeans, whose banks are closely allied with those in the United States may get slammed just as hard as US banks. And the Dollar and the Euro could very well see the same fate over the course of the next decade, which, in our view, would essentially be a complete destruction of their value in terms of buying power.
The Chinese and Russians, who are not as exposed to US and European financial problems from the banking side, are likely biding their time. We often hear that we have global collaboration in geo-politics, economies and finances, but make no mistake, China and Russia have no interest in seeing America succeed. At some point in the future, the Chinese are going to pull the plug on buying our Treasuries – their purchases are already down 10% year-over-year as of July 2010 – and when this happens we can expect other countries to follow. There will be a rush to the exits by Central Banks and institutional investors across the world as everyone holding any kind of US paper is going to be selling.
It is at this time that the US “bailout bubble,” a term coined by trend forecaster Gerald Celente, or as financier George Soros refers to it, ” the super bubble,” will burst. Interest rates will sky rocket and the US dollar will collapse.
Why would China do this if they know that this would have a significant negative impact on their own economy? Because they are patient, that’s why. The Chinese powers-that-be are willing to take a short-term, multi-year hit to their economy, no matter how badly their people are affected if the end result will be a downfall of the world’s current super power. If you haven’t guessed by now, this is a global war being fought on multiple fronts over many generations.
The Chinese know where we’re headed, as do the powers that be here in the US, as we described in our recent article assessing Timothy Geithner’s recent comments to the Wall Street Journal.
In fact, not only do those in the top echelons of government and finance understand what is happening, according Peter Schiff it is clear that even consumers know the end game:
You definitely want to stay away from Mastercard – any company that’s leveraged to the US consumer. Remember, one of the reasons so many Americans are using Mastercard is because they’re putting their food on it, they’re putting their basic necessities on it.
I think a lot of Americans are so willing to use their credit cards because they’re so far in debt, they know they’re broke, and they might as well go out with a bang. A lot of people have no intention of paying back the money that they’re using whether it’s Visa or Mastercard.
As above, so below. It’s clear that maxing out debt on all levels is the strategy of the day (decade?) in America. The government is spending so much money, and pulling forward so much time and energy yield from our children, grandchildren and great-grandchildren that it is simply impossible to ever pay back our national debt without inflating the dollar. In other words, it is a mathematical impossibility for us to ever pay back what we owe in real US dollar terms. The only way to do it is to print more money and pay off debt with dollars that are worth less.
US consumers, already getting hit hard with permanent job losses that are never coming back, wage decreases, and depreciating real estate prices, understand that with their current debt load, most will never be able to pay back the money they owe. So, instead of defaulting on their debt with available credit remaining on their cards, they’ve decided to max out those cards before they stop paying.
This author has personally witnessed two separate instances of just this phenomenon. A close friend and Citibank credit card holder recently saw a rate increase from roughly 10% to 29.99% on their existing balance. Already running on a tight budget, his payment increased from a monthly $150 per month to over $400 per month. Our friend, rather than simply stopping his payments because he was no longer able to afford them, promptly took his Citibank card to a local outdoor goods store, purchased several thousand dollars worth of guns, ammunition, and camping gear. He never made another payment. That’s a $20,000 delinquency on Citibank’s books – and that debt will never be collected. We can talk about the ethics and morality of this move, but that is irrelevant at this point. Tens of thousands, perhaps millions, of Americans are doing exactly the same thing with credit cards and home loans.
Eventually, the US government itself will follow. This is the reason for why we recommend hard assets – because your paper currency will be worthless.
Watch Peter Schiff on CNBC September 13, 2010:
Related:
What is money when the system collapses?
Hyperinflationary Depression – No Way of Avoiding Financial Armageddon
Actually, Mac, I don’t think that at this point, US default on its treasuries would impact China at all. The trillion dollars in US Treasuries that they are supposed to have, really doesn’t contribute to their national wealth. I think they continue to play the game because the game benefits them most.
And they may have spent 500 billion dollars worth of those Treasuries on Spanish Bonds to prop up the Euro last month; which they will likely exchange to latin America for real assets.
They have the means of production, they have cheap labor to exploit, and they continue to buy all of their own gold; according to SHTF America, while being the number one producer of gold in the world.
If those US Treasuries were to spontaneously burst into flames, what impact would it have on their national wealth, or GDP?     None.
I think there is definitely something immoral and unethical about raising interest rates astronomically and on past balances. Citibank got what it deserved.
And one more prepper means one less zombie to contend with when the SHTF.
DK, I agree with your view on China… Basically, they lose their US reserves. not a big deal, really. Maybe a little bit of pain, but nothing serious. What will hurt them the most, in my view, would be the complete flat-line of the American consumer.
I think this is why they are trying to ignite their consumer-class (aka middle class) and get them going. They know our consumer is on life support right now. Once the plug is pulled, their production demand is going to need to come from somewhere, and I think that is going to take years to get online completely. There’s going to be a few years where they may also decline into severe recession/depression – essentially a reset, until they can re-balance their system as well.
They may be hurting, but it will be nothing like it will be here. The Chinese are used to living very poor, on pennies a day. We, on the other hand, would consider that a death sentence.
Agreed, Mac. Thats why I think we have some time to prep. Also, I believe the PTB are trying to raise the value of the R while devaluing the dollar, to establish some balance, but it doesn’t appear that China is willing to play along, except at a very slowwwwww  pace. A pace that will collapse American purchasing power first.
Even Kissinger said that we must re-establish manufacturing in this country. Unfortunately in order to be competitive, the Wal Mart Sweatshirt Index will have to increase from six dollars to 18 dollars in real terms to make America competitve again.
Those Angorra goats in the back yard are looking like a better investment all the time! Sweaters instead of sweatshirts appear to be the future of this American! lol
Hmmm… the banks trash the economy causing you to lose income causing you to miss a credit card payment causing the banks to jack your rate just when you can least afford it? AND they got billions of our tax dollars to bail them out? That doesn’t engender much sympathy for those poor, suffering billionaires.
It’s time the regular joe’s of this country stick it back to the banks in some way. The banks deserve to be screwed by us… just like they’ve screwed all of us for decades!!ÂÂ
The bankers have no ethics… all they know are lies, deceit and change the rules as they so choose. I say fuck ethics and leave them holding the bill for their non-existent fictitious fiat funny money. Think about it, if you have $100.00 and you write me a check for $900.00… you can go to jail for writing a check for the amount you don’t have in your account and I wouldn’t have to pay you back the money that never existed… yet if you’re a bank… you can do this all day long to anyone whom you’re willing to grant a loan and charge rediculous interest rates on the money that doesn’t even exist. And this is legal how?ÂÂ
Fractional reserve lending will come back to bite them all in the ass and I’ll be laughing my ass off while I sit on my gold & silver reserves and not keep but a minimum of $10.00 in my checking account at all times.  I most definately do not have a savings account at a regular bank…  if you want to keep money in a “bank”… I suggest opening up a credit union account where you are one of the owners and get paid dividends on the loans made… not some pittly ass 2% interest on a joke of a savings account with a bank that turns around a loans out $900.00 on every $100.00 you have in your savings account while simultaneously charging the loaner a much higher interest rate then the pittly ass 2% interest they are paying you for your $100.00   Banks HATE credit unions…:)
I’ve declared war on the banking system and the best way to beat them at their own game is to not let them have your money. The bankers are the ones who caused this mess… let’s take them all down with us childrens…;)
If you look at how hard the Chinese are working to hack into our corporate, .gov, and infrastructure systems, why would they not also be working to find just the right time to pull the rug out financially? I would be shocked if the Chinese .gov is as poor at communicating and coordinating between their various bureaucracies as we are. It’s classic Sun Tsu: “To subdue the enemy without fighting is the acme of skill.”
The light is at the end of the tunnel; unfortunately, there is a red star painted beneath the bulb.
Hats off, Mr Shiff !
Now that your friend has maxed out his card and bought guns ,ammo,and camping gear and will never be able to get any kind of credit again, what will he do for food for his family?What will happen to his house and car? Mac, are you going to help your stupid friend out?
Preplanned bankruptcy is the only way to go when you are already so far in over your head that you can’t possibly pay your debt back. Screw thed damned banksters the same way they have been screwing us. There are actually books on the subject that will teach you how to do this without creating legal problems for yourself. Most folks are so far in debt that they qualify for a complete discharge of their existing debt rather than the bankruptcy court reorganizing their debt.
The one thing that you can go ‘ape-shit’ on in the last 180 days prior to filing bankruptcy without any negatives to your legal situation is food; freeze dried sealed in #10 cans will last for 20 – 30 years.
Underware, socks, shoes, shirts and jeans for the kids, remember to buy larger sizes than they currently wear. Buy from numerous stores so that the banksters can’t say that you were planning this action ahead.
Buy a book on the subject so that you don’t make mistakes.
Use your ‘plastic’ to get prepared for what’s headed our way and then invite your creditors to kiss your ass! Don’t gorget a tent; at a certain point you may have to move yourself and your family into an “Obamaville” (tent city). Be sure to buy a high quality tent with enough room for everyone, after all, it’s a present from your friendly, local bankster.
Comments…..
We were doing this—the CC companies got smart since they saw purchases usually not used for and the usage was pretty obvious that we were unemployed and our credit scores were high then–They cut them off or lowered the limit which pretty much stopped us in our tracks–and then they cut them off completely.
We made a deal, one saved us $4000 and one saved us $10,000, but the payments had to be made in a 4-6 month time frame.
NO MORE CC CARDS FOR US!!!
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Comments…..
We didn’t do what the friend did with CitiBank–we weren’t that smart and still had hope of getting jobs, paying the S**t back–that didn’t happen–Kudos to those that do just that–get all you can on CC and then give them the finger! Nice ending.
We started gathering supplies a couple of years ago and now we are ready to set a decent campsite or weather a power outage etc. I know the dollar is only being supported until the frauds and traitors are ready to pull a north American union on us. I was born an American and I will die an American. Everything they are trying to do counts on one thing, cooperation from the people. I have no intention of cooperating. The go along to get along gene is missing in my blood line. I was asked to give my opinion of the current us gov the other day and it only took one word, “irrelevant”. Our gov was bought and sell outs took office.
I have debt but no credit cards, we went on a cash basis a couple of years ago and I am going to stay that way. Banks are a big part of our problem but the prostitutes in our gov are just as guilty.
I expect it will fall apart as soon as more people figure out the game and stop paying. There will always be some who will go along, I call them bipeds, they are not people and sadly they will not make it in the end. But the rest of us can prep and educate ourselves to give it one hell of a good try.
Sc**w the bankers and the CC companies, they get absolutely not one thin dime from me. And as for as buying a house, I die laughing when I think about it.
When your Government,  who all Americans look up to for guidance (right), is obviously going to screw the World and it’s own citizens,  by defaulting in one way or another,  then why should it be a stretch for the average, one time hard working,  American to say  “Screw it” also?
Only by God’s grace, are we possibly going to come out of this, on the other side, as one country ……imho
You can’t have a collapsing currency if everyone wants it. When you sell a US treasury, you want dollars. If all countries dumped their treasuries, the dollar will go up because there will be a huge demand for dollars. Conversely there will be very low demand for US gov debt causing interest rates to spike. We are looking at the wrong place for hyperinflation. A run on the dollar would happen after the treasury run when the holders of these dollars start buying up everything denominated in dollars like oil, gold, US assets. This is when there would be a hyperinflationary scenario. At the present time I see no reason for anyone to hoard US denominated assets by dumping dollars. In fact, the precursor to this would be a run on government debt that would cause the dollar to spike upwards because of demand for it.
Comments…..I’m afraid you are confused.
As confidence drops in a country’s cuurency, the treasury is discounted by enough percentage points to maintain end value. Value is not the denominated dollar amount, but rather the value against other currencies.
As more treasuries get dumped, confidence drops further and the discount increases in a non-linear fashion.
Once the tipping point is reached in confidence, the treasury becomes essentially worthless. No spiking in value, but rather an inflated money supply worth nothing.
I got rid of my credit cards months ago. Perfect payment record, but the bank reset my default interest to 28+%. No debts remain. I had to accept poverty as a lifestyle, but I have a home and enough property to grow a garden which I have. Poverty sucks, but I have a home and I eat regularly.
Now I must go. Potatoes to dig, carrots to store, cabbage to cut and beets to can up (now where is that recipe for pickled beets). Winter is coming fast and I still have to fill the woodshed.
Oh, one further note. Those who think they will get by without a social support network are doomed to failure. If your network isn’t already in place, you lose. Barter is going to be the norm among the survivors. Nobody can do it all by themselves. Only 24 hours in a day and you gotta sleep sometime. Do what you do well and trade your surplus to those who do the other things well that you need.
Agreed! My dad has been telling me the same thing you had just said for years. Unfotunately, I never listened to him until now. Sad, huh? Why is it people think their parents do not know what they are talking about? God, I effed up! I can hunt, fish, and work on cars…what do you have for barter?
lostinmissouri: If you are going to use the term “Screw it” relative to repaying obligations and “God’s grace…” –
– then please leave God out of it since He has made it quite clear that to NOT repay one’s debts is descriptive of the wicked:
“The wicked borroweth and payeth not again…” Psalm 37:21
And don’t give me the excuse that since the banks are doing it so can we. As christians, our example is Christ, not the Fed or Citi.
My take: I have debt, but not that much, except student loans.  I am hoping to find a job as a teacher in the next 20 or so years.
Also, poverty sucks,  I have been here since I was born.  I don’t want to die here.
“Interest rates will sky rocket and the US dollar will collapse.”…. But what will come of property values? Real Estate values? Land, housing, industrial buildings, office buildings, retail buildings, apartment buildings, etc.???  With interest rates high, dollar low, does that mean asset values will decline as well? Or will there be a rush to HARD ASSETS such as Gold & Real Estate to store wealth?ÂÂ
Is it just dollar or are all currencies at stake? I mean let’s take the worst-case scenario and all global banks collapse in a day or so. This will bring a massive doubt in paper money and a massive run in commodities such as gold,silver,oil, etc… So my question is if other currencies as Euro for instance are trully “safe”? Or there is a possibility that all paper money will be worth the same as the toilet paper.
At this point in time, off the top of my head, I would consider the Loonie, the Aussie, the Swiss franc, Brazilian reale, Russian ruble, and Chinese yuan as “safe currencies” with the understanding that if the US dollar or euro collapsed, all bets are off on these other currencies as I haven’t done enough research to know how , or to what extent, the collapse of the dollar or euro may have on these other currencies. I’m pretty sure, it won’t be good.
Buy some gold and silver.
treg: As the former Chief Appraiser for the mortgage arm of one of the major banks still standing, I can tell you that, in the scenario you raise, commercial and residential real estate will tank. Don’t expect either to recover. The income of the masses cannot support higher values. Even now the trend is down.
Buy gold, silver, and farmland after you have purchased your preps, and lots of ammo. Check the SHTF America, Weapons Page link, up and to the right.