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Tuesday, September 27, 2022

Peter Schiff warns US will face ‘massive financial crisis’, economist expects much bigger problems than in 2008 ‘when defaults kick in’

Economist Peter Schiff usually has a lot to say and explained in an interview last week that he thinks the United States will face a bigger financial crisis than “Great Recession” from 2008. He explains that the US is much more in debt than it was then and insists that America’s economic downturn “there will be a much bigger crisis when defaults start.β€œ

Decrease in inflation in the USAΒ»only temporarilyβ€œ

When Peter Schiff detailed that he was going to liquidate his Euro Pacific Bank, the economist sat down to discuss the US economy with Kitco News host and producer David Lean. The day before his interview with David Lin, Peter Schiff explained that while inflation appears to be slowing down, he doesn’t think the trend will last long. β€œParadoxically, investors are selling dollars and buying gold after a lower-than-expected rise in the CPI in July, as they believe the Fed will adopt a less aggressive policy.“, said Mr. Schiff. said on Twitter. β€œThey are right to sell dollars and buy gold, but for the wrong reasons. The fall in inflation is temporary.”

During an appearance on Kitco News, Schiff explained in more detail why he thinks the US economic downturn will be worse than in 2008. According to Schiff, if the Federal Reserve continues to raise interest rates, a financial crisis is inevitable. β€œ2008 was all about bad debtsβ€œ, he pointed out. β€œThese were people who borrowed money and could not pay it back. The collateral on the loans was bad because it was real estate and the prices went down. Well, today we have a lot more debt than we did in 2008… So when defaults start, the crisis will be much more severe.”

However, this time the US financial giants will not be saved, Schiff noted. The economist remarked:

When they go bankrupt, it will be much worse, except that inflation will be too high and the Fed will fight inflation. There is no TARP 2.0. All these banks should be allowed to fail.

Inflation will be there probably before the end of the decade

Peter Schiff’s comments follow the US Bureau of Labor Statistics report on the consumer price index for July, which showed an increase of 8.5% year on year. After the CPI report, US President Joe Biden came under fire, saying that the US economy had zero inflation in July. Biden’s comment follows an attempt by the US government to revise the technical definition of the word “recessionβ€œ. β€œAccording to the official consumer price index, prices, already very high, did not rise in July.“, Schiff told show host Kitco. He then added:

I don’t think that’s a reason to be happy… Not that consumers are relieved by lower prices. I have no doubt that we will get a figure above 9.1%. We are far from solving this problem of inflation. It will persist for years and years, and possibly until the end of this decade and even longer.

Schiff’s comment on the official CPI figures follows an article published on schiffgold.com on the same day that claims that the Bureau of Labor Statistics’ CPI calculation uses a formula that understates actual price increases. In addition, shadowstats.com alternative inflation chart statistics show that inflation is much higher than official reports.

During Schiff’s interview with Lin, the economist said he expects “massive financial crisis” and big problems with the US dollar. When the dollar collapses, he expects gold and silver prices to rise sharply.

β€œThe dollar has risen so far, in the early stages of this great inflation, because investors have illusions about the Fed’s ability to contain inflation and bring it down to 2%β€œ, conclusion Schiff. β€œWhen they realize the fact that inflation will be well above 2% indefinitely, then the dollar will collapse and gold and silver will skyrocket.β€œ

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