Tags: Schiff | dollar | stimulus | Bernanke

Peter Schiff: ‘Dollar Is Going to Collapse’

By Dan Weil   |   Monday, 25 Mar 2013 08:45 AM

While the dollar hasn’t yet dropped as he predicted, it will soon enough, thanks to the Federal Reserve’s massive easing program, says Peter Schiff, CEO of Euro Pacific Capital.

The Dollar Index, which measures the greenback against six other currencies, has gained 3.3 percent in the past year, and the same amount so far this year.

“The dollar is going to collapse if [Fed Chairman] Ben Bernanke doesn’t reverse course,” Schiff tells Yahoo. “And if he does, the whole phony economy that has been built on the foundation of stimulus is going to collapse as well.”

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The Fed announced at its policymaking meeting last week that it will continue its quantitative easing and didn’t hint of a quick end.

“Ben Bernanke believes that somehow he can withdraw the stimulus and the economy will keep on expanding. It’s impossible because we have an economy that’s of stimulus, by stimulus and for stimulus,” he adds.

As for the dollar’s strength, “at some point that is going to change," Schiff explains. “People are going to realize, or call the Fed's bluff, that our economy is stimulus-based. There is not a real exit strategy. The Fed is going to print money indefinitely.”

It has only been the weakness of other currencies that has masked the dollar’s own weakness, Schiff notes.

Some experts say the U.S. currency can rise further against the euro, given Europe’s economic and debt woes.

“The growth outlook remains just awful for Europe, so I fully expect the ECB [European Central Bank] to be easing within a month or two,” Richard Franulovich, chief currency strategist at Westpac Banking Corp. in New York, tells Bloomberg.

“Whatever short-term relief we might see, I fully expect the euro to be trading lower in coming days.”

The euro stood at $1.2958 early Monday.

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