Tags: Schiff | dollar | weakness | euro

Peter Schiff: 'Dollar Weakness' Will Replace 'Euro Weakness'

By    |   Tuesday, 20 January 2015 02:54 PM

The dollar's strength isn't going to last, Peter Schiff, CEO of Euro Pacific Capital, told Newsmax TV.

The greenback soared to an 11-year high against the euro last week amid concern about Europe's economic weakness and speculation that a big quantitative easing (QE) package will come from the European Central Bank at its meeting Thursday.

But, "ultimately, euro weakness is going to be replaced by dollar weakness," Schiff told the "America's Forum" show on Newsmax TV.

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"Everybody is convinced that Europe is going to pursue this QE policy, and I don't think it's going to be nearly as large as people are hoping for. Meanwhile, the U.S. is going to surprise everybody when it launches QE4."

The Federal Reserve ended its third round of quantitative easing in October. But it's going to act again, "because we have a much weaker economy than is generally perceived," Schiff said. GDP growth averaged 4.8 percent in the second and third quarters.

He scoffed at those who worry about deflation in Europe. "That's just nonsense. Inflation can never be too low," Schiff said.

"But what they are going to get with more QE is not more economic growth, but higher inflation. And that's going to be a detriment to economic growth and ultimately cause Europe to back off on QE."

Schiff cites a contradiction between the way economists are treating the plunge of oil prices and deflation. "Everybody is talking about the benefit of lower oil prices on the consumer and on economic growth," he said.

"Why are falling oil prices a good thing, if deflation supposedly is bad? Falling oil prices are themselves deflationary. "

"This is all a myth," Schiff said. "There is nothing wrong with falling consumer prices. That means that our money is more valuable, that means that we can buy more stuff, we can have a higher standard of living."

The deflation flap is "a smoke screen," Schiff said.

"What governments are really concerned about is repudiating their debt. You have governments that have a lot of debt. They can't possibly pay it back, and so they want to inflate it away. But the pretense that we need inflation for economic growth is complete nonsense."

Meanwhile gold has soared 13 percent since early November, trading at $1,292.80 an ounce Tuesday afternoon. "Gold has been exploding upward in all currencies," Schiff said.

"It's moving more slowly against the dollar, but the trajectory of gold's rise is going to increase in coming months. And this really shows you that it's never been about dollar strength. That's not the real story. It's just been about euro or yen weakness."

The dollar hit a seven-year peak against the yen last month.

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The dollar's strength isn't going to last, Peter Schiff, CEO of Euro Pacific Capital, told Newsmax TV.
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2015-54-20
Tuesday, 20 January 2015 02:54 PM
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