There has been much talk of late regarding Currency Wars and skirmishes. The objective of a currency war is to manipulate and weaken the currency in order to stimulate growth. Whatever the outcome may be it is the consumers who pay the real cost of the resulting inflation. “Anybody who believes there is no inflation isn’t shopping,” said Peter Schiff, The CEO of Euro Pacific Capital in New York.
Consumers know that two of the biggest contributors in the daily cost of living are food and energy. However, some time ago those items were conveniently deleted form the official government cost-of-living indexes supposedly to make the number more tolerable to the unsuspecting and gullible consumer.
Indeed, Mr. Schiff refers to the consumer price index as a “total fraud. Consumer prices in the U.S. are moving up much faster than indicated by the CPI. It is manipulated. It is deliberately designed to mask inflation, not report it,” he said at the Inside ETFs conference produced by Index Universe.
“There is a currency war going on,” Schiff remarked. “The irony of a currency war which makes it different from other wars is the object is to kill itself. Unfortunately, I think the U.S. is going to win the currency war.”
“We’re broke. We owe trillions. Look at our budget deficit, look at the debt to GDP (ratio), the unfunded liabilities,” Schiff said. “If we were in the euro zone they would kick us out.”
“The Fed knows that the U.S. economy is not recovering,” he said. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”
Mr. Schiff, who is a long-time supporter of gold, feels gold will be the big winner and that the consumer, with no gold, will be the big loser in the currency wars.