Peter Schiff, President of Euro Pacific Capital, is frequently seen on CNBC and other news outlets and interviewed for his pessimistic views on the world economy.  He has predicted that gold, silver and other commodities would rise dramatically for years now due to money printing.  This interview opens with the interviewer asking Peter about the Soros meeting in Bretton Woods and Peter quickly shifts the conversation into the US Dollar.

It is a well known fact that the US Dollar has been off of the gold standard for 40 years now.  This allows the Federal Reserve to print money at will, and Peter points to this a major problem worldwide because the US is exporting its inflation to the rest of the world.  The reason commodity prices like oil, food and metals are rising is because money is being printed.

Peter believes that the solution is to return to some sort of gold standard.  He states that “The Dollar has no intrinsic value on its own.  Prior to the dollar becoming the reserve currency, gold was the reserve currency, and gold has intrinsic value.  Gold cannot be created out of thin air.  It costs a lot of money to find it and extract it from the ground, so its scare and it has real value.”

We need to back our currency with something of legitimate value so that central banks can raise interest rates without fear of crashing the Dollar.  Part of the problem is that interest rates are too low, creating asset bubbles around the world.

Peter states that as we continue to print money Americans’ cost of living is going to rise.  There are two ways that the government can pay its bills, one is to tax Americans and the other is to print money which is a hidden tax that takes away purchasing power.  Printing money is the path of least resistance, but in the end we will probably pay the ultimate price which is a Dollar collapse.

Even if we don’t see a Dollar collapse, which I hope we don’t, there is no doubt that the value of the Dollar is going to continue to decline, just like it has been for the last 98 years.  The pace though is likely to quicken.  This is why it is essential to own precious metals as a hedge against a devaluing Dollar.

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