According to Peter Schiff of Euro Pacific Capital, "investors should take immediate steps to protect themselves as a global currency way is about to create a massive economic 'implosion' far worse than 2008." He believes the US will win the currency war and kill themselves in the process.
By TERRY WEISS
Money Morning
Investors should take immediate steps to protect themselves as a global currency war is about to create a massive economic "implosion" far worse than 2008.
That's according to Peter Schiff, the best-selling author and CEO of Euro Pacific Capital, who delivered his harsh warning to investors at a recent ETF conference.
"There is a currency war going on," Schiff told the investors according to CNBC. "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."
In a currency war global central banks purposely devalue their currency in a so-called "race to the bottom." They hope cheaper money will spur economic growth by boosting corporate earnings from exports.
But many economists have argued that currency devaluation can have severe consequences, most notably out-of-control inflation.
While the U.S. government claims current inflation is under control, Schiff strongly disagrees. He says the official numbers are a "total fraud."
"Anybody who believes there is no inflation isn't shopping," he said.
"We're broke, Schiff added. "We owe trillions. Look at our budget deficit, look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out."
Schiff points out that the market gains experienced recently, with the Dow topping 14,000, are distorting reality and giving investors a false sense of security.
"It's not that the stock market is gaining value... it's that our money is losing value. And so if you have a debased currency... a devalued currency, the price of everything goes up. Stocks are no exception," he said.
"The Fed knows that the U.S. economy is not recovering," he noted. It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode."
A noted economist, Schiff has been a fierce critic of the Fed and its policies for years. And his warnings have proven to be prophetic.
In August 2006, when the Dow was hitting new highs nearly every day, Schiff said in an interview: "The United States is like the Titanic, and I'm here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States."
Just over a year later, the meltdown that became the Great Recession began, just as Schiff predicted.
He also predicted the subprime mortgage bubble burst, nearly a year before the real estate market fully crashed.
His recent warnings, however, have been even more alarming. Will they also prove to be true?
In his most recent book, "The Real Crash" How To Save Yourself and Your Country", Schiff writes that the U.S. is being eaten alive by what amounts to a horrific cancer: A sovereign currency and debt crisis that will utterly destroy the U.S. economy and impoverish the vast majority of its citizens.
When the "real crash" comes," he says, it will be worse than the Great Depression. Unemployment will skyrocket, credit will dry up, and worse, the dollar will collapse completely, "wiping out all savings and sending consumer prices into the stratosphere."
Schiff estimates this "cancer" could consume a trillion dollars from consumers this year.
"Today we're the world's greatest debtor nation. Companies, homeowners and banks are so highly leverered, rising interest rates will be devastating."
According to polls, the average American is indeed sensing danger. A recent survey found that 61% of Americans believe a catastrophe is looming - yet only 15% feel prepared for such a deeply troubling event.
Is Devastation The Ultimate Cure?
Despite it's bleak outlook, Schiff's book has become a real wake-up call for millions of readers.
While Schiffs predictions can be grim, he also offers step-by-step solutions that average Americans can follow to protect their wealth, investments and savings.
According to Schiff, "the crash and what follows" can be beneficial. But only for those who understand beforehand what is happening and have time to prepare for the devastation.
"All we can do now is prepare for the crash," Schiff said. "If we brace ourselves properly and control the impact, we will survive it."
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