Schiff on Reinvent Money: Euro on Shaky Ground

Paul Buitink, host of the Reinvent Money show, recently interviewed Peter on debt in Europe, possible futures for various currencies, and government monitoring of crypto and gold.

Paul asks Peter which Western country is in the worst shape financially. His answer? They’re all in bad condition:

“It doesn’t mean that the nation that’s in less bad shape is in good shape, and the reason we have so much debt is because central banks have been so accommodating to the borrowers by keeping interest rates so low. In fact, for many years, in Europe, they were paying people to borrow money. Interest rates were negative. So as a result of artificially low interest rates, governments, households, businesses all took on far more debt than they could reasonably service in a normal interest rate environment— and debt that they can’t repay in any environment.”

The dollar may not be the weakest currency at the moment, but it stands to suffer the most as debt spirals out of control:

“Right now the yen seems to be the weakest of the major currencies. But I think ultimately the dollar has the most to lose because we’re the country that benefits most from the current status, where the dollar is the reserve currency in a global fiat system.”

The euro’s fate will depend on which European countries continue to use it:

“Maybe the euro will break apart, in that there will be a core group of nations that continue with the euro, and there will be other nations that separate. In that case, the euro could end up being stronger— if you get rid of Italy and Portugal and Spain and some of the southern countries and you just leave Germany, Austria, the Netherlands, a few other countries that are not as recklessly irresponsible. But if Germany leaves the euro and goes back to the Deutschmark, then the euro’s toast.”

A currency crisis could be softened or averted if the United States stops spending money it doesn’t have:

“We need to roll back government so that we have the type of limited government that we had initially, that enabled us to become so prosperous, that enabled the dollar to achieve the world’s reserve currency status. We need to go back to that type of America. But the question is, are the voters prepared for it? Because it’s not an easy path to get from where we are to where we need to go. And politicians don’t have the stomach for asking voters to swallow any bitter-tasting medicine. Nobody wants to level with voters and tell them the truth—that they can’t get a lot of the government benefits they were promised.”

Peter and Paul also briefly discuss Bitcoin. With regulations in Europe making crypto transfers harder, Peter doesn’t see much of a purpose in buying the cryptocurrency:

“People are giving up, and they’re just buying ETFs. They don’t even want to buy Bitcoin. They just buy some ETF where a third party has custody and they pay a storage fee. I mean, what? That defeats the whole purpose of Bitcoin!”

With asset confiscation taking place over the Russia-Ukraine conflict, Peter explains why— at least for now— gold is unlikely to be confiscated anytime soon in America:

“You have to have a trusted custodian in a jurisdiction that has a good rule of law so that the government can’t just come in and seize it. … Let’s say Switzerland is probably not going to steal gold. And there are other countries that are probably not going to do it. And you have companies that have a reputation to protect, and they’re not going to steal their customers’ gold. They have a lot of goodwill in their brand and they want to maintain that. … You know, there’s a lot of ways for the free market to help consumers and reward companies for being honest and living up to their commitments. And that goodwill has a value.”