Peter Schiff: The World Needs an Alternative to the Dollar and the Best Alternative Is Gold (Video)
As we’ve been reporting, central banks around the world are aggressively adding to their gold reserves. During an interview on RT’s Boom Bust, Peter Schiff talked about this move toward gold and said these central banks are preparing for a dollar crisis. The world is looking for an alternative to the dollar and the best alternative is gold.
The conversation started with a discussion about what is going on in Venezuela. As Peter put it, Venezuela is paying the price of gold for its democratic socialism. He said the Venezuelan government will need gold reserves if it wants to try to re-establish some type of currency.
The Boom Bust hosts also mentioned that Serbia and the Philippines have joined the global race for gold, asking if the moves were related to fears over the strength of the dollar. Peter said the fear isn’t about the strength of the dollar but the future weakness of the greenback.
That’s why I think you’re going to have a global gold rush on the part of central banks to build up their gold reserves preparing for a dollar crisis. You know, for years and years, the Federal Reserve was pretending that they could normalize interest rates and unwind the balance sheet. But that was all a pretense. They could not do that. I’d known that from the beginning. But the world’s about to figure it out because the Fed is going to go back to zero, they’re going to do more quantitative easing, and so the balance sheet is going to blow up to new highs. We’re going back to zero and people are going to figure out around the world that the Fed is stuck, that rates are going to remain low regardless of how high inflation goes in the United States. And inflation is about to go through the roof. That means the dollar is going to go through the floor and that means the world needs an alternative to the US dollar and the best alternative is what the dollar supplanted and that’s gold.”
As Peter pointed out, gold was the reserve until the dollar came along, and the dollar only became the reserve currency because it was backed by gold and redeemable in gold.
Well, we defaulted on those obligations in 1971, but the dollar as a fiat currency has continued to serve as a reserve. Well, the days that the dollar is a reserve currency are numbered and the smart central banks are trying to buy as much gold as they can before the number is up.”
The RT hosts pointed out that Malaysian Prime Minister Mahathir Mohamad recently said East Asian countries should adopt a common currency based on gold.
At the moment we have to depend on the US dollar, but the US dollar is not stable. So, the currency that we propose should be based on gold because gold is much more stable.”
Peter said all currencies should be backed by gold.
That’s what gives currency value is the gold that backs it up.”
Peter said he thinks more central banks around the world will be looking tie their currencies to “real money” – gold – and that is going to undermine the dollar. He also noted that countries have in a sense been manipulating their currencies to prop up the dollar in order to support their exports to the US. Peter said he thinks that will shift as the dollar collapses and these exporting countries will begin to consume their products themselves.
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