Thursday , 13 June 2024

Peter Schiff: QEternity Has Its Limits – Here’s Why (+2K Views)

The latest round of quantitative easing (an additional $40 billion a month until conditions improve) has been dubbed as “QEternity” or  “QE-Infinity” by its critics but it will end much before that. We are witnessing a  massive bubble in US government debt, and we’ve reached the point where  no one in charge believes it will ever end – an excellent  contra-indicator. [Let me explain.] Words: 720

So says Peter Schiff ( in edited excerpts from his original article* entitled RIDING INTO THE SUNSET OR A BRICK WALL?

Lorimer Wilson, editor of (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Schiff goes on to say, in part:

Rather  than going on for eternity, this third round of QE is only hastening  the day when there is a flight of confidence from the dollar and US  Treasuries. This will cause a sharp rise in market interest rates and  surging consumer prices across America. If you think $4 a gallon gas is  bad, wait till you see it going up by 25¢ or more per week.

At  this point, the Fed Chairman will have a choice to make: keep printing,  which will push the dollar into uncontrollable hyperinflation, or begin  tightening, which will bankrupt the US government and banking system.

I  have long written about this Sophie’s choice confronting the Fed, but  so far the printing option has been too easy. With the world only slowly  abandoning the dollar as the reserve currency and the euro crisis  offering a distraction, the Fed has been able to more than double the  money supply without US consumers seeing out-of-control price hikes at  the store. Not that there hasn’t been inflation – look at housing, gas,  or the stock market – but it hasn’t reached crisis proportions. When  prices start rising fast enough for the average person to figure out  he’s being screwed, then there will be riots in the streets.

The good news for precious metals investors is that either scenario is bullish for gold and silver.

  1. If  the Fed pushes this insanity to the point of hyperinflation, precious  metals will quickly be seen as a form of money that can purchase the  same amount of goods week-after-week, month-after-month.
  2. If  there is tightening, prices might stabilize, but the federal government  and its banking cartel will likely go bankrupt in tandem. That means no  bailout money will be forthcoming, no FDIC insurance can be paid, and  banks may go on holiday for lack of reserves. This is what  happened in Iceland in 2008, when its big banks had debts 10X the size  of the country’s GDP. There was no way for the government to offer a  bailout, so the whole edifice came crashing down. While the 320 thousand  citizens of Iceland didn’t make a big dent in the currency markets  during this transition, you better bet the 320 million citizens of the  United States will.

As  we’ve seen in cases like Argentina’s in the ’90s and Hungary’s in the  ’40s, when the banking system freezes, hard assets trade at a premium.  Gold and silver coins may be at a disadvantage in terms of convenience  in an era of credit cards and Paypal, but what happens when those funds  are no longer available? Already, regulations and lower profit margins  have driven banks to add fees to debit card transactions. Not to mention  that every digital transaction is traceable by the tax authorities.

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If  everyone starts to carry rolls of cash everywhere, it’s not a big leap  to carry coins. A silver coin the size of a dime is currently worth  about $3.50. Two could buy you lunch.

While  I believe a tightening and national default would put the U.S. on the  road to recovery, the transition period will be messy. Bread lines,  rampant foreclosures, and a spike in crime are likely results. In this  situation, gold and silver may be the only things people can count on.  In fact, they are likely to not only hold their value, but dramatically  appreciate as millions of people flood the metals market and the dollar  economy deleverages. In plain English: maybe it will only  take one of those dime-sized silver coins to buy lunch. Maybe that coin  will buy lunch for you and a friend.


Bernanke   and his Wall Street supporters see cheap money until the horizon – but  that horizon is really a painted brick wall. So it’s not QE-Infinity,  it’s QE until the Fed either recognizes the brick wall and slams on the  brakes, or doesn’t and crashes into it. Either way, the only way to  get off this locomotive is to invest in hard assets.

*Source of original article:

Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.


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