Peter Schiff -The Dollar Collapse Starts Now!

Off Topic Politics & World Issues
21

Gold is back up over 1160. Next week should be fun.

The dollar seemed to peak at about 75.58, still to early to say this we will know by the end of next week whats going on, if we are going to see a dollar rally or if this was like when Gold went under a thousand for a few days.

Edit*

One thing I did see tho is that if the dollar goes below 74.50 that it will sell off like mad. China seems to want the dollar at over 75. The more I follow gold the more I am finding out China seems to want it to go up in a orderly fashion, maybe they are buying time for more of the people to abandon ship.

22

[quote]dhickey wrote:
orion wrote:
dhickey wrote:
StevenF wrote:
would guns and ammo be a bad investment at this point?

only if they become illegal to own or taxed

Why?

That would be a sign that you need them soon

That would make them a bad investment. They would still have utility. You wouldn’t need a collection, just a couple. Easier to hide a couple.

Edit - I have many more guns than I need right now. If they became illegal or were taxed excessively, I would thin my collection to the ones I really needed.[/quote]

But their utility would sharply increase-

Since you only need money to aquire utility you might as well bypass the use of money and invest directly in guns?

23

[quote]tme wrote:
John S., aka Henny-Penny wrote:
tme wrote:
dhickey wrote:
ZEB wrote:
Schiff is hitting the panic button for no reason. It is highly unlikely that the dollar will collapse. That is because no one who has the power to make that happen, China, Japan and other foreign dollar holders wants it to happen. It is not in their best interest. Why bankrupt your best customer? Instead, the dollar will probably decline gradually, as these countries gradually find other customers.

If we keep printing money, the dollars they are keeping off the market and the debt they hold will continue to lose value. How long to you think they will let that go on? Forever?

Forever, or until the Chinese revalue their currency and/or start selling their dollar holdings. Whatever comes first.

John S, aka Henny-Penny, wrote:
The Dollar is Falling!!! The Dollar is Falling!!! OMG!!! The Dollar is Falling!!!

Good.

Its like you guys all come back at once.

And you just hate it when anyone calls you on your constant hysterical squawking, don’t you?
[/quote]

tme,

I have to agree with you, while well intended I’m sure, he does seem a bit hysterical at times. I have images of chicken little running through the streets crying “the sky is falling the sky is falling”.

The dollar is a very complex topic, not nearly as cut and dry as some have painted it.

24

[quote]ZEB wrote:

tme,

I have to agree with you, while well intended I’m sure, he does seem a bit hysterical at times. I have images of chicken little running through the streets crying “the sky is falling the sky is falling”.

The dollar is a very complex topic, not nearly as cut and dry as some have painted it.[/quote]

The fact that you guys can sit there and think it will be alright is what I find even more disturbing then the dollar falling. I wonder when it finally does how many will be sitting there acting like they had no idea.

25

[quote]orion wrote:
dhickey wrote:
StevenF wrote:
would guns and ammo be a bad investment at this point?

only if they become illegal to own or taxed

Why?

That would be a sign that you need them soon
[/quote]

hahaha.

26

[quote]JEATON wrote:
Dr. Pangloss wrote:
Currencies are driven by interest rates; specifically, they’re driven by interest rate differentials. Once US short-term rates start moving up vis-a-vis other currencies, you’ll start to see the dollar appreciate. You may also see the dollar advance due to European-regional issues (witness todays %1.4 move in the dollar due to concern over Dubai). Either way, there’s no official “reserve status” hat that the dollar wears - or has ever worn - it simply is the currency that most of the world chooses to hold. That being said, there is no better single currency. A very good case could be made for a central bank to hold currencies in equal weighting to their foreign trade, and that alone accounted for a large percentage of the weakness in the dollar/Euro during the early part of this decade.

Points well made.
I have been watching the DXY closely for the last few months. I like the look of this little move off of 74.21. Most of the worlds attention has been on us (U.S.) for the last year. By this, I mean all of the negatives that have occurred. It was a chance for the rest of the world to pat themselves on the back and say, “Look at the high and mighty U.S. Look how they have fallen.” With their new found self esteem, they have neglected to take a look in the mirror. Yes, it is bad here. But it is no better elsewhere. I am concerned that maybe Dubai is just a prelude.
We are the economic engine of the world. When we catch the flu, it spreads. I have the bad feeling that China is not as sound as we been lead to believe. I am reminded of the cold war and the opinion that the rest of the world had about Russia and its position as a military power. In the end we discovered that they were conducting parades with what amounted to card board cut outs of missiles and weaponry. I am not saying that China is this bad. I do have my doubts though.
I also have my doubts about gold at these levels. Again, it reminds me of oil about a year and a half ago. It was going to $300-$400, no question. And then…
Today, everyone is talking about how gold is going to $2000-$5000 an ounce. People with no investing knowledge at all are asking me how do they buy gold. Even John S, who I admire for his thirst for knowledge and his enthusiasm, is talking about restructuring his student loans in order to by gold and silver. I consider John to be very intelligent, but this kind of behavior screams to me that the top is very near.

Let me give you a scenario that you can laugh at if you choose. Everyone talks of gold as being the only true money. I get it, but only to a point. If you are using it as an investment vehicle, or a hedge and are diversified, go for it. But if you are buying gold coin and such to use as real currency in the event of an economic meltdown then think it through very carefully. This is not the middle ages. Commerce is not set up to run on gold. If things got so bad that paper money was worthless, who is going to take your gold? The government would have already seized it by this point and made its possession illegal. And even assuming they did not, what would you do with it. If things were that bad, most trade would be reduced to the barter system on the local level. You can’t eat gold. My family is hungry and you offer me either a gold coin or a chicken, I’m taking the chicken.

I am not the smartest man in the world, this forum, and maybe even the room I am setting in now. I am just suggesting that folks think things through from multiple perspectives before they hitch their boxcar to any particular train. [/quote]

There is way too much sense in these posts for it to be posted in the PWI forum.

It’s just so much easssiieerr to keep crying about how the dollar is falling and America is tumbling and it’s all because of Obama.

27

[quote]FightinIrish26 wrote:

There is way too much sense in these posts for it to be posted in the PWI forum.

It’s just so much easssiieerr to keep crying about how the dollar is falling and America is tumbling and it’s all because of Obama. [/quote]

Actually I have been blaming it on Bush and Obama. But paying attention would make way to much sense.

Edit*

And besides weren’t you just last year blaming everything from the economy to it raining on Bush?

28

[quote]John S. wrote:
ZEB wrote:

tme,

I have to agree with you, while well intended I’m sure, he does seem a bit hysterical at times. I have images of chicken little running through the streets crying “the sky is falling the sky is falling”.

The dollar is a very complex topic, not nearly as cut and dry as some have painted it.

The fact that you guys can sit there and think it will be alright is what I find even more disturbing then the dollar falling. I wonder when it finally does how many will be sitting there acting like they had no idea.[/quote]

Maybe if you could explain EXACTLY why you think a strong dollar would benefit the U.S. right now it would help. Because really, the bond markets don’t seem to mind, and long term interest rates are still almost zero. Doesn’t it make sense to you that if investors were really worried about the value of the dollar and our debt that the rates on treasuries would go up as they became harder to auction? Think this through, Henny.

29

[quote]ZEB wrote:

The dollar is a very complex topic, not nearly as cut and dry as some have painted it.[/quote]

it’s pretty simple if you take the time to understand it. money is not unlike any other good or service. The laws of supply and demand are not that hard to understand.

Lot’s of people are holding large amounts of our currency.
Our gov’t keeps inflating our currency, making that which is being held worth less every day it is held.

Those holding dollars that are losing their value on consistant pace will start to liquidate the dollars they are holding. Once the sell off of dollars starts it will not end well.

An increasing number of dollars and those anxious to get rid of them will bid up prices of goods that can be purchased in dollars. This effectively increases the velocity of the falling dollar value. Before long, no one wants to hold dollars. They are all in the market and being spent as fast as they can be spent. This is hyper-inflation and it is not a fairy tale.

Sell offs happen all the time and their results are predictable. Why people think it will end well for a baseless and abused currency is beyond me. We also seem to be ignoring the many examples of this happening in the past.

30

[quote]John S. wrote:
FightinIrish26 wrote:

There is way too much sense in these posts for it to be posted in the PWI forum.

It’s just so much easssiieerr to keep crying about how the dollar is falling and America is tumbling and it’s all because of Obama.

Actually I have been blaming it on Bush and Obama. But paying attention would make way to much sense.
[/quote]

I know better than to pay attention to the ranting lunacies you post. Thanks.

[quote]
Edit*

And besides weren’t you just last year blaming everything from the economy to it raining on Bush?[/quote]

I put on him what he was at fault for- lying to the country, starting a false war, torturing, denying trials, increasing policing powers, the PATRIOT Act, etc.

So, uh, yea, for the last eight years he caused the great majority of the problems.

31

[quote]tme wrote:

Maybe if you could explain EXACTLY why you think a strong dollar would benefit the U.S. right now it would help. Because really, the bond markets don’t seem to mind, and long term interest rates are still almost zero. Doesn’t it make sense to you that if investors were really worried about the value of the dollar and our debt that the rates on treasuries would go up as they became harder to auction? Think this through, Henny.

[/quote]
Are you serious?

First let’s define what a “strong” dollar is. A strong dollar would be a stable dollar. One that holds it’s value. Currency with an unpredictable value negates almost every market singal we rely on to make economic decisions.

Second. How do bond markets or interest rates indicate a strong or dependable currency?

32

[quote]John S. wrote:
ZEB wrote:

tme,

I have to agree with you, while well intended I’m sure, he does seem a bit hysterical at times. I have images of chicken little running through the streets crying “the sky is falling the sky is falling”.

The dollar is a very complex topic, not nearly as cut and dry as some have painted it.

The fact that you guys can sit there and think it will be alright is what I find even more disturbing then the dollar falling. I wonder when it finally does how many will be sitting there acting like they had no idea.[/quote]

John, calm down, there are market forces at work as we post which will balance the falling dollar. I already mentioned them in a previous post. It’s not that I think the dollar is healthy, it isn’t it’s just that I don’t see the bottom falling out either because of various market conditions which will not allow that to happen. Will the dollar continue to fall? Sure I think it has more room to go down, but I also think it will bounce around in a trading range of 60 on the low side to perhaps 90 on the high.

No need to panic. I know you have great respect for Ron Paul and I too agree with much of what he says on various issues. However, there are other very brilliant students of the economy who disagree with Paul. Get a really good overview of what’s going on by reading information that disagrees with Paul, Schiff and other doomsayers. There are two sides to every argument, I know you know this.

33

[quote]dhickey wrote:
ZEB wrote:

The dollar is a very complex topic, not nearly as cut and dry as some have painted it.

it’s pretty simple if you take the time to understand it. money is not unlike any other good or service. The laws of supply and demand are not that hard to understand.

Lot’s of people are holding large amounts of our currency.
Our gov’t keeps inflating our currency, making that which is being held worth less every day it is held.

Those holding dollars that are losing their value on consistant pace will start to liquidate the dollars they are holding. Once the sell off of dollars starts it will not end well.

An increasing number of dollars and those anxious to get rid of them will bid up prices of goods that can be purchased in dollars. This effectively increases the velocity of the falling dollar value. Before long, no one wants to hold dollars. They are all in the market and being spent as fast as they can be spent. This is hyper-inflation and it is not a fairy tale.

Sell offs happen all the time and their results are predictable. Why people think it will end well for a baseless and abused currency is beyond me. We also seem to be ignoring the many examples of this happening in the past.

[/quote]

Hey, that was a great explanation of what’s happening to the US dollar, at least in part. But don’t forget that there extemporanous factors and circumstances that surround the dollar and its potential demise. For example, China purchased a massive amount of our debt and is also a trading partner. China cannot simply decide one day to “dump its bonds” and torpedo the U.S. economy. It can’t even credibly threaten to do so because it has no one to sell them to.

This is interesting as well:

http://search.aol.com/aol/search?query=Why+the+dollar+won't+collapse&s_it=keyword_rollover

" Australia and Brazil – with two of the strongest currencies against the dollar this year – actually run trade deficits with the United States.

Professor Krugerâ??s point – that natural resource-rich currencies are the strongest against the dollar and may continue to strengthen – seems very logical. But with the exception of Canada, we donâ??t run trade deficits with these countries. Only Canada is a component of DXY, so if the Brazilian and Australian currencies continue to strengthen, there will be no effect on the index.

Other than the natural-resource countries, what currencies can the dollar collapse against?

Not China – theyâ??re not playing the game. The euro? Look at those nice trade surpluses that Germany, Ireland, and Italy have. Are they willing to let the Euro climb to 2.00 or 2.50, and depress their already-weak economies to give American manufacturers a chance to take market share away from them? I donâ??t see that happening. How strong can the yen get? That I’m not sure of, but it’s only 13.6% of DXY versus 77.3% for all the European currencies combined.

I just canâ??t see a collapse of the dollar against the euro when their problems are just as bad as ours. My thoughts after doing this analysis are that the weak dollar is too crowded a trade, that DXY is probably close to a bottom, and finally, that I’m going to start looking into Canadian stocks and maybe bank accounts."

I probably should have said “the global economy” is very complex and not nearly as cut and dry as some have painted it.

34

[quote]FightinIrish26 wrote:

I put on him what he was at fault for- lying to the country, starting a false war, torturing, denying trials, increasing policing powers, the PATRIOT Act, etc.

So, uh, yea, for the last eight years he caused the great majority of the problems. [/quote]

So, Obama has repealed the patriot act, is definitely not trying to start something with Iran, not bombing Pakistan, and did not lie when he said if we pass his stimulus unemployment would cap at 8%?

35

The dollar closed today at 74.86.

Gold closed at 1177.67.

36

[quote]ZEB wrote:

No need to panic. I know you have great respect for Ron Paul and I too agree with much of what he says on various issues. However, there are other very brilliant students of the economy who disagree with Paul. Get a really good overview of what’s going on by reading information that disagrees with Paul, Schiff and other doomsayers. There are two sides to every argument, I know you know this.

[/quote]

I am reading different information, PRCALDUDE is kind enough to provide the information.

But you can understand why I am listening to Peter Schiff and Ron Paul. They where some of the few that called the bubble, not in 2006 or 2007 but in 2002-2003.

37

[quote]ZEB wrote:

Hey, that was a great explanation of what’s happening to the US dollar, at least in part. But don’t forget that there extemporanous factors and circumstances that surround the dollar and its potential demise.
[/quote]
go ahead and list them and we will discuss.

If inflation keeps increasing and interest on the debt they hold stays the same, they will be losing money on that debt. They will also be losing money on the dollars they are holding.

We also cannot continue to consume more than we earn. At some point we will have to stop consuming chinese goods at the rate we are. What happens then?

You expect China to endlessly extend credit to us while losing value on debt they already hold forever. You expect China to hold dollars while they loser their value. All while we become a smaller consumer of their goods. This is just plain short sighted. Why would they do this?

This is not interesting at all. Trade deficits with one nation are meaningless. Consuming more than you make is interesting and cannot continue indeffinately.

Meaningless. This is world economy. What we trade with one county means nothing. Back to econ 101.

every other country that is not printing dollars as fast as we are. Why is this so hard to understand?

So we are comfortable basing our currency on how long china is willing to play a game? We just have to make sure they don’t float their currency and we continue to spend money we don’t have on Chinese goods. All while making sure the gov’t can take what’s left over after buying chinese goods to pay our debt payments. It’s not just China we have to continue to do this with by the way. Yep. Sounds like a rock solid plan.

You don’t understand the laws of supply and demand. If you print more dollars they are worth less. Any currency that is not expanding at the same rate is safer than ours. We have been inflating our currency for years. We have not seen anywhere near the full effect because of willingness by others to keep dollars out of the market. When the flood the market we will pay for all previous sins in a very short period of time.

You obviously don’t understand the concepts you are summarizing. If you want to read an article by some Keynesian and take it at face value, fine. I chose not to. If you want to throw your hands up and say “the market is too complex so the dollar must be fine”, go right ahead. You’ll have a ton of company.

Or you can read some very basid materials on economics. This will give you the foundation to decipher the bullshit that gets published these days. You will quickly realize just how shallow most analysis really is. Any of the following will give you a good base:

Economics in One Lesson - Haslett - must read
Basic Economics - Sowell - must read
Economic Fact and Fallacy - Sowell - interesting but not a must read.
Applied Economics - Sowell - must read
Free to Chose - Friedman - so so
Economics 101 - Rothbard - little more complex
Wealth of Nations - Smith - classic sourse that sited in just about all of the above.

That’s just off the top of my head. After a few of these I would read some of the heavier material on currency from Rothbard, Hayek, and especially Von Mises.

38

[quote]John S. wrote:
ZEB wrote:

No need to panic. I know you have great respect for Ron Paul and I too agree with much of what he says on various issues. However, there are other very brilliant students of the economy who disagree with Paul. Get a really good overview of what’s going on by reading information that disagrees with Paul, Schiff and other doomsayers. There are two sides to every argument, I know you know this.

I am reading different information, PRCALDUDE is kind enough to provide the information.

But you can understand why I am listening to Peter Schiff and Ron Paul. They where some of the few that called the bubble, not in 2006 or 2007 but in 2002-2003.
[/quote]

Schiff did call the bubble a few years ago and that is impressive. But, he’s not infallible is he?

39

dhickey,

There is only one thing left for you to do on this thread. You must predict when the end of the US dollar will come. I’m not being sarcastic, while I don’t agree with you I’d like to know what you think. When will it happen? Also what are you doing about it? Where are you putting your money right now? Gold, silver, euro’s?

You are obviously convinced and there is nothing that I can post that will change your mind my friend so tell us what you are going to do about it. I will tell you what I’m doing. I’m currently buying US stocks and have made a bundle as I bought in when the dow was around 7000. Now maybe I’m wrong on the dollar and you are 100% right but so far betting with the US economy has paid off nicely for me in real dollars that are worth about .75, but none the less I’m way ahead of the game.

Anyway, I look forward to hearing your investment strategy and will not take it lightly.

Just keep in mind that any date that you set will me watched, you know I still think I’m right. :slight_smile:

40

[quote]ZEB wrote:

Schiff did call the bubble a few years ago and that is impressive. But, he’s not infallible is he?[/quote]

No he is not, in terms of day to day he gets it wrong from time to time. But in long term investments he has been right. Sure he missed the dollar rally, but that rally had nothing backing it and it crashed/is still crashing.