Peter Schiff Interview from The Bubble

"The Bubble" coming in Spring 2013:

Peter Schiff: Gold is a Long-Term Investment

Peter Schiff spoke n CNBC’s Futures Now to hammer home the point that gold is a long-term investment that offers protection from volatile fiat currencies.

"You have this record physical demand. Not only in America, but around the world. I mean, think about it: what are you going to do if you want to save your money? …You’re going to hold dollars at zero percent with Ben Bernanke promising to print to infinity? You’re going to hold euros, you’re going to hold yen, the Chinese RMB? There’s no currency you can hold and be confident of its future purchasing power…People are figuring this out, they’re voting with their feet. They’re holding something with intrinsic value that has historically been money, that people like Ben Bernanke can’t print.", explained Schiff.

Peter Schiff on the 91% Tax Rate

The fiscal cliff is now at hand. The President’s decision not to sign anything that does not raise the rates of taxes on the top 2% is definitely debatable. The 1950s are being touted, by Paul Krugman and Warren Buffett, as the country’s most successful period – with 91% top tax rate and still unbelievably fast growing GDP and individual wealth. As their opponent in this argument appears Peter Schiff.

Krugman claims that the top income bracket faced a 91% tax rate during the 50s, corporate profit taxes being twice as large at the same time. Furthermore, he says that years of high taxation after the Second World War brought to the United States an excellent speed of economic development, a good example – the 1947-73 doubling of family income. Warren Buffet has a similar point of view – he claims that during the extreme 91% tax-period he sold securities quite well.

In a Wall Street Journal publication, Peter Schiff confronts these arguments. His answer – the 50s tax rate was ‘symbolic’. In fact, top earners had to experience lower rates, compared to wealthy people nowadays. On The Daily Ticker, Schiff comments further on his argument.

Peter Schiff: Ben Bernanke throws the dollar over the Currency Cliff

The CEO and Chief Global Strategist of Euro Pacific Capital Peter Schiff accused the chairman of the Federal Reserve, which is the central bank of the United States, Ben Bernanke that he is working against the US dollar.

Peter Schiff: No Way Out

Peter Schiff, the CEO and Chief Global Strategist of Euro Pacific Capital, an SEC-Registered Investment Adviser and a full service broker/dealer, shares his thoughts on the Federal Reserve's policy, QE3 open-ended money printing. According to Schif that is not the proper medicine that will heal the US economy, it will only make things worse.

By upping the ante once again in its gamble to revive the lethargic economy through monetary action, the Federal Reserve's Open Market Committee is now compelling the rest of us to buy into a game that we may not be able to afford. At his press conference this week, Fed Chairman Bernanke explained how the easiest policy stance in Fed history has just gotten that much easier. First it gave us zero interest rates, then QEs I and II, Operation Twist, and finally "unlimited" QE3.

Now that those moves have failed to deliver economic health, the Fed has doubled the size of its open-ended money printing and has announced a program of data flexibility that virtually insures that they will never bump into limitations, until it's too late. Although their new policies will create numerous long-term challenges for the economy, the biggest near-term challenge for the Fed will be how to keep the momentum going by upping the ante even higher their next meeting.

The big news is that the Fed is now doubling the amount of money it is printing. In addition to its ongoing $40 billion per month of mortgage backed securities (to stimulate housing), it will now buy $45 billion per month of Treasury debt. The latter program replaces Operation Twist, which had used proceeds from the sales of short-term treasuries to finance the purchase of longer yielding paper. The problem is the Fed has already blown through its short-term inventory, so the new buying will be pure balance sheet expansion.

To cloak these shockingly accommodative moves in the garb of moderation, the Fed announced that future policy decisions will be put on automatic pilot by pegging liquidity withdrawal to two sets of economic data. By committing to tightening policy if either unemployment falls below 6.5% or if inflation goes higher than 2.5%, Bernanke is likely looking to silence fears that the Fed will stay too loose for too long. While these statistical benchmarks would be too accommodative even if they were rigidly enforced, the goalposts have been specifically designed to be completely movable, and hence essentially meaningless.

Bernanke said that in order to identify signs of true economic health, the Fed will discount unemployment declines that result from diminishing labor participation rates. It is widely known that a good portion of unemployment declines since 2009 have resulted from the many millions of formerly employed Americans who have dropped out of the workforce. But like many other economists, Bernanke failed to identify where he thinks "real" employment is now after factoring out these workers. So how far down will the unemployment number have to drift before the Fed's triggering mechanism is tripped? No one knows, and that is exactly how the Fed wants it.

Peter Schiff on Gold Prices

Despite the downwards movement of the price of gold recently, the Euro Pacific Capital CEO Peter Schiff says that this will not last for long. On Yahoo, he reports – gold prices will jump over 5000 dollars.

In his words, decisions still not made are now of great importance. He asks - how much time will the world need to realize the fact that we have been conning interest rates? 

Schiff describes the increasing debt of the US and the massive easing of the Federal Reserve as ‘bullish’ towards the precious metal. When the world comes to the conclusion that we ask for money in order to live a life beyond the means possible, a much more significant dollar drop will come to pass. In order for interest rates to remain low, more money will have to be printed by the Fed and thus, the price of gold will explode.

Peter Schiff on CNBC

Eamon Javers (CNBC) informs of the recent developments concerning the ‘fiscal cliff’. On this debate about the tax raise on top earners, we have the CEO of EPC (Euro Pacific Capital) Peter Schiff and Richard Brodsky – senior Demos fellow.

In his words, Peter Schiff’s total income, as a top earner, is almost in half going to the federal government, due to taxation. And next year, when those new tax hikes strike, more than 50% of his earnings will be spent on government taxes. He claims that the majority do not have the right to ‘steal his money’ just because they voted to do so.

Those taxes are going to be paid by employees – Schiff says. The wealthy will invest abroad and stop working as hard as they do now. They won’t give so much money for taxes and neither will they recruit as many employees.

Peter Schiff: The decline that’s coming from the dollar is going to be much bigger than what we saw in the 1970s

Peter Schiff appeared on Fox Business, discussing the future of the bond market and the dollar in relation to the value of gold. He compared the current situation to the 1970s inflation, but stressed that today we are facing much worse consequences.

"In 1971, when we went off the gold standard, in the next seven or eight years, the dollar lost two thirds of its value. That’s why oil prices went from three dollars to thirty dollars. That’s why we had all the inflation in the 1970s. I think the decline that’s coming from the dollar is going to be much bigger than what we saw in the 1970s. The fundamentals are much worse. Meanwhile, over the last five years, ten years, the dollar has been going down," said Schiff.

Peter Schiff on the 91% Tax Rate

The fiscal cliff is now at hand. The President’s decision not to sign anything that does not raise the rates of taxes on the top 2% is definitely debatable. The 1950s are being touted, by Paul Krugman and Warren Buffett, as the country’s most successful period – with 91% top tax rate and still unbelievably fast growing GDP and individual wealth. As their opponent in this argument appears Peter Schiff.

Krugman claims that the top income bracket faced a 91% tax rate during the 50s, corporate profit taxes being twice as large at the same time. Furthermore, he says that years of high taxation after the Second World War brought to the United States an excellent speed of economic development, a good example – the 1947-73 doubling of family income. Warren Buffet has a similar point of view – he claims that during the extreme 91% tax-period he sold securities quite well.

In a Wall Street Journal publication, Peter Schiff confronts these arguments. His answer – the 50s tax rate was ‘symbolic’. In fact, top earners had to experience lower rates, compared to wealthy people nowadays. On The Daily Ticker, Schiff comments further on his argument.

Ditching Before The Fiscal Cliff

Peter Schiff, the CEO and Chief Global Strategist of Euro Pacific Capital, an SEC-Registered Investment Adviser and a full service broker/dealer, talks about the real fiscal cliff and warns that the only way to win the game is not to play.

Turn on the TV and this is what you'll hear: The US budget is heading for a fiscal cliff. If a deal isn't reaching in Congress by the end of this year, a combination of automatic tax hikes and budget cuts will sink America into economic depression. There is no escape.

Of course, my readers know that the fiscal cliff is merely an example of the piper having to be paid. The problem isn't the bill, but that we ran it up so high in the first place. Any deal to avoid the cliff by borrowing even more money may allow the piper to keep playing a while longer, but when the music finally stops, the next fiscal cliff will be that much larger.

My readers also know that there are several ways for investors to avoid the cliff altogether. Perhaps the most secure is buying precious metals. However, given what we know, it may seem confusing that the spot prices of gold and silver have been moving sideways.

However, these headline prices have largely concealed a more important indicator: physical bullion sales are booming.

An Under-the-Radar Rally

The figures are astounding. For US Gold Eagle coins, mint sales are up some 150% from the QE3 announcement on September 13th. Despite what the spot prices show, there has been a tremendous surge in people buying physical gold.

But why hasn't this translated into higher spot prices?

It seems clear that the spot prices of both gold and silver are being driven right now by a large pool of institutional capital moving into and out of instruments like commodity ETFs. The movements have been predictable: When there is a sign of a deal coming out of Washington, the spot prices move up. If negotiations are faltering, there is instead a major selloff.

Physical bullion investors are a different breed. We are in this market for the long haul. When I increase my physical gold and silver holdings, I do it because I see the long-term fundamental picture for the US getting worse.

Getting a Read on the Bullion Bull

While the ETF speculators are trying to anticipate the market's - and each other's - immediate reaction to whatever 11th hour deal is struck, I believe physical bullion investors are sending a clear signal: this whole debate is out of order.

A J.P. Morgan study concluded that 82% of the hit to GDP if we go over the fiscal cliff would be related to tax increases, not spending cuts. And if the legislators reach a deal? It will only result in more tax increases and much fewer spending cuts. These guys just don't get it.

Looking back to the debt ceiling debate of August 2011, we saw big movements into physical gold there as well. What investors are concluding as they hear these grand debates is that whatever the result, the budget, the dollar, and the taxpayer will lose.

They are deciding to get off this runaway train. Because the real fiscal cliff isn't coming on December 31st - it is coming when there is a global flight from the US dollar.

The Real Fiscal Cliff

The Democrats are complaining that the fiscal cliff imposes too steep demands on those who receive entitlements. Republicans are trying to protect the military budget. What no one seems to want to address is what happens as foreign creditors increasingly decide to stop financing this bonanza.

To a large extent, this is already happening. China has already become a net-seller of Treasuries and is diverting more of its reserves into gold. The Chinese government recently approved banks holding gold as a reserve asset and made it easier for banks to trade gold amongst themselves.

While Japan and other Keynes-drunk governments have filled some of the gap with increased purchases, a supermajority of new issues are being bought directly by the Fed. That was the idea behind QE3 Plus, as described in last month's commentary.

Because of the acute trauma in Europe and certain institutional mandates to hold Treasuries, much of this new inflation is being absorbed. This has caused what may be the most dangerous of situations. It has allowed the inflationists to paint people like me as the boy who cried wolf. It seems to them that no matter how irresponsible Congress and the Fed are, we are immune from economic consequences.

In reality, all this money printing is like pulling back a spring. Pent up inflationary forces are building, and when they are unleashed, the debate will be over faster than they can say "oops."

The Only Way to Win Is Not to Play

Those buying into physical gold and silver see this inevitability and are getting prepared. We believe there is no sense playing Russian roulette with our savings. Every time Washington raises that debt ceiling or announces another stimulus, it's like one more click of the trigger.

When the global markets finally wrap their heads around the scale of US insolvency, the response will be as fierce as it is rapid. In such a once-in-a-century scenario, physical gold and silver are among the few assets without counterparty risk. From the looks of the physical bullion sales charts, I'm not the only investor who has figured this out.

Peter Schiff: The wealthy are going to invest more abroad

Peter Schiff came with another dark prediction about the US economy on CNBC’s Closing Bell recently. He talked about his recent commentary in The Wall Street Journal, explaining why raising taxes on the wealthy will do nothing to solve the debt problems of the US.

"You know what the wealthy are going to do? They’re going to invest more abroad, they’re not going to work as hard, they’re not going to pay as much in taxes, they’re not going to employ as many people, their employees aren’t going to pay the taxes," stressed Peter Schiff.

Peter Schiff: The Fantasy of a 91% Top Income Tax Rate

Peter Schiff, the author of "The Real Crash: America's Coming Bankruptcy" and host of the daily radio program "The Peter Schiff Show", hits once again the idea of higher taxation of the wealthy Americans in his article for the Wall Street Journal.

Democratic Party leaders, President Obama in particular, are forever telling the country that wealthy Americans are taxed at too low a rate and pay too little in taxes. The need to correct this seeming injustice is framed not simply in terms of fairness. Higher tax rates on the wealthy, we're told, would help balance the budget, allow for more "investment" in America's future and foster better economic growth for all. In support of this claim, like-minded liberal pundits point out that in the 1950s, when America's economic might was at its zenith, the rich faced tax rates as high as 91%.

True enough, the top marginal income-tax rate in the 1950s was much higher than today's top rate of 35%—but the share of income paid by the wealthiest Americans has essentially remained flat since then.

In 1958, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%.

So if the top marginal tax rate has fallen to 35% from 91%, how in the world has the tax burden on the wealthy remained roughly the same? Two factors are responsible. Lower- and middle-income workers now bear a significantly lighter burden than in the past. And the confiscatory top marginal rates of the 1950s were essentially symbolic—very few actually paid them. In reality the vast majority of top earners faced lower effective rates than they do today.

Peter Schiff: Doing Away With Ceiling Drama

Peter Schiff, the CEO and Chief Global Strategist of Euro Pacific Capital, an SEC-Registered Investment Adviser and a full service broker/dealer, shares his thoughts about the Treasury Secretary Timothy Geithner and his proposal to transfer the Congressional prerogative to raise the debt ceiling to the President.

Treasury Secretary Timothy Geithner made news last week by proposing to transfer the Congressional prerogative to raise the debt ceiling to the President. The change would essentially do away with the meaningless debt ceiling debates that have become ritual kabuki in Washington over the past few generations. Most Republicans have dismissed the proposal as a blatant executive power grab that will significantly weaken both the Congress and the minority party. While this is certainly true, Congress will only lose a power that it has never shown the slightest courage to actually use. But in truth, the proposal has the merit of refreshing honesty. By telling U.S. taxpayers, and the world in general, that the U.S. government has no intention of ever balancing its budget or limiting its accumulation of unsustainable debt, then perhaps we can begin to have an honest discussion about our economic future.

Congress has always decided how much money the U.S. government will spend and how it will tax the citizenry to meet those obligations. Geithner's proposal will change none of that. The debt ceiling debates have been simply to authorize the U.S. Treasury to issue debt to cover the ever widening gap between what Congress spends and what it taxes. As a result, these debates have become nothing more than exercises in feigned outrage. If Congress wants to control the debt, let them do so. If they don't care, just continue on the current path. Dropping the pretense is at least more honest.

The move will also help blunt the ridiculous assertions made by those in favor of lifting the debt ceiling that doing so somehow means that the United States is taking the prudent and moral step of "paying its bills."

Peter Schiff: Black Friday and Cyber Monday not healthy for the US economy

Peter Schiff, the CEO and Chief Global Strategist of Euro Pacific Capital, explains why Black Friday and Cyber Monday are not healthy for the US economy, as so many people seem to believe.

He then elaborates on how the markets have responded to the likelihood that Congress will continue to kick the can of deficit reduction down the road by avoiding the fiscal cliff.

Peter Schiff taking on hyperinflation, US economy and the strength of the US dollar

Peter Schiff shares his thoughts about the hypeinflation in the USA in Capital Account. He urges that if the things continue the same way in the US economy there will be hyperinflation. He also speaks about the future of the US economy and the strength of the US dollar.