As much as stocks have been getting slammed so far in the brief post-election era, the same cannot be said for the U.S. dollar, which is up for a second day and sitting at a 2-month high. There are many explanations why investors are seeking out our currency at a time of dire fiscal concern, but at least one well-known skeptic says it's not going to last.
"Ben Bernanke's job is safe now that Obama was re-elected, but your money is not," says Peter Schiff of Euro Pacific Capital and author of The Real Crash: America's Coming Bankruptcy. "Ultimately, they're going to print even more money."
At the heart of his long-standing stance of domestic doom, Schiff cites the recent action by the Federal Reserve to extend its Operation Twist program into 2013 instead of letting it expire as originally intended. The net result of this action --which Schiff dubbed "QE3-Plus" in a recent article "When Infinite Inflation Isn't Enough"-- is going to be an even greater degree of money printing to the tune of $1 trillion a year.
Related: Market Weakness Is All About Obama Says Schiff
The Fed has defended its stimulus efforts as necessary and repeatedly insisted that when the time comes it will be able to extract itself and shrink its balance sheet without disruption or runaway inflation. Schiff disagrees.
"He (Bernanke) is lying. It is not inflation neutral, it is the very definition of inflation and the government tries to mask how bad it is by giving us phoney numbers," he argues, adding ominously that "it's only going to get worse because the Fed doesn't think we have enough inflation and is deliberately creating more."
This is what will lead to the real crash that Schiff has been warning about, during which he predicts we'll suffer a major currency collapse.
"It's all about confidence," Schiff says, adding that as long as investors believe that the Fed can maintain this, then Ben Bernanke will get away with it. "The minute the confidence is lost, this con game is over and we will have a real crash. So it is coming, will hit us hard, and probably happen in Obama's second term."
Schiff is a long term advocate of owning gold and continues to be.
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