Hedge fund manager has a blunt verdict for US dollar (2:44)
Veteran investor Peter Schiff has a long history of sounding alarms about the U.S. economy.
In an interview with Sujal Jethwani, he delivered perhaps his bluntest take yet, summing up the U.S. dollar in just one word: “bad.”
The hedge fund manager, known for predicting elements of the 2008 financial crisis, reiterated his belief that a far larger crisis is still ahead, one centered not on housing, but on the dollar itself.
Related: Billionaire fund manager drops no-nonsense verdict on US dollar
Crisis delayed, not avoided
Schiff revisited his earlier warnings about the housing bubble and its aftermath. While he acknowledged he did not predict every detail perfectly, he said he correctly anticipated that artificially low interest rates, government-backed mortgages, and speculative excess would end in a severe downturn.
More importantly, he argued that policymakers’ response to the 2008 crisis, which included slashing interest rates and launching quantitative easing, merely postponed a deeper reckoning.
"I also predicted that, as a consequence of what the government would do in response to the financial crisis that we would have an even bigger crisis. That crisis was gonna be a dollar crisis and a sovereign debt crisis. That's the crisis that we haven't had."
While acknowledging critics who say his hyperinflation and dollar crash predictions have been wrong so far, he is convinced of his prediction.
"And I think that the fact that we were able to delay it for as long as we did, it was only because we pursued policies that made all the problems worse, that will ultimately lead to that crisis."
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Gold signals trouble ahead
Schiff pointed to gold’s recent performance as a warning sign. He said the metal’s steady rise suggests that markets may be preparing for instability in fiat currencies.
“I think that gold moving up the way it has is an indicator that the crisis is closer now,” he said, adding that even he has been surprised by how long the reckoning has taken to unfold.
Schiff’s central thesis is that the United States cannot indefinitely sustain rising debt levels and monetary expansion without consequences.
He believes a combination of mounting sovereign debt and continued reliance on money printing will eventually undermine confidence in the dollar.
During a rapid-fire segment of the interview, Schiff was asked to summarize several assets and trends in one word.
Gold? “Good.”
Bitcoin? “Add.”
U.S. dollar? “Bad.”
Related: Could Bitcoin replace the US dollar as the world’s reserve currency?