"USA Collapse Will Be Far WORSE Than You Think..." - Peter Schiff's Last WARNING

clearly most of the foreign currency deposits in China are in U.S dollars and so now when Chinese Banks take US dollar deposits they can't make as many loans they have to hold more dollars than they had been holding and so the idea here is that this is going to increase dollar demand in China because the banks are now going to have to buy more dollars or hold on to more dollars so not sell as many dollars but I don't think this move is going to provide any significant support to the dollar the question is is this an indication that the bank is going to do more to try to slow down the Dollar's decline which I think would be a mistake I think monetary authorities should let the market function and let the dollar fall the dollar is going to be falling against a lot of currencies not just the Yuan but one way that this might backfire if the goal of the policy is to strengthen the dollar is if Chinese Banks which now have to behold more dollars in reserve and so they can't loan out as many maybe they will also reduce the interest that they pay their depositors on their US dollars because obviously they can't make as much money loaning out those dollars and if they do that then that will simply widen the disparity between what you can earn on your RMB deposits or Yuan deposits versus what you can earn on your dollar deposits and that may cause more people in China to decide that they'd rather Bank their Yuan than dollars and so what they end up doing is selling their dollars so that they can convert their deposits to you on and earn more interest now this is going to happen anyway as the dollar really starts to fall and the people in China start to perceive the risk of holding dollars and they would prefer the safety of owning local currencies so that is going to happen anyway but also you know there's been a lot of people who have pointed to the Chinese currency Peg and they said if it wasn't for this Peg it's the Chinese Yuan that would fall then somehow by pegging the currency to the dollar they are having an artificially strong currency but for that Peg the Yuan would crash clearly when the central bank is intervening to support the dollar that's not true it's the dollar that's going to crash if China pulls the peg not the Yuan and in fact the main reason that the FX reserves are so large in China is because that's how many dollars they've had to buy to prevent the dollar from falling and to artificially suppress their own currency and so I think that domestic purchasing power is becoming far more important than exports to the United States and so trying to artificially suppress the purchasing power of their own currency is no longer a primary concern they're going to have a lot more people to feed and to take care of and so they want more purchasing power they want to try to see the cost of raw materials and all the things that people are going to need they want to see these things come down and they're going to be more concerned about satisfying the demands of their own population which is now going to really start to grow as opposed to satisfying the demands of the American population which is now in a lot of trouble because we're going to be fending more and more for ourselves and we do not have the capabilities of doing that because over the years we've grown dependent on countries like China and so our economy has disintegrated our industrial capacity no longer exists we have seen the economy transform into a service sector economy where consumers borrow money to buy stuff they didn't buy but all this is dependent on the reserve status of the dollar and our ability to import the stuff that we didn't make and borrow the money that we didn't save if you think about again the classic Milton Friedman inflation which is what inflation is which is too much money chasing too few goods you print more money and it bids up the supply of goods what has been happening in the U.S economy the FED prints all this money yet that money doesn't lose a lot of value look at the exchange rate of the dollar versus other currencies we've had this massive explosion of money printing big increase in the fed's balance sheet but on a relative basis the dollar hasn't lost a lot of value relative to other currencies despite the fact that we've dramatically increased the supply imagine if the United States existed as an island we didn't trade with any other Nation so any money the Federal Reserve printed just stayed within our borders it didn't go anywhere right and so the only stuff you could buy with the money the FED printed was the stuff that we made here domestically because that was the only source of goods well obviously the effect would have been much different because if the FED prints a bunch of money and we don't have any stuff we're not producing we don't have factories making stuff then the prices are obviously going to go way up but there was kind of like an escape valve that allowed the FED to print a lot of money and it not push up the price of goods and that was the fact that we have a whole world out there that was able to produce the goods that the U.S economy couldn't and we were able to take all the money that the Federal Reserve printed and then use that money to buy all those goods that were made outside the United States so the FED prints money the government gets it sends it to Americans Americans take that money and buy Chinese Goods with it and now the Chinese send us their goods and we send the Chinese our money so the money the FED creates is shipped abroad so it's not in America bidding up prices but now the goods that the Chinese produced they get shipped to America so now we have all those extra Goods to keep a lid on prices and if you look at the breakdown of the CPI between goods and services if you just look at Services you've seen a substantial increase in prices even with the government rigging the CPI because the cost of services has actually risen by more than what the government admits but if you strip out Goods you'll see a much bigger increase in prices why because we can't easily import those Services there isn't a foreign alternative you can't Outsource that stuff because the services have to be performed locally but when it comes to Goods more and more Goods have been outsourced to cheaper production economies like China and so that's kept the lid on Goods prices and so when you average the goods prices with the service prices that's kept the measured rate of inflation lower I mean think about the low production costs in a country like China which you know 20 years ago they were just starting out they went through a long period of time where they had a communist system not just in name but in practice and so you had a lot of very poor people and as they began to embrace capitalism wages started at a very low level and of course they didn't have a lot of the rules and regulations that we had they didn't have all these Environmental Protections and so the cost of manufacturing and the cost of Labor Capital was all much lower in a country like China and so we were able to Outsource that production in order to keep costs down even as the Federal Reserve was printing money and of course the money that we were printing we were sending abroad see now normally this wouldn't work because if you ran a big trade deficit like the one the U.S is running your currency would crash because your trading partners would have all this currency but they'd have nothing to buy because the whole purpose purpose of trade is that you export to import you have a concept of comparative advantage and as a nation there are certain things that you can produce efficiently and there are other things that you can't rather than producing everything you produce just what you can make efficiently and then you trade that for the things that you don't produce efficiently because maybe your trading partner can produce that more efficiently and so by everybody concentrating on what they make efficiently and then trading everybody ends up with more stuff higher living standards lower prices but the goal of your exports is to pay for your Imports you don't just export for the sake of exporting that's just a waste of resources you export to pay for your Imports but what about America you've got China and other countries exporting the United States they're not getting Imports they're getting dollars and because the US is the reserve currency those dollars are actually valuable and so our trading partners are content or have been in the past to exchange the products that they produce for the money that we print now their willingness to continue to do that and pursue this arrangement I think is coming to an end I think the world is going to Tire of exchanging real goods for our paper especially when they understand how much less that paper is going to be worth in the future than it is now when they realize the box that the FED is in with respect to its ability to control inflation and the fact that government deficits are going to keep on getting bigger and bigger and bigger putting more and more pressure on the Federal Reserve to monetize those deficits and in fact the reason that the deficits were able to get so big in the first place was because of this Arrangement because foreigners were willing to hold on to our U.S treasuries and keep interest rates artificially low that emboldened the government to go even deeper into debt because normally a government that was this Prof forget would be punished by higher interest rates and that punishment would change their behavior and cause more physical responsibility but we never got punished and as a result of that we continue to pursue even more Reckless policies than we had in the past and so foreigners actually helped encourage this and ultimately now they're going to be the ones that are going to put on the brakes because they're going to stop enabling all of this debt but it's going to be the Federal Reserve that is going to ultimately replace foreign buyers of U.S treasuries but of course when foreigners buy U.S treasuries there's no new dollars created they buy treasuries with the dollars that already exist but when the Federal Reserve has to buy those treasuries they have to produce even more dollars to finance it which is inflation and of course if those dollars stay here if they're not exported then they are going to be bidding on prices and this is what Powell doesn't understand we are not going to be able to continue to export our inflation to the degree that we did and we're going to start to see Goods prices rising now

Channel: FREENVESTING

Views: 111,795

Keywords: freenvesting, free investing, investing, stocks, stock market, stock market investing, stock market crash, stock market bubble, stock market warning, market crash, market crash coming, peter schiff, peter schiff news, peter schiff gold, peter schiff interview, peter schiff inflation, inflation, inflation is coming, inflation warning, inflation 2022, market is going to crash, market is crashing, warning to investors, economy is collapsing, printing money, fed, schiff peter

Id: kCFsnnaBT9c

Length: 11min 1sec (661 seconds)

Published: Thu Oct 27 2022