China Announced The Mother Of All Tapering

Here is the biggest bombshell of the week, maybe of the year. Everybody was focusing their attention on what the Federal Reserve did not even say, they were pretending that the Fed said they were going to taper, even though they did not. So while everyone was focusing on stuff the Federal Reserve did not say, nobody paid attention to what China actually did say.

Because China announced the mother of all tapering. China finally came out and admitted that a further expansion of their foreign currency reserves is no longer in China`s interest. Now, expanding their foreign reserve currency reserves has not been in China`s interest for a long time, it is just that now they finally came out and publicly admitted it. Now, what does it mean?

If China isn`t going to expand its balance sheet anymore because its not in their interest, it means it has to stop buying Treasuries. It has to stop buying mortgage backed securities, the same securities the Federal Reserve is buying and is threatening to taper off.

Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.

Will Bitcoins Be Worth Zero? They Might.

Today of course, we do not have a legitimate currency. We have fiat currency. There is nothing behind the dollar, which is why people think, well, what is wrong with bitcoin? Because there is nothing behind the dollar and there is nothing behind bitcoins, there fore its the same.

Well, there is a significant difference. The dollar is legal tender in America. Other currencies are legal tender some place else. And even though I do not want dollars, the government only accepts dollars in payment of taxes, therefore if I don`t want to go to jail and I value not going to jail (that does have a value), the only way I can stay out of jail is to have enough dollars to pay my taxes. So, there is a legitimate use for dollars even though they do not have any intrinsic value, the way gold does.

But bitcoins, do not have any intrinsic value whatsoever. So here is the problem. People are advocating the use of bitcoins as if its a form of money. But it can`t be. Because bitcoins do not represent a store of value. You don`t know how much bitcoins will be worth next week, next year, in 5 or 10 years. Nobody knows. Will bitcoins be worth zero? They might because they don not have any intrinsic value.

Somebody may come up with an alternative digital currency maybe more attractive than bitcoins and people will use that one. Somebody might come up with a legitimate digital currency that is actually backed by gold. That is not hard to do.

Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.

The Original Currencies

The original currencies were issued by private banks, in fact if you go back to the beginning, the first currency was issued by a goldsmith. Somebody took their gold to a goldsmith and he gave him a warehouse receipt for that gold. Now, the person who owned a warehouse receipt from a reputable goldsmith instead of going back and taking his gold, he might be able to take that receipt and exchange it with with somebody else who had goods and services that he desired. The other person might accept it because they recognize the receipt, they know its a reputable mint, they know there`s gold there and so that warehouse receipt can circulate as currency. That`s what banks did. Before the Federal Reserve in 1930, private banks all around the United States issued their own note currency. The currency was backed by gold that the banks had in their vaults.

Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.