If the markets continue to believe, if they continue to take the Fed taper bate and feel that a taper is imminent, interest rates on long term government bonds are going to rise even further. Now, if they continue to rise by the time the March meeting comes around financial conditions will be a lot tighter than they were back in September.
If the Federal Reserve could not taper in September because financial conditions were too tight, how are they going to taper in March or even sooner if financial conditions are even tighter?
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Nov 24, 2013
Nov 23, 2013
The Only Thing The Federal Reserve Fears More Than Tapering
The Fed(eral Reserve) can talk about taper but the only thing they fear more than tapering is admitting that they can`t do it because if they taper the recovery will fail.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Nov 22, 2013
Bitcoin Is The Wrong Vehicle
I want to spend a few moments talking about Bitcoins. And while I have a lot of sympathy with what the bitcoin community is trying to achieve, I just think they have the wrong vehicle.
Now, I think the idea behind bitcoin was to digitally replicate gold. A kind of a gold standard for the internet. Gold 2.0 has some people have alleged. And you know, if you look at bitcoins, the way they come into existence is just that they are mined just as actual gold. You mine them into exixtence. And just like mining gold, when you mine for bitcoins you actually expend real resources, real energy. There is a cost associated with creating a bitcoin. Just like there is with gold, in contrast to central banks that create pretty limitless amounts of currency for nothing, out of thin air at virtually no cost.
And also like gold, there is a limit there is a scarcity in that there there only 21 million bitcoins that can be mined into existence. I think right now there are probably around 12 million. So there is still more that can be created but again that is going to cost money to do so. And also like gold, bitcoins are divisible. You can take one bitcoin and make 100 million fractional bitcoins that collectively would have the value of a whole coin. But the idea is that you can break your bitcoin up into smaller increments for transaction, just like gold. You can have an ounce of gold, then you can have half an ounce, one tenth of an ounce. You can make smaller quantities that are more ideal for transactions. But unlike gold, you can instantaneously send your bitcoin over the internet. You can`t do that with gold. You can`t transport gold, because gold actually has substance. Bitcoins exist in the cyberspace.
When you have gold, you have to protect it. It can be stolen, you have to guard it and it may even cost you money to store it. It does not cost you any money to store bitcoins in your digital wallet. So bitcoins really replicate all the properties of gold, even improving on some of them. But here is the problem. They replicate all the properties except the single most important. You see without that property, gold never would have been money. I am talking about value, intrinsic value, the metal itself. Bitcoins does not have any.
The reason gold became money, first it was valued as a commodity. It was a luxury good, known through out the world, everybody wanted gold. And so you knew that if you needed something you could always buy it gold because even if the person who accepted your gold did not want it, he knew somebody else who did.
Gold was uniquely suited to be money over a lot of other commodities. It basically won the free market competition for money because it had a lot of other characteristics. These are the characteristics that bitcoin is replicating, but they are not replicating the intrinsic value. That made gold desirable in the first place.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Now, I think the idea behind bitcoin was to digitally replicate gold. A kind of a gold standard for the internet. Gold 2.0 has some people have alleged. And you know, if you look at bitcoins, the way they come into existence is just that they are mined just as actual gold. You mine them into exixtence. And just like mining gold, when you mine for bitcoins you actually expend real resources, real energy. There is a cost associated with creating a bitcoin. Just like there is with gold, in contrast to central banks that create pretty limitless amounts of currency for nothing, out of thin air at virtually no cost.
And also like gold, there is a limit there is a scarcity in that there there only 21 million bitcoins that can be mined into existence. I think right now there are probably around 12 million. So there is still more that can be created but again that is going to cost money to do so. And also like gold, bitcoins are divisible. You can take one bitcoin and make 100 million fractional bitcoins that collectively would have the value of a whole coin. But the idea is that you can break your bitcoin up into smaller increments for transaction, just like gold. You can have an ounce of gold, then you can have half an ounce, one tenth of an ounce. You can make smaller quantities that are more ideal for transactions. But unlike gold, you can instantaneously send your bitcoin over the internet. You can`t do that with gold. You can`t transport gold, because gold actually has substance. Bitcoins exist in the cyberspace.
When you have gold, you have to protect it. It can be stolen, you have to guard it and it may even cost you money to store it. It does not cost you any money to store bitcoins in your digital wallet. So bitcoins really replicate all the properties of gold, even improving on some of them. But here is the problem. They replicate all the properties except the single most important. You see without that property, gold never would have been money. I am talking about value, intrinsic value, the metal itself. Bitcoins does not have any.
The reason gold became money, first it was valued as a commodity. It was a luxury good, known through out the world, everybody wanted gold. And so you knew that if you needed something you could always buy it gold because even if the person who accepted your gold did not want it, he knew somebody else who did.
Gold was uniquely suited to be money over a lot of other commodities. It basically won the free market competition for money because it had a lot of other characteristics. These are the characteristics that bitcoin is replicating, but they are not replicating the intrinsic value. That made gold desirable in the first place.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Nov 21, 2013
The Simple Truth On The U.S. Debt: Repayment Is Impossible
The thing about Ponzi schemes is that they have to keep on growing and if they don`t grow, they implode because you need a bigger supply of new investors to cash out the old investors.
Look at the U.S. Treasury Bond market. We have a 17 trillion dollar national debt (although that is just a tip of the iceberg, we actually have 100 trillion plus in total debt. 17 trillion is just where there are U.S. treasuries outstanding but the U.S. government has lots of obligations beyond the treasury debt).
But if you just focus on that, where does the U.S. government get the money to retire all the maturing bonds every year, trillions of dollars worth of Treasuries mature. The government does not have that money. It relies on new buyers to cash out the old buyers. And in many cases its the same holders, people that hold the debt, just roll it over, so we never have to pay it back.
But nobody wants to acknowledge the simple truth that repayment is impossible. All we can do is borrow more money to pay out the maturing debt but the debt stock keeps getting bigger and bigger because of the compounding interest and because the government borrows more more money every single year.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Look at the U.S. Treasury Bond market. We have a 17 trillion dollar national debt (although that is just a tip of the iceberg, we actually have 100 trillion plus in total debt. 17 trillion is just where there are U.S. treasuries outstanding but the U.S. government has lots of obligations beyond the treasury debt).
But if you just focus on that, where does the U.S. government get the money to retire all the maturing bonds every year, trillions of dollars worth of Treasuries mature. The government does not have that money. It relies on new buyers to cash out the old buyers. And in many cases its the same holders, people that hold the debt, just roll it over, so we never have to pay it back.
But nobody wants to acknowledge the simple truth that repayment is impossible. All we can do is borrow more money to pay out the maturing debt but the debt stock keeps getting bigger and bigger because of the compounding interest and because the government borrows more more money every single year.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
We Are Going Get More And More QE Until We Overdose
The problem is we are not going to grow the economy, we are not going to create jobs by creating inflation, by debasing our money. It might make the stock market go up, it might make the real estate market go up and so we can delude ourselves into thinking that we are actually growing the economy but we are just blowing the bubbles and growing the debt. And because the economy will never recover, because the Fed won`t allow it to restructure, then the unemployment picture will continue to get worse, which means that we are going get more and more QE and they are going to keep on increasing the dosage until we overdose.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Nov 20, 2013
Federal Reserve: No Impetus To Change Course
We will need to have a complete monetary disaster before there is any impetus to change course. Because as long as the Federal Reserve can take the easy way, that is what they are going to do. As long as they keep subsidizing the growth of government and prop up the real estate market and the stock market they are going to keep doing it. It`s going to be pressures that are brought externally that will finally force us to do something different and the sooner that happens, the better, the sooner we have this crisis the sooner we can begin to deal with the underlying problems. The more we succeed in postponing the day of reckoning, the more we will have to reckon with, the more difficult it will be to solve the problem.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
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