Peter Schiff Warns : Crisis Coming and Trump Will Be Blamed

Peter Schiff on CNBC World 7/7/2017












Transcript : ok let's get our next guest in that 0:02 leadership CEO of euro pacific capital 0:04 he doing this from toronto in Puerto 0:07 Rico and peter schiff of course that for 0:09 the predicted the financial crisis as 0:11 far back as 2006 appear to have you on 0:13 the show I'd love to get your comment 0:15 here about department there again just 0:17 read the quote here it's saying that if 0:19 things go wrong we could find ourselves 0:21 at the beginning beginning of a lengthy 0:23 decline and dollar had the money and a 0:25 rapid rise in interest rates and 0:27 inflation and global banks I mean you 0:29 agree 0:30 well it's going to happen regardless 0:34 whether things go right or wrong I think 0:35 it's inevitable at this point so it's 0:37 not a question of will that happen it's 0:40 just a question of when it's a question 0:43 of when ok let's talk about the trade 0:45 deficit very quickly because even 0:47 numbers that you know don't don't get a 0:48 whole lot of attention usually but this 0:51 year because of the focus on the trade 0:53 deficit from the Trump administration a 0:54 lot of people paying attention to it the 0:56 trade balance negative for the 41st year 0:59 in a row 1:00 how effective do you think that Donald 1:02 Trump policy will be in narrowing that 1:04 gap s 1:08 well so far not always sure what the 1:10 policy is going to be I don't think that 1:13 terrorists are necessarily going to do 1:16 it i think what the problem is that 1:19 America you know we don't save and often 1:21 so we don't have the capital available 1:23 to make the investments that are 1:24 necessary to finance production our 1:27 taxes are too high or regular that the 1:29 regulations are too many so we need 1:31 substantial deregulation we need lower 1:33 taxes but in order to finance that we 1:35 need a smaller government so major 1:37 reforms have to take place you know 1:39 meanwhile the trade depth that we had 1:40 last year was the largest I think it's 1:42 for years it's over 500 billion dollars 1:45 and there are a lot of people out there 1:47 that don't think a trade deficit is a 1:48 bad thing because they think the trade 1:50 deficit is enabling a capital account 1:52 surplus but a capital account surplus is 1:55 not a good thing it means you're selling 1:57 off your assets are going into debt and 2:00 your trading partners are accumulating 2:01 asked that's in exchange for the 2:04 products they sell you so you don't want 2:06 to go into debt you don't want to be 2:07 obligated to pay interest and dividends 2:09 to your trading partners you want to run 2:12 a surplus and you want to get richer you 2:14 want to accumulate assets but we're not 2:16 doing that and I don't think that we're 2:18 going to achieve a meaningful reduction 2:20 in our trade deficits simply by 2:22 negotiating better deals we have to get 2:25 to the real heart of why America is so 2:27 uncompetitive and it's yet to be seen 2:29 whether the Trump administration is 2:31 actually going to be able to achieve 2:32 that net and I wanted to get your 2:35 thinking on the trading dynamics right 2:37 now we've gotta start getting a record 2:39 tonight do you think that investors are 2:42 placing too much of the best on Trump's 2:45 policies in this expansion real physical 2:47 agenda 2:49 yes I do and I think they're overlooking 2:53 the contractionary impact of rising 2:56 interest rates not necessarily just a 2:58 red the rates of the Fed controls but 3:00 look at what happened to the long end of 3:02 the bond market since Trump was elected 3:04 and even though you know we did get that 3:06 big reaction in the market at the end of 3:09 last year so far this year in 2017 the 3:12 that was not making much in the way of 3:14 games that's up maybe another one 3:16 percent but nobody no one is talking 3:18 about boulders up seven percent so far 3:20 in 2017 you know there's a gdxj is an 3:24 index of junior gold mining stocks it's 3:26 up 3:27 thirty-three percent this year just as 3:30 january first and meanwhile the dollar 3:32 is starting to go down it hasn't gone 3:35 down to that much yet against the euro 3:37 but you look at the australian dollar i 3:39 think it's up six percent or so this 3:41 year against the US dollar but i think 3:43 the dollar starting to roll over 3:45 gold was breaking out gold stocks are 3:47 really started to move so i think most 3:49 investors are missing what's really 3:50 going on up because they are fixated on 3:53 the doubt the emerging markets are 3:54 starting to starting to improve and I 3:57 think those trends will continue 3:58 throughout the year and anyone who knows 4:00 that shift stick to take anyone in his 4:03 village really closely knows you're an 4:05 absolute gold bola in the core of your 4:07 heart and tell me how do you think the 4:09 Fed responsibility to this expansion 4:11 real physical agenda especially at the 4:13 peak of the cycle is well teta we're 4:15 getting the stimulus at a time when we 4:17 don't really need it 4:21 well we never needed stimulus because 4:23 this stimulus is actually a sedative 4:25 everything the Federal Reserve did to 4:27 stimulate the economy undermine the 4:29 economy that's the reason that Donald 4:31 Trump is president because all the 4:33 stimulus made the economy so sick me 4:36 what we need to stimulate is not stock 4:38 prices are real estate prices or bond 4:40 prices but real economic growth and that 4:42 comes from under product consumption 4:44 from savings from capital investment and 4:47 that comes from higher interest rates 4:49 that's what we needed all along with 4:51 higher interest rates but we got a 4:52 monetary heroin instead and so the 4:55 economy never got healthy it's sicker 4:57 than ever and that is the problem and i 4:59 do believe that the Federal Reserve is 5:01 going to ignore rising inflation as that 5:04 manifest and consumer prices i don't 5:06 believe that that will be the case on 5:08 the other side of the Atlantic I think 5:09 that will be enough pressure from the 5:11 Bundesbank on the ECB that they're going 5:14 to have to take away some of their 5:15 stimulus just as the Fed is adding so I 5:18 think you're going to see tighter 5:19 monetary policy in Europe and you're 5:21 gonna get looser monetary policy in the 5:23 u.s. because the Fed is going to try to 5:25 artificially prop up the economy as it 5:28 weekends with uh eventually dialing back 5:31 to rate high talk eventually cutting 5:33 rates and going back to Cuba for none of 5:35 this is going to work but it is going to 5:37 accelerate the decline of the dollar and 5:40 you know bring about the the problems 5:43 that the hedge fund manager alluded to 5:45 with respect to what would happen if 5:47 things go wrong because there's no other 5:49 way that they could go but wrong 5:51 okay and also just wanted to ask you 5:54 about the topic du jour Akiko and I were 5:57 talking about this earlier which is 5:58 under dodd-frank are you concerned about 6:01 the ambiguity surrounding the plan to 6:05 scale back dodd-frank and what does it 6:06 present when it comes to risk in your 6:09 view 6:12 well dodd-frank was a bad idea I mean 6:15 look at it was named after Chris Dodd 6:17 and barney frank two of the most 6:18 influential members of Congress that 6:21 helped to create the financial crisis 6:23 because they protected fannie mae and 6:25 freddie mac and they resisted all 6:27 efforts to rein them in the financial 6:29 crisis was not caused by a lack of 6:31 regulation but by the central bank by 6:34 alan greenspan keeping rates too low and 6:36 by the moral hazards of a fannie and 6:39 freddie and government-guaranteed bank 6:40 accounts oh god Frank did nothing to 6:43 mitigate the prospects for future 6:45 financial crisis of anything it is 6:48 accelerated them because what we needed 6:50 to do in the aftermath of the 2008 6:53 crisis was to take power away from the 6:55 Fed in the government instead they got 6:57 more but what scares me is to the extent 7:00 that we do manage to roll back some of 7:02 the regulation that never should have 7:03 been enacted and when the inevitable 7:05 financial crisis hits to the extent that 7:08 happens after this deregulation I can 7:11 already hear the left now blaming the 7:13 crisis on that deregulation that crisis 7:16 is inevitable it's going to happen 7:17 whether we get rid of dodd-frank or not 7:20 but it was bad legislation and we should 7:22 get rid of it but when we do it is not 7:25 going to be the reason that we have 7:26 another financial crisis the reason is 7:28 is going to be the Fed the same the same 7:30 reason that we had the first one is why 7:33 the second one is good even worse and 7:35 Peter you said that investors are sort 7:37 of missing the bigger picture here 7:39 they're so fixated on the dell and that 7:41 level there you mentioned emerging 7:44 markets as a potential spacer where are 7:46 you seeing the opportunities outside of 7:47 the US 7:51 yeah i mean they're happening in many 7:53 countries just like if you remember when 7:55 a bill clinton was president and when 7:58 his president he ended and george bush 8:01 came in there was a lot of optimism that 8:03 the rally in the US stock market would 8:05 continue that the strength of the dollar 8:07 would continue and instead everything 8:09 reversed if you remember the emerging 8:12 markets had a lot of difficulties in the 8:14 late nineteen nineties with the asian 8:16 economic meltdown in 97 and there are a 8:19 lot of things happening outside the 8:20 united states so emerging markets really 8:22 got beat up 8:23 I also in in South America or Latin 8:25 America but that all changed 2001 as the 8:28 US stock market went down money started 8:31 to flow back into those areas and people 8:33 made a lot of money in emerging markets 8:35 and commodities in precious metals you 8:37 in oil and agriculture and I think the 8:40 same dynamics are lining up again 8:42 only I think that President Trump has 8:45 inherited a much bigger bubble up from 8:47 Obama than the one that Bush inherited 8:50 from clinton and so I think that dollars 8:52 gone a lot lower this time and I think 8:54 commodity prices could go a lot higher 8:56 so there's a much more bigger profit 8:58 potential now I then there was back then 9:00 in the right markets ok feet are gonna 9:03 have to leave it on that no it's always 9:05 good to get your insights peter schiff 9:06 joining us from euro pacific capital






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