US economy about to collapse, taking down dollar & American standard of living – Peter Schiff

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US economy about to collapse, taking down dollar & American standard of living – Peter Schiff Get short URL Tuesday's US stock plunge following a massive selloff on global markets is seen by some analysts as a sign of more bad things to come. RT talked to veteran stock broker Peter Schiff to explore the issue in depth.

After the dramatic early drop, US stocks recovered but finished lower after a wild day on Wall Street. By the closing bell, the Dow was down 126 points, or 0.5 percent, recovering most of its early losses. The Nasdaq closed down 0.4 percent, while the S&P 500 shed 15 points, finishing 0.6 percent lower.

According to Schiff, who currently serves as the CEO of Euro Pacific Capital, the stock market is definitely looking like it's heading for another bear market.

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"All the signs are already there. Look at what's happening out there. The stock market is falling, 40 percent of the S&P is already in a bear market. Look at homebuilders, the housing stocks, the financials, the retailers – all these are the same things that were happening in 2007 leading to that crisis," the strategist told RT America.

The economist urged people be prepared for not only an economic crisis, but a political crisis as well with the current administration likely to take the blame. According to Schiff, the US national currency is set to meet with the worst losses.

“So, what you've got to do is get out of US dollar assets. The dollar is going to be the biggest casualty along with the American standard of living,” he said, adding that foreign stock markets, especially emerging markets, currently depressed by the strong dollar would see a strong rise.

“They are going to see a boom, when the dollar weakens,” Schiff said.

“Look at the price of gold up another eight bucks, but it's still about $1,230, gold's going to new highs, it was at $1,900 in 2011, it's going to go much higher this time,” the analyst added.

According to the economist, the US household debt that is about $15 trillion represents a crucial issue for the standard of living in the country.

“Everybody is loaded up with debt, and it's not like we began this monetary experiment without much debt. We had a lot of debt in 2008. In fact, the financial crisis was about debt, it was about our inability to pay the debt that we had,” Schiff said.

“But instead of addressing the problem and allowing the debt to be paid down, the Federal Reserve led us down the primrose path into much deeper debt by keeping interest rates at zero and holding them for so long. The Federal Reserve actually encouraged an overly indebted nation to borrow even more money.”

The expert stressed that interest rate hikes would only worsen the current situation, as all the facets of American society that are leveraged to the hilt, including individuals, corporations, the federal government, state and local governments.

“So, everybody is loaded up with debt. And guess what? Interest rates are now finally rising, and that means the cost of servicing that debt is going up, and this is going [to] be a problem just like adjustable rate mortgage was a big problem in 2008, when these things were resetting,” he said. “People couldn't afford to pay. Well, the same thing is going to happen on a national scale. Rates are growing up, and we too broke to pay.”

According to Schiff, there's no way to avoid the chaos and normalize things. “It's impossible, because in fact we kept it going so long that collapse is going to be that much bigger, and sooner we face that reality the better. But no politician wants to face that reality, they want to pretend everything is great.”

The tax cut pushed by the US President Donald Trump is also set to worsen the current concerns about stocks, the economy and the living standard, according to Schiff.

“If the government is collecting less revenue, then the deficits are getting bigger and so the government has to borrow even more money, and that becomes an even bigger problem,” he said. “What we need is smaller government, but nobody wants to shrink government, including Donald Trump, who is now the defender of Social Security and Medicare.

“He wants to launch another nuclear arms race and start the space race, so it's all about spending more money, so Trump wants to spend more money and cut taxes at the same time. That's completely reckless.”

For more stories on economy & finance visit RT's business section

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