A few days ago, Peter Schiff, a well-known proponent of gold, shared his own considerations to the website thetradable.com, which highlights the freshest financial news, regarding the difficulties the U.S. economy encounters under the current recession. And we must admit that his thoughts aren’t that encouraging.
First of all, Schiff characterizes the current level of government’s spending as excessive and existing behaviour on the stock market as non-rational. Just purchase gold – this is how his straightforward recommendation looks like.
Also, he expressed his negative attitude towards the monetary policy pursued by the U.S. government. To Schiff’s opinion, current monetary policy may result in many people being ‘wiped out’ by it.
Irrationalities of stock market
Presently, we are witnessing a clearly irrational behavior of the stock market. Actually, the price of stocks is growing despite the obviously gloomy economic forecasts. To a certain extent, such growth is stimulated by the actions of the Federal Reserve System. So far, the dollar’s value unceasingly reduces and there are pretty limited hopes the situation will radically change in the nearest future.
Answering the hard question how the government should act in the current conditions, Schiff indicated the government must definitely reduce the level of its spending. He indicated that the way the government treats the interest rates combined with an inflation-based pattern of funding may have very negative long-term consequences.
Schiff also pointed out that the insolvency of market players represents the main problem for the economy. The signs of collapse have been already noticeable quite a long time ago and the crisis simply revealed how deep the problem really was.
Since the economic bubble popped, there is no way to return it to the normal state.
According to Schiff, a considerable rise of the living costs will become an essential result of the current crisis. Literally every citizen has to be ready to face unemployment challenge, increased prices ans higher interest rates.
He claimed that in terms of the present economic reality, inflation should be considered a tax. Furthermore, the most unprotected strata of society suffer most from such taxation. The very value of people’s earnings as well as savings will be substantially destroyed.
Nevertheless, there still exists a way to cope with the recession and minimize the risks of the hyperinflation. Increasing the interest rates should become a new priority for the government. At the same time, the ordinary citizens should pay more attention to such alternative option of savings as silver and gold.