CNBC video: Ben Bernanke is bluffing when he says QE2 is going to come to an end Peter Schiff says May 27, 2011
"We're bicycling towards the edge of a cliff,"
Euro Pacific Capital chief says
"If they do it, they're going to do it by selling dollars,"
says Euro Pacific Capital chief Peter Schiff in a May 26
CNBC interview when asked whether China would buy debt-stricken
Portugal's debt. "I think it's interesting that they
want to diversify into Portugal. That shows you how weak
they regard the U.S. that they'd rather have Portuguese
debt.
"They don't have an unlimited amount of money, so
any reserves that end up going into European debt is money
that would have gone into U.S. debt. That's why Ben Bernanke
is buying so much debt because foreign central banks are
not buying enough of it. That's why I think Ben Bernanke
is bluffing when he says QE2 is going to come to an end
over the summer because he's the only buyer and he's not
going to step out of the market.
"The more money they throw down this rat hole the
more they're going to lose, and that's particularly important
with the United States because they have so much of our
debt and we're asking them to buy trillions and trillions
more, and they have to know that we can't pay back what
we've already borrowed, let alone the trillions that they're
going to have to keep lending us to keep this phony economy
propped up."
On the dollar: "You're looking at a weakening dollar.
... And of course gold hit a new record high against the
euro this week, which shows that this is not dollar strength
but euro weakness."
On the likelihood of QE3: "It's going to happen. The
Fed's going to do QE until there's a crisis. They know.
The analogy -- people have said QE is like the training
wheels and now the bicycle is moving along on its own and
it's time to take the training wheels off. Well, the Fed
knows the QE isn't the training wheels - it's the only wheels.
And they're not going to take it off. But the problem is
we're bicycling towards the edge of a cliff. We need to
take those wheels off."