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​'There are no reasons for the dollar to be world’s reserve currency’

Peter Schiff is one of the few non-biased investment advisors to have correctly called the current bear market before it began.

Published time: July 08, 2014 09:53

Reuters / Adrees Latif

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The more the US antagonizes the world with spying or huge fines on foreign banks, the quicker the process of abandoning the dollar as a reserve currency will be unraveled, Peter Schiff, the president of investment house Euro Pacific Capital, told RT.

RT:This is just the latest in a series of scandals linked to America's spying on Germany. Why does Berlin not react more strongly?

Peter Schiff: I do not know. America is doing a lot to p*** off its friends - not only spying on them. Believe me, many Americans do not like it any more than the Germans. But we are also fining major European banks in Switzerland, in France and in the UK for violating US law. The Germans maybe should be even more concerned with what happened to their gold than about the spying.

RT: Why are European countries so economically dependent on the States?

PS: They are not. I think it is the other way around - the US is very dependent on the rest of the world. It is just incumbent on the rest of the world to figure that out. But the US dollar is still functioning as a reserve currency, so the dollar is a part of larger transactions but there is no reason for the dollar to be at the center of these transactions because the dollar shouldn’t be a reserve currency. Maybe at one time when we were the world’s largest exporter, as far as biggest trade surpluses, we had high savings rates, and the dollar was backed by gold. [At] one time maybe the dollar deserved to be a reserve currency, but certainly those conditions have changed dramatically. The US does not share any of the characteristics it had when the dollar became a reserve currency. It is just a matter of time before it no longer functions as a reserve currency. And the more we antagonize the rest of the world with spying or with these huge fines on foreign banks, the quicker this process is going to be unraveled.

RT: If Germany did decide to do something about America's spying activities, what could it actually achieve?

PS: I do not know, but certainly what emboldens the US to act in this way is this feeling of invincibility or superiority, and it is going to be very humbling when the truth comes out, when America is going to be forced to face what has happened to this country. We have been living beyond our means, we have been living based on our fantasy, not based on reality and the world is certainly helping to preserve that fantasy by accumulating US dollars, by continuing to loan us more money. If the world was not loaning us so much money, we wouldn’t be able to afford to spy on anybody, even on American citizens. Speaking as an American citizen, that would be an improvement.

RT: Germany is a friend of the US, so should it even be worried about being spied on?

PS: Look, Americans are afraid that they are being spied on, too. Nobody wants people spying on them. The government claims that this is all to keep us safe, this is all to protect us from terrorists, but I do not trust government and if the Germans do not trust our government, then I don’t trust them either. You always have an abuse of power, so you want to limit government power, and I think what the US government is doing with respect to the American citizens is not only immoral but unconstitutional. And again, welcome to the club. If the Germans were upset about “our government spying on us,” they probably have a right to be. But at least if they are spying on the Germans, maybe they can make an argument that might be more related to potential terrorist threats than spying on Americans.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

Comments (80)

 

Paul Ryan 13.07.2014 04:21

So the sum total of everyone offering plumbing work, selling tomatoes, tickets to a concert, offering to work for $30 per hour i.e an economy, is what backs up a currency.

S o if I own a house thats in demand and offer to sell it for $300,000, that house is as good as $300,000 worth of gold. Its the same thing.

You dont need gold to back a currency to give a currency value. Offering to sell $300,000 worth of apples is the same as offering to sell $300,000 worth of gold.

There fore its the total economy that backs up a currency. Gold is simply 1 product in an entire economy of product/services that give money value.

 

Paul Ryan 13.07.2014 04:11

A currency at the end of the day is backed by an economy i.e demand.

Peo ple misunderstand when they think gold is the key.
Gold has value current $1000+ per ounce. Its true this helps back a currency. But there isnt that much gold in the world.

But what about everything else?

If I build a house and offer to sell it, this backs up a currency.
If I offer a haircut for $10, this back up a currency.
If a shop offers to sell an iPhone for $500 this backs a currency.

G old, a haircut and an iPhone, is all the same. Someone is offering you money for an exchange of goods or service.

 

Fred Sleepwalker 11.07.2014 20:06

Karen Hudes 11.07.2014 05:18

the insolvent Federal Reserve is being carved up under the nations' bankruptcy laws.

  


Wait a second! How can a company, who is doing nothing but printing money and who everyone has to pay back debt to, be bankrupt?

I did not know that printing presses are so expensive :D

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