In our interview, Peter Schiff, the American director of Euro Pacific group that maintains an offshore bank and asset management, says the propaganda about deflation is not true.
He recommends not believing Fed’s announcements of last Thursday.
He believes, there is actually an inflation which is held back by bankers and the government. Meanwhile, states – including the western countries – are intensifying inflation by deliberately devaluating their foreign currency; Peter Schiff says the story supporting the maintenance of national debts is only a public explanation according to which the economy could or should be strengthened. He rules out the realization of Fed stopping its artificially relaxed monetary policy and eliminating zero interests.
In practice, cash keeps inflating and slowly everyone wants to flee from it and look for something safe and certain, resulting in the coming of the age of gold and silver.
Schiff says, it is in the government’s interest to exploit its citizens – for example, by the implementation of new taxes. At the end of the interview he gives instructive advices to Hungarians planning to deposit their money to offshore banks.
Péter Zentai: I barely picked up the phone; your first thoughts were there was a ‘big mess’ in the market…
Peter Schiff: There is, in the whole world and in the global market. But America causes the biggest problem, especially Fed and the government. They keep the inflation in secret, and pose deflation as the danger.
This is deliberate lying. America, followed by the leaders of Europe and politicians of other countries, along with bankers, they keep up a coordinated propaganda together in order to make people endear inflation, presenting the final goal as a tool: strengthening the economy. Creating inflation – unlike they state – is not the tool, but the goal itself!
This is hard to believe. Economy and prices are stagnant almost everywhere, this is the reason they tend to decrease and not increase.
If you ask anyone, a simple citizen, they will complain about high prices, the increase of living expenses and the decrease of their standards of living.
We can buy numerous consumer goods incomparably cheaper than before. High tech items, computers, mobile phones have become available in every corner of the Earth, to people who didn’t even know those goods existed…
It is obvious that as soon as a new technology becomes common, it also becomes cheaper. The fall of the price of technological goods is a natural economic phenomenon; it’s nothing new. It doesn’t matter to the current inflation process.
Are you telling me that we do not have to face the dangers of deflation? Not even in Europe?
If one looks at it impartially and backs out of the global brainwashing, it can be seen that we should welcome the decreasing prices and not grieve over them. We should not convince ourselves it is better for us if we buy more expensive goods. If life is cheaper, people spend more and if they can assume it will get cheaper, their sense of security and the consumer spirit will increase further. However, leaders tell the opposite.
There is no single macro-data from the United States or Europe that prove the inflation.
There isn’t, because inflation is calculated to please the leaders. Based on these calculations, they find a reason for increasing costs and its main tool is the increase of taxes. This is one of the engines of inflation.
Actually, enormous state-debts are lying behind the manipulation. Above all, the United States exports its unbelievable debts (through selling bonds) and by doing so it exports inflation as well.
Where inflation does exist, for instance in Chine or other Asian and South American countries, it is the result of the American debt export.
What is the actual rate of price increase in your country?
I have no idea. But obviously it is more significant then what they admit. If they say it is 2%, it might be at least three times bigger. But everything is question of calculation. Governments and central banks are monopolising the calculation of inflation. By that, the whole system is manipulated.
Anyway, in the United States followed by many developed, mostly European countries, there is a large-scale systematic generation of money. The aim is the depreciation of national debts. This activity is wrapped in a context of stimulating the economy which suggests by this inflation consuming will increase and production will start up.
The economy has been empowered in the United States; from New York to the west coast – almost in the whole country – there are new constructions taking place.
You are right – real estate developments, nothing else. These are the typical signs of the property bubble. They do it again and again in this country. While millions of Americans have no proper home, more and more expensive flats and offices are being built. Because they made money inexpensive for the speculation capital which generates quick and significant profit from investments, that produce unreasonable wasting, short-lived workplaces and increase. At the same time, they make people indebted by the artificially generated inexpensive money.
But where are the production projects? Where is the expansion of industry? Where is the real, lasting workplace creation? In the United States, it is not in the leaders’ interests, because they can only keep the internal inflation at bay by cheap import. We import goods that require workplaces at low prices from Asia, Africa and South America, and we export debt, in other words, inflation.
In our side, in the United States and in a part of Europe, politics is about how to get more money from people’s pockets. They make life expensive by increasing current and introducing new taxes, while the economic atmosphere changes and deterioration is typical. The working moral decreases and products and services are worthless. The lifespan of products decreases and people have to change them more often.
This is also one of the methods of generating inflation, or at least a token of making life more expensive and increasing the income of the state.
I think the drastic fall of the price of oil says everything. It means, there is no and will not be inflation in the close future…
The price of oil has been increased in the last decades. I believe this tendency is likely to be continued. Soon, energy sources will get dear again. What causes the current price fluctuation is that the world believed that the central bank of the United States will increase the default interest, money will get more expensive. This resulted in the strengthening of the dollar. With the dollar getting stronger, the prices of raw materials are falling – which are measured in dollars. By the beginning of next year – I made a bet on it, and I am investing according to this – I will make transactions based on the price increase of oil, because the dollar will fall again and the price of oil will increase…
Since Fed is giving up on its quantitative easing programs and bond purchases. Its last announcement made it clear. Now interest rate increase seems inevitable. In other words, the dollar will not weaken but strengthen…
They won’t increase interest rates! They won’t stop quantitative easing. Fed only communicates this. If it really initiated an interest rate increase cycle – which is actually terribly needed, because this zero interest rate economic environment causes damage – many bubbles would pop in mere seconds. It would end up in a stock market crash. It is in their interest to keep the bubbles growing. There won’t be – I emphasise – there will not be aggravation. Inflation, posed as a stimulation of economy, will continue.
The market believes in the coming of these aggravations and gives up its inflation politics. Since everyone thinks it’s logical, this way the strengthening of the dollar is as well. For now, the low price of oil is in the interest of the West, politics and economy-wise.
They build illusions deliberately. It has worked so far, but it does not mean it will keep working. As months go by market players will realize this policy not only will not stop but keep going as soon as it turns out that Fed will not increase interest rates. After that the tendency will turn: the dollar will fall significantly and the oil will increase. In the first quarter of next year, ‘the clock will start ticking.’
What if it won’t? What if Fed will increase interest rates?
Then markets will see earlier that the debts of the United States are overwhelming and it would cause a lot of trouble to the world. Think about it: the overall debt of the United States is greater than whole Europe’s. While Europe’s balance of trade is positive, ours is acutely negative. The internal economy of Europe and mostly its labour market are less flexible than the United States’. Europe’s economy is ruined by its overly complex civil services and the extreme power of politicians – these cause inflation. We are afflicted by building our lives on debts.
If Fed would steepen the money anyway, then again, the dollar will fall and the price of raw materials will increase because markets will realise that the United States will not be able to cope with its debts in a higher interest rate environment. The first consequence of the increase would be the crash of share prices.
I assume you will save your customers’ money – as far as I know, your investment bank and fund manager firm, the Euro Pacific Bank manages millions of dollars – from the stock market. But how? What are your investments lately?
I tell you again: Fed will not increase! It won’t let the stock markets crash. It rather produces ‘artificial money’. I am not expecting any serious crashes in the markets – for now.
The bubble keeps growing. We are currently managing a serious share portfolio: in more predictable and fair managing countries’ major companies. We still think that in Germany, Scandinavia and New Zealand the best companies with the ability for long term dividend payment are still good.
At the same time ‘money factories’ have to switch to a higher rate, increasing the possibilities of global risks – everyone can feel its danger…
As for us, we help our customers by advising them to withdraw from the depreciating dollar, yen and euro, in other words, their cash and escape to the safety of gold and silver. We also help them avoiding being exploited by their government by new taxes which are introduced to ease the state debt generated by the continuous manipulation. The citizens are not responsible for these debts but the government wants them to pay for its own irresponsibilities. We are a group of companies registered in the Caribbean archipelago: we do not keep it in secret that we offer safety to anyone –from any country, except the United States – who wants to escape from the absolutely unjust taxes.
Why not Americans? Is that because what you do is illegal according to their laws?
It is not illegal, but the American government severely taxes those people who deposit their money to offshore banks that we recommend them sparing themselves from this torture.
However you welcome Hungarians. Why do you trust me? Why do you believe I deposit my money to your company as a protest against unjust taxing? What if I got my millions from corruption and money-laundering?
Don’t worry, we check everything before! We reject more applications, than we accept. First of all, from the information of the passport we check whether the applicant is under warrant anywhere in the world, or if he or she is banned from any country…
For example in the United States?
Yes. If his or her name is on such lists, we reject any deal. However if we see that everything is clear then the applicant can be sure no state or government will know how much of his or her money we hold. Neither, he or she has any connection to us.