The Dollar Collapse Revisited and a Bull Market in US Treasuries w/Peter Schiff!
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Welcome to Capital Account. US Cyber Monday sales broke records as online shoppers shelled out 30 percent more on web deals compared to 2011. Is this good for an economy on the edge of recession or is it inconsequential, as many of the purchases were for items manufactured abroad? We talk to Peter Schiff about the future of the US economy and the strength of the US dollar.
Plus, this week President Obama plans to hit the road to sell his Fiscal Cliff proposals, according to CNN. Meanwhile Senate Majority Leader Harry Reid said he is "disappointed" with the "little progress" made in the recent debt talks, according to CNBC. We know that US public debt has been growing, but where is the dollar collapse Peter Schiff has publically predicted? The US dollar index, instead of collapsing, has gained value since 2011, so where is the hyperinflation? It's true that base money has increased over the past four years, and that the Fed's balance sheet has more than tripled in size since the onset of the financial crisis, but rather than seeing interest rates spike, we have seen US treasury yields collapse by over 60% since the collapse of Lehman Brothers. Could it be that Peter Schiff and others who have been calling for high or hyperinflation are underestimating the role of the financial system in affecting the money supply through loan growth and other forms of financial engineering? What about the role that debt plays in a deleveraging to actually DECREASE the money supply, leading to deflation, as we have seen in Japan? We ask Peter Schiff, CEO of Euro Pacific Capital, what happened to his calls for hyperinflation. Peter admitted to us that hyperinflation may not happen after all, but still maintains that inflation will reach very high levels, perhaps as high as 30%.
And who does Warren Buffett think would make a great treasury secretary? Last night he told Charlie Rose that Jamie Dimon would be a good choice. Are we in an alternate universe, or is Warren Buffett just being...well...Warren Buffett. After all, it was only 4 years ago on October 1st, 2008 that Warren Buffett went on Charlie Rose and asked the American people to trust then treasury secretary Hank Paulson with a "Blank Check," and that Paulson had "the nation's best interests at heart." Lauren and Demetri discuss this and more in today's "Loose Change."