Peter Schiff: Fed is trapped; will either bankrupt the government or the American people
(Kitco News) - The Federal Reserve has trapped themselves; either they raise interest rates and bankrupt the Treasury, or they don't raise rates, let inflation spiral out of control, and bankrupt the American people, said Peter Schiff, chief market strategist at Euro Pacific Asset Management.
"How does [the Fed] fight that inflation without bankrupting the U.S. government? The answer is it can't. My thinking is, if it can't fight inflation without bankrupting the U.S. government, it won't fight the inflation, which means it bankrupts the public because it destroys the value of the dollar," Schiff said.
Schiff said that with inevitable decline of the U.S. dollar, investment opportunities lie overseas in the emerging markets.
"I try to look for countries that are, in general, more fiscally responsible than the U.S. so I like countries where the taxes are lower but the government spending is lower and the budgets are balanced where you have a trade surplus, not a deficit," he said. "I like to see fewer regulations and more economic freedoms."
Specifically, Schiff likes New Zealand, Hong Kong, Singapore, and Switzerland, countries that are "freer than the United States."
Year-to-date, the iShares MSCI Emerging Markets ETF (EEM) is flat, while the S&P 500 index is up 4%.