Peter Schiff: When The Dollar Falls, China Won’t Be There To Catch It (Video)

By: Shadow of Truth, The Daily Coin |

Paper money eventually returns to its intrinsic value – zero. – Voltaire

The value of fiat currencies is based on faith – faith in the entity that is issuing the currency. In the case of the dollar, it’s issued by the Treasury and backed by the “full and faith and credit of the U.S. Government.”

In reality the dollar is simply a debt instrument which the Government issues to the public. There is no real objective measure of the dollar’s value. But let’s examine the “credit” of the U.S. Government. The Government has issued $18 trillion in Treasury debt. When the debt ceiling limit eventually is raised, that number will likely quickly jump north of $19 trillion. It also guarantees about $7 trillion Fannie Mae and Freddie Mac debt. It also backstops about $1.3 trillion in student debt.

These are just the “funded” liabilities issued to the parties who loaned this money to the Government. There’s also an estimated $200 trillion of “unfunded” liabilities in the form of promises to make payments associated with Government pensions, entitlement programs, Social Security, etc.

Ultimately headed for a dollar crisis – next time when the dollar falls it will fall vs. the yuan. The next currency crisis will be much worse because when the dollar falls, China won’t be there to catch it. – Peter Schiff on Shadow of Truth

The average lifespan of a fiat currency over history is 27 years. The British pound sterling has lasted 300 years but it was originally backed by 12 ounces of silver per unit. The pound is now worth .5% of its original value. The U.S. dollar as a fiat currency has lasted, so far, 44 years since Nixon removed entirely the gold-backing. Since the Fed was founded in 1913, the dollar has lost over 97% of its value. (Note: the value of fiat currencies are measured vs. gold).

The Shadow of Truth hosed Peter Schiff today. One of the primary topics was China’s move to begin devaluing currency and to “de-peg” it from the dollar. Historically, when the dollar plummeted – see 2002 – 2009, for instance – China had to buy dollars and sell yuan in order to maintain the $/yuan peg. Over the years this cost China a lot of money but it enabled China to continue building its export economy.

The purpose of de-pegging is part of a process that has been initiated by China to prepare the world for a post-U.S. global economy, as we discussed in our China Braces For Impact SoT Market Update. The next time the dollar starts to head lower, China will let the dollar fall…

Rory Hall has been a daily contributor at SGTReport.com. for more than two years. He has written several original articles and interviewed some of the top precious metals professionals in the industry, as well as top preparedness specialists in the world. His YouTube Channel, The Daily Coin, was launched in February 2014 and his website TheDailyCoin.org was launched April 25, 2014. QUOTE: “As a student of monetary, financial and economic history for the past five years it has taught me to watch the markets with an open mind and a hand on my wallet.”