Peter Schiff: Bitcoin Might Moon Amid This Emerging COVID19 Financial Crisis

The U.S. dollar and most fiat currencies will collapse during this financial crisis, said popular U.S. economist Peter Schiff. As a result, governments will start to rely once again on gold as the global reserve currency.

He also continued his anti-Bitcoin narrative, saying that its price may rise in the short term, but it has no real value for the economy.

2020 Will Be Worse Than 2008

The Euro Pacific Capital’s CEO talked in a recent podcast with the popular Bitcoin proponent – Anthony “Pomp” Pompliano. Schiff stated that the world is in a financial crisis at the moment and double-downed on his prediction that this one will be worse than the 2008 Great Recession.

The reason is linked to the Fed’s actions at the time. Instead of a productive recovery in 2008, the U.S. Federal Reserve only inflated the bubble and made it bigger. However, they only managed to postpone the inevitable crisis, he added:

“We are now at the point of the real crash. They are going to try to inflate the bubble again. They are doing everything they did after the financial crisis only at a much bigger scale. Because this is a much bigger financial crisis because we have a lot more debt now.”

Hyperinflation In The U.S.?

When talking about Fed’s controversial measures, Schiff said that “stimulus packages” didn’t work last time and won’t work now. However, he added, there’s one significant difference between 2008 and 2020:

“But this time, they don’t want just to bail out the banks. They want to bail out everybody. The entire nation is getting a bailout. They are printing money like crazy.

If the government is not taking the money from taxes and it’s just printing it into existence, which is what we are doing, then you are simply destroying the value of the money.”

Schiff explained that printing such extensive quantities of money in such a short period will eventually ruin the economy. It will lead to inflation in all sections of life, including necessities like food and hygiene stocks.

According to Schiff, the situation in the U.S. may even reach a state of hyperinflation:

“I think hyperinflation, as bad as that is, I used to think that was the worst-case scenario. Now, it’s kind of the most probable. It’s not a guarantee, but in order to avoid hyperinflation, things will have to get really, really bad.”

He went even further, saying that what the U.S. will go through now will be worse than the 1930s Great Depression.

The Dollar Will Collapse

According to Schiff, the people’s need for liquidity is the only reason why the dollar is rising in value in the past few weeks. He referred again to the early days of the last crisis when the dollar went up, but then “it got killed. It will happen now again, and once the dollar starts to fall, it’s never going to stop.”

The permanent gold-bull believes that the only possible solution from this situation would be going back to the precious metal. Once global central banks understand that the dollar’s value has nothing behind it, they will start buying more gold. Therefore, it will become, once again, the global reserve currency.

“I think the most logical choice is just to go back to what worked before it was the dollar, and that’s gold. It’s only fair. Nobody can print gold. It’s mined from the ground. It’s a real commodity. It represents actual work. It’s a perfect store of value, and it’s a perfect monetary unit.”

Gold, Not Bitcoin

As Pomp is famous for his pro-Bitcoin stance, the topic of discussion inevitably reached the largest digital asset. Schiff, a well-known critic of everything-crypto, didn’t miss the opportunity to bash out against BTC’s potential role in the economy:

“I don’t see any central banks deciding that they are going to use Bitcoin as their reserves. No banks have Bitcoin on their balance sheets now, they have gold. There’s no precedent for using a digital currency. It doesn’t have the physical properties that gold has that gives it value to store.”

In one of the few positive things Schiff has ever said regarding BTC, he noted that its price may still increase:

“I think it’s possible that Bitcoin can make another run to the highs, or even make another high. But I think that is a low probability outcome. I think there is a much greater probability that we’re in a bear market, and we are nowhere near the bottom. I don’t think the risk-reward is there.”

He also noted BTC’s high levels of volatility, saying that it’s “good for trading.” However, due to the same fluctuations, it’s not a safe asset like gold.

Ultimately, both Schiff and Pomp agreed that Bitcoin is entering a “put up or shut up” phase:

“In the next 18 to 24 months, Bitcoin has to shine, or it won’t fulfill the promise that it has.” – Pomp concluded.

Featured image courtesy of CNBC