In the 1970s, in order to print money, the US had a gold standard. In this, they promised to store an equivalent amount of gold in their treasuries for every dollar they point. And anyone could exchange their dollars for gold anytime. This was what made the dollar special. However, in 1971 this standard was abandoned, and the US started using debt to print money. It has been more than half a century, and this has been continuing, but it looks like the time for the dollar’s collapse has come as many economists like Peter Schiff predicts that the US will default on its debt. This is going to be an economic disaster for the entire world.
Peter Schiff believes that the US will default
The United States has raised its debt ceiling numerous number of times to allow them to print more money. However, this time things are different. Peter Schiff believes that the US will not only default on its debt but in case they raise the debt ceiling, which will also have severe consequences. Even former US Secretary Hilary Clinton said that there would be a ‘worldwide financial meltdown’ and the dollar would lose its status as a reserve currency if it defaulted.
Peter Schiff also argued with the claims that some politicians made, saying that they always pay their bills. He said that the US has $31.7 trillion in debt. It is the money no one has paid for till now. The US borrowed the money and never paid them, and in fact, nobody wants to. The most important statement said by Peter was it is not a matter of if but a matter of when the US defaults. Sooner or later, it is going to happen, and the things that the US says will happen if they do not raise the debt ceiling will happen nonetheless.
Another important factor at play here is how the other countries view the United States. If the other countries do not want to lend money to the US, it doesn’t matter whether they borrow or not. The US has raised its debt ceiling countless times, and it has clearly indicated that the country is not going to pay back no matter what happens.
How can this play out?
There are two situations that the US might find itself in, according to Peter Schiff. First is the case where the US defaults and they do not pay back their bondholders, which Peter calls the ‘honest default.’ Secondly, there is the ‘dishonest defaultlt’ where the US prints a ton of money and inflates its currency to pay off everyone with worthless pieces of paper. None of these situations seem to be good for the economy. Peter believes that the bigger fear might not be defaulting on the debt but raising the ceiling again because that’s what they continue doing every time.
What should the common people do?
There is only one way to deal with this situation, and that is to invest in assets. Buying Gold, Bitcoin, real estate, Silver, and other precious metals that will retail their value even if the dollar collapses. Another good but risky approach would be to invest in developing economies like India, which is likely to benefit from the dethroning of the US dollar in the longer run. But the most important is to keep your money invested and not in banks.
What are your thoughts as Peter Schiff predicts that the US will default on its debt? And do you think that the US dollar will lose its reserve currency status? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.