Peter Schiff - The Dollar is the new Peso - CNBC - 09-25-09

Airtime: Fri. Sept. 25 2009 | 10:15 AM ET

The falling US dollar is expected to get even weaker, pushing the greenback to the center of a carry trade. Brian Dolan, of Forex.com, and Peter Schiff, of Euro Pacific Capital, share their insight.

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[mongoose704]

And it is no mere coincidence that the planet entered a global recession during a period where on a glboal level people were paying a much higher percentage of their income to its government in taxes. Despite rate cuts, the tax to income ratio is still climbing on a global level until the unemployment of the 2008 crash ended that trend in 2009.  Higher taxes = recession. Most of those taxes are due to global wide deficit spending.

[mongoose704]

@WJJ1968 Only so far as the world has faith in the dollar as a reserve currency which the world has repeatedly said it is losing its faith in.

Debt is a problem for at least three reasons:

We are borrowing to consume and not to produce so we get no direct returns.

We owe much of the money, nearly 5 trillion, overseas so its not a zero sum game.

Debt financed deficits means future tax increases.

[WJJ1968]

@mongoose704 - Possibly but that seems to be way down the road since the rest of the world is in worse shape than we are. As far as debt (as SanatanUnity said) I get confused by that. Some economists like Mike Norman say that we are better off as a debtor nation. Since we trade in our own currency, doesn't that pretty much prevent a collapse?

[mongoose704]

@WJJ1968 Schiff is making LONG TERM predictions. What we are seeing today is a short term knee jerk flight to safety which is creating a dollar bubble. The fundamentals aren't there to support a long term flight to the dollar. It's a flight from a currency in free fall to one that is foundering and the extra weight on the lifeboat may be what puts it below the waterline.

[aviomaster]

- Eastern Europe is in crisis thanks to the USA . and  Dollar ...

The garbage ...

[SanatanUnity]

@WJJ1968 Due to market manipulations and bailouts, competing against the crashing Euro, the Dollar is up, temporarily in one of the most unstable economic recoveries...but what's sustaining it? Trillions of Dollars of unpayable debt?

The Dollar will crash. How can it survive the mountain of debt? The evidence is everywhere...just look at the crashing, bankrupt states.

[WJJ1968]

The dollar is over 80. These 'domm and gloom' predictions were way off.

[joeymackaroni]

Rock and roll

the Greenback carry trade is ON

US dollar @ .25% and the Aussie @ 3.25%

The dollar is running out of time.

I agree with peter here about the benefits of stronger currency. look what happened to the Australian market when they just increased there rate 25 basis points. They got a rush of foreign direct investment which helps increase economic activity.

[limitedplay]

good luck to anyone trying to find US dollars at .25. I dunno who can get that but they are getting paid huge bucks

[50chickens]

carry trade is when you borrow in a currency where interest rates are low - ie, it doesnt cost you much to borrow and then you buy assets that pay a higher interest rate. so say you borrow at .25% and then buy an asset that yields 1.25% theoretically you then make the 1% difference.

for years the yen was currency to borrow in, because of the difference in rates, but now the US has .25% rates there's no profit in it.