..from KWN - Peter Schiff interview - Expect Tremendous Global Inflation

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/27_Peter_Schiff_-_Expect_Tremendous_Global_Inflation.html

With gold and silver showing strength this summer, today King World News interviewed Peter Schiff, CEO of Europacific Capital. When asked about weakness in the US dollar Schiff stated, “Well as I’ve been saying gold is going to go higher as the dollar continues to lose value. That’s what’s happening, I mean look at the dollar even against other fiat currencies today, it’s at a new low against the Yen, a new low against the Swiss Franc, a new low against the New Zealand dollar, almost at a new low against the Australian dollar, a new yearly low against the Canadian dollar, so the dollar is sinking and gold is rising.”

“The record low was around the 70 level back in 2008, but 73.50 (dollar today) was a key low for the dollar index back on June 7th, then the dollar had a brief rally. But if you go back to April, the low in the last couple of years was about 72.70 and I think that is the next target, especially if we close below 73.50.

Once we take out 72.70, the only chart support that would remain and there isn’t much support, but that would be the all-time record low of 70.70. We’ve never traded below 70, we’ve never traded with a 69 handle, but I think that is coming.”

When asked about John Embry’s comments on KWN regarding physical gold and silver shortages possibly setting the stage for an explosive move higher in gold Schiff replied, “I think so, plus you’ve got a lot of gold strikes now around the world in some of the gold mines and other metals. Miners are on strike, that’s going to disrupt supply, it will also raise the cost of production to the extent that the strikers are able to secure higher wages, that just makes it more expensive to mine.

Of course as people begin to focus on the real threat to the US dollar, which is not default on our Treasuries, but inflation where we repudiate debt by printing because we cannot pay the debt. So we have to default and the question is what form does the default take? People are now focusing on whether America just refuses to pay, even though that is not the most likely scenario for default....

“It’s that we do pay, we just don’t pay in money that has value or has nearly as much value as it does today. So people get their money back, but they don’t get their purchasing power back. As people start to realize that is the reality, then the dollar will decline even further. Eventually you could have the $1 bill disappear and the smallest could be $10 or $100 and we end up coming out with $1,000 bills or $10,000 bills.

A lot of wealth is going to be destroyed, it’s already been destroyed. The government has borrowed money and squandered it and the people who loaned money to the US government are not going to get it back, not in the purchasing power terms in which they loaned it. That’s the reality and a lot of people who believed they were going to get money from the government in the form of social security or medicare, they are in for a rude awakening. They may get the money, but it’s not going to buy what they think it’s going to buy.

I think at some point we will go back on the gold standard, the question is what country will be first to embrace it? How does it happen? I think it will happen here in America, but there will be a financial, a monetary, currency crisis, whatever you want to call it, before we go back on a gold standard, but ultimately that will be the solution to the problem.”

When asked about the fact that many businesses are constantly having to adjust their prices higher such as international fast food outlet Taco Bell, which has had three menu re-pricings in the last 30 days Schiff replied, “That’s going to start to be par for the course in the US, companies are going to be raising their prices. Eventually most business probably won’t even have their menus type-set, they will have them on chalk boards or electronic where prices can be easily changed because they will be changing their prices every week and maybe eventually every day.”