Peter Schiff, the EuroPacificCapital chief that’s been a fierce bear on the dollar, slammed the latest fed move in an interview with ABC radio in Australia:
STEPHEN LONG: But some reckon that printing money, in effect, will make it a whole lot scarier.
PETER SCHIFF: Well, I don’t think it’s going to rescue us from anything. I think what we’re doing is the equivalent of selling our financial souls to the devil.
STEPHEN LONG: Peter Schiff, the head of Euro Pacific Capital in Connecticut, speaking to me last year when this kind of intervention was first mooted.
PETER SCHIFF: I mean if we think we can solve our problems by creating inflation, we oughta send some of these guys down to Zimbabwe to see how well it’s working out for them.
STEPHEN LONG: You’re not suggesting that American could end up in a situation like Zimbabwe with totally out-of-control inflation?
PETER SCHIFF: No, no, yes, I am. I’m not only suggesting that, I’m saying that.
Of course, Schiff has had his clients positioned against the dollar for some time, a move that’s had limited success given the ongoing flight-to-safety trade. But eventually, the Fed could, in theory, print more than enough to satisfy this demand, prompting a real decline.
One counterpoint, as Hayman Capital has argued, is that ultimately other countries, where the banks have grown to even larger percentages of national GDP, will be forced to print even more.
Meanwhile, here’s a good picture of what the dollar collapse looked like when the Fed’s move was announced. Straight down.