In a surprise move earlier this month, OPEC announced further oil production cuts of about 1.16 million barrels per day. Analysts projected the cuts could raise the price of oil by $10 per barrel. Peter Schiff recently appeared on NewsMax’s Wake Up America and explained why these production cuts will further complicate the Federal Reserve’s efforts to fight price inflation, and more broadly, how global moves like this and others undermine the dollar.
Peter called the production cuts “a very big deal” and said it is clearly complicating efforts to bring down price inflation — especially given the fact that we’re in the midst of another financial crisis.
Not only is the supply of oil going to come down, but the supply of money – US dollars – used to buy oil is going up. The Fed has already gone back to quantitative easing to bail out the banks. So, we’re printing more money, but we’re not producing as much oil.”
Compounding the problem is the fact that the world is starting to divest itself from US dollars.
That will put more downward pressure on the value of the dollar, which of course will put more upward pressure on the price of oil.”
Wake Up America host Carl Higbie noted that President Trump made energy independence a priority. Peter said it’s not just energy independence that is necessary.
We need to be able to produce everything. We’re dependent on the rest of the world for everything that we consume because we no longer have the industrial capacity that we once enjoyed because of the policies that have been pursued for decades. We have too much regulation. We have too high taxes and too much government spending, and so we’re not producing what Americans consume. We rely on the rest of the world.”
Peter pointed out that the only way the US can rely on the world as it does is because the dollar is the reserve currency.
We may lose that privilege over the next several years, maybe even over the next few months. Who knows?”
The BRICS nations recently announced plans for a new currency. Higbie asked what impact that could have even if it only usurps a small percentage of global trade in dollars. Peter said he thinks it would hurt “substantially.”
And once they start moving in that direction, the pendulum is going to continue to swing. There are all sorts of reasons why the world should want to divest of dollars and no longer depend on the US dollar as a reserve currency, but we gave them another one. The Biden administration in slapping those economic sanctions on Russia really highlighted how dangerous it is to allow the United States to enjoy this privilege. And so, we have scared the world into divesting of dollars, something they should have done anyway because it was in their economic interest to do so.”
Peter emphasized that the dollar’s role as the world currency is a huge privilege for the US that the rest of the world pays for.
It enables Americans to live beyond our means. We’re able to consume all kinds of stuff that we did not produce. And the only reason we could do that is because we could print money that costs us nothing and our trading partners will accept that instead of actual goods. If we lose that privilege, our standard of living is going to implode.”
Higbie asked Peter what he would tell Joe Biden to do if he had 30 seconds with the president.
Well, he needs to resign. But he also needs to take Kamala Harris with him. But what we need is free market capitalism. We don’t need more government solutions to government-created problems. Government has to get out of the way so free market capitalism can clean up the mess government created.”
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