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The U.S. dollar and most fiat currencies will collapse during this financial crisis, said popular U.S. economist Peter Schiff. As a result, governments will start to rely once again on gold as the global reserve currency.
He also continued his anti-Bitcoin narrative, saying that its price may rise in the short term, but it has no real value for the economy.
2020 Will Be Worse Than 2008
The Euro Pacific Capitalâs CEO talked in a recent podcast with the popular Bitcoin proponent â Anthony âPompâ Pompliano. Schiff stated that the world is in a financial crisis at the moment and double-downed on his prediction that this one will be worse than the 2008 Great Recession.
The reason is linked to the Fedâs actions at the time. Instead of a productive recovery in 2008, the U.S. Federal Reserve only inflated the bubble and made it bigger. However, they only managed to postpone the inevitable crisis, he added:
âWe are now at the point of the real crash. They are going to try to inflate the bubble again. They are doing everything they did after the financial crisis only at a much bigger scale. Because this is a much bigger financial crisis because we have a lot more debt now.â
Hyperinflation In The U.S.?
When talking about Fedâs controversial measures, Schiff said that âstimulus packagesâ didnât work last time and wonât work now. However, he added, thereâs one significant difference between 2008 and 2020:
âBut this time, they donât want just to bail out the banks. They want to bail out everybody. The entire nation is getting a bailout. They are printing money like crazy.
If the government is not taking the money from taxes and itâs just printing it into existence, which is what we are doing, then you are simply destroying the value of the money.â
Schiff explained that printing such extensive quantities of money in such a short period will eventually ruin the economy. It will lead to inflation in all sections of life, including necessities like food and hygiene stocks.
According to Schiff, the situation in the U.S. may even reach a state of hyperinflation:
âI think hyperinflation, as bad as that is, I used to think that was the worst-case scenario. Now, itâs kind of the most probable. Itâs not a guarantee, but in order to avoid hyperinflation, things will have to get really, really bad.â
He went even further, saying that what the U.S. will go through now will be worse than the 1930s Great Depression.
The Dollar Will Collapse
According to Schiff, the peopleâs need for liquidity is the only reason why the dollar is rising in value in the past few weeks. He referred again to the early days of the last crisis when the dollar went up, but then âit got killed. It will happen now again, and once the dollar starts to fall, itâs never going to stop.â
The permanent gold-bull believes that the only possible solution from this situation would be going back to the precious metal. Once global central banks understand that the dollarâs value has nothing behind it, they will start buying more gold. Therefore, it will become, once again, the global reserve currency.
âI think the most logical choice is just to go back to what worked before it was the dollar, and thatâs gold. Itâs only fair. Nobody can print gold. Itâs mined from the ground. Itâs a real commodity. It represents actual work. Itâs a perfect store of value, and itâs a perfect monetary unit.â
Gold, Not Bitcoin
As Pomp is famous for his pro-Bitcoin stance, the topic of discussion inevitably reached the largest digital asset. Schiff, a well-known critic of everything-crypto, didnât miss the opportunity to bash out against BTCâs potential role in the economy:
âI donât see any central banks deciding that they are going to use Bitcoin as their reserves. No banks have Bitcoin on their balance sheets now, they have gold. Thereâs no precedent for using a digital currency. It doesnât have the physical properties that gold has that gives it value to store.â
In one of the few positive things Schiff has ever said regarding BTC, he noted that its price may still increase:
âI think itâs possible that Bitcoin can make another run to the highs, or even make another high. But I think that is a low probability outcome. I think there is a much greater probability that weâre in a bear market, and we are nowhere near the bottom. I donât think the risk-reward is there.â
He also noted BTCâs high levels of volatility, saying that itâs âgood for trading.â However, due to the same fluctuations, itâs not a safe asset like gold.
Ultimately, both Schiff and Pomp agreed that Bitcoin is entering a âput up or shut upâ phase:
âIn the next 18 to 24 months, Bitcoin has to shine, or it wonât fulfill the promise that it has.â â Pomp concluded.
Featured image courtesy of CNBC
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The post Peter Schiff: Bitcoin Might Moon Amid This Emerging COVID19 Financial Crisis appeared first on CryptoPotato.
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