Economic expert Peter Schiff predicts that the USD is about to "free fall" while gold will "surge" due to the United States' undisciplined fiscal policy and trade deficit.
Peter Schiff – a renowned economic expert and gold advocate – recently issued strong warnings about the future of the USD in a series of posts on the X platform on May 6. With a controversial argument, he asserts that the only way for the US to resolve its severe trade imbalance is to abandon the USD's global reserve currency status.
"The USD is about to free fall, and gold will surge to levels few can imagine. The only way to end the US's severe trade imbalance is to end the USD's global reserve role," Schiff wrote on X.
The US Economic Model Faces Systemic Challenges
In response to investor Bill Ackman's proposal to impose escalating tariffs on imports from China, Schiff completely rejects this solution. He shifts criticism towards the US fiscal policy instead of foreign trade practices, arguing that the problem lies domestically.
"I believe China has decided to decouple from the US. This means they will stop supporting the USD and stop lending us money just to continue selling goods we cannot afford to pay for," Schiff noted.
According to Schiff, this shift could create an unsustainable consumption cycle in the US, where people tend to spend more due to inflation fears. "The USD will continue to depreciate, causing people to tend to spend as soon as possible," he wrote in another post.
Schiff also did not hesitate to criticize Federal Reserve Chairman Jerome Powell, arguing that Powell's recent statements about the economic situation and inflation contain worrying contradictions. He analyzed the real message behind Powell's statements:
"Reading between the lines, this is what Powell is really saying: We are in big trouble. The economy is weak and getting weaker, but the Fed cannot lower interest rates because inflation is strengthening. In fact, we should raise interest rates, but we also cannot do so without causing a financial crisis."
This dilemma, according to Schiff, shows that the Fed's traditional monetary policy tools have lost effectiveness. The agency is currently stuck between two unfavorable choices: either stimulating higher inflation or causing widespread economic instability through excessive monetary tightening. Currently, the Fed maintains a target interest rate range of 4.25% to 4.5% after the May meeting.
