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November 12, 2009

The Dollar Will Lose Its Status As A Reserve Currency

I don't think we should have a reserve currency. Well, it's led to a lot of problems in the global economy. When the dollar was backed by gold, and was redeemable by gold, it being the reserve currency was OK. But at the moment, there are no currencies backed by gold. So I think that foreign central banks should hold gold as their key reserve, and not another currency. They can also have some foreign currencies as part of their overall reserves, but I think that gold should play a much bigger role in giving value to currency.

Because remember, you can't have a monetary system without money. And money is gold. Just printing paper—there's nothing behind that. There's nothing intrinsic there. It always leads to chaos. If you can just print money at will, it has no scarcity. Then you have inflation; you have these asset bubbles; and you don't have a well-functioning global economy. Hopefully we don't anoint another reserve currency.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.
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