Economist Peter Schiff has warned that the U.S. cannot afford to decouple from China. “Our entire standard of living rests on the support of China,” he stressed, adding that “If we lose that support, it’s going to collapse.” He also predicted the collapse of the U.S. dollar as the USD loses its world’s reserve currency status.
Peter Schiff on US-China Decoupling, Dollar Collapse
Economist and gold bug Peter Schiff discussed various economic topics, including the relationship between the U.S. and China, in an interview with NTD News last week.
Commenting on the recent statement by Commerce Secretary Gina Raimondo stating that “Decoupling is neither in our economic or national security goals,” Schiff stressed:
We can’t afford to decouple because you have to recognize that China is both our biggest supplier and our biggest banker. The Chinese loan us the money to buy the stuff that they produce that we can’t, and our entire standard of living rests on the support of China.
“If we lose that support, it’s going to collapse. Now, we are in the process of losing that whether we want to or not. I think the Chinese realize that it’s in their interest to drive the decoupling and that’s what’s going on,” the economist described.
Referencing the efforts by the BRICS countries (Brazil, Russia, India, China, and South Africa) to de-dollarize, Schiff said: “Look at what’s happening with the BRICS nations. They had a summit, they are expanding their numbers, they’re looking to de-dollarize, and to reduce — and eventually eliminate — the dependency on the U.S. dollar.” At the summit, the BRICS leaders invited six nations to join the economic bloc: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). Some believe that oil giants joining the BRICS group is a strategic win for China and Russia.
Schiff added:
And when they no longer need dollars, well then they no longer need to sell us their stuff because they have plenty of domestic demand for what they produce, and that means the United States is going to be in a lot of trouble because we don’t have the industrial capacity to produce what we are now getting from China.
“Despite what Biden is saying about some kind of manufacturing renaissance, it’s all a bunch of BS. The manufacturing sector continues to shrink under his presidency and our trade deficits have hit record highs,” he further said.
Schiff was asked how the U.S. could mitigate the danger relating to the economic relationship with China.
“What we have to do is reduce the burden that the U.S. government places on the American economy, and on the American industry,” he replied. “So, we need to see massive deregulation. We also have to see substantial and across-the-board cuts in government spending, so we can relieve the economy of the burden of paying for that spending.”
He concluded:
So that we can start producing again the thing that we are now importing from China and other countries because when the dollar collapses, which I think is inevitable as it loses its status as a reserve currency, we are not going to be able to consume unless we can produce, and right now our productive capacity is being inhibited by government.
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