As a non-expert in the matter, I don’t know how finally to determine how correct Peter Schiff is when he predicts calamity for the U.S. economy due to a future collapse of the dollar.
The argument he posits about the fundamentals of the U.S. economy - namely, those described in the “six Asians and an American are stranded on an island” analogy - strikes me as quite persuasive.
At bottom, the accuracy of Mr. Schiff’s prediction seems to hinge on the likelihood that foreign debtors will change their minds about further lending to the United States.
Thus, how likely is it that, sometime in the relatively near term, foreign lenders will stop lending to the U.S.?
[For those who haven’t heard this analogy: Six Asians and an American are stranded on an island. The first day, they divide up responsibilities. The American is assigned to eating. One of the Asians is assigned to fishing, another to foraging, yet another to hunting, etc. At the end of each day, they gather on the beach, where the American eats the food produced by all the Asians, leaving enough crumbs for the Asians to eat and be able to go back out the next day for more food.
Economists (ahem, NON-AUSTRIAN economists) would look at this situation and conclude “Hey, without the American, the island economy would surely collapse, because without his demand for food, none of the Asians would have a job.” Of course, in reality, the island economy would in no way collapse, Indeed, the standard of living for each Asian would immediately increase dramatically if they were to boot the American from the island.]
