In the late 19th century, opium smoke and loose women beckoned to the rich and powerful, luring them down the garden path to hell.
These days, it’s apparently loose monetary policy.
So says top investor Peter Schiff of Euro Pacific Capital.
Never one to shy away from drama Schiff thinks the European Central Bank is about to take a step in a dangerous direction. And he’s grabbed his bullhorn to shout, “don’t do it!”
”The ECB should do nothing,” he says emphatically.
The European Central Bank is widely expected to cut interest rates back to a record low of 1 percent from the current 1.25 percent on Thursday and provide longer-term loans to banks that are struggling to find funding.
But Schiff says bad move. In fact, he compares the rate cut to pouring a glass of whiskey for someone who's struggling with a drinking problem. “It’s like an alcoholic who needs to quit, and we’re giving him more alcohol!” Schiff says.
Schiff wants to see Europe’s central bank stand firm; he also wants tighter fiscal controlsand he doesn’t want to see the EU engage in any further bailouts.
"A monetary bailout is just a cowards way to default,” Schiff says. “If the central bank in Europe stood firm they would force European nations to cut spending and that’s the only solution that works!”
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"European government have to bring their fiscal houses in order – and if the ECB provides an easy way out they won’t do it.”
And he worries that the Europeans may be looking at (what he considers) a terrible model – the US Federal Reserve.
”The Fed has given us an easy way out and we made no progress. We just pile more debt on – but, eventually the whole thing will blow up!” Schiff insists.
It’s an extreme thesis but if you agree with Schiff you might want to look at gold. “I’m long gold – I don’t think it’s a bubble. If anything gold is undervalued,” he says.
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Trader disclosure: On Dec 7, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour is long AAPL; Seymour is long BAC; Seymour is long INTC; Seymour is long CSCO; Gartman is long Gold; Terranova is long EMC; Terranova is long SU; Terranova is long NCR; Terranova is long UPC; Terranova is long TRLG; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long AXP; Terranova is long IBM; Terranova is long HES; Terranova is long CAT; Terranova is long SWN; Terranova is long CNI; Terranova is long DECK; Terranova is long SBUX; Murphy is long AKS; Murphy is long BAC; Murphy is long BTU; Murphy is long PCX; Stutland is long INTC; Stutland is long IBM ; Stutland is long CSCO and short calls; Stutland is long WMT and short calls; Stutland is long FXE put spread ; Stutland is long EWZ and short call; Stutland has GOOG short put spread; Stutland is long LQD; Stutland has TLT short puts; Stutland is long TIPS; Stutland is long DBA and short calls; Stutland is long AAPL and short calls; Stutland is long MSFT and short calls
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