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Peter Schiff: EU is Following Bernanke Down Wrong Path

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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Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

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