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
For Brian Kelly
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