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Private Briefingwith WILLIAM PATALON III, Executive Editor
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U.S. Federal Reserve policies like QE3 are building up to an inflationary catastrophe, says economic expert Peter Schiff.
Schiff, the CEO and Chief Global Strategist of Euro Pacific Capital, made his remarks about the dire consequences of excessive quantitative easing in a video interview on Yahoo! Finance's Breakout.
Schiff said he has dubbed the Fed's third round of bond-buying, known as QE3, "Operation Screw" because "everybody's pretty much screwed if they own dollars."
He warned that the Fed can only continue its policies of buying U.S. Treasuries and mortgages by printing more money, and printing more money inevitably will drive much higher inflation.
"The Fed is now promising to print $85 billion a month," Schiff said. "That's over a trillion dollars a year. And I think that's just their opening bid."
Schiff, who is best known for predicting the collapse of the housing bubble and the 2008 financial crisis in his 2007 book "Crash Proof," laughed at the claim made by Fed Chairman Ben Bernanke that QE3 is "inflation-neutral."
"He's lying," Schiff said. "It is not inflation-neutral. It is the very definition of inflation. The government tries to mask how bad inflation is by giving us phony numbers that purport to measure it with the CPI or PCE or whatever Ben Bernanke wants to point to, but the reality is prices are already going up."
Inflation isn't running rampant now, he said, only because all that new Fed money hasn't worked its way to the consumer yet.
"Inflation enters the market in different ways," Schiff explained. "It goes through the banks, it goes through housing, it goes through stocks. Sometimes it takes a distorted path before it ultimately ends up in consumer prices."
As proof that a major bout of inflation is lurking around the corner, he noted that gold prices have more than doubled since the Federal Reserve launched QE1, QE2 and now QE3. Rising gold prices indicate a weakening dollar.
"That's a pretty good barometer of what's going on," Schiff said.
When QE3-fueled inflation finally does strike, Schiff said, the impact will hit Americans hard.
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