Peter Schiffs predictions about the U.S economy.

I don't think anyone's predictions are likely to be 100% correct. Because no one knows the future that well. Although there is some probability that Peter Schiff may turn out to be right.

Peter Schiff's prediction is based on the fact that people have recently borrowed and wasted a couple trillion dollars on extravagant houses and various luxuries. These people can't repay their debts. And the things they've spent their money on are more or less worthless now because no one else wants them.

The banks in collusion with the US government are still pretending that the money they've loaned will be repaid. But sooner or later the truth will have to come out. And that's when all the bad things to the US dollar and the US economy will happen.

This may happen if all the foreigners who keep lending more and more money to USA every month get scared that their loans won't be repaid in full. They will stop lending more money to USA. And that will cause a collapse of the US dollar.

The problem is that the US budget deficit is due to soar to almost $500 billion dollars next fiscal year. Which means that the US government will need to increase its borrowing from foreigners. And this will be at a time when the price of oil is falling and the Chinese economy is slowing down. Which means that the main foreign lenders to USA will have fewer US dollars to lend.

This doesn't look like a good scenario. The money will have to come from somewhere. Or else the US government will have to lay off an awful lot of government workers. Which would cause the unemployment rate to soar. And it probably would crash the US economy.

I think he sold out to sensationalism. People actually want to hear bad news (it gives us something to talk about). Moreover, this coinsides nicely with election time.

Our economy has started to show signs of recovery. It's just waiting now.

Oh, and the US dollar has only fallen in comparison to the Euro (actually, its the Euro that's been on the rise).

Just wait for the next few years as the European economy slows just as the US is now. By that time, the US will be well on the way to recovery. And when it hits the fan in Europe (and believe me, it will) there is a good chance that the European Union will break up. That's why China has'nt rushed to swap their dollars into Euro's - they want to see how it plays out first.

the consumer is 70% of the economy and it is unsustainable, and running trade deficits is unsustainable. i believe his predictions to a certain degree. i think people will walk away from their houses if they are significantly underwater and housing will get worse.