Oil prices crashed early this week as Russia and Saudi Arabia launched a full-blown price war. The big drop in the price of oil pulled stocks down yet again, with the Dow Jones losing over 2,000 points.

But in an interview on RT, Peter Schiff said he thought the drop in oil would prove to be short-lived because ultimately the dollar is going to collapse.

“I certainly did not expect this big a move down in the price of crude oil, but I don’t think it is sustainable. I think that a lot of the heavily indebted energy companies are clearly going to go bankrupt and so ultimately those that survive will be in a position to make even more money as the price of oil rebounds, which I do expect to happen.”

Despite what is going on in the oil markets right now, people need to focus on the bigger picture.

“I think a lot of people are missing the fact that the Fed is going back to zero. They’re going back to QE, or they’re going to ramp up QE. And I think the US dollar is going to fall rather substantially, particularly against a lot of the emerging market currencies and these consumers are going to be big buyers of oil. So, I do think you’re going to see a big increase in global demand from a falling dollar, which is ultimately going to power the crude market to much higher prices.”

Peter was asked who he thought was to blame for the oil price war. He said he had no idea, but noted that cartels are notorious for having a difficult time staying together. Meanwhile, in the short-run, American consumers might get the benefit of lower gas prices, but Peter said a lot of them are about to lose their jobs.

“So, they’re not going to need to drive to work anyway. So, the savings won’t be as big.”

Peter said the real problem for US oil companies is the high levels of debt and this is a microcosm of the entire US economy.

“You know, we have so much debt, not just in oil companies, but in all sorts of companies. And everybody is missing this. All of the analysts that are looking at the stock market can’t see the bubble for the pin. Because the problem is the debt bubble. It’s not the pin the pricked it. If it wasn’t the coronavirus, it would have been something else. So, the air is now coming out of the biggest financial bubble the Fed has ever inflated.”

Peter said there is a key difference between now and the 2008 financial crisis.

“This time, they don’t have enough bullets left in their gun to reflate a larger bubble. So, now we’re going to have to deal with the full aftermath of this coming crisis.”

On a micro level, the US fracking industry will be in trouble if the oil price war continues for any length of time. Their cost of production is much higher and these companies will struggle to survive with $30 per barrel oil. Peter said he wonders if the US government will try to bail out the oil industry.

“I hope they don’t, but they may. They may bail out a lot of other industries too, like they bailed out the banks in 2008. But you know, they may have to bail out the banks again. I mean, if you look at the banks today, all the banks that they claimed were too big to fail in ‘o8, well, they’re a lot bigger now and I think they’re all going to fail again.”

Is Saudi Arabia destabilizing things more with its oil production increase and pushing the price down? Peter pointed out that some segments of the economy should benefit from lower oil prices, so there is more going on here.

“The larger issue is the debt bubble that has popped. And what we’re watching now is the bubble deflating. And maybe the drop in oil prices is part of that deflationary process. But ultimately, the Fed’s going to get it all started again, because when they go to zero and they ramp up QE, the bottom is going to fall out of the dollar. That’s the opposite of what happened in 2008.”

As a result, Peter thinks the commodity bear market, including in oil, will be very short-lived.

“Once the dollar starts to collapse, all these prices are going to rise, including the price of oil.”

Peter said he expects the price of gold to take off as well.

“I think it’s very rare that you see this big a disparity between the price of oil and the price of gold. And I don’t think this disparity is going to be taken away with gold prices coming way down. I think it’s more likely that oil prices are going to eventually go up to catch up with gold.”

Alex Jones shows the breathalyzer paperwork on air that proves he was under the legal limit for blood alcohol content needed to charge him with a DWI after being arrested.

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