iShares Silver Trust (SLV)

[TopHat]

Investment U: Speaking of government intervention, what do you see will be the end result of the Fed's Operation Twist?

Peter Schiff: Well, it's going to put the screws on the economy. It's going to hurt quite a bit. It's not going to grow the economy. In fact, if anything it's going to further subject the banking sector to additional losses. That is the problem. Yes, they have temporarily brought down long-term rates, but that's squeezing the spread that these banks are operating off of.

And so ultimately it weakens the banking sector, and it paves the way to QE3. All-out QE3 is coming, because, again, this didn't work, but when they first announced it, the initial reaction was a drop in oil prices, a rise in the dollar. And this might create an environment in which the Fed can claim that there's no inflation, that the danger is deflation. And it creates a smokescreen under which it can do what it wanted to do all along, which is just create more inflation, print more money, buy more government debt and stimulate.