The U.S. Dollar is the New Peso Not the New Yen Says Peter Schiff

In a recent converversation about the collapse of the U.S. dollar, Peter Schiff stated that the Federal Reserve is facing a dilemna that they'll have to make a decisions about, neither one which looks like it'll end in a good way for the U.S. dollar.

The first one is to continue on with close to zero interest rates where inexpensive dollars are the endless supply for carry traders, or they could stop the carry trade in its tracks by raising interest rates, which would cause a deeper recession "than anything we’ve experienced so far.”

Schiff added that the use of the yen for carry trade is now over, and it should continue strengthening, as the Japanese consider it a good move for their domestic economy for it to strengthen rather than be weak with low interest rates connected to it any longer.

When asked about the future of the U.S. dollar and carry trade, Schiff responed in a CNBC interview, “I don’t know when [the dollar] is going to strengthen. The dollar isn’t the new yen, it’s unfortunately the new peso.

Either way, as far as making money on the carry trade, Schiff said that because the U.S. dollar will continue to collapse, those using it to invest in higher yielding currencies and assets should make a fortune for some time to come.

US Dollar Play | Invest in Commodities

One of the more obvious play with the U.S. dollar is to invest in commodities. That can be done through futures, funds and stocks linked to raw materials.

A commodity index fund is another great way to invest in commodities over the long haul, which will continue their bull run overall once the demand for infrastructure materials resume from countries and companies spending more money.

No matter what happens to the U.S. dollar though, which will obviously continue to lose its value, commodities will continue to rise based on the demand from growing middle classes in emerging markets.

So while commodities are a great play against the weakening U.S. dollar, they are also a terrific plays in and of themselves based on demand and supply; along with tight credit markets.

US Dollar Play | US Multinationals

Many investors concerned over the unknown risks of investing outside the U.S. instead will focus on U.S. multinational companies which have a significant percentage of their business outside the U.S.

Some large institutions are looking for U.S. multinationals that do over 50 percent of their business outside the U.S. which are large and obvious companies like General Electrice (GE) and Waters Corp. (WAT), among many others.

What should be looked for is companies with history and proven track records, most of which have been performing pretty well considering the difficult economic circumstances we're in.