Peter Schiff joins Fox News to discuss last week’s rise in unemployment claims (up 13,000), the epidemic of foreclosures, and the next downward wave(s) in this economic slump.

There are a lot of waves to come. We’re standing in the ocean and there are actually some Tsunamis that haven’t hit.

The foreclosures are not the problem. They’re part of the solution. The problem is that a lot of people bought homes that they couldn’t afford and they actually need to leave those homes so that the people who can afford them can buy them. They need to rent something that they can afford.

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I still think all these banks are going to fail again, because the real crisis is the dollar crisis that could hit next year. That could send interest rates through the roof and all the banks that we bailed out, they’re going to be coming for another hand out only we’re going to have to give them a much bigger bail out next time.

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All of this [rise in silver, commodities recently] shows the dollar losing value. Look at commodity prices, look at agriculture. And all of this is going to impoverish a great number of Americans because the cost of living is going to go up dramatically. Every American is taking a pay cut every time the dollar loses value. This is a direct result of what the Federal Reserve is doing.

And they’re doing this because they refuse to allow us to confront reality – the reality of the enormity of the problem that was created by years and years of bad monetary policy, bad fiscal policy.

This economy is a complete mess. We need to allow the free market to cure it.

While we have dedicated some time over the last week to the foreclosure crisis and how the average home buyer should verify and validate who owns the mortgage note on their home and whether or not their mortgage service company is authorized to accept their monthly payments, the fact of the matter is that millions of Americans purchased homes they had no business buying.

Easy lending policies by the Fed, mandated social policies from our federal government, and a culture of greed in the mortgage lending system gave way for those with insufficient incomes to purchase homes and take out mortgage loans that they would never be able to service.

We, as a country, have lived a life of excess. Be it with buying expensive homes or cars, or racking up credit card debt for inferior goods made in China, or rocketing our national debt, we have spent too much. This was an upward, self reinforcing price spiral and now it has reversed course.

The loss of jobs that we outlined in our recently posted video is not going to stop. Neither will the real decline in wages in terms of the US dollar. Debt will continue to be defaulted on – in mortgages, car loans, credit cards, and student loans.

The free market is trying to cleanse itself.

Over the last twenty or thirty years we experienced a period of robust, often excessive, growth. Now we are experiencing the hangover, a self reinforcing negative feedback loop that is going to wipe out wealth (and debt) across the entire spectrum of the US and global economy.

It simply cannot be stopped. It is mathematically impossible, and the last two years prove that. No matter how much money is printed, how many laws are passed, how many financial institutions are bailed out, it will not stop until the system is rebalanced.

And like a pendulum, we will swing from one end (the boom) to the other end (the bust) and we will likely overcompensate the swing to the bust side (just as we overcompensated the boom side when the historical average for home prices went from $130,000 to over $200,000).

There is going to be a lot of pain on the bust side of the pendulum, and unfortunately, whether we admit it or not, that is the direction we’re swinging right now.

Hat tip: Schaef Report