Peter Schiff, economist, best-selling author, and CEO of Euro Pacific Capital, believes a U.S. dollar crisis is underway.

"The dollar is very overvalued…and the dollar is a bubble," he told Newsmax Prime on Aug. 11. "This dollar bubble is going to burst."

Indeed, less than two weeks after Schiff's interview, the U.S. dollar index, which measures the greenback against a basket of currencies, has retreated 2.1% to 93.063 for a fourth-straight loss.

And U.S. markets are getting rocked with a major sell-off – last week finished out as the worst for stocks in four years…

On Friday, Aug. 21 (the last full trading session), the Dow Jones Industrial Average closed down 6.2% for a total 10.1% loss since its May peak. The S&P 500 has dropped 7.5% from its May 21 record close.

The sell-off continued today (Monday). Within minutes of the first trades, the DJIA plunged 1,000 points. Stocks quickly recovered – an hour into trading, the Dow was down about 450 points, still on track for a major loss. Futures for the CBOE Volatility Index (or VIX) – a "fear gauge" index – surged 26% in early trade, above 25% for the first time since June 15, 2012. VIX futures have soared 44% over the last four sessions of last week.

Many blame the surprise China yuan devaluation for the sell-off.

"When you look at the immediate import [the yuan devaluation] had on currencies – you get a sense as to why people are very, very frustrated with China," Jon Huntsman, former U.S. ambassador to China, told CNN on Aug. 16. [Editor's Note: For a full explanation of the Chinese currency devaluation and its effect on the dollar, click here…]

But Schiff has a completely different take.

He believes investors should be worried about the United States, not China…

Peter Schiff: Fed to Blame for U.S. Dollar Crisis, Not China

"China's economy is not failing and this is a small devaluation, 2%" Schiff said. "The Chinese currency has increased in value dramatically over the past several years, along with the U.S. dollar. So this move was motivated not by the exchange rate between the yuan and the dollar, but between the yuan and all the other currencies because the dollar is in a bubble right now."
Schiff went on to say the dollar has been propped up on hype and speculation. And the U.S. Federal Reserve is to blame – not China.

"Our economy is in much worse shape than the Chinese economy. The Fed is going to be forced to admit this," Schiff said. "They're not going to be raising interest rates; they're going to be doing QE4. That's going to sink the dollar, and then the Chinese are going to have to revalue their currency much higher in the future against the dollar, and it's the dollar collapsing that's going to hurt the U.S. Not this recent move by China."