(Fortune Magazine) -- A couple of years ago, when Peter Schiff first began appearing regularly on TV to warn of an impending real estate collapse that would crash the U.S. economy and stock market, he was surprised and disappointed to find that he was rarely, if ever, approached by strangers in restaurants.

"I'd walk down the streets of New York and figure, 'Gee, you know, I'm on CNBC, CNN,'" says the brash 45-year-old president of brokerage Euro Pacific Capital. "But nobody ever recognized me."

Those days, as Schiff will triumphantly tell you, are over. Perhaps no market soothsayer has had his profile raised higher over the past six months. As one of the few talking heads who loudly, relentlessly, and more or less accurately sounded the alarm about the mortgage bubble and its consequences - in the process becoming the latest bearish commentator to earn the moniker "Dr. Doom" - Schiff has suddenly emerged as a cult hero and something of a minor celebrity.

Recently he's even gone viral. One ten-minute video on YouTube that's packed with some of his "greatest hits" - with, for instance, clips of Schiff predicting a brutal recession and massive credit crunch while prominent debate partners, such as writer and actor Ben Stein and former Reagan economic advisor Art Laffer, make what now sound like laughably optimistic counterarguments - has been viewed just over a million times at last count.

But the evidence of his popularity hardly ends there. An admirer has launched a tribute website that compiles his written commentaries and weekly radio broadcasts. There's a Facebook page pushing him as a Senate candidate in Connecticut for 2010. Both of the books he's published in the past couple of years are in the top five of Amazon's list of investing bestsellers.

"And I do get recognized now," says Schiff excitedly. "In the health club. In restaurants. The other day I called Cablevision to switch my service, and the guy says, 'This isn't the Peter Schiff from CNN, is it? I'm a big fan!'"

While Schiff's mood has gotten a boost from his newfound fame and enhanced status, his outlook for the U.S. economy has only grown grimmer while watching the federal government throw unprecedented amounts of capital into circulation to prop up banks and car companies. A response, he likes to point out, that he also predicted. "I'm as negative as I've ever been," he says, "because everything the government is doing now is going to make the situation much, much worse. They're trying to reflate this bubble. All along I knew that what would potentially be fatal wasn't the recession itself but the government's response. But what they've already done exceeds even my worst-case imagination."

'Ponzi economy'

As he outlined in 2007 in his first book, Crash Proof: How to Profit From the Coming Economic Collapse, Schiff believes that the U.S. economy has become dangerously and unsustainably dependent on consumption - fueled by trillions of dollars borrowed mainly from Asian countries like Japan and China.

"We have an economy that's based on the same principles as Bernie Madoff's investments," he says. "It's a Ponzi economy. It's not real. We don't save and we don't produce anything anymore. We simply borrow from the rest of the world, and then we spend it. We've had a giant party. We bought all these plasma TVs and iPods. We remodeled our houses and took vacations. But you know what? The bills are coming in."

Schiff is predicting a wicked post-party hangover. He sees a multiyear recession ahead marked by rampant inflation, a steadily weakening dollar, soaring commodities prices, slumping U.S. stock indexes, and falling wages.

Last year Schiff was an economic advisor to the presidential campaign of libertarian Congressman Ron Paul of Texas. Like Paul, Schiff is an adherent of the Austrian school of economics, which advocates a laissez-faire approach. And Schiff's prescription for how the U.S. can dig out of our current mess comes straight out of the libertarian playbook: Shrink the government radically, cancel all bailouts immediately, take plenty of tough medicine, and let the free market do its job - however harsh it may be for, say, autoworkers in the meantime.

It's no surprise that Schiff grew up with an unconventional outlook. His father, Irwin Schiff, is a well-known longtime tax protester who has published several books arguing the illegality of federal taxes. The elder Schiff, 80, is currently serving 13 years in federal prison for various tax crimes. "My dad has basically taken a certain principled stance, and unfortunately to his detriment," says Schiff. While expressing sympathy for many of his father's views, he acknowledges the futility of his crusade. "I pay my taxes," he says.

Schiff attended college at the University of California at Berkeley - not the obvious choice for a rabid free-marketer. After graduating in 1987, he found his way to a job as a broker at Shearson Lehman. Schiff did okay there financially, he says, but he never meshed well with his bosses. He also says it bothered him that actually making money for clients seemed to be a secondary priority to racking up commissions or pushing hot stocks. In 1996 he and a partner bought an existing broker-dealer business and renamed it Euro Pacific Capital. Operating out of a small office in Los Angeles, Schiff spent those early days cold-calling potential clients with warnings about a growing bubble in tech stocks.

In 2005 he moved his headquarters to Darien, Conn. Currently Euro Pacific has just over 60 brokers in six offices around the country, and it recently had about $1 billion of clients' money invested. But Schiff is moving to capitalize on both his new guru status and the chaos on Wall Street. He has applied to become a licensed investment advisor so that he can actively manage clients' money for the first time, and he's hiring analysts to begin generating independent research.

Schiff's current investment advice is the same as it has been for years: Get your money out of the U.S. dollar and into more fundamentally sound currencies like the Swiss franc or the Singapore dollar; buy some precious metals; and buy foreign, dividend-paying stocks, with an emphasis on natural-resources companies.

Ironically, though, the year that Schiff became a star prognosticator on TV was also one of the worst periods ever for his clients. In most cases the foreign markets he likes got hit even harder than the U.S. in 2008 (Australia's ASX 200, for instance, fell 41.3%, vs. 38.5% for the S&P 500), and even more surprising to Schiff, the U.S. dollar rallied strongly as investors rushed to the perceived safety of Treasuries.

It would be wrong to think that Schiff is doubting himself or his advice, however. "None of this shocks me," he says. "Oftentimes in the short run markets are irrational. And my problem has always been that I see things too clearly and too far in advance. Other people don't understand what I do, so the markets might not validate what I'm saying right away. But they will eventually. In the end the fundamentals are going to prevail, just as they did in the housing market." Spoken like a true prophet of doom.