Early in the interview, Peter laments the possibility that the United States will decline economically. China is poised to surpass our economy as the dollar continues to weaken:

“I think the media is constantly writing China’s obituary. And I think they’ve got it wrong. Just like they downplay the significance of the problems in the US economy, they overplay the significance of the problems of the Chinese economy. I’m not saying it’s perfect over there in China. But I think they have a lot going for them that people are overlooking.”

Michael and Peter discuss the role of U.S. foreign policy– specifically having a military presence around the world– in driving up deficits and the debt:

“We’re all over the world. We’ve got our troops all over the world, but we can’t afford to deploy them. We can’t afford to provision them without borrowing money, and that is not sustainable. I mean, it’s going to crumble. I don’t think the world is going to pay an ever-increasing tribute to the United States to maintain this situation. I think it’s going to come to an end. Yes, it’s gone on for a long time, and our military has probably been part of what’s enabled it.” 

With tension in the Middle East ratcheting up this week, Peter delivers a masterful explanation of why wars are terrible for the economy. The temptation to inflate combined with the physical destruction of productive goods mean wars inevitably impoverish all involved:

“You’re more likely to debase your currency with a war, and it’s actually twofold, depending on how big the war is. Wars can result in the destruction of goods, and there’s a destruction of productive capacity. So, you have less supply of goods in a war. A lot of times, if it’s a big war, you have to produce ammunition and military hardware at the expense of civilian consumer goods. So, wars tend to reduce the supply of consumer goods but increase the quantity of money. Governments today don’t want to pay for wars. They don’t want to tell the taxpayer, ‘We’re fighting a war, so we’re raising your taxes.’ … And they go out and borrow, creating bigger deficits. So, the Fed has to print more money.”

The trio also discusses Peter’s opinions on investments other than precious metals, including stocks and crypto. He argues that Bitcoin highlights the difference between large institutional investors and retail investors trying to cash in on a trend:

“Bitcoin peaked out in November 2021, and priced in gold, it’s almost 40% below that peak. Despite all that money spent, all that hype, all those ETFs in the market, all that institutional buying. So that tells you something. It tells you there’s a lot of people that have been selling their Bitcoin into all the hype. And I think the people selling Bitcoin are a lot smarter and know a lot more than the people who have been buying it.”

Peter is optimistic for the future of gold. With no end in sight for the Fed’s money printing, there’s a distinct possibility that gold’s price could increase by many multiples over the next couple of decades:

“I think the potential is much higher because we’re going to print so much money. We’re going to have so much inflation that the dollar is going to lose a lot of value, and you’re really going to need a lot of dollars to buy gold. If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000, or even to $100,000. There’s no limit because, again, gold isn’t changing—it’s the value of the dollar that’s decreasing.”

Halfway through the interview, Peter also drops some trivia about his wife, Lauren. Did you know she both sang and acted in a 2022 Bruce Willis film? Check out the full recording (starting at 38:30) for the details!

Peter compares gold in 2024 to gold in 1979 but notes one key difference. In 1980, the Fed raised rates, putting a stop to gold’s rise. Rate hikes are highly unlikely after the Fed’s recent announcement:

“Gold is up almost 30% so far this year. Another all-time record high today, getting close to 2700 in the spot market. This is the best year that gold has had since 1979…

…A key difference between now and 1979? That was the end of the gold bull market. And in 1980, Paul Volcker raised interest rates up to 20%.

That’s what killed the bull and brought inflation down. But the current Fed is cutting rates. It’s going to cut rates more in 2025. So, gold is just getting started.”

A 50 basis point rate cut signals that either the Fed is scared of America’s economic future, or they believe we’re already in a recession:

“Well, the Fed is very desperate. I mean, normally they wait until there’s a problem before cutting rates.

They wait for a major stock market decline. They wait for a recession. But here, they’re cutting rates even before we’re officially in a recession and with the stock market at all-time record highs, with real estate prices at all-time record highs, and with the gold price at all-time record highs.

We’ve never had the Fed start cutting rates when gold was at an all-time record high. And in fact, the record high in gold proves that the Fed’s rate cut was a mistake.”

A lot of the data that supposedly portrays a healthy economy is corrupted by the pervasiveness of private and public debt. GDP growth is one example:

“The GDP is consumers spending borrowed money to buy more expensive groceries and stuff like that. The government spending borrowed money is a big part of that GDP. And we have a massive deficit that is a consequence of this fake GDP growth…

…We do not have a good economy. We don’t have a growing economy. We have inflation. And inflation creates the illusion of economic growth. But people are getting poorer, even though the numbers are going up again.”

For more Schiff insight and insight from the Austrian school of economics, watch a recent interview between Peter and Jason Burack, host of “Wall Street for Main Street.”

“If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000,” he said.

But that took decades. The vast majority of Americans are concerned about what their finances are going to look like tomorrow… or even today. The current financial situation in the United States can be described as turbulent in the nicest of terms, but that doesn’t mean there aren’t those looking to the future.

They’re probably not looking at decades, though, as Genesis Gold Group CEO Jonathan Rose noted.

“I appreciate the sentiment and Peter’s right that gold could skyrocket over the years, but the people we talk to want to know what gold and silver will do next week, next month, and next year,” he said. “Even with the retirement accounts that we service, most are seeking safe haven for now and five to ten years ahead at the most.”

Genesis Gold Group is a faith-driven precious metals company that specializes in rolling over or transferring retirement accounts into Genesis IRAs backed by physical gold and silver.

Schiff compared today’s gold bull run to the 1970s. In that decade, gold went from $35 per ounce to over $800. He sees gold potentially hitting $3000 before the end of 2024 and possibly doubling in 2025.

“A lot will depend on what happens with the economy, especially with the port strike happening now and the election around the corner,” Rose continued. “Having physical precious metals in your safe or in a depository may be essential if things get extremely rocky in the markets, which seems likely at this point.”

Those who want to learn how to protect their retirement and life’s savings can request a free Wealth Protection Kit from Genesis.

The FOMC held its November meeting last week. As expected, the Fed left interest rates unchanged. Peter said you can almost always count on the central bank to do what is expected.

The Fed never wants to confound expectations. They never want to surprise the markets. So, if the markets expect no rate hike, well, they deliver no rate hike, and that’s what happened.”

During his prepared remarks, Federal Reserve Chairman Jerome Powell acknowledged the “economic hardship” caused by price inflation. But Peter said he doesn’t seem to grasp the full picture.

Since inflation is caused by the government, and caused by the Federal Reserve, it’s the government and the Fed that are creating that hardship. It’s not like it’s just happening out of left field.”

It’s an intentional policy. The government has decided that it will pay for its borrowing and spending through an inflation tax.

Now, had they used another form of taxation, had the Biden administration, and the Trump administration for that matter, had they raised taxes enough to pay for all of these government programs, that would have created hardship too. Families would be struggling under the burden of crushing taxation. So because the government decided to tax them through inflation as opposed to through the income tax or the payroll tax, the hardship that is being created is because of government. It’s not just something that’s happening by happenstance.”

Powell also reiterated that the goal is “price stability.” Nobody ever bothers to ask, “Why?” What’s so good about price stability?

What about lower prices? Because price stability, the way a normal person would define it, is prices stay the same. Well, I’m a consumer. I’d rather have prices go down than prices remain the same. So, what if prices went down 1% a year, or 2% a year? Why is that so bad? Why does the Fed have to replace that with stability?”

Peter said we don’t really need “price stability.”

It’s really a BS goal.”

And we don’t even actually have a goal of price stability. The goal is for prices to go up 2%.

There’s nothing stable about that other than the rate of increase.”

After the Fed meeting, Powell admitted the central bank isn’t anywhere near that goal and that this is a long process.

He’s underestimating. Waiting for inflation to go to 2% is going to be like waiting for Godot. It’s never going to happen.”

During the Q&A, Powell emphasized that we have a “very strong” economy. Just two days later, we got a very weak jobs report. (Peter talked about this earlier in the podcast.)

How is the economy so strong if the labor market is that weak? … I don’t know what Powell is looking at. I think he’s just reading a script that the Biden administration handed him because he’s just reiterating their talking points to talk up the economy so Biden can get credit for it.”

The question is how will Powell respond when the labor market continues to deteriorate? That would imply the Fed should stop hiking. But as Peter pointed out, one of the reasons the labor market is weakening is because price inflation is strengthening. How can he focus on a weakening labor market and ignore strengthening inflation?

Meanwhile, Powell continued to insist that we need to see a slowdown in economic growth and some “dampening” in the labor market in order to “fully restore price stability.” In other words, he wants to see more people lose their jobs. That’s because he thinks people are spending because they are doing well, that spending is creating more jobs, and also pushing wages higher. Peter said people are spending more because prices are going up.

They’re spending because the money supply has gone up. They’ve got more money to spend, and they’re spending because they’re still able to access credit. They’re taking that borrowed money and spending it. This is not how you grow an economy. This is how you destroy an economy. This is not a virtuous dynamic that he is describing. It is a vicious one that is going to end in ruin. Because you don’t grow an economy by people spending money.”

You grow an economy by not spending money and saving. That provides seed corn for capital investment. That increases productivity creating more output.

You produce your way to prosperity. You save your way, and then invest and produce your way into prosperity. We’re not doing that. We’re trying to put the cart before the horse.”

Peter reiterated that we don’t have a strong economy. We have an inflationary economy.

It’s inflation that is driving everything. Powell just doesn’t realize that. He’s looking at the ‘strong’ economy, and he’s thinking everything is good. He’s looking at inflation. He just doesn’t understand that.”

Peter said he doesn’t think there are any more rabbits the central bankers can pull out of their hats or any road left where they can kick the can. The economy is about to implode and inflation is alive and well. That means the Fed can chuck both its mandates right out the window.

They don’t realize that we are at the beginning of the end of this whole phony economy.

In a nutshell, the economy is buried under trillions in debt. The cost of the debt is rising. The economy simply isn’t built to handle an even moderately high interest rate environment.

But here we are.

Every day, we’re getting closer to a major stock market crash, or a financial crisis, or both.”

And he emphasized that the crisis is inevitable. Nothing can derail it in the long run. He said Federal Reserve Chairman Jerome Powell could put off the implosion in the short run by doing something drastic to change the narrative. That would entail at least hinting at interest rate cuts.

Otherwise, this is going to happen. Whether it’s tomorrow, the next day, or the next week is hard to tell. But what seems apparent to me is that we’re about to go over a cliff. I just don’t know how much more distance there is between where we are now and the edge of that cliff. But we’re going there.”

What is going to push us over the edge?

The rise in interest rates as the bond market continues to collapse.

Peter pointed out that he’s been warning about this for years. And he’s not alone. In July, Jim Grant said we could be heading toward a generational bear market in bonds.

Bond yields are now at the highest level since before the 2008 financial crisis with the yield on the 10-year Treasury approaching 5% (currently 4.56%). The last time it was that high was in 2001.

There is one big difference between then and now. In 2001, the national debt was $3.3 trillion. Today, it is over $33 trillion.

We have a lot more debt now than we had back then. So, this is a much bigger problem.”

Peter said the mainstream financial media doesn’t seem to appreciate the fact that they are looking at the beginning of the end of this whole phony economy.

The economy is built on a foundation of cheap money. It’s not just the economy; it’s every facet of it. The government, the deficits, the government budget is built on cheap money. And it’s not just the federal government that’s been gorging on this cheap money. A lot of the state governments, municipalities — they’ve all issued a tremendous amount of debt over the last 15 years.”

This was by design. The central bank wanted to “stimulate” the economy. With that goal in mind, they held interest rates at close to zero for nearly 15 years. People were incentivized to borrow and spend. So, they took advantage of the cheap money and levered up.

And what was I saying for years? This is a mistake. I said just because it’s cheap doesn’t mean you should do it. My analogy was should you do heroin if it’s free? … No! Just because it’s free doesn’t mean you want to inject it into your body. Because eventually it’s going to cause a problem, and that’s exactly what is happening now.”

Now the proverbial chickens are coming home to roost. All of that cheap money is coming back to bite the people who borrowed it because interest rates are going up and the debt is still there.

It is a disaster in the making.”

It’s not just bond yields. All interest rates are rising. Mortgage rates are approaching 8%. The average credit card interest rate is close to 21%. Meanwhile, credit card debt has spiked to well over $1 trillion.

An economy built on borrowing easy money can’t keep chugging along when the easy money is gone. It’s like trying to run an engine without oil.

Meanwhile, the mainstream hasn’t come to grips with the fact that the dynamics have changed.

As yields rose with the Fed’s rate hikes, a lot of people bought bonds thinking that a 4% yield would make them a lot of money when rates quickly fell back toward zero. The easy money of the last decade-plus made everybody believe that was the norm. Peter said it’s not going to work that way this time around.

Peter also pointed out that there are still inversions in the yield curve. Long-term yields remain well below where you would expect given short-term rates. With a 6-month Treasury yielding at 5.5%, a 30-year bond should be over 7%. But it’s currently only at 4.7%.

That’s not how a yield curve works. It’s positively sloped. Usually, at the beginning of a recession, you’ll get an inversion of the yield curve, where the long end will be below the short end. But under normal circumstances, when you’re not in a recession — and everybody claims that there’s no recession, that we’ve got this resilient economy, that maybe a soft landing but not a real recession — if that’s the case, the yield curve needs to normalize.”

The reason long-term bonds come with higher yields is investors are taking on more risk with more time. So, what is the biggest risk?

The real risk is inflation — that your money will be worth a lot less in 30 years.”

And what is the biggest factor driving that inflation risk?

It’s the size of government deficits. Because the bigger the government deficits are, the more inflation the government is likely to create. So, when you have large fiscal deficits, you would expect to have a higher premium on longer-term bonds.”

Peter started the interview by noting that the Bureau of Labor Statistics (BLS) has revised the nonfarm payroll numbers down for all seven months this year.

If we’ve done something seven times in a row, it doesn’t seem very random. Because if these were random numbers, sometimes they’d be too high, sometimes they’d be too low. Like, it’s difficult to toss heads seven times in a row. So, if you toss it seven times in a row, maybe the coin is not fair.”

Peter said he thinks the BLS is biased in its assumptions and thinks the labor market is stronger than it actually is.

Obviously, unemployment picked up. So, that’s a sign of weakness. Average hourly earnings — up less than expected, which is problematic because prices continue to rise.”

Peter also noted there was a big spike in spending last month, but a very small gain in incomes.

The way consumers handled that was raiding their savings.”

The savings rate plunged to 3.5%.

In fact, American consumers have blown through nearly all of the excess savings they accumulated during the government pandemic lockdowns. Aggregate savings peaked at $2.1 trillion in August 2021. As of June, the San Francisco Fed estimated that aggregate savings had dropped to $190 billion.

That’s a sign that the economy is weak because consumers need that rainy day fund, right? Because it’s raining. They’re having a hard time.”

And Peter said it also shows the Fed isn’t making any progress in its inflation fight.

Consumers keep spending and reducing their savings in spite of the rate hikes. The rate hikes are supposed to reduce spending and increase savings. That’s how they bring down inflation. But nothing has worked, and so inflation is going to get worse.”

When you boil it all down, this is stagflation.

The economy is weakening, the labor market is weakening, but consumer prices are strengthening.”

Peter said he thinks we’ve bottomed out on headline CPI and noted that we really haven’t seen much of a reduction in core CPI.

So, now we’re bending back up again and the Fed is at five-and-a-half. They’re no closer to getting 2% inflation than when they had rates at zero.”

Meanwhile, federal budget deficits continue to spiral upward. The government is spending more instead of less.

Nothing has worked, and the markets are completely wrong on their benign outlook for future inflation.”

Peter said the “proper response” would be for the Fed to continue to raise rates while the federal government cuts spending. Of course, the Biden administration isn’t going to cut spending. And while you might see another quarter-point rate hike in September, it’s not going to be enough.

We actually need much higher interest rates. The problem is we can’t afford them. So any interest rate high enough to fight inflation is too high for the markets. And in fact, not only does the Fed create a recession. But it creates a financial crisis, and that financial crisis will be considerably worse than the one we had in 2008.”

Article and video cross-posted from Schiff Gold.

Thanks to Democrat over-spending during the pandemic when the supply chain was busted and goods were in short supply, prices skyrocketed to reflect the lack of availability, and they’ve not come down very much at all.

Worse, other monetary assets are now being negatively affected as well.

“We saw a big selloff in the gold market last week and the price dropped below $2,000 an ounce. The catalyst for that selloff was tough talk from several Federal Reserve officials and an increasing expectation that the central bank will raise rates again in June,” SchiffGold.com noted this week.

“As Peter Schiff explained in his podcast, everybody thinks the Fed is going to win the inflation fight because it is going to be even tougher. In reality, they are talking tougher because they are losing the fight,” the site noted further.

In a statement on Thursday, Lorie Logan, the President of the Dallas Fed, expressed her concerns about “much too high” inflation, stating that it is not slowing down quickly enough to enable the Federal Reserve to consider pausing its campaign of interest rate hikes in June.

“The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet,” Logan said.

Despite the stock market’s indifference to the Federal Reserve’s more stringent stance, there were notable reactions in other financial markets. The dollar gained strength, gold prices declined, and there was a sell-off in the short-term bond market. If the Federal Open Market Committee (FOMC) proceeds with a rate hike next month, it would result in the Fed funds rate reaching a range of 5.25% to 5.5%. Schiff highlighted that this would surpass the peak rate observed during the previous cycle in June 2006.

“We will be above the interest rate level that precipitated the 2008 financial crisis and Great Recession. Except the difference is today that we have so much more debt than we did back then. Everybody has a lot more debt — the government, corporations, individuals. So, that level of interest will do far more damage today than it did in 2007. And we know how much damage it did then because we had the financial crisis of 2008. So, the financial crisis that has already begun in 2023 is going to be much worse than the one that we had in 2008,” Schiff said during his podcast.

For the first time ever, household debt in the U.S. has surpassed $17 trillion. Typically, credit card balances fall during the first quarter of the year, but this year they were flat.

“Americans are using their credit cards as a lifeline. That’s how they’re dealing with higher prices. They’re charging stuff,” Schiff said.

During March, revolving credit, which encompasses credit card debt, experienced a significant annual increase of 17.3%. Simultaneously, interest rates on credit card debt soared above 20%. Schiff suggested that these trends demonstrate the Federal Reserve’s lack of progress in addressing inflation.

“The consumer keeps spending. Where are they getting the money? They’re borrowing it. Credit continues to expand. That’s part of the inflationary dynamic. Inflation is an expansion of the money supply, which includes credit. So, consumers are not cutting back on their spending because of higher prices. They’re not even cutting back on their spending because of higher interest rates. They just keep on spending,” Schiff said.

“So, prices are going to keep on rising, and this next quarter-point rate hike isn’t going to be any more effective than the previous rate hikes, which means they’re going to have to do it again,” he added.

Get ready for a massive debt bomb to explode soon, in other words.

Sources include:

• ZeroHedge.com
• SchiffGold.com
• NATURAL NEWS