Peter Schiff MoneyShow Talk: Stagflation Will Shock the Markets

Peter Schiff recently spoke at the January 2022 Virtual MoneyShow. He talked about the impacts of inflation and said stagflation is going to shock the markets.

Peter said the long-overdue arrival of inflation is completely changing the investment landscape.

This is going to completely change the dynamics that have existed for investors over the last decade. Pretty much everything that worked while the Fed was inflating this bubble is not going to work as the air comes out of it. And the air is going to come out of it despite whatever efforts the Fed may pursue to prevent that.”

HIGHLIGHTS FROM THE TALK

“Clearly, we have an inflation problem. And we’ve had this inflation problem for over a decade. It’s just that it hasn’t manifested itself in a way that is problematic to the Fed or investors because the inflation was resulting in asset prices going up rather than consumer prices.”

“Given the ability of the government to pretend that we had inflation below 2%, that gave the Fed cover to create more inflation.”

“We did the worst possible combination of monetary and fiscal policy when we first entered the pandemic.”

“When you’re not working, you need to consume less. But the government didn’t want that because that would have meant the more severe recession. So, the government sent everybody money to buy goods and services that they weren’t producing. And the fact that we have big shortages should not have been a surprise. It’s an obvious consequence of the failure to produce.”

“If you look at what Powell is talking about doing in order to fight this inflation that it now admits wasn’t transitory, it’s too little too late.”

“How are you going to do something about an inflation problem by throwing gasoline on it? Because a 1% interest rate, even if we get there at the end of the year, is still a stimulative rate of interest.”

“The reality is it’s not the worst inflation in 40 years. It’s the worst inflation ever.”

“Even if the Fed follows through with their commitment to raise rates to 1% by the end of the year, inflation, even if you believe the government’s numbers, which I don’t, at 7%, 1% is still a -6% interest rate. You are not going to encourage savings with negative six percent.”

“Inflation is now the number-one problem on the public’s mind. The public is dealing with sticker shock every time they go to the supermarket, the gas station, and that’s only going to get worse.”

“Even though the Fed is still going to be providing cheap money, it’s not going to be cheap enough to sustain the bubble.”

“Anticipation of higher real interest rates have been supporting the dollar. Well, when currency traders realize that even if the Fed raised rates, they won’t do it enough to stop inflation and that real rates are going to be falling even as nominal rates are rising, then the dollar is going to fall through the floor. And we’re going to have the worst of both worlds — inflation and recession.”

“We’re really at the end of the rope for the Fed. They’ve been kicking the can down the road for more than a decade.”

“It was bad monetary policy that inflated this bubble. And it’s bad monetary policy as it deflates that’s going to make the situation much, much worse.”

“You need to be in inflation hedge investments, one obviously being gold and silver.”

“The inflation is going to be much worse. The economy is going to be much weaker. And unfortunately, we won’t be able to put a stop to it like we did in 1980 because we have no ability to raise interest rates because the country is completely insolvent.”

“The one thing that surprises me is not that we’re here, but that it’s taken us so long to get here.”