Peter Schiff: Stagflation is Here and the Fed is Clueless

In Sunday’s episode of the Peter Schiff Show, Peter tackles the misguided optimism of the Federal Reserve, the dangers of escalating tariffs, and the troubling signs of entrenched stagflation. Peter takes a critical view of Jerome Powell’s policies, scrutinizes the logic behind rate cuts amidst ongoing inflation, and warns investors that Bitcoin will continue to falter in the coming economic environment as gold gains strength.

Peter begins by highlighting the alarming disconnect between economic data and Fed policy, recalling Jerome Powell’s flippant dismissal of stagflation concerns last year:

So first let me talk about the economic data, because all the economic data points to stagflation, and of course, I’ve been out in front of the stagflation scenario for a long time. I’ve been very critical of the Fed, Powell in particular, for dismissing stagflation. In fact, during his May press conference a year ago, 2024, so almost a year ago, May 1st, he was asked about stagflation, and then he kind of joked and he says, ‘I don’t know what people are talking about—I don’t see the stag, and I don’t see the inflation.’ That kind of made him laugh, and everybody else laughed. I pointed out on this podcast that it’s no laughing matter, because the Fed’s blindness to stagflation, and the comment that there’s no sign of stagflation, is going to go down like ‘subprime is contained’ and ‘inflation is transitory.’

As policy missteps compound, Peter points to the impending car tariffs as a prime example of misguided economic intervention, emphasizing that ordinary Americans will bear the brunt of higher prices:

So we got these car tariffs, which are going to significantly increase the price of cars in the United States. We’ve got these reciprocal tariffs, whatever they’re going to be, that are going to be announced on Tuesday. The market is bracing for this, but nobody is going to eat these tariffs but Americans. We’re going to be paying these higher prices. We’re going to have stagflation, and nobody is prepared for this.

The inevitable reality, he argues, will be a Fed forced into rate cuts even amid rising inflation—an environment disastrous for the U.S. dollar, but highly beneficial to gold. Peter remains consistent in his stance that Bitcoin, unlike a tried and true store of value like gold, will fail investors during this uncertain period:

Now, I think eventually they’re going to cut despite rising inflation. That’s the nail in the coffin for the dollar, and gold goes through the roof because that means real interest rates are plunging, but Bitcoin is going to go down. Like if we have a bear market in stocks, if stocks keep going down, Bitcoin is going to keep going down more. Gold is what’s going up, and just again, obliterating this whole narrative.

Explaining further, Peter warns of the unintended consequences of tariffs on inflation dynamics. Restrictions on imports don’t help the American consumer; instead, they magnify domestic inflationary pressures by reducing goods availability and leaving more money chasing fewer goods at home:

If we import less stuff from abroad because the prices go way up and we can’t afford it, the money that we used to send abroad stays here. And what does that money do? It bids up the prices of what’s here without all the goods coming in. So domestically, we have more money chasing fewer goods, and that puts upward pressure on prices, goods, and services. So domestic money supply means more of our inflation stays here, we don’t export it.

Finally, Peter voices his frustration with mainstream Republican cheerleaders who blindly praise policy moves without considering serious economic repercussions. He notes parallels between the current economic climate and the lead-up to the 2008 financial crisis, emphasizing the danger of partisan-driven cheerleading:

So much of what’s going on right now, it’s really bothering me to see all these Republicans just cheerleading everything Trump is doing, talking about how great it is. It reminds me of George Bush’s second term, you know, when they had the financial crisis, and I was going on all these shows that won’t have me on anymore. Now, I was 45 back in 2008, a much younger man. Time flies. But I remember all these guys on Kudlow and the Laffers—Stephen Moore is a friend of mine—but a lot of other people too, that were just cheerleading the Republicans. And I didn’t like it.

Make sure you check out Peter’s latest interview with mining.com!