Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Peter Schiff Breaks Down the Inflation Tax (Video)

  by    0   0

Peter Schiff recently appeared on the Matt Walsh podcast. During the interview, he broke down exactly how the Federal Reserve and the US government team up to hit you with an inflation tax.

Matt said upfront that culture and social issues are more in his wheelhouse than economics. But like pretty much everybody, he sees prices rising with his own two eyes. He said he went shopping with his wife recently and “had one heart attack after another looking at how expensive everything was.” Peter said, “You ain’t seen nothing yet.”

Prices are just starting to go up. So, they’re going to go a lot higher. And I think even the acceleration is going to pick up, so, you’re going to see bigger gains.”

Peter said the real question is why didn’t this happen sooner? Why weren’t prices moving up faster over the last few years?

The Federal Reserve has been creating a lot of inflation. That’s been their monetary policy. That’s how they responded to the busting of the dot-com bubble, and then the housing bubble, and then COVID – they just printed a lot of money.”

As Peter pointed out, money creation itself is inflation. Rising prices are a symptom.

The more money there is, the more expensive everything is, because each unit of money is diminished as the quantity of money is increased. So, as you have more dollars, each dollar is worth less and now you need more of them to buy stuff.”

Peter said the reason we didn’t see spiking prices early on was a lot of those dollars ended up going into financial assets.

That was the way they were kind of entering into the economy and the way the Fed was administering this monetary policy. And so, you saw big increases in stock prices or real estate prices. All of those price gains were being fueled by inflation. But now, you’re finally starting to see that inflation now showing up in the consumer goods prices.”

This is particularly a problem in the wake of the COVID-19 pandemic.

What COVID did was it reduced the supply of goods, because a lot of people who used to work stopped working, and so they were no longer helping to produce goods and services that we all buy, because they weren’t working anymore. So, the economy, not only in the US but around the world, became less productive, so that we weren’t making as much stuff. The proper response for the Fed would have been to withdraw money from the economy — take money away so that the money supply was going down with the supply of goods and services, and that would have kind of kept prices in check. But instead, the Fed did the opposite. The Fed decided to print a bunch of money and mail it out to the people who were no longer working.”

In fact, a lot of people got more money not working than they earned at their job. But they weren’t producing anything.

So, we decreased the supply of goods and services to buy while simultaneously increasing the amount of money in circulation to buy them. So, it’s a perfect storm for prices. And the government is going to throw fuel on the fire with this infrastructure program and all this other economic stimulus that is really just inflation because it’s all paid for by the Fed printing money.”

Peter reminds us that every time the government spends money, it’s a tax – whether it raises taxes or not.

Whether they want to acknowledge it as a tax or not, the cost of government is what it spends, not what it collects in taxes — what it spends. So, every dollar of federal spending has to be paid for. And the way you pay for the spending that is financed when the Fed prints money to buy government debt – we pay for that with higher prices. So, what you’re experiencing every time you go and buy something, and the price is much higher than what you remember, that increase is really a tax. That is what all the government spending is costing you. It’s costing those higher prices. And since government spending is going to go way up from here, the inflation tax to pay for it is also going to go way up.”

So, what is the path out?

Well, we have to cut government spending, and then the Fed won’t be printing as much money to finance all the debt.”

But of course, there is no indication that will happen any time soon.

We’re going to keep printing money. We’re going to keep borrowing and spending money. And so, we’re going to keep paying for all that through inflation, which means the price of everything we buy is going to go up.”

In this interview, Peter also talked about the future trajectory of the economy, and he delves into Bitcoin.

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Peter Schiff: This Is Gold’s Day

Peter Schiff recently appeared on the Claman Countdown with Creative Planning president Peter Mallouk to talk about the recent record high in gold and the trajectory of the markets over the next few months. Mallouk is bullish on the stock market, but Schiff makes the case that this is gold’s day.

READ MORE →

Peter Schiff and Dan Ball: Things Are Even Doomier and Gloomier Than They Look

Peter Schiff recently appeared on Real America with Dan Ball to talk about the latest employment data and the state of the real estate market. We know there is a lot of doom and gloom in the headlines, but Peter said the situation is actually doomier and gloomier than the headlines suggest.

READ MORE →

Jim Grant: The Fed Needs Some Grounding in Financial History and Common Sense

Will the Federal Reserve raise interest rates again? Or is this hiking cycle over? Will it really hold rates higher longer, or will it cut in the near future? Everybody in the financial world is trying to predict the central bank’s next move. Fed members insist they are data-dependent and will go where the numbers […]

READ MORE →

Peter Schiff: The Government Is Lying About Inflation

The CPI has cooled in recent months, but Americans say they’re still struggling with rising prices and they’re worried about inflation. Why is there this dichotomy between people’s perceptions and the official data? Peter Schiff recently appeared on Real America with Dan Ball to talk about the economy. He said the problem is the government […]

READ MORE →

Peter Schiff Puts the UAW Strike in Its Economic Context

The United Auto Workers went on strike against the Big Three US automakers in Detroit last week. Peter Schiff went on Real America with Dan Ball to talk about the strike and how it might impact the US economy. Peter put the strike in the context of the current inflationary and high interest rate environment, […]

READ MORE →

Comments are closed.

Call Now