Peter Schiff Debates: You Don’t Need to Reinvent the Wheel with Gold

On Friday, Peter participated in an exhilarating debate over the merits of gold and Bitcoin. Professor of economics Nouriel Rabini joined Peter to debate Erik Voorhees and Anthony Scaramucci, two proponents of Bitcoin. They cover a lot of ground in their 2+ hour debate, so be sure to watch the full video on Peter’s youtube channel.

Peter and Rabini actually start the debate with a disagreement on “Team Gold.” Rabini is optimistic for the U.S. economy, but Peter explains that we certainly are not in a “soft landing:”

“I don’t think the economy is good at all. I think it’s an illusion created by statistics. I think the reason that Biden is the most unpopular president in modern history— the reason Harris is the most unpopular vice president— is because the economy is lousy. … I think that we’re suffering from 20 years of monetary-fiscal policy mistakes. Inflation has driven the cost of living up maybe 30, 40% in the last few years. As a result American families are struggling. They’re borrowing. Consumer debt is at an all time record high.”

Peter issues a grim prediction about the dollar. Its time is limited:

“We’re benefitting from the fact that other countries are also suffering from the same monetary & fiscal policy mistakes, and that’s causing people to take refuge in the dollar, so I think the dollar remains overvalued versus other fiat currencies. It’s losing value in terms of purchasing power. It’s losing value in terms of gold, but the fact that it’s not losing as much value as the yen, or the euro, or the pound, is temporarily propping up the economy. But I think we’re headed for a dollar crisis and a sovereign debt crisis that’s going to result in a massive economic-financial crisis— much worse than anything we had in ‘08.”

While cryptocurrency technology may have other applications, Bitcoin is simply too unwieldy to use as money:

“I don’t think anybody should move to Bitcoin. First of all, Bitcoin was created to be a digital currency, but it doesn’t really work well as a digital currency. It’s very slow. It’s very expensive. There are a lot of other cryptos out there that could do that better, but the problem is, most of them are too volatile to be money, because money needs to be a commodity. It needs to be the most liquid commodity.”

Gold’s value as currency originates from its non-monetary uses, which Bitcoin lacks:

“Bitcoin can’t do anything that gold can do. It’s no more digital gold than if I create an image of a hamburger on a computer screen— that’s not digital food! It may look like food, but it has no substance, I can’t eat it, and if I have a diet of digital food, I will starve!”

Peter actually agrees with Voorhees on the government’s real motivation for the surveillance and monitoring of financial institutions:

“The real purpose is tax evasion. Governments have very high taxes, and so the people don’t want to pay. The politicians can’t say, ‘We need all these laws to make sure you pay these onerous taxes,’ so they have to come up with a pretense and say, ‘Oh, it’s to fight terrorism. It’s to stop money launderers or drug dealers.’ That’s a tiny amount. Almost all the efforts that banks spend is all trying to find average citizens who aren’t properly reporting all their taxes. That’s why we have all these laws. They just make up these excuses so the public will buy it.”

Bitcoin’s meteoric rise is not necessarily a good sign. Peter thinks it’s characteristic of a bubble:

“They say that Bitcoin has outperformed gold when you go over the last 10 years or something. Well, it has outperformed everything, just like at one point Beanie Babies outperformed everything. If you have a bubble in something and the price goes way up, sure it can outperform everything until the bubble pops!”

At the end of the debate, Peter offers a vision that even Bitcoiners can get behind. The technology and innovation behind cryptocurrency can benefit modern money via the tokenization of gold:

“I don’t believe in Bitcoin as digital gold. I just think it’s the latest iteration of fool’s gold. It’s digital fool’s gold. If you really want to get out of fiat currency, if you’re worried about inflation and monetary debasement and you want to have a store of value other than just making more traditional investments like buying stocks or buying real estate, then buy actual gold. You don’t have to reinvent the wheel. Gold still works, and I do think that the properties of gold will be improved through the internet or blockchain or other technologies that will make gold even more liquid, even more divisible, even more portable and spendable in the future.”