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 isn’t being honest about inflation.
Dan opened the interview noting that the recent fight over the House speaker wasn’t really about the speaker. It was about the enormous national debt and ever-increasing government spending. The US government added over $1 trillion to the national debt in just three months. Dan said he doesn’t see any “silver clouds” in the future. Peter agreed, saying it’s “all rain clouds.”
The problem has been over a decade of reckless spending financed by debt on the part of not only just the federal government, but look at all the state and municipal governments, corporate America, households — everybody has gorged themselves on this debt fest that was served by the Federal Reserve.”
Artificially low interest rates incentivized this borrowing for the better part of a decade. Now we have a pile of debt that can never be repaid.
The only thing we were able to do is pay the interest because it was practically zero. Well, now its not zero anymore. The prime rate is at eight-and-a-half, so, many people are paying more than 10% to borrow money. Long-term Treasuries are almost at 5%. They haven’t yielded that much in over 15 years. But they’re going a lot higher. We’re still early in this journey back to normal rates. And in fact, we’re not going to have normal rates. We’re going to actually have higher than normal rates. But the problem is we can’t handle it because we have much higher than normal debt.”
Dan noted that credit card debt has skyrocketed while savings have plummeted. But higher interest rates should slow spending and increase savings. Peter said this just goes to show the Fed’s inflation fight isn’t working.
It’s not resulting in more savings. It’s just resulting in more spending. The problem is people are spending more but buying less because the extra spending is a function of higher prices.”
Dan played a clip of a man walking through Cosco showing how much prices have gone up in the last year. It’s clear that a lot of prices have risen far more than the CPI data reveals. Peter said those photos don’t lie.
It’s just the CPI that lies.”
In 2013, the CPI indicated that the cost of newspapers and magazines had increased by 30% over the previous 10 years. Peter went back and looked at the actual prices. The real increase was 130%. What happened to that other 100%?
Obviously, it got lost in the sauce of the CPI. So, the government is not honest about inflation.”
Peter said this is one of the reasons President Biden is so unpopular.
The reason his popularity is so low is because the economy stinks. It’s because inflation is so much higher than the CPI reflects. That’s why people are struggling. That’s why so many people have second and third jobs. They can’t make ends meet with their first job because the cost of living has gone up so much.”
Is there any good news? Peter said there really isn’t, but you can try to protect yourself.
Once you recognize the problem, even though you can’t solve it or do anything about it, you can at least protect yourself, protect your family. You can invest in the right things. You can buy gold or silver and get out of US currency. You can buy quality assets around the world — dividend-paying foreign stocks to try to protect your wealth. Because this inflation tax is going to get much, much higher in the coming years, and if you don’t want to pay the tax, then you’ve got to do whatever you can to avoid it as best can by divesting of what’s being taxed, which is your dollars. Your paycheck is going to be taxed, your savings, your investments. But to the extent that you can get some of that out of the US dollar, you can at least avoid part of that inflation tax.”