Peter Schiff: The Only Thing the Economy Has Going for It Is the Fed

Last week, Peter Schiff appeared on NTD News to talk about the Federal Reserve’s increasing dovishness. He said despite all of the assurances from Jerome Powell that the central bank’s monetary policy isn’t stoking inflation, the economy and the dollar are both at risk for collapse. The Fed is the only thing standing in the way and it can’t stand there forever.

During this interview, Peter also touched on his recent Twitter debate with Elon Musk about bitcoin.

Jerome Powell claims that the Federal Reserve is not blowing up bubbles, there is no inflation threat, and that its easy money policy will continue for years. Peter said Powell gets more and more dovish every time he talks.

I think it’s a necessity because the US economy is in need of more artificial support every time he speaks because the only thing the economy has got going for it is the Fed. Because it’s a phony economy. It’s not real. And it’s completely dependent on increasing levels of inflation. So, the Fed keeps on printing money while pretending it has no effect on interest rates, no effect on asset prices, and claiming that the market doesn’t even need its help.”

During his testimony on Capitol Hill, Powell even claimed the Fed’s bond-buying programs weren’t having any impact on interest rates. He thinks there is plenty of demand for US Treasuries without the central bank’s intervention into the market. Never mind that the Fed now holds a record percentage of US debt.

If that were true, why is the Fed buying all these bonds in the first place? The truth is that’s the only thing standing between us and complete economic collapse – is the Fed. But the only thing standing between the Fed and collapse is the value of the dollar.”

The Fed has also expanded the money supply by a record amount. Powell says that doesn’t really matter either and claimed that there is no longer any relationship between the supply of dollars and the value of those dollars.

Well, the laws of supply and demand are still in effect. And if Powell keeps printing dollars, eventually there’ll be no demand, and the value, the price, is going to collapse. And that’s when it all hits the fan.”

Peter also addressed his Twitter battle with Elon Musk about bitcoin. Musk purchased about $1.5 billion of bitcoin through Tesla.

Once you own bitcoin, you’re really obligated to talk your book because the only way to prop up the price is to con other people into buying it.”

In one tweet, Musk said, “Money is just data that allows us to avoid the inconvenience of barter. That data, like all data, is subject to latency and error. The system will evolve to that which minimizes both.” Peter said Musk doesn’t seem to understand money.

He said to me that money is just data and it’s not. That’s not what money is. Data can represent money, but money is a commodity like gold and silver. That’s money. What we use today, Federal Reserve notes, or people that use euros, or Japanese yen, those are what you call money substitutes. They’re not actual money. In fact, when the Federal Reserve issued notes backed by gold and silver, the gold and silver was the money. The notes were currency. And what gave the currency value was the money, the gold, that backed it up. So, currency is also a money substitute. But what we have now is a substitute for legitimate currency and that’s fiat currency. The difference between real currency and fiat currency is real currency is backed by actual money whereas fiat currency is backed by nothing. The dollar is fiat currency. Bitcoin is fiat digital currency. But the problem is it doesn’t even function as a currency. So, it’s really nothing. What bitcoin really is is a digital token. And you have people who are collecting bitcoin and you have people who are trading bitcoin. So, it has a price, but that price is a function of all the speculation. But at the end of the day, these bitcoin collections are going to have no value because there’s nothing unique or scarce about bitcoin and the price is going to collapse.”