Peter Schiff: The Recession Is Already Here and It Won’t Be Mild

The mainstream is concerned about the Fed pushing the economy into a mild recession as it battles inflation. Peter Schiff recently appeared on NTD News to talk about the economy. He said the recession is already here and it’s not going to be mild!

First of all, I think the recession has already started. I think we’re in it now. It’s just early.”

Peter reminded the audience that the first-quarter GDP data already came in as a negative print.

I don’t think it’s going to be a mild recession. I think this recession is going to be worse than the Great Recession that started following the 2008 financial crisis.”

Few people in the mainstream saw the Great Recession coming either.

In fact, when we were six or seven months into that recession, the Federal Reserve and other economists still claimed that there was no recession anywhere in sight. So, this recession is going to be much worse than that one.”

Peter said ongoing inflation will make this recession particularly problematic.

Inflation is actually going to be exacerbated by the recession. So, Americans are going to have the worst of both worlds. A worse recession than the Great Recession of ’08 but worse inflation than anything we experienced in the 1970s.”

Mainstream pundits say one reason we don’t have to worry about a financial crisis like the one in ’08 is because banks are in good shape. Peter said the banks are only in good shape until the value of their collateral collapses and people can’t repay their loans.

That’s what happened in the last financial crisis. This one is going to be even bigger because the economy has a lot more debt now than it did in 2008. And Americans are less able to pay it when interest rates rise because the balances are much greater. So, we’re in much worse shape as a result of all the bailouts and all the stimulus that papered over the last crisis. So, now the one we’re dealing with is going to be much worse because we kicked the can down the road instead of solving the problem when we had a chance.”

Is there a remedy? Or is the damage already done?

There is a remedy, but it’s not without pain. And unfortunately, it’s the middle class and the poor who are going to feel the pain the most. Because if the Fed fights inflation, it’s middle class and poor people who are going to suffer the most during the inflation fight. If they don’t fight inflation because they think they want to spare the middle class the pain of a horrible recession, well then they’re going to suffer even more with massive inflation.”

The stock market has been in a freefall for weeks. How much lower can stocks go?

They can drop a lot further and they will drop a lot further until the Fed does an about-face and acknowledges how weak the economy is.”

Peter emphasized that the Fed is only pretending it’s going to fight inflation.

Because it’s also pretending the economy is strong enough to withstand the fight. It’s not. Even though the fight is inadequate to solve the inflation problem, it’s going to cause a big problem for the economy that is so levered up on debt.”

Meanwhile, you have people like Elizabeth Warren saying businesses are gouging customers.

They’re not. They’re actually not raising prices enough. They have to raise prices more because businesses have been taking a hit in their margins. They’re going to have to prepare for reduced sales at higher prices because customers don’t have the money and that’s when the layoffs begin.”

Peter said this is a recipe for rising inflation and surging unemployment at the same time.

So, what should Americans do?

Stock up on the stuff that you need now while they can still afford it. Prices are going to go much higher for basic necessities.”

And Peter said that we could see government price controls down the road. That would make things even worse, causing more widespread shortages. But would the government really impose price controls?

We did it in the 1970s. Why wouldn’t they do it again? The government has a history of repeating its mistakes. It never learns from them.”