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Peter Schiff: We’re on Autopilot Down the Road Toward Inflation

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During his recent 60 Minutes interview, Federal Reserve Chairman Jerome Powell reiterated that he thinks any spike in price inflation will be transitory. As he put it during the interview, we may see “temporarily higher prices but not persistent inflation.” Peter Schiff appeared on RT Boom Bust to talk about Powell’s view on rising prices. He called the Fed chair’s position, “laughable.”

Peter said in the first place, contrary to popular opinion, we don’t actually have an economic recovery.

What we have is inflation. And it’s that inflation that’s masquerading as a recovery. But the economy itself is a mess. It’s weak. It hasn’t recovered. All we’re doing is spending the money that the Federal Reserve prints.”

But as Peter has pointed out on numerous occasions, this money printing is — by definition — inflation.

And that’s what’s driving the appearance of economic growth. But this is a bubble. It’s a disaster waiting to happen. And prices ultimately are going to skyrocket. And I don’t care what Powell says. Maybe they have the tools to deal with it, but they’ll never us them, because in doing so they’ll destroy the house of cards that they worked so hard to erect.”

Peter was asked what the Fed should do – even if it hurts the economy. He said the Fed needs to reverse everything it has been doing. And it wouldn’t harm the economy itself. It would harm the bubble by popping it.

They need to start shrinking the money supply and allowing interest rates to rise. And that’s going to pop bubbles all over the place, including forcing the US government to massively cut spending.”

The central bank has been backstopping the biggest spending spree in US history. The budget deficit through the first six months of fiscal 2021 came in at an all-time record of $1.7 trillion. Anything approaching normal monetary policy would stop the spending gravy train. For that reason alone, the Fed can’t unwind its extraordinary loose monetary policy.

So, not only do we have to cancel any future stimulus, but we have to take back the stimulus of the past. We have to deliver either substantial cuts to government spending or tax increases. And not just to the rich, but to average Americans. And so, I don’t see that happening. I just see more and more inflation. And so that is the way all the government is going to be paid for — through inflation, which means consumer prices are going to go through the roof.”

Peter said that at this point, we’re on autopilot down the road to inflation.

And remember, the Federal Reserve said the same thing about the mortgage crisis in the early days of subprime. ‘Don’t worry about it. Everything is fine. It’s contained to subprime.’ Well, they were completely wrong. We had a financial crisis. Now they’re saying the same thing about the big rise in consumer prices and producer prices. Anybody who’s not blind can see it. And the Fed is saying, ‘Don’t worry because it’s all transitory.’ Well, how do they know it’s transitory? Inflation is just as transitory now as subprime was contained then. They were wrong then and they’re even more wrong now.”

So, what can we do to protect ourselves from the ravages of inflation? Typically, gold is seen as an inflation hedge. But gold has floundered in recent weeks, frustrating many gold investors.

They see all the inflation and they’re wondering why gold is not reacting. Well, the reason gold is not really moving up is because most of the people in the market believe the Fed. They believe that the Fed will put out any inflation fire before it gets too big. They actually think inflation will be contained. When they realize that it won’t be, that inflation is headed much, much higher, and that there’s absolutely nothing the Fed is prepared to do about it, that’s when the price of gold is really going to take off.”

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