Schiff on CapitalCosm: The West Needs to Wake Up

On Thursday, Peter joined Danny at CapitalCosm for an interview. They explore several timely financial topics, including the unprecedented highs in gold prices and the corresponding drops in fiat currencies. Peter critiques the Federal Reserve’s policies and how they fostered America’s dependency on debt and fiat money. They also discuss BRICS countries’ move away from the US dollar, impending increases in oil prices, and questions whether income taxes could ever be replaced by tariffs in today’s economy.

Peter and Danny start by addressing what’s on everyone’s mind: the election. Despite political rhetoric to the contrary, the next president will probably do very little to mitigate the coming economic disaster:

“The problem is that, regardless of who wins, the issues are only going to get worse. Budget deficits are going to grow, trade deficits are going to expand, and we’re heading for a crisis. We’ve been kicking the can down the road since Greenspan, but eventually, we’re going to run out of road and face a dollar and sovereign debt crisis. I think that’s what the gold market is signaling. Gold prices are rising as a warning sign, but unfortunately, it’s being ignored.”

Central banks have caught on to the coming dollar crisis, but retail investors and the media are oblivious to the warning signs in precious metals prices:

“Silver is very cheap, and I think investors are ignoring it. In fact, most investors are ignoring gold as well. The reason gold is almost at $2,800 is because central banks are buying it. Most Americans are selling gold—if they even had gold to start with—and the media barely covers what’s happening in gold. … I recently dug up a clip and posted it on X from when I was on CNBC around 2004. I was talking with Mark Haynes. … His response was, ‘Who cares about the price of gold? Why should I care about the price of gold?’ And now it’s almost $2,800, yet they still don’t care about the price of gold.”

Gold’s recent highs only account for demand from a fraction of central banks. Once Western nations and private investors realize they need to hedge with gold, the price could go even higher than $2,800:

“Imagine how much faster the price of gold will rise when central bankers have to compete with private investors who are currently not even in the market, or when Western central banks realize they need more gold. The US hasn’t bought any; they’re not buying gold in the UK, Germany, or France. It’s the East buying the gold—emerging markets like Poland, which now holds more gold than the United Kingdom. So, what happens when the West wakes up to what the East is doing and realizes they need more gold?”

Donald Trump is gaining momentum in betting markets, thanks in part to his policy proposals surrounding income taxes and tariffs. Peter urges caution, reminding us of the government’s record with taxation:

“What the politicians at the time told the people was, ‘You’re paying all these tariffs. … We can get those super-rich guys to pay an income tax of one or two percent. They can afford it because they’re super rich. … So let’s put a little tax on the rich, and then we can get rid of the tariffs that are burdening the middle class and the poor.’ That was the deal. … Now, Trump is promising to bring back tariffs, but that burden actually falls on the middle class, although he’s trying to pretend it won’t.”

Tariffs have their downsides, but they are superior to income taxes in that they provide far greater privacy to American taxpayers:

“When you pay an indirect tax—like a sales tax, tariff, or value-added tax—it’s very simple. I buy a product, and the tax is included in the price. I don’t have to write a check to the government, hire a lawyer or an accountant, or keep books and records. I don’t have to disclose everything about myself to the government. … The US government knows more about Americans than your typical communist government would know about its citizens. We furnish the government with all sorts of personal information, and there’s no privacy left.”

America’s monetary policy is almost always disheartening. Thankfully, a new generation of anti-Fed politicians is on the rise.