Schiff on Kitco News: Currency Crisis on the Horizon

Last week Peter appeared on Kitco News to chat with Michelle Makori about the Fed, the debt crisis, and the future of the country. Peter issues predictions about de-dollarization and an eventual return to the gold standard.

In the context of a recent large downward revision to job statistics, Peter explains why all jobs aren’t created equal to begin with:

“But the labor market was never really strong. The jobs that are being created, I think the largest segment was government jobs. These are not the jobs the economy needs. These are non-productive jobs. In fact, they tend to make productive people less productive. So they have to be supported by the taxpayer or inflation. We have to run larger deficits. The Fed has to print money to pay their salaries. And then they spend that money to buy goods and services. They didn’t help produce, and it drives up prices.”

Makori humorously quips, 

“Trusting the government to report on inflation and economic data is like asking the mafia to give you the crime statistics. And the crime reports and data. I’ve always loved that line because it really crystallizes the intentions there. But nonetheless, Peter, this is the data that the Fed uses to make its calls.”

The statistics are ultimately a distraction from the fact that the Fed has been keeping rates too low for too long:

“If gold is the most important signal of monetary policy, and it’s at an all-time record high of $2,500, what should that be telling the current Fed chair? Powell, its monetary policy is too loose. And he keeps claiming that it’s tight. It’s not tight. If it was tight, gold would not be making record highs. Greenspan was Fed chairman, so why is he wrong? And Powell, right? He said gold was a key indicator of whether you have the right policy. We clearly have the wrong policy.”

It seems every politician competes to rack up the most debt in their administration:

“We’re damned if we do and we’re damned if we don’t. I mean, maybe Harris will be able to beat Obama’s two-term [debt] record in a single term. Biden has given him a run for his money. He’s not going to be that far off of outdoing eight years of Obama, which is four years of Biden. But now interest on the national debt is over a trillion dollars a year. That’s a big program that they can’t cut unless they default. It’s now bigger than the defense budget.”

Congress can keep kicking the can down the road, but adding trillions and trillions in debt is not sustainable:

“But the current monetary system cannot last, right? With the dollar at the centerpiece, because it is the source of all these global economic imbalances. You have a country like the United States that consumes way beyond what it produces. And these huge chronic deficits are a major problem for the structure of the global economy. And the longer it exists, the bigger that problem grows.”

De-dollarization is a frightening prospect, but it does have a solution:

“So people are complacent. ‘Oh, the dollar will be the world’s reserve forever because no other currency can take its place.’ … But people are missing the elephant in the living room. The obvious choice to replace the dollar is what the dollar replaced. And that’s gold.” 

Peter is optimistic that the era of fiat currency won’t last forever. Gold will ultimately reclaim its status as the best money:

“And gold is the best real money that we’ve discovered. And that’s where we’re headed. So the question is, when does the world go back to the gold standard? Not does it, but when? But the history of the world for hundreds of years is gold is money. And that history hasn’t been rewritten. Gold’s going to continue to be money for a long time. This period where it wasn’t used as money will be a footnote in history and a lesson to be learned.”

What do you think? Follow us at @SchiffGold on X  and let us know your thoughts.