Schiff on Kitco News: The Dollar Bubble Just Burst

In an interview last week on Kitco News, Peter joined Jeremy Szafron to offer his latest insights into the unraveling U.S. economy, surging gold prices, and rapid inflationary pressures. Peter explains the Fed’s precarious position, the imminent threat of a U.S.-centric financial crisis, and why he thinks we’ve already entered serious economic decline, despite the government’s denials.

Peter kicks off by noting the troubling and self-inflicted nature of the current economic turmoil, pointing directly at misguided actions by former President Trump, whose tariff policies were based on fundamentally flawed reasoning:

Well, I mean, this is something that I’ve been predicting for quite some time now. It was inevitable. I always thought it would be an external dollar crisis that would set these events in motion. I didn’t realize that we would do it to ourselves, but we have. We’ve pricked our own bubble and there’s a lot of air that’s going to come out of it. You know, Donald Trump looked at our huge trade deficits and just concluded that the trade deficits themselves were the problem and that they must be the result of foreigners cheating us and ripping us off.

As economic uncertainty has grown, gold prices have surged significantly. Peter emphasizes gold’s recent notable momentum, a rally that many investors overlooked due to their fixation with cryptocurrencies like Bitcoin:

Well, gold’s up over $250 in the last three days. So we’re accelerating. Two days, the last couple of days, we were $100 a day, and maybe we’ll be up again. Maybe we’ll be up another 100 by the time they close today’s trading. But what’s happening, and what I’ve been telling people was happening all last year as the price of gold went from 2000 to 3000 and nobody cared and nobody was buying it because everybody was sidetracked by Bitcoin and all the talk about digital gold.

Turning to the inflation outlook, Peter sharply criticizes the Fed’s claims that inflation expectations remain anchored at their so-called 2% target. He argues that the actual inflation outlook is far worse than the Fed admits and set to climb higher:

Yeah, well, the year ahead inflation expectations now are 6.7%. I mean, the Fed keeps saying that long-term expectations remain anchored at 2%. What are they talking about? Nothing is anchored at 2%. We’ve been adrift for a long time and now we’re at 6.7%. And you know what? It’s going to be a lot higher than that. The Fed is completely wrong.

Peter believes the Federal Reserve will eventually be forced to reverse rate hikes and resume quantitative easing (QE), but only after recognizing clear systemic deterioration. He foresees a painful and widespread economic contraction, particularly affecting employment within the service sector:

I think the Fed is eventually going to cut rates and go back to QE, but they’re waiting for everything to collapse. Because they don’t even know that it’s going to collapse. But they’re waiting for some signs that the financial system is buckled. Maybe they want to see big layoffs, which are coming. We’re going to have widespread layoffs in the United States because the whole service sector economy is going to shut down because all the imports are going to be cut off.

Finally, Peter cautions listeners that the U.S. economy is heading toward a severe crisis—one he considers far worse than the global financial crisis of 2008. Crucially, he points out that the brunt of the damage will impact America specifically, emphasizing the international shift away from reliance on the U.S. dollar and American markets:

Well, I think that there is going to be a massive loss of confidence because it’s been a confidence game the entire time. But look, this is going to be a financial crisis much worse than 2008, but it’s not going to be global. It is a U.S. crisis. It’s not a global crisis. It’s actually liberation for the rest of the world because they’re going to be liberated from the burden of supporting the U.S. economy. That means more for them.

If you missed it, be sure to watch Peter’s debate tariffs with Spencer Morrison and George Gammon!