Schiff on X Spaces: QE is On the Way

On Friday night, Peter took again to X Spaces to comment on the Fed’s recent decision, the stakes of the upcoming election, and Bitcoin, among other topics. He spends most of the Space interacting with his followers and responding to their questions. Follow Peter on X to catch the next Space he hosts.

Peter starts by addressing the big news from last week: the Fed announced rate cuts of 50 basis points, signaling a return to monetary policy from the Great Recession era:

“There’s no doubt in my mind that we’re going to have quantitative easing probably at the latest by the first quarter of 2025. The Fed may even start after the election, depending on how bad things are. But the rate cuts were just the beginning. Powell and the guys at the Fed are saying, ‘Well, the economy is great. Everything is awesome, but we’re cutting rates by 50 basis points anyway–’ something that they rarely do.”

The Fed insists that inflation is under control, but it’s still above the typical 2% target they’re expected to target:

“The Fed is cutting rates, claiming a victory over inflation when it should be obvious to anybody who understands inflation that it’s about to go through the roof. We saw a big breakout in inflation up to 9%, we’ve now seen a pullback to around 3%, and we’re now finding support above what used to be the resistance.”

Every time the Fed tries to delay a recession, it facilitates an even larger national debt and ensures that the next crash will be bigger and badder:

“We’re going to have a real economic crisis in the United States that we should have had 10 years ago– 20 years ago. But we were able to succeed in kicking the can down the road, and that’s going to come back to bite us, because the collapse is going to be much worse because our economy is so much worse. We’re screwed up now. The deficits are much bigger than they were back then, so it was an easier problem to solve 20 years ago.”

In response to a listener question about his preferred economic reforms, Peter explains that the size of the government needs to be drastically reduced. Even many Republicans struggle to grasp this:

“We have a huge bureaucratic monstrosity that needs to be dismantled. There’s so much that the government does that it shouldn’t even do at all, at least the federal government. These functions would be better performed at the state and local level, and so the federal government should just get out of those things. Even the things that the federal government should do—and there’s not that many things that it should do—it does very inefficiently. … Trump brags about the fact that he created the Space Force. We didn’t need the Space Force. That’s another agency. It’s the wrong direction. We needed to get rid of some of the agencies we had, not add new ones.”

One listener asks Peter about Jack Mallers, the CEO of crypto company Strike, and the mindset behind investing in Bitcoin. Peter thinks crypto investors like Mallers and Michael Saylor don’t seriously consider the possibility that Bitcoin will crash:

“I remember the housing bubble in 2002, 2003, 2004, and 2005. I found that people who owned homes—and I was renting at the time—but people who owned homes could not accept the fact that their house was going to go down in value. I think one of the reasons for that is they had such a vested interest in their house going up because it was their biggest asset. … They didn’t even want to consider the possibility that this gravy train was going to come to an end. I think that happens in Bitcoin to an even bigger degree, especially when you’ve invested so heavily in Bitcoin—not just because you own it, but because you’ve started a business that’s based on it.”

Towards the end of the Space, several listeners ask Peter about gold stocks, prompting him to comment on his experience as a stock broker. He argues that there’s ample room for deregulation in the financial sector too:

“Trump should get rid of the SEC—not just get rid of [SEC Chair] Gary Gensler, get rid of the entire SEC! We don’t need it. We should just abolish it, and we should abolish FINRA. Not only would that save a bunch of money because we could fire all those bureaucrats and let them get real jobs, but it would help the country; it would help the capital markets. Things would be better, right? Investors would be better protected and better served without the government looking over their shoulders.”