Peter Schiff: The Surplus of Printed Dollars Is Driving Price Inflation

The Consumer Price Index came in much hotter than expected last week. The mainstream chalks rising prices to supply chain and production issues caused by the pandemic. But in a recent interview on NTD News, Peter Schiff says there’s more to it than that. Prices are rising because a surplus of printed dollars is bidding up prices.

It’s not that a slowdown in production is irrelevant.

I was talking about this early on in the pandemic. A lot of people weren’t going to work, and so they weren’t on the job helping to make things. So sure, the supply chains got backlogged. But of course, you always have a supply problem, or a shortage of supply, when you have a surplus of money.”

Peter said that is the primary culprit behind the rapidly rising prices.

All the money that’s being printed is being used to bid up products. You have a lot of people who have a lot of money to spend, but they didn’t earn any of it. They didn’t go to a job where they helped produce goods and supply services. They just stayed at home and received a government check. So, the government can print money, but it can’t create products for the money to buy. So, that’s the problem. Not so much a shortage of goods but a surplus of dollars.”

Peter also pointed out that the CPI understates the true level of price inflation in the economy.

And I think that’s deliberate. I think it’s by design. The government doesn’t want to report honest numbers on inflation. It has a vested interest in pretending inflation is less than it really is, and so I don’t believe these CPI numbers. But even if you accept them on face value, prices have risen by 4% during the first four months of the year. So, if you annualized that, that’s a 6% rise in consumer prices.”

And if you look at the monthly numbers, there is a clear trend. Every month is higher than the month before.

• January – 0.3%
• February – 0.4%
• March – 0.6%
• April – 0.8%

The 0.8% increase in April was the biggest jump in the CPI since 1981.

If you extrapolate the monthly trend to the end of the year, you’re looking at a 20% year-over-year rise in consumer prices in the United States. That’s 10 times the Fed’s official 2% target.”

So, what can the average American do?

Peter said, “stock up!”

Go out and buy everything you’re going to need. But buy it now. Things that are non-perishable, items that you’re going to need around the house, whether it’s toiletries, cleansers, food, things like that, just buy it now. Because, number one, a lot of this stuff might not even be available in the future because other people have hoarded it before you got a chance to buy. But there could also be price controls in the future, which will really result in shortages. But why wait to buy something in a year where it may cost 10, 20, 30 percent more — why not just buy it now? What’s the point in sitting on the cash? It’s just going to depreciate in value. You might as well turn it into something that you can actually use.”

The anchor asked Peter if he really thought we could see price controls in the US. Peter pointed out that we saw price controls in the 1970s.

Why wouldn’t we have it again? You know, government never learns from its mistakes. And it was a mistake for Richard Nixon to introduce price controls in the 70s, and it would be a mistake for Joe Biden to introduce them now. But that doesn’t mean they won’t make the mistake. Governments have a habit of repeating their mistakes.”

The anchor pointed out that enhanced unemployment benefits seem to be discouraging people from working. Will there be any kind of resolution to all this?

No. We’re just going to have much higher prices in the foreseeable future — and the immediate present. But yes, those very generous unemployment benefits are highly inflationary, because number one, the government has to print the money to fund the benefits. But number two, those benefits are directly resulting in fewer people going to work. And so those people are not helping to produce goods or provide services. But they’re spending a lot of money. So, you have fewer goods and services to buy, but more consumers trying to buy them with more money. And so that pushes prices way up.”