Contact us
CALL US NOW 1-888-GOLD-160

Peter Schiff: The Fed Can’t Tell the Truth About Inflation

  by    0   2

Inflation is the word of the day.

We’ve been talking about inflation for months, but now the mainstream is starting to pay attention to rising prices. In corporate board rooms, board members are talking about passing along their increased costs to their customers. Consumers are trying to tighten budgets. But the Federal Reserve keeps telling us there isn’t a problem. Inflation – so we’re told – is transitory. In his podcast, Peter Schiff said the central bankers at the Fed have to tell us that because they can’t be honest about inflation.

The ISM Services Index prices paid component reveals just how much prices are going up. The ISM’s price gauge rose to a 13-year peak and came in twice as high as the last month before the pandemic began. But the central bankers at the Federal Reserve continue to insist the price increases are transitory. Peter called their position absurd.

To simply dismiss what is happening as being transitory strains any credibility. It makes no sense for the Fed to be taking this position unless you actually understand why they’re doing it.”

When it comes to inflation, the Fed basically has two options. It can admit it’s a problem and take steps to address it, or it can pretend there isn’t a problem so it doesn’t have to do anything about it. If the central bankers admit inflation is a problem, it puts the onus on them to take action. That would mean tightening monetary policy – hiking rates, ending quantitative easing, and shrinking the balance sheet.

And therein lies the problem.

They can’t simultaneously prop up the economy and then take the props away. The economy is being propped up on pillars of inflation. That’s the only thing that we’ve got going is the inflation. So, the Fed has to continue to provide inflation. It can’t take it away.”

On top of that, we have President Biden promising all kinds of big spending programs, from his massive infrastructure plan to the “American Families Plan.” If the Fed admits we have an inflation problem, we can’t have these spending plans.

The only reason that we can have all the stimulus is if we also pretend that financing it is not inflationary, that we can print all this money to pay for all this government, and we’re not going to have an inflation problem.  So, once you understand the box that the Fed is in, now you understand why they have to dismiss inflation as being transitory. Because they have to pretend that there’s no problem to solve. Because the only way they can keep printing all this money and enabling all these deficits is if they also maintain that it’s not going to cause inflation.”

Even the slightest hint by anybody at the Fed or in the administration that inflation might be a problem creates panic in the markets. We saw this earlier in the week when Treasury Secretary Janet Yellen suggested interest rates might have to rise to keep the economy from overheating. The stock market tanked and Yellen quickly walked back her comments, pivoting back to the approved messaging – inflation is “transitory.”

Peter called it an “insipid” inflation problem that has nowhere to go but up.

More and more Americans are going to have to start accepting and dealing with the consequences of living in a highly inflationary environment.”

Warren Buffett recently warned about inflation, but he blamed it on a “red-hot economy.” Peter said the economy is the exact opposite of red-hot.

A hot economy doesn’t cause prices to go up. It’s actually an ice-cold economy that is the cause. Because the economy is so cold, the government is artificially heating it up with stimulus. So, that is what’s causing this substantial inflation. It’s not the strong economy. It’s the fact that we don’t have a strong economy. We have a weak economy. And so the Fed is stimulating the weak economy by printing money to finance massive government spending. And that is responsible for the increase in prices — not the strength of the economy.”

Download SchiffGold's Gold vs GLD EFT's Guide Today

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Peter Schiff: Oblivious Financial Media Downplays Inflation

Average Americans are worried about inflation, but the mainstream financial media doesn’t think they should be. Even though inflation is a hot topic, the conversation seems to primarily center around the notion that inflation is overblown. In his podcast, Peter explains why this mainstream media spin downplaying inflation is dead wrong.


Peter Schiff: It’s a Double Whammy

Gold and silver whipsawed to end last week. Gold fell over $30 on Thursday when weekly jobless claims and the ADP private payroll numbers came in better than expected. But the yellow metal gained back much of the loss on Friday after a less than overwhelming Labor Department May jobs report. In his podcast, Peter […]


Peter Schiff: Americans Are Worried About Inflation

If you’ve been to the grocery store, or the gas station, or the building supply store, you know we have an inflation problem. Last month’s hotter than expected CPI confirmed what we already intuitively know. But the folks over at the Federal Reserve continue to tell us there’s nothing to worry about. They insist inflation […]


Peter Schiff: Traders Starting to Realize High Inflation is Bullish for Gold

For months, the markets have responded to inflationary pressures by piling into dollars and selling gold. They’ve taken this counterintuitive approach because they believe the Fed will tighten monetary policy to fight inflation sooner rather than later. But we’re starting to see a shift in sentiment. As Peter Schiff explains in a recent podcast, traders […]


Peter Schiff: Gold Cracks $1,900 as Inflation Tax Destroys Purchasing Power

Gold pushed above $1,900 an ounce near the end of the trading day Tuesday (May 25) and closed just below that level. Silver also had a strong day, up about 22 cents, closing just below $28 an ounce. Meanwhile, the dollar index headed in the opposite direction, closing an 89.66. That’s the lowest level for […]


Comments are closed.

Call Now