Peter Schiff: The Fed’s Real Power – The Power to Destroy

PBS Frontline recently released a documentary titled “The Power of the Fed.” Peter Schiff watched it and offered his analysis of the show on his podcast. He said the documentary missed the real power of the Fed — the power to destroy.

Peter said his expectations for the production were pretty low.

As low as I set the bar, I didn’t set it low enough. Because they didn’t even meet my low expectations.”

A lot of people said the documentary exposed the Fed, but Peter said he didn’t think it exposed it at all. He said it felt more like a propaganda piece than it did a genuine investigatory documentary.

The documentary didn’t so much expose the Fed as a bad actor or that it’s responsible for our economic problems. The point seemed to be that the central bank uses its power improperly to help the rich and neglecting everybody else. The documentary did expose how the Fed creates moral hazard, asset bubbles and widens the disparity between the rich and the poor. But Peter said that is about the only criticism the documentary got right.

But moral hazard and enriching the wealthy with asset bubbles and all that, that’s just one part of the damage that the Fed does. It’s a lot more. That’s like a tip of an iceberg. But this documentary ignored the iceberg and just focused on that one little tip.”

The documentary fails to put any blame squarely on the Federal Reserve. It shifts the blame to Wall Street and the rich for corrupting what would otherwise be a benevolent institution.

Peter said the documentary’s message seemed to be that we need to redirect the power of the Fed from Wall Street to Main Street. If we could just reform the Fed and shift the way it uses its power, everything would be fine.

Hey, if the Fed can make the rich rich, why not just have the Fed make everybody else rich? The problem is it doesn’t work that way. The Fed can blow asset bubbles and so the Fed can enrich the people temporarily who own those assets. But the Fed cannot create real economic growth. So, it can’t make workers rich. It can’t increase real wages. It doesn’t have that power. But I think the producers of this documentary believe that it does. And they probably want the Federal Reserve to focus its power on helping Main Street and therefore helping to fund this big-government agenda that is now gaining traction in Washington. That’s really the message here.”

Ultimately, the producers of the documentary want the Fed to use its power – but use it differently. It wants the central bank to print money and monetize the massive debts of the Biden administration so the government can get bigger and solve our social problems.

Peter recalled Lord Acton’s famous quote, “Power tends to corrupt. And absolute power corrupts absolutely.”

I think the Federal Reserve is the closest thing we have in the financial markets to absolute power. And it is absolutely corrupt.”

And while power can be used for benevolent purposes, it can also be extremely destructive.

Remember John Marshall, ‘The power to tax involves the power to destroy?” Well, so does the power to inflate. Inflation is a tax. And what the Federal Reserve is using is its power to help the government tax us through inflation to destroy the economy. And that is the bigger picture that this so-called documentary completely overlooks.”

Peter goes on to dissect the documentary piece by piece.