Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Peter Schiff: The One Promise the Fed Is Going to Keep

  by    0   2

Since the beginning of the pandemic, government debt and money printing are off the chart. This is creating inflationary pressure. Prices are on the rise. And this is by design. In fact, the Fed has been promising more inflation for years. As Peter Schiff explains, it looks like this is one promise the Fed is going to keep.

The US government blew up the national debt by over $5 trillion in just 18 months. To support all of his borrowing and spending, the Fed turned the printing press up to full speed. The central bank’s balance sheet has expanded to a record $7.72 trillion as it’s created money out of thin air in order to buy trillions in US Treasuries and mortgage-backed securities. Peter said that the Fed is printing about half of the money being spent by the US government.

So, it’s not really borrow-and-spend anymore. It’s print and spend.”

But virtually nobody in the mainstream sees this as a problem.

People seem to think that we’ve stumbled on the equivalent of a monetary fountain of youth. People like to call it Modern Monetary Theory, which is we can have whatever we want as long a government prints the money to pay for it, that there’s no limit, that government is free as long as they print money.”

Why didn’t we figure this out sooner? After all, the printing press has been around for hundreds of years. And Peter raises an interesting question: if this is true, why do we even need to pay taxes?

Of course, the reality is that this is a fantasy — the kind that ends in disaster.

The fantasy is built on a misunderstanding of money. People have come to equate cash with wealth. But there is a big difference between earning money in exchange for producing things and the government running off dollar bills and handing them out.

When people go to work, their labor produces stuff. It increases the supply of goods and services available in the economy. You contribute your labor, and in exchange, you get money. That allows you to buy things from the pool of goods and services that you helped produce. The money itself isn’t wealth. The wealth is made up of the goods and services produced through your labor.

The more productive you are, well, the more you earn, and the greater share of what society produces you are able to enjoy yourself.”

But with government and Fed intervention, we have millions of unemployed people sitting at home just getting a check from the government. They don’t produce anything. They add no goods or services to the economy.

Yet, they can consume goods and services in the same proportions as if somebody had actually done work and actually been a productive member of society.”

What does this do?

It raises prices.

If your work adds to the goods and services, and now you’re consuming the goods and services you helped creates, that’s fine. But if now you start consuming goods and services, and you didn’t help create any of those goods and services, you just have more money chasing a diminished supply of goods and services, and prices are going to go up.”

Peter said with this level of money printing and spending, prices will go up like never before.

Ironically, the Federal Reserve has been promising Americans more inflation.

Well, that’s one promise that they’re going to deliver on. In fact, they’re going to deliver on it beyond their wildest expectations.”

Central bankers and government policymakers claim a little inflation is a good thing. It’s not.

Higher inflation is not making progress.”

Think about it. Do you want higher prices? Of course not. You want a lower cost of living.

When prices go down, that’s progress. That’s capitalism. That’s how capitalism works. When you have real capitalism, businesses become more productive. They become more efficient. They develop economies of scale. And as they do that, the cost of production comes down. And as the cost of production goes down, demand goes up. Because as prices go down, more people can afford to buy more stuff. It’s falling prices that have historically driven a rising standard of living. Well, the government has interrupted that benevolent process through inflation.”

It’s not just that inflation drives prices up. It also prevents prices from going down.

A decline in a price would have been a windfall for the consumer. When the consumer is denied that windfall by government — it’s still a tax. The government is still taking your purchasing power because the goods and services you want to consume are more expensive as a result of the government inflation.”

When you boil it all down, inflation is a promise we’d really rather the government and central bank not keep.

scam-2-sm

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: Government Serves Grade-A B.S. on Inflation

Both the Federal Reserve and the Biden administration continue to insist inflation is transitory. And they are also trying to shift the blame for rising prices so they avoid any responsibility. In this clip from his podcast, Peter Schiff explains why the government inflation narrative is Grade-A B.S.!

READ MORE →

Peter Schiff: Inflation Will Win in a Knockout!

A lot of investors are disappointed in gold. After all, many buy gold because of inflation. Even with rapidly rising prices, the yellow metal hasn’t delivered as you might expect. During his virtual speech for the Money Show, Peter Schiff explains exactly what is going on. He said in the end, gold will be vindicated […]

READ MORE →

Peter Schiff: Jerome Powell Rewrites Inflation History

During his Jackson Hole speech, Federal Reserve Chairman Jerome Powell rewrote the history of inflation. In this clip from his podcast, Peter Schiff unravels the yarn that Powell spun. In a nutshell, Powell claimed prior Fed policymakers mistakenly moved too fast to address inflation that turned out to be transitory, and he said he didn’t […]

READ MORE →

Jerome Powell’s Bad Economics

During a Q&A with students and teachers, Federal Reserve Chairman Jerome Powell praised the bad economics that drove the government response to the coronavirus pandemic. In this clip from his podcast, Peter Schiff breaks down everything Powell got wrong. During the Zoom event, Powell went out of his way to praise Congress for passing the […]

READ MORE →

Jim Grant: The Fed Is Playing With Fire

Dallas Federal Reserve President Robert Kaplan has been one of the more hawkish Fed members. On Aug 11, he said the Fed should announce a quantitative easing taper in September and begin slowing asset purchases in October. But two weeks later, Kaplan backed off that assertion, saying that with the surge of COVID-19, he was […]

READ MORE →

Comments are closed.

Call Now