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The U.S. national debt is at 34.7 trillion dollars. If you laid that many dollar bills end-to-end, it would wrap around the Earth 134,599 times. That’s enough to travel to the sun and back 17 times. Suffice it to say, we’re in a pickle.

America is slowly approaching the precipice of debt default. This is no minor dilemma. A default could cause approximately 8 million jobs to be lost. In other words, the bill would come due.

For many politicians, the debt crisis is not a pressing concern. At least not enough to take measures to fix it. The Biden administration passed a 1.2 trillion-dollar infrastructure bill in 2021, adding 256 billion dollars to the budget deficit over the next ten years. Biden has also forgiven 167 billion dollars in student loans during his tenure, which was financed through increased government spending. Despite already being one of the most indebted countries in the world, politicians continue to dig the U.S. into an even deeper hole. The problem is not simply a monetary one. There is an ideological battle underlying our descent into debt.

The ideas that have caused America’s current debt crisis were birthed during the Great Depression. In 1932, Franklin D. Roosevelt issued a series of spending measures that were intended to stimulate economic activity in what was called the “New Deal.” FDR spent over 950 billion (inflation-adjusted) dollars on the program while being touted as an economic “savior.” The deal was promoted as what released America from the bonds of the recession. In reality, it made the problem worse.

A study conducted by two UCLA economists found that the New Deal actually extended the Great Depression by seven years. By artificially increasing wages while unemployment remained rampant and below projected recovery rates, FDR’s program harmed economic health. Simply pumping money into the economy wasn’t the fix-all solution it was advertised to be.

…click on the above link to read the rest of the article…

New Schiff Interview: All Inflation Has One Source

May 16, 2024

New Schiff Interview: All Inflation Has One Source

On Wednesday, Peter appeared on This Week in Mining with Jay Martin. Jay and Peter discuss the state of the economy, the government’s assault on sound money, and why the mining sector constitutes a good investment.

Early on in the interview, Peter lays out the dilemma the Federal Reserve will face in the near future:

“Inflation is going to get much stronger as the economy weakens and enters recession. … Then the Fed has to choose, and it’s going to be at the point where it’s damned if it does and damned if it doesn’t. But it’s going to have to make a choice, a very unpopular choice. Does it fight inflation, which means much higher rates than the rates we have now (the rates we have now are not high enough)? Does the Fed hike rates even though there’s a recession and even though the hikes will make this recession worse and potentially cause a massive financial crisis? … Or will the Fed ignore the inflation problem and try to rescue the economy by creating more inflation?”

As the government continues to grow and encroach on individual liberty, Peter explains what would happen if gold is ever outlawed, as it was in the 1930s:

“There always will be a market. If it’s illegal, then there’s a black market. People sell all kinds of drugs in this country, and they’re not legal. But there are plenty of buyers. It just means the market is underground, and of course, even if it’s illegal in America, that doesn’t mean it’s going to be illegal in every country, so there will be plenty of legal gold markets…

…click on the above link to read the rest of the article…

Peter Schiff: Biden Lies Again on Inflation

May 16, 2024

Peter Schiff: Biden Lies Again on Inflation

This week on the Peter Schiff Show, Peter covers a week of dismal economic reports. Both jobless claims and consumer sentiment came in worse than expected last week, with both figures missing predictions by a wide margin. Peter also discusses public statements made by both Joe Biden and Donald Trump on the nature and origin of inflation.

The Fed faces a difficult choice. Does it prioritize fighting inflation or keep rates low for consumers?

“If Powell looks at these numbers and decides we need to raise rates because consumers are worried and they’re pessimistic about inflation, that’s going to make the high-interest rate problem worse. Consumers are upset about both high inflation and high interest rates. So how is the Fed going to do something about that? Because if it raises interest rates, it’s going to make that problem worse. And if it doesn’t raise interest rates, or cuts interest rates, it’s going to make the inflation problem worse.”

In a recent interview, President Biden took to blaming private companies for inflation. Peter explains how absurd this explanation is:

“He immediately changed the subject to shrinkflation and then started blaming greedy corporations. And he said, ‘We have a problem of corporate greed. That’s why everything is so expensive now.’ As if corporations weren’t greedy until Joe Biden became president. All of a sudden, Biden’s president and these corporations decide, ‘You know, let’s stick it to the consumer. We can make some extra money if we really jack up the price of food.’ Where were all these greedy corporate officers a few years back?”

Peter rebuts Biden further. If anything, corporations initially took losses in the hopes that inflation was temporary:

…click on the above link to read the rest of the article…

Why The Establishment Fears a Trump-led Fed

May 14, 2024

Why The Establishment Fears a Trump-led Fed

While in office, Trump blamed the Fed for tightening monetary policy. Now members of Trump’s team allegedly plan to give a re-elected Trump more power over the Fed, igniting panic from mainstream economists about a politicized Fed. Our guest commentator explains why the real risk, from the establishment’s perspective, is not that Trump will turn the Fed into a political organization but that he will expose that it already is one.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Discourse about the Federal Reserve is frequently full of myths, dishonest framing, and outright lies. Listen to a press conference by Chairman Jerome Powell or read an article from a major outlet’s lead Fed correspondent and you’re bound to hear at least a few. For instance, it’s common for the financial press to characterize the Fed’s current conundrum as “walking a tightrope.”

It’s said that the Fed is working to guide the economy along without tipping it over into either high inflation on one side or a recession on the other. The last couple years, we’re told, saw the economy wobble too far toward the inflation side, with the Fed now attempting to pull the economy back to the thin line of stability without tipping over too far and plunging into a recession.

But anybody who actually understands what causes recessions can tell that this framing is, at best, incredibly misleading. The Fed doesn’t prevent recessions, it directly causes them. These days the tightrope analogy contributes to the myth that, while difficult, a recession is possible to avoid. It isn’t. All the Fed can do is delay and amplify the painful correction that earlier monetary policy made inevitable.

…click on the above link to read the rest of the article…

Peter Schiff: Rate Hikes on the Horizon?

May 9, 2024

Peter Schiff: Rate Hikes on the Horizon?

Peter’s back to recap the last week in markets and economic news. This episode starts with April’s dismal stock performance and also discusses Jerome Powell’s most recent appearance. Peter wraps up the episode by recounting the Bitcoin debate he participated in on Friday.

Peter notes that April’s losses in the stock market were in part created by doubt about the Fed’s future rate cuts:

“The reason for that was heightened talk not just about the Fed not cutting rates, but for the first time, I heard people discussing the possibility that the Fed might have to raise rates, that the next move may in fact be a hike and not a cut. Now that‘s the first time that I’ve heard any mainstream discussion of that possibility. … I’ve been saying that that is the correct policy. If the Fed really is data-dependent, and if the Fed really wants to fight inflation, based on the data, they should resume their hikes.”

Despite this possibility, markets are unduly optimistic. The Fed’s historical record is not very successful, even decades ago when America’s fiscal health was much better:

“The markets believe that the Fed is going to succeed. This is pure nonsense! I look back at the inflation statistics for the 40 years before the 2008 financial crisis— so 2008, 2007, going back to 1968, those 40 years— there were only 3 years where inflation was 2% or lower. The average inflation rate over those 40 years was 4.8%. … If the Fed wasn’t able to come close to 2% during those 40 years, why does anybody think it’s going to come anywhere near it over the next 30 years?”

Fed Chair Jerome Powell still refuses to criticize federal fiscal policy, despite the apparent need for rate hikes:

…click on the above link to read the rest of the article…

The Copper Supply Shortage Is Here

April 25, 2024

The Copper Supply Shortage Is Here

With the AI boom and green energy push fueling fresh copper demand, and with copper mines aging and not enough projects to match demand with supply, the forecasted copper shortage has finally arrived in earnest. Coupled with persistently high inflation in the US, EU, and elsewhere, I predict the industrial metal will surpass its 2022 top to reach a new all-time high this year:

Copper vs USD, 5-Year Graph:

Source: tradingview.com

The AI boom is stoking the need for more data centers, which will require around a million metric tons of copper by 2030. Meanwhile, this year’s deficit of 35,000 tons is expected to rocket up to a staggering 100,000 tons in 2025.

Electric car batteries and EV charging stations also depend on copper, adding to the problem of there not being enough activity at existing mines, or the development of new ones, to satisfy the industrial need. Says Bank of America analyst Michael Widmer:

“The much-discussed lack of mine projects is becoming an increasing issue for copper.”

While many mainstream forecasts depend on a solid economic rebound to keep demand for copper up, inflation is here to stay, especially as the Fed is likely going to be forced to cut interest rates at some point this year. Even with just one 2024 rate cut instead of the three that markets originally expected, higher USD prices for copper and other commodities like gold are on the way. Out-of-control inflation will drive prices higher even if the oomph gets sucked out of the AI bubble, or we see other signs of an economic “hard landing.” As Peter Schiff said last month,

“I think we’re on the verge of the biggest bull market in commodities since the 1970s…They’re cutting rates because they have to avoid a financial crisis — a banking crisis.”

…click on the above link to read the rest of the article…

Never Ending War on Cash

January 22, 2024

Never Ending War on Cash

In the last few decades, there has been a global shift towards a “cashless world,” a trend that continues to shape financial autonomy. Physical currency is becoming increasingly rare as the majority of the world’s money supply exists in electronic form. Governments and financial institutions are actively promoting a cashless society, raising concerns about individual financial freedom.

The Federal Reserve’s last annual update on physical currency in circulation reported about 2.2 trillion dollars in physical cash supply. This includes physical coins (dimes, quarters, dollars) and green Federal Reserve notes. Nevertheless, there has been a rapid shift towards electronic funds. In the current era, the total global money supply is predominantly composed of electronic funds, with physical currency representing a diminishing percentage.

The concept of Central Bank Digital Currencies (CBDC) in the last year has gained substantial prominence globally. IMF Director Kistalina Georgieva noted in her speech last year that CBDCs have already been introduced in The Bahamas, Jamaica, and Nigeria, with over 100 additional countries (including the United States) currently in the exploratory phase.

The push towards a cashless society is often justified on grounds of enhanced security, with claims that electronic transactions deter terrorism, money laundering, and counterfeiting. However, upon closer examination, it becomes apparent that the primary objective is an attempt to ‘bar the doors’ and keep assets within the US Financial System. Reduced reliance on physical cash facilitates increased monitoring and taxation of financial transactions, aligning with the government’s and central planners’ interests.

Interestingly, even with the diminishing purchasing power of the US dollar, the face value of Federal Reserve notes has also been decreasing. Today, the highest denomination note produced by the Federal Reserve is the $100 note. The elimination of higher denominations, such as $500, $1,000, $5,000, and $10,000 notes, began in 1969. Discussions continue, with some advocating for the complete discontinuation of cash.

…click on the above link to read the rest…

Central Banks Will Keep Gobbling Gold in 2024

January 19, 2024

Central Banks Will Keep Gobbling Gold in 2024

The first half of 2023 was a record-breaking moment for central bank gold buying, led by none other than China and Russia. Organizations like the World Gold Council reported a staggering increase compared to 2022:

“On a year-to-date basis, central banks have bought an astonishing net 800t, 14% higher than the same period last year.”

Whether or not The January Effect will apply to the gold price as we finish the first month of 2024, there are plenty of indicators that the central bank buying spree will continue for at least the first half of the new year. Accelerating de-dollarization is just one factor, as powerhouses like China and Russia continue strategically moving further and further from the grips of USD hegemony.

Of course, actions by the Biden administration to isolate Russia with sanctions in the wake of the Ukraine conflict only provide further impetus for the Russians to continue divesting in any way they can from the US dollar. Combined with a volatile ruble and a wave of new American spending to feed its proxy wars in Ukraine and Israel, it only makes sense that Russia’s gold coffers will continue to grow.

You can also bet on China and Russia buying significantly more gold than what gets reported publicly, so the real numbers are always higher than they seem. As Jim Richards has pointed out many times, such as in this tweet from Q1 last year, countries like Russia and China hold gold acquired through off-the-books buying programs that far exceed what they officially claim:

“Central Bank of Russia reported a gain of 30 metric tonnes in its gold reserves. That’s after a year of flatlining more likely due to non-reporting than non-acquisition. Nice to see Russia back in the game.”

…click on the above link to read the rest…

The World Is Sitting on a Powder Keg of Debt

December 20, 2023

The World Is Sitting on a Powder Keg of Debt

The Federal Reserve recently surrendered in its inflation fight. But price inflation is nowhere near the 2% target. Why did the Fed raise the white flag prematurely?

One of the major reasons is debt.

The world is buried under record debt levels and the global economy can’t function in a high interest rate environment.

Fed officials know that and it is certainly one of the reasons they don’t want to raise rates any higher and hope to bring them down as soon as possible.

Over a decade of easy money policies incentivized borrowing to “stimulate” the economy. As a result, governments, individuals, and corporations all borrowed to the hilt. That was all well and good when interest rates were hovering around zero, but when central banks had to hike rates to battle the inevitable price inflation, it pulled the rug out from under the borrow-and-spend economy.

Governments around the world are feeling the squeeze as they try to deal with trillions in debt in a rising interest rate environment.

According to projections by the International Monetary Fund (IMF) global government debt will hit $97.1 trillion in 2023. That represents a 40% increase since 2019.

By 2028, the IMF projects that global public debt will exceed 100% of global GDP. The only other time global debt-to-GDP was that high was at the height of the pandemic lockdowns.

Americans like to brag about being number one. Well, when it comes to debt, they’re right.

The US national debt makes up 32.4% of the total global government debt.

According to the IMF, America’s debt-to-GDP ratio stands at 123.3%.

This chart by Visual Capitalist captures the extent of the problem.

THE DEBT SPIRAL

Unless governments dramatically cut spending and/or raise taxes, this debt spiral will only get worse, especially if interest rates remain elevated.

…click on the above link to read the rest…

Inflation in Real Life Much Worse Than in Government Fantasy World

December 14, 2023

Inflation in Real Life Much Worse Than in Government Fantasy World

Inflation is dead!

At least that’s what you would think if you listen to government officials and talking heads in the financial media.

So, how is this victory over inflation working out for the average person?

Not so great.

Based on official CPI data, price inflation has cooled somewhat, although it remains far above the Federal Reserve’s 2% target. That hasn’t stopped President Biden and most of the mainstream financial media from declaring victory over rising prices. Biden even suggested that companies should start cutting prices since inflation is falling.

It’s important to remember that even if we believe the government numbers and price inflation is cooling, that doesn’t mean consumers are getting any relief.

Prices are not falling. They’re just going up slower than they were six months ago.

And those price increases are cumulative. Since January 2022, prices have risen 9.7% based on the CPI. And the CPI is designed to understate rising prices.

In other words, we’re all still coping with much higher prices no matter what the latest CPI report says. And the suffering is far worse than sterile BLS reports indicate.

This becomes clear when we go out in the real world and stop listening to news people spouting government numbers.

Ironically, we can learn more about the actual impact of inflation from the movie Home Alone than we can from some guy on CNBC droning on and on about the CPI.

In this 1990 classic, 8-year-old Kevin McCallister’s family went on a holiday trip to Paris and accidentally left him alone in his house. Chaos ensues.

You may recall that after realizing he’s alone, Kevin makes a trip to the grocery store. After all, a kid has to eat.

…click on the above link to read the rest…

Deutsche Bank Economists Say the Fed Will Create More Inflation in 2024

November 29, 2023

Deutsche Bank Economists Say the Fed Will Create More Inflation in 2024

Deutsche Bank economists say the Federal Reserve will create more inflation in 2024.

OK, that’s not exactly what they said. But that is the implication of their latest forecast.

The Deutsche Bank analyst forecast that the Fed will cut rates by 175 basis points in 2024 in response to a “mild” recession. That would drive the Federal Reserve funds rate down to between 3.5% and 3.75%.

This loosening monetary policy, by definition, would create more inflation.

The Fed currently has interest rates set at between 5.25% and 5.5%.

Most mainstream analysts now think the central bank will cut rates next year, but not as steeply as Deutsche Bank economists.

The dominant narrative today is that the Fed has successfully beaten down price inflation. A cooler-than-expected CPI report for October reinforced this notion. With inflation on the run, mainstream analysts think that the Fed has initiated its last hike and will pivot to rate cuts next year to guide the economy to a “soft landing.” Even before the CPI data release markets were pricing in 75 basis points of rate decreases in 2024.

Many mainstream analysts and financial news network pundits have taken a recession completely off the table. But Deutsche Bank senior US economist Brett Ryan told Reuters he expects the US economy to hit a “soft patch” that will lead to a “more aggressive cutting profile.”

Ryan said he expects this economic weakness to further ease inflationary pressure.

The Problems With the Forecast

There are several problems with the Deutsche Bank projections, and the entire mainstream narrative more generally.

In the first place, the death of inflation is greatly exaggerated. No matter how you slice and dice the data, none of the numbers come close to the Fed’s 2% target. Core CPI is still double that number.

…click on the above link to read the rest…

The Future for Fiat

November 4, 2023

The Future for Fiat

The day of reckoning for unproductive credit is in sight.

With G7 national finances spiraling out of control, debt traps are being sprung on all of them, with the sole exception of Germany.

Malinvestments of the last fifty years are being exposed by the rise in interest rates, increases which are driven by a combination of declining faith in the value of major currencies and contracting bank credit. The rise in interest rates is becoming unstoppable.

Do not be surprised to see a US Government deficit exceeding $3 trillion this fiscal year, half of which will be interest payments. And in the run-up to a presidential election, there’s every sign of deficit spending increasing even further.

We now face America and her allies being dragged into another expensive conflict in the Middle East, likely to drive oil and natural gas prices higher; far higher if Iran becomes a target. With the Muslim world united against Western imperialism more than ever before, do not discount the closure of Hormuz, and even Suez, with unimaginable consequences for energy prices.

The era of interest rate suppression is over. G7 central banks are all deeply in negative equity, in other words technically bankrupt, a situation which can only be addressed by issuing yet more unproductive credit. These are the institutions tasked with ensuring the integrity of the entire system of bank credit.

This is not a good background for a dollar-based global credit system that is staring into the black hole of its own extinction.

The end for the dollar is nigh

There are a number of events coming together that suggest we are about to undergo a major upheaval in world economic, financial, and monetary affairs…

…click on the above link to read the rest…

Peter Schiff: A Crisis Is Already Playing Out Under the Radar

November 1, 2023

Peter Schiff: A Crisis Is Already Playing Out Under the Radar

The mainstream remains optimistic about the trajectory of the economy. Price inflation has supposedly been beaten down. GDP growth was even better than expected, and most economists have tabled their recession predictions. But in his podcast, Peter Schiff explained that it’s all an illusion. The financial crisis has already started, and it continues to play out beneath the radar.

Nobody understands that this crisis has started. But believe me, it has. This was the way the 2008 financial crisis started. It didn’t just happen when Lehman Brothers went bankrupt.”

By the time Lehman went under, everybody knew there was a crisis. But it was obvious long before that.

That’s the reason it went under. It didn’t just go out of business out of the dark. It wasn’t just happenstance. The reason that Lehman Brothers, and Bear Sterns, and Fanny and Freddy, and AIG, and all these companies went under was their exposure to the mortgage market. That exposure was obvious to me for years, but particularly in 2007 when the subprime market blew up. That was the point where even the village idiot should have been able to figure out what was coming. The problem was most people on Wall Street weren’t even smart enough to qualify as the village idiot, so they still couldn’t figure it out.”

They needed the proverbial anvil to fall on their head. That finally happened in 2008. But even in the summer of ’08, a lot of people were oblivious.

So, if you’re wondering, ‘Peter, how can we be so close to this massive crisis, in fact, how could this crisis have already started if nobody is talking about it?’ Well, just go back to the summer of 2008. Nobody was talking about it.”

Peter emphasized that this crisis is much bigger because the problems driving it are much bigger.

…click on the above link to read the rest…

The Myth of the Invincible Dollar

October 15, 2023

The Myth of the Invincible Dollar

I write a lot about the national debt.

And most people don’t care.

That’s because there’s a widespread belief that the dollar is invincible.

It isn’t.

The prevailing attitude is that the US government can borrow and spend indefinitely. After all, it hasn’t caused a problem so far. But a long fuse can burn for a long time before it finally reaches the powder keg.

I don’t know how long we have before the debt bomb explodes, but I do know we get closer and closer every day. And sadly, very few people care enough to address the problem.

The recent government shutdown drama is a case in point.

A stopgap spending deal swept the shutdown threat out of the headlines, but it’s still there lurking in the shadows of the halls of Congress. If lawmakers don’t figure something out by Nov. 17, the government will be forced to shut down.

There isn’t much talk about a shutdown right now, but when people do discuss the possibility, they almost always focus on the mythical crisis that shuttering the federal government might cause. That sidesteps the real problem — out of control government spending.

Conventional wisdom is that Congress needs to do whatever it takes to avoid a shutdown. If that means maintaining spending at current levels or even increasing spending, so be it. The handful of intransigent members of Congress who want to hold out for spending cuts are always cast as the bad guys in this kabuki theater. As economist Daniel Lacalle put it in a recent article published by Mises Wire, “The narrative seems to be that governments and the public sector should never have to implement responsible budget decisions, and spending must continue indefinitely.”

…click on the above link to read the rest…

Unwinding the Financial System

October 6, 2023

Unwinding the Financial System

This article looks at the collateral side of financial transactions and some significant problems that are already emerging.

At a time when there is a veritable tsunami of dollar credit in foreign hands overhanging markets, it is obvious that continually falling bond prices will ensure bear markets in all financial asset values leading to dollar liquidation. This unwinding corrects an accumulation of foreign-owned dollars and dollar-denominated assets since the Second World War both in and outside the US financial system.

Furthermore, collapsing collateral values, which are increasingly required backing for changing values in over $400 trillion nominal in interest rate swaps are a new driver for the crisis, forcing bond liquidation, driving prices down and yields higher: we are in a doom-loop.

What action can the authorities take to ensure that counterparty risk from widespread failures won’t take out inadequately capitalised regulated exchanges?

It seems that they acted some time ago by giving central security depositories (The Depository Trust and Clearing Corporation, Euroclear, and Clearstream) the right to pool securities on their registers and lend them out as collateral. Your investments, which you think you may own can be absorbed into the failing financial system without your knowledge.

This seems particularly relevant, given the appointment of JPMorgan Chase as custodian of the large gold ETF, SPDR Trust (ticker GLD). In a test case in the New York courts concerning Lehman’s failure, JPMC was given legal protection should it seize its customer’s assets.

This important erosion of property rights is poorly understood. But as the financial distortions are unwound, leading to unintended consequences such as bank failures and ultimately the collapse of the dollar-based fiat currency regime, the implication is that holders of physical gold ETFs will be left owning an empty shell at a time when they might have expected some protection from the collapse of the value of credit.

…click on the above link to read the rest…

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