Schiff Warns Stagflation Is Monetary Kryptonite

Via SchiffGold.com,

Earlier this week, Peter Schiff went live on X Spaces to discuss both Bitcoin and gold’s recent price action and interact with his followers in a Q&A. He dissects the current state of the global economy, lambasts retail investors and Wall Street, and paints a dire picture of fiscal mismanagement.

Peter argues that retail investors and Wall Street are consistently off the mark, with the latter systematically underpricing the value of gold stocks:

It’s very rare that retail investors are right about anything. Since they’ve never been this wrong about gold, then gold is probably on the verge of its biggest rally. The reason that gold’s gone up, despite the fact that the public is dumping whatever they have, is because the central banks are gobbling it up. The central banks aren’t buying silver. The central banks aren’t buying gold stocks. … All the Wall Street firms, when they rate these gold stocks, they assume the price of gold is going to be much lower in the future than it is now. They have no confidence in this rally. That’s why they don’t want to buy gold stocks because they expect the price of gold to fall, even though it’s going to continue to rise.

Addressing the state of monetary policy in America, Peter argues that the Fed will soon be impotent against a combination of inflation and economic stagnation:

Another big thing I think is happening is I don’t think people are looking at the stagflation problem that’s starting to evolve in the United States. In real terms, stagflation is already here in the United States, but it’s all over the world. That’s why I pointed this out. That’s why Powell says the Fed has no plans for stagflation, and they’re just going to hope we don’t have it. That’s why in their stress tests, they don’t even stress test for stagflation because they know every major bank would fail. Stagflation is basically like kryptonite to Superman as far as the Fed is concerned. That’s exactly what we already have, and it’s going to get worse.

He recounts the origins of the Fed’s 2% inflation target. Even with the Fed failing to keep inflation below 2%, the target was contrived from the beginning:

When they’re talking about inflation of 2 percent, they’re not talking about inflation, they’re talking about prices. They’re talking about prices going up by 2 percent a year. Inflation is the rate at which the money supply is expanding. … To say that there’s some kind of ideal rate at which prices should rise every year is complete folly. It’s nonsense. It was just made up by central bankers. The only time they started talking about a 2 percent target was when they were below it. No central banks were talking about getting it down to 2 percent when it was 3 or 4 or 5. They only invented this concept when they were able to report inflation rates below 2 percent. The only reason they could report rates that low was because the governments were lying about it. They had these rigged indexes that purported to measure in prices and it was all rigged.

Foreseeing turbulence in the futures markets, Peter predicts that deliveries will increase with silver as they have with gold this month:

I’ve been saying for years that I thought that eventually, you were going to see the long positions on futures exchanges delivered, that there’s going to be big buyers that are going to go into the COMEX or the London Metal Exchange, they’re going to buy these futures, and then they’re going to take delivery of the 100-ounce bars of gold, and that that’s going to ultimately blow up the market because they’re going to run out of metal. They’re going to have to rush to buy more, and the prices are just going to go through the roof. I think that that will happen with silver, too, that they’ll try to take delivery of these contracts.

Later in the space, Peter explains why Bitcoin needs to crash. Like a recession, it’s an unfortunate but necessary economic correction:

Bitcoin crashing would be a very good thing. And it’s not that, look, I’m going to be happy that people are losing money. I actually feel very badly that a lot of people are going to lose money, that it’s unfortunate, that people are going to lose money because they were misled. They got suckered into the mania. So I’m not happy that people are going to lose money, but the sooner people stop putting money into this Ponzi scheme, the better. I mean, it’s a major distraction. It’s a major misallocation of capital and resources and labor. I think the whole crypto industry is doing tremendous damage to the global economy and now to the US economy in particular.

Be sure to check out more of Peter’s analysis on the latest episode of the Peter Schiff Show.