Peter Schiff Explains How U.S. Inflation Crisis Could Be a Fuse that Ignites a Powder Keg

Long was were trying ░░░░░░░░ look for scapegoats as ░░░░░░░░ as we re going ░░░░░░░░ blame exotic It is ░░░░░░░░ on inflation it s ░░░░░░░░ to get worse and ░░░░░░░░ fact we re going ░░░░░░░░ create more inflation to ░░░░░░░░ to solve the problems ░░░░░░░░ inflation because what the ░░░░░░░░ is going to be ░░░░░░░░ at are rising Food ░░░░░░░░ rising energy Prices rising ░░░░░░░░ they re going to ░░░░░░░░ looking at the impact ░░░░░░░░ s going to have ░░░░░░░░ the economy on consumer ░░░░░░░░ I already mentioned earlier ░░░░░░░░ the podcast how it ░░░░░░░░ weighing down consumer sentiment ░░░░░░░░ inflation is going to ░░░░░░░░ recession and what is ░░░░░░░░ got me going to ░░░░░░░░ to stimulate the economy ░░░░░░░░ recession create More inflation ░░░░░░░░ what s amazing to ░░░░░░░░ is the fact that ░░░░░░░░ is questioning any of ░░░░░░░░ How come nobody is ░░░░░░░░ wait a minute the ░░░░░░░░ about to start raising ░░░░░░░░ Next week they re ░░░░░░░░ lift off and rates ░░░░░░░░ going to go up ░░░░░░░░ one quarter of one ░░░░░░░░ we re going to ░░░░░░░░ from zero to 10 ░░░░░░░░ five basis points inflation ░░░░░░░░ already seven point nine ░░░░░░░░ officially unofficially who knows ░░░░░░░░ it is Maybe double ░░░░░░░░ amount But even if ░░░░░░░░ accept the government s ░░░░░░░░ up version of reality ░░░░░░░░ inflation is seven point ░░░░░░░░ Why isn t anybody ░░░░░░░░ maybe a quarter point ░░░░░░░░ hike won t cut ░░░░░░░░ may be it s ░░░░░░░░ little too late maybe ░░░░░░░░ if the Fed raises ░░░░░░░░ seven times this year ░░░░░░░░ a lot of people ░░░░░░░░ t think they ll ░░░░░░░░ they think it s ░░░░░░░░ to be fewer maybe ░░░░░░░░ or four but let ░░░░░░░░ say the Fed manages ░░░░░░░░ raise interest rates all ░░░░░░░░ way up to one ░░░░░░░░ a half percent by ░░░░░░░░ end of the year ░░░░░░░░ is no Eddie saying ░░░░░░░░ if that s not ░░░░░░░░ What if that doesn ░░░░░░░░ work What if you ░░░░░░░░ t put out a ░░░░░░░░ point nine percent inflation ░░░░░░░░ with one point five ░░░░░░░░ interest rates In fact ░░░░░░░░ don t think there ░░░░░░░░ any historical example of ░░░░░░░░ this high being extinguished ░░░░░░░░ interest rates this low ░░░░░░░░ is nobody saying what ░░░░░░░░ we have to really ░░░░░░░░ interest rates What if ░░░░░░░░ the end of the ░░░░░░░░ it turns out that ░░░░░░░░ inflation rate went up ░░░░░░░░ not doubt what if ░░░░░░░░ five or six or ░░░░░░░░ quarter point rate hikes ░░░░░░░░ year over year inflation ░░░░░░░░ hasn t gone back ░░░░░░░░ near two percent What ░░░░░░░░ it s got up ░░░░░░░░ if it s closer ░░░░░░░░ 10 percent what if ░░░░░░░░ s higher than 10 ░░░░░░░░ Nobody is asking these ░░░░░░░░ and saying what if ░░░░░░░░ Federal Reserve has to ░░░░░░░░ interest rates to 10 ░░░░░░░░ and what if they ░░░░░░░░ t raise it to ░░░░░░░░ percent in quarter point ░░░░░░░░ What if they have ░░░░░░░░ go medieval what if ░░░░░░░░ have the just raise ░░░░░░░░ rates from what and ░░░░░░░░ half percent to 10 ░░░░░░░░ in one swoop in ░░░░░░░░ meeting and what If ░░░░░░░░ percent isn t even ░░░░░░░░ enough What if by ░░░░░░░░ time the Fed realizes ░░░░░░░░ they re go slow ░░░░░░░░ point rate hike approach ░░░░░░░░ was ineffective and didn ░░░░░░░░ work and actually fueled ░░░░░░░░ even bigger inflation fire ░░░░░░░░ if they have to ░░░░░░░░ even higher than that ░░░░░░░░ is considering the impact ░░░░░░░░ that s going to ░░░░░░░░ because it s gonna ░░░░░░░░ catastrophic Think about what ░░░░░░░░ percent interest rates would ░░░░░░░░ forget about something Higher ░░░░░░░░ that just think about ░░░░░░░░ percent What would that ░░░░░░░░ to an overleveraged You ░░░░░░░░ economy me what would ░░░░░░░░ to the real estate ░░░░░░░░ If interest rates were ░░░░░░░░ percent meaning that maybe ░░░░░░░░ cheapest mortgage you can ░░░░░░░░ was 11 percent What ░░░░░░░░ happen How many Americans ░░░░░░░░ afford to buy real ░░░░░░░░ at today s prices ░░░░░░░░ 11 percent mortgage rates ░░░░░░░░ could barely afford the ░░░░░░░░ we got now with ░░░░░░░░ percent mortgage rates The ░░░░░░░░ estate market would crash ░░░░░░░░ many people would still ░░░░░░░░ their mortgage payments if ░░░░░░░░ real estate market crash ░░░░░░░░ about all the people ░░░░░░░░ have adjustable rate mortgages ░░░░░░░░ many people are gonna ░░░░░░░░ those payments when they ░░░░░░░░ up to the maximum ░░░░░░░░ forget about the housing ░░░░░░░░ What about corporate America ░░░░░░░░ this that that s ░░░░░░░░ there corporations have been ░░░░░░░░ all this low yielding ░░░░░░░░ and they been using ░░░░░░░░ might buy back their ░░░░░░░░ stock What s going ░░░░░░░░ happen when that debt ░░░░░░░░ and now they got ░░░░░░░░ it over and interest ░░░░░░░░ or 10 percent and ░░░░░░░░ corporate race or 11 ░░░░░░░░ or 13 percent How ░░░░░░░░ they a roll over ░░░░░░░░ that what s going ░░░░░░░░ happen to corporate earnings ░░░░░░░░ all their money goes ░░░░░░░░ that service and what ░░░░░░░░ going to happen to ░░░░░░░░ earnings when their customers ░░░░░░░░ spending all their money ░░░░░░░░ their debt service and ░░░░░░░░ t buy their products ░░░░░░░░ stock market is going ░░░░░░░░ crash and of course ░░░░░░░░ stock market would crash ░░░░░░░░ definition if interest rates ░░░░░░░░ up that much because ░░░░░░░░ prices are function of ░░░░░░░░ rates you re discounting ░░░░░░░░ future value of their ░░░░░░░░ so not only would ░░░░░░░░ crash if interest rates ░░░░░░░░ 10 percent but the ░░░░░░░░ rate that you would ░░░░░░░░ to value those collapsed ░░░░░░░░ would be much higher ░░░░░░░░ so stock prices would ░░░░░░░░ eviscerated What about the ░░░░░░░░ system The banks would ░░░░░░░░ if the Banks suddenly ░░░░░░░░ to pay 10 eleven ░░░░░░░░ percent interest to their ░░░░░░░░ Yet they have portfolios ░░░░░░░░ low yielding long term ░░░░░░░░ They would all go ░░░░░░░░ and then what would ░░░░░░░░ to the depositors they ░░░░░░░░ lose all their money ░░░░░░░░ the f the I ░░░░░░░░ doesn t have any ░░░░░░░░ to bail out all ░░░░░░░░ banks That would be ░░░░░░░░ in a high High ░░░░░░░░ rate environment and effect ░░░░░░░░ about the government itself ░░░░░░░░ government would be insolvent ░░░░░░░░ have a 30 trillion ░░░░░░░░ national debt financed with ░░░░░░░░ bills The average rate ░░░░░░░░ now is one percent ░░░░░░░░ government is spending three ░░░░░░░░ billion in interest on ░░░░░░░░ 30 trillion Dollar debt ░░░░░░░░ of rates go to ░░░░░░░░ and percent as all ░░░░░░░░ low yielding debt matures ░░░░░░░░ has to be rolled ░░░░░░░░ at a 10 percent ░░░░░░░░ and not a one ░░░░░░░░ rate Now you re ░░░░░░░░ about three trillion dollars ░░░░░░░░ year in interest payments ░░░░░░░░ three hundred billion and ░░░░░░░░ course what would be ░░░░░░░░ to the us economy ░░░░░░░░ interest rates were 10 ░░░░░░░░ we would be in ░░░░░░░░ worst session ever which ░░░░░░░░ mean government tax revenues ░░░░░░░░ implode as spending exploded ░░░░░░░░ budget deficits would be ░░░░░░░░ This would force the ░░░░░░░░ government to slash spending ░░░░░░░░ entitlements like Social Security ░░░░░░░░ and also raise taxes ░░░░░░░░ on the middle class ░░░░░░░░ the severity of an ░░░░░░░░ severe recession In addition ░░░░░░░░ the fact that the ░░░░░░░░ cost is skyrocketing to ░░░░░░░░ that that we already ░░░░░░░░ but the government would ░░░░░░░░ racking up record that ░░░░░░░░ more than it racked ░░░░░░░░ during cove it in ░░░░░░░░ economic catastrophe that would ░░░░░░░░ brought about by 10 ░░░░░░░░ interest rates have been ░░░░░░░░ had a bear severe ░░░░░░░░ when rates went to ░░░░░░░░ percent in 19 80 ░░░░░░░░ a rate of 10 ░░░░░░░░ would do far more ░░░░░░░░ now than 20 percent ░░░░░░░░ Then because we had ░░░░░░░░ much stronger economy we ░░░░░░░░ a lot less debt ░░░░░░░░ we were still a ░░░░░░░░ nation We were still ░░░░░░░░ world s biggest creditor ░░░░░░░░ We still had true ░░░░░░░░ surpluses America was the ░░░░░░░░ image in 19 80 ░░░░░░░░ what it is today ░░░░░░░░ re complete basket case ░░░░░░░░ couldn t even handle ░░░░░░░░ percent interest rates let ░░░░░░░░ 10 percent In fact ░░░░░░░░ saw what happened and ░░░░░░░░ 18 when the Fed ░░░░░░░░ interest rates up to ░░░░░░░░ and a half percent ░░░░░░░░ whole economy started to ░░░░░░░░ Well if we could ░░░░░░░░ t handle two and ░░░░░░░░ half percent rates in ░░░░░░░░ 18 we sure as ░░░░░░░░ can t handle it ░░░░░░░░ we have so much ░░░░░░░░ debt today than we ░░░░░░░░ back then So nobody ░░░░░░░░ asking these questions Nobody ░░░░░░░░ contemplating the various scenarios ░░░░░░░░ what s gonna happen ░░░░░░░░ the Fed is wrong ░░░░░░░░ it s not like ░░░░░░░░ Fed has a great ░░░░░░░░ record of being right ░░░░░░░░ on inflation Everything the ░░░░░░░░ has told us about ░░░░░░░░ has been wrong yet ░░░░░░░░ everybody believes the most ░░░░░░░░ lie that these little ░░░░░░░░ hikes are going to ░░░░░░░░ The inflation that first ░░░░░░░░ Fed said didn t ░░░░░░░░ and then claim was ░░░░░░░░ tory and now it ░░░░░░░░ is going to get ░░░░░░░░ of it by moving ░░░░░░░░ rates back up to ░░░░░░░░ they were when there ░░░░░░░░ no inflation How can ░░░░░░░░ appropriate monetary policy to ░░░░░░░░ the highest inflation and ░░░░░░░░ years be the same ░░░░░░░░ policy that you use ░░░░░░░░ we had no inflation ░░░░░░░░ fight In fact even ░░░░░░░░ the ed gets rates ░░░░░░░░ up to where they ░░░░░░░░ prix colvin back then ░░░░░░░░ Fed was still claiming ░░░░░░░░ there wasn t enough ░░░░░░░░ and it s monetary ░░░░░░░░ was geared to creating ░░░░░░░░ inflation Then we had ░░░░░░░░ How can that interest ░░░░░░░░ the same interest rate ░░░░░░░░ the Fed was using ░░░░░░░░ it said we didn ░░░░░░░░ have enough inflation and ░░░░░░░░ needed more How Can ░░░░░░░░ be the same interest ░░░░░░░░ That s going to ░░░░░░░░ the worst inflation in ░░░░░░░░ years and if accurately ░░░░░░░░ the worst inflation in ░░░░░░░░ lifetimes because the inflation ░░░░░░░░ we have just experience ░░░░░░░░ the prior 11 months ░░░░░░░░ higher than any to ░░░░░░░░ month period during the ░░░░░░░░ of the 19 seventies ░░░░░░░░ everybody looks to the ░░░░░░░░ seventies as the worst ░░░░░░░░ ever when in fact ░░░░░░░░ worst inflation ever is ░░░░░░░░ now and this decade ░░░░░░░░ going to be a ░░░░░░░░ more inflationary decade than ░░░░░░░░ 19 seventies and we ░░░░░░░░ just getting started This ░░░░░░░░ 20 twenty two Do ░░░░░░░░ 20 twenty nine and ░░░░░░░░ only is it going ░░░░░░░░ be stagflation but it ░░░░░░░░ going to be an ░░░░░░░░ depression because it s ░░░░░░░░ just a stagnant economy ░░░░░░░░ we re going to ░░░░░░░░ it s going to ░░░░░░░░ a depression and it ░░░░░░░░ not just high inflation ░░░░░░░░ may even get hyper ░░░░░░░░ We are going to ░░░░░░░░ the worst of both ░░░░░░░░ kids yet nobody in ░░░░░░░░ main stream is even ░░░░░░░░ the possibility that this ░░░░░░░░ but not only are ░░░░░░░░ contemplating it I am ░░░░░░░░ everybody who will listen ░░░░░░░░ me, prepare for it