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

RUSH TRANSCRIPT The impact ░░░░░░░░ consumer prices of the ░░░░░░░░ that the Federal Reserve ░░░░░░░░ unleashed and all of ░░░░░░░░ people who initially said ░░░░░░░░ q we wouldn t ░░░░░░░░ inflation don t understand ░░░░░░░░ They have no idea ░░░░░░░░ this is happening There ░░░░░░░░ still convinced that que ░░░░░░░░ doesn t cause inflation ░░░░░░░░ they re looking back ░░░░░░░░ chewy want two and ░░░░░░░░ and they didn t ░░░░░░░░ any immediate inflation as ░░░░░░░░ consequence of that and ░░░░░░░░ they think well it ░░░░░░░░ t cause inflation And ░░░░░░░░ what s happening right ░░░░░░░░ has absolutely nothing to ░░░░░░░░ with quantitative easing It ░░░░░░░░ have something to do ░░░░░░░░ cove 19 or it ░░░░░░░░ have something to do ░░░░░░░░ Russia or greedy corporations ░░░░░░░░ gouging is got nothing ░░░░░░░░ do with any of ░░░░░░░░ Inflation is and always ░░░░░░░░ and always has been ░░░░░░░░ monetary phenomena even Milton ░░░░░░░░ knew that everybody should ░░░░░░░░ that which is why ░░░░░░░░ s so amazing that ░░░░░░░░ few people in academia ░░░░░░░░ on Wall Street are ░░░░░░░░ to acknowledge what should ░░░░░░░░ obvious that all this ░░░░░░░░ is made in America ░░░░░░░░ fact is one of ░░░░░░░░ few things that still ░░░░░░░░ in America Ah is ░░░░░░░░ and we re going ░░░░░░░░ make a lot more ░░░░░░░░ It is specially if ░░░░░░░░ don t acknowledge the ░░░░░░░░ as long as we ░░░░░░░░ trying to look for ░░░░░░░░ As long as we ░░░░░░░░ going to blame exotic ░░░░░░░░ is factors on inflation ░░░░░░░░ s going to get ░░░░░░░░ and in fact we ░░░░░░░░ going to create more ░░░░░░░░ to try to solve ░░░░░░░░ problems of inflation because ░░░░░░░░ the government is going ░░░░░░░░ be looking at are ░░░░░░░░ food prices rising energy ░░░░░░░░ rising rents they re ░░░░░░░░ to be looking at ░░░░░░░░ impact that s going ░░░░░░░░ have on the economy ░░░░░░░░ consumer spending I already ░░░░░░░░ earlier in the podcast ░░░░░░░░ it s weighing down ░░░░░░░░ sentiment Ultimately inflation is ░░░░░░░░ to cause recession and ░░░░░░░░ is the government going ░░░░░░░░ do to stimulate the ░░░░░░░░ in recession Create more ░░░░░░░░ and what s amazing ░░░░░░░░ me is the fact ░░░░░░░░ nobody is questioning any ░░░░░░░░ this How come Nobody ░░░░░░░░ saying wait a minute ░░░░░░░░ feds about to start ░░░░░░░░ rates Next week they ░░░░░░░░ gonna lift off and ░░░░░░░░ are going to go ░░░░░░░░ by one quarter of ░░░░░░░░ percent we re going ░░░░░░░░ go from zero to ░░░░░░░░ 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 real ░░░░░░░░ that inflation is seven ░░░░░░░░ nine why isn t ░░░░░░░░ saying maybe a quarter ░░░░░░░░ rate hike won t ░░░░░░░░ it Maybe 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 nobody saying what ░░░░░░░░ that s not enough ░░░░░░░░ if that doesn t ░░░░░░░░ What if you can ░░░░░░░░ put out a seven ░░░░░░░░ nine percent inflation fire ░░░░░░░░ one point five percent ░░░░░░░░ rates in I don ░░░░░░░░ think there is any ░░░░░░░░ example of inflation this ░░░░░░░░ being extinguished with interest ░░░░░░░░ this low Why is ░░░░░░░░ saying what if we ░░░░░░░░ to really raise interest ░░░░░░░░ what if at the ░░░░░░░░ of the year it ░░░░░░░░ out that the inflation ░░░░░░░░ went up in not ░░░░░░░░ what if after five ░░░░░░░░ six or seven quarter ░░░░░░░░ rate hikes the year ░░░░░░░░ year inflation rate hasn ░░░░░░░░ gone back down near ░░░░░░░░ percent What If it ░░░░░░░░ got up what if ░░░░░░░░ s closer to 10 ░░░░░░░░ what if it s ░░░░░░░░ than 10 percent Nobody ░░░░░░░░ asking these questions and ░░░░░░░░ what if the Federal ░░░░░░░░ has to raise interest ░░░░░░░░ to 10 percent and ░░░░░░░░ if they can t ░░░░░░░░ it to 10 percent ░░░░░░░░ quarter point increments what ░░░░░░░░ have the go medieval ░░░░░░░░ if they have the ░░░░░░░░ raise interest rates from ░░░░░░░░ and a half percent ░░░░░░░░ 10 percent in one ░░░░░░░░ in one meeting and ░░░░░░░░ If 10 percent isn ░░░░░░░░ even high enough What ░░░░░░░░ by the time the ░░░░░░░░ realizes that they re ░░░░░░░░ slow quarter point rate ░░░░░░░░ approach was ineffective and ░░░░░░░░ t work and actually ░░░░░░░░ and even bigger inflation ░░░░░░░░ What if they have ░░░░░░░░ go even higher than ░░░░░░░░ Nobody is considering the ░░░░░░░░ that that s going ░░░░░░░░ half because it s ░░░░░░░░ be catastrophic Think about ░░░░░░░░ 10 percent interest rates ░░░░░░░░ mean forget about something ░░░░░░░░ than that just think ░░░░░░░░ 10 percent What would ░░░░░░░░ do to an overleveraged ░░░░░░░░ us economy me what ░░░░░░░░ happen to the real ░░░░░░░░ market if interest rates ░░░░░░░░ 10 percent meaning that ░░░░░░░░ that she us mortgage ░░░░░░░░ can get was 11 ░░░░░░░░ What would happen How ░░░░░░░░ Americans can afford to ░░░░░░░░ real estate at today ░░░░░░░░ prices Would 11 percent ░░░░░░░░ rates they could barely ░░░░░░░░ the prices we got ░░░░░░░░ with three percent mortgage ░░░░░░░░ The real estate market ░░░░░░░░ crash how many people ░░░░░░░░ still make their mortgage ░░░░░░░░ if the real estate ░░░░░░░░ crash whatever all the ░░░░░░░░ that have adjustable rate ░░░░░░░░ how many people are ░░░░░░░░ make those payments when ░░░░░░░░ go up to the ░░░░░░░░ and forget about the ░░░░░░░░ market What about corporate ░░░░░░░░ All this that that ░░░░░░░░ out there corporations have ░░░░░░░░ selling all this low ░░░░░░░░ debt and they been ░░░░░░░░ the might buy back ░░░░░░░░ overpriced stock What s ░░░░░░░░ to happen when that ░░░░░░░░ matures as and now ░░░░░░░░ got roll it over ░░░░░░░░ interest rates are 10 ░░░░░░░░ and so corporate race ░░░░░░░░ 11 percent or 13 ░░░░░░░░ How Are they going ░░░░░░░░ roll over that that ░░░░░░░░ s going to happen ░░░░░░░░ corporate earnings when all ░░░░░░░░ money goes to that ░░░░░░░░ and what s gonna ░░░░░░░░ to corporate earnings when ░░░░░░░░ customers are spending all ░░░░░░░░ money on their debt ░░░░░░░░ and can t buy ░░░░░░░░ products The stock market ░░░░░░░░ going to crash and ░░░░░░░░ course the stock market ░░░░░░░░ crash by definition if ░░░░░░░░ rates went up that ░░░░░░░░ because stock prices are ░░░░░░░░ function of interest rates ░░░░░░░░ re discounting the future ░░░░░░░░ of their earnings So ░░░░░░░░ only what earnings crash ░░░░░░░░ interest rates were 10 ░░░░░░░░ but the discount rate ░░░░░░░░ you would use to ░░░░░░░░ those collapsed earnings would ░░░░░░░░ much higher and so ░░░░░░░░ prices would be eviscerated ░░░░░░░░ about the banking system ░░░░░░░░ banks would fail if ░░░░░░░░ banks suddenly had to ░░░░░░░░ 10 eleven 11 percent ░░░░░░░░ to their deposits Yet ░░░░░░░░ have portfolios of low ░░░░░░░░ long term debt They ░░░░░░░░ all go bankrupt and ░░░░░░░░ what would happen to ░░░░░░░░ The pot visitors They ░░░░░░░░ lose all their money ░░░░░░░░ the f the I ░░░░░░░░ doesn t have any ░░░░░░░░ to bail out all ░░░░░░░░ banks that would be ░░░░░░░░ in a high interest ░░░░░░░░ environment and effect What ░░░░░░░░ the government itself The ░░░░░░░░ would be insolvent We ░░░░░░░░ a 30 trillion dollar ░░░░░░░░ debt financed with t ░░░░░░░░ The average rate right ░░░░░░░░ percent the government is ░░░░░░░░ three hundred billion in ░░░░░░░░ on a 30 trillion ░░░░░░░░ debt well of rates ░░░░░░░░ to 10 percent as ░░░░░░░░ that low yielding debt ░░░░░░░░ and has to be ░░░░░░░░ over at a 10 ░░░░░░░░ rate and not a ░░░░░░░░ percent rate Now you ░░░░░░░░ talking about three trillion ░░░░░░░░ a year in interest ░░░░░░░░ not three hundred billion ░░░░░░░░ of course what would ░░░░░░░░ happened to the us ░░░░░░░░ If interest rates were ░░░░░░░░ percent we would be ░░░░░░░░ the worst recession ever ░░░░░░░░ would mean government tax ░░░░░░░░ would implode as spending ░░░░░░░░ The budget deficits would ░░░░░░░░ skyrocketing This would force ░░░░░░░░ federal government to slash ░░░░░░░░ on entitlements like Social ░░░░░░░░ and Medicare and also ░░░░░░░░ taxes substantially on the ░░░░░░░░ class worsening the severity ░░░░░░░░ an already severe recession ░░░░░░░░ addition to the fact ░░░░░░░░ the interest cost is ░░░░░░░░ to service that that ░░░░░░░░ already have But the ░░░░░░░░ would be racking up ░░░░░░░░ that even more than ░░░░░░░░ racked up during cold ░░░░░░░░ in an economic catastrophe ░░░░░░░░ would be brought about ░░░░░░░░ 10 percent interest rates ░░░░░░░░ been We had a ░░░░░░░░ severe recession when rates ░░░░░░░░ to 20 percent in ░░░░░░░░ 80 but a rate ░░░░░░░░ 10 percent would do ░░░░░░░░ more damage now than ░░░░░░░░ percent did Then because ░░░░░░░░ had a much stronger ░░░░░░░░ we had a lot ░░░░░░░░ debt and we were ░░░░░░░░ a creditor nation We ░░░░░░░░ still the world s ░░░░░░░░ creditor nation We still ░░░░░░░░ trade surpluses America was ░░░░░░░░ mirror image in 19 ░░░░░░░░ of what it is ░░░░░░░░ we re a complete ░░░░░░░░ case We couldn t ░░░░░░░░ handle five percent interest ░░░░░░░░ let alone 10 percent ░░░░░░░░ fact we saw what ░░░░░░░░ and 20 18 when ░░░░░░░░ Fed got interest rates ░░░░░░░░ to two and a ░░░░░░░░ percent The whole economy ░░░░░░░░ to implode Well if ░░░░░░░░ couldn t handle two ░░░░░░░░ a half percent rates ░░░░░░░░ 20 18 we sure ░░░░░░░░ hell can t handle ░░░░░░░░ Now we have so ░░░░░░░░ more debt today than ░░░░░░░░ had back then So ░░░░░░░░ is asking these questions ░░░░░░░░ is content playing the ░░░░░░░░ scenarios regarding what s ░░░░░░░░ happen if the Fed ░░░░░░░░ wrong because it s ░░░░░░░░ like the Fed has ░░░░░░░░ great track record of ░░░░░░░░ right especially on inflation ░░░░░░░░ the Fed has told ░░░░░░░░ about Inflation has been ░░░░░░░░ yet now everybody believes ░░░░░░░░ most recent lie that ░░░░░░░░ little rate hikes are ░░░░░░░░ to vanquish the inflation ░░░░░░░░ first the Fed said ░░░░░░░░ t exist and then ░░░░░░░░ was transitory and now ░░░░░░░░ claims is going to ░░░░░░░░ rid of it by ░░░░░░░░ interest rates back up ░░░░░░░░ where they were When ░░░░░░░░ was no inflation how ░░░░░░░░ the appropriate monetary policy ░░░░░░░░ fight the highest inflation ░░░░░░░░ and forty years be ░░░░░░░░ same monetary policy that ░░░░░░░░ use when we had ░░░░░░░░ inflation a fight In ░░░░░░░░ even if the Fed ░░░░░░░░ rates back up to ░░░░░░░░ they were prix colvin ░░░░░░░░ then the Fed was ░░░░░░░░ claiming that there wasn ░░░░░░░░ enough inflation and it ░░░░░░░░ monetary policy was geared ░░░░░░░░ creating more inflation Then ░░░░░░░░ had well how can ░░░░░░░░ interest rate the same ░░░░░░░░ rate that the Fed ░░░░░░░░ using when it said ░░░░░░░░ didn t have enough ░░░░░░░░ and we needed more ░░░░░░░░ can that be the ░░░░░░░░ interest rate That s ░░░░░░░░ to fight the worst ░░░░░░░░ in forty years and ░░░░░░░░ accurately measured the worst ░░░░░░░░ in our lifetimes because ░░░░░░░░ inflation that we have ░░░░░░░░ experience in the prior ░░░░░░░░ months is higher than ░░░░░░░░ 11 month period during ░░░░░░░░ entirety of the 19 ░░░░░░░░ and everybody looks to ░░░░░░░░ 19 seventies as the ░░░░░░░░ inflation ever when in ░░░░░░░░ the worst inflation ever ░░░░░░░░ right now and this ░░░░░░░░ arcade is going to ░░░░░░░░ a much more inflationary ░░░░░░░░ than the 19 seventies ░░░░░░░░ we re just getting ░░░░░░░░ This is 20 twenty ░░░░░░░░ 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 in and ░░░░░░░░ s not just high ░░░░░░░░ We may even get ░░░░░░░░ inflation We are going ░░░░░░░░ get the worst of ░░░░░░░░ worlds Yet nobody in ░░░░░░░░ mainstream is even contemplating ░░░░░░░░ possibility that this happens ░░░░░░░░ not only are my ░░░░░░░░ it I am helping ░░░░░░░░ who will listen to ░░░░░░░░ Prepare, for it