Peter Schiff: The SVB Bailout Is Another Nail in the Coffin of Capitalism

INGRAHAM Joining me now ░░░░░░░░ Schiff himself He s ░░░░░░░░ Chief Economist and Global ░░░░░░░░ at Euro Pacific Capital ░░░░░░░░ Ken Griffin founded the ░░░░░░░░ fund Citadel said the ░░░░░░░░ package for Silicon Valley ░░░░░░░░ shows American capitalism is ░░░░░░░░ down before our eyes ░░░░░░░░ you agree Schiff Well ░░░░░░░░ capitalism broke down a ░░░░░░░░ time ago And the ░░░░░░░░ bailout effort is just ░░░░░░░░ nail in that coffin ░░░░░░░░ Well explain that for ░░░░░░░░ viewers please Schiff Well ░░░░░░░░ know the reason that ░░░░░░░░ are now having another ░░░░░░░░ crisis and it would ░░░░░░░░ be a lot worse ░░░░░░░░ we hadn t made ░░░░░░░░ mistake of backstopping all ░░░░░░░░ insolvent banks But the ░░░░░░░░ they got insolvent was ░░░░░░░░ of the government The ░░░░░░░░ Reserve kept interest rates ░░░░░░░░ zero for 12 years ░░░░░░░░ easing and during that ░░░░░░░░ banks and pretty much ░░░░░░░░ else loaded up on ░░░░░░░░ yielding debt But in ░░░░░░░░ to keep interest rates ░░░░░░░░ low the Federal Reserve ░░░░░░░░ to create massive inflation ░░░░░░░░ call that quantitative easing ░░░░░░░░ the adverse consequences really ░░░░░░░░ to show up last ░░░░░░░░ when we had these ░░░░░░░░ elevated increases in the ░░░░░░░░ And so inflation was ░░░░░░░░ such a burden on ░░░░░░░░ that the Fed was ░░░░░░░░ into taking action And ░░░░░░░░ it raised interest rates ░░░░░░░░ prick the bubble that ░░░░░░░░ inflated And now all ░░░░░░░░ institutions are insolvent At ░░░░░░░░ interest rates we have ░░░░░░░░ bigger debt crisis now ░░░░░░░░ the one we had ░░░░░░░░ 2008 which was also ░░░░░░░░ by the artificially low ░░░░░░░░ rates that followed the ░░░░░░░░ of the NASDAQ bubble ░░░░░░░░ the Fed kept interest ░░░░░░░░ at 1 percent that ░░░░░░░░ the housing bubble but ░░░░░░░░ time 0 percent inflated ░░░░░░░░ much bigger bubble which ░░░░░░░░ why we re now ░░░░░░░░ a much bigger financial ░░░░░░░░ But none of this ░░░░░░░░ have happened had we ░░░░░░░░ with a free market ░░░░░░░░ free market would have ░░░░░░░░ the economy from all ░░░░░░░░ excesses a long time ░░░░░░░░ and instead of having ░░░░░░░░ bubble we would have ░░░░░░░░ a genuine recovery with ░░░░░░░░ prosperity instead of the ░░░░░░░░ prosperity that we ve ░░░░░░░░ And now the chickens ░░░░░░░░ come home to roost ░░░░░░░░ All right Larry Summers ░░░░░░░░ rejecting this idea that ░░░░░░░░ rates are behind this ░░░░░░░░ this Clip starts SUMMMERS ░░░░░░░░ problems had much more ░░░░░░░░ do with the failure ░░░░░░░░ risk management at Silicon ░░░░░░░░ Bank I also think ░░░░░░░░ if we didn t ░░░░░░░░ to contain inflation we ░░░░░░░░ have even higher interest ░░░░░░░░ And those even higher ░░░░░░░░ rates would make more ░░░░░░░░ problems not less Clip ░░░░░░░░ INGRAHAM So Peter what ░░░░░░░░ the problem here He ░░░░░░░░ the one sounding the ░░░░░░░░ on inflation in early ░░░░░░░░ you were as well ░░░░░░░░ what is it Is ░░░░░░░░ risk management or the ░░░░░░░░ rates Schiff Well it ░░░░░░░░ both but you know ░░░░░░░░ low interest rates is ░░░░░░░░ led to all the ░░░░░░░░ risk taking and so ░░░░░░░░ the moral hazard of ░░░░░░░░ 2008 2009 bailouts Wall ░░░░░░░░ learned the lesson that ░░░░░░░░ can gamble and if ░░░░░░░░ win you keep the ░░░░░░░░ if you lose the ░░░░░░░░ bails you out So ░░░░░░░░ was part of the ░░░░░░░░ for the risk taking ░░░░░░░░ also government regulation banking ░░░░░░░░ encouraged all banks to ░░░░░░░░ up on treasuries and ░░░░░░░░ backed securities because of ░░░░░░░░ favorable way they re ░░░░░░░░ for accounting purposes They ░░░░░░░░ t have to take ░░░░░░░░ haircuts They don t ░░░░░░░░ the mark on the ░░░░░░░░ And so it s ░░░░░░░░ policy that caused all ░░░░░░░░ but none of it ░░░░░░░░ have happened had we ░░░░░░░░ had the 0 percent ░░░░░░░░ rates or the quantitative ░░░░░░░░ And inflation unfortunately is ░░░░░░░░ to go through the ░░░░░░░░ Because when President Biden ░░░░░░░░ that nobody is going ░░░░░░░░ have to pay for ░░░░░░░░ bailouts he s wrong ░░░░░░░░ re all going to ░░░░░░░░ through inflation because the ░░░░░░░░ Reserve is financing it ░░░░░░░░ printing money And so ░░░░░░░░ price of everything is ░░░░░░░░ to go up now ░░░░░░░░ Yeah Schiff And in ░░░░░░░░ bank deposits are more ░░░░░░░░ risk now than ever ░░░░░░░░ because inflation is going ░░░░░░░░ destroy the value of ░░░░░░░░ s savings INGRAHAM Peter ░░░░░░░░ that cheery note thank ░░░░░░░░ for joining us.”