SANTELLI: "Welcome back to 'Squawk on the Street.' My guest today for the Santelli Exchange, Peter Shiff, needs no introduction. Thanks for taking the the time to join me today."
SCHIFF: "Good morning, Rick. Thanks for having me on."
SANTELLI: "We only have three minutes. We have to move fast. In 30 seconds give me what you think about the fact that several days ago gold hit a six-month high."
SCHIFF: "Well, what is surprising is that it's not at a one-year high or a two-year high. We're going to hear from Janet Yellen later today. Every time Janet Yellen talks it makes me want to buy gold even more."
SANTELLI: "Let me stop you there. Janet Yellen is the topic. I'm going to do a little yelling on Yellen. I continue to see that the programs are a mere $55 billion a month, that was said yesterday by an economist, by the way, mere in front of $55 billion a month. We need to continue to do this. There's slack like in the labor market. What do you define structural versus cyclical unemployment, Peter? And are the Fed's programs one or the other going to address this?"
SCHIFF: "No, the Fed's programs are making it worse. You know, all Janet Yellen and Ben Bernanke have succeeded in doing is re-flating the bubbles estate market. But that adds to our structural problems. It doesn't solve them. You know, these malinvestments are inhibiting legitimate economic growth. Temporarily it feels good, but we have seen these movies before."
SANTELLI: "Give me oneexample."
SCHIFF: "Because we're misdirecting resources into speculative activities on Wall Street, we're over building in housing, too much money is funding, money-losing enterprises. We're not doing real legitimate capital investment. We're not, you know, investing in plant and equipment. We're not producing more products. We're not creating good jobs. We're just blowing air into a bubble. We're creating phony paper wealth that we leverage up and we use it to spend more money on imported goods that we didn't produce. But this whole thing is an illusion and the illusion is going to shatter."
SANTELLI: "Okay. Now, many politicians for the next cycle, especially Democratic, are going to be running on the platform of the disparity in wealth and income in the United States of America. Are any of these programs addressing that fact?"
SCHIFF: "No, I mean, there is a bigger disparity than the free market would create. You're always going to have people that are wealthier than others in a free market and we don't want to prevent that from happening. But right now the chasm between the rich and poor or maybe the middle class, is much wider than in a free-market economy and that is because of the policies of the Fed, that's because of the policies come ought of Washington. But what the Democrats are advocating isn't going to make that situation better. It's going to make it worse."
SANTELLI: "Peter, we're out of time. but thank you as always."