"Prepare Now, Huge Inflation Is Coming..." — Peter Schiff's Last WARNING
Summary
TLDRThe speaker expresses concern over the potential economic challenges in 2025, criticizing the Federal Reserve's approach to inflation and fiscal policy. They argue that both monetary and fiscal policies are flawed, with past deficit spending contributing to current issues. The speaker predicts a weak US dollar, increased inflation, and the negative impact of government subsidies on banking and healthcare sectors, advocating for a free market approach and cautioning against the risks of Bitcoin as opposed to investing in gold and silver.
Takeaways
- 📉 The speaker anticipates 2025 to be a particularly challenging year for the economy, with concerns about inflation and fiscal policy.
- 🤔 There is a perceived lack of congressional understanding and proactive discussion on economic matters, particularly concerning the impact of new legislation on inflation.
- 🗣️ The Federal Reserve's reluctance to comment on specific fiscal policies or legislation is criticized, with a call for transparency and guidance on economic impacts.
- 💸 Historical context is provided, highlighting past deficit spending and monetary policies under various administrations, which may contribute to current inflationary issues.
- 📉 The speaker criticizes the Federal Reserve's approach to inflation, suggesting that their policies are not effectively targeting the 2% inflation goal and may instead be contributing to it.
- 💵 Concerns are raised about the U.S. dollar's strength, suggesting that it may weaken significantly in the future, potentially exacerbating inflationary pressures.
- 🏦 The banking system is criticized for taking excessive risks due to government guarantees, creating a moral hazard that encourages risky behavior without consequences.
- 🏥 The growth of government and healthcare jobs is highlighted as problematic, as these roles are seen as non-productive and funded by government deficits, contributing to economic imbalances.
- 📈 The speaker predicts a potential increase in price controls and rent controls as the government seeks to manage inflation, which they believe is a result of their own policies.
- 📊 Economic data, specifically CPI and PPI figures, are discussed, with the speaker noting a discrepancy between the two and implications for future monetary policy decisions.
- 📈 The speaker notes a divergence in the performance of gold stocks and the gold price itself, suggesting a potential change in market sentiment and the start of a new trend favoring gold investments.
Q & A
What is the speaker's main concern regarding the economic outlook for 2025?
-The speaker is concerned that 2025 could be one of the worst years economically due to potential mishandling of fiscal policy and monetary policy by the government and the Federal Reserve, which could lead to high inflation and a weak US dollar.
Why does the speaker believe that the Federal Reserve's approach to fighting inflation is flawed?
-The speaker criticizes the Federal Reserve for not using contractionary fiscal policy and for not reducing government spending. They argue that the Fed is trying to fight inflation with monetary policy alone, which is insufficient and could lead to more inflation rather than less.
What historical figure does the speaker mention in relation to fiscal policy and inflation?
-The speaker mentions Volker, presumably referring to Paul Volcker, the former Chairman of the Federal Reserve, who is known for his efforts to combat inflation in the 1970s and 1980s through tight monetary policy.
How does the speaker view the role of government spending in the current inflationary situation?
-The speaker believes that government spending, including deficit spending by previous administrations, has contributed to the current inflationary situation and that it needs to be reduced to effectively combat inflation.
What is the speaker's opinion on the Federal Reserve's current monetary policy?
-The speaker is critical of the Federal Reserve's current monetary policy, suggesting that it is too focused on avoiding a rate cut and not proactive enough in addressing the root causes of inflation.
What does the speaker suggest is the Federal Reserve's real motive for wanting inflation?
-The speaker suggests that the Federal Reserve wants inflation to devalue the national debt, thereby avoiding the need for Congress to make difficult political decisions about cutting government spending.
How does the speaker describe the impact of government-backed deposit insurance on bank risk-taking?
-The speaker argues that government-backed deposit insurance creates a moral hazard, encouraging banks to take excessive risks because they know their customers are protected by government guarantees, leading to a lack of competition for safety.
What is the speaker's view on the relationship between government jobs and the private sector?
-The speaker believes that government jobs, particularly in healthcare, are not productive and are funded by deficits, which is unsustainable and leads to larger trade and budget deficits, putting downward pressure on the dollar and upward pressure on consumer prices.
What economic indicators did the speaker mention in the script, and how did they affect the markets?
-The speaker mentioned the CPI and PPI as key economic indicators. The better-than-expected CPI numbers led to a market rally, while the worse-than-expected PPI numbers initially caused some concern but did not significantly impact the market's bullish trend.
How does the speaker compare the performance of gold stocks to that of Bitcoin?
-The speaker notes that gold stocks have been leading the bull market in gold, breaking out to new highs, while Bitcoin has been stagnant and is expected to decline significantly in the future.
What advice does the speaker give regarding investment in precious metals versus cryptocurrencies?
-The speaker advises investors to move away from cryptocurrencies, which they refer to as 'fool's gold,' and to invest in real gold and silver, which they believe have significant upside potential with a favorable risk-reward ratio.
Outlines
💼 Economic Policy Critique and Inflation Concerns
The speaker expresses concern about the potential economic challenges in 2025, particularly criticizing the lack of economic and financial knowledge among congressmen and women. They suggest that these individuals should be seeking advice on how to impact the economy and fight inflation through legislation and fiscal policy. The speaker also criticizes the Federal Reserve's monetary policy, suggesting that it is contributing to inflation and that fiscal policy is necessary to address the issue. They mention past deficit spending under various administrations and predict a worsening economic situation, including a weak US dollar and high inflation. The speaker also touches on the risks taken by banks due to government guarantees and the moral hazard this creates.
🏦 Banking Risks and Government Intervention
This paragraph delves into the risks taken by banks, attributing them to government guarantees of deposits. The speaker argues that this safety net encourages excessive risk-taking, as depositors do not have to worry about the financial health of the banks they choose. They compare this to consumer behavior in other markets, where people research and compare products before purchasing. The speaker suggests that eliminating government guarantees would force banks to be more cautious and competitive in managing risks. They also discuss the impact of government and healthcare jobs on the economy, criticizing the non-productive nature of these jobs and their reliance on government deficits and inflation. The speaker predicts larger budget and trade deficits, leading to downward pressure on the dollar and upward pressure on consumer prices.
📈 Market Reactions to Economic Data
The speaker discusses the impact of recent economic data on the financial markets, focusing on inflation numbers. They note that the Consumer Price Index (CPI) showed a better-than-expected decline, which was initially positive for the markets, leading to a rally in gold and a drop in the dollar. However, the subsequent release of the Producer Price Index (PPI) showed a worse-than-expected increase, which is typically a leading indicator of higher CPI. Despite this, the markets continued to rally, with the Dow Jones Industrial Average reaching a new all-time high. The speaker also comments on the performance of gold stocks, suggesting that they are leading the bull market in gold, and predicts further increases in gold prices. They also discuss the weakening of the dollar and the potential for price controls as a response to inflation.
🌐 Investment Advice Amid Economic Uncertainty
In this paragraph, the speaker provides investment advice, recommending gold and silver as wise speculative investments given the current economic climate. They argue that the potential for significant returns outweighs the risk of loss, making it an opportune time for those with the risk tolerance to invest in these precious metals. The speaker contrasts this with what they term 'fool's gold', such as Bitcoin, which they predict will experience a significant decline. They encourage investors to move away from cryptocurrencies and towards tangible assets like gold and silver, which they believe will perform well in the face of economic uncertainty.
Mindmap
Keywords
💡Inflation
💡Fiscal Policy
💡Monetary Policy
💡Deficit Spending
💡Federal Reserve
💡Interest Rates
💡Quantitative Easing
💡Moral Hazard
💡Gold
💡Consumer Price Index (CPI)
💡Dow Jones Industrial Average
Highlights
Concerns about 2025 being one of the worst years economically due to potential lack of knowledge among congress members on economics and finance.
The role of congress in understanding the impact of new legislation on the economy and fighting inflation through fiscal policy.
Criticism of the Federal Reserve Chairman for not commenting on fiscal policies and legislation due to non-partisan concerns.
Historical context of inflation and deficit spending under various administrations, including Trump, Obama, and the Bushes.
The Federal Reserve's approach to monetary policy and its impact on inflation, with a focus on the potential overshoot of the 2% target.
The rationale behind the Federal Reserve's desire for inflation, including the reduction of real debt burden through currency devaluation.
Predictions of a weak US dollar in 2025, influenced by Federal Reserve policies and global economic conditions.
The moral hazard in the banking system due to government guarantees and the resulting excessive risk-taking by banks.
The difference between productive private sector jobs and non-productive government and healthcare jobs, funded by taxpayer money and deficits.
The implications of government-subsidized jobs on trade deficits and the pressure on the dollar's value.
The potential for price controls and rent controls as a government response to inflation.
The impact of government power on personal freedom, with a reference to a recent Supreme Court decision.
Economic data and market reactions to inflation numbers, with a focus on the CPI and PPI figures.
The disconnect between gold stocks and the price of gold, with a prediction of a new trend where gold stocks lead the metal.
The contrast between the performance of gold and Bitcoin, with a warning of a potential decline in Bitcoin's value.
Advice on investing in gold and silver as a hedge against inflation and economic uncertainty.
The distinction between speculation and prudent investment, with a focus on the potential rewards of investing in gold stocks.
Transcripts
I think 2025 could be one of the worst
Years yet and so you would think that
these congressmen and women who may have
very little knowledge about economics
and finance here's their opportunity to
kind of Bounce some ideas and find out
hey how would this impact the economy we
know you're trying to fight inflation
what would be the impact of this new
legislation or what could we do right
could you give us some advice right what
would you suggest we do to help fight
inflation what recommendations would you
have for us on fiscal policy right you
would think that that would be the
purpose but no any time anybody ask
power to comment on how a particular
piece of legislation whether it's fiscal
policy or just you know a regulation he
said why I can't answer that I'm not
allowed to talk about that I can't talk
about fiscal policy because you know
it's not my job he talked about vulker
again he brought his name up about how
he did a good job and bringing out
inflation but vulker also was very
critical of the deficit spending that
was going on during the 1970s and early
80s and he was very specific in his
warnings that government spending needed
to be reduced that we can't fight
inflation with just monetary policy that
we need fiscal policy as well we need
contractionary fiscal policy not these
massive deficits but poell refuses to
comment and it's mainly because he
doesn't want to be critical right he
doesn't want to be accused of being
partisan by criticizing any piece of
legislation of course the FED is very
much to blame it's not just the deficit
spending of Biden it's the monetary
policy of the fed and of course the
Republicans never want to admit that a
lot of the problem was caused prior to
Biden becoming president just because we
didn't see the inflation in the CPI when
Trump was President doesn't mean that
his deficit spending isn't partially
responsible for the inflation that we're
suffering now of course it is and it's
not just Trump it's Obama and the bushes
I mean this has been going on for a long
time and of course it's about to get a
whole lot worse you know for all the
congratulatory talk about how the FED
has succeeded you know pal said in his
prepared remarks that the fed's tight
monetary policy has really gone a long
way and bringing inflation down from
where it was to 3 percentage wherever it
is and that we're on a Glide path to 2%
the FED didn't say you know we better
start hiking rates as we're getting
closer to 2% because we don't want to
overshoot they had no problem
overshooting 2% on the way up but no no
no they want to make sure that there's
no way they overshoot it on the way down
again this is all a bunch of BS the
government pal is just trying to justify
creating more inflation cutting interest
rates giving the economy the stimulus
like giving the drug addicts the drugs
that he knows they need so he's making
up all these excuses so that the FED
could start cutting rates even though
inflation never even gets to 2% when it
comes to inflation for the American
public it's heads they lose Tails
inflation wins because you can never get
low inflation because if we ever get low
inflation the FED is determined to
average it back up so if we get lucky
and we get a few years where inflation
is low well now we've got to get high
inflation to make up for that but if we
get a lot of years where inflation is
high we can never get years of really
low inflation to make up for that no no
the FED wants to make sure that it's 2%
but if it's 2% we know it's not it's
much higher than 2% and the reason that
the FED wants inflation is because it
wants to inflate away the debt it wants
to make it so that Congress doesn't have
to cut government spending and make the
difficult political choices the FED
wants to help destroy the value of the
currency and inflate away these
obligations and that's what's really
going to happen when the dollar really
starts to fall that's when you're going
to start to see the inflation in the US
really start to pick up because we've
had these high inflation numbers during
a period of time where the dollar has
been relatively strong imagine how much
worse it's going to get when the dollar
is weak now we're not going to have to
imagine that for much longer because I
think the dollar is going to be very
weak in fact I think 2025 could be one
of the worst Years yet for the US dollar
I mean it's kind of defied gravity but a
lot of that has to do with the fact that
there's so many problems in other
countries that people have been taking
refuge in our currency but I think
that's going to flip once the FED is
cutting rates and more importantly once
they go back to quantitative easing
which is around the corner they may
restart quantitative easing before the
end of this year but then I think the
bottom is going to drop out of dollar
the reason the banks take so much risk
is because the government guarantees the
deposits that is the problem it's not
capitalism Elizabeth Warren is right
there's too much risk taking at the
banks I agree with her there but the
reason there's so much risk taking is
the moral hazard created by the
government that she created by back
stopping all these banks by telling all
the bank customers you don't have to
worry about your bank failing because
we're going to bail you out everything
is insured by the government that's
what's causing all the risk if the
government didn't do that if we had a
free market in Banks and depositors had
to shop around because they were
concerned about the risks that the banks
took with their deposits CU When You're
A Bank depositor you're a creditor of
that bank you're lending your money to
the bank you're an unsecured creditor
you're depositor and therefore you
should be concerned about the type of
loans the type of risk that the bank is
taking with your money but nobody is
concerned about those risks because the
government said don't be concerned just
put your money anywhere doesn't matter
the bank fails you're going to get your
money back so there is no competition
for safety imagine if that happened with
other products people do a lot of
research before they buy let's say a
television set they go online they look
at Consumer Reports they look at reviews
they want to find out which ones have a
better picture picture which one is more
reliable you know same thing where you
buy a car think of how much you test
drive you go from dealership to
dealership you do a lot of research well
people don't do any research before they
put hundreds of thousands of dollars in
a bank but if the government basically
said hey just go buy any TV and if
anything goes wrong we'll fix it for you
buy a car you don't need to war if
anything goes wrong we got in cover it
well people wouldn't shop around if the
government said don't worry if anything
goes wrong we'll just reimburse you and
make you whole we want people to shop
around they used to shop around before
Roosevelt screwed it all up but at least
when Roosevelt put the deposit insurance
it was a very low number and what
Roosevelt thought was that okay the
little guy doesn't know which banks are
good but the bigger depositors do it and
they'll keep all the banks honest the
large depositors you know they'll shop
around they'll make sure the banks
aren't taking on too much risk except
the government now basically bails out
everybody every bank that has failed
nobody has lost money didn't matter how
much they had there they fully covered
everybody and so it's massive moral
Hazard the reason the executives take
this risk is because the government
makes it possible so don't blame banks
for exploiting the game that you rigged
if you don't like what they're doing
then stop subsidizing it eliminate the
guaranteed deposits and then you'll
eliminate the excessive risk taking
because the customers won't let them do
it they won't have any customers if they
take excessive risk the only way that
you could get rid of it now is even more
regulation but that's you know two
wrongs don't make a right but the
problem is if you don't have the second
wrong you're going to have problems more
regulation just ushers in even worse
problems than that other thing that I
thought was interesting it's not about
that it's a concentration of jobs in
government and Healthcare the problem is
that government and healthc care jobs
are not productive and they're being
paid for by the government by the
taxpayer by deficits that is a huge
problem private sector jobs pay for
themselves and their employers get the
money from the productivity workers but
government gets the money to pay its
workers by running deficits by creating
inflation that's what's going on nobody
even brought out that the problem
between a productive private sector job
and a nonproductive government job the
reason we have so many healthcare jobs
because the government is spending so
much money on Healthcare the government
gives people all kinds of money Medicaid
Medicare Obamacare and they take that
money and they buy health services and
so the money is being directed to
healthare by the government and so those
jobs are being created in the sector
that the government is subsidizing where
are the products going to come from that
the government workers and the
healthcare workers buy if they're not
producing them they're going to come
from Imports so we're going to have
bigger trade deficits the type of jobs
that we are creating as I've said lead
to larger budget deficits and larger
trade deficits so the twin deficits get
bigger that puts more downward pressure
on the dollar more upward pressure on
consumer prices says we are going to
have price controls a supreme court that
can come up with that decision may allow
rent controls under some perversion of
the Commerce Clause but it's coming and
it's not just rent controls but it's
going to be price controls on all sorts
of stuff because the government wants to
blame inflation that they create on
businesses that have no choice but to
raise prices because their costs which
are also prices have gone up that they
need to stay in business they need to
have a profit and they can't do that
unless they pass on their increased
costs that were caused by the government
created inflation to the end consumer
whenever the government gains power we
lose Freedom we are less free today as
Americans than we were before this
decision came out anyway I want to get
to the economic data and the markets the
big news that came out moving the
markets was the inflation numbers that's
what everybody was waiting for and those
numbers came out well below estimates
and the market loved that instead of a
0.1% rise we got a 0.1% drop in the CPI
so a negative number year-over-year went
from 3.3 last month to 3.0 which was
less than had been expected in fact it
was lower than the lower end the core up
just 0.1 versus 0.2 expectations and
year-over-year core went down to 3.3
from 3.4 so this was great news right
inflation is lower the FED can cut rates
markets you know love the news gold was
up about 40 50 bucks on the day the
dollar was down everybody liked this but
then after we got the better than
expected CPI number on Thursday we got a
worse than expected PPI number on Friday
where June producer prices were up 02
which was double the 0.1 that was
estimated and they revised the prior
month's minus .2 to zero and the
year-over-year number which was supposed
to be 2.3 went to 2.6 and the prior
year-over-year number was revised from
2.2 to 2.4 this is a really bad number
and again it's a leading indicator of
higher CPI the core was supposed to be
up 0.2 it was up4 and they revised up
the prior month from zero to up point3
and the year-over-year core Rose all the
way to 3% it was
2.3% in May It was supposed to be 2.3%
in June it was 3% this was a horrible
number this is one of the worst ppis
relative consensus that you can imagine
and initially gold was down about 20
bucks not that much no real rally in the
dollar and the markets just rally in
fact by the end of the day the Dow was
up over 400 at one point it didn't close
up that high but it hit a new all-time
record high finally the Dow despite this
horrible number hit a new all-time
record high in fact the Dow closed above
40,000 for the first time ever we had
traded above 40,000 a couple of times
but we never closed above 40,000 so I
think the market pretty much realizes
that rates are hung down we're going to
cut rates doesn't matter what these
numbers are it's good to enough for
government work the inflation numbers
are good enough that pal is going to
start cutting I mean that's what he's
set up and that's what's going to happen
and that's why the market went up the
S&P hit a record high the Russell 2000
was the star on the week for the broader
index it was up
5.1% on the week Dow was only up about
1% S&P up about 2/3 of 1% the NASDAQ
though was barely because of the big
drop on Thursday this is the first time
in years that the gold stocks are Le
eating the metal and I think this is the
beginning of a new trend I think that
Gold stock investors are finally
starting to wake up to the reality that
this bull market in gold is real and
that it's got a long way to go because
normally during a bull market this is
typical the stocks normally lead the
metal what's been so unique about this
bull market one of many things that have
been unique is it's been the other way
around the metal has been dragging the
miners reluctantly there has been no
enthusiasm in the investors they're not
anticipating High gold prices they're
worried that we're going to get lower
gold prices and so they don't want to
buy the stocks they're nervous about
buying the gold stocks well now they're
a little bit less nervous because the
gold stocks finally broke out to new
highs even without the price of gold
itself breaking out to new High so now
the Gold stock investors are
anticipating a breakout and I think they
finally got it right I expect the price
a goal to hit a new all-time record high
next week and I think we're going to
keep moving up also the dollar doar is
breaking down just as gold is breaking
out dollar Index closed I think
10375 had a lot of weakness against the
Japanese Yen this week there was some
Bank of Japan intervention although this
time it actually succeeded in driving
the dollar down but the Euro closed a
week above 109 this is the highest it's
been I think in several months maybe
since April my restaurants might be a
little bit more expensive now because
the Euro's going up but to me this makes
sense that these things are happening
together that the dollar is rolling over
and about to break down just as gold is
about to break out one thing that is not
breaking out not following real gold is
fool's gold Bitcoin had really a
nonevent during the week so really not
participating in the rally that you're
seeing in Precious Metals I still think
that we're getting ready for another big
decline in Bitcoin in fact I noticed
during the week that Michael sailor
announced that they were going to be
having a split of micro strategy stock
even though the stock is 35% below it's
high for the year which is rare I mean
yes it's a high price the stock is
around what 1,300 or something a share
so often times stocks that are that
expensive will split but the high was
almost 2,000 but the real problem for
Bitcoin is when those ETF buyers who
have continued to buy they were buying
all week they didn't help they didn't
push the price up because they were
selling to offset it the ETF buyers are
still there propping up the market but
when these buyers turn into sellers
there is is nothing left and the
Market's going to collapse and bitcoin's
going through the floor so before that
happens you know it's not too late to
get rid of your fool's gold and get some
real gold get some silver you know
Silver's still below $32 an ounce the
key to me when I'm speculating is how
much upside potential do I have versus
the downside risk and I think it is so
skewed right now that it's such a good
bet yeah you can lose money but what you
can lose Pals in comparison to how much
you can make so if you're ever going to
gamble on anything this is the time and
gold stocks are the assets that you want
to choose I mean it's not just a gamble
it is a very wise speculation and
gambling is just pure chance like it's
just random luck but when you speculate
there's a logic behind it you can make a
prudent speculation maybe you're wrong
and you lose money but if you're right
you can make a killing and this is the
time to concentrate those bets if you
have the risk tolerance to lose money
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