"Prepare Now, Huge Inflation Is Coming..." — Peter Schiff's Last WARNING

Summary

The 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

00:00

💼 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.

05:01

🏦 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.

10:05

📈 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.

15:07

🌐 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.

Keywords

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. In the video, it is a central theme as the speaker discusses the impact of various economic policies and actions by the Federal Reserve on inflation rates. The speaker criticizes the Fed's approach to managing inflation and suggests that their policies contribute to its persistence.

💡Fiscal Policy

Fiscal policy involves the government's use of taxation, government spending, and borrowing to influence the economy. The speaker in the video suggests that fiscal policy should be used more effectively to combat inflation, criticizing the current approach as being too focused on monetary policy and not enough on reducing government spending.

💡Monetary Policy

Monetary policy is the process by which a central bank, like the Federal Reserve, manages the money supply and interest rates to control inflation and stabilize the economy. The video discusses how the speaker believes the Fed's monetary policy is contributing to inflation rather than curbing it, highlighting the tension between monetary and fiscal policy approaches.

💡Deficit Spending

Deficit spending occurs when a government's expenditures exceed its revenues, resulting in a budget deficit. The speaker argues that deficit spending by various administrations, including those of Trump, Obama, and the Bushes, has contributed to the current inflationary environment. This is tied to the broader discussion of fiscal irresponsibility and its economic consequences.

💡Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It is responsible for implementing monetary policy. In the video, the speaker criticizes the Fed for its role in managing inflation and for its reluctance to comment on fiscal policy, suggesting that the Fed is avoiding accountability for its actions.

💡Interest Rates

Interest rates are the cost of borrowing money, set by central banks like the Federal Reserve. The speaker discusses how the Fed's manipulation of interest rates, particularly its strategy of cutting rates, is a form of economic stimulus that can lead to inflation. The expectation of rate cuts is also seen as a factor driving market behavior.

💡Quantitative Easing

Quantitative easing is a monetary policy where a central bank creates new money and uses it to buy government bonds or other securities to inject money into the economy. The speaker predicts that the Fed might return to quantitative easing, which he believes will further weaken the dollar and exacerbate inflation.

💡Moral Hazard

Moral hazard refers to the possibility that a party insulated from risk may behave more recklessly than they would if they were fully exposed to the risk. In the video, the speaker discusses how government guarantees on bank deposits create a moral hazard, encouraging banks to take excessive risks because they know they will be bailed out.

💡Gold

Gold is often seen as a safe-haven asset and a hedge against inflation. The speaker in the video discusses the potential for gold prices to rise as a response to inflation and the weakening of the dollar, suggesting that investing in gold and gold stocks is a wise speculation given the current economic climate.

💡Consumer Price Index (CPI)

The Consumer Price Index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. In the video, the speaker discusses the CPI as a key economic indicator, noting that a recent drop in CPI was seen as positive news by the markets, despite concerns about the underlying inflationary pressures.

💡Dow Jones Industrial Average

The Dow Jones Industrial Average is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. The speaker mentions the Dow hitting a new all-time high, reflecting the market's optimism despite economic concerns, particularly related to inflation and fiscal policy.

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