Peter Schiff: Debt Crisis & War Are Destroying U.S. Economy (Highlights)

Ajouté : 2026-05-14

[00:00:00]Exactly. And And what's interesting is that the Trump administration has been in this battle with the Fed for for a while now.

[00:00:08]Um the new incoming, if confirmed, Fed chair Kevin Warsh is is of course Trump's pick. And it may be very challenging for him to support lower rates given the current economic environment without looking like he's carrying water for the Trump administration. So, the Fed's independence or the appearance of independence is at stake. Um what do you expect the Fed's policies under Warsh, if he's confirmed, to look like in terms of a response to surging inflation and uh weakening labor market?

[00:00:42]Well, look, you know, this is not Warsh's first rodeo. He's He's been on the Fed before.

[00:00:49]And I don't expect any difference from prior uh you know, Fed chairs.

[00:00:57]Uh he will respond the way Yellen and Bernanke and uh Greenspan and and Powell responded. He will cut rates and print money. Like when when times get bad, if stocks are weak enough, if the economy is weak, if unemployment is rising, they will prime the pump. They will cut rates.

[00:01:18]Uh they will print money.

[00:01:19]Um you know, they're going to ignore the impact that those things have on consumer prices.

[00:01:25]Uh because as far as they're concerned, the other things are more important.

[00:01:31]How do you think >> And they're very concerned They're very concerned about long-term interest rates and the Fed's ability or the US government's ability to finance its debt. And so they will be the buyer of last resort, even if that means creating a lot of inflation in the process.

[00:01:48]How do you think that policy will reflect in the global demand for the US Treasuries? Because to me, the world is already saying the US has no fiscal sense of responsibility. It is, you know, racking up debt. It's It's national debt is out of control.

[00:02:05]Um the interest cost to service that debt is surpassing $1 trillion per year.

[00:02:11]And uh wouldn't that mean effectively fewer and fewer countries saying we do want to purchase US securities because we believe that the US economy, you know, is resilient. Uh I I feel like that would sort of backfire if they start printing money again. Of course, it would probably be a good thing in the short term, but in the long run, that seems to be a self-defeating strategy.

[00:02:33]Yeah, well, it's never really a good thing. I mean, it can make you feel good. Uh you know, just like, you know, drugs, you know, you could take some very harmful drug that makes you feel good for a while, but you know, you're doing damage and you're creating problems. And that's you know, that's what monetary heroin ha- has done. I mean, the economy is in a lot of trouble today because of how many times we relied on that drug to make us feel better rather than dealing with the underlying problems that were the reason that we needed to feel better.

[00:03:01]Right.

[00:03:01]>> Um So, [clears throat] um yeah, you know, I I I I I I I think that the policies aren't going to work and they they will backfire.

[00:03:12]And the money printing is going to directly undermine the dollar. And the weakness in the dollar is going to push up long-term interest rates just when they're trying to lower them.

[00:03:23]And higher inflation is going to act as a sedative on the economy just as they're trying to stimulate it.

[00:03:31]So, I think it's you know, I think we're headed for a real crisis here, much worse than 2008. I think it's going to be, you know, a um a sovereign debt crisis, not a subprime crisis. And a US dollar crisis. You know, that dollar is going to be at the epicenter of this. And so people need to be prepared. They need to own gold. They need to own silver, you know, not dollars. You know, that's why, you know, I got SchiffGold. Um that's my gold company. I get people to buy as much gold and silver as they can. And they need to invest abroad. Get out of the US markets. I mean, US markets are way overpriced. Money is now pulling out. Uh so people should look for these international strategies. And those are the strategies that we specialize in at Euro Pacific uh asset management. So, we can help people build portfolios, emerging markets, developed foreign markets, precious metals, other, you know, natural resource companies that that benefit from these stagflationary environment that we're not only in now, but we're going to be stuck in for many, many years. Let's turn to energy markets because I know that uh you know, when when when you look at the news, energy prices are in every single headline, it seems. And so oil prices are now trading at around $100 per barrel. JP Morgan forecast predicts oil hitting 120 or even 150 per barrel. If there is a new escalation and uh let's say Yemen closes Bab el-Mandeb, we may be looking at $200 per barrel. Uh which would be absolutely catastrophic. At what point does the rising energy price become extremely economically destabilizing here in the United States? And And if that happens, what do you think the Trump administration would do to to mitigate the risks?

[00:05:12]Well, you know, it it's it's going to have an effect even at today's prices of, you know, close to $100 a barrel.

[00:05:20]But obviously, the higher the price of oil goes and the longer the war continues, and you know, the longer the strait is is is closed, uh the higher the prices are going to go. Now, I think prices are going to go higher anyway, even if the war ends and the strait is reopened.

[00:05:37]They They were going to go up anyway.

[00:05:39]This just makes them go up sooner and and and more.

[00:05:43]I don't know exactly at what point the oil price is high enough that it could actually tip the economy into recession all by itself. But it certainly has an impact right now on the margin. And the impact will be greater.

[00:05:58]And you know, a lot of people talk about demand destruction. You know, when oil goes up, you know, we use less oil. And to an extent that that that happens, people will economize if the price gets high enough. But a lot of the demand destruction is not actually in energy.

[00:06:12]It's in other things. Because if you know, I have to spend a lot more money on energy. And that's not just gas for my car, you know, heating my house, you know, a lot of stuff. The The fertilizer for my food, so my food is ex- more expensive. So, if all the the things that are directly impacted by the strait being closed get more expensive, where am I going to get the money? Well, I got to cut back on other things. So, the demand destruction occurs in discretionary spending.

[00:06:42]And then you see weakness there. You see layoffs there.

[00:06:47]And you know, what would the Trump administration likely do? The closer we get to an election, too, the more pressure there is to do something.

[00:06:56]But they'll do some kind of tax cuts, some kind of gimmick, maybe lower the gas tax, or give everybody a gas stimulus check, or whatever. But all this stuff is counterproductive. It all fuels demand, which makes the problem worse. Doesn't give us more supply, just gives us more demand.

[00:07:12]Uh and the Fed, of course, could try to cut rates and print money to try to offset the higher oil price.

[00:07:20]Uh but that's going to create even higher prices, not just for oil, but for everything else.

[00:07:24]You see, oil price is going up. That doesn't create inflation. That could create recession. What creates inflation is when the Fed prints a lot of money because high oil prices cause a recession. Then the Fed prints a lot of money, and that makes all prices go up, not just oil. What are your thoughts on the energy market in general? I've seen some reports that effectively point to uh price manipulation and and uh the fact that uh the price of Brent crude, and probably WTI as well, doesn't really reflect the um you know, the true supply chain risks. What are your thoughts on the overall kind of pricing situation?

[00:08:04]Is this Does it reflect true market conditions or Are there other things going on that perhaps other people are not aware of?

[00:08:12]Well, you know, I think energy prices are low. And I think one of the reasons is the dollar is still pretty high.

[00:08:20]Um you know, barely below 100. I think once we start to see a more meaningful de- decline in the dollar, dollar index starts to trade 80 instead of 100.

[00:08:31]You're going to see a lot more demand for oil. And so the price is going to be a lot higher. And as we continue to print money and create inflation and, you know, reduce the demand for dollar, we're going to increase the the demand for oil.

[00:08:43]Uh priced in dollars. So, I I I think it's going to go up. That's why after mining stocks, the second biggest part of my portfolio are energy stocks. So, you know, I'm bullish. Um let's turn to the labor markets. Unfortunately, rising energy costs are not the only issue. And uh despite the most recent headline, labor market data, household survey show that year to date, the US has lost uh approximately 1.4 million jobs. So, the US economy is very clearly weakening.

[00:09:14]And right now with rising rising energy costs, it may be safe to say that we're on a path toward a stagflation, a full-blown stagflation. So, the Federal Reserve is now sort of stuck between fighting inflation and uh supporting economic growth. How does this situation complicate decisions for central banks um globally, including the Federal Reserve?

[00:09:38]Yeah, and you know, that dichotomy uh and the tension between the mandates, as they like to describe it, all actually stems from a lack of understanding of of of the the the efficacy of Fed policy. Because the The that the Fed can stimulate the economy by creating inflation is just wrong.

[00:10:00]Cutting interest rates, doing quantitative easing doesn't really help the economy. Now, it can help prop up asset prices, but higher stock prices doesn't necessarily help the economy.

[00:10:12]In fact, if stock prices are too high, having them come down is what's good for the economy. If the Fed prevents that from happening, it's doing harm. And in fact, when interest rates are high and there's a recession, if the Fed artificially suppresses those rates, the Fed could actually be damaging the economy. The The high interest rates were there for a reason. They're trying to address a problem. Generally, the problem is insufficient savings. And so, the high interest rates are the market's way of encouraging more savings and discouraging more borrowing. So, if we have too much borrowing and not enough savings, we could have high interest rates. Now, those high interest rates could result in a recession in the short run. But if the Fed now intervenes and says, "Oh, we got to lower interest rates to fight this recession." They've undermined what the market is trying to accomplish by moving rates higher.

[00:11:07]And now you have artificially low rates, which are doing damage to the economy.

[00:11:10]Now, in the short run, again, you know, could it could feel good if you're coming off a high to get more drugs, but what's better is to get the drugs out of your system and go through withdrawal.

[00:11:22]And And that's, you know, the market tries to do that from time to time. And when a central bank interferes with that process, it's doing harm. It's not doing good.

[00:11:32]You mentioned the stock market and one of the most, I would say, um frequent comment that I get on my finance-related videos is, "Well, you're saying the economy is so bad, but then I see the stock market is doing really well. So, what you're saying must not be true."

[00:11:49]What would be your response to those comments? Why is the stock market hitting new highs, but we're talking about the US economy collapsing effectively?

[00:11:57]Well, because A, the stock market is not the economy. The stock market's the stock market.

[00:12:02]And the stock market can go up for reasons having nothing to do. In fact, a weak economy could be seen as good for the stock market because if a weak economy keeps interest rates low, low interest rates are good for the stock market.

[00:12:16]If you've got a lot of liquidity, that liquidity goes into stocks.

[00:12:22]Uh if there's a lot of inflation, stock prices go up, just like the price of anything else. Stocks are prices.

[00:12:29]But if you want to look at stocks in terms of real money, if you want to look at stocks in terms of gold, that gives you a a better picture.

[00:12:40]Because 20 years ago, 20 20 26 years ago, actually, the Dow was worth more than 40 oz of gold. It was maybe 43, 44 at the peak.

[00:12:50]Now, it's only worth about 10.

[00:12:53]Um that's a huge decline. That's a 75% decline in the Dow in terms of real money. So, once you, you know, look at it from that prism, things aren't so good.

[00:13:06]If If I made more money just putting a bar of gold in my sock drawer than owning the S&P 500 and collecting all those dividends, if the bar of gold still beat the S&P, what does that tell you about the real performance of US stocks?

[00:13:24]And you know, if the if the real performance of US stocks is that bad, then maybe so is the economy.

[00:13:32]And And And that's probably one of the reasons that the stock market has so underperformed gold is because we've had a bad economy the entire time they've been pointing at the nominal increase in the stock market to try to convince us that we have a good economy. Another economic wild card, I would say, that is worth covering is the private credit market. It sizes 1.3 trillion dollars and in recent weeks, its biggest players, such as Blue Owl Capital and Blackstone, have capped investor withdrawals. These loans are not liquid assets, of course, and if funds do begin selling those portfolios to cover withdrawal requests, they will likely have to sell at a loss.

[00:14:15]So, it's only going to make things worse. And I was really surprised by a recent comment by JP Morgan CEO Jamie Dimon. He warned that private credit losses will be, quote, "larger than expected." So, what is your interpretation of the private credit situation and its possible impact on this very fragile state of the US economy today?

[00:14:38]Yeah, well, you know, if we have an economic downturn, um you know, there's going to be defaults.

[00:14:46]And a lot of these private loans, I don't know how good the the vetting process was. A lot of times during good times, the underwriters tend to look the other way. Uh they take on more risk in a low interest rate environment.

[00:15:02]Um so, you know, just like during the the financial crisis of 2008, I mean, people people were very reckless when the party was raging.

[00:15:12]And that's why the hangover was so bad when the music stopped. And so, I'm sure it's even worse now. I'm sure there's a lot of problem loans, uh you know, in commercial, in in in in individual.

[00:15:26]A lot of them related to real estate, but also, you know, other forms of consumer finance. A lot of these loans are going to go bad. A lot of the loans There's a lot of people that have borrowed money against crypto.

[00:15:39]Um all these These loans are going bad.

[00:15:41]They're, you know, there's going to be a lot of defaults. Collateral's going to have to be sold at at fire sale prices.

[00:15:47]And that's obviously not good for the sellers. You know, maybe the buyers will get a good deal.

[00:15:53]Uh but this There's going to be big losses throughout the financial system and that's going to have repercussions.

[00:15:59]Several years ago, I remember seeing you uh being very skeptical of of the crypto industry. And that was, I think, pre-Trump 2.0. That That's putting it mildly. Yeah, no, I I'm trying to be diplomatic here.

[00:16:13]>> [laughter] >> Uh so, you were very skeptical and um then, of course, Trump came into the Oval Office and he and his sons are very much focused on, you know, driving the crypto their crypto businesses um and and uh you know, making that sort of a priority.

[00:16:34]Have your views changed on the cryptocurrencies? And And what's your take on the on the overall kind of Trump crypto craziness that we see uh every single day in the news?

[00:16:47]Well, I mean, you summed it up pretty well by just calling it craziness cuz I think the whole thing is crazy.

[00:16:53]Uh I think the reason that Trump embraced Bitcoin was not because he found Bitcoin religion after years of criticizing him.

[00:17:01]He recognized that embracing Bitcoin was good politics.

[00:17:06]He was able to get a lot of money from the crypto community to help finance his 20 uh 24 campaign.

[00:17:15]And he was able to convince a lot of people who own Bitcoin to vote for him simply because of his pro-Bitcoin stance. So, it was a great political issue because he didn't really lose any support by being pro-crypto. Like Like if you come out pro-choice, yes, you get the pro-choicers, but you lose the pro-lifers and vice versa. But if you come out pro-crypto, I mean, there aren't There isn't a big anti-crypto vote. "Ah, Trump likes Bitcoin. I'm voting for Kamala." You know, people weren't doing that. So, it was it was a very good political decision that Trump made. But then, not only did he embrace crypto to get the money and the votes, he also saw an opportunity for himself and his family to make a lot of money.

[00:17:57]And so, they basically focused their whole Trump business empire on crypto. Real estate took a backseat.

[00:18:06]And they're making more money in crypto than they are in anything else. And that is a function of his popularity within the crypto community and the influence that he has over the industry.

[00:18:19]Because people want to invest alongside him. And they figure that Trump's got their back. Now that Trump is pro-crypto, we have a crypto czar, he's a crypto president. He's obviously going to steer capital and steer investment into crypto and try to uh orchestrate pro-crypto uh legislation that's going to benefit. So, he's creating, you know, that perception to help fuel the mania.

[00:18:45]What's interesting is that Bitcoin is lower now than it was. It's lost all of the gains that it had early in the Trump administration, despite all this hype, despite all this promotion.

[00:18:57]And what that shows you is that the smart money, the real money, was waiting to sell into it.

[00:19:03]So, the people that helped elect Trump from the crypto community, they cashed in.

[00:19:09]When Bitcoin rallied, they were the ones doing all the selling.

[00:19:12]They did the buying before he got elected, and then they sold afterwards.

[00:19:16]But now you got a bunch of bag holders that have bought a lot of hundred thousand dollar plus Bitcoin uh that are going to lose their shirts.

[00:19:27]And uh maybe the last question for today. So, the US economy is in this very uh questionable state, let's say. The ceasefire is very fragile with Iran and and there seems to be maybe a new round of negotiations happening this weekend.

[00:19:45]I think reports are unconfirmed at this point in time. So, my point is, we're just not sure where we stand and whether things are going to escalate or if they will be sort of just sort of put on pause, so to speak.

[00:20:00]The midterms are coming up and he clearly has to focus on domestic poli- politics as well, not just foreign relations.

[00:20:09]But the economic impact of his of his policies has been very unpopular. So, what is Trump's economic end game here?

[00:20:18]What is What is sort of What's the plan to uh combat the resurging inflation, to to address the >> He He He doesn't have a plan. I mean, his plan is drill, baby, drill plan, right? Let's just have more oil.

[00:20:35]Oil prices don't cause inflation.

[00:20:38]But, you know, we're not drilling much more oil now than we were when Biden was president.

[00:20:45]And so, it's not going to make a big impact.

[00:20:48]Uh and of course, now, you know, we've got what's going on with the war, which undermines the whole drill, baby, drill, you know, scenario anyway.

[00:20:56]But other than that, Trump does not have a a plan. His other plan is to try to beat companies up, you know, like the drug companies and Trump RX and trying to force [snorts] companies to sell their products at lower prices, but that's not going to work. That's like a government price control. You're trying to attack the symptoms of inflation, ignoring the underlying cause of the inflation, just like when we had price controls.

[00:21:21]Uh uh you know, when Nixon was president or four of them. I mean, they didn't work. Yeah, because they can't work.

[00:21:28]It's like, you know, if I got a a skin cancer and I just put a band-aid on it, so I don't have to look at it, it's not going to stop it from spreading. I I got to get to the cancer to to cure it.

[00:21:40]And and and and all they're trying to do with inflation is cover up the symptoms while the disease gets worse. So, he has no plan.

[00:21:49]The only plan he could have would be cutting government spending and having higher interest rates.

[00:21:54]And these are two things that he opposes. Doesn't want to cut any government spending. He wants the government to spend more.

[00:22:00]And he wants the Fed to cut rates. He wants rates at 1%, maybe less.

[00:22:05]He wants the Fed to go back to QE.

[00:22:06]That's all inflation. So, he doesn't want less inflation. He wants more inflation. He just doesn't want the public to realize that.

[00:22:17]Peter, thank you so much for joining us today. This was an absolutely fascinating conversation and I know that our viewers would absolutely love to have you back on the program and I hope you come back for a new episode. Oh, sure. I'm surprised it's taken so long to have this first one. I know I hear that we we we kept canceling for a while. My schedule was was busy, so but I'm glad we finally managed to get it done.

[00:22:40]I am, too, and I look forward to a new one with you.

[00:22:43]All right. Take care. Have a good weekend.