Peter Schiff Exclusive: This Economy Is "On Borrowed Time"
Submitted by QTR's Fringe Finance
I was happy to welcome my friend Peter Schiff back on to Fringe Finance this past week, where I was able to get his take on a couple of the items I wrote about on the blog last week - most importantly, whether or not he thinks markets will crash up (hyperinflation) or down (deflationary depression).
Schiff and I also talked about his perspectives on markets, government policies, and the future of Bitcoin and gold. I also asked Schiff about his miscalculations, primarily underestimating the length of time it would take for economic reckoning and on bitcoin.
Speaking from his residence in Puerto Rico, Schiff painted a dire picture of the U.S. economy, marked by excessive debt, misguided monetary policies, and misplaced optimism.
Schiff’s outlook on the markets remains grim. “The market is already very expensive,” he observed, highlighting that “the optimism factored in is misplaced.” He warned of an impending reckoning, exacerbated by years of deficit spending and inflationary policies: “We have a $36.2 trillion debt that’ll soon reach $40 trillion. This is unsustainable.”
"The market is already very expensive. It’s hard to see parabolic upside when optimism is misplaced. The markets are expecting good things to happen that aren’t going to happen." - Peter Schiff
On whether markets are set to “crash up or crash down,” Schiff remarked, “Higher inflation is baked in, but that’s not good for the dollar. The markets are wrong to think it is.” His skepticism extends to the Federal Reserve, which he accused of sacrificing long-term economic health for short-term stability: “The Fed is a one-trick pony. Its solution to every problem is to inflate, mask the problem, and hope it goes away.”
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Schiff remains an unwavering advocate for gold, dismissing Bitcoin as a speculative bubble. He criticized Bitcoin’s lack of utility, stating, “It’s not digital gold; it’s not digital anything.” Contrasting it with gold, Schiff argued, “Gold has intrinsic value and has been a store of wealth for millennia. Bitcoin has failed to be money for 15 years.”
Taking aim at Michael Saylor’s proposal for the U.S. government to sell its gold reserves to buy Bitcoin, Schiff called it “a horrible idea” and dismissed Saylor’s comments as “self-serving.” He continued, “Bitcoin is not a reserve asset; it’s a speculative tool that has concentrated risk.”
Schiff also lambasted the speculative frenzy surrounding Bitcoin ETFs and institutional purchases: “Bitcoin ETFs and MicroStrategy have cornered 8% of Bitcoin’s total supply. That’s a bubble waiting to burst.”
"Bitcoin ETFs and MicroStrategy have already cornered 8% of Bitcoin’s supply. That’s concentration risk in a speculative bubble,” Schiff said. “Michael Saylor’s proposal for the U.S. to sell its gold for Bitcoin is not just a bad idea—it’s delusional. It’s putting all your eggs in one highly speculative basket."
Schiff highlighted the worsening state of the U.S. economy: “People are working harder for less real income, drowning in debt, and paying 25% interest on credit cards. This is the reality behind the so-called recovery.” He lambasted the bipartisan reluctance to address deficits: “Trump promised to cut deficits but signed every debt-busting bill put on his desk. Nothing will change under his leadership.”
We also discussed:
- Market outlook: Speculation on whether markets will experience an inflationary rise or deflationary crash
- Federal Reserve policies: Predictions about the Fed’s actions concerning inflation and interest rates
- Inflation expectations: Discussion about how inflation impacts the economy and the U.S. dollar
- Government deficits: Criticism of rising budget and trade deficits under various administrations.
- Trump’s economic policies: Evaluation of Trump's promises versus the reality of government spending and deficits
- Impact of tax cuts: Debate over whether tax cuts would stimulate the economy or worsen the deficit
- Military and welfare spending: Criticism of increases in military and welfare spending despite calls for fiscal restraint.
- Gold and currency: The comparative value of gold versus the U.S. dollar and other assets.
- Bitcoin and cryptocurrency: Analysis of Bitcoin’s perceived value, speculative nature, and potential risks.
- Comparative risk of assets: Comparison between speculative investment in Bitcoin and traditional markets.
- Historical trends in gold ETFs: Analysis of gold's stability and its market dynamics versus Bitcoin.
- Government intervention in Bitcoin: Concerns over potential government involvement in Bitcoin markets
- Critique of modern monetary theory (MMT): Dismissal of MMT as a sustainable economic approach
- Economic bubbles and malinvestment: Concerns over the allocation of capital into unproductive sectors
- Debt servicing crisis: Warnings about rising interest payments on national debt
- Future economic predictions: Forecasts of a potential dollar crisis or significant inflationary period
You can watch the entire hourlong interview here.
QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.
This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.
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