The Pomp Podcast - #1206 BREAKING: Peter Schiff Is Now A Bitcoiner

Episode Date: June 2, 2023

Peter Schiff is the co-founder of Euro Pacific Asset Management. In this conversation, we talk about the macro environment, Fed policy, interest rates, inflation, banking crisis, debt limit crisis, and impact on asset prices such as real estate, gold, bitcoin, and stocks. This is a special episode, Peter Schiff is now a bitcoiner, he is using the bitcoin network to do things with Ordinals and artwork. Welcome Peter Schiff to the bitcoin community. ======================= Pomp writes a daily letter to over 235,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. We have no advertisers on this podcast, so it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Peter Schiff is a co-founder of Euro Pacific Asset Management.

In this conversation, we talk about the macro environment, Fed policy, interest rates, inflation, the banking crisis, the debt limit crisis, and what he thinks is going to happen to assets like real estate, gold, Bitcoin, and stocks. I always enjoy talking to Peter, and this one is special. Peter Schiff is now a Bitcoiner. That's right. Peter Schiff is now using the Bitcoin network to actually do things with ordinals and artwork. So make sure that once you get to the end of this conversation, you get on Twitter and let them know.

Thank you, Peter Schiff. Welcome to the Bitcoin community. Here is my conversation with Peter Schiff. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales. using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify.

Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Peter here with me. Peter, I thought a great place to start would be the debt limit, the debt limit crisis. Everyone's talking about it. It looks like it's averted. Talk a little bit as to why everyone should be paying attention to this and what is the impact on the U.S. economy

now that we've averted that crisis? Well, first of all, the debt ceiling was not the crisis. That was a contrived crisis. The real crisis was for the politicians who wanted to run up more debt. And the debt ceiling limited their ability to do that. So the crisis was if we can't raise the debt ceiling, we have to come clean with the American public. We have to admit that we can't provide all the benefits that we promised. And that would have been very difficult for a lot of politicians because they may not have gotten reelected. So they solve the crisis by raising the debt ceiling. But that allows the real crisis to remain, which is the debt itself. Nobody seems to be caring about that. You know, during the debates before they raised the debt

ceiling, a lot of people talk about how bad it would be for American families if we didn't raise the debt ceiling, and then the U.S. got a credit downgrading because of a default, and it would mean that rates would be higher, that people would be paying higher interest rates. Well, people are going to pay higher interest rates because of the debt. In fact, they're going to have to pay higher taxes to repay the debt. That is the burden on the families. It's the debt itself. The limit tries to limit that burden, but the government wants the burden to be unlimited. They want to continue to pile on more debt that American families are obligated to repay, either honestly through higher taxes or dishonestly through higher prices, because they end up creating inflation to monetize the debt. So when we look at this specific solution, it appears that they're just kicking the can down the road for about two years or so, and then we will come back to a debt limit crisis again in about 24 months, give or take.

Now, if we look at the debt to GDP ratio here in the United States, it is significantly lower than, let's say, in Japan. And if we look at Japan, we see that they've been able to go for a very long time with that high debt to GDP. Do you think that the United States is facing something in the imminent kind of timeframe? Or do you think that the United States can continue to play this game with debt levels for many decades to come? Well, first of all, when you're comparing us to Japan, I mean, Japan is the exception. it. I mean, Japan is unique in how much debt to GDP it has. The United States is one of the highest debt to GDP nations in the world. And most countries that have a debt to GDP anywhere close to ours are having a lot of trouble right now. So to say that, well, Japan got away with it,

we can too, is not an argument that I buy, especially if you look at the differences between Japan and the United States. Japan is a nation of savers, right? The individual Japanese can, in theory at least, afford this debt. The Japanese government bonds are almost owned exclusively by the Japanese. The Japanese don't depend on the rest of the world to finance that debt. But that doesn't mean it's not a problem. I mean, look at what's happening in Japan right now. Inflation has finally broken out. It's at a 30 or 40-year high, yet they can't let rates go up because they have so much debt. So Japan is going to have a debt crisis of its own. It's not like they've gotten away with it. They're going to have a price to pay. And it's very

unfortunate for the Japanese because this is not going to be a low price. But if you also look at the aggregate of debt, you can't just look at the bonds, right? That's just one portion of a nation's debt. There are other obligations that governments are on the hook for that go beyond the money they actually borrowed. For example, in the United States, the U.S. government has guaranteed all the bank accounts. It's guaranteed all the pensions. It's guaranteed student loans. It's guaranteed pensions of retired government employees, including the military. It has all of these commitments that are out there. And these unfunded liabilities dwarf the funded portion of the debt. You're talking about, let's say, $200 trillion worth of commitments

that the U.S. government has made. And if you compare all of the unfunded liabilities that the U.S. government is on the hook for compared to Japan, we're in more debt than they are. And also look at our trade deficits. Japan does not have the enormous trade deficits that the United States has. So we've got another trillion plus per year that we have to borrow as a nation to maintain our standard of living. The Japanese don't have that problem. They have a budget deficit, but they don't have a trade deficit. We have both. And so you have to look at the totality upon which the U.S. depends on debt, and more importantly, the financing of that debt externally. And so I think we are much closer to an even bigger crisis than Japan.

About three years ago, in 2020, I was sitting in New York City. I was having a relaxing evening with my now wife, and I got a message from you. And you said to me, hey, gold is about to hit an all-time high. Let's do an interview live. And so you and I both got on YouTube, and we did an entire live stream interview talking about gold, about the economy, Bitcoin, et cetera. And at the time, you said something that I think many people thought was insane. I frankly don't remember exactly what I thought, but it sounded pretty insane in hindsight, which was that at the current period, the interest rate in the United States was at 0%. There had been two emergency rate cuts and suppressed down to 0%. You said that the interest rate was going to have to rise to

5% to 10% in order to allow people to hold dollars, to address the debt, etc. Here we are now with the interest rate at 5%. I don't like to tell you that you were right, but on that one specifically, you were correct. Talk a little bit about why have they had to raise interest rates from zero to over 5%, and what do you think they will have to do moving forward, given the debt, given a lot of the current market conditions, and also the health of the consumer? Well, A, inflation is over 5% at a minimum. And so if you're going to hold dollars, you're losing 5% of your value per year at a minimum. And so you need to be paid 5% just to break even, to offset that decline in purchasing power. You need more dollars

to have the same purchasing power. So in order to get people to hold dollars, they have to be compensated for that loss of purchasing power. But I don't think 5% is going to be enough because I don't think inflation is going to stay at that level. I think it's going to be higher. Plus, people don't loan money to break even. I mean, what's the point of loaning money if at the end of the day, you're just going to break even? You need a positive return that exceeds the rate of taxes by an amount that's high enough to make the loan worthwhile. And of course, you know, the more you, you know, a country borrows, the higher the risk that we might default. Look, we just spent several months telling our creditors we may default.

We're not even sure if we're going to pay you back. We may not raise this debt ceiling. So if I'm a creditor of the United States, why do I want to take that chance to break even? Like, you know, best case scenario, you keep raising the debt ceiling and I break even? Why? But the other problem is the more debt the U.S. government has, the more likely they are to resort to inflation, printing money to pay it off rather than taxation. And so if inflation is going to be much higher, that means my losses are going to be much greater.

So why bother? So rates have to go up. But the thing is, because we've had no real attempt to do anything about inflation other than raising rates, inflation is not going away. Because inflation is not about the low rates. The Fed created inflation to make the rates low because it had to print money to buy all the bonds to suppress the rates. But what's really driving the process is government spending and the massive deficits that it produces that have no other means of financing other than inflation, the Fed. And we just raised the debt ceiling with no real cuts to government spending.

The deficit is going to explode over the next two years, four or five trillion, maybe more. So inflation is going to get worse from here. It is not going to get better, despite the fact that the Fed has hiked rates. And in fact, those rate hikes are now working their way through the cost structure of business, just like higher wages or higher raw material costs or higher rents. And so ultimately, higher rates are just going to be part of the price increases that get passed on to consumers. And that's one of the reasons that the CPI in the future is going to be higher than it is now. When you look at the CPI, obviously, it is a 12-month kind of year-over-year measurement. It has been coming down.

What's interesting about that, that is a 12-month measurement. But if you look month-over-month throughout 2023, we actually see an acceleration. There's been positive growth month-over-month of that inflation measurement. If you then go and you look at something like Truflation, which is an alternative method, They estimate that inflation is actually somewhere around 3%. If you talk to someone like a Barry Sternlich, he thinks that inflation on the headline number will be negative or around 0% sometime this summer. What's your take on where inflation is today, and where do you think that it'll go through the rest of this year? Well, first of all, we have so much inflation in the pipeline because of 12 years of money printing, right?

That's the inflation. The reason that the year-over-year numbers have come down is just because of the comparisons. We had such a huge increase in prices the prior year that on a year-over-year basis, at some point, you're always going to get an improvement because of the comparisons. The problem is going forward over the next year, you're not going to have those same comparisons. So it's going to be much easier later in 2023, early 2024, to have year-over-year numbers that are much worse. But if you look at the month-over-month numbers, just if you annualize each month, each month in and of itself, we're still showing prices increasing over the prior month at an annualized rate of 5%, 6%, 7%. And this is cumulative. This is on top of the price increases that have already taken place.

You know, people were complaining about, oh, prices went way up. Well, they keep going up. That means that stuff is getting even more expensive. Prices aren't coming back down. We are not reversing any of the inflation from 2021, 2022. We're adding to it. And there is no path at all forward for inflation to come anywhere near 2% or stay there, right? Those days are long gone.

We're permanently now back in a period where CPI, unless they find a way to completely redo the index again so it can hide the inflation to an even greater degree, we're looking at inflation at a minimum, probably 4%, 5%, 6% kind of trough, and then potentially much higher than that. So living in this world is very different from the world where inflation was below 2%, Because you're in a whole new reality in that situation, and that requires new interest rates, new gold price. But when the U.S. government is confronted with an interest rate that reflects that higher level of inflation, it's impossible to finance. Even right now, interest rates are about consuming almost a trillion dollars a year.

We're close to a trillion dollars a year in interest in the national debt. When you and I had that conversation that you're talking about, it was maybe $300 billion a year. Now you're talking a trillion. In a couple of years, if the Fed has to keep raising rates, let's say they even get to 6% or 7%, but more and more of the short-term debt has a chance to roll over, plus we have to add to that all this new debt that we're going to borrow. in two or three years, it could be $2 trillion a year in interest on the national debt. Where is this money going to come from? The U.S. government only collects about $4 trillion in taxes. How can 50% of tax revenue go to interest on the debt? That's like somebody that earns $100,000 a year. They have to spend $50,000 a year paying the interest on their

credit cards. You can't survive with that type of interest expense. So we are headed for a debt crisis, a sovereign debt crisis and a currency crisis. That's real. What we just went through with the debt ceiling, that was fate. What happens in a sovereign debt crisis or a currency crisis? What are you expecting to kind of be prepared for? Well, that's where you see a collapse of treasuries. Nobody wants to buy treasuries because the yield is not high enough to offset for inflation. And so then the Fed has to print even more money to buy the treasuries that nobody else wants. And then an already elevated inflation rate starts to spiral out of control. And now you're talking hyperinflation. And so that's the risk. And then what happens there? Well,

the dollar is imploding in value. The cost of living is skyrocketing. Then what does the government do? Well, then they panic and they impose like price controls, exchange controls, all sorts of desperate measures to try to prevent, you know, prices from spiraling out of control. And then you end up with shortages. You end up with long lines for basic necessities. You end up with black markets. And so you turn honest Americans into criminals because the only way they can buy stuff as if they do it illegally, right, on the black market. So a lot of this stuff is going to happen as a result of the fact that politicians do not want to accept this responsibility for what they've done, level with the American public, and make the tough political

choices that are actually necessary to rein this problem in before it gets out of control, which means huge cuts to government spending and telling a lot of people that they're not going to get what they were promised. Now, they're not going to get it anyway. It's just that the politicians won't tell them that. They're just going to inflate these obligations away. And so, yes, you're going to get your Social Security benefits. They just won't be worth anything when you receive them. So if you listen to somebody like Stanley Druckenmiller, he's saying exactly this, right? There's all these things that the U.S. government has promised, whether it's Medicaid, Medicare, or various other programs like Social Security. He believes that we have to have a talk now about

cutting entitlements. And if we don't, then we're going to have to do it later. And it's not really going to change. So it's better to do it up front rather than wait. It sounds like you agree with him that we should cut entitlements and just have that hard conversation today. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. Well, yeah, I mean, it's not we can't just talk about it. We've got to we've got to actually do it. But but I think that there is no political politically viable way to make meaningful cuts in entitlements without also making meaningful cuts in other parts of the budget. We have to make meaningful cuts in defense. And I don't think that we should leave our creditors unscathed, the bond market.

I think that there should be a shared suffering among everybody who is owed money by the U.S. government. I mean, just like in any bankruptcy, you can't take certain creditors and say, well, you guys are going to be made whole and we're going to make everybody else pay. So I think that we should restructure the debt, and we should tell people who own U.S. treasuries, which, of course, would include the Japanese, the Chinese, the Saudis, everybody, you know what? We don't have the money to pay you back, and so we're not going to do it. Now, we're not going to give you nothing. We're going to give you something, but it ain't going to be 100 cents on the dollar. I mean, we've got to spread the pain because I don't think people on Social Security are going to accept the fact that they're not going to get their money, but we're going to prioritize the Chinese and give them all theirs. So I think there's got to be some kind of acknowledgement that we're broke and everybody has got to take a haircut on what they've been promised.

And if that means that we end up with a lower credit rating, well, we get a lower credit rating. That doesn't bother me, because I want the government to live within its means. I don't want the federal government to borrow any money. Maybe if we have a lower credit rating, that's a way of getting a balanced budget. We would be better off with a balanced budget anyway. So I don't care if our debt gets downgraded. But you know, in my mind, if we actually got our fiscal house in order, which included, you know, a restructuring of our treasury debt, we would actually be a better credit risk at that point. Just like, you know, if somebody goes through a bankruptcy, and they get rid of all their credit card debt and a lot of stuff, and they have a

clean slate, you'd probably want to, you'd be more willing to lend that person money after they've already wiped out all their debt, you know, than before, when you might end up, you know, as just another creditor in a bankruptcy. So there's going to be massive inflation to anybody who buys US treasuries now. But if we can get our fiscal house in order, reduce government borrowing, reduce spending, balance the budget to the extent that we didn't need to borrow money for an emergency, we'd get a better deal. We actually needed it. But I don't think the government should need to borrow money. They have the power to tax. If you want to pay for something, then tax the people to cover the cost. And if the people don't want to pay the taxes,

then don't do it. Taxation keeps government honest. But with inflation, the government gets to pretend they're giving people something for nothing. We can have all these programs and you don't have to pay for it. Well, if I don't have to pay for it, sure, I'll take the program. But if you want me to pay for it, well, maybe I don't actually want it. And I think if Americans got the bill for a lot of these programs that they claim they want, they really wouldn't want them. What would it look like to get a haircut in the bond market? So it makes sense in terms of cutting entitlements, but what does that look like in terms of the creditors of the United States? Well, again, they take an honest haircut instead of a dishonest one. Nobody's going to get

their money back. I mean, that is reality. So the question is, how are you going to lose as a creditor of the United States? Are you going to lose because America doesn't pay you everything that was promised? Or are you going to lose because they pay you what was promised? They just pay you in a money that doesn't buy very much. So you're either going to lose to honest default or you're going to lose to inflation. But those are your only choices. You're going to lose no matter what. I think if we act fiscally responsibly now, which would include a restructuring, our creditors are actually going to lose a lot less. How does the banking crisis play into all of this? Obviously, we saw that there was this immense outflow from banks like Silicon Valley

Bank, et cetera. We saw the Fed, the OCC, the Treasury, and other organizations step in and basically backstop all deposits in the United States. There's a debate as to whether that is an inflationary action or it's not. How do you read into the banking crisis? Well, the banking crisis was a byproduct of everything the Federal Reserve has done, everything the U.S. government has done to create that crisis. They set the stage for it, A, by insuring bank deposits. They never should have done that. Of course, that goes back to the Roosevelt days, right? It started in the 1930s. But it was a mistake, and the moral hazard has grown ever since. Why do you think it was a mistake?

Well, because the government shouldn't guarantee anything. I mean, banks should have to stand on their own creditworthiness. Banks should have to compete with one another in a free market based on safety. That should be a primary criteria. Where do you want to put your money? Well, I want to put my money into a bank that doesn't do dumb things with it. I recognize when you open up a bank account, you are a creditor of that bank. You are loaning money to the bank. Well, how is it that you can loan money without any regard for the ability of the bank to pay you back? I mean, only the government has done that. In a free market, the banks that had the best balance sheets, the best loan portfolios. Those are the ones that would get

the deposits. Today, the bank that gets the deposits is the one that's closest to your house or whatever has the easiest website to navigate. No one gives a damn about what the bank does with your money because the government has got it all guaranteed. But also, the government kept interest rates for the Fed at zero for a long time. And so the only way the banks were able to generate any return was to go out long-term. Even though the returns were low, there was no return on the short-term money. So the Fed basically encouraged all these banks to take on the long-term debt. Look at the mortgages. I was talking about this for years. Nobody else was. When everybody was talking about how great it was that Americans could refinance their mortgages

at 3%, I kept saying, yeah, but what about the other side of that coin? What about the banks who are going to be stuck owning this paper for 30 years, collecting 3%? What's going to happen to those banks when interest rates go up, right? The borrower's gain is the lender's loss. So we basically created a ticking time bomb for all these banks that were on the other side of the refinance boom. And the same thing with all the treasuries that they bought. And another reason that banks were loaded up on treasuries and government guaranteed mortgages was because the banking regulators encouraged banks to own them because they punished them if they owned anything else. They forced them to take big haircuts on those positions, which impeded their

capital. The deal that the regulators made with the banks, if you own U.S. treasuries, if you own a government guaranteed mortgage, you never have to market to the market. Doesn't matter how much value that asset loses, we're not going to count it against you. So the banks bought it because of those unfavorable accounting treatment. Now, the banks just said, well, we can pretend that we don't have these losses because we're just going to claim that we're going to hold these assets to maturity. Well, how do you know if you own a 30-year asset, how do you know you're going to to be able to keep it for the next 30 years? What if something comes up and you need to sell it? Well, they just pretended that nothing would come up. Well, you know what's come up? Rates have gone

up. And so now the banks are in trouble because their customers want their money back. Why? Because they can put it someplace else and get a higher yield. Why leave it locked up? The depositors are not locked up. The banks, they're locked up. That's why for years I was warning about these banks again. Everybody was saying on Wall Street, oh, interest rates going up is going to be good for financials. I said, no, it's going to destroy the financials because it's going to blow up their balance sheets. It's going to cause huge losses for the assets that they own. And that's exactly what happened. So this was not something that came out of left field. Just like the 2008 financial crisis, it was easy to predict. That's why I was able to predict it. I can only predict stuff

that's easy to predict, right? I'm not that smart, right? So it has to be pretty obvious for me to understand it early in advance. And so this is something that I was talking about, a warning about, that everybody else was clueless about until it happened. And then of course, their solution,

more government bailouts, more money printing, actually makes the ultimate problem worse. How do you think about it being a government bailout in terms of they let the equity and the debt holders fail, but they save the depositors? Is that still considered a bailout in your mind, and is that a positive or a negative thing? Should they have allowed people with more than $250,000 in those accounts to just go to zero? Well, you know, yes, they should have because now here's what they've done.

They bailed out the large depositors, but in doing that, they communicated to the public that all banks don't necessarily enjoy that protection, that it's a case-by-case situation. When a bank fails, that the Fed, the Treasury are going to evaluate the impact that that bank failure might have on the economy or whatever, and then decide whether or not they want to cover the large deposits. And that created a huge problem for a lot of regional and community banks, because now you have the large depositors who are thinking, you know, I've got my money at some small bank.

And if this small bank fails, the FDIC coverage for my account, let's say I got $5 million at some small bank. You know, I may not be covered. So I'm going to take my money out of that little bank. I'm going to send it to Bank of America. I'm going to send it to some big bank that's either too big to fail, or if it fails, I know they're going to cover everybody. So the government has actually accelerated the run out of smaller banks, because why would you put your money into one of those banks, given the fact that all these banks are in trouble? So why take a chance? It's not like they're going to be able to pay you more interest. And if they did pay you more interest to offset

the higher risk that you'll lose your money in a default, it's going to put those banks at a competitive disadvantage. So what the government has done is now they're moving towards even more consolidation in the bank industry because they've created this problem. Now, of course, the solution to that problem is, okay, let's make this an explicit guarantee. We're going to guarantee everybody's account, no matter how large, no matter where it is. But then that's an even bigger problem because where do you get the money to do that? And the whole theory behind the deposit insurance was, look, we're just going to cover the little accounts. We're not going to cover the big accounts. And it's the big depositors that are going to keep the banks honest, right?

Because if you put 5, 10 million, 20 million in a bank, you're going to do your research. You're going to do your homework because you know you're not insured. And so we're going to count on the large depositors to police the banks. But the minute you say, hey, it doesn't matter, you're covered no matter what, then nobody polices the banks. Then it's just the government that polices the banks. And the government can't do a good job of it. Government doesn't do anything right. You need free market competition. That's the only regulation that works because there you have The responsible parties held accountable for what they do wrong. So there is really no way out of this.

There's just various bad choices. The only real way out of it is to get away from insured accounts and to just phase it out. But, of course, they're not going to do that either because the banking system is insolvent. The whole thing would collapse without the government guarantees right now. It's on government life support. all of these banks would be technically insolvent today if they had to stand on their own two feet. It's only the government guarantees that are propping up the industry. But that is not how you want your banking industry to be. You don't want it to be a phony house of cards that is

dependent on government backstops, because eventually those backstops are going to fail and the house of cards is going to collapse. Is it fair to say that there's been a pseudo nationalization of the banks given these backstops if they're insolvent on a technical basis given that they're underwater on so many of the assets if the government is essentially propping them up with this backstop is that a form of nationalizing banks or do you feel like yeah absolutely look i mean you know this is fascism you know is what we have you know the you know that's the type of economic system that we have. It's that combination of a government and industry basically under government control. The government doesn't own the banks, but it basically controls

them. And we don't have a free market competition. It's certainly not capitalism. I mean, you can't call what we have in banking capitalism. I mean, it's not even close. So it is a form of socialism, but what form of socialism is it? Because it's not communism, clearly, right? But fascism is the type of socialism that really describes what's going on, and not just in banking. I mean, more so in banking, but also in other aspects of the economy. We have basically adopted that type of economic system. Talk to me about the real estate market. We've seen tons and tons of headlines talking about commercial real estate, people with remote work, these buildings are empty in major cities. We also see, obviously, interest rates drastically moving markets into

either being illiquid from a transaction standpoint. We're seeing all cash offers, cap rates around 4%, 4.5%. It just seems like things are breaking across the real estate market. How do you read into this? Yeah, well, again, everything that is a function of interest rates is already broken because the Fed kept interest rates at zero for a decade, and real estate is hugely impacted by interest rates. First of all, residential real estate, people, when they shop for a home, they shop monthly payments, right?

The actual price of the home is irrelevant. What they look at is, what are my payments? And that's how they get qualified for these mortgages. And so when interest rates were very low, people could afford to pay a lot more for houses than they can afford to pay now when rates are not as low. And so real estate prices have to adjust by coming down. Of course, that exposes a lot of problems because real estate is collateral for a lot of loans.

And if the real estate prices go down, well, the loans go bad, right? We know that. We've seen that movie. Commercial real estate also is a huge house of cards because when people buy commercial real estate, it's like a bond. You're buying the rental income, and that income is worth more when interest rates are lower. The lower the interest rate, the higher the present value of rents, and that is built into the price of the commercial real estate. And a lot of that commercial real estate is also collateral for a lot of loans. So the entire real estate market was a house of cards, right?

Built on this foundation of 0% interest rates, which is no longer there. So you remove the foundation, whatever was built on top of it comes collapsing down. And so that's what's happening. Now, you also have inflation though, right? And inflation can make real estate prices go up only because it makes the value of money go down. operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales using automation, analytics, and smarter workflows to

simplify campaign delivery and access better data across the business. The result, less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. And so, so you have counter balancing forces. You have inflation that will push the price of everything up, which would include real estate, but you have rising interest rates that are going to push the price of assets that are a function of interest rates down. And so, you know, it's a mixed bag. A lot of it depends on where the real estate is, you know, what kind of real estate, you know, it is. And a lot of that, as far as what's going to happen with the real estate market in this high inflationary environment that favors real assets,

right? Real estate is a real asset, right? And so, but you also have the leverage. But what I like are assets that are not a function of leverage, right? Maybe like commodities or like gold, right? That wasn't bid up based on the cheap money. But the way people will end up making money on their real estate in real terms are the people who were smart enough to lock in a 30-year loan at three, three and a half percent, and who still have maybe 25 years or so left on that mortgage, they will make a lot of money, not as a homeowner, but as a debtor, because they're not going to really have to repay the money they borrowed. And so, and that means that the house that they're getting, they didn't get it for free, but they got it for a fraction of the real

price that they paid. And it means the lenders who loaned them the money are going to take huge losses. And those are the banks. Who do they think owns or the American taxpayer that is on the other side of these mortgages. In our conversation in 2020, gold was trading just over $1,900. You were very excited because it was nearing an all-time high. Bitcoin was trading just over $10,000. If we look today, gold is flat to slightly down. Bitcoin's up like 250% since then. How do you look at those two assets, one being the analog version of gold, the other being at least presented as digital gold and Bitcoin drastically outperforming gold over the last two to three years? Yeah, I don't care how you want to dress up Bitcoin. It isn't digital

gold, right? So it's got nothing to do with gold. But yeah, gold did go on to make an all-time high. it got above 2,000 after we spoke. Bitcoin didn't come near making another all-time high. The record high in Bitcoin is close to 70,000. And so even though Bitcoin had a big recovery from that 10,000 level, it did not recover to new highs like gold did. And gold today at around 1,970 is very close to its record high. It's not that far below it. So if you bought gold at an all-time record high, you're not losing that much money. But if you bought Bitcoin at an all-time record high, you've lost more than half your money. So they're very different types of assets. I think going forward, gold is going to shine as a store of value, as a

monetary alternative to fiat currencies. And I think Bitcoin is going to be seen in a different light. I think that Bitcoin is a speculative digital token that rose and fell and rose and fell. But I don't think it ultimately has anything to do with gold, despite the fact that some people have confused it for some digital form of gold. Yeah, Bitcoin rallied, just like the Nasdaq rallied. A lot of stocks are higher than they were when we spoke a couple of years ago. The interesting thing, though, is recently, like last month, for example, you had a huge month. The Nasdaq was up about 6%. The Nasdaq 100 was up 8%.

And Bitcoin got clobbered last month. So it's kind of decoupled from the Nasdaq. And so if Bitcoin is not going to go up with the Nasdaq and it's not going to go up with gold, then what's it going to go up with? Maybe nothing. Maybe it's just going to start going down. But, you know, I wanted to talk to you and I reached out to you, too, about, you know, the Bitcoin community is now like real excited because they think I'm I join the club. Hold on one second. We're going to get to you becoming a Bitcoiner. But I want to talk about Bitcoin and gold for a second.

So Bitcoin is up 60 ish percent to start the year. It's the best performing asset in Q1 destroyed gold in terms of financial return. But what I think is interesting about this is Bitcoin being a speculative tool. Would you agree that gold, stocks, commodities, everything is a speculative tool? Or do you think Bitcoin is uniquely speculative versus maybe gold or something else? No, I mean, there's a degree of speculation in just about everything. I just think that the degree that there's speculation in Bitcoin is much higher because, you know, Bitcoin is all speculation. It's 100% speculation because there's nothing actually there beyond the speculation.

So you have other things that are less speculative. I mean, gold stocks, there are many things that you speculate on when you choose to buy a gold mining company. In addition to what happens to the price of gold, that's just one aspect of it. There are a lot of other risks that are inherent in operating a gold mine. So all of those risks are going to weigh on the ultimate value or price of a gold stock. So you can't invest in gold stocks unless you are comfortable assuming those risks and speculating on all these various outcomes that may or may not happen that would result in a gain in that stock. But, you know, Bitcoin, it's all speculation. There is nothing to fall back on that is not speculative.

it. And so gold has a lot less risk than a gold mining stock, right? Because the only risk you have really, if you own physical gold and you have it in your house, the only risk you really have other than the fact that you could lose it, which is, or somebody could steal it from you, right? But it's the price. Will the price go up? Will the price go down? And so that's a lot less to worry about than operating a gold mine, where all sorts of things could go wrong. I mean, the price of gold can go up, and you could lose 100% in your gold mine, right? So, you know, there are a lot of aspects there. But that's why, you know, when I tell people should invest in gold stocks, diversify, hire an expert. That's, you know, when I formed my gold

fund, I didn't even manage it. I hired a guy that knew more about it than me, right? Adrian Day. I mean, I know enough to buy gold. I know enough to invest in gold stocks, but I don't know enough to know which ones are the best, especially when it comes to the junior miners. And so I want to hire a guy that does nothing but analyze these stocks and is very familiar with the managements and the projects. And Adrian has been doing this 30, 40 years. And so to the extent that you want to speculate on gold stocks, and to me, I think it's a great speculation. I think the risk reward, and that's always what you want to look at. Whenever you're speculating, you want to try to balance, okay, if I'm right, how much can I make? If I'm wrong, what can I lose? And try to

figure out the possibility, assign a probability of success versus failure, and kind of weigh the expected outcome, the return. And I think on a risk-reward basis, the amount of money that you can make in the mining sector, if I'm right about what's going to happen, is so skewed relative to what you could lose, that it's a great speculation to make. That doesn't mean you can't lose. You can. But I just think the probabilities and the potential skewed reward to risk is worth it if you can afford to lose money. Some people can't. Some people, it doesn't matter how much they might make. They just can't lose anything, in which case you can't get in the sector. But we have other investments, right? I manage money for people in just basic dividend paying foreign

stocks, I think are also good inflation hedges. They don't have as much upside as a gold stock portfolio, but they have significantly less downside. And in the short run, they'll pay more income, you'll get higher dividends, which also offsets the risk because you're getting compensated with current income that you can use. So and you know, a way that people can kind of figure out, you know, a portfolio is by speaking with my reps, you know, getting talking to the people at Europe Pacific Asset Management about what type of portfolio is going to best suit you based on your own individual objectives and risk tolerance. But everybody needs to do something because inflation is a huge risk. And mitigating that risk, I think, is the single most important

thing any investor can do, recognizing how high inflation is going to be, how long it's going to persist, and making the appropriate changes to your portfolio to guard against that risk. And that's why, again, I would encourage your audience to contact us and look into how you can incorporate these strategies in your portfolio, even if you have some of your money in Bitcoin, because that's another risk that you have to hedge, because you need to worry about the fact that I could be right and your Bitcoin could be headed for zero. Okay. That was a fantastic sales pitch that you slipped in there. Congratulations. Talk to me about, you hammered it in. All right. Talk to me about becoming a Bitcoiner. Peter

Schiff is now a Bitcoiner. Peter Schiff has an inscription where he is going to auction it off. You are a user of the Bitcoin blockchain. You have become a promoter of the Bitcoin blockchain. Why is Peter Schiff now a Bitcoiner? Yeah, well, so I'm not a Bitcoiner, and now I'm under the delusion that Bitcoin is some digital version of gold, right? But what I am doing, and it's interesting that the people in the Bitcoin community are so desperate for my approval. It's like anything I do, any little thing I do in the direction of Bitcoin gets blown out of proportion, right? Because it's like you guys are a bunch of little kids trying to win my approval, right? You need that from me, right?

Which, okay, is fine. I get it, you know. But so look, a good buddy of mine, who's a very talented artist, who is a neighbor of mine in Puerto Rico. I've known him for years. He's a big Bitcoin guy from way back. So he's one of the most successful Bitcoin guys as far as having a very, very large net worth, in part because of having gotten into Bitcoin early. Right. And and that's what a lot of the people I've met, you know, in Puerto Rico that live in my neighborhood, a lot of these guys got into Bitcoin early. And that's why they've got so much money now that that's not the only reason.

Some of them, you know, they made money in other endeavors, but they also made a lot of money in Bitcoin. So he made a lot of money and he's always had some Bitcoin element in his art. You know, he tries to incorporate Bitcoin stuff in a lot of his artwork, you know. But anyway, so about a year ago, he made we I had to make a painting for me. of a bar goal. And, you know, we were playing around with how to incorporate Bitcoin into it, but we never really, I mean, you, you know, put the Bitcoin itself in the art, but he was doing, he's doing a show in New York, which you could go by it. They just, I think they opened today, the show it's on, it's the galleries on Madison Avenue.

And it's going to be going through, I think June and his work is on display, but we put that painting that he did for me on display. And I said, okay, you know, let's sell it. Let's auction it off. Anybody who wants to buy this Peter Schiff gold painting, it's, you know, I didn't paint it, market price paint it, we're both going to sign it. But we also decided to come out with a series of prints, 50 individually numbered prints. So if you can't buy the original oil painting, but you want to have one of these prints that's signed by me and the artist, you can get that. But we're going to use Bitcoin. We're going to use the ordinals, which are the Bitcoin's version of an Ethereum NFT. And I'm going to try to incorporate Bitcoin into this

piece by using the Bitcoin blockchain as a way to authenticate the original genuine status of these prints, to the extent that anyone who owns one wants to sell it, the buyer can have a way of authenticating that it's not a counterfeit, that this is the actual print, because it corresponds to this ordinal, right? And I can track the ownership of this print from day one and know, okay, yes, you are the original owner, and I'm buying it from you, or I'm buying it from somebody who bought it from the original owner. And so you don't have to worry about the fact that you're buying some kind of fake. And so trying to find a way to use blockchain in a way that actually adds some type of value. What that means a Satoshi is worth, I got no idea. I don't

think it's worth anything near where it currently is, but I'm going to incorporate it. And the reason I think that this is an opportunity for Bitcoin, assuming I am wrong about Bitcoin, I don't assume that, but there are a lot of people like you who assume that I'm wrong. I do believe that historically, I could go down as the most wrong person on Bitcoin. I think right now within the Bitcoin community, I am the single best known Bitcoin critic. And I even asked ChatGPT, who is the biggest, most well-known Bitcoin critic in the Bitcoin community? And it said Peter Schiff. Are you proud of that?

People know me. Are you proud of that? Yes, I am proud of that. Okay. I'm also the most well-known gold bug. I asked ChatGPT, who is the most well-known gold bug in the world? And again, it came back with me. And so gold-

Well, you know, why would it lie? I mean, it doesn't have, you know, it's not a human, right? It doesn't have emotion. But my point is this. If Bitcoin replaces gold, and I am the biggest gold bug, if Bitcoin succeeds, and I'm the most well-known early critic of Bitcoin, to have the only work of art that I commissioned, or the first, because obviously I can do it again, but to have the first work of art that I commissioned, and the first set of ordinals or any ordinal that I did, and I put on a

blockchain, if any of these things are going to have value in the future, if anybody's NFT or ordinal, if anybody is going to create something that has value, it's going to be this. Because I'm basically saying in your face, Bitcoin, I'm basically holding up this bar gold. It's not my arm. It's just a symbolic arm that is holding gold up in victory. Now, what if it turns out that I was wrong?

Here is this old guy claiming that gold is supreme, and it was just around the corner, and it was destroyed by Bitcoin. And so here is something to commemorate that, the holdout or whatever. So I think it could have some value. But also, even if I'm completely right about Bitcoin and it goes away, the original work of art, forget the ordinal, because I'm not selling the ordinals. The ordinals are a freebie. You get that for free. I'm just selling a print. So at the end of the day, you've got a signed print.

My signature is on it. What's my signature going to be worth on that print in 100 years? What's the artist's signature going to be worth? I don't know. What's that original going to be worth? I don't know. It could have a lot of value, right? So there's a speculative element in there, but I'm just giving Bitcoiners an opportunity

to own one of these things and decide whether or not they think that. Because I remember when people started selling their tweets, I never actually took time to sell anybody, but there was some fool that offered to pay several thousand dollars for one of my anti-Bitcoin tweets. I never actually bothered to sell it because I just didn't feel like doing what I needed to do to get the money. But somebody was willing to buy it. So let me just conclude our conversation, because I know that we both have to run to something else here.

But I just want to explain that you now are a Bitcoin user. You may not be a Bitcoin proponent, but you are a Bitcoin user. Yes, I will be using Bitcoin to inscribe these ordinals. And the auction, and you've got to go to the website, right? You should put it up there. I forget if the market price website to you have to register in order to bid. But we are accepting bids in Bitcoin. You can pay for the prints if you submit a winning bid, because only 50 people are going to get a print.

So you have to be one of the top 50 bidders. Now, of course, if you don't win the print at the auction, you could buy one in the secondary market that may develop. It'll be interesting to see like what happens to these prints after after I, you know, float them. Right. Somebody somebody can result. And then, of course, you could also be you could also bid on the original oil painting. That is the one that is on display right now in that art gallery. So anybody that's in the New York area, you know, I think I think you should put in a bid. I think that that painting would look nice in your office there. um but the last thing i'm gonna say is i just want everyone to know that i am proud of you for

having open mind becoming a bitcoin user and after all these years after we've all weathered you down like water hitting a rock over and over and over again you finally are a bitcoiner and so peter schiff i i appreciate you joining us today anthony what if nobody wants to buy these prints then i You know, then that's going to kind of like, hey, it doesn't even work. Nobody wanted them. So I'm a potential Bitcoin user. It actually has to work. People have to want to buy these.

I mean, you know, I don't know. People might want the prints anyway, even if there was no ordinal. But we'll see. We'll see how successful. We'll see what kind of value these ordinals add to these prints, if any. And it'll be interesting for me to watch because once I sell them, they're gone. Like, I don't own any other ones. There's only 50.

I'm not going to inflate the supply, right? I'm not going to make 51, 52, 53. So once I sell them, I don't own them anymore. So it'll be interesting to see what happens to them in the market and to the extent that these ordinals add any value. But again, if I was a Bitcoiner and I had a lot of money in Bitcoin, I would want to own one of these Peter Schiff market price original Bitcoin art and gold. All right, ladies and gentlemen, Peter Schiff, thank you so much. I appreciate it. We will definitely do it again in the future.

All right, Anthony. Take care.