The Pomp Podcast - #971 Peter Schiff On Why We Are Officially In A Recession

Episode Date: May 20, 2022

Peter Schiff is the Chief Economist & Global Strategist At Euro Pacific, the Chairman of Schiff Gold, and the Host of Schiff Radio. In this conversation, we discuss the macro economy, why we're already in a recession, what Peter would do if he was in charge at the Fed, and debate Gold vs. Bitcoin. ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone.  Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= Today’s episode is sponsored by Abra. Based in California and backed by top VC firms, Abra is an all-in-one simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 14% APY on stablecoins and 8.15% APY on Bitcoin.  Join nearly 2 million users by downloading Abra from the Google Play or Apple App store. If you download the app today, you will get $15 in free crypto once you fund your account.  You came, you invested — now conquer. ======================= DeFi Technologies represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U.S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at http://defi.tech  =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Peter Schiff is the Chief Economist and Global Strategist at Europac.com. He's also the Chairman of Schiff Gold. In this conversation, we talk about the Federal Reserve, inflation, interest rates, commodities, store of value, gold, Bitcoin, and much, much more. I really enjoyed this conversation with Peter, and I hope you guys enjoyed it as well. Before we get into this episode, though, I first want to talk about our sponsors. Today's episode is brought to you by Exodus, the world's leading desktop, mobile, and hardware crypto wallet. They offer beautiful,

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crypto wallet. Go to Exodus.com slash Pomp today. Today's episode is sponsored by Abra. They're based in California and they're backed by top VC firms. Abra is an all-in-one simple secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 13% APY on stable coins and 7.15% APY on Bitcoin. You can join nearly 2 million users by downloading Abra from the Google Play or Apple app store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested, now conquer. Abra, conquer crypto. Go check it out today. This episode is brought to you by DeFi Technologies. DeFi Technologies represents

what's next in the digital economy. They're providing simplified, trusted access to crypto, decentralized finance, and Web3 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols through a single stock purchase on a regulated exchange. DeFi Technologies is currently listed on the U.S. Exchange at DEFTF Stock Ticker and the Canadian NEO Exchange at DEFI. For more information or to subscribe to receive company updates and financial information, visit their website at defi.tech. I'm really excited about what these guys are doing. I've become an advisor to the business and I highly

suggest you go check them out. Go to their website at defi.tech today. 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. Ladies and gentlemen, boys and girls, my friend Peter Schiff is now joining us. Peter, how are you? I'm okay. I'm okay. Question is, are you boys still hodling? Yeah, of course. Peter, listen, let's start with the big macro picture, and then we'll get into

why gold sucks and Bitcoin's better. If we start with the Federal Reserve, it seems like they are in control. They are the driver of good times. They're the driver of bad times. And everything is one trade. If the Fed says we're going to pump liquidity, get long and shut up and let them just do their thing. If they say they're going to pull the liquidity away, basically get out of the market, it seems like. Is that a fair categorization of what the Fed's role in financial markets is today? They're not in control of anything. But certainly in the short run, the markets trade off of the Fed and what they believe the Fed is going to do. And I think the Fed still has a large degree of credibility.

Why? I have no idea. Maybe because the people following the Fed are just as clueless as the Fed. So when the blind is leading the blind, the blind that are following along have no idea that they're following somebody who also can't see. But reality is going to rear its head, and it may have already done so, at least beginning. I mean, I'm looking at the markets to last several days. We've seen some pronounced weakness in the dollar finally.

I mean, today is one of the weakest days in several years for the dollar. Who knows? It might end up being the weakest day of several years. We'll see. Gold is starting to pick up. I mean, nothing explosive, but we were below 1,800 a few days ago, now back at 1,850-ish. And so even as the stock market is going down and what I am thinking is that the markets are finally starting to look beyond the tightening cycle to the next easing cycle.

Yes, the Fed is talking about how this super strong economy can withstand higher rates. But meantime, this super strong economy is probably already in a recession. And we're not only just in a recession, we're in a worse recession than what we call the great recession that we had following the 2008 financial crisis. And remember, we were six, seven, eight months into that recession and they still denied that we were in one. In fact, they said there was no recession anywhere in sight and we were in the middle of it.

And so I think they made the same mistake again in overestimating the strength of the economy. They think consumers spending money is economic strength. It's not. It's a reflection of inflation. the economy is actually very weak beneath the surface. But when you look at the news yesterday from Target, from Walmart the day before, and now Cisco's news today, you can see that we're collapsing into recession, that higher prices are taking a toll as are higher interest rates

on the consumer's ability to keep on spending. And unemployment is going to follow. I mean, look at today, unemployment claims jumped to a four month high. I think we've already turned the corner. And, you know, we're very close to a major spike, I think, up in unemployment. And so that whole myth about this strong labor market is going to die. And I think the markets are now pricing in the fact that the Fed is going to be recognizing that the economy is not as strong as it thought. And it's going to indicate that it's not going to raise rates as much or as quickly as it once believed. So when you think about this, let's talk about the idea of this recession. We obviously saw the Q1 contraction. I think it was minus 1.4% annualized of GDP. Do you expect Q2

to be a contraction as well? And should we expect GDP to contract through the end of the year? Is this like a just get two quarters of it? What is the GDP expectations that you have through the end of the year? Let's start there. Well, I think it will be another negative print. So we won't get that until, what, August or July. July, we get the numbers or something like that. But I think there's a good chance that we'll get a negative print. I thought there was a good chance we were going to get a negative print in Q1. Very few people believed that, and we ended up getting one. And I think if we avoid one, it's probably because they understated inflation, because they always have to use a deflator to take the nominal GDP and make it real.

But if they're not using a big enough deflator because they're understating how much inflation has pushed up prices, then they can kind of create the illusion that a contracting economy is growing. But I think we're in recession, whether it is officially revealed by the numbers or not. But I think it's going to happen. And then, you know, the Fed's not going to fight inflation when we're in recession because all the Fed's tough talk about we're going to do whatever it takes. It's all predicated on this super strong economy and red hot labor market that can withstand doing whatever it takes. Powell has never acknowledged his willingness to continue to fight inflation if the economy is in a recession.

I mean, he's been asked that question, but he's never answered it. He always is very evasive and just changes the topic. But I think that if you kind of listen to his praise for Paul Volcker, he is always specific to make sure he has never praised Paul Volcker for raising rates and pushing the economy into a recession to fight inflation. He has always qualified his admiration for Paul Volcker by saying, I admire the fact that he did what he thought was right. That's all he's willing to give Volcker credit for is doing what he thought was right. Now, maybe he didn't think that was right. And I think when push comes to shove, when he has to make a decision between stimulating the economy because it's in recession or fighting inflation, he will not make the mistake that

he will not make the same choice that Paul Volcker made. He will make a different choice because he has a different set of beliefs. Yes, he thinks inflation is a problem, but not as big a problem as unemployment and a weak economy. And I think he will ignore the inflation problem, which means it's going to get so much worse, which also means the economy is going to fare much worse because inflation is going to decimate it. So as we start to think about this contracting economy, their expectation or their kind of promise to the markets is they're going to keep raising interest rates. The market, as of maybe two weeks ago, was still thinking there was going to be 10 interest rate increases this year. there was going to be a 300 basis point interest rate by the end of the year.

Is your expectation that they'll continue to raise rates all the way through the year, or will they at some point pause it? Do we maybe get a rate cut at some point? What are you expecting to happen with interest rates? Yeah, all of those things. I mean, I think they will pause the increases and maybe eventually reduce rates. We'll see. But even if they just pause the increases, that counts as an easing. They've taken back what they've promised to deliver. And remember, as inflation continues to get higher and higher and higher, real interest rates keep falling.

Even if the Fed doesn't officially reduce nominal rates, if the inflation rate goes from 8% to 10% or 12%, and the Fed still got the Fed funds rate wherever it ends up being 1% or 2%, then rates are effectively being reduced. But you have to remember that the rate hikes that the Fed is promising are inadequate. They're not promising to raise rates nearly enough to actually bend the inflation curve and bring it back down to 2%. You're not going to take 8% inflation and make it 2% inflation by taking 0% interest rates and making them 2% or 3%.

That is still a historically ultra-stimulative monetary policy, but more important than just the interest rates. It's the quantity of money that is important. The Fed has to massively withdraw money from circulation. And what the public doesn't understand is it's had this massive increase in the size of government. Nobody's taxes have been raised. Nobody's benefits have been cut.

So where did all this government come from? How did we afford this massive expansion in government? We paid for it through inflation. We printed a bunch of money. We ran these big deficits. the Federal Reserve monetized the deficits, and we paid for government with inflation. Now the public is demanding lower inflation. Well, inflation is simply the way we pay for all the government that the public also demanded. Well, you don't have a free lunch. So the only way

to get rid of the inflation is to pay for government some other way with taxation. So So the only way to lower inflation is to raise taxes on the middle class substantially, not on the rich. There's not enough money there. Plus, if you tax the rich, you reduce investment. That's a problem. You need to tax the middle class or the poor because that reduces spending. And that's what the government has to do.

They have to stop people from spending money they didn't earn, meaning money that's not associated with productive activity. You can't just spend money unless you help produce stuff to give that money value. The problem is we've been printing all this money instead of paying taxes. Now, people think, oh, you're heartless, Peter. You want the middle class and the poor to pay higher taxes. I don't.

What I would rather see is the government slash spending, cut spending on the military, cut spending on social security and Medicare and all sorts of things. You know, get rid of the space force that Donald Trump, you know, stuck. We have to cut government spending. I'd rather do that.

Now, of course, that's gonna affect the middle class because a lot of middle class people are drawing Social Security checks. But unfortunately, the government has to tell the truth to the American public. Either we drastically cut government spending, dramatically raise taxes, or inflation is here to stay. We can't get rid of inflation without cutting government spending or raising taxes. But either way, it's the middle class that is going to flip the bill. Do you expect the Federal Reserve at some point in the next 24 months to change their 2% inflation target to 2.5%, 3%? Will they change that target inflation rate? It would really be ridiculous to do that because let's say inflation is 8% or 10%.

Does it matter if you raise the target from 2% to 2.5%? I mean, you're nowhere near 2.5%. I think they would look ridiculous to raise the target when they're still miles away. Now, let's say they raise the target to 7% or 8%. But that would scare the hell out of the markets. They would never do that. So I don't know if they're ever going to raise the target. I just don't think they'll ever get close enough to 2% to even have a rational basis for doing that. I mean, that would assume that, hey, they got down to 2.5%. And they're like, you know what? This is as low as we're going to get. Let's just raise our target rather than try to get it down an extra half a percent, but I don't think they're ever going to come close enough that they would look

too ridiculous to lower a target that they're not even close to. In the next decade, what do you think the lowest inflation rate that we're going to see is? Can they get it under 5%? Can they get it under 3%? What do you think is possible for them to actually achieve? Well, they could. I just think they're not willing to do what it takes to do it, right? I mean, sure, anything is possible, but what's probable? What are vote-seeking politicians more likely to do? And so in my mind, the most logical way that they're going to get the CPI below 5% is to rig it some more, is to make more changes in the CPI so that a 12% inflation rate will be recorded as a 4.5% inflation rate, right? So they're not going to actually get the rate down. They just may succeed

in lying about how high the rate is by coming up with additional ways to change the CPI. In fact, they've already done that. They made some changes to the CPI in the beginning of this year that is probably going to shave a little bit off of it. And that's why they did it. But inflation is so high that even if they knock off 1% or 2% based on rigging the books, it's still a big number. So when you start to think about moving forward, obviously, somebody like a Jeff Bezos, who now is being much, much more public about his comments around inflation and even politics to some degree. We've seen Elon Musk at the all-in summit. He started talking about inflation and the cause of it being the printing of money. Is there a changing of the tide or a changing

of the sentiment that now you have two of the best entrepreneurs of our lifetime kind of armed with Twitter accounts and willing to speak their mind about this stuff? Is that going to change the way that the American public thinks about inflation and maybe the job of the central bankers or the government so far? I don't know. I mean, I think it's certainly a step in the right direction. I mean, some of the CEOs need to fight back because they've been the scapegoat. The Biden administration wants to blame big business for gouging their customers. But we know that that's not the case. In fact, it's actually the customers who have been gouging business. I mean, look at the earnings, again, of Target and Walmart. They haven't raised prices enough. That's the problem.

they have absorbed increasing costs rather than raising prices. So if inflation is this bad with businesses not fully passing it on to their customers, imagine how much worse it's going to get when they do, because they are going to do it. I think a lot of these companies originally were fooled into believing that it was transitory. And so they were reluctant to pass on transitory increase in costs. But now that they realize those costs are permanent and they're going to keep rising. Now they have to make the customer foot the bill. And it's a big bill. So prices are going to go way up. Now, obviously, that's going to cannibalize some sales because people can't afford to pay the higher prices. Well, that's the way it's going to be. So they're

going to have fewer customers, but the customers they have left are going to be paying much higher prices. But that also means they don't need as many workers because they don't have as many customers. So layoffs are coming too. When you start to think about the recent market crash, pretty much everything peaked in November, and it's come down further and further. What's your expectation in terms of how are you going to identify a bottom? Do you think that things will just fall until they stop raising interest rates? What's your read right now? Well, I mean, I think that, number one, we had a major blow off top in the very speculative part of the market. Whether it's you know kathy wood type stocks you know these high-flying money-losing companies pie in

the sky you know future uh innovators right that people were buying or whether it's you know cryptocurrencies or nfts or meme stocks or even big tech like the fang stocks i think that trade is is over uh so i think when we get a new bull market and we are in a bear market even if you want to be in denial. It's a bear market and it could have more to go. But I think the next bull market that will emerge and it will come as a product of the Fed backing off. And so the rate hikes will stop, but inflation will continue. And I think investors will look to equities as a inflation hedge, as a much better investment than bonds, which get destroyed by inflation. But I think investors are going to be looking for real value companies that trade

at lower PEs that have real earnings today, not the prospect of earnings in 10 or 20 years that pay good dividends to their shareholders to help offset the increasing cost of living and companies that are selling products and providing services that customers need where there's some relative inelasticity in the price, meaning if, you know, you're selling food and you have to jack up prices by 20 percent, you're not going to just lose all your customers because people still have to eat. Right. And so you don't want to be invested in companies that are selling products that consumers can do without because they have to spend more money on the things they can't do without. Right. You want to be in necessities, not luxuries. And you want to own

resources, whether it's energy or agriculture or industrial materials or precious metals, there are a lot of things that in an inflationary time period hold on to their value, become more expensive. And so if you own these resources and are in position to sell them at higher prices, that's where the market's going to come back. We're not going back to what we were. So all these guys trading on Robinhood, that game is over. So when the new bull market comes back, it's going to be your grandfather's bull market, not buy any meme stock and it's going to go up. It's do your homework. It's a stock picker's market. It's understanding value behind a business, understanding that stocks are actual businesses. They're not just ticker symbols.

You actually have to look at what the companies do and their balance sheets and their management and all these fundamentals. That's what has to come back into vogue, right? Because all that's been out of style during the mania. When you think about commodities, oil, gas, the whole thing, what's going on there? And do you expect that to kind of be a safe haven to some degree while this is going on, given some of the supply chain and the Russia-Ukraine crisis and prices will remain elevated? Or do you think that crashes as well? No, I mean, because I'm looking at inflation. I'm looking at weakness and fiat currencies across the board. Not just the dollar. On a relative basis, I believe the dollar will start to weaken against other currencies that it has

been strengthening against recently. But all those currencies will continue to weaken in real terms as far as how much people who own those currencies can buy. And so prices of real things, commodities are going to go up. And especially if you think about the investment landscape over the last decade or two, where has most of the capital investment gone? It's not into building new copper mines or planting more farmland. It's gone into technology. I mean, look at the industry that you're associated with, cryptocurrencies and blockchain. Look at how much money was wasted building out all these companies that are basically worthless. That money should have been going into mining and manufacturing and agriculture and energy and all that stuff.

But it didn't. It went into something else. And so we are not going to have enough of those resources. We're going to have more than enough cryptocurrencies. We almost have 20,000 cryptocurrencies. So we got plenty of cryptocurrencies out there, but we're not going to have enough energy. We're not going to have enough food. We're not going to have enough steel. Those are the things that we should have been making, but instead we came up with cryptocurrencies and other things. But that's just an example of the malinvestment. And so these commodities are going to go up for a long time. This is the beginning of a major bull market that could last 10, 20 years in resources. When is gold going to start to work?

It seems like it just has been going down. It hasn't performed very well. It hasn't beaten inflation over the last decade. When does gold start to work? Yeah. Well, first of all, everybody likes to talk about the last decade because gold was at 1900, but they forget that it started the decade below 300. So gold had a huge move. And then to say, well, we hasn't done anything for 10 years, over 20 years it's outperformed the S&P. So forget about those benchmarks. The reason that gold is hanging out around 1850 and the reason it's not 3,000 or 5,000 is because the markets are not afraid of inflation yet.

They're afraid of the inflation fight. They believe that the Fed is going to beat inflation, it's going to whip inflation now, it's going to do whatever it takes, it's going to raise rates as high as they have to. And it's that tough talking Fed that is keeping a lid on the price of gold. It's also keeping a floor underneath the dollar because the Fed is the only major central bank that's talking about fighting inflation. Europe, Japan, they're still in denial, really. But the Fed is the only one that's really talking about it.

When the markets start to realize that the Fed is all talk, that it's all bluff or a lie or whatever, the markets are going to start to price that in to the dollar and gold. And as I mentioned earlier in this talk, looking at what's happened the last few days, there is a reasonable chance that that revelation has already happened. And we'll see. I mean, if gold can really break out and get above $2,000 or $2,100, if the dollar index can really break down, maybe get not just below $100, but below $90, I think we'll have clear and convincing evidence that the markets have certainly now completely discounted any

rate hikes that we could possibly get and are already starting to factor in the next round of cuts, the next round of quantitative easing. But when gold goes ballistic and the dollar collapses is when the markets come to realize that that recession is not going to solve the inflation problem, that the recession is actually going to make high inflation even higher. And so it's going to be stagflation, but not just a stagnant economy, an economy in a severe recession, and not just inflation, but very high inflation. And that's going to be the toxic combination that really destroys confidence in the Fed and the dollar and causes a stampede into gold. Peter, the reason why I love you is because you're talking about gold's ballistic run

in the 2000s when most people watching this were in diapers. So most of them will discount that. But my next question, let's say that a global recession does occur. Where can investors hide? What do they do with their portfolios in order to be able to protect themselves in a recessionary period like this? Well, again, if the recessionary period is followed by inflation, which is how governments try to stimulate economies in recession, they run deficits and their central banks print money, then it's a hedge against inflation is what you need. So you need real things. Like I said,

commodities, precious metals, companies that own real assets that can raise their prices without destroying their market, the same things that I've been describing. But I don't think it's going to be a global recession. I mean, I think there will be economies in recession, maybe some of the developed economies that have a lot of debt. But I think emerging markets markets could actually enjoy a boom as developed markets are enjoying a bust. They have a lot more productivity, they don't have the debt, they don't have the older populations dependent on government money. So I think you can have a dynamic where you have recession or very slow growth in the

developed economies that have been doing all the QE and have had artificially low interest But then the emerging markets really pick up the slack, especially if their currencies appreciate significantly, and that gives their consumers more purchasing power. If that results in better inflows of capital into those economies to escape the stagflationary economies of more developed countries, and especially if the dollar loses its role as the reserve currency, which is clearly in jeopardy right now, and we've placed it in greater jeopardy with the sanctions on Russia and driving Russia and China closer together, maybe even pulling India into the mix and pissing off a lot of people and reminding a lot of people

of the dangers of holding dollars as a reserve and the extraordinary power that is given to the U.S. by virtue of its ability to sanction anybody it wants if it disagrees with what they're doing. You know, not that I agree with what Putin is doing. It doesn't even matter. It's just that every country that's a sovereign government knows that it may do something one day that the United States doesn't like. You know, I'm sure the United States does stuff that a lot of other countries don't like, but they can't sanction us because it's our currency everybody's using. But the ultimate sanction is to stop using our currency. Because then what good is it? Because then the dollar is just worth what we produce. And we don't produce much. I mean, in aggregate, look at our

trade deficits, we have a deficit of over $100 billion a month. That is enormous. What is the most asymmetric bet that you have in your portfolio right now? Is it an equity or something else that you're like, look, this is the thing that I believe has the most upside? That's my mining stocks. Maybe my silver mining stocks and junior mining stocks. I mean, the ones that we own in the Europe Pacific Gold Fund or the separate accounts that are managed by Adrian Day or my own personal account. I mean, I think those are the stocks that could not only be 10 baggers, but 50, 100 baggers. I mean, you go back and you look at what happened to gold stocks in the latter part of the 1970s, early 1980s, that's what happened, right? And so I expect

something similar. I mean, maybe it won't be as meteoric as what happened with Bitcoin. it's hard to repeat that. But I think it's going to be big. And I have a lot of real money in this trade. I mean, I think most of the people that got into Bitcoin when it was, you know, a dollar or $10, you know, they didn't put that much money in. Maybe a few people did, but most people didn't put much. So I've got a big bet riding on these mining stocks, a much bigger bet than I ever would have made on crypto, even if I made the bet. Do you own any Bitcoin? Peter? Peter Schiff? No, you know I don't own any Bitcoin. Why would I be dumb enough to buy Bitcoin?

Well, because Bitcoin's up 212% over the last two years and gold's only up five, which means gold hasn't outperformed inflation and Bitcoin outperformed your whole portfolio. That'd be one reason. Well, it hasn't outperformed it year to date. It hasn't outperformed it in the last year. I mean, Bitcoin in November of last year

was almost 70,000 and now it's barely 30,000. I mean, gold doesn't do that. gold doesn't drop by 50, 60%. Because it doesn't go up 50 or 60% either. Well, yes, it does. I just told you 20 years ago, it was under 300. 20 years ago? I don't even think I knew how to read yet. That's the point. You should listen to people who were around back then. The world existed when you were still in diapers or before you were born. So I got some gray hairs, if you haven't noticed. So I've been around the block a few times.

You also have dial-up Wi-Fi, it looks like, but I wasn't going to say nothing about that. dial up internet. One of the things that I do want your opinion on is if you were the Federal Reserve chairman, what would you do right now? You're in charge. Give me the playbook. They get three or four moves. How do you get this to inflation comes down, we avoid a recession? Oh, look, if I was the head of the Federal Reserve, I would basically maybe call a press conference and I would basically level with the American public and say, the party is over. The buck stops with me. The Fed is out of the interest rate manipulation market. We're no longer setting rates. Rates are going to go wherever they're going to go. The market is going to determine

interest rates, not the Fed. So we're just going to take the pressure off and we are going to start unloading our balance sheet. We're going to start selling U.S. treasuries. We're not just going to let them mature. We are selling them. And basically, interest rates are going to soar. And I'm basically going to say, look, there's no more bailouts. There's no more stimulus. So the government needs to finally act responsibly. And there needs to be massive cuts in government spending. There needs to be, I don't know, tax hikes. And maybe the government has to default on its debt. I mean, if it has to default, that's better than the Fed inflating. But the government can no longer rely on the Federal Reserve to paper over its problems by

creating inflation. We're going back to sound money. We're going to follow the original mission of the Federal Reserve and that's it. And we're not going to be political anymore. We're not going to be bailing out politicians and investors. We're going to have a free market in interest rates and we're going to have sound money, even though it's fiat money. I mean, we're going to make it as sound as we can by kind of maybe having a de facto gold peg, like Alan Greenspan used to talk about having, that he looked at the price of gold and if gold was too low, he knew they were too too tight, if goal was too high, he knew they were too easy. But I don't even think they even have to do that if you allow the market to set interest rates, because if the market sets

interest rates, the rates are going to go way up. I mean, there's no doubt about that, especially if they know the Federal Reserve is permanently out of the QE business, that no matter what, there's no more QE. We're never going to do it again. All we're doing is QT. Never again will we do QE. And the market knows that. But yeah, I mean, you know, it's not going to be fun. I mean, I would be doing what Paul Volcker did, right? I would be the new Paul Volcker. Only the problem is the economy is in much worse shape now than it was when Paul Volcker was around in 1980. So the consequences of having another Paul Volcker are so much greater. But the consequences of not having another Paul Volcker are also so much greater. Because if we

don't do the right thing, which is what I would force to be done right away, then what ultimately happens is going to be so much worse. Because I think Paul Volcker knew that back in 1980. If he did not get control of inflation and allowed it to run away, it would have destroyed the dollar and it would have destroyed the economy back then. And so he did what was right. And he took to short-term pain for the long-term gain. The Fed doesn't do that now. They do the opposite trade. They trade short-term gain for long-term pain. Well, the problem is the long-term pain is going to be excruciating. And we may be in the long-term. You can't always say, yes, it's a problem for the future. It's a problem for the future. Because eventually, that future is your present.

My last question for you, you have to answer. Yep. What is the point at which you will capitulate and purchase Bitcoin? Well, so far, look, Bitcoin has not shown me anything to believe it's going to work. Remember, first, Bitcoin was marketed as a currency, as a medium of exchange. Hey, use Bitcoin to buy coffee instead of dollars or euros. Well, that doesn't work. I mean, Bitcoin is too volatile.

It's too expensive. It's too slow. People aren't buying coffee with Bitcoin. Even in El Salvador, they ain't buying coffee with Bitcoin. But then, you know, Bitcoin was reinvented as digital gold. Well, don't buy Bitcoin, you know, to use it as a medium of exchange, as money. Buy it as a store of value because it's just like gold. It's digital gold.

Problem is, it's nothing like gold. It doesn't have any of gold's physical properties, but it doesn't even trade like gold. I mean, it's more inversely correlated with gold than positively correlated. So I can't use Bitcoin as an alternative to gold as a store of value. I mean, I'll just buy gold if I want gold. So what is Bitcoin? It's a highly speculative asset. Well, what's its intrinsic value? It has no intrinsic value. It just has a price and the price is a function of what people want to pay for it. Well, if I just want to buy a purely speculative asset, there are a lot of other assets I can buy beside Bitcoin. There's a lot of other cryptocurrencies I can buy beside Bitcoin. What does Bitcoin have that makes it so special if it's just a speculative asset and it only has value if people believe that it's going to keep going up? Well, right now it's going down and it

could go way down. And I think people who believe it's going to go up may start believing that it's only going to go down. I think a lot of the institutions that got suckered into Bitcoin wish they never heard of it. Look at my friend, Anthony Scaramucci. And you know Anthony, And, you know, when he got SkyBridge into blockchain and crypto, I told him, I said, you are marking the top. You're going to get going to go down historically. You got all this money into this sector and you are top taking this market. Look at his funds. Look at these these vehicles that he set up, put hundreds and hundreds of millions of dollars into these vehicles. and they're down 50, 60, 70 percent. They are obliterated, right? All this money wasted. I think a lot of these institutions are going to leave the space. I mean, all that's going to be left

are the true believers, hardcore guys like you. But that's not enough to keep this pyramid going, especially when I think a lot of the hodlers are going to need to start unloading because maybe they're going to be unemployed and maybe they're going to need money for food or for rent. And, you know, the supermarkets don't take Bitcoin. The gas stations, they don't take Bitcoin. So if all you got is Bitcoin, but you want some food and you want some gas, well, maybe you have to sell. The question is sell to who? Because I think all the philosophically inclined believers in Bitcoin, they're already in. They're not left. The people who have been buying recently, apart from the institutions who have suckered their clients into it because they thought they

were going to get rich. You've got people who follow celebrities, you know, on Instagram or TikTok, you know, pop singers or sports stars. I mean, what do these guys know? They were just buying these coins because they thought they were going to get rich because, you know, whoever they idolized was touting it. So I think when you get away, when you take away that incremental demand, there's nothing left to keep the pyramid going. And you have nothing but supply. There's not enough demand. The market is going to implode in crypto, including Bitcoin. And it's holding in there now around 30,000. They're trying to keep it up. You're impressed. You're impressed it's at 30,000, aren't you? Look, personally, if you'd have asked me two or three weeks ago,

I would have thought it would have been lower. I thought that when it got down to like 26,000, I would have thought, oh, shit, it's going to sell off. They managed to save it. Who's they? I don't know. The big whales who manipulate the market, right? But remember when Bitcoin was hanging out at $40,000 for a while and people thought, oh, you see, Bitcoin is really resilient. It's hanging out at $40,000. Well, it took a big leg down quickly. And what was the catalyst potentially was what happened with Luna, that ridiculous Luna coin. Did you have any? Were you holding any Luna or USD?

In fact, look, look at my Twitter account. The first minute I heard about this scheme, I tweeted out, this is nonsense. It doesn't make any sense. You can't have a stable coin to the dollar without having dollar backing. This whole thing is a scam. I knew it the minute I saw it. So you couldn't back dollars with gold then, according to that logic? No, because gold, yes, you can. Because if you say the dollar is fixed at a price of gold and then you have the gold, then you can do it. You can't, they weren't trying to back Luna with gold.

They were trying to back Luna with dollars, but they didn't have any dollars. You get it back. How do you get it back something with something you don't even have? They had some crazy algorithm. But the problem is all the big wigs in crypto, you know, guys like, you know, Mike Novogratz,

Not only he tattooed the thing on his arm, but all the money they put in there. Why aren't all these smart people? Where were you, Anthony? Why weren't you saying, hey, this is a fraud. This is a Ponzi. This can't work. You know, all you guys embrace this because they were buying Bitcoin. They were helping to pump up the Bitcoin market because they were buying Bitcoin.

Remember, you tweeted out on your Twitter how excited you were when Bitcoin was around 40,000 and Luna was buying billions of Bitcoin. you said, this is great because they're buying Bitcoin. And I tweeted back and I said, yeah, but what happens when they stop buying? And even worse, what happens when they start selling? Well, we know what happens. Now, Bitcoin tanked. That's what happened. So yeah, they dumped 80,000 Bitcoin. To your point, they dumped 80,000 Bitcoin and Bitcoin went down, but it's still sitting at $30,000, even though one of the largest holders in the world started to dump everything. They dumped everything pretty much.

Yeah, but now it's still and it's still holding in. So hold on. So using that logic, what is the how does Bitcoin in your mind is going to zero? How does it go to zero? Well, you know, look, even Luna is not zero. Right. I mean, you have all these decimal points. Right. But practically speaking, it can approach zero. But what you have to ask yourself is this. Okay, so Luna unloaded all this Bitcoin. Who bought it? And what are their intentions? Because maybe the buyers don't want to hold all that Bitcoin. Well, we know.

We know. We know. We know. Who? We can see it online. Who bought it? We can see on chain. So there's a couple of things to point out.

No, but you just know wallet addresses. You don't know who those people are. Hold on. Hold on. So I actually am very interested. As much as we joke around, I'm very interested in your thoughts on this. One of the key metrics right now is that Bitcoin that has not moved in one year, so sitting in a wallet, hasn't moved in a year, is at an all-time high, over 65%.

Do you put any weight on a metric like that, where you know that 65% of the Bitcoin in circulation hasn't moved in a year? Or do you think that's Bitcoiners just looking for something to get excited about? No, I think that's a sign that we still have a long way to go down because from any kind of market, right, you don't get a bottom until you have some kind of capitulation. So I think it would actually be a good sign if a lot of the holders threw in the towel. But to the extent that they still have diamond hands and they're holding strong, well, clearly we need some more pressure to get to flush them out, right? So to say that, hey, everybody is holding tight, I wouldn't be bragging about that because if you're

looking for a bottom in the market, that's not a good sign. You want to see a flush out. You don't think that it's selling off to $26,000 was a flush out? No. No. First of all, I don't even think we've liquidated the margin debt yet. I think we have a ways to go. But if you look at prior Bitcoin bear markets, we've had plenty of 80%, 90% declines in Bitcoin going back to day one. So we're not even there yet. You keep using the word we. I'm going to start thinking you got Bitcoin. Keep saying, we haven't done this. We haven't done that. I didn't know you were a Bitcoiner. OK. I just mean, not that I own any, but I'm experiencing it. I'm seeing what's happening.

Oh, you're watching. OK. All right. All right. All right. So if Bitcoin was at, what was it, near 70,000, and if it goes down 80%, percent, right, that would still take it well below 20,000, right, 15,000-ish or whatever the math is there. He's not selling. And if it goes down 90 percent, you know, it's going to take it below 10,000. So that would be a flush out. But then the question is, if we have a flush out where Bitcoin goes down to between 5,000 and 10,000, let's say, what comes next, right? Is there going to be another big wave that takes Bitcoin up to 100,000, whatever, 200,000, or is that the end of it right is that is that is this the last hurrah this is my last question for you yeah if the

united states federal reserve puts bitcoin in its reserves will you buy bitcoin it's not going to do that if they do it will you buy bitcoin the federal reserve does a lot of dumb things but they're not that dumb if the federal reserve puts bitcoin into their reserves will you buy bitcoin okay If the Federal Reserve was that dumb, no, I wouldn't do it, too. It's like asking me, hey, if my friend jumped off a bridge, would I jump off the same bridge? No, I'm not going to do it. I don't expect the Federal Reserve to do something that dumb. But if they did do something that dumb, I'm not going to copy them.

I'm just going to continue to do what's right, not copy somebody else doing something that I know is wrong. Then why, if they hold gold, do you keep buying gold? if they're so dumb? Actually, you know, they don't hold nearly as much gold as they should over at the Fort Knox. I mean, they're pooing gold. So, but, you know, gold was around long before the Fed.

You know, gold's been around since before the nation, but when the founding fathers established the Republic of the United States of America, they were smart enough to put us on a gold standard, not a fiat standard. They did not want paper money. Paper money existed back in 1789. It's not like there hadn't been any examples of paper money.

They were very familiar with the failures of paper money. And that's why they specifically made it impossible to have paper money in the United States. Now, the question is, if the Constitution was written to prevent paper money, why do we have paper money now? Well, that's because the Constitution is being ignored and the Supreme Court is not enforcing the Constitution on the government and it's allowing the government to get away with something that the framers clearly prohibited in the language of the Constitution. So I'm just following Jefferson and Adams and, you know, Jay and Madison and all the

learned men who who put us on the right foundation that laid the foundation for America to arise from nowhere to become the richest nation in the history of the world because we had free market based on a gold standard. We had sound money and limited government. And so it's a shame that we have strayed away from those founding principles. I hope that in the ashes of this collapse, we can re-embrace those principles and do it in my lifetime. I would really like to see that and let my children and all you young people enjoy the blessings of liberty. Unfortunately, it may be the opposite. We may have to deal with the consequences of a complete lack of liberty and an all-powerful central government. That seems to be the direction the pendulum is swinging in.

If our forefathers were alive today, they would all be Bitcoiners. No, they would not. Bitcoin takes every single one of those ethos around freedom, personal responsibility, individual liberty self-sovereignty freedom of speech etc and it wraps it up into a digital tool that has been handed to literally hundreds of millions of americans and allows them to express the american ethos in a way that does not leave them susceptible to any organization or individual they cannot be censored all they cannot have their currency devalued the forefathers would be Bitcoiners. You can't devalue Bitcoin because it has no value to begin with. It's already worth

nothing. Look, all you're doing is taking a Ponzi scheme and you're wrapping it in the garments of freedom and liberty and all those cash words. Do you know how a Ponzi scheme works? Do you know how a Ponzi scheme works? Yes, I do. And a pyramid and a chain letter. You know, the interesting thing about a chain letter, chain letters are actually illegal, but a blockchain letter somehow is. Like if you take a chain letter and put it on a blockchain, all of a sudden it becomes legal. Look, none of this stuff works, right? You guys are too young to realize it doesn't work.

I'm telling you. Peter, Peter. It doesn't work. Peter, how proud of you that you came up with a chain letter and a blockchain letter. That was pretty good. That was, I know you've been thinking about that one for a while.

Well, I've used it. That's not the first time I've used that one. Yeah, that was pretty good. That was pretty good. All right, listen, I appreciate you coming on. I have an open door whenever you would like to come here. My only request is that when you capitulate, regardless of when it is, you just come on here and you do it first. And I promise you, the only thing I will say is, I told you so. And then I

won't make fun of you at all any more than that. Well, look, I'm going to be saying the same thing. You know, I wish as your friend, right? And maybe your mentor somewhat, because I'm a little older than you. You got a lot of your net worth in Bitcoin. You got to reduce that exposure. It is even if you're right. And this thing goes to the moon. So you're saying I'm right? Even if you're right, you're not. But even if you were, like for the sake of argument, right? You don't need that much. A little bit will go a long way if you're right, right? If Bitcoin's going to a million or whatever, you know, a small amount will make you very rich. But if I'm right, you're going to lose so much wealth. I mean, take chips off the table. Call up Shift Gold.

There's a way that you can exchange some Bitcoin for gold. We work with BitPay. Maybe open up an account with Europe Pacific Asset Management. Send me some of your money before you lose it. And we can put it in a good, solid dividend-paying stock so that you'll always have something. A lot of my neighbors, I mean, all these bigwigs, they're all cashing out. I can see it. You know, they're buying big houses. They're overpaying for houses. They're buying big boats and private planes.

And they're doing all sorts of stuff. They are cashing out. You got to cash out. Do not go down with this ship, right? I mean, they look no good to go down with the ship and hodl till the end. That was the greatest plug of all time. That was the greatest plug of all time, slipping in all of your plugs. All right, where can we send people to find you on the internet?

Well, The Peter Schiff Show, you know, you can see that's my podcast. So people can go to shiftradio.com and listen or on YouTube. You know, I just started out on Locals, you know, where I'm, you know, charging people for the first time to get my podcast a day early and commercial free. I'll be coming up with some new content for the Locals audience as well. So people could do that and also become clients, whether you want to buy some real money from Shift Gold or you want me to manage your money for you. I talked earlier about how I've got a lot of my own money in these mining stocks. I think that is the asymmetric huge payday where I think I can make 50 to 100 times my money. So if I'm right on gold, I'll end up being a billionaire several times over. I think even

adjusted for inflation in today's dollars, I'd be a billionaire. So I'm not quite there yet. But I think a lot of the people who are billionaires now in Bitcoin, if they don't don't get rid of their Bitcoin, I mean, they're not going to have much left of their paper stack. But if you want me to manage some money for you, get a hold of me at Europe Pacific Asset Management. I'm based out of Puerto Rico. I also work with guys at Europe Pacific Capital, which is a broker dealer I used to own. I now work managing accounts for them, for their customers in my strategy. So you can talk to them at europac.com. But, you know, the sooner people can get out of fiat and get out of crypto and out of overpriced

stocks into real money, gold and silver, into value stocks, dividend paying stocks. And I think also the trade is getting away from the U.S. because this is going to be the epicenter of the crisis, the U.S. dollar and get into foreign markets, emerging markets, try to invest where standards of living are going to go up, not down. You know, these countries are going to finally reap the benefits of their hard work and their productivity. And Americans are going to suffer the consequences of our profligacy. And, you know, as an American citizen, I don't like that. I wish I could change that. I can't. But as an investor, there's at least something I can do about it to protect my wealth and to profit from these events. And I can help other people protect

their wealth and profit. You're a legend. I appreciate it very much. You can come on the show whenever you want uh anyone who does not follow peter uh it's the best comedy account on twitter you can go follow him at peter schiff and uh i appreciate it we'll definitely do this again in the future my friend yeah one of these days i have to overtake you with your followers though you're about double my my followers shows you the bitcoin bubble can do goodbye take care everybody thanks so much for listening to today's episode i really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got

you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to palmscryptocourse.com to learn more, and I'll meet you guys for the next episode. Thank you.