Schiff vs. Pompliano: Tariffs Don’t Help Consumers!

In a recent episode of Anthony Pompliano’s Pomp Podcast, Peter debates Anthony on a host of issues, ranging from the merits of Bitcoin to who pays the bills for tariffs. Throughout the debate, Peter’s incisive rhetoric cuts through the mainstream narratives on the dollar and protectionism, undercutting the White House’s and the Fed’s harmful policies. 

Peter opens by taking personal stock of being early on his warning and why that doesn’t change the thesis about sound money and inflation risk:

First of all, what’s happening now proves that I wasn’t wrong for a decade. I was right for a decade. It just took a decade for the markets to figure out what I already knew. But even if you go back and look at my investment returns over the past ten years, I’m well ahead of the S&P 500. All the gain happened in the last year and a half, but who cares, right? What matters is where we are right now, and I am financially way better off having been ten years early than had I just missed it.

Peter frames the current move not as a speculative rotation but as a broad shift out of dollars into tangible stores of value, including industrial and agricultural commodities as well as precious metals:

I disagree; it is a move out of dollars into hard assets, into a monetary alternative to the dollar. Inflation ultimately is going to lift all boats and it’s not just metals that are gonna go higher—whether it’s precious metals or industrial metals, it’s agricultural commodities, it’s energy… Gold is being bought by central banks, and more central banks are going to be buying it this year than bought it last year.

He illustrates how policy choices like tariffs translate into real costs for consumers, undercutting any idea that businesses will absorb the levy for their customers:

I have purchased things that are now subject to tariff and they immediately increased the price that I have to pay. When you bring something into the country that I used to pay $100 for and now they say, “Well, we got to charge you 120 because of the tariff,” I don’t say, “Wait a minute, you eat the tariff.” Either I pay the tariff or I don’t get the products; that’s how it works. The tariff is a tax paid by the importer to bring a product into the country and, like any other tax, it gets added on to the cost of the product. 

Peter stresses that genuine productivity-driven price declines are stolen by inflation when central banks expand the money supply, a subtle but powerful libertarian critique of monetary finance:

Efficiency and productivity brings prices down; that does not give the government carte blanche to create inflation. Let’s say economic efficiencies and capitalism would have lowered prices by 5% but because the government creates inflation they only go up by 2% instead. That’s not a good thing—the government has stolen 7% of my gain. I would have been able to buy stuff 5% cheaper, but because they created inflation to finance their budget deficits everything costs me 2% more. That’s a 7% swing out of my pocket.

Finally, in the most anticipated part of the episode, Peter turns a skeptical eye on Bitcoin’s long-promised outperformance relative to gold, using Michael Saylor’s multi-year accumulation as a test case for the narrative that crypto is “digital gold”:

The whole selling point of Bitcoin was that it is better than gold; it’s a digital version, like high-octane gold 2.0. And if gold goes up, well Bitcoin will just go up even more. … That narrative was completely destroyed by Bitcoin’s failure to rally. And in fact look at the poster boy of Bitcoin buyers– Michael Saylor and Microstrategy where he spent over five years accumulating Bitcoin … He’s barely up– what is he up, 15%, 16%? That’s all he’s got to show for five years of non-stop buying.

For Peter’s analysis of the Fed’s latest decision, check out his latest podcast!