Schiff w/ Joy: The Dollar’s Time is Limited

Last week, Peter appeared on the Shannon Joy Show to walk through why inflation is not a transient problem and how policy and politics are masking deeper economic risks. He connects recent price data, market vulnerabilities, and the dollar’s short-lived strength to argue that sound money — particularly gold — will expose the true state of the economy.

He begins bluntly on political spin, calling out leaders who downplay economic reality and mislead voters about their record and the state of the economy:

Unfortunately, Donald Trump is the liar in chief, right? He lies constantly. I mean, I only know about certain things that he’s lying about. There’s probably other things that he’s lying about that I have no idea. But when it’s obvious he’s lying, like when he talks about the economy, when he talks about inflation, when he talks about the tariffs, when he talks about, you know, his economy, his accomplishments.

Peter moves quickly from politics to the data that actually matters. He warns listeners that official inflation measures like the CPI can lag, and points to import/export price trends as a clearer forward-looking signal of inflationary pressure:

The most recent price data that we got for import export prices was a huge increase in both and annualizing it. You’re looking at 18, 19 percent increases. And I remember back in 2021 when everybody still thought that there was no inflation problem because they were looking in the rearview mirror of the CPI. I was looking through the windshield at import export prices and saying, look, look at what’s happening to these prices. This is real.

Peter notes the Fed’s arsenal — cutting rates and fresh money printing — can postpone a market reckoning, but at the cost of higher inflation. He also warns the current bubble may exceed 2008’s scale:

It may not happen because the Fed may preempt it, which they can do if they slash interest rates and they print enough money. So if they recognize how big the risk is, they can just paper it over with massive inflation, which is of course also not a get out of jail free card. It’s still going to be really bad. But I think we have a bigger asset bubble now than the one that popped in 2008.

On the dollar and gold, Peter explains the war-driven bid for dollars is small and temporary. He expects the dollar to roll over once gold resumes its advance, and he gives listeners specific price moves he’s watching as triggers:

The war has caused a bit of a bounce in the dollar. The thing is, it’s very small compared to the type of bounce that the dollar enjoyed in the past when there was a war breaking out. I think that this is going to be a short-lived reprieve for the dollar, and I think it’s going to roll over. It will probably happen when gold breaks out of this pullback. Gold’s been going down. Gold dropped from $5,500. On the weekend, the war broke out. Monday of this week, it got down to $4,100. Gold sold off. As we’re speaking, it’s bounced back to $4,500, a little over $4,500.

He closes by explaining why rising inflation together with static nominal rates collapses real interest rates — and why that’s bullish for gold. His math is simple and useful for anyone deciding how to hedge purchasing power:

Let’s say people thought there was going to be 3% inflation or 2.5% inflation and they thought the Fed was going to cut rates from 3.5% to 3%, that meant that interest rates were maybe a half a point above what you thought inflation was going to be, so you had a real rate of maybe a half; but let’s say the Fed doesn’t cut rates, rates stay the same, but inflation doubles to 6%, real interest rates have collapsed, they’re now like negative at 2.5%, that is bullish for gold. The fact that the Fed is going to sit tight while inflation soars, that is the bullish thing you can have for gold.