Peter Schiff: Socialism Simply Can’t Work

In Wednesday’s episode of his podcast, Peter walks through the self-reinforcing cycle of deficits, inflation, and interest rates that he believes is cornering the U.S. economy, and explains why rising inflation numbers should be sending investors into gold rather than out of it. He also touches on the deteriorating housing market, offers a refresher on what socialism actually is, takes aim at Trump’s claims about a Russia-Ukraine ceasefire, and closes with a startling account of a banking scandal involving his own bank that he says dwarfs Watergate.

Peter opens by laying out the vicious cycle he sees driving U.S. fiscal policy into a corner. It’s hard to overstate how much the government’s growing deficits are actively making everything worse:

We have these huge budget deficits that are rising. That drives the inflation, which leads to rising interest rates. The rising interest rates not only raise the deficits, but weaken the economy. And the weaker the economy is, the bigger the deficits become. And now we’re back at the beginning.

From there, Peter pivots to how markets are misreading high inflation prints. Rather than treating hot inflation data as a sign the Federal Reserve needs to keep fighting, Peter argues it’s actually proof the battle is already lost, and that gold is the logical response:

What the markets should do in response to these high inflation numbers is they should buy gold. They should recognize that these high numbers are not a sign that the Fed just has to fight harder to win the battle against inflation. It’s proof that the Fed has already lost the battle against inflation. I don’t care if they hike rates another two or three times.

Turning to the housing market, Peter describes a standoff between buyers who are priced out and sellers who haven’t yet come to terms with reality. He explains that the resolution to this standoff can only go one way:

Now eventually something has to give, and the only thing that can give is the sellers. They have to capitulate and lower their prices because they can do that. The buyers can’t pay more because they can’t get approved for the mortgage. They simply can’t afford it. They’re maxed out. So the only way that homes are gonna sell is at lower prices.

Peter takes a moment to clarify a term that gets thrown around loosely in political debates. He breaks down what socialism actually means in practice, and why its lofty goals never translate into reality:

What socialism actually is, is when the government owns or controls the means of production and organizes it for the collective benefit of everybody. So yes, the goal of socialism is for everybody to live a good life, for everybody to be equal, but everybody to have all this good stuff and have a high standard of living. That’s the goal, but they don’t achieve it because their method for achieving it can’t work.

Peter then turns his attention to foreign policy, taking a shot at President Trump’s handling of the Russia-Ukraine conflict. He mocks the idea that simply declaring a ceasefire makes it so:

So that’s it. Donald Trump believes that Russia and the Ukraine agreed to a ceasefire because he said there was a ceasefire. He willed it, he imagined it into existence. And that’s why there’s a ceasefire. Not because the two sides actually agreed to a ceasefire. No, he just said that there was a ceasefire and that made it true.

He closes with an update on lawfare and corruption in the government, noting how well connected corporations are treated differently than his bank was. The worst part? Nobody knows because the media doesn’t report honestly:

The media is completely burying the fact that I won that lawsuit because the media wants to protect their own, even when their own are unethical, when they’re lying, they’re committing fraud. So it’s not just an indictment of the government, the corruption of the government, but the corruption in the mainstream media. And that’s why it’s so important that we have channels like mine, podcasts, YouTube. People have to tune out the mainstream media because you’re never gonna get the truth.