Peter Schiff: Tariffs, Fake Data, and the Fed’s Coming Inflation Trap

In his latest episode of the Peter Schiff Show, Peter returns to Puerto Rico to dismantle the government’s economic reporting system, expose the contradictions in Trump’s pressure campaign against the Federal Reserve, and share a personal story that reveals the hidden costs of tariffs. He closes with a historical parallel that shows just how absurd protectionist policy really is, no matter the era or excuse.

Peter opens by taking aim at the endless parade of economic statistics that dominate headlines and move markets, despite being unreliable at best:

Now again, as I’ve been saying, none of these numbers even matter. Who cares what the number is, because it’s meaningless, because it’s always revised, and it’s almost always revised down. Every once in a while, the revisions are up, but even those could be downwardly revised. You have no idea. They can go back a year later and revise months and months of employment numbers, which is what they’ve been doing for years. Yet for some reason, the market reacts to these numbers, like Moses just brought them down on tablets, on Mount Sinai.

From there, Peter turns to Trump’s obsession with low interest rates, unpacking why the president’s nostalgia for the “good old days” ignores just how much America’s financial position has changed:

First, he said that the United States deserves to have the lowest interest rates in the world, just like we had in the old days, the good old days when we had low interest rates. And that was true. At one point, we had very low interest rates relative to the rest of the world. And Trump wants to go back to those good old days. The problem is we can’t go back to the interest rates of the good old days without going back to a lot of other things that we had in the good old days that we don’t have now. Because back in those days, a lot was different. We were the world’s biggest creditor nation or a creditor nation. Now we’re the biggest debtor nation.

Peter then digs into the logic, or lack thereof, behind Trump’s threats toward the Federal Reserve. He points out that the very structure of the threat reveals its emptiness:

I mean, first of all, how do you even threaten the Federal Reserve? Say, if you don’t lower interest rates, I’m gonna send the US economy into a collapse because I’m gonna ban trade. I mean, what does that have to do with the Fed’s decision on interest rates? I mean, you’re basically saying, look, if you don’t do this, I’m gonna do this really bad thing because obviously it must be a bad thing if it’s a threat. If he’s saying, I’m gonna do this unless you do something that you don’t wanna do, that doesn’t work if what you’re promising to do is good. It’s only if you’re promising to do something bad. 

Building on this, Peter connects the dots between the deteriorating demand for US debt and the Fed’s likely response. He warns this dynamic sets the stage for the very inflation policymakers claim to be fighting:

So everybody that was buying treasuries is now selling them. And we’ve got more treasuries to sell than ever before, which is why we’re such a bad credit risk right now. Trump doesn’t understand that because the Fed is gonna end up buying all the treasuries that nobody else wants. And the only way they can do that is to create inflation.

Peter closes the episode by drawing on a historical example to underscore that protectionism has always been absurd, regardless of the era or the excuse used to justify it:

As absurd as that is, it’s just as absurd to have protectionism for anything. So everything that they are trying to do, and of course, this was an example. This was being used because the government back then was trying to protect a particular industry from competition by using tariffs, and this was to illustrate the absurdity of what the king was trying to do. Well, it’s just as absurd when we’re trying to do it.