Peter Schiff: The Fed Can Talk, But It Can’t Act

On Tuesday’s podcast, Peter breaks down the sharp correction hitting gold and silver after their historic run higher, and uses it as a launching pad to question whether the Federal Reserve has any real intention of fighting inflation. He also takes aim at Washington’s spending habits, arguing that neither party is serious about shrinking government, and closes with a memorable metaphor comparing the Fed to the powerless wizard behind the curtain in the Wizard of Oz.

Peter opens by walking through the weekend dip in the metals markets, noting that even with a Monday bounce, there’s still room to buy before we’re back above $4,000:

Silver traded below $50 for the first time in 2026. In fact, it traded below 49. Now both markets have recovered about half of Friday’s losses on Monday, but gold is still below 4,000. Gold’s at 39.45 as I am speaking. And silver is up just over a buck and a half. Back above 50 though at $50.53. But I did not expect the correction to be anywhere near this big. In fact, it’s obviously not just a correction. It is a bear market that we’ve gone through. … Part of that has to do with anticipation of Fed policy that the markets have gotten wrong.

From there, Peter pivots to the bigger question hanging over the metals selloff: what is the Federal Reserve actually doing about inflation? He lays out the contradiction at the heart of current Fed policy, noting that by its own logic, a rate hike should already be on the table:

So you would think, given those three things, the Fed would have hiked rates. Because after all, if we have this strong economy and the Fed is still accommodative, it makes sense that inflation is too high. And if inflation is too high and you recognize that and you want to bring it down, why not do something about it? Why not raise interest rates?

Instead of action, Peter says, all we get from the central bank is tough talk recycled from years past. He mocks the familiar script central bankers roll out whenever inflation rears its head again:

[Fed Chairman Warsh] said, we own the inflation problem. This time we’re serious. This time we’re really going to do something about it. We’re not pussyfooting around anymore. Don’t doubt our resolve. We understand how painful inflation is and how much it’s hurting people. So I’m the new cop on the beat. And I’m taking it seriously. Forget about what my predecessors did. You can rest assured. Those are different now. Well, nothing is different now.

The conversation then shifts to fiscal policy, where Peter argues that Republicans in Washington have done nothing to slow the growth of government, setting the stage for something far worse once Democrats regain control of Congress:

So if the party that hates government made government bigger, imagine what the party that loves government is gonna do and Trump is gonna sign on to whatever comes out of that Congress. You can bet your bottom dollar on that.

Tying fiscal recklessness back to the Fed’s credibility problem, Peter reaches for a classic pop culture image to describe what he thinks will eventually happen to the central bank’s reputation. He says the illusion of control the Fed projects will someday be exposed for what it is:

Just like with the Wizard of Oz, at some point the curtain is gonna go back and somebody’s gonna see what’s really standing there. It’s not this big, powerful, scary wizard. It’s just a little old guy behind the curtain, but he really can’t do anything. He doesn’t have any real power because he’s powerless.

Peter wraps up by explaining exactly why the Fed finds itself stuck. He argues the central bank has boxed itself into a debt spiral so completely that fighting inflation head on is no longer a real option, leaving nothing but rhetoric to fill the gap:

So we are in a position where we’re damned if we do, we’re damned if we don’t. The Fed has created a box for itself where it can’t fight inflation, because trying to fight inflation will bring about a crisis that the Fed fears even more. So the only thing they can do about inflation is talk about it. They can talk about fighting it because they can’t actually do it, but they hope nobody figures it out, that nobody calls their bluff.