Peter Schiff: The Fed Has Lost the Inflation War

In his latest podcast, Peter breaks down the latest inflation data and explains why the Federal Reserve finds itself cornered with no real options left to fight rising prices. He also analyzes Strategy’s Bitcoin buybacks, the political blame game over the affordability crisis, and Donald Trump’s curious claims about his own net worth.

Peter opens by diagnosing the Fed’s predicament following another round of disappointing inflation numbers. He argues the central bank is structurally incapable of raising rates high enough to actually curb inflation:

What these bad inflation numbers show is that the Fed has lost the war, that it’s impossible for the Fed to fight hard enough to win because it can’t, because it put itself, our country in a box, where we can’t afford to pay any interest rate that is actually high enough to do something about this inflation.

Despite this reality, markets continue to react to hot inflation prints by selling off gold and silver, a reflex Peter attributes to algorithmic trading rather than sound reasoning. He believes these knee-jerk sell-offs are actually opportunities for those paying attention:

So the traders are programmed, or program their algorithms, whenever these hotter than expected inflation prints come out, they automatically dump gold, dump silver, sell mining stocks. But the smart money that understands what this means is accumulating on these sell-offs. That’s why over the longer term, these sell-offs are just buying opportunities because the gold and silver markets recover from this noise.

Shifting gears, Peter turns his attention to Strategy and Michael Saylor’s relentless Bitcoin buybacks and the illusion of wealth they represent. He draws a pointed comparison to how absurd this behavior would look in any other corporate context and blasts the company’s preferred stock, “Stretch:”

I don’t remember Apple buying back their iPhones because people didn’t like them, so this great product now all of a sudden, Strategy has to buy it all back because their customers don’t really want it anymore, but imagine how much lower the price of Stretch would be if Sailor hadn’t bought back over 20% of the outstanding issue, and he has to keep buying because the minute he stops buying, the price is gonna collapse.

Returning to the affordability crisis gripping American households, Peter pushes back against the conventional narrative that blames corporations or wages. He insists the real culprit is government spending itself, which crowds out household budgets:

They don’t understand where the affordability crisis is coming from. It’s coming from government spending. What’s not affordable is government. That’s the point that they don’t understand. The reason that people can’t afford stuff is because they’re spending too much of their money on government, and so there’s not as much left over for other things.

From there, Peter pivots to some eyebrow-raising comments from President Trump regarding his personal net worth and the debt behind it. He finds it hard to believe that someone so vocal about his business acumen would claim ignorance about his own finances:

So first, he brags about how great he is at making money. Then he actually said when the guy talks about the $3 billion, he said, well, you know, I don’t know. I don’t really know what happened to my net worth. I don’t keep track of it. I’m not really sure if it goes up or if it goes down. I’m not really paying attention. I mean, what? Who the hell does Trump think he’s fooling, saying he doesn’t even know if his net worth went up or down?

Peter closes the episode by circling back to the inflation-driven sell-offs in gold and silver, reiterating that these moments should be seen as gifts rather than warning signs. He maintains that the market simply hasn’t caught up to what rising inflation really means for precious metals:

These are one-off events when you get these hotter-than-expected inflation sell-offs. These are the gifts from the trading gods. Because it’s actually good news being marketed as bad news. It is not bearish for gold and silver when we have higher inflation. It is bullish. The markets just don’t know that yet..