Economist and gold bug Peter Schiff usually has a lot to say, and last week Schiff explained in an interview that he thinks the United States will face a financial crisis worse than the “Great Recession” of 2008. Schiff explains that the United States has much more debt than it did then, and insists that the American economic downturn “is going to be a much bigger crisis when the defaults start”.
Chief market strategist at Euro Pacific Asset Management says lower US inflation ‘is only temporary’
As Peter Schiff detailed that he was going to liquidate his Euro Pacific bank, the economist sat down to discuss the US economy with Kitco News presenter and producer David Lin. The day before his conversation with Lin, Schiff explained that even though inflation seems to be calming down, he thinks the trend won’t last. “Paradoxically, investors are selling dollars and buying gold on a weaker-than-expected rise in the July CPI, as they believe the Fed will adopt less aggressive policy,” Schiff said. said on Twitter. “They are right to sell dollars and buy gold, but for the wrong reasons. The drop in inflation is only temporary.
US productivity fell 4.6% in the second quarter after falling 7.4% in the first quarter. Year-on-year productivity fell 2.5%, the largest drop since the series began in 1948. With falling productivity, real wages must fall and consumer prices must rise. Government created #inflation exacerbates both problems.
— Peter Schiff (@PeterSchiff) August 9, 2022
While speaking on Kitco News, Schiff elaborated on why he thinks the U.S. economic downturn will be uglier than the economic decline of 2008. Schiff says if the Federal Reserve keeps raising interest rates interest, a financial crisis is inevitable. “2008 was all about bad debts,” noted the gold bug and economist. “These were people who borrowed money and couldn’t pay it back. Loan collateral was not good because it was real estate and prices went down. Well, we have a lot more debt now than we had in 2008… And so it’s going to be a much bigger crisis when the defaults start.
This time around, however, the US financial giants will not be bailed out, Schiff noted. The economist remarked:
If they fail, it will be much worse, except with inflation being too high and the Fed fighting inflation. There is no TARP 2.0. All of these banks are going to have to be allowed to fail.
Schiff says US inflation ‘is going to be there for years and years, and probably the rest of this decade’
Schiff’s comments follow July’s Consumer Price Index (CPI) report from the U.S. Bureau of Labor Statistics, which reflected an 8.5% year-over-year increase. Following the CPI report, US President Joe Biden was heavily criticized when he said the US economy recorded 0% inflation in July. Biden’s comment followed the US government’s attempt to redefine the technical definition of the word “recession”. “If you believe the official CPI, then prices, which are already very high, have not increased during the month of July,” Schiff told the Kitco show host. Shif added:
I don’t think that’s something to celebrate… It’s not like consumers are really relieved by the lower prices. There is no doubt in my mind that we will get a number above 9.1%. We are far from done with this inflation problem. He’s going to be here for years and years, and probably the rest of this decade and more.
Schiff’s comment on the official CPI figures follows the article published on schiffgold.com the same day, which claims that the Bureau of Labor Statistics’ CPI calculation uses a government formula that underestimates the real price increase. Additionally, statistics from shadowstats.com alternative inflation charts show that inflation is much higher than the official reports.
Even multiple jobs don’t allow workers to keep up #inflation. In June, consumer credit jumped by $40.1 billion much more than expected, while credit card debt soared at an annualized rate of 16%, as consumers took on more debt to enable the purchase of basic necessities at higher prices.
— Peter Schiff (@PeterSchiff) August 5, 2022
Measurements of the Truflation Index also point to a much higher rate of inflation than the CPI, with August 14 data at 9.41%. During Schiff’s interview with Lin, the economist said he expects a “massive financial crisis” and major problems with the US dollar. When the dollar fails, it expects the values of gold and silver to skyrocket.
“The dollar has risen so far, in the early stages of this great inflation, because investors are under illusions about the ability of the Fed to contain inflation and bring it down to 2%,” Schiff concluded. . “When they realize the reality, this inflation is going to be well above 2% indefinitely, then the dollar is going to fall through the floor, then gold and silver are going to skyrocket.”
What do you think of Peter Schiff’s economic views and forecasts? Do you think Schiff’s predictions are correct or do you think he will be wrong? Let us know what you think about this topic in the comments section below.
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