Peter Schiff: Debt And Taxes

Tyler Durden's picture

Submitted by Peter Schiff of Euro Pacific Capital,

The red flags contained in the national and global headlines that have come out thus far in 2014 should have spooked investors and economic forecasters. Instead the markets have barely noticed. It seems that the majority opinion on Wall Street and Washington is that we have entered an era of good fortune made possible by the benevolent hand of the Federal Reserve. Ben Bernanke and now Janet Yellen have apparently removed all the economic rough edges that would normally draw blood. As a result of this monetary "baby-proofing," a strong economy is no longer considered necessary for rising stock and real estate prices.

But unfortunately, everything has a price, even free money. Our current quest to push up asset prices at all costs will come back to bite all Americans squarely in the pocket book. Death and taxes have long been linked by a popular maxim. However, there also exists a similar link between debt and taxes. The debt we are now incurring in order to buttress current stock and real estate will inevitably lead to higher taxes down the road. However, don’t expect the taxes to arrive in their traditional garb. Instead, the stealth tax of inflation will be used to drain Americans of their hard earned purchasing power.

I explore this connection in great length in my latest report Taxed By Debt, available for free download at But diagnosing a problem is just half the battle. I also present investing strategies that I believe can help Americans avoid the traps that are now being laid so carefully.

The last few years have proven that there is no line Washington will not cross in order to keep bubbles from popping. Just 10 years ago many of the analysts now crowing about the perfect conditions would have been appalled by policies that have been implemented to create them. The Fed has held interest rates at zero for five consecutive years, it has purchased trillions of dollars of Treasury and mortgage-backed securities, and the Federal government has stimulated the economy through four consecutive trillion-dollar annual deficits. While these moves may once have been looked on as something anything goes.

But the new monetary morality has nothing to do with virtue, and everything to do with necessity. It is no accident that the concept of "inflation" has experienced a dramatic makeover during the past few years. Traditionally, mainstream discussion treated inflation as a pestilence best vanquished by a strong economy and prudent bankers. Now it is widely seen as a pre-condition to economic health. Economists are making this bizarre argument not because it makes any sense, but because they have no other choice.

America is trying to borrow its way out of recession. We are creating debt now in order to push up prices and create the illusion of prosperity. To do this you must convince people that inflation is a good thing...even while they instinctively prefer low prices to high. But rising asset prices do little to help the underlying economy. That is why we have been stuck in what some economists are calling a "jobless recovery." The real reason it's jobless is because it's not a real recovery!  So while the current booms in stocks and condominiums have been gifts to financial speculators and the corporate elite, average Americans can only watch from the sidewalks as the parade passes them by. That's why sales of Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors. Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt, which at some point in the future must be repaid.

As detailed in my special report, when President Obama took office at the end of 2008, the national debt was about $10 trillion. Just five years later it has surpassed a staggering $17.5 trillion. This raw increase is roughly equivalent to all the Federal debt accumulated from the birth of our republic to 2004! The defenders of this debt explosion tell us that the growth eventually sparked by this stimulus will allow the U.S. to repay comfortably. Talk about waiting for Godot. To actually repay, we will have few options. We can cut government spending, raise taxes, borrow, or print. But as we have seen so often in recent years, neither political party has the will to either increase taxes or decrease spending.

So if cutting and taxing are off the table, we can expect borrowing and printing. That is exactly what has been happening. In recent years, the Fed has bought approximately 60% of the debt issued by the Treasury. This has kept the bond market strong and interest rates extremely low. But a country can't buy its own debt with impunity indefinitely. In fact the Fed, by winding down its QE program by the end of 2014, has threatened to bring the party to an end.

Although bond yields remain close to record low territory, thanks to continued QE buying, we have seen vividly in recent years how the markets react negatively to any hint of higher rates. That's why any indication that the Fed will lift rates from zero can be enough to plunge the markets into the red. The biggest market reaction to Yellen's press conference this week came when the Chairwoman seemed to fix early 2015 as the time in which rates could be lifted from zero. That possibility slapped the markets like a frigid polar wind.

Janet Yellen may talk about tightening someday, but she will continue to move the goalposts to avoid actually having to do so. (Or as she did this week, remove the goalposts altogether). As global investors finally realize that the Fed has no credible exit strategy from its zero interest policy, they will fashion their own exit strategy from U.S. obligations. Should this happen, interest rates will spike, the dollar will plunge, and inflation's impact on consumer prices will be far more pronounced than it is today. This is when the inflation tax will take a much larger bite out of our savings and paychecks.  The debt that sustains us now will one day be our undoing.

But there are steps investors can take to help mitigate the damage, particularly by moving assets to those areas of the world that are not making the same mistakes that we are. In my new report, I describe many of these markets. Just because the majority of investors seem to be swallowing the snake oil being peddled doesn't mean it's wise to join the party. I urge you to download my report and decide for yourself.

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Belrev's picture

One of chief leaders of Ukrainian Right Sector military wing Alexander Muzychko - hero of Ukrainian Revolution RT news background of Muzychko

Landotfree's picture

"But there are steps investors can take to help mitigate the damage, particularly by moving assets to those areas of the world that are not making the same mistakes that we are"


Sorry Peter, the rest of the world is going to collapse and burn once the global credit system is unable to expand.   You remember what your customers portfolios looked like in 2008 and 2009, where you had them investing in foreign stocks, gold and silver.   I do... most of your clients were down 60%.  

Oh yeah, that's right you called the housing top and didn't short... lol.

The rest of world is not imploding because of the actions taken, of course, that is all temporary, eventually the amount of power needed to sustain the unsustainable will be too great.... the whole global system will collapse.   There is no backup system there Peter.

Crash Proof.... haha... .you didn't crash proof anything.   Let me see you think that is going to work next time?



scuttlebutt's picture

Live debt free and hope for the best

Boris Alatovkrap's picture

When end is near, make sure you are having good neighbors.

fonestar's picture

Peter Schiff was wrong about Bitcoin.

Mister Kitty's picture

Let's be fair to Peter Schiff.  If you're not a member of the circle-jerk, then it's tough to get things right. The whole game is rigged.  

shovelhead's picture

Chubby well marbled neighbors are best.

And BBQ sauce.

newworldorder's picture

Pick a rural county in the US where you have family and are known to locals.

codecode's picture

and develop a marketable skill(s)...

A Lunatic's picture

Such as stealing, informing, killing and door kicking.......

SilverIsKing's picture

Physical metals can sustain a high impact crash.

newworldorder's picture


My vote is for a small Jeep with off road tires 1995 to 2005 vintage in good mechanical condition.

RichardParker's picture

I'd go for something like an old volvo station wagon (pre-smog) with a transplanted chevy 350 small block in it and no driver monitoring software installed by the manufacturer.

JuliaS's picture

Notice how he doesn't say China. Cat ate his tongue? He used to be all about moving money to China. China this, china that. I guess somewhere half way through he figured out his error and now he's been right all along saying something completely different. No wonder his "Crash-proof" bible goes through revisions almost annually.

I'll repeat the same thing I said about him in 2009. He's the kind of person who rescues people from a burning building by escording them into a nearby shed full of gasiline and fireworks.

He makes some funny and informative videos criticising the the policy, but he should stick to entertainment. Google his track record and you'll see how practical he advise is. He was right about the housing bubble - that it was going to implode. Been ringing that bell since 2000. Well, ain't he special!

Been talking down the US dollar for even longer. Well, if you followed any of his investment ideas, by now you'd probably have no dollars left to criticise.

RafterManFMJ's picture

Crash proof.

Small stone house with a wood burner for primary or backup heat.
At least a few acres for food cultivation.
Water source.
Clued in neighbors - hopefully also family.
Some chickens.
A few dogs of unknown parentage.
A pistol, shogun, and AR or AK pattern rifle.

Not crash proof, but crash resisrant.

scuttlebutt's picture

All what you say is true Julias.

Unfortunately, those who can manipulate are much stronger than those with only common sense words.

One day, I'm sure, the likes of Shiffer, (which are few) will be proven true.

Manipulation can last a long time, but not forever.

JuliaS's picture

In the land of the blind, the one-eyed man is king. To the mainstream majority, Peter is indeed an eye-opener.

To us here at ZH, he's just a funny pirate with an eye-patch. He's fine as long as you don't let him handle your finances.

Renewable Life's picture

LOL, "the company" and NWO globalist are getting confused and desperate now, they saw all the hippy, peace and freedom shit reincarnated, didn't turn out so well in the ME!  Time too enroll the nazi thinking motherfuckas now, they'll make sure the objective is accomplished!

Whats the NWO objective you ask?  Answer: make sure a free floating, backed by nothing more then toilet paper, USD is NEVER challenged as the WRC! 

At what cost, you ask?  At ANY and ALL COST, if need be!

ILLILLILLI's picture

One notable thing about herion addicts is all they focus on is their next fix...regardless of the fact that the building is burning down around them.

It's apparent that this same kind of behavior is prevalent in the financial industry...


AssFire's picture

As one who has thought the implosion woud have already occured against the mother of all ponzis.. I must ask:

Since when has sustainability mattered?? I'd say not since we began paying people not to riot with the formation of the "Great Society". As a Texan, LBJ is without a doubt the biggest embarrassment to the people of Texas. Reality will one day come, until then I lament our narcissist society and just plain hope they (the Fed, bankers and US Government) FAIL.

unitwar's picture

No my friend, as a fellow Texan, GW Bush is our greatest embarassment.  LBJ could at least present a coherent thought.  Nobody laughed and made fun of LBJ and didn't pay for it.  Everybody, except Texans and most Americans thought GWB was a joke.  Rick Perry is a close second.  GWB made LBJ look like a miser!  GWB was guns and butter on steroids.  At least LBJ's butter was distributed evenly.  GWB's butter went straight to his cronies, the oligarchs on Wall St and the MIC.

Charles Wilson's picture

So...LBJ gets into politics with a value of about $55,000 and ends up valued at anywhere from $55 mil on up to "Real Money".

All on $20,000 +/- salary throughout his career.

What a Capitalist he must have been to be able to do that!  We ought to fall down on our knees and pray to god that LBJ has a nice mansion at the highest levels of heaven, right?


unitwar's picture

Don't get me wrong.  I am no LBJ lover.  He was a true scumbag as only a Texan can be.  There should be a law against anyone from Texas being president.  We are a disaster as presidents.  Lets look at metrics though.  The deficit was $60.14 Billion under LBJ and $459 Billion under GWB.  GWB did much more damage to the country.  He began the implementation of the police state, which matters more to me than the budget deficit.  Before you red team blue team jaggoffs start frothing at the mouth, Obama has just put the petal to the metal on what GWB started.  They are both fascistic corporate feudalists working for the same people.  


Howdy from outside Houston. You are both right and wrong 

There are 4 principal presidents that presided over and pushed this country over the edge.

Woodrow Wilson (FED, IRS, League of Nations), Franklin Delano Roosevelt (Who made communism ok and was the first democratically elected Fascist), LBJ (who decided we could have Guns, i.e Vietnam and Butter :created govt jobs for the unemployable by expanding the welfare state and all of its agencies) and Barack Hussein Obama (who will preside over the collapse with the gutting of the economy and expanding beyond LBJ's vision with Obamacare and everything else he can do that follows the Cloward-Piven model.)

The Bushes (41, 43) are the willing accomplices and in many ways did far more damage to this nation because they were trojan horses. (Personally I think Bush 43 was worse than LBJ because LBJ was at least transparent about his new deal beliefs). Bush 41 only got elected becuase he was Reagan's third term. That blue blood Rockefeller republican is nothing but a NWO progressive who, with his thousand points of light bullshit, help to destroy any semblance of principle in the republican party. (I'm ashamed that my alma mater hosts his Library) and it galls me that he call himself a Texan. He is a Yankee Blue Blood Carpetbagging NWO POS

Worse is his Faux conservative George 43 who is a progressive who lied about his conservative roots by putting on boots and throwing a few pitches out in Dallas. . He doubled the DEBT on his watch and deserted core principles at the counsel of his stooge Rove and became Demo Lite. Bush prostituted himself with the Meidcare part D (which now has a higher liability than freaking Medicare itself). Bush bankrupted  this country by the engagement in Iraq and Afghanistan and fed the authoritarian monster that is the police state. He gave Obama everyhing he needed to complete the destruction.

The Bushes are worse in my opinion because at least the Dems act like Dems. The Bushes sold this country out far more. Obama has an excuse, he is American by birth but not by identification. Frank Marshall Davis saw to that.

We are screwed and all of this POS's had a hand in it



machineh's picture

Deserving at least honorable mention are Nixon and Reagan.

Nixon signed off on the federal War on Drugs (Drug Control Act of 1970) and the destruction of banking privacy (the Orwellian-named Bank Secrecy Act, which made banks into narcs for the state).

Reagan signed off on federal sentencing guidelines (Crime Control Act of 1984) which filled the Gulag, and the Anti-Money Laundering Act of 1986 which created a whole new class of victimless crime with no precedent in the common law.

If LBJ (a likely conspirator in Kennedy's assassination) is the Great Satan, Nixon and Reagan are certainly little Satans.

Time to stop celebrating Texas Independence Day on March 2nd, and instead MAKE IT HAPPEN. Every fedgov politician from Texas is a sellout.

RichardParker's picture

Not to mention that social security benefits became taxable income under Reagan...  Double taxation at its finest.

Stuck on Zero's picture

unitwar:  As a Texan you have to know that GW Bush was not a Texan.  He was a blue blooded New Englander born in Ct and attending Yale.



McMolotov's picture

Wow, he seems like a pleasant fellow. Bet he's a big hit at parties.

ebworthen's picture

Belrev - I would assume the down arrows are because you used the words "hero of Unkranian Revolution" without putting "hero" in quotation marks.

That Muzychko is one sick fuck; maybe Spetsnaz will take him out 'ere long.  It would be o.k. with me.

Rafferty's picture

Sum ting wong here.  The new Prime Minister and newly-appointed governors of the major cities are all Jewish while the dual citizen oligarchs who plundered the country are back in business and thriving.  I suspect a false flag dimension to this 'Nazi' phenomenon.

Kirk2NCC1701's picture

As I recall, Schiff Sr. is in Debtor's Prison for refusing to pay taxes.

McMolotov's picture

"His name is Irwin Schiff! His name is Irwin Schiff! His name is Irwin Schiff!"

shutdown's picture

"If you like your prison, you can keep your prison."

sleigher's picture

His argument was the same as many who have fought and won that battle.  Show me the law that says I have to pay.



preaching to the choir I suppose...



ben_bernanke's picture

Yes, doom is right around the corner. Wash, rinse repeat. What, another 5% correction? Oooooh, I'm scared.

w00dmann's picture

...and this is all thanks to Obama, the most ego-centric President in history, a guy who is more concerned with how pretty his face looks on the TeeVee than actually doing anything.  I (along with many others) really had high hopes when this assclown was elected in 2008; talk about letdown!  Exactly how often does he talk about the economy?  The unemployment rate?  The bubble market?  Where are the great new ideas to stimulate the economy?  Seriously, WHERE ARE THEY???  I sit and watch day by day as Oblamma does NOTHING, says NOTHING about the problems that truly afflict his country.  instead he would rather get a photo-op handing out awards to football teams, or talking about how he was given a "2nd chance" after a troubled youth smoking pot...  Poor baby. THIS is what people elected?  Honestly, I do not know how this ego-fuck can look himself in the mirror each day.  His country is in CRISIS, his precious Fed has had to institute EMERGENCY MONETARY MEASURES for the past 4 YEARS... (count 'em - YEARS) - doesn't that mean ANYTHING to him?  No?  Apparently not.  He sits there fiddling while his entire country burns around him, utterly unconcerned - just so long as he gets to flap his purty mouth on the TeeVee, everything's swell.  The entire middle class in the United States is being gutted in real time, and he does nothing.  What a selfish fuck.  History will not be kind to Mr Obama - nor should it be.



A Lunatic's picture

Obama promised to fix everything, what the fuck more do you want........!?

EconomicGenocide's picture

Get a faqing clue. The red and blue are equal in the countries demise via allowing the Z scourge to control our banks and currency. Reagan started the rapid descent and the ball just keeps rolling. As long as the American people are delusional enough to believe in Christianity, they will be the sheep of the so called, "chosen people" from the "holy land".


I mean what we are watching is people doing "Gods work",,,,,,,,,,,,,,,,,,,,right!!

Bryan's picture

It's always the Jews with you people, isn't it?  Why don't you stop pigeon-holing whole cultures and races and pull your head out long enough to find the real issues in the world, and start with yourself.

RichardParker's picture

Not the first time in history the Jews have been made a scapegoat. Next thing you know they'll blame global warming er, uh I mean climate change on the Jews. 


SilverIsKing's picture

"I (along with many others) really had high hopes when this assclown was elected in 2008."

You did? What gave you any impression that this guy had a clue about anything relevant? You want him to talk about the economy? To stimulate?

What we need is for him and everyone else in DC to get out of the way and let the market function without their involvement. Sad to say now it's too late anyway.

w00dmann's picture

What we need is for him and everyone else in DC to get out of the way and let the market function without their involvement.


Totally agree.  We can dream can't we?

Uncle Remus's picture

."We can dream can't we?"

There's a kamp for that.

Renewable Life's picture

These cocksuckers in DC havent been "out of the way" in this Country since 1912, you didn't think some clown Prez from our lifetime was the cause i hopey????

Each one has just built on the madness and Government control from 1913 until now!

I have no fucking idea when this shit will get "too heavy" to sustain, but I DO KNOW this, when this bitch starts to go, it wont go quietly!  Russia, india, and China have all foreshadowed THEIR awareness of this fact in the last two weeks during this Ukrainian drama, and they've made it clear, they wont be drug under the water with the Americans and Euro's!

El Vaquero's picture

I had high hopes that he would only be a partial disaster.  Instead, we got a full disaster.

FLHRS's picture

He's in way over his head.  It would be bad enough if this "US mess" was the only worry.  Europe is worse off then the US.  Russia's economy is weak.  China has their issues, though they are the strongest of the bunch.  The war cycles are gaining speed.  Social unrest.  It will be amazing if his Chicago, thug, lying, political skills (which he is very good at) can get him through the next few years without hurting us/the citizens too much.

awakeRewe's picture

" History will not be kind to Mr Obama - nor should it be."

The the hell with history ... the present should not be kind to this prick!