The Fed's Biggest Fear Is "Complete Economic Collapse" - Peter Schiff Warns "You Ain't Seen Nothing Yet"

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by Tyler Durden
Monday, Feb 27, 2023 - 12:20 PM

Via Greg Hunter’s,

Money manager and economist Peter Schiff said in October the Federal Reserve “could NOT win the fight on inflation by raising interest rates.” 

As inflation just turned up anew, it looks like he was right—again. 

Schiff explains, “Based on the recent data we got... the inflation curve has bent back up."

" The months of declining inflation are in the rearview mirror.  Now, we are going to see accelerating inflation... and I think before the year is over, we are going to take out that 9% inflation high last year in year over year CPI (Consumer price Index)...and what that is going to show is what the Fed has done thus far in its inflation fight is completely ineffective. 

If the Fed is serious about fighting inflation, and I do not believe it is, it’s going to have to fight a lot harder than it has.  Interest rates need to go up much higher than anybody thinks, but that alone is not going to do the trick.  We also have to see a big contraction in consumer credit and lending standards rising so consumers can’t keep spending...

Consumers are running up credit card debt.  That is inflationary.  That is an expansion of the supply of credit.”

It gets worse when the Fed has to save the economy again.  Schiff predicts,

I think the Fed is going to have to throw in the towel on the inflation fight because it will be fighting something it fears more, which is a complete economic collapse...

The federal government may be legitimately forced to cut Medicare and Social Security instead of illegitimately cutting it through inflation....

We have this collapsing standard of living, but think about it as a tax.  This is what Americans are paying.  This is the price of big government. . . .

Higher prices are the price we pay for big government, and inflation is a tax.  Instead of raising our taxes, they are just printing money, and that devalues the money we have.”

What is the answer?  Schiff says, “We have to let the phony economy collapse so we can build a real economy on the rubble of this economic house of cards.”

There are going to be lots of losers in the coming collapse.  Schiff says,

People are going to suffer the consequences of this experiment gone bad. . . . We know how this experiment is going to end. 

They are not doing anything that Zimbabwe didn’t try, or Argentina didn’t try or the Weimar Republic.  They didn’t reinvent inflation.  It’s the same old thing.”

As a result, Schiff predicts big losses in many stocks (but not all), bonds and bank deposits.  Schiff contends, “They can’t cover the deposits at the FDIC. .."

"They have to acknowledge that the FDIC is bankrupt and people are going to lose money at a bank.  The losses are going to dwarf those in the Great Depression because we have a far more leveraged system now thanks to government intervention.

Schiff says he also likes gold and silver as a core investment and thinks they both go way up in price in a world where the dollar is eaten up by inflation.

In closing, Schiff says, “We already have inflation.  So, prepare for the consequences of inflation."

" It is going to raise prices, but it is also a massive transfer of wealth.  You have to position yourself to be a winner and not a loser. . . .Creditors are going to get wiped out.  People think they are playing it safe in a bond portfolio.  Look how bad bonds did last year.  It was the worst year in history, and you ain’t seen nothing yet.

There is much more in the 47-minute interview.

Join Greg Hunter of as he goes One-on-One with money manager and economic expert Peter Schiff, founder of Euro Pacific Asset Management  2.25.23.

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