Peter Schiff: Stagflation Finally Revealed

Tyler Durden's Photo
by Tyler Durden
Tuesday, Apr 30, 2024 - 11:20 AM


In this week’s episode, Peter covers the dismal figures released Thursday and Friday, horrible tax policies, and the appalling lack of transparency in our government.

Stagflation is back in the economy, as last week’s GDP and PCE figures reveal. The US GDP growth metric for Q1 was only 1.6%, much lower than expected. To make matters worse, the PCE (Personal Consumption Expenditures) price index came in hotter than expected, staying steady at 2.8%.

Peter has been predicting stagflation for a while, and now that it’s here, he sees mining stocks as an opportunity:

“That’s one of the reasons I’m so over-weighted in mining stocks, apart from the valuation, is if there is stagflation, you don’t have a better economic environment. Because you have inflation that the Fed can’t fight, because you have a weak economy. So the Fed is reluctant to raise rates, because it’ll weaken the economy further. … Plus, the weak economy widens the budget deficits. And that means a weaker dollar, more money printing, more inflation. So the best possible economic scenario for gold stocks is stagflation, which of course is the worst economic scenario for the economy.”

High consumer spending is especially alarming, considering these figures are probably conservative and underestimate the true extent of inflation in the economy:

Why are people spending more? Well, because things cost more. That’s why they’re spending more. They’re not buying more. And even though these numbers are supposed to be adjusted for inflation, they’re not because you know the government numbers don’t accurately capture how much inflation there actually is.”

The savings rate also dipped from last month, dropping from 3.6% to 3.2%. Saving is a great economic indicator, as Peter explains:

​​This is the lowest savings rate I think in a couple of years. So this is not good news— that Americans are having to deplete their savings. This is bad news. When the economy is good, you save more. That’s when you add to your rainy day fund. You have to tap into it when times are tough and you’re struggling. And that’s exactly what Americans are doing. They’re struggling, and they’re tapping into their savings in order to do it.

Instead of addressing the Fed’s disastrous monetary policy, the Biden administration is trying to raise taxes on wealthy Americans, which means raising taxes on everyone eventually:

They’re promising just to tax the rich, right? The millionaires and billionaires. Of course, that’s what they always say. That’s what they said in 1916 when they got the income tax or 16th amendment. It was just to tax Carnegie, Rockefeller, Vanderbilt. They were going to lower taxes on the middle class, right? If we just allow this 4% tiny little tax, that was the maximum bracket. … Next thing you knew that 4% rate was like 70, 80%. And then by the Second World War, they had the withholding tax and pretty much everybody was paying the income tax.”

Peter addresses recent proposals for wealth taxes on the ultra-wealthy, pointing out how they’re both illegal and counterproductive:

“It would be very destructive to the economy, to wealth creation, to production, to employment. So it would be a complete economic disaster as well as being unconstitutional. So I mean, the good news is these are just talking points for the election. So it’s not going to actually happen. Now, it might happen if Biden won the election and the Democrats got the House and the Senate. Then it actually might happen. But as of now, it just shows you where they stand, and they’re throwing red meat to their base, which is basically socialist.”

At the end of this episode, Peter updates us on his FOIA request for the closing of his bank in Puerto Rico. After the government essentially refused to disclose all relevant information for his case, Peter explains how corrupt and shady this whole affair is:

“I have a right to see this information, but they don’t want me to see it. I think because it reveals the commission of a crime. And so, you know, the IRS can commit a crime and then they can cover it up. Because they’re the government, right? They prosecute the citizens for committing crimes, but then they get away with murder. They commit crimes all they want because they’re the cops, right? And they make the rules.”

Be sure to check out Peter’s recent interview with Anthony Crudele, in which they discuss the traditional value of gold, Bitcoin’s role in the economy, and the perpetual inflation that defines today’s economy.