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Peter Schiff: You Can Print Money But You Can't Print Stuff

Tyler Durden's Photo
by Tyler Durden
Wednesday, Aug 25, 2021 - 11:00 AM

Via SchiffGold.com,

As prices continue to spiral upward and the Federal Reserve maintains its inflationary monetary policy, a lot of people in the mainstream keep talking about inflation as a good thing. Peter Schiff said it seems like they’re trying to soften us up and make us willing to accept higher inflation. But as he explains in this clip from his podcast, these pundits are missing a fundamental truth - no matter how much money the Federal Reserve prints, it can’t print actual stuff.

Peter said he read an article claiming that higher inflation could lead to a “jobs boom.” The author argued that since tighter monetary policy to battle inflation would destroy jobs, allowing inflation to run hot with a continuation of loose monetary policy will create jobs. The pundit also claimed it would lead to higher real wages and even reduce inequality by helping create more, better-paying jobs — particularly for African Americans.

Peter called this pure BS.

The opposite is true. The people who suffer most from inflation are workers. Real wages fall as a result of inflation. Nominal wages may rise, but real wages will fall, and it is the poor, it is the middle class that get hit hardest by rising consumer prices.

Peter said inflation will ultimately widen the wealth gap even further. Inflation will make assets belonging to the rich more valuable while effectively wiping out the debt they incurred to accumulate them. Meanwhile, it will diminish the value of savings along with the purchasing power of the wages earned by the poor and middle class.

Imagine believing that inflation is somehow a good thing — that you can actually create wealth and prosperity by simply raising prices.

Just printing money and having prices go up, that’s the ticket. That’s how you create good jobs and that’s how you bring prosperity to the downtrodden — is by destroying the value of their savings and their wages and making their cost of living go up. It is utter nonsense that people believe this.”

Just look at countries that have had high inflation. They have all been economic disasters. The most economically prosperous countries typically have low inflation rates.

So low inflation and prosperity go hand-in-hand. High inflation and poverty – they go hand-in-hand.”

Inflation is already having a negative impact on the US economy. Retail sales dropped significantly in July.

I think the reason that retail sales are falling is because consumers can’t afford to buy as much now that prices are higher, and so they’re cutting back. And of course, another reason that sales are falling is because some of the money has run out. A lot of the people who were shopping were using stimulus money. Well, the stimulus money is gone. They’ve already spent that money, and they have nothing left. So, they’re cutting back on their spending. So, you’re already starting to see inflation take a toll on retail sales.”

If the US government and the Fed try to boost consumer spending again with more stimulus, that will just cause another wave of price increases.

So, you can’t solve this problem with inflation because inflation is the problem. Because if you just print money and give it to people to spend, well, then it’s going to mean that prices are going to go up, and they’re not going to be able to buy stuff because it’s going to cost more money. You can’t make yourself rich by printing money.”

There is a limiting factor but it’s not the amount of money. The limiting factor is in production. It is in the supply of goods.

The money is irrelevant. The money is going to derive its value from how much goods that are produced. So, the money supply could shrink. All that means is prices would go down. … The limiting factor on consumption is the number of goods that you produce. If you simply produce more money and let people use it to buy stuff, well, prices just have to go up. That’s what these guys don’t seem to understand yet – that you can print money, but you can’t print stuff.

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