The economist and gold bug Peter Schiff usually has a lot to say, and this past week Schiff explained during an interview that he believes the U.S. will face a financial crisis worse than 2008’s ‘Great Recession.’ Schiff explains that the U.S. has a lot more debt than it did back then, and insists America’s economic downturn “is going to be a much bigger crisis when the defaults start.”
Chief Market Strategist at Euro Pacific Asset Management Says the Decline in US Inflation ‘Is Only Temporary’
Peter Schiff explained that he was going to liquidate Euro Pacific Bank. David Lin, an anchor at Kitco News and producer of Kitco News, sat down with him to talk about the American economy. Schiff stated that although inflation appears to be slowing, the trend is not likely to continue. “Paradoxically investors are selling dollars and buying gold on a lower than expected rise in July CPI, as they think the Fed will adopt a less aggressive policy,” Schiff saidTweet. “They’re right to sell dollars and buy gold, but for the wrong reasons. The decline in inflation is only temporary.”
U.S. productivity declined 4.6% during Q2, following a decrease of 7.4% in Q1. YoY productivity dropped 2.5%. This is the biggest drop in productivity since 1948, when the series began. Falling productivity means real wages have to fall, and consumers prices need to rise. Created by the government #inflationBoth problems are getting worse.
— Peter Schiff (@PeterSchiff) August 9, 2022
While speaking on the Kitco News broadcast, Schiff further explained in greater detail why he thinks America’s economic downturn will be more ugly than 2008’s economic decline. Schiff claims that if the Federal Reserve continues to raise interest rates then a financial crises is likely. “2008 was about bad debt,” the gold bug and economist stressed. “It was about people borrowing money and they couldn’t pay it back. Because the collateral was real property, prices fell and it wasn’t worth any of that collateral. Well, we have much more debt now than we had in 2008 … And so this is going to be a much bigger crisis when the defaults start.”
This time around, however, America’s financial giants won’t get bailed out, Schiff noted. According to the economist:
When they fail, it’s going to be a lot worse, except with inflation too high and the Fed fighting inflation. There’s no TARP 2.0. These banks will all have to go under the hammer.
Schiff Says US Inflation Is ‘Going to Be Here for Years and Years, and Probably the Remainder of This Decade’
Schiff’s comments follow the U.S. Bureau of Labor Statistics July Consumer Price Index (CPI) report, which reflected a year-over-year increase of 8.5%. U.S. president Joe Biden received a lot criticism following the CPI report. Biden claimed the American economy saw zero percent inflation in July. Biden’s commentary followed the U.S. government attempting to redefine the technical definition of the word “recession.” “If you believe the official CPI, then prices, that are already very high, did not get any higher during the month of July,” Schiff told the Kitco show host. She added:
I don’t think that’s something to celebrate… It’s not like consumers actually got the relief of prices coming down. There’s no doubt in my mind that we will get a higher number than 9.1 percent. This inflation issue is far from over. This inflation problem will continue for many years. It’s likely to persist into the next decade.
Schiff’s commentary about the official CPI numbers follows the post published on schiffgold.com the same day, which claims the Bureau of Labor Statistics’ CPI calculation uses a government formula that understates the actual rise in prices. Additionally, statistics from shadowstats.com’s alternative inflation charts show inflation is much higher than official reports.
Workers can’t keep up with the pace of others even if they have multiple jobs. #inflation. Consumer credit rose by $40.1 billion in June, which was much more than anticipated. Credit card debt increased at an annualized 16% rate, as consumers took on greater debts to be able to purchase higher-priced necessities.
— Peter Schiff (@PeterSchiff) August 5, 2022
The Truflation Index’s August 14 data shows a 9.41% inflation rate. During Schiff’s interview with Lin, the economist said he expects a “massive financial crisis” and major issues with the U.S. dollar. He expects silver and gold to rise if the dollar falls.
“The dollar has risen so far, in the early stages of this big inflation, because investors are delusional about the Fed’s ability to contain inflation and bring it back down to 2 percent,” Schiff concluded. “When they wake up to reality, that inflation is going to be way above 2 percent indefinitely, then the dollar is going to fall through the floor, and then gold and silver will go through the roof.”
What do you think about Peter Schiff’s opinions and economic forecasts? Do you think Schiff’s predictions are correct or do you think he will be wrong? Comment below to let us know your thoughts on this topic.
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