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well and great to be joined right now by
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Peter Schiff chief chief Economist with
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europacific Asset Management Peter
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thanks for a few moments today oh my
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pleasure obviously lots of questions
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about kind of where the state of the US
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economy is right now give us your
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overall view at this
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point well I think the US economy is in
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a lot of trouble I think uh you know
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we're poised for a
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unprecedented uh you know economic
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collapse based on the fact that the
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markets um have prematurely celebrated
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the fed's victory over
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inflation um the the expectation is that
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the FED is close to achieving its goal
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of you know putting the inflation Genie
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back in the bottle that we're going to
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be back to 2% inflation and that means
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the FED could slash interest rates back
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down to the super low rates that uh
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people on Wall Street have uh grown
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accustomed to as well as the US
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government and American consumers
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but that's not reality reality is
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inflation is here to stay uh it's about
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to take a a huge move back up towards
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the year-over-year highs you know we
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went from 9% down to 3% but that was
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mainly because of a 50% drop in oil
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prices well oil's up 40% in the last
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four months headed much much higher and
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uh you know the reason we were able to
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get the price down before was an
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unprecedented dump of oil from the
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Strategic petroleum Reserve well it's
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now an all time record low we only have
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about a 20-day Supply there's really not
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much they can sell unless they want to
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deplete it completely uh so now there's
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nothing to stop oil prices from heading
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well north of 100 you know maybe $150 to
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$200 a barrel uh over the next couple
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years and with that going on I mean
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inflation's not going anywhere near 2%
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that means the fed's got a lot more to
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do on rate hikes and that means uh uh
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it's not a soft Landing it's a crash
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landing and probably a worse financial
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crisis than 20
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eight so let me start with the inflation
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component because the the the FED has
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obviously tried to Target that 2% number
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for a while and I think even the
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perception as inflation the numbers have
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seemed to come down is that getting from
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4% to 2% was really going to be a tough
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pull to get to that point correct well
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it's we're not even going to come close
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because we're going to go back up right
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inflation is headed much higher at least
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you know the the the official measures
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so they have no chance of of getting
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getting the 2% the markets just don't
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understand this now the FED has to you
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know try which means rates are going to
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stay higher for longer and nobody can
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afford it you know the if just look at
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the federal government interest on the
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national debt is now the third biggest
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line item of the budget it just passed
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National Defense but by the end of next
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year it'll probably be the biggest it'll
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probably be bigger than Medicare which
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is number one uh imagine that I mean
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we're going to be spending over two
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trillion dollars a year just an interest
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on the national debt and the next
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recession is going to see annual budget
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deficits swell to probably four to five
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uh uh trillion dollars a year because
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we're running deficits right now in
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peace time in a supposedly good economy
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in excess of $2 trillion I mean that
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that's never happened
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before what should have or could have
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the Federal Reserve done to change the
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path of
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this well nothing really I mean if they
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would have done the right thing sooner
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we would have had a collapse sooner the
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problem was uh the FED never should have
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bailed out the economy uh following the
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2008 financial crisis the way that it
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did it shouldn't have slashed interest
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rates to zero it shouldn't have done all
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that quantitative easing the FED set the
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stage uh for the tragedy that's about to
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unfold and there's no way that they can
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undo that right the mistakes were made a
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long time ago now we're just having to
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deal with the consequences so if we're
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going to see oil prices that high you're
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talking about just an unbelievable
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impact on on the public in general As
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you move across the board oh yeah and
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not just oil prices I mean food prices
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uh you know everything's going to go up
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uh and so the inflation is just getting
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started we're we're we're at the
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beginning if you look back at the 1970s
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we're like 1971 1972 this is early days
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it's going to get a lot worse what are
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your thoughts on the labor force right
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now well I think the labor force is
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going to be in a lot of trouble I think
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a lot of people are in the labor force
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now with two or three jobs because they
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can't get by on one job because wages
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have not kept paid
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with
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prices I think we do have a lot of
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people that have left the labor force
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and they're just permanently uh you know
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detached from it living off of some type
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of government handout uh and I think
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that's going to be a bigger problem but
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also I think there's a big skills
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mismatch I think that uh American
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workers don't have the skills that
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American employers need that's
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unfortunate uh but that's you know a
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flaw in our educational system run by
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the US Government so I think that the
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labor force is is uh in trouble I think
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this next economic downturn is going to
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see a big increase in unemployment a lot
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of these jobs are in the service sector
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and uh you know we can't afford those
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jobs anymore and meanwhile you know you
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do have um other other things that are
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coming to help uh alleviate the need for
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for for Labor uh and as you know you
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have more onerous regulations taxes
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lawsuits and things like that associated
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with being an employer uh more and more
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employers are trying to figure out how
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they can organize their companies
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without actually hiring any people or
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hiring as few people as possible so the
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government is unfortunately making it a
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lot more difficult for for people who
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want jobs so let me put you in the in
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the big chair for a second and and think
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about maybe the first couple of things
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that need to be addressed right out of
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the gate here to try at least start it
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the path back in the right
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direction well I mean we got to shrink
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government I mean that's the most
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important thing we can do is
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dramatically cut government spending uh
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so we don't have these huge deficits
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anymore because that's ultimately what's
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been driving the fed and inflation is uh
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you know the fiscal deficit so they've
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got to go away we need to see a lot of
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deregulation so that businesses are not
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hampered uh by all of that uh red tape
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so that it's easier uh for businesses to
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survive and compete GL globally you know
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without all that government uh
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regulation to have to uh overcome but
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unfortunately we're we're still going in
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the wrong direction you know we're still
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uh increasing the size of government and
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burden that it places on the economy and
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on
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businesses and uh and so we're just
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making the problem
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worse how about outside factors outside
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the US and and the potential impact that
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they may add into this mix as we move
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forward obviously there's a lot of
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conversation uh around what's going on
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in China right now the European economy
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has still got a lot of issues with it as
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well yeah well you know right now you
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know one of the best things the US has
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got going for it is that other countries
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have problems too and so uh the way the
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world has generally re reacted to that
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is you buy the dollar as a save Haven
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and that enables the US economy to
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continue down this destructive path of
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uh consumption and debt but now you have
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you're seeing a bit of a revolution
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around the world a lot of the countries
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don't want to play this game anymore uh
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especially after seeing what happened to
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Russia and how it got punished for using
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the dollar as a reserve and so I think
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you're seeing this movement uh
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particularly out of the Emerging Markets
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The Brick Nations to divest and
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dollarize and that is going to be a huge
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problem for the US going forward as the
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world makes progress in its move away
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from the dollar because the Dollar's
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role as the reserve currency is what our
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whole economy is based on so we lose
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that and everything implodes because our
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economy can't function unless we can get
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Imports of goods that we don't produce
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and unless we can rely on the world's
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savings to finance our debts but if we
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can't do that if we have to finance our
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own debts if we have to produce our own
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Goods we we're incapable of doing that
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yeah sounds like the message also to
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investors would be uh kind of a a
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concerning one as well as you move
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forward over the next six 12 18 months
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yeah look investors have to realize that
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everything that worked during the bubble
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isn't going to work as the air comes out
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so people have to think outside the box
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uh don't take a cookie cutter uh you
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know Wall Street approach to your
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Investments you got to prepare really uh
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you know for a financial
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Armageddon uh you know of stagflation of
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a falling dollar uh collapsing bond
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prices I mean just look at the bond
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market again today I mean uh you know
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this is a major major bare Market I mean
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don't underestimate how many more years
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this bare Market is going to run and how
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high bond yields are going to rise uh
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this is going to be probably the worst
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Bond bare Market in history I think
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it'll end up being worse than the bare
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Market of the 70s and if you recall uh
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interest rates you know on treasuries
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ended that decade around 13
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14% And money market rates were up
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around you know 20% 21% you know for t-
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bill so uh you know where we are now uh
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five five and a quarter you know in the
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short term four and a quarter on a 10
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year to a 30-year I mean we're we're
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just starting even though it's already
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been ugly for anybody in bonds it it's
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going to get a lot worse but people have
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to get out of not just us bonds but I
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think US stocks are an accident waiting
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to happen they're much too expensive
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they're priced for you know a fantasy of
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of of what's going to take place where
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inflation comes back down uh we have the
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we we don't have recession it's like
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this Goldilocks economy where everything
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is awesome uh nothing's in is is awesome
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you know Goldilocks you know is going to
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get eaten by the big bad wolf here uh so
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it's not it's not going to turn out the
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way Wall Street believes so what I
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advise people to do and I've been
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advising this for a while now it's not
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like I just started this approach
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because I've been forecasting what's
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going to be happening for many many
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years you know because this has been a
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long time in the making we're just now a
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lot closer to the reality of this uh um
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you know I I didn't know that we could
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make it this long you know we kicked a
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can down the road for a long long time
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uh but our ability to do that is uh is
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running out so you got to have a
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portfolio that is an inflation hedge
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that means make sure you have gold and
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silver as part of your portfolio uh
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invest in the Mining stock but also
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other companies uh agriculture
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energy that will do well you know with a
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inflationary environment where commodity
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prices are kind of leading the way
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higher but also you need to own a lot of
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equities but not the overpriced stuff
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that you find in in the S&P or you know
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the NASDAQ 100 you got to look around
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the world for Value companies companies
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that you can buy at a low PE that pay
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high dividends that sell goods and
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services that their customers actually
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need and can't do without and so as
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inflation pushes up the price of
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everything they don't stop buying what
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you're selling maybe they'll buy a
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little less of it but they're going to
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keep buying it they're going to stop
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buying discretionary items so that's not
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where you want to be or you know you
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don't want to be selling things that the
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consumer could do without because he's
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going to do without it because he's got
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to eat you know he's he's he need he
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needs to you know he his home or cool it
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or whatever he he doesn't want to be in
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the dark so there are certain things
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that people are going to have to buy and
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they're going to have to pay a lot more
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to buy them so you want to own the
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companies that have pricing power and
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not like look what's happening now with
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all these cable companies uh you know
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and other content consumers can't afford
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all these streaming services they're
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broke and so all these cable companies
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content providers are are feeling that
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because they're they're losing their
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subscribers because they can't afford it
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they need the money for food right so
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they don't have it uh and so they're
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cutting back where they can so you don't
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want to be invested in the companies
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that that are going to you know on be on
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the losing end of that cutback but I
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find the value internationally and
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that's also a good hedge against the
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falling dollar uh so you know we I'm
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building portfolios for people at EUR
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Pacific Asset Management um that you
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can't really do yourself and no
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mainstream Wall Street firm is going to
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do it for you uh so if you're interested
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in protecting yourself from the
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inflation tax and and kind of
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prospering during this uh you know this
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economic period I can help you if you're
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more of a doer your selfer I've got five
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mutual funds that I own and and manage
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and you could buy these funds uh and any
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of the major brokerage firms or the
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discount firms some of the you know the
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big full service firms you know won't
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let me on their platform uh they just
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don't want the competition but all the
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discount brokers you know they have more
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of a Level Playing Field and they're not
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not trying to guard their their customer
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base from competitors right but I've got
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an emerging market fund which I think
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the Emerging Markets are going to do
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extremely well over the rest of this
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decade relative to the US got an
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international value fund a dividend
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pairs fund a gold fund right with all
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kinds of gold mining stocks and I have a
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foreign bond fund I mean if you're going
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to be in bonds you might as well be in
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short-term obligations of other
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countries not the US government uh which
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is broke and is going to inflate away
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the value of the of of its liabilities
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Peter great to have you with us today
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thanks for your Insight we'll stay in
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touch thank you sir all right take care
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my pleasure you got a Peter Schiff Chief
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Economist with europacific Asset
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Management
