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