#663 What Is Happening With Inflation? With Peter Schiff

Peter Schiff is the Chief Economist and Global Strategist at Euro Pacific Capital. In this conversation, we discuss inflation, monetary policy, gold, bitcoin, taxes, and where inflation will be one year from today. ======================= MiamiCoin, the first CityCoin, is now live! This is a community-launched program built on Bitcoin, and it’s far more than a currency: MiamiCoin is a protocol, and a platform for innovation. So, the CityCoins team is announcing something pretty cool: MiamiCoin Makers Month is a bringing together hackers, designers, and creators who are passionate about creating apps to benefit the City of Miami. $25k in total prizes will be awarded to developers who build the winning apps. And, the winners will be announced by Ryan Hoover, founder of Product Hunt, and Bored Elon Musk, everybody’s favorite pseudonymous Twitter inventor and blockchain enthusiast. Visit MiamiMakers.co to learn more and sign up to take part. ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp ======================= Matrixport, Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody, it offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC as well as lending. You can earn from high single digit with fixed income to high double digit yield with their Dual Currency Product. If you hold crypto and look for yield, this is the app you don’t wanna miss out. Go download the Matrixport App and enjoy a welcome offer of 30% APY on USDC here: https://invest.matrixport.com/en

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Peter Schiff is the Chief Economist and Global Strategist at Euro Pacific Capital. In this conversation, we discuss inflation, monetary policy, gold, Bitcoin taxes, and where inflation will be one year from today. I always enjoy these monthly conversations with Peter when the inflation data is released, so I hope you enjoy this one as well. And before we get into this episode, though, I want to quickly talk about our sponsors. First up is Miami Makers Month. This is a virtual hackathon for hackers, designers, and creators who are passionate about creating apps to benefit the city of Miami. There's over $25,000 in total prizes that will be awarded to developers who build the winning

• 0:46Anthony Pompliano?

  apps on Miami Coin. What is Miami Coin? Far more than a currency. Miami Coin is a community launch platform for innovation built on Bitcoin and Stacks, the network that enables apps and smart contracts for Bitcoin. Miami Coin is generating real world value. The protocol has already generated over $3 million in contributions reserved for the city, and the project is just getting started. The city commissioners in Miami just decided to go ahead and grab that reward, which is a huge deal for Miami and for Miami Makers Month. You can go visit miamimakers.co to learn more and get involved today. Again, miamimakers.co. Go learn more about what they're doing, and I think that you will really like it. Next up is Matrix Port. Have you lost your way in this low-yield environment while searching

• 1:29Anthony Pompliano?

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• 2:14Anthony Pompliano?

  or go to matrixport.com, matrixport.com. Go check it out. Next up is Cosmos. Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. You can dive into Cosmos and their vision for a multi-chain world at cosmos.network/pomp. Again, cosmos.network/pomp. Go check out the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. Cosmos.network/pomp. All right, let's get into this episode with Peter. I hope you guys enjoy this one.

• 2:52Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:16Anthony Pompliano?

  Peter, what's going on, man?

• 3:17Speaker 02

  Well, nothing, nothing. You tell me.

• 3:22Anthony Pompliano?

  All right, we're live right now.

• 3:23Speaker 02

  Everything's the same. We got more inflation news out today. No one seems to care, you know?

• 3:28Anthony Pompliano?

  Don't say anything crazy because we're live already, or say all the crazy things. No problem. All right, let's do the inflation data first. 5.3% CPI, 4% core inflation. What's your read on these numbers?

• 3:40Speaker 02

  Well, you know, first of all, you have to take them in context. I mean, this is the first report that we've received now in nine months that was lower than expected. So they were looking for 0.4 for the month and we got 0.3. But, you know, most of the time, we get a much bigger number. So a lot of people are taking a lot of solace in the fact that we finally have one number. We broke a nine-month streak of having worse-than-expected numbers, and now we get one number that's not as bad as expected, and somehow we're out of the woods. I think that's ridiculous. You know, if you annualize even that 0.3, that annualizes to 4%

• 4:23Speaker 02

  inflation a year, which in and of itself is pretty bad. But if you look at the actual Increase in consumer prices in the first eight months of this calendar year and then annualize that, that's 6.4%. So we're still triple the 2% that the Fed is claiming it's the target. You know, it says it wants to be slightly above 2%, right? Well, we're not even in the neighborhood of 2%. And the number would be much, much higher if the government was not using owner's equivalent rent, which is, you know, like a third of the index. And this number is supposed to represent housing costs, but it doesn't even come close. Because if you look at what's actually happening to rents or home prices,

• 5:08Speaker 02

  we've never seen these kind of increases. These are double-digit increases in the cost of buying or renting a home, yet none of that is reflected in the CPI. In fact, the government claims that shelter prices are rising so slowly that it's actually weighing down the CPI. The number would be much higher, obviously, if we use the real rate of increase of rent or home prices, not what the government is pretending the increase is.

• 5:34Anthony Pompliano?

  Okay, so one of the things I want to talk to you about is there's obviously, when you have data, people can manipulate that data, massage the data to say all kinds of things. So I could take the data that came out today, and I could make an argument that inflation is going down and it's a really positive story. I could take the data and paint a picture that it's really bad and everything, the world's gonna end, whatever. Explain around housing specifically. What is the data that you're looking at where you're saying to yourself, okay, this data is showing very high and rapid price appreciation? And then explain what the CPI number accounts for, what the difference between those two things are.

• 6:10Speaker 02

  Well, the housing component, I think owner's equivalent rent in August, which is the month we got today, they have as 0.2 is the increase. And I think year over year, I'm not even sure if it's at 3%. But if you look at housing prices year over year, they're up almost 20%, like 19% or something like that. This is one of the biggest years ever for home prices. And if you look at rents, I think rents year over year are up about 30%. 13%, and that's based on companies that actually track rents, right? Websites that are tracking what homes are renting for. So the real data is at odds with the government data. The real data is much, much higher.

• 6:54Speaker 02

  And of course, everything associated with homeownership. Your utility bills are going way up. Your insurance costs are going way up. Your taxes are going up. So every aspect of renting or buying a home is going up in addition to what it costs you to buy it or rent it. And it's not, of course, not just shelter components that are going up. Everything is getting more expensive. And if people think that's transitory, it's because they don't understand the problem. In fact, they don't even understand inflation or where it comes from. Because inflation is about money. You're inflating the money supply. That's what's being expanded. And none of this is transitory because these deficits aren't transitory. The money printing isn't transitory. It's here to stay.

• 7:38Speaker 02

  We're at QE infinity. The Fed's balance sheet is going to continue to expand. And that means prices are going to keep going up because we continue to destroy the value of the dollar as we expand the supply.

• 7:50Anthony Pompliano?

  When you think about the term transitory, we talked about it a little bit earlier, where it's just the definition is not permanent. So there's no kind of quantifiable, hey, it's above this percent for this number of years or anything like that. What do you think is the metric that would have to be hit in order to qualify as transitory? Is it something where if CPI all of a sudden went sub 2% next month, then you'd be like, yeah, it was transitory? Or have we already breached the idea of transitory inflation? And we're well now into a kind of a permanent, you know, kind of status?

• 8:25Speaker 02

  Well, the Federal Reserve already changed the definition of transitory. Because in the beginning, the way it defined transitory, at least when you heard their explanation. It meant a temporary increase in prices that would go away. So in other words, prices came up because of the reopening of the economy and because of some supply bottlenecks. But once the economy reopened and those bottlenecks cleared up, the prices that went up would come right back down to where they were. So that's what most people believe transitory was, that prices will be high for a while, but then they're going to come back down to where they would have been. The Fed has already backtracked on that initial definition.

• 9:07Speaker 02

  According to the Fed Now, the price increases that they're saying are transitory are in fact permanent, that we're never going to have a reduction in prices. They're going to stay at this higher level. What the Fed Now means by transitory is once prices stop going up by 8% or 10% a year, they will go back to only going up by 2% a year. But those 2% per year increases will be on top of all these increases that we already experienced. So in other words, if we get a transitory, let's say 20% increase in prices, that 20% price increases, we're going to be living with that forever. And in fact, then we're going to get 2% per year in addition to that.

• 9:51Speaker 02

  So to me, that really represents a massive inflation tax because you're going to need 20% more money to buy the same amount of stuff that you were able to buy before the transitory period took place.

• 10:04Anthony Pompliano?

  When you start to think about the idea of the supply chain bottlenecks, there definitely are some supply chain disruptions that have occurred. I think everyone agrees that to some degree that is true. How do you start to separate out what is price increases due to supply chain versus what is due to monetary or fiscal policy? And then what is due to rising labor costs? Is there a way that, or like a framework you use to evaluate when the price of a good or a service goes up? How do you attribute the driver of that price increase?

• 10:36Speaker 02

  Well, certainly, you know, whenever you have a big increase in the money supply, you can always claim that there's a supply shortage. Because there's not going to be enough supply to meet all that demand. Because normally, the way demand comes into existence is through the creation of supply. Right? So let's say people do work. They perform goods and services. And as a reward for performing services or helping to produce goods, they earn money. And so now, that demand, their paycheck, they can now use that money to buy the stuff that they help produce. So there's supply to go with the demand. But if people are just sitting at home and they're not producing anything, and the government just prints money and gives it to them,

• 11:20Speaker 02

  and now they want to go and buy it, there's obviously a shortage of supply because they did not help supply anything. All they're doing is demanding to buy stuff that they didn't help produce with the money that the Fed printed. So the only way to clear the market, to have supply and demand balance, is for prices to go up. And then prices will go up to the point where now supply and demand meet. So, you know, this is always going to happen. And it's very easy to blame a surplus of money on a shortage of goods. Right? Because you could always do that. I mean, think about it. What if the US government gave everybody a million dollars? And everybody in America got a million dollars.

• 12:01Speaker 02

  And now, one of the first things everybody wanted to do was buy a new Lamborghini. Right? That's what you crypto guys want. You want your new Lambos. So, let's say everybody gets a million dollars, and now everybody wants to buy a Lambo. And now they're saying, "Well, there's a shortage. There's a supply shortage of Lambos." Right? That's why the prices are surging because there's a supply shortage. Of course, they can't make them fast enough. You can't make that many. And just because you make more money doesn't mean that there's going to magically be more Lamborghinis, you know, created. And so what has to happen is if all of a sudden you have a lot of demand for the Lamborghinis that are there, prices have to go way up to the point where all these people can no longer afford a Lamborghini, even though they have a million dollars, because the Lamborghini now costs 10 million.

• 12:46Speaker 02

  So that's what's gonna happen, you know, whenever you have all this money printing, because the government doesn't want to accept responsibility for inflation. It never wants to blame inflation on their money printing, so they want to blame the public. And so they like to talk about supply shortages, or greedy businessmen, or greedy workers. People want more money, or they're, you know, you read all these stories now. Biden administration wants to investigate the meat industry, the poultry industry. They're price gouging, why, you know, they're trying to deflect the blame. All of these price increases are a direct result of the government, the Federal Reserve, printing money to modest highs US government budget deficits. That's the source of it.

• 13:31Anthony Pompliano?

  When you think about food and rent, electricity, we went earlier and we literally went through the August numbers. Many of these are kind of staple expenses in a monthly budget. It feels like it's just affecting those that are in the bottom forty, fifty percent of the population, way more than they're affecting the wealthy. Like, the wealthy are getting rich and those at the bottom are getting hurt, and we just get a continuation of the wealth inequality gap. Is that your read on this as well?

• 13:58Speaker 02

  Well, that's always the case, right? Because the wealthier people don't spend nearly as much of their incomes as the poor, or, you know, let's say the middle class. In many cases, they have to spend everything that they earn. And so as the cost of living goes up, it more immediately impacts their quality of life, because obviously, if you're spending everything you earn, and now the price of food goes up, the price of energy goes up, you know, you have to cut back spending someplace else. I mean, unless you've earned enough money to equal the rise in cost, and very few people are. I mean, even if you look at the government numbers, wages are going up much more slowly than prices.

• 14:40Speaker 02

  And so you're forced to cut back. But let's say you're very rich, and let's say you're earning a million dollars a year, and you're only spending two hundred thousand dollars a year, and you're taking the other eight hundred thousand, and you're just investing it, or saving it, and if now your cost of living- living goes up and now you need 220,000. Well, you just save a little bit less. You invest a little bit less, but it doesn't come at the expense of your standard of living. You're not giving up something that you otherwise had. You're just, you know, you just don't have enough left over for savings and investing, which has negative consequences for the economy. Because that saving and investment is what grows the economy.

• 15:20Speaker 02

  And so if somebody needs to save and invest less because they need more to survive because the cost of living has gone up, then that hurts society. But as far as the immediate pain for the individual, the more of your money that you spend, the more impactful rising costs are. That's why inflation is such a, you know, a heinous tax. Because it falls most heavily on those who can least afford to pay it. And that's the the lower class or the middle class income earners.

• 15:52Anthony Pompliano?

  When you start to think about how this affects what people are paid, we have 10.5 million open roles in America, highest that there's ever been. Unemployment is still hovering around 5% or so. How do you think about wages? The hourly rate, minimum wage, you know, some of the data that we recently looked at was 80% of American workers now make over $15 an hour. Amazon just committed to hiring tens of thousands of new workers. Some of them, they're going to pay $18 an hour. Like, how do you just view the wages and the movement that we've seen over the last 18 months and where we're going on that front?

• 16:25Speaker 02

  Yeah, well, wages are going up for a number of reasons. In addition to inflation, wages are going up because the government is incentivizing people not to work. And so therefore you have to pay them even more money to encourage them to give up those incentives. Because all else being equal, people prefer leisure to work. So if the government makes you a good deal not to work, the employers have to make you an even better deal to work. And then, of course, you have things like the minimum wage law and occupational licensing and other things, workman's comp, social security, other regulations that the government implements that drive up the cost of hiring people and therefore, you know,

• 17:06Speaker 02

  wages are being pushed up. All of this ultimately has to be borne by the consumer of the products because whatever it costs a company to employ the labor, all of those costs have to be made up by the end customer in whatever good or services they're buying. And obviously, the people who are most impacted are the elderly, people who are living on fixed incomes because they're not getting wages. Their incomes are fixed and yet their costs are going way up. The people who are getting pay increases have a little bit of a cushion, although again, my thinking is all these people who are taking these $15 an hour jobs, these $18 an hour

• 17:49Speaker 02

  jobs, those increases are not even going to be enough to cover what they're about to experience as far as their cost of living. So they would have been better off if they were still earning less money and their cost of living hadn't gone up as much because they're going to be behind the curve. And also, what's going to happen is a lot of these jobs, because of how much more expensive they are, they're going to end up getting eliminated. So a lot of people will be priced out of the market, businesses will automate, they'll outsource, or some companies will just go out of business entirely, that their customers will not be able to afford their services if they have to pay those rates.

• 18:32Speaker 02

  And so they end up closing up shop and now they don't need to hire anybody because they don't have a business anymore.

• 18:39Anthony Pompliano?

  When you think about what they should do, if you're the head of the Federal Reserve, Treasury, or you're in the room with them, what would you suggest that they do? What's the solution?

• 18:51Speaker 02

  Well, you know, the solutions are simple economically. It's just that the consequences are grave politically, and that's the problem. You have to realize that the Fed is trying to make policy For political reasons. So they're not trying to do what's right. They're trying to do what's expedient. And so I would be different. See, I would actually want them to do the right thing, but they don't really care about doing the right thing. That's not their objective. But assuming they have that objective, then the right thing is really easy. You just back off of the quantitative easing and you let interest rates go up.

• 19:31Speaker 02

  You tell the markets in no uncertain terms, the Fed is no longer in the business of buying any US debt. We're not going to buy any mortgages anymore. We're not going to buy any US treasuries. We're done. There's no taper. We're done. We're, in fact, we are going to take whatever opportunities we can to reduce the size of our balance sheet right now. Right? And then if they do that, well, then interest rates are going to skyrocket, right? And that, that has to happen. And when that happens, you know, all hell's going to break loose, right? I mean, some stocks are going to crash, real estate's going to crash, people are going to default on their loans.

• 20:11Speaker 02

  The government's going to have to massively cut spending and level with the American public that not only can't we afford all this new government spending that the Democrats are talking about, we can't even afford to pay for the stuff we've already promised. We can't even afford to pay for the stuff that we already passed decades ago. We don't have the money. So that's going to set off a whole, you know, chain of dominoes falling if the Fed does the right thing. But the sooner we do the right thing, the better, because all this bad stuff is going to happen anyway, eventually. It's just that the sooner we allow it to happen, the less bad it's going to be. Because the only way to delay the day of reckoning is by making that day much, much worse. So I don't want to do that.

• 20:53Speaker 02

  I'm not about making the pain worse. I want, I want to, I want to get the pain over with. Like I want to rip off the Band-Aid. I don't want to slowly peel it off. And, you know, it's not hard to do, you know, once you really understand what the problem is. But you have to have the political will to sit back and, you know, allow the consequences to play out.

• 21:11Anthony Pompliano?

  Gold is currently around $1,800. I'm sure you're jumping up and down naked in your bedroom when gold goes up. What is, what is your price prediction for gold by the end of the year?

• 21:24Speaker 02

  Well, obviously, I don't have one. I mean, I don't know where the price of anything is going to be at the end of the year. But, you know, I do think that it's more likely to be higher rather than lower, although it's possible that it could be lower. But if it is lower, it's not going to stay lower. I mean, gold is ultimately going much, much higher than 1800. And when I say ultimately, I don't mean like, you know, in 100 years or something like that. I mean, like now, I mean, soon, it's going to go up. And I think the only reason that gold is not already a lot higher than 1800 is because most people still believe

• 22:05Speaker 02

  the Fed. For whatever reason, the Fed still has a lot of credibility, and so do other central banks. And so when the Fed says inflation is transitory, they accept that. When the Fed says we have the tools and we will use them to make sure it's transitory, even if in the event that it's not, the markets believe the Fed. So the market is not looking for insurance. It's not looking for inflation protection. The market is just looking for risk. The market is just buying whatever's going up. Everybody is optimistic. They think the party will never end. And so they don't really see the reason to hold something stable like gold, you know, something that's regarded as a safe haven or as an insurance policy.

• 22:49Speaker 02

  They want to gamble. They just want to keep on buying the stuff that's hot. And that includes a lot of different types of stocks, a lot of these momentum stocks or meme stocks, you know, these risk assets. And it includes, you know, what you guys talk about, you know, cryptocurrencies, digital assets, Bitcoin, Ether, you know, or these NFTs, right? That's what people want. They just want all the stuff that's going up. And they don't even realize that the reason it's going up is because of all the inflation that the Fed is creating. And if it ever actually tried to fight that inflation, all that stuff would come crashing down. So but they haven't connected those dots yet for whatever reason.

• 23:31Anthony Pompliano?

  Is there a piece of you that thinks, okay, let's say that the Fed is inflating asset prices, which I tend to agree, right? They're basically devaluing the currency asset prices are going up. And rather than fight the Fed and say, hey, they're going to change their mind, they're going to do something different, or, you know, I'm smarter than the Fed, they're going to inflate asset prices, I want to buy the assets that are going to go up. And so just go invest in the market rather than wait for them to make some, you know, miscalculation or kind of rip the band-aid off, as you said, like, do you think there's validity in that argument of just don't fight the Fed and just go buy the assets that they're going to pump up in price?

• 24:08Speaker 02

  Yeah, I mean, that's what I'm doing myself. But, you know, I am buying assets that I think represent better long-term values, not these highly speculative assets that I think, no matter what, are eventually going to collapse, right? I mean, whether the Fed, you know, pricks the bubble with rate hikes, or whether the bubbles just deflate, you know, on their own, that is what happens to bubbles. I mean, they never just continue indefinitely. So yeah, I don't want to own cash. So my personal portfolio is long equities. You know, I own a lot of stocks all around the world, good quality companies that I think are trading

• 24:50Speaker 02

  at low valuations, that have high dividend yields, that are in sectors that I think are undervalued, they're in countries that I think are more stable and have, where the governments are not going to be under as much pressure to debase the currency, to sustain budget deficits or trade deficits. I do have a lot of focus on resources, natural resources, commodities, not just gold, but all sorts of industrial commodities, energy, agriculture. I have emerging market exposure because I think the emerging markets will outperform the developed markets in an era of higher inflation and dollar devaluation. I own physical

• 25:34Speaker 02

  gold and silver. So I, you know, I'm fully out of the US dollar, and I understand why Other people would have an aversion to hold dollars. I would just argue with their decisions on what to buy. And maybe some of the things that other people have been buying over the last, you know, five years or so have done better than what I've been buying in general. But I don't think that's going to hold up much longer. I think ultimately, the portfolio of stocks that I've put together for myself are going to prove to be a much better performer in this environment than a lot of these stocks that have done well so far, but I think will not do well when we really start to see the inflation take off and the dollar really collapse.

• 26:19Speaker 02

  And then I also own real estate. I don't only own stocks. I mean, I have money invested in real estate. Again, you know, real estate is a real asset. And again, all real estate is not the same. And so, you know, some real estate is different than other real estate, but it represents a viable alternative. Because when you have inflation, you have to understand that not only is it a tax where the government takes your purchasing power and gives it to somebody else, but it's also a giant transfer of wealth from creditors to debtors. So the people who have borrowed money make wealth, or transferred purchasing power at the expense of those who have loaned the money. And if you think about it from the government's perspective, the US government is the biggest

• 27:03Speaker 02

  debtor on the planet Earth. I mean, is probably the biggest debtor in the whole universe. I mean, to the extent that there's life on other planets, I'm sure they haven't borrowed as much as the United States government. So we're probably the biggest debtor there is in the universe. And as the biggest debtor, the US government has the most to gain from inflation, because it screws over all of the people who loaned it money. But when the government is screwing over all of its own creditors, they also screw over all the private creditors. And so you don't want to be a creditor, you want to be a debtor. And that's one of the reasons that so many people take on so much debt. But of course, the best thing you can do with that, the proceeds from the debt, is

• 27:46Speaker 02

  to acquire real tangible assets, whether it's real estate, whether it's... Whether it's a private business, because you buy something real and then you end up not having to pay for it because you borrow the money and you buy a real asset and then inflation destroys the value of the money and then you pay back the loan with practically worthless money, but you still get a real asset. Whereas the lender loaned you money that had real value and you pay him back with money that has much less value.

• 28:15Anthony Pompliano?

  Bitcoin's up 60% year to date, gold is not. Why is gold going down in price? And what do you think happens to Bitcoin's price through the end of the year?

• 28:22Speaker 02

  Well, again, there's only a few months left. I know most of you guys think 100,000. I mean, that's pretty much been the standard, you know, 100,000 by the end of the year. And I think a lot of you are still clinging to that. I guess it's possible. You know, I never, you know, I think I was on your show or somebody's show and I said, yeah, I think it's possible Bitcoin can go to 100,000. Then I'm reading all these headlines. Peter Schiff forecasts $100,000 Bitcoin, right? So, you know, I actually think it's not likely to hit 100,000. So I think it's more likely not to go there. And obviously, you know, there's only a few months of the year left for it to do that. But I guess if I was just going to flip a coin up or down on Bitcoin, I mean, I guess I'd pick down, you know, but I mean, I mean, it could be up. But, you know, I think the market for Bitcoin

• 29:07Speaker 02

  to me, again, looks toppy once again. I mean, we just had this huge pump and dump over El Salvador. You know, everybody was excited. Everybody was buying in solidarity and, you know, and then all of a sudden, the day of the El Salvador inaugurates Bitcoin and there's one hour and there's a massive dump and the price goes from, you know, 52,000 down to whatever, 42,000, whatever it was, almost or over a 15% drop in under an hour. And so that might have been a key reversal that day, that week. You know, we'll see how this month looks, but I thought

• 29:48Speaker 02

  last week was a technically very weak week for Bitcoin. And so it may end up, you know, getting, you know, finishing the year closer to that 30,000 support than the 50,000 resistance. And it's also possible that it could break below that and go much lower. I mean, if it doesn't do it by the end of this year, I think it's going to do it eventually. I mean, I think this is a bubble as well as the other 12,000 some odd cryptocurrencies that currently exist and that compete with Bitcoin.

• 30:20Speaker 02

  Yeah.

• 30:20Anthony Pompliano?

  If Bitcoin breaks 100K this year, you have to fly to Miami in that shirt, that exact shirt I want you to wear, and I'll take you to dinner. If Bitcoin doesn't break 100K by the end of the year, I'll buy a little gold.

• 30:34Speaker 02

  Why don't you, since you're gonna have so much money if Bitcoin's at 100,000, why don't you fly down here and take me to dinner down here in Puerto Rico? Because you're gonna have all the money, not me.

• 30:42Anthony Pompliano?

  You have to come to me. No, no, no. The loser comes to the winner. That's how this works, is you gotta come to me when that happens.

• 30:49Speaker 02

  But, uh...

• 30:50Anthony Pompliano?

  Are you in?

• 30:50Speaker 02

  Well, what are you, what are you gonna do if it doesn't hit 100,000 by the end of the year?

• 30:53Anthony Pompliano?

  I'll buy some gold.

• 30:55Speaker 02

  Oh, well, how does that help me? That helps you. I mean, even if you buy it from Schiff Gold, our commissions are so low, you know, it doesn't really do me any good.

• 31:07Anthony Pompliano?

  All right. My two brothers, they got questions for you, and then I'll finish you off in a second. Go ahead. Peter, that was good. I appreciate you giving him a couple ribbons there. My question would be, what would have to happen, if anything, kind of for Bitcoin and the Bitcoin network for you to change your mind and reverse course?

• 31:24Speaker 02

  Yeah, you know, I answered that question on somebody else's show, and then somebody, you know, took it out of context and made a video out of it to try to say that I'm endorsing Bitcoin, because I talked about all the things that haven't happened to Bitcoin, that if they did happen, well, then I, you know, would probably have to change my mind. But, you know, none of those things have actually happened yet. But, you know, again, what would have to happen is Bitcoin would actually have to succeed as money, right? So I would have to see a demonstration, and like, even if you just took El Salvador, for example, right? Because, I mean, hey, that's legal tender. If I actually saw, like,

• 32:04Speaker 02

  El Salvador function, let's say for a, I don't know, a longer period of time, but where everything was priced in Bitcoin, forget dollars. You got a salary, it was expressed in Bitcoin. You rented an apartment, your rent was in Bitcoin. Not that you paid it in Bitcoin, that you figured out what the Bitcoin equivalent was for a dollar, that when you actually rented your apartment, your monthly payments were fixed in a quantity of Bitcoin, right? Your salaries are in Bitcoin, rents are fixed in Bitcoin. You know, you go out and buy an insurance policy, the premium is in Bitcoin, the benefits are paid in Bitcoin, right?

• 32:46Speaker 02

  You have a whole world where Bitcoin is used exclusively, where nobody tries to do a calculation, "Well, you know, what is the dollar value of this?" When you go into a store in America and something is $10, you don't try to calculate in your head, like, "What does that mean in terms of other things?" It's like, $10 is $10, that's the price, right? So, you'd have to be able to transact in Bitcoin in that kind of world, where I can make you a loan, or, you know, a pawn can come to me and say, "Peter, I need a loan, can you lend me a Bitcoin? I'll pay you back, you know, in five years, I'll give you the same Bitcoin, and I'll give you, you know, 5% interest a year in Bitcoin." I mean, we'd have to be able to agree on a loan where the only thing in the loan was Bitcoin.

• 33:31Speaker 02

  So if we could actually get to a world where Bitcoin can function, because, you know, we're in a world right now where the dollar functions like that. We used to live in a world where gold functioned like that, you know, where all these things were done, all these calculations were in gold, everything was priced in gold. Whether the gold was represented by dollars or not, even when the gold was represented by dollars, the dollars were fixed to gold. So those calculations were still there. So if Bitcoin can actually be a medium of exchange, a unit account, and a store of value all at once, and does that over time, then I'd have to say, "I guess I was wrong about Bitcoin." But, I mean, we're not even close to that happening.

• 34:13Speaker 03

  Fair enough.

• 34:13Speaker 04

  John?

• 34:14Speaker 03

  Yeah.

• 34:15Speaker 04

  Peter, amazing plug on, um, your guys' fees for gold, by the way. But you're talking about inflation and how it's not transitory, how the Fed still has some credibility. Uh, can you talk about, like, then why is, why aren't people rushing to gold? Why is gold down 8% in the last year and basically break even for 10 years? Like, what needs to change, I guess, for gold to kind of go back to being positive?

• 34:36Speaker 02

  Well, I mean, people have to wake up to reality, uh, understand the threats. But you also have to put gold's price in perspective and realize that it started this century. Uh, in 2000, the price of gold was under $300. Uh, so for gold to go from 300 to 1800, I mean, I know that doesn't excite people in the Bitcoin world. But, you know, for a commodity, especially gold, that is a very significant price gain. In fact, it's outperformed the S and P over that time period, even if you include the dividends that the S and P paid. And, and the gold doesn't pay any dividends at all because it's just a commodity. It's not, it's not a, a, a income generating company.

• 35:20Speaker 02

  So gold has already made a big move. Now, granted, over the last 10 years, ever since, you know, kind of Bitcoin had come on the scene. If you're simply looking at gold during the lifetime of Bitcoin, yes, you're not seeing a big move. And you may be scratching your head, hey, why is this happening? Well, A, you're ignoring all the things that happened before anybody was looking at gold because there was no Bitcoin. And a lot of other people are simply making the false logical conclusion that Bitcoin is going up and gold's not. It must be because Bitcoin is going up that gold's not going up. So Bitcoin is the new gold. Bitcoin is stolen gold's thunder. And I don't think that's the case at all.

• 36:00Speaker 02

  I think that to the extent that people are buying Bitcoin, the vast majority of people who are buying Bitcoin would simply buy some other speculative asset, uh, if Bitcoin wasn't around. I mean, most of them would not be buying gold. Some of them would, but I think the vast majority of the people who are speculating on Bitcoin are speculators by nature. Uh, they're not just savers. They're not just trying to, you know, store their wealth. In something boring, you know, like a metal. But the reason that I think the more sophisticated, bigger money, the endowments, the institutions, the pension funds, the reason they're not looking at gold, and of course they should be, is because they're way too optimistic, as they always are in

• 36:41Speaker 02

  a bubble, on the US economy, on the stock market, on the risk assets. Nobody wants to hold on to a metal that is lagging the risk assets, I mean, the stock market and things like that. So people are concerned about their relative performance, and so they're not interested in gold. But they will become interested in gold at some point in the future, once gold has significantly risen to the point where it's now beating a lot of these risk assets, meaning these risk assets have actually come down in price in relation to real money. You know, regardless of what they do in dollar terms, they come down in gold terms.

• 37:20Speaker 02

  And more people perceive the real threat of inflation, and they no longer trust the Fed and its bluff that it's transitory, that it's going to fight it. When people are really worried about inflation, the way they were in the 1970s, that's all going to change. And people should be even more worried now about inflation than they were then, because unlike the 1970s, we don't have the ability to do anything about it. Because the way we stopped the inflation in the 1970s was with Paul Volcker in 1980, letting interest rates go to 20%. Paul Volcker did, when you asked me, hey, what's the right thing to do? Well, Paul Volcker did it. He was the last Fed Chairman to ever do the right thing.

• 38:04Speaker 02

  But doing the right thing means interest rates go way up. But the problem is, we have so much debt now that we didn't have back then, and the duration is so short compared to what it was back then. We can't afford to do the right thing. Of course, that doesn't mean we can afford to do the wrong thing indefinitely. We can't afford to do that either. But we're going to keep on doing the wrong thing until there's a complete crisis in the dollar. And I think before we get to that point, more of these big investors will realize this, and they will be buying gold. And you're not going to see $1,800 gold anymore. Maybe it'll be 3,000, or 4,000, or 5,000, or 10,000. I think it's going much, much higher. And I think that the best way to play it, for your audience, to the extent that you guys

• 38:49Speaker 02

  want to speculate, is buy the mining stocks. I mean, they've never been this cheap, really, in my entire career. And the sentiment is still relatively negative on the sector, even though the fundamentals couldn't be better. So that's where you get a real opportunity. You get a big mispricing of an asset. You don't have anywhere near the upside potential priced into these stocks. So they're great speculative buying opportunities. So you can either do the research yourself, or you can let me do it for you. You can invest in my gold fund, the EuroPacific Gold Fund, which you could buy at any broker-dealer, a discount broker. You could buy it with my firm, EuroPacific Capital. Or you can set up a separately managed account. We manage portfolios for people of individual gold stocks. So you can do it yourself, or you can hire me.

• 39:34Speaker 02

  But either way, I would encourage risk takers to do that. And if you're listening to this podcast, if you're buying cryptocurrency, by definition, you're a risk taker. And if you don't realize you're a risk taker, then you don't belong in cryptocurrencies.

• 39:48Anthony Pompliano?

  Peter, before I let you go, I know you're laughing. I see you laughing over there. You think that that's funny. What is your thoughts on inflation moving forward? We just saw the New York Federal Reserve yesterday say, a year from now could still be over 5%, which would suggest a 4% to 5% compounding annually inflation rate. We saw the Biden administration increase from 2% in Q4 to like 4.8%. What's your take, maybe in Q4, and then a year from now?

• 40:18Speaker 02

  Well, unless the government changes the CPI, which I wouldn't put it past them to do, right? They kind of decided to change the methodology for computing it. The CPI inflation in 2022 is going to be higher than 2021. And the reason I'm confident that that's the case is if you look at the producer prices, they have already risen quite a bit more. I mean, they're up 8 point something percent annualized this year. So businesses have been reluctant to pass on price hikes. The most recent one being 3M yesterday, they warned on their margins because their costs are rising too much and they haven't raised prices enough to offset those increases.

• 41:03Speaker 02

  And that's pretty much the story for a lot of big companies. They have been reluctant to raise prices, hoping that their increases in costs would be transitory. But as the year comes to a close, and there is absolutely no evidence whatsoever that that was the case, and in fact, it looks like the price increases will just continue, I think a lot of these companies are going to rush to make up for that lost ground. And I think we're going to see some bigger price increases on the consumer side in 2022 than we had in 2021. Plus, I think at some point in 2022, the government is going to have to come clean, at least to a degree, and raise owner's equivalent rent

• 41:48Speaker 02

  to be somewhat more reflective of actual rent. So I think at some point, we're going to start to see much bigger numbers for that component of the CPI. And so all that is going to work to make the number even higher next year than it is this year.

• 42:06Anthony Pompliano?

  Where can we send people to find you on the internet, my friend?

• 42:10Speaker 02

  Yeah. Oh, and one more thing too, before I get back to that. The other reason that inflation is going to keep getting worse is they're not going to turn off the printing presses. They're going to keep on printing money. The deficits are going to keep on, you know, growing, and so the Fed's going to keep on monetizing. And I think instead of tapering QE, they're going to end up expanding it. And so all this is going to pressure prices even more in the future than it has in the past. And where people can find me, my own podcast, of course. The Peter Schiff Show, you can listen to that at shiftradio.com. You could listen to it on YouTube, on The Schiff Report. I do usually two a week, sometimes three, depending on how busy my schedule is. I'll be recording one later today.

• 42:56Speaker 02

  So if you haven't had enough of me today, you could look out for that podcast this evening. Also, you know, read my books. There's a couple of them behind me here in my office. The most recent one being The Real Crash, American's Coming Bankruptcy. The updated edition, the most recent edition, I think, is 2013 or 2016. Maybe it was 2016. So it's still a while since I've written a book. But everything I wrote back then is as relevant today as it was when I wrote it. Just the real crash hasn't happened yet, but all the ingredients are there. And the crash is going to be bigger than ever. So the idea is to be prepared. And that's the other thing you can do. If you want to get prepared, you can prepare your portfolio. And that's what I'm helping people do. If you want to have a small amount of cryptocurrency as part of that portfolio,

• 43:42Speaker 02

  you know, that's up to you. That's the risk portion of your portfolio. But most of your portfolio should not be invested in highly risky assets that can go to zero. You know, even if Bitcoin does go to a million, okay, fine. You'll make money on it if you have a small amount of your portfolio. But what you have to do is be prepared for what happens if it goes to zero, right? You don't want to get wiped out. You don't want to lose everything, especially if you're older. I mean, if you're a young kid, if you're like my son's age, it doesn't matter if he loses everything. He's got a lifetime to make it back. And, you know, it's a valuable lesson. You know, if you lose your money when you're 19, you know, hopefully you end up making a lot more money over your lifetime and you avoid losing even more money because you learned from the mistake you made as a kid.

• 44:28Speaker 02

  But if you're older, if somebody's listening to your podcast and they're nearing retirement age, you know, you got to minimize, if you have any exposure to crypto at all, it's got to be very, very small, right? You know, the bulk of your assets have got to be in more risk adverse, lower risk.

• 44:48Speaker 02

  Assets and what I'm talking about lower risk is not necessarily lower volatility. Although anything has lower volatility than Bitcoin. I'm talking about getting out of US currency, so being in real assets that protect you from inflation. But in a way that you can be assured that those assets aren't going anywhere. If I own stock in a business that's been around for 50 or 100 years. I have a pretty good idea that it's going to continue to stay in business. It's got good management, it's got a good basis, balance sheet. And especially if it's selling products that I know people want, that people need, actually more important than what they want, what they need. And they have the ability to raise prices to cover their rising costs and you know. So you make the right investments in the right asset classes.

• 45:30Speaker 02

  Then you can have a retirement that will, that will survive a massive dollar devaluation and inflation. And it will continue to deliver real purchasing power into the future, which is what you need. You have no assurances with Bitcoin or any cryptocurrency. Maybe it will go way up and maybe it will, will help provide for your lifestyle and maybe it will be worth nothing. And so you can't take that chance with a lot of money. So with the money that you don't want to take that kind of risk with, that's the kind of money that people should be, you know, having me invest for them.

• 46:05Speaker 02

  Or do it yourself if you don't want me to do it.

• 46:07Anthony Pompliano?

  Peter, the next time everyone on this show is going to see you is when the inflation's come out next month. Bitcoin will likely be higher, gold will probably be down and you'll still have a dope shirt on.

• 46:16Speaker 02

  But you're going to always say that, right? Gold, gold's always likely to be down and Bitcoin's always, but you know, got to remember Bitcoin and gold have nothing in common. It's just the Bitcoin community that wants to pretend they have something in common.

• 46:27Anthony Pompliano?

  Well, we have you in common.

• 46:28Speaker 02

  They're actually like the opposite of each other.

• 46:31Anthony Pompliano?

  No, you love Bitcoin, you love gold, so we have you in common, no problem. All right, my friend, thank you so much for doing this, we appreciate it as always. You understand inflation better than most, we'll do it again next month. Behave yourself in the meantime.