#971 Peter Schiff On Why We Are Officially In A Recession

Peter Schiff is the Chief Economist & Global Strategist At Euro Pacific, the Chairman of Schiff Gold, and the Host of Schiff Radio. In this conversation, we discuss the macro economy, why we're already in a recession, what Peter would do if he was in charge at the Fed, and debate Gold vs. Bitcoin. ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= Today’s episode is sponsored by Abra. Based in California and backed by top VC firms, Abra is an all-in-one simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 14% APY on stablecoins and 8.15% APY on Bitcoin. Join nearly 2 million users by downloading Abra from the Google Play or Apple App store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested — now conquer. ======================= DeFi Technologies represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at http://defi.tech =======================

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 Europac.com. He's also the Chairman of Schiff Gold. In this conversation, we talk about the Federal Reserve, inflation, interest rates, commodities, store of value, gold, Bitcoin, and much, much more. I really enjoyed this conversation with Peter, and I hope you guys enjoyed it as well. Before we get into this episode, though, I first want to talk about our sponsors. Today's episode is brought to you by Exodus, the world's leading desktop, mobile, and hardware crypto wallet. They offer beautiful, user-friendly blockchain products that sync across all of your devices, making it easier to send, receive, and exchange over 150 or

• 0:47Anthony Pompliano?

  more crypto assets in one place. And with world-class customer service available to you 24/7, Exodus always has your back. But the fun doesn't stop with staking and trading. They recently launched a new NFT marketplace where you can buy and sell your favorite NFTs on the Solana network. By partnering with the popular NFT platform, Magic Eden, they're offering the Full Monte Unverified Collection, with more added every single day. Ready to check it out for yourself? Run, don't walk. Over to exodus.com/pomp for your free download today. Again, if you want the world's leading desktop, mobile, and hardware crypto wallet, go to exodus.com/pomp today. Today's episode is sponsored by Abra. They're based in California, and they're backed by

• 1:28Anthony Pompliano?

  top VC firms. Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral, and earn interest with up to 13% APY on stablecoins and 7.15% APY on Bitcoin. You can join nearly 2 million users by downloading Abra from the Google Play or Apple App Store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested, now conquer. Abra, conquer crypto. Go check it out today. This episode is brought to you by DeFi Technologies. DeFi Technologies represents what's next in the digital economy. They're providing simplified, trusted

• 2:10Anthony Pompliano?

  Access to crypto, decentralized finance and web three investment opportunities. Institutions and investors can gain diversified, secure, compliant and easily tradable access to a diversified set of industry-leading equity products and protocols through a single stock purchase on a regulated exchange. DeFi Technologies is currently listed on the US exchange at DEFTF Stock ticker and the Canadian NEO exchange at DEFI. For more information or to subscribe to receive company updates and financial information, visit their website at defi.tech. I'm really excited about what these guys are doing. I've become an advisor to the business and I highly suggest you go check them out. Go to their website at defi.tech today.

• 2:53Speaker 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?

  Ladies and gentlemen, boys and girls, my friend Peter Schiff is now joining us. Peter, how are you?

• 3:21Speaker 02

  I'm okay. I'm okay. Question is, are you boys still hodling?

• 3:24Anthony Pompliano?

  Yeah, of course. Peter, listen, let's start, let's start with the big macro picture and then we'll get into why gold sucks and Bitcoin's better. If we start with the Federal Reserve, it seems like they are in control. They are the driver of good times. They're the driver of bad times and everything is one trade. If the Fed says we're going to pump liquidity, get long and shut up and let them just do their thing. If they say they're going to pull the liquidity away, basically get out of the market, it seems like. Is that a fair categorization of what the Fed's role in financial markets is today?

• 4:00Speaker 02

  They're not in control of anything, but certainly in the short run, the markets trade off of the Fed and what they believe the Fed is going to do. And I think the Fed still has a large degree of credibility. Why? I have no idea. Maybe because the people following the Fed are just as clueless as the Fed. So when the blind, you know, is leading the blind, you know, the blind that are following along, you know, have no idea that they're following somebody who also can't see. But, you know, reality is going to rear its head. And it may have already done so, at least beginning. I mean, I'm looking at the markets to last several days. We've seen some pronounced weakness in the dollar finally.

• 4:42Speaker 02

  I mean, today is one of the weakest days in several years for the dollar. Who knows, it might end up being the weakest day of several years. You know, we'll see. Gold is starting to pick up. I mean, nothing explosive, but we were below 1800 a few days ago. Now back at 1850-ish. And so even as the stock market is going down. And what I am thinking is that the markets are finally starting to look beyond the tightening cycle to the next easing cycle. Yes, the Fed is talking about how this super strong economy can withstand higher rates. But meantime, this super strong economy is probably already in a recession. And we're not only just in a recession.

• 5:27Speaker 02

  We're in a worse recession than what we called the great recession that we had following the 2008 financial crisis. And remember, we were six, seven, eight months into that recession and they still denied that we were in one. In fact, they said there was no recession anywhere in sight and we were in the middle of it. And so I think they've made the same mistake again in overestimating the strength of the economy. They think consumers spending money is economic strength. It's not. It's a reflection of inflation. And the economy is actually very weak beneath the surface. But when you look at the news yesterday from Target, from Walmart the day before, and now, you know, Cisco's news today. You can see that we're collapsing into recession,

• 6:12Speaker 02

  that higher prices are taking a toll as are higher interest rates on the consumers' ability to keep on spending. And unemployment is going to follow. I mean, look at today, unemployment claims jumped to a four-month high. I think we've already turned the corner and, you know, we're very close to a major spike, I think, up in unemployment. And so that whole myth about this strong labor market is going to die. And I think the markets are now pricing in the fact that the Fed is going to be recognizing that the economy is not as strong as it thought. And it's going to indicate that it's not going to raise rates as much or as quickly as it once believed.

• 6:50Anthony Pompliano?

  So when you think about this, let's talk about the idea of this recession. We obviously saw the Q1 contraction. I think it was minus 1.4% annualized of GDP. Do you expect Q2 to be a contraction as well? And should we expect GDP to contract through the end of the year? Is this like a just get two quarters of it? What is the GDP expectations that you have through the end of the year? Let's start there.

• 7:15Speaker 02

  Well, I think it will be another negative print. So we won't get that until, what, August? Or July? July, we get the numbers or something like that. But I think there's a good chance that we'll get a negative print. I thought there was a good chance we were going to get a negative print in Q1. Very few people believed that, and we ended up getting one. And I think if we avoid one, it's probably because they understated inflation. Because they always have to use a deflator to take the nominal GDP and make it real. But if they're not using a big enough deflator because they're understating how much inflation has pushed up prices, then they can kind of create the illusion that a contracting economy is growing.

• 7:59Speaker 02

  But I think, you know, we're in recession, whether it is officially revealed by the numbers or not. But I think it's going to happen. And then, you know, the Fed's not going to fight inflation when we're in recession. Because all the Fed's tough talk about we're going to do whatever it takes, it's all predicated on this super strong economy and red hot labor market that can withstand doing whatever it takes. Powell has never acknowledged his willingness to continue to fight inflation if the economy is in a recession. I mean, he's been asked that question, but he's never answered it. He always is very evasive and just changes the topic. But I think that if you, you know, kind of listen to his praise for Paul Volcker, he

• 8:44Speaker 02

  is always, you know, specific to make sure. He has never praised Paul Volcker for raising rates and pushing the economy into a recession to fight inflation. He has always qualified his admiration for Paul Volcker by saying, "I admired the fact that he did what he thought was right." That's all he's willing to give Volcker credit for, is doing what he thought was right. Now, maybe he didn't think that was right. And I think when push comes to shove, when he has to make a decision between... Stimulating the economy because it's in recession or fighting inflation, he will not make the mistake that, he will not make the same choice that Paul Volcker made. He will make a different choice because he has a different set of beliefs.

• 9:28Speaker 02

  Yes, he thinks inflation is a problem, but not as big a problem as unemployment and a weak economy. And I think he will, you know, ignore the inflation problem, which means it's going to get so much worse, which also means the economy is going to fare much worse because inflation is going to decimate it.

• 9:46Anthony Pompliano?

  So as we start to think about this contracting economy, their expectation or their kind of promise to the markets is they're going to keep raising interest rates. The market, as of maybe two weeks ago, was still thinking there was going to be 10 interest rate increases this year. There was going to be a 300 basis point interest rate by the end of the year. Is your expectation that they'll continue to raise rates all the way through the year? Or will they at some point pause it? Do we maybe get a rate cut at some point? What are you expecting to happen with interest rates?

• 10:15Speaker 02

  Yeah, all of those things. I mean, I think they will pause the increases and maybe eventually reduce rates. We'll see, but even if they just pause the increases, that counts as an easing. They've taken back what they've promised to deliver. And remember, as inflation continues to get higher and higher and higher, real interest rates keep falling, even if the Fed doesn't officially reduce nominal rates. If the inflation rate goes from 8% to 10% or 12% and the Fed's still got, the Fed funds rate, you know, wherever it ends up being, 1% or 2%, then rates are effectively being reduced. But you have to remember that the rate hikes that the Fed is promising are inadequate.

• 10:58Speaker 02

  They're not promising to raise rates nearly enough to actually bend the inflation curve and bring it back down to 2%. You're not going to take 8% inflation and make it 2% inflation by taking 0% interest rates and making them 2% or 3%. That is still a historically ultra-stimulative monetary policy. But more important than just the interest rates, it's the quantity of money that is important. The Fed has to massively... Withdraw money from circulation. And what the public doesn't understand is it's had this massive increase in the size of government. Nobody's taxes have been raised. Nobody's benefits have been cut. So where did all this government come from?

• 11:41Speaker 02

  How did we afford this massive expansion in government? We paid for it through inflation. We printed a bunch of money, right? We ran these big deficits. The Federal Reserve monetized the deficits and we paid for government with inflation. Now, the public is demanding lower inflation. Well, inflation is simply the way we pay for all the government that the public also demanded. Well, you don't have a free lunch. So the only way to get rid of the inflation is to pay for government some other way with taxation. So the only way to lower inflation is to raise taxes on the middle class substantially. Not on the rich. There's not enough money there. Plus, if you tax the rich, you reduce investment. That's a problem.

• 12:26Speaker 02

  You need to tax the middle class or the poor because that reduces spending. And that's what the government has to do. They have to stop people from spending money they didn't earn. Meaning money that's not associated with productive activity. You can't just spend money unless you help produce stuff to give that money value. The problem is, we've been printing all this money instead of paying taxes. Now, people think, oh, you're heartless, Peter. You want the middle class and the poor to pay higher taxes. I don't. What I would rather see is the government slash spending. Cut spending on the military. Cut spending on social security and Medicare and all sorts of things. You know, get rid of the Space Force that Donald Trump, you know, stuck. We have to cut government spending. I'd rather do that.

• 13:09Speaker 02

  Now, of course, that's going to affect the middle class because a lot of middle class people are drawing social security checks. But unfortunately, the government has to tell the truth to the American public. Either we drastically cut government spending, dramatically raise taxes, or inflation is here to stay. Right? We can't get rid of inflation without cutting government spending or raising taxes. But either way, it's the middle class that is going to flip the bill.

• 13:35Anthony Pompliano?

  Do you expect the Federal Reserve at some point in the next 24 months to change their 2% inflation target to 2.5%, 3%? Like, will they change that target inflation rate?

• 13:47Speaker 02

  You know, it would really be ridiculous to do that because let's say inflation is 8% or 10%. You know, does it matter if you raise the target from 2% to 2.5%? I mean, you're nowhere near 2.5%. I think it would look ridiculous to raise the target when they're still miles away. Now, let's say they raise the target to 7% or 8%. You know, but that would scare the hell out of the markets. They would never do that. So I don't know if they're ever going to raise the target. I just don't think they'll ever get close enough to 2% to even, you know, have a rational basis for doing that. I mean, that would assume that, hey, they got down to 2.5% and they're like, you know what? This is as low as we're going to get. Let's just raise our target rather than try to get it down an extra half a percent.

• 14:32Speaker 02

  But I don't think they're ever going to come close enough that they would look too ridiculous to lower a target that they're not even close to.

• 14:40Anthony Pompliano?

  In the next decade, what do you think the lowest inflation rate that we're going to see is? Can they get it under 5%? Can they get it under 3%? What do you think is possible for them to actually achieve?

• 14:52Speaker 02

  Well, they could. I just think they're not willing to do what it takes to do it, right? I mean, sure, anything is possible, but what's probable? What are vote-seeking politicians more likely to do? And so in my mind, the most logical way that they're going to get the CPI below 5% is to rig it some more, is to make more changes in the CPI so that a 12% inflation rate will be recorded as a 4.5% inflation rate, right? So they're not going to actually get the rate down. They just may succeed in lying about how high the rate is by coming up with additional ways to change the CPI. In fact, they've already done that. They made some changes to the CPI in the beginning of this year

• 15:35Speaker 02

  that is probably going to shave a little bit off of it. And that's why they did it. But inflation is so high that even if they knock off 1% or 2% based on, you know, rigging the books, you know, it's still a big number.

• 15:48Anthony Pompliano?

  So when you start to think about kind of moving forward, obviously, somebody like a Jeff Bezos, who now is being much, much more public about his comments around inflation and even politics to some degree, we've seen Elon Musk at the All In Summit, he started talking about inflation and the cause of it being the printing of money. Is there a changing of the tide or a changing of the sentiment that now you have two of the best entrepreneurs of our lifetime, kind of armed with Twitter accounts and willing to speak their mind about this stuff? Is that going to change the way that the American public thinks about inflation and maybe the job of the central bankers or the government so far?

• 16:23Speaker 02

  I don't know. I mean, I think it's certainly a step in the right direction. I mean, some of the CEOs need to fight back because they've been the scapegoat. The Biden administration wants to blame big business for gouging their customers, but we know that that's not the case. In fact, it's actually the customers who have been gouging business. I mean, look at the earnings again of Target and Walmart, they haven't raised prices enough. That's the problem. They have absorbed increasing costs rather than raising prices. So if inflation is this bad with businesses not fully passing it on to their customers, imagine how much worse it's going to get when they do, because they are going to do it. I think a lot of

• 17:06Speaker 02

  these companies originally were fooled into believing that it was transitory. And so they were reluctant to pass on transitory increase in costs. But now that they realize those costs are permanent and they're going to keep rising, now they have to make the customer foot the bill. And it's a big bill. So prices are going to go way up. Now, obviously, that's going to cannibalize some sales because people can't afford to pay the higher prices. Well, that's the way it's going to be. So they're going to have fewer customers, but the customers they have left are going to be paying much higher prices. But that also means they don't need as many workers because they don't have as many customers. So layoffs are coming too.

• 17:45Anthony Pompliano?

  When you start to think about the recent market crash, pretty much everything peaked in November and it's come down further and further. What's your expectation in terms of how are you going to identify a bottom? Do you think that things will just fall until they stop raising interest rates? What's your read right now?

• 18:02Speaker 02

  Well, I mean, I think that, number one, we had a major blow off top.

• 18:11Speaker 02

  In the very speculative part of the market, whether it's Cathie Wood-type stocks, these high-flying, money-losing companies, pie-in-the-sky, future innovators that people were buying, or whether it's cryptocurrencies, or NFTs, or meme stocks, or even big tech like the FAANG stocks. I think that trade is over. So I think when we get a new bull market, and we are in a bear market, even if you want to be in denial, it's a bear market, and it could have more to go. But I think the next bull market that will emerge,

• 18:55Speaker 02

  and it will come as a product of the Fed backing off, and so the rate hikes will stop, but inflation will continue. And I think investors will look to equities as an inflation hedge, as a much better investment than bonds, which get destroyed by inflation. But I think investors are going to be looking for real value, companies that trade at lower PEs, that have real earnings today, not the prospect of earnings in 10 or 20 years, that pay good dividends to their shareholders to help offset the increasing cost of living, and companies that are selling products

• 19:38Speaker 02

  and providing services that customers need where there's some relative inelasticity in the price, meaning if you're selling food and you have to jack up prices by 20%, you're not going to just lose all your customers because people still have to eat. And so you don't want to be invested in companies that are selling products that consumers can do without, because they have to spend more money on the things they can't do without. You want to be in necessities, not luxuries. And you want to own resources, whether it's energy, or agriculture, or industrial materials, or precious metals. There are a lot of things that in an inflationary time period hold on to their value.

• 20:21Speaker 02

  Become more expensive and so if you own these resources and are in position to sell them at higher prices, that's where the market's going to come back. We're not going back to what we were. So all these guys trading on Robin Hood, that game is over. So when the new bull market comes back, it's going to be your grandfather's bull market. Not buy any meme stock and it's going to go up. It's do your homework. It's a stock picker's market. It's understanding value behind a business, understanding that stocks are actual businesses. They're not just ticker symbols. You actually have to look at what the companies do. And their balance sheets and their management and all these fundamentals.

• 21:01Speaker 02

  That's what has to come back into vote, right? Because all that's been out of style during the mania.

• 21:07Anthony Pompliano?

  When you think about commodities, oil, gas, the whole thing, what's going on there? And do you expect that to kind of be a safe haven to some degree? While this is going on, given some of the supply chain and the Russia-Ukraine crisis and prices will remain elevated? Or do you think that crashes as well?

• 21:23Speaker 02

  No, I mean, because I'm looking at inflation, I'm looking at weakness in fiat currencies across the board. Not just the dollar, you know, on a relative basis, I believe the dollar will start to weaken against other currencies that it has been strengthening against recently. But all those currencies will continue to weaken in real terms as far as how much people who own those currencies can buy. And so, you know, prices of real things, commodities, you know, are going to go up. And especially if you think about, you know, the investment landscape over the last decade or two, where has most of the capital investment gone? It's not into building new copper mines, right?

• 22:02Speaker 02

  Or planting more farmland, you know, it's gone into technology. I mean, look at the industry that you're associated with, you know, cryptocurrencies and blockchain. Look at how much money was wasted building out all these companies that are basically worthless. That money should have been going into mining and manufacturing and agriculture and energy and all that stuff. But it didn't. It went into something else. And so we are not going to have enough. of those resources. We're going to have more than enough cryptocurrencies. You know, we almost have 20,000 cryptocurrencies. So we got plenty of cryptocurrencies out there, but we're not going to have enough energy. We're not going to have enough food. We're not going to have enough steel.

• 22:46Speaker 02

  Those are the things that we should have been making, but instead we came up with cryptocurrencies and other things. But that's just an example of the malinvestment. And so, you know, these commodities are going to go up for a long time. This is the beginning of a major bull market that could last 10, 20 years, you know, in resources.

• 23:06Anthony Pompliano?

  When is gold going to start to work? It seems like it just has been going down. It hasn't performed very well. It hasn't beaten inflation over the last decade. When does gold start to work?

• 23:16Speaker 02

  Yeah. Well, first of all, you know, everybody likes to talk about the last decade because gold was at 1900, but they forget that it started the decade below 300. So gold had a huge move. And then to say, well, you know, we hasn't done anything for 10 years. Over 20 years, it's outperformed the S and P. So forget about, you know, those benchmarks. The reason that gold is hanging out around 1850 and the reason it's not 3,000 or 5,000 is because the markets are not afraid of inflation yet. They're afraid of the inflation fight. They believe that the Fed is going to beat inflation. It's going to whip inflation now. It's going to do whatever it takes. It's going to raise rates as high as they have to.

• 24:00Speaker 02

  And it's that tough-talking Fed that is keeping a lid on the price of gold. It's also keeping a floor underneath the dollar because the Fed is the only major central bank that's talking about fighting inflation. Europe, Japan, they're still in denial really, but the Fed is the only one that's really, you know, talking about it. When the markets start to realize that the Fed is all talk, that it's all bluff or a lie or whatever. The markets are going to start to price that in to the dollar and gold. And as I mentioned earlier in this talk, looking at what's happened the last few days, there is a reasonable chance that that revelation has already happened. And we'll see.

• 24:41Speaker 02

  I mean, if gold can really break out and get above 2,000 or 2,100, if the dollar index can really break down, maybe get not just below 100 but below 90, I think we'll have clear and convincing evidence that the markets have certainly now completely discounted any rate hikes that we could possibly get and are already starting to factor in the next round of cuts, the next round of quantitative easing. But when gold goes ballistic and the dollar collapses is when the markets come to realize that that recession is not going to solve the inflation problem, that the recession is actually going to make high inflation even higher. And so it's going to be stagflation,

• 25:24Speaker 02

  but not just a stagnant economy, an economy in a severe recession. And not just inflation, but very high inflation. And that's going to be the toxic combination that really destroys confidence in the Fed and the dollar and causes a stampede into gold.

• 25:42Anthony Pompliano?

  Peter, the reason why I love you is because you're talking about gold's ballistic run in the 2000s when most people watching this were in diapers. So most of them will discount that. But my next question, let's say that a global recession does occur. Where can investors hide? What do they do with their portfolios in order to be able to protect themselves in a recessionary period like this?

• 26:06Speaker 02

  Well, again, if the recessionary period is followed by inflation, which is how governments try to stimulate economies in recession, they run deficits and their central banks print money, then it's a hedge against inflation is what you need. So you need real things, like I said, commodities, precious metals, companies that own real assets that can raise their prices without destroying their market.

• 26:36Speaker 02

  The same things that I've been describing, but I don't think it's going to be a global recession. I mean, I think there will be economies in recession, maybe some of the developed economies that have a lot of debt, but I think emerging markets could actually enjoy a boom as developed markets are enjoying a bust. You know, they have a lot more productivity, they don't have the debt, they don't have the older populations dependent on government money. So I think you can have a dynamic where you have recession or very slow growth in, you know, the developed economies that have been doing all the QE and have had artificially low interest rates, but then the emerging markets, you know, really pick up the slack,

• 27:19Speaker 02

  especially if their currencies appreciate significantly and that gives their consumers more purchasing power, if that results in better inflows of capital into those economies to escape the stagflationary economies of more developed countries. And especially if the dollar loses its role as the reserve currency, which is clearly in jeopardy right now, and we've placed it in greater jeopardy with the sanctions on Russia and driving Russia and China closer together, maybe even pulling India into the mix and pissing off a lot of people and reminding a lot of people of the dangers of holding dollars as a reserve and the extraordinary power that is given to the US by virtue of

• 28:02Speaker 02

  its ability to sanction anybody it wants if it disagrees with what they're doing. You know, not that I agree with what Putin is doing, it doesn't even matter, it's just that every country that's a sovereign government knows that it may do something one day that the United States doesn't like. You know, I'm sure the United States does stuff that a lot of other countries don't like, but they can't sanction us because it's our currency everybody's using, but the ultimate sanction is to stop using our currency, because then what good is it? Because then the dollar is just worth what we produce, and we don't produce much. I mean, in aggregate, look at our trade deficits, we have a deficit of over $100 billion a month, that is enormous.

• 28:42Anthony Pompliano?

  What is the most asymmetric bet that you have in your portfolio right now? Is it an equity or something else that you're like, look, this is the thing that I believe has the most upside?

• 28:51Speaker 02

  That's my mining stocks. You know, my, maybe my silver mining stocks and junior mining stocks. I mean, the ones that we own in the Europe Pacific Gold Fund or the separate accounts that are managed by Adrian Day or my own personal account. I mean, I think those are the stocks that could not only be 10 baggers, but 50, 100 baggers. I mean, you go back and you look at what happened to gold stocks in the latter part of the 1970s, early 1980s, that's what happened. Right? And, and so I expect something similar. I mean, maybe it won't be as meteoric as what happened with Bitcoin. It's hard to repeat that. But I think it's going to be big. And I have a lot of real money in this trade.

• 29:35Speaker 02

  I mean, I think most of the people that got into Bitcoin when it was, you know, a dollar or $10, you know, they didn't put that much money in. Maybe a few people did, but most people didn't put much. So I've got a big bet riding on, on, on these mining stocks, a much bigger bet than I ever would have made on crypto, even if I made the bet.

• 29:53Anthony Pompliano?

  Do you own any Bitcoin? Peter, Peter Shitt.

• 29:55Speaker 02

  No, you know I don't own it. You know I don't own any Bitcoin. Why would I be dumb enough to buy Bitcoin?

• 30:01Anthony Pompliano?

  Well, because Bitcoin's up 212% over the last two years and gold's only up five, which means gold hasn't outperformed inflation and Bitcoin outperformed your whole portfolio. That'd be one reason.

• 30:10Speaker 02

  Well, it hasn't outperformed it year to date. It hasn't outperformed it in the last year. I mean, Bitcoin in November of last year was almost 70,000 and now it's barely 30,000. I mean, gold doesn't do that. Gold doesn't drop by 50, 60%.

• 30:26Anthony Pompliano?

  Cause it doesn't go up 50 or 60% either.

• 30:29Speaker 02

  Well, yes, it does. I just told you 20 years ago, it was under 300.

• 30:33Anthony Pompliano?

  20 years ago? I don't even think I knew how to read yet.

• 30:36Speaker 02

  That's the point. You should listen to people who were around back then. You know, the world existed, you know, when you were still in diapers or before you were born. So I got some gray hairs, if you haven't noticed. So I've been around the block a few times.

• 30:49Anthony Pompliano?

  You, you also had dial up wifi, it looks like, but I wasn't going to say nothing about that dial up internet. Uh, one of the things that I, uh, I do want your opinion on is if you were the Federal Reserve Chairman, what would you do right now? You're, you're in charge. Give me the playbook. They get three or four moves. How do you get this to inflation comes down, we avoid a recession?

• 31:11Speaker 02

  Oh, look, if I was the head of the Federal Reserve, I would basically maybe call a press conference and I would basically level with the American public and say, "The party is over. The buck stops with me." Interest rates, I am, the Fed is out of the interest rate manipulation market. We're no longer setting rates. Rates are going to go wherever they're going to go. The market is going to determine interest rates, not the Fed. So, we're just going to take the pressure off and we are going to start unloading our balance sheet. We're going to start selling US Treasuries. We're not just going to let them mature. We are selling them. And basically,

• 31:54Speaker 02

  interest rates are going to soar. And I'm basically going to say, "Look, there's, there's no more bailouts. There's no more stimulus. So, the government needs to finally act responsibly. And there needs to be massive cuts in government spending. There needs to be, I don't know, tax hikes, and maybe the government has to default on its debt. I mean, if it has to default, that's better than meat than the Fed inflating. So, but the government can no longer rely on the Federal Reserve to paper over its problems by creating inflation. We're going back to sound money. You know, we're going to follow the original mission

• 32:36Speaker 02

  of the Federal Reserve and, and that's it. And we're not going to be political anymore. We're not going to be bailing out politicians and investors. We're going to have a free market in interest rates and we're going to have sound money. Even though it's fiat money, I mean, we're going to, you know, make it as sound as we can.

• 32:56Speaker 02

  By, you know, kind of maybe having a de facto gold peg like Alan Greenspan used to talk about having that he looked at the price of gold and if gold was too low, he knew they were too too tight. If gold was too high, he knew they were too easy. But I don't even think they even have to do that if you if you allow the market to set interest rates, because if the market sets interest rates, the rates are going to go way up. I mean, there's no doubt about that. Especially if they know the Federal Reserve is permanently out of the QE business, that like no matter what, there's no more QE. We're never going to do it again. All we're doing is QT. Never again when we do QE. And the market knows that. But yeah, I mean, you know, it's not going

• 33:38Speaker 02

  to be fun. I mean, I would be doing what Paul Volcker did, right? I would be the new Paul Volcker. Only the problem is, the economy is in much worse shape now than it was when Paul Volcker was around in 1980. So the consequences of having another Paul Volcker are so much greater. But the consequences of not having another Paul Volcker are also so much greater. Because if we don't do the right thing, which is what I would force to be done right away, then what ultimately happens is going to be so much worse. Because I think Paul Volcker knew that back in 1980. If he did not get control of inflation and allowed it to run away, it would have destroyed the dollar and it would have destroyed the economy back then.

• 34:23Speaker 02

  And so he did what was right. And he took the short term pain for the long term gain. The Fed doesn't do that now. They do the opposite trade. They trade short term gain for long term pain. Well, the problem is, the long term pain is going to be excruciating. And, you know, we may be in the long term, right? You can't always say, yes, it's a problem for the future. It's a problem for the future. Because eventually, that future is your present.

• 34:49Anthony Pompliano?

  My last question for you. You have to answer.

• 34:52Speaker 02

  Yep.

• 34:52Anthony Pompliano?

  What is the point at which you will capitulate and purchase Bitcoin?

• 34:58Speaker 02

  Well, so far, look, Bitcoin has not shown me anything to believe it's gonna work. Remember, first, Bitcoin was marketed as a currency, as a medium of exchange. Hey, use Bitcoin to buy coffee instead of, you know, dollars or euros. Well, that doesn't work. I mean, Bitcoin is too volatile, it's too expensive, it's too slow. You know, people aren't buying coffee with Bitcoin. Even in El Salvador, they ain't buying coffee with Bitcoin. But then, you know, Bitcoin was reinvented as digital gold. Well, don't buy Bitcoin, you know, to use it as a medium of exchange, as money. Buy it as a store of value, because it's just like gold, it's digital gold. Problem is, it's nothing like gold. It doesn't have any of gold's physical properties, but it doesn't even trade like gold.

• 35:43Speaker 02

  I mean, it's more inversely correlated with gold than positively correlated. So I can't use Bitcoin as an alternative to gold, as a store of value. I mean, I'll just buy gold if I want gold. So what is Bitcoin? It's a highly speculative asset. Well, what's its intrinsic value? It has no intrinsic value. It's, it just has a price, and the price is a function of what people want to pay for it. Well, if I just want to buy a purely speculative asset, there are a lot of other assets I can buy beside Bitcoin. There's a lot of other cryptocurrencies I can buy beside Bitcoin. What, what does Bitcoin have that makes it so special? If it's just a speculative asset, and it only has value if people believe that it's gonna keep going up? Well, right now, it's going down, and it could go way down.

• 36:26Speaker 02

  And I think people who believe it, it's gonna go up, may start believing that it's only gonna go down. I think a lot of the institutions that got suckered into Bitcoin wish they never heard of it. Look at, you know, my, my, my friend, Anthony Scaramucci, right? And you know Anthony, and, you know, when, when he got Skybridge into blockchain and crypto, I told him, I said, "You are marking the top. You're gonna get, it's gonna go down historically. You got all this money into this sector, and you are top tick in this market." Look at his funds, look at these, uh, uh, these vehicles that he set up, put hundreds and hundreds of millions of dollars in.

• 37:07Speaker 02

  to these vehicles and they're down fifty sixty seventy percent they are obliterated right all this money wasted I think a lot of these institutions are gonna leave the space I mean all that's gonna be left are the true believers hardcore guys like you but that's not enough to keep this pyramid going especially when I think a lot of the holders are gonna need to start unloading because they maybe they're gonna be unemployed and maybe they're gonna need money for food or for rent and you know the supermarkets don't take bitcoin the gas stations they don't take bitcoin so if all you got is bitcoin but you want some food

• 37:47Speaker 02

  and you want some gas well you maybe you have to sell the question is sell to who because I think all the philosophically inclined believers in bitcoin right they're already in they're they're not left the people who have been buying recently apart from the institutions who have who have suckered their clients into it because they thought they were gonna get rich you've got people who follow celebrities you know on instagram or tik tok you know pop singers or sports stars I mean what do these guys know they were just buying these coins because they thought they were gonna get rich because you know whoever they idolized was was was touting it so I think when you get away when you take away that incremental demand there's nothing left to keep the pyramid going

• 38:31Speaker 02

  and you have nothing but supply there's not enough demand the market is gonna implode in crypto including bitcoin and you know it's holding in there now around thirty thousand you know they're trying to keep it up

• 38:44Anthony Pompliano?

  you're impressed you're impressed it's at thirty thousand aren't you

• 38:48Speaker 02

  I'm look I'm look personally if you'd have asked me two or three weeks ago I would have thought it would have been lower I thought that when it when it got down to like twenty six thousand I would have thought oh shit is you know it's it's gonna it's gonna sell off they they managed to save it

• 39:03Anthony Pompliano?

  Who's they?

• 39:04Speaker 02

  But remember, I don't know, the big whales who manipulate the market, right? But remember when Bitcoin was hanging out at 40,000 for a while? And people thought, oh, you see Bitcoin is really resilient, it's hanging out at 40,000. Well, it took a big leg down quickly. And you know, what was the catalyst potentially was what happened with Luna? That ridiculous Luna coin.

• 39:26Anthony Pompliano?

  Did you have any?

• 39:27Speaker 02

  Their stablecoin.

• 39:28Anthony Pompliano?

  Were you holding, were you holding any Luna or USD?

• 39:31Speaker 02

  In fact, look, look at my Twitter account. The first minute I heard about this scheme, I tweeted out, this is nonsense. It doesn't make any sense. You can't have a stablecoin to the dollar without having dollar backing. This whole thing is a scam. I knew it the minute I saw it.

• 39:49Anthony Pompliano?

  So you couldn't back dollars with gold then, according to that logic?

• 39:52Speaker 02

  No, because, yes, you can, because if you, if you say the dollar is fixed at a price of gold, and then you have the gold, then you can do it.

• 40:01Anthony Pompliano?

  Alright.

• 40:02Speaker 02

  You can't, they weren't trying to back Luna with gold. They were trying to back Luna with dollars, but they didn't have any dollars. You're gonna back, how are you gonna back something with something you don't even have? They had some crazy algorithm, but the problem is, all the bigwigs in crypto, you know, guys like, you know, Mike Novogratz, you know, now he tattooed the thing on his arm, but all the money they put in there, why aren't all these smart people, where were you, Anthony? Why weren't you saying, hey, this is a fraud, this is a Ponzi, this can't work? You know, all you guys embraced this because they were buying Bitcoin. They were helping to pump up the Bitcoin market because they were buying Bitcoin. Remember, you tweeted out on your Twitter, how excited you were when Bitcoin was around

• 40:45Speaker 02

  40,000 and Luna was buying billions of Bitcoin. You said, this is great because they're buying Bitcoin. And I tweeted back and I said, yeah, but what happens when they stop buying? And even worse, what happens when they start selling? Well, we know what happens. Now Bitcoin tanked, that's what happened.

• 41:01Anthony Pompliano?

  Yeah, they dumped 80,000 Bitcoin, to your point, they dumped 80,000 Bitcoin and Bitcoin went down, but it's still sitting at $30,000 even though one of the largest holders in the world started to dump everything, they dumped everything pretty much.

• 41:16Speaker 02

  Yeah, but now.

• 41:17Anthony Pompliano?

  And it's still, and it's still holding in. So hold on. So, using that logic, what is the, how does Bitcoin, in your mind, is going to zero? How does it go to zero?

• 41:28Speaker 02

  Well, you know, look, even Luna is not zero, right? I mean, you have all these decimal points, right? But practically speaking, it can approach zero. But what you have to ask yourself is this. Okay, so Luna unloaded all this Bitcoin. Who bought it? And what are their intentions? Because maybe the buyers don't want to hold all that Bitcoin.

• 41:49Anthony Pompliano?

  Well, we know, we know, we know, we know. We can see it online. We can see on chain. So there are a couple of things to point out.

• 41:56Speaker 02

  But you just know wallet addresses. You don't know who those people are.

• 41:59Anthony Pompliano?

  But hold on, hold on. So I actually am very interested, as much as we joke around. I'm very interested in your thoughts on this. One of the key metrics right now is that Bitcoin that has not moved in one year, so sitting in a wallet, hasn't moved in a year, is at an all time high over 65%. Do you put any weight on a metric like that where you know that 65% of the Bitcoin in circulation hasn't moved in a year? Or do you think that's Bitcoiners just looking for something to get excited about?

• 42:28Speaker 02

  No, I think that's a sign that we still have a long way to go down. Because from any kind of market, right? You don't get a bottom until you have some kind of capitulation. So I think it would actually be a good sign if a lot of the holders threw in the towel. But to the extent that they still have diamond hands and they're holding strong, well, clearly, we need some more pressure to get to flush them out, right? So to say that, hey, everybody is holding tight, I wouldn't be bragging about that. Because if you're looking for a bottom in the market, that's not a good sign. You want to see a flush out.

• 43:03Anthony Pompliano?

  You don't think that it selling off to 26,000 was a flush out?

• 43:09Speaker 02

  No. No, first of all, I don't even think we've liquidated the margin debt yet. I think we have a ways to go. But if you look at prior Bitcoin bear markets, right? We've had plenty of 80, 90% declines in Bitcoin going back, you know, to day one.

• 43:28Speaker 02

  So, you know, we're not even there yet.

• 43:30Anthony Pompliano?

  You keep using the word "we", I'm gonna start thinking you got Bitcoin. Keep saying, "We haven't done this, we haven't done that", I didn't know you were a Bitcoiner.

• 43:37Speaker 02

  Okay, I just mean like, not that I own any, but like, I'm experiencing it, like, I'm seeing what's happening.

• 43:43Anthony Pompliano?

  Okay, alright, alright, alright.

• 43:45Speaker 02

  So if Bitcoin was at, you know, what was it, near 70,000? And if it goes down 80%, right, that would still take it well below 20,000, right? 15,000-ish, or whatever the math is there.

• 43:58Anthony Pompliano?

  He's not selling.

• 43:59Speaker 02

  And if it goes down 90%, you know, it's gonna take it below 10,000. So, that would be a flush-out. But then the question is, if we have a flush-out where Bitcoin goes down to between 5 and 10,000, let's say, what comes next, right? Is there gonna be another big wave that takes Bitcoin up to 100,000, whatever, 200,000? Or is that the end of it, right? Is that, is this the last hurrah?

• 44:24Anthony Pompliano?

  This is my last question for you.

• 44:26Speaker 02

  Yeah.

• 44:27Anthony Pompliano?

  If the United States Federal Reserve puts Bitcoin in its reserves, will you buy Bitcoin?

• 44:33Speaker 02

  It's not gonna do that.

• 44:34Anthony Pompliano?

  If they do it, will you buy Bitcoin?

• 44:37Speaker 02

  The Federal Reserve does a lot of dumb things, but they're not that dumb.

• 44:41Anthony Pompliano?

  If the Federal Reserve puts Bitcoin into their reserves, will you buy Bitcoin?

• 44:46Speaker 02

  Okay, if the Federal Reserve was that dumb, no, I wouldn't do it too. It's like asking me, "Hey, if my friend jumped off a bridge, would I jump off the same bridge?" No, I'm not, I'm not gonna do it. I don't expect the Federal Reserve to do something that dumb, but if they did do something that dumb, I'm not gonna copy them. I'm just gonna continue to do what's right, not copy somebody else doing something that I know is wrong.

• 45:12Anthony Pompliano?

  Then why, if they hold gold, do you keep buying gold? If they're so dumb?

• 45:17Speaker 02

  Actually, you know, they don't nearly, hold nearly as much gold as they should over at the Fort Knox. I mean, they're pooing gold. So, but, you know, gold was around long before the Fed. You know, we, gold's been around since before the nation, but when the founding fathers established the Republic of the United States of America...

• 45:38Speaker 02

  They were smart enough to put us on a gold standard, not a fiat standard. They did not want paper money. Paper money existed back in, you know, 1789. It's not like there hadn't been any examples of paper money. They were very familiar with the failures of paper money. And that's why they specifically made it impossible to have paper money in the United States. Now, the question is, if the Constitution was written to prevent paper money, why do we have paper money now? Well, that's because the Constitution is being ignored, and the Supreme Court is not enforcing the Constitution on the government, and it's allowing the government to get away with something that the framers clearly prohibited in the language of the Constitution.

• 46:21Speaker 02

  So I'm just, you know, following Jefferson and Adams and, you know, Jay and Madison and all the learned men who put us on the right foundation, that laid the foundation for America to arise from nowhere to become the richest nation in the history of the world because we had a free market based on a gold standard. We had sound money and limited government. And so it's a shame that we have strayed away from those founding principles. I hope that in the ashes of this collapse, we can re-embrace those principles and do it in my lifetime. I would really like to see that. And let my children and all you young people enjoy the blessings of liberty.

• 47:04Speaker 02

  Unfortunately, it may be the opposite. You know, we may have to deal with the consequences of a complete lack of liberty and an all-powerful central government. That's, you know, that seems to be the direction the pendulum is swinging in.

• 47:20Anthony Pompliano?

  If our forefathers were alive today, they would all be Bitcoiners.

• 47:26Speaker 02

  No, they would not.

• 47:27Anthony Pompliano?

  Bitcoin takes every single one of those ethos around freedom, personal responsibility, individual liberty, self-sovereignty, freedom of speech, et cetera. And it wraps it up into a digital tool that is then handed to literally hundreds of millions of Americans and allows them to express the American ethos in a way that does not leave them susceptible to any organization or individual. They cannot be censored.

• 47:58Speaker 02

  All Bitcoin has done.

• 48:00Anthony Pompliano?

  They cannot have their currency devalued. The forefathers would be Bitcoiners.

• 48:04Speaker 02

  You can't devalue Bitcoin because it has no value to begin with. It's already worth nothing. Look, all you're doing is taking a Ponzi scheme and you're wrapping it in the garments of freedom and liberty and all those catchwords.

• 48:16Anthony Pompliano?

  Do you know how a Ponzi scheme works? Do you know how a Ponzi scheme works?

• 48:19Speaker 02

  Yes, I do. And a pyramid and a chain letter. You know, the interesting thing about a chain letter, chain letters are actually illegal, but a blockchain letter somehow is. Like if you take a chain letter and put it on the blockchain, all of a sudden it becomes legal. Look, none of this stuff works, right? You guys are too young to realize it doesn't work. I'm telling you.

• 48:39Anthony Pompliano?

  Peter, Peter.

• 48:40Speaker 02

  It doesn't work.

• 48:40Anthony Pompliano?

  Peter, how proud of you that you came up with a chain letter and a blockchain letter. That was pretty good. That was, I know you've been thinking about that one for a while.

• 48:48Speaker 02

  Well, I've used it. It's not the first time I've used that one.

• 48:50Anthony Pompliano?

  Yeah, that was pretty good. That was pretty good. All right, listen.

• 48:53Speaker 02

  Yeah, well, thank you.

• 48:54Anthony Pompliano?

  I appreciate you coming on. Uh, I have an open door whenever you would like to come here. My only request is that when you capitulate, regardless of when it is, you just come on here and you do it first. And I promise you, the only thing I will say is, I told you so. And then I won't make fun of you at all any more than that.

• 49:14Speaker 02

  Well, I, I, look, I'm gonna have to be saying the same thing. You know, I wish as your friend, right? And you're maybe your mentor somewhat, because I'm a little older than you. You got a lot of your net worth in Bitcoin. You gotta reduce that exposure. It is, it is, it is, even if you're right, and this thing goes to the moon.

• 49:33Anthony Pompliano?

  So you're saying I'm right?

• 49:35Speaker 02

  Even if you're right, you're not. But even if you were, like for the sake of argument, right? You don't need that much. A little bit will go a long way if you're right, right? If Bitcoins go into a million or whatever, you know, a small amount will, will make you very rich. But if I'm right, you're gonna lose so much wealth, I mean. Take chips off the table, you know, call up Shift Gold. There's a way, there's a way that you can exchange some Bitcoin for gold.

• 50:01Anthony Pompliano?

  I gotta go.

• 50:02Speaker 02

  We work with Bitpay, you know. Maybe open up an account with EuroPacific Asset Management. Send me some of your money before you lose it. And, you know, we can put it into good, solid dividend paying stocks so that you'll always have something. You know, a lot of my neighbors, I mean, all these bigwigs, they're all like, they are all cashing out. I can see it, you know, they're buying big houses, they're overpaying for houses, they're buying big boats and private planes and they're doing all sorts of stuff. They are cashing out. You gotta cash out. Do not go down with this ship, right? I mean, they look noble to go down with the ship and huddle till the end.

• 50:38Anthony Pompliano?

  That was the greatest plug of all time. That was, that was the greatest plug of all time, slipping in all of your plugs. All right, where can we send people to find you on the internet?

• 50:47Speaker 02

  Well, Peter Schiff Show, you know, you can see that's my podcast. So people can go to Schiffradio.com and listen or on YouTube. You know, I just started out on Locals, you know, where I'm, you know, charging people for the first time to get my podcasts a day early and commercial free. I'll be coming up with some new content for the Locals audience as well. So people could do that. And also become clients, whether you want to buy some real money from Shift Gold or you want me to manage your money for you. I talked earlier about how I've got a lot of my own money in these mining stocks. I think that is the asymmetric, huge payday where I think I can make 50 to 100 times my money.

• 51:29Speaker 02

  So if I'm right on, on gold, you know, I'll, I'll end up being a billionaire several times over. I think even adjusted for inflation in today's dollars, I'd be a billionaire. So, you know, I'm not quite there yet.

• 51:41Speaker 02

  But, you know, I think a lot of the people who are billionaires now in Bitcoin, if they don't get rid of their Bitcoin, I mean, they're not gonna have much left. Of their paper stack. But if you want me to manage some money for you, get ahold of me at Europe Pacific Asset Management. You know, I'm based out of Puerto Rico. I also work with guys at Europe Pacific Capital, which is a broker dealer I used to own. I now work, you know, managing accounts for them, for their customers in my strategy. So you can talk to them at Europe at Europe PAC dot com. But you know, the sooner people can get out of fiat and get out of crypto and out of overpriced stocks into real money, gold and silver, into value stocks, dividend paying stocks.

• 52:23Speaker 02

  And I think also the trade is getting away from the U.S. Because this is going to be the epicenter of the crisis, the U.S. dollar and get into foreign markets, emerging markets, try to invest where standards of living are going to go up, not down. You know, these countries are going to finally reap the benefits of their hard work and their productivity. And Americans are going to suffer the consequences of our profligacy. And you know, as an American citizen, I don't like that. I wish I could change that. I can't. But as an investor, there's at least something I can do about it to protect my wealth and to profit from these events. And I can help other people protect their wealth and profit.

• 53:05Anthony Pompliano?

  You're a legend. I appreciate it very much. You can come on the show whenever you want. Anyone who does not follow Peter, it's the best comedy account on Twitter. You can go follow at Peter Schiff and I appreciate it. We'll definitely do this again in the future, my friend.

• 53:18Speaker 02

  Yeah, one of these days I have to overtake you with your followers, though. You're about double my my followers. Shows you the Bitcoin bubble can do.

• 53:27Anthony Pompliano?

  Goodbye.

• 53:29Speaker 02

  Take care, everybody.

• 53:30Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three week intensive training program with over 50 events packed into that three week time period. Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.