5 MINUTES AGO! Peter Schiff Sent Out A Terrifying Message...

now inflation is a huge problem see inflation was the government's solution to the problem until inflation has now become the problem and so inflation is going to get much worse forget about what these Central bankers and politicians are saying about their commitment to fight inflation how they're Resolute and how they're determined no matter what to bring the inflation rate back down to 2% that's never going to happen we're going to see 20% inflation before we see 2% inflation and this pre-end war war against inflation is going to come to an end soon and the central banks are going to surrender and inflation is going to win look we've already seen the First Central Bank capitulate and wave the right white flag and that was the bank of England the bank of England a week or two ago was every bit as committed to fighting inflation as the FED until the inflation fight threatened the financial crisis and then they towered out turned around and they're back to quantitative easing they went from quantitative tightening the open-ended quantitative easing in fact the bank of England said we're going to print as many pounds as we have to we're going to keep on buying guilts we're not going to let interest rates go up they have to let interest rates go up if you want to fight inflation you got to let interest rates go up but the other thing you have to do to fight inflation is to make government spending go down because government spending is the source of that inflation governments are running deficits and the central banks are monetizing those deficits by creating inflation governments are actually funding themselves through through inflation when you have a budget deficit you're not getting government for free every nickel that the government spends has to be paid for by the citizens and if they don't pay for it with a tax then how are they paying for it through inflation so when prices go up that's the tax that you're paying for all these government programs and so if the government wants to get rid of inflation well then it has to get rid of those programs or it has to raise taxes to finance those programs and that's not happening that's not happening anywhere nowhere in the world despite all these governments that claim they want to fight inflation no government is actually doing it nobody is cutting spending in fact in the UK they cut taxes well when you cut taxes you increase the inflation tax so the British were claiming that they wanted to fight inflation while at the same time creating even more of it that is the problem but the same thing is going to happen to the Federal Reserve in the United States you cannot raise interest rates without creating a financial crisis the the financial crisis we had in 2008 was a result of a normalization of interest rates it wasn't simply a subprime problem the reason subprime was the problem was because it was debt people borrowed money and they couldn't pay it back why were they able to borrow the money because it was cheap the FED lower interest rates to 1% they created a housing bubble housing prices went up people borrowed money against those inflated property values they borrowed money with artificially low interest rates and when interest rates went up property prices went down people didn't want to pay their mortgages you get a financial crisis because now the banks didn't get their money back they loaned all this money out they didn't get it back that was why we had a crisis well today we have much more debt than we had in 2008 we had 0% interest rates for almost 10 years think about all the debt that was taken on during those 10 years by not only the government corporations private citizens do you think they can repay that debt when rates normalize of course not and what happen when rates go up asset prices come down it's like the other side of a seesaw the lower interest rates are the more expensive stocks are the more expensive real estate is but as interest rates go up those prices come down because it's all a function of interest rates so if I borrowed a bunch of money to buy a house and now the house goes down I have no equity and my mortgage payments are up I'm I'm mailing in the keys but you have all these companies in America that have been losing money in fact in 200 21 it was a record year in America for money losing companies going public now how do all these money losing companies stay in business because a company's supposed to generate a profit to stay in business how do you lose a bunch of money and still stay in business how do you pay your employees how do you pay your rent and how do you do anything well the companies were selling stock to the public they were raising money by selling stock and a lot of companies were borrowing money to pay their expenses take it on debt but it was all great when rates were at zero and people were willing to buy these overpriced stocks when rates were at zero they're not willing to do it when rates are at 4% and in order to fight inflation they got to go much higher than 4% despite the rate increases federal funds rate in the United States right now is about 3 and a qu to 3 and a half% inflation even the way the government measures it is 8 and a/4 per. that's -5% real interest rate you're not going to fight inflation with NE 5% rates you're going to create more inflation the only way that you can fight inflation with higher interest rates is if the interest rate is higher than the inflation rate and it can't just be a little bit higher it's got to be meaningfully higher in 1981 when Paul vulker raised interest rates or allowed interest rates to go up short-term rates went to 21% the highest inflation got was 132 so that's what it took people had real interest rates the reason you need that is because you've got to stop people from spending money that's what's the demand it's spending you've got to get people to stop spending and start saving because that accomplishes two things it reduces demand but it increases Supply how does it increase Supply well when you spend money I mean when you save money and you don't spend it that money can Finance capital investment that will lead to more production of goods and so you increase the supply of goods while decreasing demand for goods prices can come down or stop going up that's what you need to do now if interest rates are negative that is not going to encourage anybody to save if rates are Nega 5% you're going to lose 5% a year on any money you save why the hell would you save you wouldn't you're going to spend your money as quickly as you get it you're not going to save it and lose 5% a year now if the Federal Reserve raise interest rates up to let's say 10% or 15 % then you might save your money hell I can put my money in the bank and earn 15% I'm not going to spend it even if inflation is 8% I'm still 7% ahead I'm going to save my money I'm going to earn all that interest I'm going to spend my money in the future because then I'm going to able to spend the interest that I earned on my money that's what the Federal Reserve needs to do but they're not doing that also we are running $2 trillion a year deficits in the United States where's the money coming from it's coming from the Federal Reserve or it was there's no other source because if the Federal Reserve isn't going to print all that money then the private sector is going to have to buy all those treasuries but the private sector doesn't want those treasuries foreign central banks don't want those treasuries they want they need to sell the treasuries they've already got they don't need to buy anymore there is no way to finance these deficits so the government has to cut spending but they haven't cut any spending in fact if you look at the inflation reduction act that was a spending bill they increased spending to fight inflation how are you supposed to do that it's the spending that is the source of the inflation because the spending is being monetized by the central bank so instead of fighting inflation they created additional inflation instead of putting out the fire they poured gasoline on the fire and just pretended that they were going to put it out but everything we're doing we just were forgiving student loans in fact we told people that have student loans you don't have to pay those loans just go out and spend the money on other stuff buy more Goods buy more Services push the prices even higher you see this the Federal Reserve and other central banks are at an inflection point they're really in a situation where they're between a rock and a hard place and they're damned if they do and then they're damned if they don't because for years they were able to Kick the Can down the road by creating inflation and sweeping the problem under the rug but now that inflation has become the problem they can't solve the inflation Problem by creating more inflation because the solution to every problem has been inflation the economy is weak print money lower interest rates companies are failing let's bail them out how do we pay for that print money create inflation so inflation has been kind of the one trick pony it's been a cure all whatever alss us just inflation is going to be the Cure well now that inflation is the disease where's the Cure there is none any more stimulus and we end up with an overdose and that is where we are right now and what's keeping everything going the reason that we haven't already seen a collapse in the bond market or collapse in the value of the US dollar the reason we've had a rally in the dollar is because the world is still or still has faith in the Federal Reserve the world still believes that the Federal Reserve is serious about bringing inflation back down to 2% and that it has the ability to bring inflation back down but it doesn't remember it was the Federal Reserve back in 2008 or 207 that said not to worry about the subprime market it was contained of course we saw how contained that was but even before the subprime problems they told us there were no problems they said there wasn't a real estate bubble and they said even if the real estate prices went down it wouldn't hurt the economy because it was so strong so the FED has a very bad track record and more recently with respect to inflation first the Federal Reserve said we didn't have enough inflation then when inflation got to 2% they said oh well we need to have it a little bit higher than 2% to make up for all the years that it was a little bit below 2% and then when it got much higher than 2% they said don't worry about it it's transitory it's all going to go away on its own and they said that for a year as inflation got worse and worse and worse until they finally admitted that it wasn't transitory and so now they're claiming that they're going to solve the problem but that's another lie it's just like the transitory lie they knew inflation wasn't transitory so why didn't they admit it because they couldn't fight it because they knew that fighting inflation would crash the house of cards that was built on a foundation of inflation everything the Federal Reserve has done has been to artificially prop up an overly leveraged economy well the minute they try to fight inflation they knock out those props and everything comes collapsing down that's why they pretended it was transitory because they didn't have the guts to do something about it it was only when the problem became such a big political hot poata and everybody was worried about inflation that the Federal Reserve finally said okay we're you know we're going to do something about reing inflation but they don't have the ability to actually live up to those commitments now they can pretend and they can hope that inflation just goes back down to 2% all by itself because they're talking about how committed they are to bringing it down but they can't do it without creating a financial crisis in fact the rate hikes that they've already delivered even if there's nothing else behind it will create a financial crisis it's just a question of how much they already happened in the UK or would have happened and we're very close to that point now I put my finger on the strength of the Japanese Yen and what that potentially Port told for risk assets I pointed to the continuing preponderance of weak economic data and I pointed out the emerging Trend that I had noticed where investors were rotating out of growth and into value and I postulated that it looked to me like investors were now finally starting to price out the soft landing and they were starting to price in a harder landing and I also warned that if J Powell didn't take advantage of the September meeting which we just had a couple days ago to cut rates and I suggested a 50 basis point rate cut to be preemptive on what I saw was the potential for a market crash that if the FED didn't cut by maybe 50 basis points on its next meeting that it risked a stock market crash if it even waited till September and I said that the recession would officially begin then with the stock market crash now of course we've been in recession all year maybe even longer I believe the government will eventually after this election in November they will revise over a Year's worth of economic data and they will then backdate the recession to some time before 2024 began if Pal's goal was to really help the economy try to prop things up for a little longer if that's what the goal was I thought he should have taken advantage of that move to help the markets and to at least look like they know what they're doing of course they don't know what they're doing but he would look extremely smart right now as far as the conventional wisdom is concerned also I think we're going to see a big drop in the dollar the dollar was down dollar Index down 1% on the week it was down 1. 2% today basically the entire decline in the dollar Index happened today because until today it was up but it was led lower by a surging Japanese Yen Japanese Yen I mentioned at its low the Japanese Yen was over 161 to the dollar you needed 161 Japanese yen to buy a dollar as of the close on Friday you only needed 1462 you've had almost a 10% rise in the end in a couple of weeks not quite maybe 9% that is a huge move in a very short period of time and that's why you had this collapse in the Japanese stock Mark they had one of their worst days in history the Nik was down 5.

8% overnight on the strength of the end now if you're a US dollar in some of that was offset by the strong yen in fact on the week the Japanese stock market was down 7. 8% in yen in dollars it was only down 3. 3% so that's actually a smaller loss than the NASDAQ or the Russell 2000 so as bad as the Japanese stock market was if you were an American and you own those stocks then you didn't do so bad the big shocker was the unemployment rate which spiked up nobody predicted this everybody thought the unemployment rate would either stay at 4.

1 or drop to 4. 0 it's spiked up to 4. 3% this is a huge increase in the official unemployment rate and is it indication that the hard Landing is coming but to really put the unemployment rate in perspective you got to look at the U6 rate and the U6 rate spiked up even more to 7.

8% nobody talks about the U6 rate and that's by Design that's why they created u3 so that people would forget about U6 but I mentioned on this podcast U6 was created in 1994 up until 1994 U6 was the number so when they reported the unemployment rate in 1993 1992 and every year before that they reported what we now call U6 that nobody reports When anybody talks about how unemployment is low and they compare it to what unemployment was in the 70s or the 60s it's apples to oranges you can't make the comparison the only way you can do it is the way I'm doing it you have to compare the current U6 number to the old headline number and even that is an apples to oranges but it's closer because then U6 included all the disgruntled workers no matter how long they've been disgruntled right even if they've been I haven't looked for work in three years cuz I'm so disgruntled they still counted as unemployed but now after you've been disgruntled for a year you drop out of the U6 so even these numbers are too low there wasn't a single year in the 52 years between 1942 and 1994 52 years not a single one of those years ended with an unemployment rate as high as the one we got right now 52 years now it was a little higher in 1940 1941 because we were still in a depression right so other than the depression the Great Depression those 52 years every president had lower unemployment than Biden so how can he claimed that he's got this really low unemployment how can pal say the economy is great because the unemployment rate is low when if you look at the real unemployment rate which still isn't real U6 it's high it is historically High we have right now a historically weak labor market and high unemployment rate and the inflation rate is also High especially if you measure it the way we used to measure in the 1970s I would say that the misery index which is the combination of unemployment and inflation is higher right now than it was for the majority of the 1970s the latter part the cter years were still a bit worse but the earlier years with Ford and Nixon it's worse now under Biden and that was a stagflation decade so we've got it the data supports it and the markets investors are slowly starting to queue in looking at some of the other numbers manufacturing added 1,000 jobs no big deal last month they lost 9,000 jobs a little bit more than they first told us labor force participation did pick up to 62. 7 but average hourly earnings only Rose 02 they're supposed to rise3 year over-ear they were up 3. 6 so people not making as much and the work week dropped from 34.

3 hours to 34. 2 hours it was a very weak report we also got a report on Factory orders which were down 3 3% manufacturing is in recession it's been in recession for almost the entirety of the Biden presidency and you can see that you know in the Intel earnings or what we saw with uh even Amazon is showing that the consumer is headed there I think he's already in one ISM Manufacturing another big Miss they were looking for a weak number they got a much weaker number the only thing that was strong was the prices paid it was a hot inflation number that's what spooked the markets that's what we're going to get cuz we got stagflation the economy is going to keep getting weaker and inflation is going to keep getting stronger construction spending another drop they were looking for a rise of 0. 2 we got a decline of.

3 nobody expected a negative number and in fact they revised the prior month from down. one to down point4 Dallas fed manufacturing was supposed to be weak was supposed to beus 13. 5 it was weak minus 17 A5 nobody thought it would be that weak the weakest anybody thought in the consensus was a 14.