Peter Schiff Wealth Manager
Peter Schiff and I discuss the most commented financial news of the year: The Covid-19 pandemic and how it affects the U.S. economy, the future of the American currency, bitcoin, and why producing coins is key in national news.
Maybe you've listened to The Peter Schiff Show podcast but in this interview, we go deeper into the nuance of Peter's arguments.
The national debt just passed $24 trillion, up $4 trillion since @realDonaldTrump took office. He will add more debt in 4 years than Bush did in 8. If reelected he will add more debt in 8 years than Bush & Obama did in 16. Instead of draining the swamp, he is draining the nation. — Peter Schiff (@PeterSchiff) April 8, 2020
Why currency doesn't equal purchasing power
Peter Schiff, a well-known financial and gold expert, was invited to The Rebel Capitalist Show to discuss the current financial news.
The host, George Gammon, expressed his admiration for Peter and how he has influenced his thinking since 2012.
Before starting the interview, George mentioned that he had previously discussed his thoughts on Dave Ramsey and why he was critical of him.
He explained that he started studying macroeconomics in December 2012 and began listening to Peter's podcast.
Why Currency Doesn't Equal Purchasing Power But Consumption, Production, And Productivity Does?
The belief that printing more money can increase purchasing power is a common misconception. Despite the temptation of sponsored posts on social media, spending money on unnecessary products does not equate to increased purchasing power.
The truth is that production is the key factor in determining purchasing power.
Even though the relief plans announced by the government during the coronavirus pandemic may give the impression that everyone will be made whole, the reality is that production is what truly drives the economy.
This is a concept that is important to understand, especially for those who have recently graduated from high school.
Money in the real economy
The transfer mechanism of printed money from the Fed to the real economy involves several steps.
Firstly, the Fed prints money and deposits it into the reserve accounts of primary dealers. Next, the primary dealers create a deposit or the government spends the money and borrows it, creating another deposit.
However, for the money to circulate and chase goods in the real economy, the US government must sell a treasury bond to borrow money separately from the Fed.
As an example, the government announced today another $850 billion in stimulus to send checks to Americans. Despite functioning as part of the government, the Fed is not officially a part of it.
Inflation
The recent coronavirus outbreak has caused a supply shock, which is affecting the economy.
Due to “illness”, people are not able to work and be productive, and factories are producing less or not producing the components needed to make their products.
This means that there are fewer goods and services available in the market.
The government's response to this situation is to inject more money into the economy, but this will not be effective if there is less stuff for people to buy. In fact, it could worsen the inflationary process.
The US dollar being the reserve currency is currently keeping inflation under control, but if the situation worsens, more cash will stay in the country, and prices will start to rise.
Therefore, the government should focus on shrinking the money supply to maintain price stability.
Comparing the 2008 crisis to today's crisis.
Peter Schiff, who was one of the first people to predict the last financial crisis in 2008, believes that the Covid-19 pandemic has acted as a trigger for the current economic collapse, but the bubble was already deflating before the pandemic.
According to Schiff, the Federal Reserve's decision to hike rates in Q4 2018 was the beginning of the end. The Fed panicked and reversed course by cutting rates and implementing a QE program, which they tried to disguise as something else.
Schiff believes that the Fed is still being coy about the true nature of their actions.
U.S. Bank's Balance Sheets
The interviewer asked Peter Schiff whether he believed that the banks were as vulnerable now as they were in 2007-2008.
While it is commonly believed that the US banks' balance sheets are in better shape now, Schiff argued that if everyone defaults on their loans, the banks will eventually suffer.
He recalled how people claimed that the banks were sound in 2008, even weeks before Lehman and Bear went bankrupt, which exposed the truth.
Schiff contended that one cannot trust the same people who claimed the banks were in great shape then, and even the Federal Reserve's stress tests are not reliable as they are designed for all banks to pass.
Bailouts: Why They're Not a Good Idea According to Peter Schiff
Peter Schiff argues that bailouts primarily benefit the owners and creditors of companies.
When it comes to airlines, people often believe that letting them fail would be catastrophic. However, if airlines were to declare bankruptcy, they would still exist.
The restructuring process would result in current shareholders losing their investments, while bondholders would take ownership. Bondholders would either operate the business themselves or sell off the assets.
Therefore, letting companies fail would not result in the end of the world, but rather a natural process of restructuring and ownership transfer.
Peter Schiff's perspective on gold and silver's future…
Peter Schiff, a prominent figure in the world of finance, sheds light on the current downward trend in the gold price. He attributes this to the margin call process, which he explains in detail.
Schiff also touches on the topic of dividend-paying stocks outside the United States and the significance of the silver to gold ratio.
He notes that the price of gold has seen a 70% increase since January 2016, peaking at $1,700 during the current crisis.
However, it has since experienced a 10% correction as the market began to deteriorate. As the stock market plummeted 30% and small caps fell 40%, gold also saw a decline.
How do foreign dividend stocks' PEs act?
Peter Schiff, a well-known figure in the precious metals industry, also has a keen eye for overseas dividend-paying stocks.
In a recent podcast, Schiff shared that these stocks are currently trading at low double-digit or high single-digit PEs, with yields in the higher single digits and low double digits.
Many of these stocks are now cheaper than they were in 2009 and have not experienced the same level of growth as US stocks.
Schiff believes that while the US stock market has been in a bubble, value stocks and defensive, dividend-paying names have been overlooked. As a result, these stocks present a unique opportunity for investors.
Peter Schiff FAQ
How an economy grows and why it crashes by peter schiff
Peter Schiff is a well-known economist and author who has written several books on economics. His book, “How an Economy Grows and Why it Crashes”, provides an in-depth analysis of the factors that contribute to economic growth and decline. In this book, Schiff explains how economies grow by producing goods and services, and how they can crash when government policies interfere with market forces. He also discusses the importance of sound money, free markets, and limited government in promoting economic growth. Schiff's views on the economy have gained him a reputation as a contrarian thinker. He is known for his skepticism of mainstream economic theories and his advocacy for gold as a store of value. Schiff has been a vocal critic of the Federal Reserve's monetary policy, arguing that it has led to excessive debt and inflation. He has also been a strong advocate for free trade and globalization, arguing that they promote economic growth and prosperity. In addition to his writing, Schiff is also an entrepreneur and investment advisor. He is the founder and CEO of Euro Pacific Capital Inc., a brokerage firm that specializes in international investments. Schiff has been a frequent guest on financial news programs and has been featured in numerous publications. His insights on the economy are widely respected by investors and policymakers alike.
Peter Schiff How An Economy Grows And Why It Crashes
Peter Schiff is an American businessman, investment broker, author, and financial commentator.
He is best known for his book, “How an Economy Grows and Why It Crashes,” which explains the fundamental principles of economics in a simple and understandable way.
The book uses an allegory of an island economy to explain how economic growth occurs through production and trade.
Schiff argues that government intervention in the economy through regulations, taxes, and monetary policy can hinder economic growth and cause crashes.
He also emphasizes the importance of savings and investment in creating sustainable economic growth.
Schiff's book has been praised for its clear explanations of complex economic concepts and its relevance to current economic issues.
However, it has also been criticized for oversimplifying some aspects of economics and for promoting a libertarian ideology.
Despite the criticisms, “How an Economy Grows and Why It Crashes” is a valuable resource for anyone interested in understanding the basics of economics and how they apply to real-world situations.
Peter Schiff Twitter
Peter Schiff is a well-known American businessman, author, and financial commentator who has gained popularity for his economic predictions and analysis.
He is the CEO of Euro Pacific Capital Inc., a brokerage firm specializing in foreign securities.
Schiff has also written several books, including “The Real Crash: America's Coming Bankruptcy – How to Save Yourself and Your Country,” and frequently appears on financial news shows.
If you want to follow him on Twitter, his account handle is @PeterSchiff.
To follow him, go to Twitter and search for his handle or click on the link to his profile.
Once you are on his profile page, click the “Follow” button to receive updates on his tweets and economic insights.
Peter Schiff's Twitter account is a great resource for those interested in finance, economics, and investing.