Peter Schiff sees elevated inflation persisting, with the primary culprit being the protectionism of the incoming Trump administration, rising commodity prices, and the pretending of central banks with their rate-cutting cycle that inflation is under control. 

Peter Schiff believes inflation in 2025 will exceed the Fed’s 2% inflation target.  

He believes the proposed tariffs on Canadian and European goods would be inflationary.   

“We have a massive trade deficit with Europe and Canada. We need those products because we don’t make them,” said Peter Schiff.  

“We could, but that is going to have to start with changing regulations, government spending, and monetary policy, but none of those changes are likely to be implemented,” he said. 

Peter Schiff reiterated that the US needs products from Canada and Europe free from trade restrictions, which could reduce supply and increase prices, albeit in the short term.  

We have a massive trade deficit with Europe and Canada. We need those products because we don’t make them

PETER SCHIFF

He noted significant increases in CPI in 2021, the very first year Biden was in office. 

That big jump began in the last few months of the Trump presidency.

He noted the contradictions of protectionist policy and keeping inflation low. 

“Trump is saying we do not need these Canadian and European products. Schiff believes protectionism will deprive the US of these products, reducing the supply of goods Americans can buy.      

“He talks about taking over Greenland and the Panama Canal. 

He implied that he might even use military force or economic pressure.

He said we would sanction or Tariff Denmark if they don’t want to give us Greenland.

He can’t tariff Denmark.

He will tariff Americans who want to buy Danish products,” said Peter Schiff.  

“All Congress has approved since Trump’s election is more government spending and bigger deficits,” he added. 

He talks about taking over Greenland and the Panama Canal. He implied that he might even use military force or economic pressure

PETER SCHIFF

Peter Schiff sees elevated inflation as mainstream ignores surging commodity prices

“If you look at the CRB Index, today it is at a 14-year high and in the last seven months, we are up over 28% in commodity prices in USD,” he said.

He noted that the CRB Index, a measure of the price of a basket of commodities, is up even more in EURO, GBP and Canadian dollars.

“So commodity prices are surging all over the world. 

In Europe, they are up over 30%,” he said. 

The Fed wants to make sure they are close to 2%, they are not even close, and the bond market is starting to sniff this out” – Peter Schiff

Central banks pretend inflation is under control as Peter Schiff sees elevated inflation persisting

“Christine Lagarde, head of the ECB, said on X that 2025 will be a great year where inflation is coming down to 2%.

What is she smoking?,” he said.   

First of all, it is about 3% now heading in the other direction.

Prices are surging all around the world,” he said. 

“We now have strong commodity prices even with a strong dollar.

So imagine how much stronger they will be when the dollar weakens, which eventually will turn down,” added Peter Schiff. 

He noted that oil has been much higher than 74 USD over the last 14 years. “It is one of the bright spots in this cloud of other commodity prices. Coffee, sugar, cocoa, soybeans, corn, all these commodities are surging,” he said.  

Regarding food items, he noted everything surging in price. 

“At the same time, the Fed and ECB believe they have won the inflation battle.  The Fed wants to make sure they are close to 2%, they are not even close, and the bond market is starting to sniff this out,” he said.  

He noted that the yields on a 30-year treasury rose to 4.9%.

The yield on a 10-year is 4.69%. “These are the highest yields since the Fed started cutting rates,” he said. 

Mortgage rates are above 7% and rising and going above 8%.

So, soaring commodity input costs do not jive with the central bank’s view that inflation is coming down. 

“They are going to bleed into consumer and producer prices. 

They caused the inflation, and now we see it in these commodity prices. You are going to see it more in oil,” said Peter Schiff.   

Inflation will be much higher than 2%. The bond market is mispriced, gold is mispriced, and the dollar is mispriced” – Peter Schiff

Rising oil prices are why Peter Schiff sees elevated inflation persisting 

“The Biden administration raided the strategic oil reserves to keep oil prices down. 

Where would oil prices today be if they didn’t do that?

We didn’t have to drill baby drill and just tapped the oil we already had, but played that card,” he said.  

American companies will not invest 70 USD a barrel, which is not high enough to make capex. 

Peter Schiff sees elevated inflation persisting as the Fed can’t hike anymore without triggering another crisis in the bond market.  

He noted the Fed can’t raise rates with interest payments on debt now near 1 trillion.

“I can not see Powell hiking rates at all, even though he should,” said Peter Schiff.

So, he thinks they will slow down rate cuts.

“8.5 trillion dollars of debt has been added in the Biden administration, in five years, which shattered Trump’s record for most debt in any presidential term,” he said. 

He thinks Trump will beat Biden’s record.

He thinks the National debt will continue to grow by 3 trillion a year with Trump as president in the next four years. 

“That will take the national debt to 48 trillion dollars. I think there is a good chance we will hit 50 trillion dollars,” he said. 

He thinks the public deficit will be huge in the next four years. 

“Inflation will be much higher than 2%. The bond market is mispriced, gold is mispriced, and the dollar is mispriced,” he said.

“The markets are not pricing in inflation reality. They are pricing in an inflation fantasy that can’t exist,” he added.   

Peter Schiff thinks that if the Fed keeps rates where they are and inflation goes back up to 5%, that means negative rates, which is bearish for the dollar and bullish for gold.