Peter Schiff sees perpetual debt as the crux of the current financial and economic crisis. 

Most of the G7 advanced economies are in a recession, with living standards for most in freefall as double-digit inflation festers away through economies like the clappers.

Europe is in the grips of the endless senseless war in the east, a deep recession, a sovereign debt crisis, and a cost of living crisis. 

UK inflation has hit 10.1%, and EU inflation is at 10.7%. The Ukrainian war is causing cost-push inflation and shortages through supply chain disruptions. Ukraine, Europe’s breadbasket and energy logistic hub is out of action due to the war increasing global food and energy prices as Europe goes further in the field to find alternative suppliers, thereby biding up global prices.  

So central banks are pissing in the wind with their rate hikes, which leads to more financial instability. The UK September Gilt market meltdown comes to mind. Tightening is also causing hardship. The cost of servicing a US mortgage has doubled in the US since 2022.

In the UK, five million families face mortgages rising by 5,100 GBP a year, by year-end. 

“Europe is in the grips of the endless senseless war in the east, a deep recession, a sovereign debt crisis, and a cost of living crisis”

WEALTH TRAINING COMPANY

Peter Schiff sees perpetual debt and where the impact of central bank tightening has human costs

When households have cut all their discretionary spending to keep a roof overhead, their children are going to school hungry.

This current financial-economic crisis has young eyes, and those advocating and implementing austerity on the most vulnerable are taking part in a modern-day Holodomor.   

Peter Schiff sees perpetual debt and inflation as decades-long problems

The spiraling debt and inflation problem have been going on for decades.      

“The mistake, they say, was thinking inflation was transitory. But as Peter Schiff has pointed out, this problem didn’t start last year, or even with the pandemic. This problem was decades in the making,” he said.

Mal investments are where Peter Schiff sees perpetual debt leading to inflation.

“The severity of malinvestments, of the misallocations of resources, of the monumental mistakes that have been made throughout this economy by the government, the private sector, corporations, individuals — everybody has made mistakes because of this cheap money,” he said.

“The mistake, they say, was thinking inflation was transitory. But as Peter Schiff has pointed out, this problem didn’t start last year, or even with the pandemic. This problem was decades in the making”

PETER SCHIFF

The federal government’s public deficit recently eclipsed $31 trillion. 

“A year ago, Janet Yellen was saying the big debt wasn’t a problem because interest rates were low. Well, they’re not low anymore. This is a perfect example of how cheap money incentivized bad decision-making.

The whole nation was drunk on cheap money, and while they were drunk, they did a lot of stupid things, just like a lot of people do when they’re drunk,” he said 

Peter compared it to a favorite Warren Buffet quote: when the tide goes out, we see who’s swimming naked. Peter said, “Basically, everybody has been naked.”

And everybody is going to be exposed when the tide goes out, which is what’s happening right now.”

Indeed the implosion of the Gilt market exposed how yield-starved pension funds bought more gilts with leveraged debt positions to make yield income to pay current liabilities. 

Conservative investors, pension funds, rely on inexpensive credit to buy debt-based investments, gilts, to make payments.

“The Fed has been too loose for almost 25 years, flooding the economy with cheap money” – Peter Schiff

Put simply Peter Schiff sees perpetual debt as becoming integral to the system

The Fed’s inflationary monetary policy can be traced back to 1998 and the Long-Term Capital Management bailout.

“And then it printed even more money in advance of Y2K. And then even more money after the NASDAQ bubble popped in 2000. And even more money after the real estate bubble popped in 2008, then the 2020 pandemic lockdowns,” he said, 

Peter Schiff sees perpetual debt where the strategy is to inflate away the debt

“The Fed has been too loose for almost 25 years, flooding the economy with cheap money.”

Peter said he knew 2008 wasn’t the real crash. The reckless monetary policy in the response to the Great Recession, simply papered things over and kicked the looming crisis down the road.

Well, the real crash is the one we’re headed for right now. And we were going to have that crash regardless of the mistakes the Fed made in 2021. We were going to have it because of all the mistakes it made — not just going back to 2008 — but going all the way back to 1998,” he said.

“the less skilled and gullible investors have also been the losers of the central bank liquidity boom-bust cycle” – Wealth Training Company

Peter Schiff sees perpetual debt, but we see currency debasement as a risk for investors

Those at the short end of the stick will be prone to long-term investment paralysis and risk-averse with capital. So the least capital risk, cash deposits held at banks, and sovereign bond yields have experienced wealth shrinkage due to the currency being debased.

But because the central bank liquidity cycle creates waves of investment cycles of boom and bust, insiders are better placed to get in early and exit at the top. 

Retailers have often left bag holding, buying at the top and riding the investment down, then forced to sell due to margin calls or not having the resources to ride the investment up.

So the less skilled and gullible investors have also been the losers of the central bank liquidity boom-bust cycle.

Also, the public education system does not teach students about money and investing. A student can study for six years at secondary school and another three years at university and not know the difference between a stock and a bond and the impact of currency fluctuation on investment. But dwindling tax revenue is being spent on gender identity lessons.

So an entire young generation is shouldering declining real wages, and the few lucky enough to save are seeing the capital erode due to currency debasement. 

Capitalism withers on the vine when the coming gender-neutral generation becomes permanent renters.