Peter Schiff Shreds Soft-Landing Narrative

Peter Schiff shreds soft-landing narrative, and he believes the Fed’s liquidity cycle from peak to trough in central bank liquidity will be less effective this time around.  

In his latest podcast entitled, “Fed money magicians running out of rabbits,” Peter Schiff noted that inflation is not under control despite its restrictive monetary policy consisting of 11 rate hikes and Quantitative tightening, which started in the summer of 2022 and has hit $864 billion.

Peter Schiff believes that President Biden’s selling oil from the strategic oil reserve was another significant factor in keeping cost-push inflation down. 

“Today, reserves are at a 40-year low. At this point, the US economy could only run for 20 days on the current oil reserves,” he said. ”

“Meanwhile, oil prices are now up 37% since the price bottomed out a few months ago,” he said.

Peter Schiff shredders soft-landing narrative is based on rising oil prices

He noted that the rent oil price hikes haven’t even shown up and that it has just started. “But we’re going to start to see that in the CPI numbers,” he added. 

The Takeaway point is that the US is no longer in a position to manipulate oil prices, irrespective of what the Fed does.  

With strategic oil reserves at an all-time low as the northern hemisphere enters winter oil reserves are no longer available to act as a price buffer.   

“They don’t have that rabbit to pull out of the hat anymore,” he said. 

“Inflation is going to continue to drive higher, and that destroys this whole disinflation narrative,” he said.

Foes holding a nuclear financial bomb as Peter Schiff shredders soft-landing narrative

Fed chair Powell cannot admit that the 2% inflation target is a pipe dream because it would widen cracks in the long-term treasuries market, sending the 30-year treasury price even lower and corresponding yields higher. Investors have already lost more than 40% holding safe haven 30-year treasuries since 2020 August.

If the Fed were to concede to inflation, losses in long-maturity treasuries would worsen, making the 2008 subprime mortgage crisis great recession, which ensued look like a picnic. It is a systemic crisis when long-maturity treasuries, prime collateral, and the pillar of Western finance become unstable. In this great power struggle, the hegemon’s Achilles’ heel is the 32 Trillion USD public deficit and inflation risk of holding treasuries. Foes could crash the treasury market and USD through collusion by restricting essential commodities.  

When investors realised inflation was used as a WW3 weapon, which the Fed had no tools to combat, the Top Brass would probably get their order to ramp up the war. 

USD is like a stool propped up on three legs, the petrodollar, treasuries and the military, and when two legs get kicked in, the only thing supporting the system is war. 

“The only thing Americans have in abundance is debt. And that’s businesses too. … Everybody partook in this debt orgy when the Fed had interest rates at zero,” said Peter Schiff.

Peter Schiff thinks that the Fed’s decision to keep raising interest rates will worsen inflation because it increases borrowing costs, which is an input cost that everyone has.   

“In a nutshell, energy prices have gone up, and interest rates have gone up. All of this is going to bleed into higher consumer prices. The markets still don’t get this,” he said. 

Peter Schiff shredders the soft-landing narrative and sees another market crash

“If markets weren’t expecting the Fed to bail them out, investors would not pay such high prices for stocks. It would be too risky.”

Investors are about to find out that the safety net isn’t there anymore because price inflation is no longer low.

The only way the Fed was able to bail the economy out of the 2008 financial crisis was by creating inflation. They were able to do that because price inflation – the way they measure inflation – stayed around 2%. Then they created more inflation to get the economy out of the COVID government shutdown mess. That was the final straw. 

Over the last two years, we’ve seen the impact of inflation — money creation — in rapidly rising prices.

When price inflation is the problem, inflation can’t be the solution. You can’t solve the inflation problem by creating inflation. That is the bind,” he said. 

The problem is when the next disaster happens, the Fed can’t save us with more inflation. I mean, they can try. It won’t work. They may not try. Maybe they’ll realize it doesn’t work. But they’re not going to be able to get rates back to zero. They’re not going to be able to launch another round of QE,” he said. 

“If the Fed does try to do what it’s done in the past — it will blow up the dollar,” he added. 

But what if inflation is being used as a weapon to blow up the dollar in the Great power struggle of this century?