Gold Hits Historic Highs: Is America's Economy About to Implode? | Impact Theory Tom Bilyeu

Summary

Podcast Summary

Podcast: Impact Theory
Host: Tom Bilyeu
Guest: Peter Schiff
Episode: Gold Hits Historic Highs: Is America’s Economy About to Implode?
Date: October 28, 2025

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Episode Overview

This episode of Impact Theory features renowned economist and gold advocate Peter Schiff, discussing the recent historic surge in gold and silver prices, the underlying reasons for this move, and its warning signals for the U.S. and global economy. Schiff warns of escalating risks to the American economic system, drawing historical parallels to the 1970s and projecting the potential consequences if current trends persist. Tom Bilyeu guides the conversation through the mechanics of monetary policy, the dismantling of the gold standard, the intervention of government and central banks, and what everyday individuals should do in this shifting landscape.

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Key Discussion Points & Insights

1. Gold's Soaring Price as a Warning Sign

[01:06–07:32]

• Peter Schiff: Gold closed above $4,200 and silver above $53, both at all-time highs—a scenario not seen since the 1970s. Schiff stresses that a surging gold price is a direct market indictment of overly loose U.S. monetary policy and a sign of eroding confidence in both the Federal Reserve and the U.S. political system.
• Historical Reference: Alan Greenspan’s use of the gold price as an informal policy gauge—if gold rises, policy is too loose.
• Implication: Rising gold and silver indicate the world is moving away from the dollar as a reserve currency, which threatens the entire American economic structure.
• Quote:

  “What this means for America is a complete collapse in our entire economy and our standard of living.” —Peter Schiff [06:47]

• Analogy: Schiff describes gold as the economic canary in the coal mine, likening its current surge to the early warnings before the 2008 financial crisis.

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2. Mechanics of the Dollar’s Decline

[07:32–16:08]

• Monetary History 101:
  • The U.S. dollar was originally defined by its gold or silver content.
  • Federal Reserve Notes began as promises to pay gold or silver (the actual dollars), gradually being severed from physical backing.
  • 1933: Roosevelt suspended domestic convertibility, seizing Americans’ gold to fund a stimulus and then devaluing the dollar.
  • 1944: Bretton Woods made the dollar exchangeable to gold for foreign holders.
  • 1971: Nixon shut the “gold window,” defaulting on the U.S. promise to redeem dollars for gold even for foreign holders. Schiff argues this was a pivotal moment when the dollar became a true fiat currency.
• Quote (on 1971 Nixon Shock):

  “They said, well, let's just temporarily close the gold window... Not gonna let you get any gold for your dollars anymore.” —Peter Schiff [13:48]

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3. Consequences for American Workers and Living Standards

[16:08–23:14]

• Loss of Dollar Value:
  • The 1970s dollar crisis led to a 2/3 depreciation vs. other fiat currencies and an even greater collapse against gold.
  • Result: Massive inflation in everyday goods and a dramatic reduction in real wages, forcing more dual-income households.
  • Quote:

    “Before the dollar collapsed, a man was able to earn enough money to support his wife and kids. But as a result of the loss of purchasing power... most men could no longer support a stay-at-home wife.” —Peter Schiff [17:29]

• Globalization & Offshoring:
  • America’s lack of savings and fiscal responsibility led to offshoring manufacturing and loss of bargaining power for workers.
  • China’s rise as a global manufacturer correlates with lost U.S. leverage and the erosion of domestic job options.

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4. True Nature and Definition of Inflation

[23:14–25:38]

• Inflation as Money Supply Expansion: Schiff insists inflation is not rising prices, but the government/fed increasing the money supply. The government conflates the two, using faulty metrics like the CPI to downplay real inflation and obscure its roots.
• Government Incentive: By blaming “greedy businessmen” for price increases rather than money printing, policy-makers avoid accountability.
• Quote:

  “The government doesn’t want the public to understand what inflation is because then they would know the government creates it by design.” —Peter Schiff [23:39]

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5. World Moving Away from the Dollar

[26:15–31:40]

• Gradual Flight from Dollars: Foreign central banks and governments now prefer gold over U.S. Treasuries/MBS, progressively “de-dollarizing” reserves.
• Reserve Asset Shift: Gold is regaining its status as the primary reserve—not currency per se, but “money.” Emerging economies, especially those previously overweight dollars, are buying gold at record rates.
• Implications for U.S.: The U.S. loses its ability to finance deficits by borrowing abroad and will face higher import costs and rising interest rates.

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6. Triggers for the Imminent Crisis

[31:40–39:45]

• What's Different Now:
  • Previous crises were contained by global demand for U.S. dollars and Treasuries.
  • As foreigners withdraw from U.S. assets, sell off dollars, and repatriate funds, the dollar will weaken further, accelerating inflation (“imported inflation”).
• No Containment:
  • Unlike 2008, printing more money will only worsen the situation, not arrest it.
  • The U.S.’s reserve currency privilege (“the global gravy train”) is ending, and with it, the ability to export inflation and import goods cheaply vanishes.
• Quote:

  “We've conned them into giving us all their stuff for just paper.” —Peter Schiff [40:13]

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7. Policy Response and Political Failure

[37:34–41:49]

• Responsible Solution (Unlikely): Massive spending cuts, higher rates, letting failing companies fail—Schiff is pessimistic that politicians will adopt these measures due to electoral unpopularity.
• Expected Mistakes:
  • Further money printing, new programs, possible national price controls, and currency controls—none of which treat the underlying causes.
  • Quote:

    “Given the choice of doing the right thing or the wrong thing, the politicians always choose the wrong thing because they're always looking at it from a politically expedient perspective.” —Peter Schiff [37:49]

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8. What Can Individuals Do? Protecting Yourself

[41:49–51:22]

• Gold and Silver as Personal Safeguards:
  • Schiff expects gold and silver to continue outperforming the U.S. stock market.
  • Historically, in “real money” (gold), assets get cheaper over time; in fiat, prices only rise.
  • Individuals should accumulate gold and silver, invest in foreign stocks and mining companies, and not be deterred by current high prices.
• Quote:

  “If you're watching this interview, don't even wait till the end. Put it on pause, go to Schiff Gold and buy some gold and silver. Because if you wait till the end... it'll be more expensive.” —Peter Schiff [50:16]

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9. Where Could Gold Go? The Ultimate Upper Bound

[51:22–55:25]

• No Theoretical Ceiling: As the dollar devalues, gold (priced in dollars) could go to infinity (“if the dollar's worth zero, the price of gold is infinity”).
• Practical Targets: Schiff speculates gold will trade at a minimum close to half the Dow Jones Index, possibly hitting $10,000–25,000/oz depending on how government and Wall Street portfolios shift away from U.S. bonds into gold.
• Trend Shift: If Wall Street reallocates traditionally “safe” portfolios (from 60% stocks, 40% bonds to 60% stocks, 20% bonds, 20% gold), it signals massive selling in Treasuries and likely more gold buying.

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Memorable Quotes & Moments

• Schiff on Political Failure:

  “When given the choice of doing the right thing or the wrong thing, the politicians always choose the wrong thing.” [37:49]

• On American Privilege:

  “We've been riding on the global gravy train… we've conned them into giving us all their stuff for just paper.” [40:13]

• On Gold’s Real Role:

  “Gold is the reserve asset. It’s not a currency. Gold is money.” [27:12]

• Jamie Dimon Revelation:

  “For the first time in his career, it's not completely crazy to have some money in gold right now.” —as quoted by Schiff [49:41]

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Timeline of Important Segments

• 01:06 — Tom introduces Peter Schiff and prompts explanation on gold’s warning
• 01:20–07:32 — Schiff details gold’s rise, historical context, and warning signs
• 08:40–14:27 — Evolution of the dollar, from gold standard to pure fiat
• 16:05–19:35 — Dollar collapse of the ‘70s, loss of real wages, American labor changes
• 23:14–25:38 — Schiff unpacks the true definition of inflation and government incentives to obscure it
• 26:15–31:58 — The world’s move away from the dollar, implications for Americans
• 37:34–39:45 — Discussing possible policy responses and why the correct path is politically impossible
• 41:49–52:42 — Investment strategies: gold, mining stocks, and why waiting is dangerous
• 52:42–55:25 — Upper bounds for gold, Wall Street’s shift, and what might drive the next surge

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Takeaways for Listeners

• A soaring gold price historically signals deep underlying issues in U.S. monetary policy and global confidence in the dollar.
• The “dollar standard” is ending; foreign governments and central banks are moving to gold, threatening the American model of consumption fueled by external debt.
• The U.S. government and Federal Reserve’s likely response—more spending and printing—will accelerate the crisis rather than avert it.
• Individuals should consider real assets, especially gold and silver, and foreign investments as protection.
• The consequences of this global shift may be catastrophic for U.S. living standards, while beneficial for the rest of the world.

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For more on surviving and thriving amid a crumbling monetary system, stay tuned for part two.

Transcript

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[Peter Schiff]

Peter Schiff welcome back. Hi Tom, thanks for welcoming me back. Great to be here man.

[Tom]

Good to have you. And I know that right now gold is at or over all time highs. And you've said that the rising price of gold is a warning sign. So what I want to know is what is a high gold price a warning sign of?

[Peter Schiff]

Yeah, well first of all, gold closed today above 4200. It was just a week ago that it traded above 4,000 for the first time and now we're $200 higher than that. Silver closed above $53. That's an all time record high for the price of silver. Back in the, I guess the latter 1990s when Alan Greenspan was Fed chair, he was asked about gold, you know, when he went to Congress to testify because he was an old school gold bug, you know, he wrote an article, the Case for Gold, which is in one of Ayn Rand's books, Capitalism the Unknown Ideal. So he was a big gold advocate and so he was often asked about gold and in one of these questions he said that even though we're not on a gold standard, he said that he uses gold as a tool and he looks at the gold price and as an indication of whether or not he's got the correct monetary policy. And he said if gold is up towards 400, that means that my policy is too loose and if I see it down at 300 then too tight. Of course at the time it was around 350, right. So he said, look, you know, I'm watching gold's reaction to see what it does to know if I've got the correct interest rate because I'm looking for a market signal to. So he said, while we're not technically on a gold standard, I'm using gold as a way to conduct monetary policy because it's a market mechanism to let me know if the policy is correct. Well, now gold is soaring. And so what that would tell Greenspan, if he was still Fed chairman, is that monetary policy is too loose and that interest rates need to be higher. Yet despite this, the Fed is poised to cut rates even more. And so gold is a warning sign a, that the Fed has got the policy wrong, that these rate cuts are a mistake and that in fact rates are too low and they need to be raised. But I also think it's a bigger warning that the world is getting rid of the dollar, that foreign central banks, foreign governments are losing confidence in, in the dollar as a stable long term store of value. They have no confidence in the fiscal responsibility of the United States Congress or the President to get his house in order. And they're losing confidence in the independence of the Fed, which is being beat up constantly by Trump, putting political pressure on the Fed to cut rates, print money, create inflation. And so I think the world is moving away from the dollar. And we haven't seen this kind of movement in the price of gold since the 1970s. This is the best year for gold. Gold's up almost 60% on the year. And you have to go back to the 1970s to find a year where that happened. And there were several years during the 70s when that happened. But the significance of the 70s is we went off the gold standard in 1971. And when we did that, it was a game changer for the monetary system. And the dollar lost a lot of value. And so gold went from $35 an ounce to 850. But what's happening now I think is just as significant, maybe more so, because now it's not the US that's going off the gold standard, it's the world that's going off the dollar standard. And what this means for America is a complete collapse in our entire economy and our standard of living. Because over the past 50 years, we've grown completely dependent on the dollar's reserve status. That's how we're able to live beyond our means. That's what makes these trade deficits possible. That's why we can buy stuff, consume what we don't produce. That's why so many Americans can borrow without anybody saving, because we're tapping into the rest of the world's productivity. And the rest of the world's savings. And the vehicle to do that is the dollar and its status. Well, as the dollar loses that status, our ability to rely on foreign production and foreign savings is gone. And that means our whole economy implodes. Because without foreign production, foreign factories, we can't produce the goods that we consume, and we don't have the savings to finance our massive debt. And so we're headed for an economic crisis much greater than the 2008 financial crisis. That is what gold should be telling everybody, that a monetary crisis, a US Dollar crisis, a debt crisis is just around the corner. Right. This is the economic canary in the coal mine that's dying here. And I think this is a bigger warning than the subprime blow up in 2007 was about the financial crisis that hit in 2008. And when the subprime market blew up, it was obvious to me what was coming, because I had seen years in advance that the subprime market would implode. And I knew that a financial crisis would follow. But most people on Wall street, including the Fed, actually had no clue. Even when subprime blew up, Ben Bernanke said, don't worry about it, it's contained. And I knew that that was nonsense. Well, the same thing is happening now. I've been waiting for years. I've been predicting for years what is happening in gold would eventually happen. It's now happening for the very reasons I always warned that it would happen. And now what it is confirming is that the currency and sovereign debt crisis that I've been warning about for decades now, not just years, is finally upon us, and it should happen maybe as early as next year.

[Tom]

That is, I think, a very astute prediction. And you're getting at the cause and effect. But I want to drill into the actual mechanisms that make this happen. So you've thrown out a couple ideas. One is this sense we need to get our house in order. I want to know what that is. Another is that the world is moving away from the dollar. So there's going to be some mechanistic reason why they don't trust it anymore. I want to understand that, but I want to frame it in the idea of, in 1971, we go off the gold standard in a very acute moment. So Nixon goes on and he says, hey, everybody, I know that we previously would give you gold for your dollars. Sorry, we're not doing that anymore. And you had a moment right then you could just point to a calendar and say, that's exactly when it happened, down to the minute. We don't have that same kind of thing happening now, which I think is a big part of why people are able to confuse themselves or tell themselves a story. So walk me through the mechanisms of how the dollar got in trouble. Is this just a game of debt? So what does it mean to have our house in order?

[Peter Schiff]

Yeah, well, first of all, going back to the coinage act of 1792, right after our republic was first born, the dollar was legally defined as a weight of gold or silver. So that's what a dollar was. It wasn't that dollars were backed by gold. The dollar was gold, the dollar was silver. And of course, back then, there was no paper currency, but there were banknotes that were issued by private banks, but they were just IOUs for. For dollars, which were gold and silver coins. Now, when the Federal Reserve was first introduced in 1913 as a, you know, basically a private banking syndicate that issued notes, again, those notes were not dollars. And in fact, if you. If. Even if you take a Federal Reserve note today and you look at it and you read it, it says, this note is legal tender. It doesn't say this dollar is legal tender. It says this note. And a note is a promise to pay. Originally, those promises paid dollars. The dollars were gold and silver. Now, in 1933, during the Depression, Roosevelt suspended the convertibility of notes to lawful dollars and, in fact, made it illegal for Americans to own gold. And so you can no longer take your Federal Reserve note to the Federal Reserve bank and get gold.

[Tom]

Peter, why did he do that? Was that they needed the gold for something or.

[Peter Schiff]

Yeah, well, because the government, well, they wanted to do a big stimulus, but they didn't have the printing press the way they did today. We were on a gold standard. And so Roosevelt basically took everybody's gold and gave everybody $20 an ounce. And then after they got the gold, they devalued the dollar and said, okay, the gold we just took away from you is now worth $35 an ounce. And that gave the US government a lot of extra money to spend to try to stimulate the economy. That was how they ran this stimulus.

[Tom]

That's wild. So they confiscated people's gold so that they could debase the government.

[Peter Schiff]

Yes, yes. But of course, a lot of people didn't turn in their gold. They kept it. You know, they were smart. The smart ones didn't turn it in. But, you know, they appealed to your sense of patriotism. Like, you know, we need to do this to help get us out of this depression. But Roosevelt didn't tell people what he was going to do with the value of the dollar once everybody turned in their gold. But he never did this to foreigners. So they never suspended the convertibility of the dollar to gold for overseas holders of these notes. And in fact, when we had the Bretton woods at the end of the Second World War, where the world agreed that we would have this monetary system backed by the dollar, the dollar, right. The Federal Reserve notes, even though American citizens couldn't take them to the Fed and get gold, the Germans, the French, the Japanese, the Italians, any other foreign bank that owned the Fed had Federal Reserve notes, could go to the Federal Reserve. And if they gave him 35 notes, $35, whatever, they got an ounce of gold. That was the deal that we made with the world. In fact, the Federal Reserve note was really like a bond and a promise to pay a quantity of gold. And so that continued up until the late 1960s. And the problem was, during the 1960s, the US government really started to run large budget deficits. I mean, not by today's standards, but, you know, by the standards back then. Because we were fighting the war in Vietnam, we were fighting the war on poverty as part of the Great Society programs. You know, we were funding the space program. You know, the government was spending a lot of money and running deficits, and. And so the Fed was printing money to fund them, but we didn't have the gold. We didn't have enough gold to back up the notes. And a lot of foreign countries recognized this, and they said, you know, we don't think America has the gold, so we're gonna go get it. We're just. We're not gonna hold these Federal Reserve notes. We're not gonna wait for America to default. We're gonna take these notes to the Federal Reserve right now and get our gold. And so that started to happen. And so all this gold started to leave the US because the world rightly didn't trust us anymore. Now, Nixon had a decision to make at that time, right? Cut back on government spending. Right. Balance the budget, act fiscally responsible so that the gold doesn't keep leaving, maybe devalue the dollar to a new, lower level, so make gold more expensive because they had printed so much. Allow a deflation to take place. Basically, Nixon could have done the politically responsible thing, but why would he want to do that, right? So they tried to think, how can we, you know, continue to run these big deficits and not have to be responsible? And they said, well, let's just temporarily close the gold window. It was supposed to be temporary. Let's stop the bleeding by like, let's just default basically what they did. Not gonna let you get any gold for your dollars anymore. And so that's what he did. 1971 said, we're not gonna honor these notes now taking a short break, but

[Tom]

there's more impact theory after. Stay tuned.

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[Tom]

Thanks for staying tuned. Now let's get back to it.

[Peter Schiff]

So if you have $35 or $42, because we devalued a couple times, but if you have $42, you can't take them to the Federal Reserve and get an ounce of gold. You can't get anything right? So if you've got $40, all we'll give you is two twenties or four tens. We're not going to give you any gold. And, and so as a result of that, the dollar crashed during, during the 1970s. I mean, the dollar lost about 2/3 of its value against other fiat currency. What?

[Tom]

Really? I didn't realize it was that bad.

[Peter Schiff]

Well, I mean, yeah, it went down about 2/3 against, you know, the mark, the frank, the yen pound, but against gold. That's where you really saw the loss because it went from basically $35 an ounce at, you know, beginning of the decade. You needed, at the peak in 1980, you needed $850 to buy an ounce of gold. And that's why oil, oil prices were $3 a barrel in 1970. They went to $40 a barrel in 1980. Now, a lot of people back then claimed that it was the Arab nations, right? They were the ones that were screwing us by jacking up the price of oil. But that's not what happened. We tried to screw them over by giving them paper for their oil instead of gold. And when we were paying real money, they were willing to sell us oil for $3 a barrel. But that's when it was gold. But when we tried to just give them paper that we were cranking off the printing presses, well, now they needed $40. It's not their fault. We changed the rules, we debased our currency. We can't expect them not to raise their prices to compensate for that. And so one of the main reasons that so many women were working in the 80s that didn't have jobs in the 60s was because the 70s destroyed the purchasing power of their husband's paychecks. So before the dollar collapsed, a man was able to earn enough money to support his wife and kids. But as a result of the loss of purchasing power of the dollar and higher taxes that also went along with that decade, most men could no longer support a stay at home wife.

[Tom]

How did real wages go up?

[Peter Schiff]

Well, real wages went down. They crashed. You know, nominal wages might have gone up, but the real purchasing power of those wages went down. And so now you needed a second breadwinner.

[Tom]

Wait, why wasn't the reaction. So if I'm working at that time and I'm like, okay, the government has inflated the life out of the money supply, doing the wars, all of that, but now I'm gonna put pressure on my employer to get paid more. Why didn't. Because that essentially is you're just driving down the, what you're actually having to pay.

[Peter Schiff]

Yeah, well, people did get raises. Yes. But they, they didn't keep pace with the rise of the cost of living. That was the problem.

[Tom]

So let me, let me get at what I'm really driving at. So right now I'm telling myself a story and maybe I'm just wrong about this, that when I look at the data and I see the reason why real wages aren't going up right now, the answer is because we've offshored so many jobs, we've hollowed out manufacturing. So there's a certain type of worker that just doesn't even have an option to work even if they wanted to. We've pushed everybody to get a college education, not go into the trades. And so you've got this thing where you offshore, let's say, 2 to 3 million jobs. And that has made it impossible for those workers to have the kind of leverage that they would otherwise have in the job market. Because if I'm an employer, I just go, oh, you're clamoring for more money. Nah, I'm just going to move my factory to China, to Mexico, to wherever. But were we already doing that in the 60s and 70s? I didn't think we were.

[Peter Schiff]

No, we didn't. We started doing it after that because, you know, first of all, back in the 60s and 70s, China was still an actual communist country. So, you know, we didn't get anything from China back then. But the reason that so much of our production got outsourced had to do with our regulatory and tax policy. During the 70s and the 80s and the 90s. That drove up the cost of production here in the United States and made it more attractive for companies to lower their costs by manufacturing outside the United States.

[Tom]

But what kept the worker from having the leverage to say, the dollar has gone down. You can't keep paying me this. You can't keep paying me the same thing.

[Peter Schiff]

Yeah, well, obviously a lot of American workers didn't have the bargaining power because they would have priced themselves out of a market because there was another option. But it wasn't just a wage. Well, you could, you could use foreign workers. You could, you could, you could produce abroad. But it wasn't just the wages, it was the factories. You see, people in other countries were saving money while Americans were just spending money. We were spending our money to buy stuff. But in China, they were saving their money so they can build the factories. And so the Chinese workers were more productive because they had the capital investments that the American workers didn't have because we didn't save as a society. And, and so we couldn't fund the type of investments that were being financed abroad. So places like China, they built out all the infrastructure, the factories, the supply chains in order to produce. My mother for one time worked in the shoe industry, and she's retired now. But almost all the shoes were made in the United States that we wore. But over time, you know, factories opened up in China or Indonesia or India that could produce the shoes at a lower cost, even with shipping them across the ocean. And, you know, businesses are under competitive pressure from the customer. Because I'm a customer, right? I want to buy a pair of shoes. I'm shopping around. I'm looking for the best deal, right? And I want to buy the shoes that are the highest quality but the lowest price. I'm going to, you know, and if there's a company that's getting their shoes from China, and because they're bringing them in from China, they're a lot less expensive than another company that's making them in America. Well, I'm going to buy the ones made in China.

[Tom]

I want to pause you for a second because I really want to understand the difference between what happened in the 70s and what's happening now. So in the 70s, is it that other countries. Because it wasn't China. To your own point, just a minute ago, it wasn't China that was coming out of communism and developing the goods. That happens in the 90s. But in the 70s, what it sounds like, listening to you, is it sounds like there were two things that were going on. One, other countries, not China, but other countries were realizing that we can import goods into the US and so we as consumers were like, yes, please, I'm feeling strapped. I'm going to get cheaper goods from outside the US and then the other thing is that I, I am putting forward, and I would love for you to attack this idea if you think that it's inaccurate. But I'll put forward that what was going on is the average person just didn't understand what was happening to them. They did not understand inflation in the way that we understand it now. Certainly not the average person.

[Peter Schiff]

Well, we don't understand it now either. Most of us. I mean, we might, but. And, and, and the US Government deliberately confuses people about inflation. The government doesn't want the public to understand what inflation is because then they would know that the government ca. The government creates it by design. Inflation is the government's silent partner. Inflation helps solve a lot of problems for the government. It creates a lot of problems for the people. But the government doesn't want to know. That's why they've redefined inflation, the actual definition. And again, if you get an old enough Webster's Dictionary, you'll read it. But inflation is an expansion of the money supply or credit. Expansion of money and credit. That's inflating inflation. Because what's being inflated is the money supply. Because the word inflate means to expand. That's what inflate is. You don't, you don't expand a price. Prices go up and down. They don't, they don't inflate. It's the money supply that inflates. Now, deflation is a contraction of the money supply. Now when you expand the money supply, a result of that is that prices go up. So whenever the government creates inflation, prices end up going up. Now what the government wants to do is call the prices going up inflation and not the expansion of the money supply. And the reason is now the government can blame whoever's raising the prices. So oh, why are prices up? Because greedy businessmen raised the prices. They're exploiting you, they're taking advantage of you. Or greedy labor unions demanded higher wages or speculators drove up prices or Putin or whatever. You know, they can always blame whoever's raising the price. But prices are raised because of the inflation that the government has created that results in prices going up. So they're not honest. And then they come up with these gimmicks like the CPI that are supposed to measure inflation based on the impact on prices. Yet the methodology is so flawed by design that if prices go up 10%, the the CPI says they're up 4%. Right. So if you, if you just look at the cpi, you have no clue as what's actually happening to prices. Right. Prices are rising at least twice as much as the government will admit with their doctored statistics.

[Tom]

We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere.

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Ugh. Love a good hot rock thing. Fancy.

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[Tom]

Thanks for sticking around. Let's get right back into the action. Okay, so we've got internationally, people are moving away from the dollar. How far does that go given that there was no announcement? Are people, are we at the beginning of something where they already have enough impetus that they're just going to keep drawing down, presumably into gold, into stocks so that they are not carrying anything in USD. Or will something have to keep ratcheting up for them to keep drawing down?

[Peter Schiff]

Well, I think right now it's kind of a gradual process. It's maybe speeding up a bit. But foreign central banks are moving out of dollars. They're moving out of Treasuries or mortgage backed securities and they're moving into gold. Gold is the replacement asset for the dollar. That's what you're saying.

[Tom]

That's going to be the new reserve currency.

[Peter Schiff]

It's the reserve asset. It's not a currency. Gold is money. And before the dollar became the reserve currency, gold was the reserve for every currency, including the US dollar. And when the US Dollar originally became the world's reserve currency, it was backed by gold. And so in effect, the world was still on a gold standard just through the dollar. And the dollar was as good as gold, or at least that's what people thought until we defaulted. It's only been since 1971, really, that we've had a monetary system without any money, right? We, we've had fiat currencies backed by a fiat currency. Now, of course, central banks have always had some gold, right, as reserve. And the countries that had the most gold were the old established countries, Germany, France, right? They have a lot of gold, right? The emerging economies like a China or in India, they had almost all dollars. They hardly had any gold, right? Those are the countries now that are buying the most gold because they want to reconstitute their reserves to be more heavily into gold and less dollars. But the significance of this is that as the dollar goes down, which is going to lose purchasing power, everything that Americans buy is gonna be a lot more expensive because we're gonna have to pay a lot more dollars to pay for things and our interest rates are gonna go up a lot because what foreigners have been doing is they sell us goods that we didn't produce and now we get to consume stuff and then they take the money that we paid and they lend it right back to us by buying government bonds or mortgage backed securities. And so Americans won twice, at least initially. We got cheap goods we didn't have to make, and we got to borrow money that nobody saved. And those artificially low interest rates also caused stock prices to go up, real estate prices to go up. So on paper, right, we're getting richer, all of our assets are going up, but in reality we're getting poorer because our debts are going up. We're borrowing more and more money from the rest of the world so we can continue to consume and live beyond our means. But the world is now going to pull the rug out from under us because they're moving away from this system. And the irony of it is we chase them away, right? It's not like they did this on their own. First it was Biden who said, you know, who sanctioned Russia and sent a wake up call to everybody that you got to get out of dollars or you could be next, right? We can yank your dollars away whenever we want if you do something we don't like. But then Trump comes in and not only signs on to the big beautiful bill, which was a disaster of deficit spending, and lets our, our creditors know we're never going to get our house in order because even the Republicans won't cut government spending, they're going to increase it. But then he vilified the world and imposed all of these tariffs to make it even more expensive for Americans to buy the goods that the world is selling us to get our dollars. And then he beats up the Fed and says you need to slash interest rates. We need, you know, 1% interest rates or 0% interest rates when inflation is already rising. But he's also destroying the perception of Fed independence. So all of our credibility has been destroyed. We have no fiscal responsibility credibility, no independent Fed monetary policy credibility. We've already screwed over people with sanctions. So there's no reason for the world to continue with this dynamic. And so I think the whole thing is coming to an end. And it's slow now, but it's going to speed up. Right now the strength in gold has not bled into the foreign exchange market. So the dollar relative to the euro or the pound or the yen has been relatively stable these last few months. I think that's going to change probably by the end of the year or next year. We're going to really see the dollar start to come down and that's going to really push up import prices. And so the CPI is really going to start to blow up in a big way.

[Tom]

What do you think is going to cause that? Because given that other countries have also been inflating their money supply, I get why the dollar is relatively stable compared to everybody else. So what do you see happening that

[Peter Schiff]

will the dollar is going to go down against those other currencies and so the price of everything we buy is going to go up because you know, everything's going to be more.

[Tom]

What I'm asking is what's going to happen that's going to cause the dollar to go down relative to other fiat currencies that also have their own problems?

[Peter Schiff]

Yeah, it's. Well, it's going to be the holders of dollars selling them and buying back their local currency. So people in Europe are going to sell back their dollars and to buy back their euros. Right. They don't want their dollars anymore. And also the global performance, the US Stock market is one of the worst performing stock markets year to date, especially in if you adjust it for currencies. For example, we have a fund that we manage at Euro Pacific Asset Management, it's a global dividend payers fund, Europe Pacific Dividend Payers Fund. And we have a separately managed strategy and that that strategy is up almost 50% in US dollars year to date. Yo, and you know, triple the return on the US Stock market. And the US Stock market is very expensive relative to the rest of the world. So I think what's going to be

[Tom]

happening, you guys invested in, sorry to

[Peter Schiff]

that you're getting dividend paying stocks, you know, a pretty good feel.

[Tom]

So safe in that, that those are climbing in value.

[Peter Schiff]

Well, yeah, they're good. People are put, people are putting money into those stocks and taking money out of US Stocks, you know. But I think that trend is going

[Tom]

to be a dividend paying stock is not a growth stock. So I would only expect people to go into that if they're, they, they just prioritize cash flow. But that doesn't explain the sudden jump and safety though.

[Peter Schiff]

Well, let's say the dividend payer stock is very cheap and it, you know, so the price can go up because more people want those dividends and, and now the price of those stocks has gone up. And of course, you know, a lot of the stocks that pay dividends have rising earnings. You know, it's not like they don't grow their earnings. They, they grow their earnings and pay dividends. So you still get appreciation in the share price. You also get the currency appreciation. You know, a good chunk of the, of the gain on foreign stocks has to do with foreign exchange. As the dollar goes down, the price of foreign stocks in dollar terms goes up. So I think you're gonna see, you know, Europeans and Asians who are getting out of US Stocks then selling their US Dollars to get back their local currencies to invest locally.

[Tom]

Hold on one sec. That hypothesis makes the prediction that people trust their local currency more than the U.S. do you think that's just because the debt spiral is going to continue?

[Peter Schiff]

Yeah, and also, you know, just because they're, they're bringing their money home, right? They, they're going to repatriate it. I mean if they bought U.S. stocks, they, you know, they, they didn't necessarily want U.S. dollars, they wanted to buy a U.S. stock, but when they sell the U.S. stock, they want their local currency back. And that's, and that's what they're going to get. But also with bonds, you know, some of the biggest selling is going to be in U.S. bonds. People around the world, governments and private citizens who own U.S. treasuries and U.S. mortgage backed securities, they're going to get rid of those because they're losing on the foreign exchange. The interest isn't high enough to offset what they're losing. So they're going to be selling their foreign, their US Bonds and then converting those dollars back to their own currency. And that's going to put downward pressure. But of course the other problem is as the US Economy goes into recession as a result of rising inflation, right Stagflation, what does the Fed do? Prints more money. We need economic stimulus and they throw gasoline on the fire. They accelerate the flight out of the dollar into foreign currencies, into hard assets. And you know, the US Dollar is the reserve currency. And so if the US Dollar is going to lose that status to gold, that is a unique problem that America is going to deal with because no other country is going to be losing reserve currency status because no other currency has that status to begin with. And that status has been responsible for our entire way of life. It's the reason that we can consume so much. It's the reason that we don't have to save very much. And so that whole thing is going to be knocked out from under us. And we've built up this entire economy that is based on that. And if you take away the foundation of a credit fueled consumer based economy, then that whole economy that's been erected on that foundation collapses. And that's what we're looking at, a complete economic collapse. Much worse than the 08 financial crisis. And the bigger difference is there is no way the government can bail us out. Because the reason that the government was able to bail out in 2008 is because people still wanted dollars, people still wanted Treasuries so the government could print money and you know, buy up toxic mortgages and send out stimulus checks. And you know, it worked in a sense. I mean, it didn't really work. It made the problem worse, but it arrested the immediate problem. But when they try to do that again, it's going to backfire because the printing of the money is just going to drive the dollar even lower and inflation is going to soar and the stimulus is going to be a massive sedative.

[Tom]

All right, so what becomes the, the unfolding of events? How do we respond to that? We've got the debt spiral going. More and more people are going to pull out. That's going to make it impossible for people to get their debt fueled life going. So that's going to start to dry up. What happens when do people stop being able to make payments? What does that look like?

[Peter Schiff]

Well, you know, what we need to do, what we should do in response to this is the responsible thing, which would be massive cuts in Government spending, higher interest rates, and to allow companies to fail, banks to fail and not have any government bailouts. It would be very difficult. It would be very unpopular and painful. But it would be the right thing. Right now that's not going to happen. Right? Because, you know, Nixon had the choice of doing the right thing or the wrong thing, and he did the wrong thing. I mean, when given the choice of doing the right thing or the wrong thing, the politicians always choose the wrong thing because they're always looking at it from a politically expedient perspective. Like, you know, how do we make the pain a little bit less today? Who cares about tomorrow? I just care about the election that's coming up. Right. And so, you know, we're going to, you know, just try to print money and create government programs, and maybe we're gonna have price controls, national price controls. They'll try to stop prices from rising by making it illegal to raise prices. There may be foreign exchange controls to prevent Americans from converting their dollars into other currencies. I mean, who knows what they're gonna try to do to stop the bleeding. But none of it is gonna work because the underlining wound that we're bleeding from is gonna just keep getting worse as they're trying to, you know, put on all these band aids without getting to the root wound that's underneath.

[Tom]

Do you think I oversimplify it to say that the underlying wound, just to be very specific, is debt?

[Peter Schiff]

Well, debt is the consequence of, of the fact that we don't save enough and we don't produce enough, and we don't do that because of our reckless monetary and fiscal policy that we've been pursuing. But the reason we've been able to pursue it for as long as we have is because of the reserves status of the dollar. So we've been able to get away with it. We've been able to kick the can down the road for generations now.

[Tom]

And just to be clear, because I want people to be able to follow the mechanism here, the way we've been able to get away with it is we can always issue new debt. There's always more debt to cover the old debt, and so never a problem. Just keep printing money to cover the debt. People will buy the debt because they want our dollars. As soon as that stops, we can no longer issue new debt to cover the old debt. We can no longer issue debt to make the interest payments. And so you find yourself with, oh, there actually is no more source of magic money.

[Peter Schiff]

Yeah, we've been creating inflation and then exporting it. We export our paper, we import real goods that we don't produce, and, and then we borrow the money back from the people who have vendor financed the stuff that we bought. You know, we've been riding on the global gravy train. I mean, Trump has it backwards. He, he believes that the world's been ripping us off, we've been ripping them off. You know, we, we've conned them into giving us all their stuff for just paper. And this is the system that is going to collapse. And I think, you know, this is going to be very liberating for the rest of the world. I mean, when Trump talked about Liberation Day, he wasn't liberating Americans. He's liberating the world from having to support Americans. So the world is going to see an improvement in our standard of living because now the world's going to have a lot more stuff to consume and a lot more money to invest and borrow for themselves. Right? They're not going to be shipping all their production to America and, and they're not gonna be lending us all our savings, so they're gonna retain the goods and the savings for themselves to make their own lives better instead of making our lives better. So this is gonna be a rude awakening for Americans. Nobody seems to understand this in Washington. I mean, the current administration, unless they're all just a bunch of liars, they're completely clueless and everything that they're going to do as a result of what's going to happen is going to make what's going to happen worse.

[Tom]

Okay, so what should somebody who believes in everything that you're saying, what should they be doing right now? Is gold just going to keep going up and just dollar cost average into gold or is there another play?

[Peter Schiff]

Yeah, well, first of all, everybody needs to own gold and silver. I mean, I've been saying this for 20 years. When I first started buying gold for my clients, it was under $300 an ounce. Silver was four and a half dollars an ounce. Right. So both are up more than 10x. Gold and silver have beaten the stock market over the last 25 years. In fact, 26 years ago in 1999, that was the all time record high for the US stock market. The Dow Jones was worth 45 ounces of gold. It's now worth 11, a 75% decline in terms of real money over 26 years.

[Tom]

Peter, is there anywhere that you can go to find that data fast? Like is there a tracker that shows this is the average house price compared to gold? This is the stock market compared to gold.

[Peter Schiff]

You could, you could plug it in because you know, you know where gold was and you know where houses were. Just, you know, run the charts. I mean, everything is cheaper. The government wants you to believe that, that prices go up every year only in their inflated currency. In real money, stuff gets cheaper every year. That's how it works. And you know, when we were on a gold standard between 1800 and 1900, that 100 year period, consumer prices were cut in half. So stuff was half the price in 1900 as it was in 1800 because we had real money, we had honest money during the 19th century. Now prices go up because we have fake money, we have funny money. But if you go back and price stuff in real money, you'll see that prices have been coming down. And that's the beauty of capitalism. We find better ways to make stuff cheaper.

[Tom]

This is one thing that drives me crazy when I try to get people to understand that when the Fed says inflation is 2%, they mean they've gobbled through all of the innovation led deflation. I know it's not technically deflation, but the innovation led reduction in cost.

[Peter Schiff]

Yes.

[Tom]

Of something plus 2%.

[Peter Schiff]

Yeah. And it's, it's ridiculous for the Fed to say that we need prices to go up. Why? What? You know, it, it doesn't make any sense. When you examine it like, do you want food to be more expensive or less expensive? Do you want a college education that costs more or cost less? Right. When you go to the gas station, are you happy when the gas price is up? Or, or are you happy when it's down? Right. We all want lower prices. Lower prices are good for everybody, including the business. Businesses are always trying to find ways to lower their prices. Why do you think they have sales? Because they know if they can lower their price, they'll sell more stuff. Right. Because people can buy more if the price is low. It was idiotic for the Federal Reserve to claim that the key to prosperity is to make sure that prices go up every year. That is nonsense. The only reason they invented this B.S. about 2% inflation was because we were lower than 2% the way they measured it. And they wanted an excuse to print money and stimulate the stock market and artificially boost the economy. So they came up with this nonsense that their mandate was to have 2% inflation, which was never their mandate. Their only mandate was price stability, which means no inflation. But even falling prices is better than stable prices. Why prevent prices from going down? Why deny people the benefits? You know, imagine if they did that in specific industries. They, oh, computer prices can't come down. Cell phone prices can't come down. If that was the case, nobody would own cell phones. They'd still be too expensive for most people to buy them. The only reason that everybody owns one now is because the price came way down. Right. What was wrong with that? How. You know, the company. Cell phone companies that make cell phones make a lot more money now selling cell phones for a few hundred dollars a phone than when they were 5,000 a phone. And when they were 5,000 a phone, that's how much a car cost, you know, and so the price came way down. And then everybody benefits from, from, from low prices. But prices now, though, are going to soar because this game is over. We're not going to be able to export our inflation. All the money that we're printing is going to stay here, and a lot of the money that we printed and sent abroad is going to come back here. So all these dollars that have been circulating around the world and that have been invested in US Assets are going to come back here and be spent. And so they're just going to drive up prices for everything. You know, a lot of our used cars, used car prices are going to soar. Why? Because Asians are going to come buy used cars. Right. You know, they'll just start buying cars and bringing them back to China. Right. Because they'll be cheap here because, you know, our currency is going to collapse. And so now they'll be able to buy up all this stuff. And so the prices go up because now you have foreigners coming in buying whatever's not nailed down.

[Tom]

Yeah. For anybody listening that you're saying that's the exact reason that the collapse of the dollar will be good for the rest of the world is now we're not able to mop up all of their goods. And so that's going to be released into their own country where they'll finally be able to compete with us from.

[Peter Schiff]

Yeah, you see, Donald Trump, he keeps saying that Americans are so important to the world because we consume everything. Well, we're lucky that we get to consume. The key is production. You can't consume something that hasn't been produced. So the real economic drivers, right. When Trump says that China doesn't have the cards, they've got all the cards, we got nothing. They've got the factories, they've got the savings, they've got the production. Yes, we have the customers, only because of the exchange rate of the dollar. Collapse the dollar, allow other currencies. To go up. And now the rest of the world is rich. And now the rest of the world can afford to buy everything. It's now Americans who are broke and can't afford to buy because the dollar has gone down. And I've always argued that the world will be better off consuming their own production rather than letting Americans consume it. And we're obviously much worse off. Yeah, we can print all the money we want, but if there's nothing to buy, what good is it? So this is going to be a game changer. But the government is going to try to do what worked in 2008 and 2020, and it never really worked. It just let us kick the can down the road. But we've run out of road, right? We can't do it anymore. And again, that's what gold is telling you. So that's why I said people have to get into gold and silver now. Don't think it's expensive. And you know, Jamie Dimon, I just, just today I read a quote. Jamie Dimon said he thinks gold can easily go to 10,000, which, you know, can go a lot higher than that. But do you.

[Tom]

That is catastrophic. But here's what he said. It's wonderful.

[Peter Schiff]

But, but here's what Jamie Dimon said. He said for the first time in his career, it's not completely crazy to have some money in gold right now. It's never, it's never been completely crazy. In fact, it's been totally sane. Jamie Dimon just didn't understand why, like when guys like me were telling people to buy gold when it was 300, 400, 500, 1000, right. It was because we understood what was coming. Jamie Dimon didn't get it until just now. Now he, he's starting to worry about the stuff that I've been worried about for 20 years. Now Dimon is finally worried about it. But now more people on Wall street are starting to worry about what they should have been worrying about all along. The problem is now we're so far down this rabbit hole, there's no way out of it. Right? So it's, you know, when I first started talking about this, it was early enough to do something to prevent the crisis. Now all you can do is, you know, buckle up, right? The crash is coming. So, yeah, you gotta buy gold, you gotta buy silver. People should go to shift gold. You know, in fact, I tell people now when I do interviews, if you're watching this interview, don't even wait till the end. Put it on pause, go to shift Gold and buy some gold and silver. Because if you wait till the end of the interview, it'll be more expensive. So just go in there and buy it now and have some real money. And then, you know, also I think people should be investing in foreign stocks, gold stocks. I mean, gold stocks, you know, have more than doubled this year. I have stocks I own that have tripled and quadrupled, but they're still cheap. You know, this is just the beginning. Hardly anybody owns these stocks and hardly anybody owns gold. We are at the very early stages of what is going to be a generational bull market in, in, in, in gold and silver and these mining stocks. This is really, this is really the first year of the bull market, you know, but it's not going to end in one year. It's going to last, I think, for the rest of the decade and probably most of the next.

[Tom]

Damn. All right, if Jamie dimon is calling 10k believable, what is your upper bound believable number for gold?

[Peter Schiff]

Well, look, there is no upper bound because there's no lower bound to the dollar. I mean, the dollar could be worth nothing, in which case the price of gold is infinity. If the dollar's worth zero. Yeah. No matter how many dollars somebody offers you, you won't give them any gold. Now, you know, as far as where I think it's going, I think that gold is going to be worth at a minimum half of the Dow Jones at some point. So I, I mentioned that the, the dow is at 45 ounces of gold in 1999 and now it's 11. So I think it's going to be down to 2. You know, probably, maybe lower, but let's just call it two. Right. So where would that be? Well, if the dow went to 20,000 and gold went to 10,000, that would do it. But you know, that would be a big bear market. The dow is like 46,000. So it has a long way to fall. Let's say the dow goes to 50,000. Well, now gold has to go to 25,000 and now you got 2 to 1. Right. So that could be, you know, a way it happens. Or the dow goes to 40,000. Right. And gold's. Gold's 20,000. Yeah. As 25,000.

[Tom]

Why would, if the companies are still doing fine, why would the Dow drop so much? Is it that you think this downward spiral of the dollar is going to cause the companies to start having trouble?

[Peter Schiff]

Well, I just. If you look at the, the last two major declines in U.S. stocks, they ended with the Dow and gold at 1 to 1. That was 1932 and 1980. Right. At both of those major stock market bottoms, you could buy the Dow for about an ounce of gold. So I'm not saying that the Dow should be worth 2 ounces of gold. I think it would be cheap at 2 ounces of gold. I'd be happy to buy the Dow at 2 ounces of gold. I'm just saying that if we get the type of decline that I think that is, the Dow is going to get very cheap. It's not going to, it's not going to the bottom of this bear market is not going to be fair value. Stocks are going to get ridiculously cheap at the bottom, just like they're ridiculously expensive at the top. But, you know, depending on how much money we print, I mean, if we were to go back on a gold standard, I think you'd probably have to have 20 or $30,000 gold at this point to make it work. Based on how much debt we have and how many dollars are out there. I do think the world is right now going back on the gold standard without us. Right. I think foreign central banks are going to be backing their currencies predominantly with gold. They may not make them convertible into gold, but their primary asset that they will hold to defend the value of their currency will be gold, not US Dollars. And what that means is they're not buying any more Treasuries. And you know who else is not buying Treasuries anymore? Maybe Americans. Morgan Stanley. Just a couple of weeks ago, their strategist said that we should recommend instead of a 60, 40 portfolio, 60% stocks, 40% bonds. 60, 20, 20, 60% stocks, 20% bonds, 20% gold, which is a sell signal on bonds. Sell half your bonds and buy gold. Now if, if Wall street does that, if the average American who has a 6040 portfolio makes it into a 60, 2020 portfolio, I mean, that means Americans are going to go on a selling spree, getting rid of their bonds and just buying gold. So how is the US Government going to finance these massive deficits if nobody wants to buy the debt they're selling? That's the problem. That's why the Fed is going to crank up the presses and do massive qe. But that's just massive inflation. That's just throwing gasoline on this bonfire.

[Tom]

All right, that's it for part one. Make sure that you come back for part two. As we get into even more insights into how we can use this moment to our advantage. I'll see you there.