🔴 An Independent Fed Would Criticize Fiscal Policy - Ep 903

Introduction

Peter Schiff introduces the podcast and mentions the sponsors.

Podcast Introduction

• Peter Schiff introduces the podcast.

• The podcast is sponsored by Netsuite and Next Evo Naturals.

• He mentions that he had a busy day earlier, dropping his kids off at summer camp and having dinner with his wife.

• He also mentions that he will be traveling to Germany for a blockchain crypto conference.

Sponsors

Peter Schiff talks about the sponsors of the podcast.

Sponsorship Details

• The podcast is sponsored by Netsuite and Next Evo Naturals.

• Peter Schiff provides details on how to take advantage of special financing from Netsuite.

• He encourages listeners to try Next Evo Naturals' natural capsules, gummies, mints, and tropical creams for smarter CBD.

Capitol Hill Testimony

Peter Schiff discusses Jerome Powell's testimony on Capitol Hill regarding monetary policy.

Political Grandstanding

• Jerome Powell testified on Capitol Hill earlier in the week regarding monetary policy.

• Democrats claim that Biden is responsible for everything being great while Republicans are critical of him.

• Powell tries not to offend anyone or take any stances during his testimony.

• The whole thing is just political grandstanding.

Highlights/Lowlights of Testimony

Maxine Waters' Bill Proposal

• Maxine Waters introduced a bill in Congress proposing that the Fed have a new mandate to solve racial inequality by redistributing wealth from whites to blacks.

• This proposal was criticized as asinine since it's impossible for the Fed or government to redistribute wealth.

Twitter Followers Engagement

• Peter Schiff has almost 960k real followers on Twitter who engage with his tweets through likes, comments, and retweets.

• He compares his engagement to that of the New York Times, which has 55 million fake followers and one-tenth the engagement he has.

Powell's Stance on Inflation

• Powell claims that inflation is transitory and will eventually go away.

• Peter Schiff disagrees with this stance and believes that inflation will continue to rise due to government spending.

Powell's Stance on Interest Rates

• Powell claims that interest rates will remain low for a long time.

• Peter Schiff disagrees with this stance and believes that interest rates will eventually have to rise due to inflation.

Conclusion

Peter Schiff concludes the podcast by encouraging listeners to follow him on Twitter for more updates.

Podcast Conclusion

• Peter Schiff concludes the podcast by thanking listeners for tuning in.

• He encourages listeners to follow him on Twitter for more updates.

The Impact of the FED's Policies on African Americans

Peter Schiff discusses how the policies of the Federal Reserve disproportionately hurt African Americans due to inflation and its impact on the poor.

Disproportionate Impact of Inflation on African Americans

• The policies of the Federal Reserve disproportionately hurt African Americans due to inflation.

• When inflation is created, it has a disparate impact on the poor.

• If African Americans are overly represented among the poor, then they are disproportionately victimized by the policies that the FED is pursuing.

• Maxine Waters supports these policies despite their negative impact on African Americans.

Maxine Waters' Longevity in Congress

• Maxine Waters has been in Congress for 32 years and will likely remain there until she passes away.

• She does not have any real-world experience outside of government and has been in elected office for most of her life.

• Term limits should be implemented to prevent individuals like Maxine Waters from remaining in Congress for extended periods.

Silicon Valley Bank and Government Regulations

Peter Schiff discusses how government regulations played a role in allowing bad management at Silicon Valley Bank.

Blaming Rogue Bankers

• A congressman attempted to blame Silicon Valley Bank's failure solely on rogue bankers attempting to make a profit.

• Powell disagreed with this assessment, stating that bad management also played a significant role.

Role of Government Regulations

• Both Congress and the Federal Reserve allowed bad management at Silicon Valley Bank through low-interest rates and incentivizing risk-taking behavior.

• U.S regulators encouraged banks to buy bonds that lost value by valuing them at par regardless of their actual worth.

Netsuite's Special Financing Offer

The speaker talks about how difficult running a business can be and how Netsuite can help. For the first time in Netsuite's 25 years, they are offering a special financing offer where businesses can defer payments for six months with no interest.

Netsuite's Benefits

• Netsuite is the number one Cloud Financial system that provides real-time visibility and control over financials, inventory, HR, e-commerce, and more.

• More than 36,000 companies have already upgraded to Netsuite to reduce manual processes, boost efficiency, build forecasts and increase productivity across every department.

• Businesses can take advantage of the special financing offer today at netsuite.com to get the visibility and control they need to weather any storm.

The US Dollar Reserve Currency Status

The speaker discusses whether the US dollar reserve currency status is due to America's economic dominance or if it is a consequence of it.

US Dollar Reserve Currency Status

• Initially, the reason that the dollar became the world's reserve currency was because America dominated the world economically.

• However, now it is reverse; America's economic dominance is dependent on its reserve currency status.

• The United States' economy has become less competitive due to regulations and taxes. Instead of pushing back against these issues, they were able to run deficits and import goods because of their reserve currency status.

• Today, America is so dependent on its reserve currency status that if it were taken away, everything would collapse.

The Federal Reserve's Balance Sheet

The speaker talks about the Federal Reserve's balance sheet and how it keeps growing.

Federal Reserve's Balance Sheet

• When the economy is bad, the Federal Reserve ramps up the balance sheet quickly. However, when times are good, they are slow to shrink it.

• Since they never withdraw all the liquidity put in during bad times, when they add more liquidity during the next economic downturn, the size of the balance sheet grows perpetually.

• Although Powell acknowledged concern about the growth of the balance sheet, he did not address how it will stop growing.

• The speaker disagrees with Powell's claim that America has a strong labor market due to low unemployment rates and job creation. He argues that one must look at the quality of jobs created to determine whether there is a strong labor market.

Weak Labor Market

In this section, Peter Schiff discusses the state of the labor market and how it is not evidence of a strong economy. He argues that people are forced to take multiple jobs due to low wages and real wages have been falling.

Weak Labor Market

• People are taking second and third jobs which is not evidence of a strong labor market.

• Real wages have been falling, indicating a weak labor market where workers don't have bargaining power to get wage increases.

• The fact that people who are retired can't afford to stay retired due to increased cost of living shows that we have a weak economy.

• More people are being forced back into the labor market and taking low-paying jobs due to the weak economy.

Inflation Blame Game

In this section, Peter Schiff talks about how inflation is being blamed on Biden by Republicans while Democrats blame it on other countries. He argues that inflation was manufactured by government and central banks pursuing inflationary monetary policies.

Inflation Blame Game

• Powell claims that looking around the world, all countries experiencing elevated inflation have COVID in common.

• However, what they really have in common is creating inflation through printing money, slashing interest rates, and running bigger budget deficits because of COVID.

• All these countries were pursuing inflationary monetary policies by design before COVID hit.

• Governments made mistakes on both sides of the Atlantic with quantitative easing and zero percent or negative interest rates leading to elevated inflation now.

Next Evo Naturals

In this section, Peter Schiff talks about Next Evo Naturals and their CBD products that can help people stay healthy during summer vacations.

Next Evo Naturals

• Summer vacations mean people are more susceptible to getting sick, so it's important to do whatever you can to stay healthy.

• Next Evo Naturals has developed smart sword technology clinically proven to help your body absorb CBD four times faster than regular CBD oil.

• Their all-natural products are backed by more scientific studies than any other CBD brand and are developed by experienced consumer healthcare and pharmaceutical professionals.

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Inflation and Fiscal Policy

Peter Schiff discusses inflation rates and fiscal policy, specifically the connection between deficits and inflation. He criticizes Congress for not taking responsibility for their reckless spending and Powell for not calling them out on it.

Inflation Rates

• The current rate of inflation is lower than the average rate during the Reagan Administration.

• However, comparing today's inflation rate to that of the early 1980s is an apples-to-oranges comparison due to differences in CPI measurement. If measured using the same CPI as in the 80s, today's four percent would be eight percent.

• Four percent inflation is still a lot and has a significant impact on middle-class and lower-class Americans.

Fiscal Policy

• Congressmen are trying to get Powell to comment on budget deficits, which are running out of control with massive spending.

• Excess fiscal stimulus leads to massive deficits, which lead to inflation. Even Keynesians should know this.

• Powell claims he cannot talk about fiscal policy because he is responsible for monetary policy. This is complete BS since part of having an independent central bank is so that it can criticize reckless fiscal policy.

• Paul Volcker was critical of deficit spending even under Reagan and called on Congress to cut defense spending, entitlements, Social Security, and Medicare. As Fed chairman, he had no problem commenting on fiscal policy and giving advice to Congress.

Conclusion

Peter Schiff criticizes both Congress and Powell for not taking responsibility for their actions regarding reckless spending and lack of criticism towards it.

Alan Greenspan's Criticism of Deficit Spending

Peter Schiff discusses how Alan Greenspan, the former Federal Reserve Chairman, routinely criticized deficit spending during his time in office. He questions why current Fed Chairman Jerome Powell is not doing the same.

Greenspan's Criticism of Deficit Spending

• During his final term as Fed Chairman, Greenspan warned Congress about the dangers of deficit spending and urged them to balance the budget.

• Schiff questions why Powell claims he cannot comment on fiscal policy when previous Fed Chairmen like Volcker and Greenspan were allowed to do so.

• Schiff argues that if the central bank was truly independent, they would be criticizing Congress for their fiscal policies.

The Link Between QE and Inflation

Peter Schiff discusses how current Fed Chairman Jerome Powell denies a link between quantitative easing (QE) and inflation despite evidence to the contrary.

QE and Inflation

• Powell claims there is no real link between QE and inflation because we had low inflation during a long period of QE. However, this was due to government lies about inflation measurements.

• The Fed created inflation for so long without adverse consequences that they got complacent. Now we are dealing with years of inflation chickens coming home to roost.

Senate Banking Committee Hearing

Peter Schiff discusses some remarks made by Senator Sherrod Brown during a Senate Banking Committee hearing where he thanked Powell for bringing down inflation and claimed that Americans are enjoying falling prices.

Remarks Made by Senator Brown

• Senator Brown thanked Powell for bringing down inflation but claimed that Americans are enjoying falling prices, which is not true.

• Prices are still rising, just at a slower rate. The CPI is still going up and Americans are still suffering from high prices.

• Powell assured the Senate that the banking system is sound and resilient, but Schiff disagrees.

The Impact of Bank Failures and Deficit Spending on the Economy

In this section, Peter Schiff discusses the impact of bank failures and deficit spending on the economy. He highlights how government intervention has propped up banks that would have otherwise failed, leading to massive deficits and bills being sent to the US government instead of checks.

Bank Failures and Government Intervention

• The government has propped up failing banks through bailouts.

• Some of the biggest bank failures in history occurred this year.

• Banks like Silicon Valley Bank or Signature Bank became insolvent due to a decrease in value of their treasuries and mortgage-backed securities.

• The Fed has massive losses on its bonds, which could affect the solvency of banks if it had to sell those bonds.

Deficit Spending and Inflation

• Deficit spending is causing an explosion in deficits that will continue to grow.

• Powell admits that increased government spending can lead to inflation but doesn't believe it's the root source.

• Government deficit spending stimulates consumption, not economic growth.

• Stimulating consumption through increased government spending leads to inflation rather than economic growth.

Impact on US Government

• The Fed used to send profits from interest collected on its balance sheet back to Congress but now sends bills due to low rates on its portfolio.

• This change is one reason why deficits are going to explode, leading to more pressure on the deficits to grow.

• The deficit is expected to rise so much in the final year and a half of Biden's term that he will beat Donald Trump's record for the most debt in a single term.

Criticizing the FED and Banking System

In this section, Peter Schiff discusses the criticism of the Federal Reserve by Greenspan and Volcker. He also talks about Senator Warren's comments on Powell's deregulation policies and how it has wrecked the banking system. Peter argues that it is not deregulation but excessive government regulations that have caused problems in the banking industry.

The Problem with Government Regulations

• Greenspan and Volcker criticize the FED for not admitting that government spending causes inflation.

• Senator Warren blames Powell's deregulation policies for breaking the banking system.

• Peter argues that excessive government regulations, not deregulation, have caused problems in the banking industry.

• The highly regulated and subsidized banking industry is one of the most screwed up industries in the country.

The Solution to a Sound Market

• To have a sound market, we need to leave it alone and let the free market function.

• People are responsible for their own bad decisions, which is checked by both greed and fear in a healthy balance provided by a free market.

• Excessive regulations make people think it's impossible to lose money, which lets greed run amok without being checked by fear.

• Politicians don't care about real economic consequences because none of it is their own money; they only care about re-election.

• We need to get rid of government regulation in banking so we can get back to a free market.

Update on Litigation in Australia

In this section, Peter Schiff gives an update on his ongoing litigation in Australia. He talks about how Channel Nine's latest strategy is to claim that his reputation was already bad before they defamed him and how they equated his conservative libertarian political philosophy to criminality.

Evidence of Rotten Reputation

• Peter won the last hearing, but Channel Nine's latest strategy is to claim that his reputation was already bad before they defamed him.

• Channel Nine wanted to introduce ridiculous evidence that Peter's conservative libertarian political philosophy equated to criminality.

• Peter has never advocated for people to break the law; he only discussed his disagreement with the law and reasons why he'd like to see them changed.

• Peter is highly critical of government rules and regulations, but he follows their rules because he knows they'll put him through the ringer if he doesn't.

• Peter testified in Congress that he thought we should get rid of agencies like FINRA and SEC, which regulate him.

Criticizing Government and Fighting Legal Battles

Peter Schiff talks about his political beliefs, criticizing the government, and fighting legal battles.

Criticizing Government

• Schiff believes it's important to criticize the government as it is a fundamental right of freedom of speech.

• He criticizes the regulations in financial services but still abides by them.

• Schiff has hours of podcasts where he introduces irrelevant information to criticize the government.

Fighting Legal Battles

• Schiff fights legal battles against corporations like Channel 9 who try to delay verdicts and run up his legal bills.

• He has resources that allow him to fight these corporations, but many people don't have those resources and are forced into submission.

• In every hearing, Schiff wins and gets his costs back.

Legal Battle with Channel 9

• The judge threw out irrelevant information introduced by Channel 9 during the hearing.

• The judge allowed only six out of thirty-eight pieces of evidence introduced by Channel 9.

• Channel 9 tried to argue that they shouldn't pay Schiff because he already announced on his podcast that he won the lawsuit.

Media Coverage

• Newspapers reported false accusations made against Schiff by 60 Minutes regarding money laundering and tax evasion.

• Operation Atlantis investigated Euro-Pacific Bank for running a massive tax evasion money laundering scam, but found no evidence supporting their claims.

• None of the newspapers had the guts to report that all investigations against Euro-Pacific Bank were wrong.

The Importance of Confidentiality in Investigations

In this section, Peter Schiff discusses the importance of confidentiality in investigations and how the media should handle leaked information.

The Role of Confidential Indictments

• A confidential indictment is meant to protect the innocence of the accused.

• If someone is being investigated but is innocent, the fact that they are being investigated can make people think they are guilty.

• If a journalist has information from an illegal leak, they should keep quiet until an indictment is produced.

• Only report on an investigation once there is an indictment.

Media's Role in Leaked Information

• The media does not care about confidentiality and will report on leaked information regardless of whether it's legal or not.

• Peter Schiff's bank was exonerated, but it was put out of business by the media reporting on a leak.

• 60 Minutes Australia proclaimed Peter Schiff guilty without evidence, leading to his bank's demise.

False Claims Against Peter Schiff's Bank

In this section, Peter Schiff refutes false claims made against his bank and explains why these claims are untrue.

Claims About Account Opening Process

• Channel 9 claimed that people could open a bank account at Peter Schiff's bank in one minute with no paperwork required. This claim is false.

• It took one to three weeks to get an account at Peter Schiff's bank. Every applicant had to submit multiple documents and go through a personal interview via Skype or Zoom.

• 75% of applicants never got an account because the process was so difficult.

Claims About Marketing Tactics

• Channel 9 claimed that Peter Schiff marketed his bank as a way to evade taxes or hide money. This claim is false; there was never anything on the bank about lowering your taxes or avoiding taxes.

• Peter Schiff's bank had a dozen different prohibited accounts, including cannabis, gambling, sex, crypto, and charities. They turned down the accounts of many people who were probably criminals to reduce the chances of tax evasion or money laundering.

Compliance and Reputation

In this section, Peter Schiff talks about the compliance of his bank and how he invested millions of dollars in it. He also discusses how 60 Minutes Australia falsely accused him of having no compliance and defamed him.

Compliance Investment

• Peter Schiff invested millions of dollars in compliance for his bank.

• At its peak, half of the bank's staff worked in compliance, with 80 employees and 40 in compliance.

False Accusations

• 60 Minutes Australia falsely accused Peter Schiff's bank of having no compliance.

• They had no evidence to prove their claims and repeatedly lied about the case.

• They refused to admit they were wrong even when they had no proof that Peter Schiff did anything wrong.

Reputation Damage

• 60 Minutes Australia labeled Peter Schiff as a crook who dealt with organized criminals like the mafia.

• Prior to this, he was known for being honest, authentic, having integrity, accurately predicting the 2008 financial crisis, and being an economic advisor to Ron Paul's presidential campaign.

• The false accusations destroyed his reputation by labeling him as a tax protester who didn't care about dealing with low-life characters.

Witnesses Needed

In this section, Peter Schiff talks about needing witnesses for his trial in Australia. He mentions two types of witnesses: clients who can testify about how strict his compliance was and people who can testify about his good character before the false accusations.

Compliance Witnesses

• Clients from Australia can testify about how strict Peter Schiff's compliance was.

• Negative reviews on Trustpilot show how tough the compliance was, and people were unhappy about having to do so much.

Reputation Witnesses

• People from Australia can testify about Peter Schiff's good character before the false accusations.

• He was known for being honest, authentic, having integrity, accurately predicting the 2008 financial crisis, and being an economic advisor to Ron Paul's presidential campaign.