Peter Schiff on the economic ramifications of sanctioning Russia

다듬은 글

※ 자동 자막 원문(다듬기 전)

01. do you may think all this stuff that's going on in ukraine wherever the hell on the map that is is nothing to do with you but it could actually uh affect you in your pocket if you didn't think uh inflation which is uh seven percent officially and i think in uh on some of those american charts is uh up ticking toward double figures already it's only going to make things worse uh if if the two biggest countries in europe goes to war go to war peter schiff says that sanctions against russia we're not going to be fighting in russia we're not going to take on the red army even the pentagon aren't that stupid but peter schiff says what we're doing instead again a war sanctions will only make inflation worse and he joins me now peter explain this because people seem to think that ukraine is just they've they've picked a spot a pinprick on the map to arrange a little distraction from whatever's going on at home but actually this uh the actions we're taking against russia are going to make the home front worse well absolutely you have to remember that inflation is really just another government tax it's one of the ways that governments pay for spending they could take our money legitimately uh through an income tax or a sales tax or they can just print money and when they do that they create inflation and so the price of everything we buy goes up and so instead of paying higher prices we pay instead of paying higher taxes we pay higher prices as well if we sanction russia we're going to end up with larger government deficits oil prices are obviously going to end up rising as a result of the sanctions biden has already indicated that he's going to try to offset the impact on consumers so the government's going to run bigger deficits so the fed's going to have to print even more money as a result of the sanctions and so we're going to get even more inflation and prices are going to rise uh by an even greater degree now the the uh salient point about american debt uh has been that it's risen in a time of uh virtually invisible interest rates so that it's gone it's gone from i think five trillion to thirty trillion in a you know a nothing period of time but in that period of time the cost of borrowing has been zilch zero what happened to that 30 trillion dollars yeah it was so what happens to that debt when paying real amounts of interest in it you know uh suddenly becomes a factor well if the us government had to pay real interest the government would default the main reason that interest rates are still so low is because the government can't afford higher interest rates and of course ironically by keeping interest rates so low for so long the federal reserve encouraged an overly indebted u.s government to go even deeper into debt uh for years uh congress was saying we should take advantage of these low interest rates by borrowing more money and i kept saying well that's like saying you know we should take advantage of free heroin by by injecting it you know just because something is free doesn't mean you do it and the risk is always well what happens when it's no longer free what happens when interest rates go up because we don't have 30 trillion dollars worth of debt locked up in 30-year treasury bonds most of it is in short-term treasury bills like during the housing bubble a lot of americans took out adjustable-rate mortgages so they didn't lock in their low interest rate for 30 years they had a teaser rate and when interest rates went up they could no longer afford to make the mortgage payments and so they walked away if the fed actually raised interest rates sufficiently to fight inflation there is no way the u.s government could service the debt let alone repay it and it would have to default so to prevent the default we're going to run the presses full steam inflation is not going to go away it's just getting started in the united states and it's going to get much much worse america is not greece or zimbabwe because its currency is the global reserve currency which is a huge advantage um not only putin but chairman xi and the ayatollahs in tehran at some point they're going to want to yank the rug out from under the dollar aren't they well especially when we use it as a weapon when we try to sanction people by you know denying russia access to u.s dollar payment system obviously that doesn't sit well with the chinese who are wondering if we might do the same thing to them but the only reason america has been able to live beyond its means is because of the dollar's reserve status the only reason we can run these huge uh budget deficits and trade deficits the only reason we were able to get away with all this quantitative easing was because the world valued the fiat currency that we created out of thin air but when they stop valuing it when they no longer want to stockpile it when they no longer want to exchange the goods that they produce for the paper that we print the party is over we're going to have a sovereign debt crisis a currency crisis and the american standard of living is going to plunge because we're going to be forced to live within our means and unfortunately those means have been dramatically diminished over the years on the flip side this is actually going to be very positive for the rest of the world because they will no longer have the burden of supporting and subsidizing the us economy the world will be able to consume more of what it produces and invests more of what it saves rather than diverting those resources and those goods to americans so your view of this is that this is a uniquely perilous i mean you're right in the uh in the macro picture i mean generally speaking denmark and norway and sweden tax their peoples for what their governments spend in america in washington one political party talks about small government all the time in fact it's a big government that's just basically uh put the debt on its great grandkids credit cards but the problem is it's going to come to a crisis long before the great grandkids well it's already a crisis it's a crisis right now the only reason we were able to kick the can down the road for as long as we did with quantitative easing and stimulus was because we could pretend that inflation was too low the federal reserve kept saying that we don't have enough inflation it's lower than two percent even though the way they measured it was wrong and that the whole time they were pretending it was below two percent it was well above it well now they can't pretend anymore inflation is so bad that they can't lie about it i mean they can still proclaim it's seven and a half when it's really 15 but even seven and a half percent is too much and so they can't do this anymore and so now they're caught uh you know in this box and there's no way out because they can't fight inflation but they can't admit that they can't fight inflation because either way we have a crisis yeah i remember you saying uh hearing a speech yours a couple of years ago just before the covet kicked in in which you were saying uh talking about the dow jones being worth less than your cufflinks at a certain point i take it you've kind of advanced the coming of that scenario after after what's been going on in the last couple of years well that's because that particular pair of cufflinks was made out of 24 karat gold so yes i mean i i do think that the nominal value of those cufflinks will will will exceed the the dow because there's going to be a tremendous amount of inflation unfortunately that's the uh the less uh you know that's the viable way out you know policy wise of course i think that's the worst choice i think a better choice would be to restructure the debt and admit the truth but politicians never do that they never want to accept responsibility they always want to blame others and so we're going to keep on printing money the government's not going to default the debt's going to be repudiated through inflation holders of u.s dollars are going to suffer a tremendous loss in the purchasing power of those dollars as the price of goods and services arrives dramatically as a result of the loss of value of the us dollar and of course when the dollar loses its reserve currency status which i think we're on the cusp of doing right now that will simply accelerate the dollar's demise okay you heard those words folks the dollars demise thank you peter and uh don't wear those uh cufflinks when you're strolling around the cd part of town you