저자: PeterSchiff · 외국인
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미국 국채금리 상승(10년물 5%대)과 재정적자 누적으로 디폴트 또는 초인플레이션 위기가 임박했다고 주장. 주택시장은 모기지 금리 상승과 negative equity 누적으로 가격 하락 압력이 크며, 주식시장은 S&P 500 내 60%가 약세장이라 과거 1973·1999-2000 사례처럼 대폭락 가능성을 경고. 트럼프 정책과 암호화폐 규제 부재를 비판하고, 실물 금·은과 신흥국·자원·에너지 분산투자를 권유함.
다듬은 글
Well, friends, we are very honored to welcome Peter Schiff to our studio . He is a true financial guru, and in this time of continuous economic turmoil, rising bond markets, and financial uncertainty, there is no better speaker to feel the pulse of the economy than Peter Schiff. Peter, welcome to our studio.
Thanks for the invite, guys. I appreciate it. Certainly. This is a special edition of Let's Talk Geopolitics, and Mr. Schiff, I want to give you the floor and ask you an extremely important question. We are seeing US Treasury yields reach levels we haven't seen in decades . The yield on 10-year bonds is now above 5%.
We know that the US government has over $40 trillion in debt. Can you explain to the average American who doesn't understand the bond market what's happening right now ? And, more importantly, are we approaching a financial crisis? Yes, I think we're probably getting close. And I think what's far more worrying than the current level of rates is where those rates will go next.
Because there is no reason to believe that they will stop growing. I mean, right now the yield on the 10- year bond is about five and a quarter. And the yield on 30- year bonds is about 5.6. But that's still a relatively low return, especially for a country with such a huge debt. Because usually, the greater your debt, the lower your creditworthiness becomes.
And the higher the price you have to pay to lenders for the risks associated with granting you new loans. People think that lending to the US government carries no risks. This is not true. First, there is inflationary risk, because the more debt the US has, the more likely it is that the government will inflate inflation to service it.
This depreciates not only your interest payments, but also the principal amount of the debt. But there is also a real possibility of a true default, which could take the form of a formal debt restructuring, in which the lender is not paid back the face value. This is a very real possibility. Because if you look at the numbers, you mentioned that rates are now the highest they've been in 20 years.
But 20 years ago, we did n't even have nearly that much debt. Therefore, the rates were not so problematic. But we went through a 40-year bull market in bonds, during which rates fell for 40 years. The yield on the 10-year Treasury bond was 16% in 1981 and was less than 1% at its low in 2021. So, we have now reversed this trend and are moving upwards.
But there is no reason for yields to stop at current levels. Let's say the yield reached 8%, just as a figure that's well below, you know, 16%. This is half of what it was in 1981, 8%. Yes. And if it took, say, a few more years to get there, and by then our $40 trillion national debt would be $ 50 trillion.
dollars. Assuming we would have to finance all the debt at 8%, which, you know, is not a very big exaggeration, because all the short-term debt is constantly being paid off and needs to be refinanced. But 8% of $50 trillion is $4 trillion a year in interest payments. There is no way we could do this.
Because to do that we would have to borrow all of that $4 trillion . So that would, you know, add almost 3 trillion to the current national budget deficits, which are now approaching 3 trillion. I mean, official deficits are around 2 trillion, but the national debt is growing by more than 2.5 trillion a year.
So, this is real debt. But if we're already close to $3 trillion, and we have to borrow another $3 trillion to pay the interest on the debt, that would mean our annual budget deficits would be $6 trillion. Mhm. Which would exceed 100% of tax revenues. The government would borrow more money than it collects in taxes.
These numbers are so huge that there is no realistic way the government could make these payments. So, if he fails to resort to hyperinflation, the only other alternative is default. Ovva. So, in any case , a crisis awaits us. And I think lenders will start to connect these facts, if they have n't already , and just run away from Treasuries, which will accelerate the collapse of bond prices and the rise in bond yields, which will ultimately lead to one of two things: hyperinflation or default.
Yes. Yes, this is a very bleak forecast. And you know, let's move on to Donald Trump, because he promised to bring manufacturing back to the United States, reduce the trade deficit, and restore America's economic growth. But as you pointed out, you know, we're seeing rising borrowing costs and huge government deficits.
When you look at Trump's economic policies, particularly his tariffs, government spending, and relationship with the Federal Reserve, is he solving these problems or is he simply making America much worse off? No, he didn't fix anything. Things got worse under his leadership. This is why Republicans will lose these midterm elections, because voters will blame Trump not only for the problems themselves, but also for his failure to acknowledge them.
Because it's very disappointing when you're a voter, your economic situation has deteriorated dramatically over the last couple of years, and Donald Trump is trying to convince you how wonderful everything is and that you're living in the greatest boom in world history. If you look at sentiment indicators, consumers have never been more concerned in the 75 years since these observations have been made.
And you know, we've gone through a lot of real problems over these 75 years. But never before have consumers been as pessimistic as they are now . So, this is inconsistent with the claim that we have the best economy in the history of the world. Because if that were true, you would expect a lot more enthusiasm and optimism from people living in this economic boom.
And, you know, if you look at the data, trade deficits are now at their highest ever . The largest trade deficits we have ever recorded on a monthly basis have occurred under Trump. So trade deficits are growing, budget deficits are growing. There is no significant return to production . This is all a figment of Trump's imagination.
As well as the energy truce he announced. You know, last weekend, Trump wrote on Truth Social that Russia and Ukraine had agreed to an energy truce, under which they would stop bombing energy infrastructure. And then, when both sides denied having such an agreement, and reporters asked Trump, "Hey, wait a minute .
You said there was an agreement." And he replied : "Well, there was a deal because I said there was one. That's why." That is, he admitted that he actually just lied, but since he lied, it's like the truth. And that's Trump in a nutshell. That's how he behaves in everything. We have an economic boom , because he says we have an economic boom.
You know, manufacturing is coming back to America, because he says manufacturing is coming back to America, right? Nothing actually happens. This is just what Donald Trump says is happening. Apparently, in his imagination, if he says it's happening, then it is, because he simply brings it to life with the power of thought.
True. Yes, that definitely sounds like Trump. This is exactly Trump's style of doing business , right? He seems to live in his own little world in the White House, and unfortunately, it is the Americans who are paying a high price for this. Mr. Schiff, what do you see when you look at this energy crisis?
I mean, we're still looking at the Strait of Hormuz, where the situation is still unresolved. It is clear that the war in Iran is ongoing. The United States could not win there at all . How do you view this from the perspective of oil markets and the ongoing chaos in the Middle East? They just bombed Saudi Arabia.
You know, the airport was attacked. There is still a lot of instability and chaos there. What are your thoughts on the war in Iran? I think this is a complete mess. I think the Trump administration has opened a Pandora's box that shouldn't have been opened. And the unforeseen consequences became a disaster.
And yet, what does Donald Trump say ? Everything is great. Why? Because he says so. He says we will win the war . Just as he says , a ceasefire has been declared . It's all just in his imagination. The problem is that no one in his administration wants to point out the president's mistakes. So the president just makes things up and everyone else agrees with him.
This is truly a spectacle that I think will cast a dark shadow over the Republican Party, which is very unfortunate because the alternative is socialism. It's not that there are n't plenty of socialists in the Republican Party, including Trump. You know, they're socialists, but not as big as the Democrats.
But unfortunately, democratic socialism is the brand we're going to get, not republican socialism, because the Republican Party will be so discredited by Trump and the fact that they supported him. You know, just like the Democrats looked foolish claiming Biden was extremely intelligent when it was obvious he wasn't .
Republicans make the same mistake with President Trump, because he's not that sharp either. Not everyone is at home. Yes, definitely. Yes. Peter, thank you for joining the program. I've been following you for over 20 years, and I want to move on to my next question. You know, in my financial circles, I often hear people say, "When the market gets better, when the market gets better." Well, I mean, the S&P hit a 52- week high just a few days ago .
I'm not sure what better market they're looking for, but I think that's probably the most you can expect. But yesterday I was listening to your conversation with Grant Cardone, and you discussed the topic of real estate quite seriously. Unless Grant has watched your warning signs from 2006-2007, the “Peter Schiff Was Right” video, I am very reluctant to show respect to Grant Cardone now, because his conversation with you yesterday was very disrespectful, extremely unprofessional, and every time you criticized the administration, you were accused of having Trump derangement syndrome.
Yes, this is the standard " trump card" they play— disorder syndrome. Although , look, I called on people to vote for Trump three times. It's not that I was anti-Trump or didn't support the president as a lesser evil compared to the alternative. So you can't put that label on me. But yes, Grant Cardon, first of all , said: " Peter, you've been advocating for gold since 2002, and gold hasn't moved anywhere." And, you know, gold was worth $300 in 2002.
So, perhaps for Grant, an increase from $300 to $4,000 is “nowhere.” But I think most people would consider tenfold growth a success. Yes, it may have underperformed Bitcoin during that period, but it outperformed almost everything else. But, regarding your comment about people wanting a better market, maybe they are referring to the 60% of companies on the S&P that are in a bear market.
60% of stocks are more than 20% below their peak. So, you know, unless you're just buying the "G7" tech giants and a few other AI companies or the energy sector — by the way, energy stocks have also performed quite well . Um, but, you know, outside of a few isolated areas in the S&P 500, maybe 60 or 70 stocks, the rest are either flat or in a bear market.
So, I think people hope that the soldiers will follow the generals. But if history teaches us anything , it's that it's the generals who will follow the soldiers. Because the last two times in U.S. history, in the history of the stock market, when the coverage situation was this bad, meaning, you know, so few stocks were going up compared to the ones that were going down, it was only twice: in 1973 and 1999-2000 .
And after both of these extreme levels, the S&P index fell by almost 50%. Mhm. So I know, you might say that this time it's different, because, you know, everyone always says "this time it's different," but maybe it's not. Maybe this time everything will be the same as the previous two times. In that case, you know, we are in for a big bear market.
Yes, and I want to add to that, Peter. We see that mortgage rates are rising now. We see people agreeing to 20-30 year mortgages now. I mean, I personally feel— and maybe you can help flesh this out a bit more—but the dam is about to burst. And another thing that really confused me about Grant's words yesterday, and I really don't want to give this guy a lot of airtime, is how can these people continue to claim that Bitcoin is an asset?
He has no balance. It does not generate any income. There are no dividends. There is no, you know, state support. And they say, "Well, you know, let's put in 25," or I think he had 80/20, something like that. He, he, he " sold" it to his investors. Uh, 20% Bitcoin, 80% real estate. "I agree to a 50% discount." Very confusing for the average person, but to me, if he says real estate won't fall, then why should it fall?
Um, if you could buy on the lows. Tell that to the 9 million Americans who lost their homes in 2008 and 2009 : "Hey guys, you're left with nothing, you should have bought your home back at the lowest price and enjoyed yourself." So, I would like to give some advice to the audience: What obstacles are we facing right now ?
We are witnessing an oil shock and a shock in the diesel market . I give the floor to you, Peter, thank you. Listen, I see as much complacency about real estate now as I did in the years leading up to 2008, because I pointed out all the obvious problems that were supposed to cause prices to fall , but no one believed me.
This was one of the reasons why I had a hard time convincing people to play the subprime market down , because the whole strategy was based on falling real estate prices, which no one believed, although of course it happened. And real estate is now more overvalued than at any time before the 2008 financial crisis .
So, we have a real estate market with very high prices. And Grant was betting that many people had low fixed- rate mortgages, so they wouldn't sell their homes. So houses won't come on the market because people have mortgages at three or four percent. This is a point I can agree with. In fact, I made this argument myself many years ago.
That this will not only be a factor in curbing the pace of falling real estate prices, but will also lead to significant losses for creditors. Because lenders will be left with those mortgages, receiving only three to four percent. Although they pay much more for this money. So, a mortgage is an asset for the borrower, but a liability for the lender.
And this is a big problem for our financial system, because it creates hidden insolvency in the banking system. But most people believe that what is happening now with interest rates and mortgage rates is just a temporary deviation . They say this is a short-term phenomenon, and we will return to normal, that is, to 4% on mortgages .
This is exactly what Grant expects. He thinks that soon rates will fall again and we will get a normal 4 percent mortgage. Well, there's nothing normal about a 4 percent mortgage . It was these ultra-low mortgage rates that were anomalous. The argument I made to Grant is what is happening now. Rising rates are a return to normality we have n't seen since the 2008 financial crisis .
So, we will return to normal mortgage rates, perhaps even high ones, which will be at least 9 or 10%, if not more. We used to be able to handle mortgage rates of 10% or higher. In fact, mortgage rates peaked at 18% in 1981. The economy and housing market could withstand this because there was much less debt.
And since mortgage rates have been going down for 40 years, even if you took out a mortgage at 18%, after a couple of years you could refinance it at 15%, then 12%, then 10%, 8%, 6%, and 4%, right? So Americans constantly refinanced their mortgages and got better terms. And they not only reduced their payments, but also simultaneously withdrew cash and spent it.
But now the situation is changing, and mortgage rates will not decrease. They will continue to grow. And the point I'm trying to make to Grant is that houses will sell. Some houses will be sold. Yes, if I have a mortgage at 3% or 4%, I will be very reluctant to sell or move. I got a good deal. I will continue to pay my mortgage.
I will live in my house. But some houses will still be sold because they simply need to be sold. People die. People get divorced. People are moving. People are losing their jobs. Circumstances are such that people simply have to sell their homes. They have no choice. And when these houses are sold, prices will fall, because this is the only way to sell this housing.
I mean, we have the highest number of unsold homes on the market right now, I think, since 2017 or so , but that number is going to go up. Because sellers haven't lowered their prices yet. They are trying to sell their homes at prices that no one can afford. And that's why the houses are just standing idle.
But at a certain point, you can no longer wait for the price of your dream home . You will have to sell. And then the most you will get is what someone is willing to pay. And how much you are willing to pay depends on the mortgage rate. In fact, if mortgage rates hit 9%, which I think will happen early next year.
For the monthly payment to be the same as if you could get a mortgage at 3%, the price of the house would have to be halved. That's a huge difference. So, prices should go down. And, of course, it's not just that mortgage interest rates have increased . Insurance has become more expensive. Utilities have become more expensive.
Taxes have become more expensive. Maintenance has become more expensive. So everything related to owning a home now costs more. This means that the buyer should pay less because they should be able to afford all these costs. And so, as soon as there are enough houses that are being sold for 20% less than before.
You will reset the entire real estate market, as its prices depend on comparable sales . Your house is worth what your neighbor's house sold for. And so once we bring down prices, millions of people who have mortgages at 4% or 3% may have good terms, but they will be "underwater" because the debt will be much greater than the value of their home.
They will have negative equity. Now the question is: should you continue to make low mortgage payments even if you're just putting money in the bank's pocket through negative equity? If you have a hard time making this payment, you can just skip it. Yes, I understand, it's a low payment, but I'm wasting my money on a losing property.
What if there is a problem with your house ? The roof will crack and you will have to spend 30 or 40 thousand on a new roof. Will you do this when you have minus 100 or 200 thousand in equity and you do n't even have that money? Where are you even going to get this money? Where are you going to borrow them?
Who will give them to you? So I think you're going to start seeing a significant increase in foreclosures, even at these low rates, because of the lack of equity that will come from falling prices. And this will recreate the conditions that led to the financial crisis. Only now you will face defaults on mortgage loans .
Banks will lose money. Fannie and Freddie, instead of coming out of external management and being privatized again, will have to be bailed out again at the expense of the budget. They are going to crash for the same reasons they crashed in 2008 . Peter, can some of these small lenders demand early repayment of the mortgage based on the fine print in the contracts?
Is there a chance that they will tell these borrowers at 2.5-3 %: "Hey guys, we are requesting early repayment of the mortgage. We are closing it." Is this possible or not? No, I mean they hope the house will sell, the loan will be paid off, and they will get out of this trap. But they can't demand...
Now, if the borrower is in arrears, if they stop paying, yes, they can foreclose on the collateral and then sell the property. But a problem will arise if they try to do this when the value of the property is lower than the mortgage. So it would be great if they had, say, a house that was worth $600,000 and they took out a loan for $500,000 at 3%.
They would be happy if the person stopped paying and they could foreclose on the mortgage, sell the property, get that 600,000 or even 500,000 and get rid of that low-interest loan. But if that $ 600,000 house is now worth only $400,000, they are in a difficult position. Because now, if they foreclose, they'll have to write off $100,000 in losses because they'll only get $400,000 for the property, and they owe $500,000.
And really, the only time a borrower is likely to default is under those circumstances. If a borrower has $100,000 in equity to protect, they will make payments to preserve that equity. But if he is "underwater" by 100,000, what incentives does he have? Just to avoid ruining your credit rating? You know, it won't keep a person in a house they can't afford.
Yes. It's 2006 again. Oho. Yes. Well, we're looking at this...I'm in Las Vegas right now. We have a huge number of houses on the market. It's true, you know, if you buy a house, like you said, houses will always sell because people need somewhere to live. You know, people will move, but it's a very interesting market here right now when I look at the local market because we have a huge amount of supply.
If you have the cash, the finances, this is a great time to buy because you have leverage. A lot of people don't want to sell, as you said, because they have these low mortgage rates, and so the supply in the market is just huge. Something we have never seen before in this real estate market. at this point, because the buyers, you know, they, they are.
There are significantly fewer of them than sellers. Right. Buyers are physically unable to pay the offer prices. They simply don't have the financial resources to do so. They can't get a mortgage big enough to pay. But sellers are not yet ready to lower the price. So they just say, okay, this is what we want.
And although there are many of us who want such prices, no one gives in. No one lowers their price to actually close the deal. And one of the reasons for that is that mortgage rates are so low that people say, well, I'll just keep paying this mortgage until I get my price. So the question is , when do sellers capitulate?
Because it does n't depend on the buyer. The buyer physically cannot pay more. Right. So the only way to make a deal is for the sellers to lower the price. Yes. And the question is, when will they do it? What will be the catalyst for the seller, you know, and not all sellers need to lower prices. Only a few of them need to do this.
And once a few of them lower their prices and the first deals appear, it will become a new market. Right. So now, I mean, these will be your comparative assessments. And once a few people lower their prices, everyone will have to lower theirs. Yes. Peter, I want to go back to the macro level and just look at the Federal Reserve, because it seems like they're really in a dead end situation .
If they raise interest rates to fight inflation, it makes America's debt more expensive. If they lower rates or print more money to support the economy, they risk making inflation much worse. So what choice does the Fed have now? Are they trapped and where do we go next? Well, first of all, it's not like they just got, you know, trapped in this.
They set it up themselves. They created it themselves. They drove themselves into this dead end. I've been warning about this for years, that they're eventually going to end up in a "no matter what , everything's bad" situation where they, you know, have to raise rates but they can't . Because if they don't raise rates significantly and reduce the balance sheet, inflation will get out of control.
But if they do, the entire economy built on low interest rates will collapse. Because we have accumulated so much debt precisely because the Fed kept monetary policy too loose for too long . But now they can't pull this rug out from under the economy's feet, because it's its foundation. These high real estate prices are a result of cheap money.
If you make mortgage rates normal, then real estate prices should normalize, and these are significantly lower prices. And the whole economy, I mean, everyone has accumulated a lot of debt, including the U.S. government. Why do we have $40 trillion in debt? Because the Fed made it very cheap for the government to accumulate this debt.
If interest rates were much higher, we wouldn't be able to do this. They would have resisted and demanded cuts in government spending long ago. But because the Fed encouraged waste by holding down rates, there were no brakes. Moreover, one can even recall Janet Yellen, when she, as Secretary of the Treasury, was asked about the debt, she said: “Well, there's nothing to worry about, because it's very cheap.
The percentages are so low. We need to look at how much it costs us . "Debt is not that expensive." Yes, until the rates rise. And what to do then? You know, it's like jumping off the top of the Empire State Building and saying, "Oh, so far so good." No, you understand, you will fall on the asphalt.
Then it wo n't be so good. And it's inevitable that interest rates will eventually rise. And that is exactly what is happening now. That's why interest on the national debt is now somewhere around 1.3 or 1.4 trillion. This has already exceeded defense spending. And also Medicare. This is the second largest item in the federal budget .
And next year it will overtake Social Security. That would be over 2 trillion percent. And this is provided that interest rates remain at 5%. But if they go up significantly, and I think they will or should go up, you will again face much higher interest costs, which we obviously cannot afford. So, sooner or later there will be a sovereign debt crisis or a dollar crisis, because the choice is only between uncontrolled inflation or default.
Yes. Peter, you just actually moved on to my next question, which is about the United States dollar. And, you know, we've seen the United States enjoy this extraordinary privilege for decades. Because the dollar is the world's most dominant currency and has remained a reserve currency for so long, countries around the world have needed the US dollar for trade, investment, and the purchase of goods.
But with America's national debt rising and countries like China increasingly looking for alternatives , how long can this system last? And are we actually witnessing the beginning of the end of the US dollar's dominance? Well, I believe that the dollar has already started to lose its dominant position.
If you look at the dollar's share of total reserves, it has been falling for many years. You know, central banks now hold more gold than dollars or US Treasury bonds. This is partly due to the rising value of gold, not just its accumulation. But central banks continue to get rid of dollars and accumulate more gold.
So, this trend exists. And I believe that this is what will eventually replace the dollar. It will not be the euro , the yen, the pound, or the yuan. This will be gold. Foreign central banks will hold more gold and fewer dollars and Treasury bonds. So this will significantly change the rules of the game, because now we will have to finance our debts domestically, which we cannot do due to the very low level of domestic savings.
This means that interest rates have to be much higher, which again is beyond our means. That's why we will have a crisis. And I think if the Fed eventually monetizes a significant portion of that debt, the government won't have to cut spending or default. Then we will simply destroy the value of the dollar.
And this will be the way in which we will declare default. We don't tell people they will get fewer dollars. Everyone will get all the dollars they were promised. It's just that you can buy much less for these dollars. And this applies to everyone: whether you own Treasury bonds or borrow money from the U.S.
government by buying those bonds, the money you get back will only buy a fraction of what you could buy at the time you bought them. But if you were a civil servant and you were promised a pension, you will get that pension, you will get that money . You just won't be able to buy very much with them.
The same applies if you receive Social Security. Yes, the government will send you Social Security money. You just might not be able to buy anything with them , or very little at all. So, getting a Social Security check won't change your life, but you'll still get it, right? Here's what will happen.
Everyone will simply be paid with money that is worth little. Yes. Peter, let's talk a little bit about China, China and the United States. You have long argued that America consumes too much, borrows too much, and produces too little . And we see China, which has been building up its manufacturing capacity and industrial infrastructure for decades.
If we compare these two economies, which country is better positioned for the next 20 years? Well, I mean, normally I would say China is in a better position. But the only unpredictable factor is the bet on artificial intelligence that we are now making collectively, with all the capital expenditures for acquiring computing power and building data centers.
If we gain an unrivaled advantage in AI, it will give us a head start in the global economy, because we will become leaders in intelligence and use it to reindustrialize and create an army of robots that will build everything we currently buy in China . So, if this risky bet works, then maybe it will be the US.
But I think, in all likelihood, it will still be China. And China...it's not that China isn't investing in artificial intelligence. Invests. And even if they are behind us now, that doesn't mean they will always be behind, or that the models they eventually develop won't be good enough . Even if they're not that good, they might be good enough.
Yes, and they can be much more competitively priced than ours. So, but I think in terms of manufacturing capacity, industrial base and demographics, China is in a better position. They were always in a better position. Yes, and I think they are closing that gap in AI very quickly. I think so. We are already seeing many American companies starting to use Chinese AI models because they can use them at a much lower cost.
You know, they, you know, the tokens that they buy, and, you know, the interest cost is significantly less. Sometimes up to 80-90% cheaper than, you know, our American models. So I'm a little skeptical that the United States will actually maintain its leadership in AI. I mean, both countries, the US and China, are obviously the two major superpowers in AI.
So, if this is indeed the rate the United States government is counting on going forward, I would be very hesitant to say that this is a long-term strategy that will work. I think the Chinese models are definitely closing the gap, and as we know, they are also very actively investing in AI for the future.
Yes. Yes. And, and, and we'll see. I mean, we'll see how it all plays out. I, I, I , I don't know. I see huge potential in AI, and, you know, even in the limited ways that we've already implemented it in our lives—both personally and in business and in the things that I do. I already see huge potential beyond what we are already using it for.
Um, so, and it seems to me that this is what the Trump administration is essentially putting everything on the line. They're essentially saying, " Look, we're not going to cut government spending. Our only hope is to grow to get out of debt, but the growth will come from AI." Because that's the only theoretical way we could grow fast enough.
Because the debt is already growing so quickly and accumulating. We need an economic miracle. Perhaps AI will provide this miracle. The problem is, what happens if the miracle comes too late? What if, what if it doesn't happen within the next year or two, but in 5 years? Between now and then, you know, the stakes will continue to rise, partly because of the capital investment needed to build the AI economy of the future.
This will require a lot of resources, a lot of capital. And, you know, the companies that are getting all this capital and these resources don't have cash. They have to borrow money to make investments. So, who should you borrow from? And if I'm going to lend my money to, uh, an AI hyperscaler, I can't buy Treasury bonds, right?
I can't buy government bonds from France, Germany, or Japan. All these governments are competing with all these hyperscalers and everyone else for a very limited pool of savings. So, the rates will continue to rise until something breaks here. Yes. Well, I think you know, earlier in the interview you mentioned the S&P 500, how most of those stocks are actually down, with the exception of energy and a few AI stocks.
Of course, this "Big Seven" that we keep hearing about. It really just supports this S&P 500. I mean, we look at, you know, Trump always wants to talk about, wow, we hit a new 52- week high, as Alex mentioned earlier. You know, everything seems great and rosy, but are we really waiting for another stock market crash?
I mean, the potential bursting of this bubble and a lot of doom in our future in terms of stocks. Well, I don't know. Much depends on the Fed, and if the Fed returns to rate cuts and large-scale quantitative easing in a timely manner, it could prevent a nominal decline in stock prices. But the real drop in stock prices will be even bigger, and you can measure it by how much the price of gold rises.
But I think if the Fed did the right thing, stock prices would fall because they are overvalued. The only unknown factor would be whether AI could actually deliver enough revenue growth to justify current prices. But, you know, we don't know that for sure. This is just speculation. And companies are spending a lot of money on AI.
The question is, will the income they ultimately receive from these investments be sufficient? And how competitive will this market be? Will they compete with other companies that have spent significantly less capital investment but can still offer something of comparable value , or value sufficient to perform a certain task, causing the companies to be unable to sell their models as they planned because a cheaper competitor will appear ?
Right? Yes, I am definitely worried about this. I mean, look at the Anthropic IPO. That is, it is planned, perhaps, for the end of this month or the beginning of November. They expect a valuation of $2 trillion. And I think, if you just do the math, they're not even close to getting the revenue they need to justify that incredible valuation, right?
This is based on revenue projections a few years from now, when they will essentially be doing everything. So , the theory is that Anthropic is actually creating the future workforce. That they will own the workers of tomorrow, because businesses will lay off people and use Anthropic for all that work.
So, think about the payroll. All these companies, which have thousands, tens of thousands of employees, can now lay them all off. And instead, they can direct that money to Anthropic. Isn't that right? That's where all this revenue will come from. It will come from replacing human labor with artificial intelligence, or, in Donald Trump's words, superintelligence.
This is a new factor of production that they will own. Of course, not a complete monopoly, because they will compete with OpenAI or several other companies. But that's exactly what you would do. So if you have a business, instead of paying 100 employees, you just pay Anthropic and you don't have any employees.
Perhaps this is what the future is heading towards. The question is, how quickly will we get there? And what will governments do to slow down this process? Because if you are one of those employees who get laid off , it will become a problem for politicians. Undoubtedly. You could argue that in the long run we'll all be better off because we'll get better jobs, but in the short term—I'm losing the only job I have.
This is my problem. And politics is all about the "here and now." What is appropriate at this moment? Not that , yes, we'll be better off in the long run because you'll get a better job than the one you just lost. I do n't know about that better job yet, because no one has offered it to me yet. Yes.
All I know is that I just lost mine. And I have to pay for the mortgage, and the gas prices, and all that, you know? I need to live somehow to get to that real job, which might appear in a year or two. Yes, and even if prices go down, but I don't have a salary , the fact that everything has become cheaper doesn't matter.
I still can't afford it. I have no money at all. That's right. So, yeah, there's going to be a lot of problems before we get to this, you know, " promised land" of AI, right? We may have to spend some time in the desert. Peter, I just want to add, we see oil being traded in paper derivatives markets.
We know that this is not at all the price that a barrel of oil has when it is delivered and transported to refineries. This is the first thing. Secondly, we saw manipulation in the oil market. We see this in the crypto market. This administration has made a big bet on crypto bros. This could really fall apart in November if they don't hold the House and Senate, this whole cryptocurrency thing.
Where are the regulators? This is my question. Where are the regulators? We have seen so much fraud in the markets. Where are they? Well, Trump controls the regulators. And so, you know, the fox was put to guard the chicken coop, right? That is exactly what is happening, because some of the biggest violators are the Trump family itself and all their friends.
I mean, they manipulate the markets for their own financial gain. One of the reasons the crypto industry is getting away with it is that it is a Trump family business. They make hundreds of millions or billions of dollars in crypto by scamming people, ripping them off. So they don't want to interfere with that.
This is, you know, the "feeding trough" that they sit on. So, I guess we'll have to wait for the new administration, which will perhaps come back and look into this issue. Perhaps after Democrats regain control of the Senate and House of Representatives and create the appropriate judiciary committees, they will be able to investigate some of what is going on.
I'm not a big fan of strict government regulation. Not at all. I mean, I want as few regulations as possible. But, you know, what the government has actually done with cryptocurrency is actually encouraged it, encouraged people to use it and buy it. Uh, you know, they don't just maintain neutrality.
They influence people's decisions. And if you go back to the early marketing efforts of the crypto community, when Bitcoin initially rose to 125,000 a little over a year ago, the push for that was entirely Trump-related. It was: “ Hey, Trump supports this. We have a Bitcoin president. We have a bitcoin cabinet .
We have a Bitcoin king. We are creating a strategic bitcoin reserve. Uh, Trump wants to make America the Bitcoin capital of the world. His family's entire business is now bitcoin. You should join this. You must participate in this matter. You should go with the president. I mean, he's going to get rich.
You should get a piece of this pie, right? So, everything hinged on government approval and support for Bitcoin, which attracted a lot of money. And now, you know, these people are losing money because, you know, Bitcoin is worth maybe half or a third of what they paid, but it's going to go even lower when we really start to go down.
But the same thing happened before. I mean, look what he did to Fannie and Freddie. I mean, they blew it up. They raised Fannie and Freddie shares to, it seems, $14 and $16 a share. And now they are 80% lower, around three. But the people who sold during the rally because they bought it for less than two dollars, you know, before Trump won, Trump inflated it and his friends dropped it.
And now the public is left with nothing, just like they were left with Bitcoin. I mean, even more dramatically, they're holding Trump and Melania coins. I mean, these tokens are down 99%. But Trump made a fortune all the way down. Not only did they make money when they initially dumped their tokens on the market, but as the price dropped, they made more money each time they changed hands.
Every time you buy or sell a Trump token, Trump makes money. He gets a small piece of this transaction. Even if you lost 80% of your money, 90% of your money, when you sell to get back the 10% you didn't lose, Trump makes even more. Oh my God. Incredible. Peter, it is always fascinating to talk to you , and I sincerely appreciate your time.
I have one last question, let's take a look into the future. If you're an average American listening to this podcast and you're concerned about the housing market, the financial market, cryptocurrency, AI—all of these real-world issues that we've discussed today, what's your advice? Where should they go next?
How can we protect ourselves? What is the best thing you can do to protect yourself in this very uncertain future? You know, this is the same advice I've been giving for years, because I've seen this disaster from afar. That is, it hasn't arrived yet, but we are getting closer and closer. You must buy physical gold and silver.
That's why I have Schiff Gold. So I encourage people to go to Schiff Gold and buy gold and silver. Grant Cardon may not think 10x earnings is a good result, but I think it was not bad, and I think we can get to 10x again by continuing the policies that drove the previous growth. So, I think you should buy gold and silver.
You should also diversify your assets. The US market is expensive, but there are many overseas markets that are not, especially if you look for bargain options. If you look at emerging markets, the resources, raw materials, and energy sectors. There is a way to structure your portfolio to protect yourself from the financial carnage that I believe will destroy the portfolios of many American investors.
You should contact my representatives at Euro Pacific Asset Management. You can visit the website europac.com. You see him over my shoulder. Fill out one of the online forms or simply call our toll-free number to speak with a representative about how we can help you with your portfolio management. Or, if you prefer to work independently, I have five mutual funds, information about which can be found on the Euro Pacific website.
In fact, you can even buy shares in funds directly on the site. But if you have a brokerage account with Schwab, Fidelity, or any other major discount brokerage , all of my funds are available with a no-sales-fee share class that you can buy, so just add them to your existing brokerage account . Uh, but these are the things I think you should do in advance.
Apparently, most people have no idea what awaits them. Mhm. And I think you know that people are in for big losses when the air comes out of this "bubble." Yes. Well, Mr. Schiff, I want to thank you very much for your time today, and we'll put all of those links in the description below for our viewers who are watching us.
Alex and I have been big fans of yours for many, many years. We will continue to follow your work, just thank you for all that you do. We really appreciate your time. Good. I'm grateful that you invited me. Take care of yourself. Good. Thank you very much.
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