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Whatever money we borrow to pay for the war just adds to our debt problem because now we have more debt that we can't repay, but it's also possible that the dollar blows up here that the world does not want to uh finance this war. Uh the world was already moving away from the dollar before the war started.
They were de-dollarizing. Economist Peter Schiff warns that the war on Iran could actually further weaken the US dollar and even drag the United States even deeper into debt, something I've been raising concern about on this show. And in fact, his concerns are warranted to say the least. So, let's get into it.
So, two important disclaimers that I want to get out of the way right off the bat because this is so important. Peter Schiff does have a conflict of interest here. You should know about it. So, for instance, he's a big advocate of investing in gold. In fact, he does have a financial interest in getting listeners to invest accordingly.
So, keep that in mind. Number two, the dollar has actually rallied since we started this war on Iran. According to CNBC, the dollar is still seen as a safe haven asset. So, even though the dollar had been weakened in recent months especially and especially in the last several months. Uh the war in Iran ended up spooking the investors who took money out of riskier investments and instead decided to park their funds in the US dollar.
Okay? So, that's what happened after the war started. However, the dollar's rally has slowed down a little bit today. Now, with that out of the way, the war in Iran could open up a whole new can of worms when it comes to inflation. And we should be very worried about that. First, let's go to Schiff's argument and then I'll fill in the blanks.
The economy will will it be able to sustain such a war with the increase in energy prices? Or will it impact the US as much as it will impact Europe and Asia? Well, as long as we can keep going into debt and you know, we can sustain it as long as we can borrow money. But the problem is if the Fed has to print all the money and we have a lot of inflation, can we sustain that?
Our foreign central banks are moving away from the dollar. Now, it's possible that this war slows down the exodus from the dollar, but it's also possible it speeds it up. And if it speeds it up, then you know, we're even less able to continue the war. If it slows it down, that buys us some time. But it's going to mean higher oil prices.
That's that I mean that's a certainty. How much higher? It's hard to say. They could end up being a lot higher. And obviously that's problematic. That sure is problematic, Peter. Definitely problematic. And uh, I have no doubt that uh, what we pay at the pump, it's we've already seen it increase since the war began.
Uh, and I don't think it's going to get better anytime soon. And remember, when it comes to energy, when it comes to oil, when it comes to gas, we're not just talking about what you pay at the pump. We're also talking about the cost of transporting goods and services. And so, that is going to lead to inflation.
So, speaking of high oil prices, on Monday an oil refinery in Saudi Arabia was damaged by two Iranian drones. Not good. Those drones were intercepted, but shrapnel from the drones caused a fire in the refinery. So, that forced the refinery to pause operations. That's not good. That limits oil supply.
That same day, Iranian drones targeted a power plant and energy facility in Cutter. In response, uh, Cutter Energy, a state-controlled energy company, announced it was going to stop producing natural gas indefinitely. Indefinitely. So, there is no timeline on when they will go back to producing more natural gas.
And as you can imagine, that spiked the price of natural gas. Because again, supply stays the same. I'm sorry, demand stays the same, but supply is limited. Energy facilities in Oman and the UAE have also been attacked. And traffic through the Strait of Hormuz has come to a screeching halt. If you're wondering how relevant is the Strait of Hormuz, about 20% of our oil gets shipped through there.
So, that's not a good sign. So, time will tell how bad things are going to get when it comes to oil prices and how this war, regional war at this point, is going to impact global economies. But right now, we do know for a fact that the American people are facing an affordability crisis. We were forcing We were facing this affordability crisis even before the war began.
And when it came to our debt, I mean, we're already topping $40 in debt. And we just got started with this war. Disaster. Absolute disaster. That's why Schiff argued that the war in Iran could be a convenient scapegoat for the poor US economy even if it leads to more economic chaos in the future. Let's hear his argument here.
Trump gets a scapegoat because a lot of problems that were going to happen anyway with the economy can now be blamed on the war. Hey, look, everything was great, but you know, we had to go to war. And you know, one of the sacrifices of war sometimes is you have a recession, you have higher inflation.
So, it's not my fault. I mean, everything was going to be great, but unfortunately we know we had no choice. We had to go you know fight this war. And so the weakness in the economy is not my fault. Right? Everything would have been great and it will be great once we end the war. But it's his but he started the war.
How is it not If that If the that narrative collapses with on itself? Cuz he started the war. Yes, but if he says I had to I didn't start I had no choice. Right? Because we were in imminent danger. Iran was about to nuke us. So whatever the hell he's going to say. He says different things depending on the day by the way, Trump does.
Uh We got dragged into the war by Israel because they want regime change in Iran. Marco Rubio was telling the truth the first time. Uh but anyway As this rage as this war rages on, uh you should know that Americans were already hurting. I think most of you already do know that, but there are more signs of a troubled US economy.
This really worries me. So last year a record 6% of workers in 401k plans administered by Vanguard Group took a hardship withdrawal. That is up from 4.8% in 2024 and a pandemic average of about 2% according to Vanguard. You guys that's disastrous. Okay, that is not good. [gasps] And when you take a hardship withdrawal from a retirement account, you not only I mean depending on what kind of retirement account it is, let's say it's a traditional 401k.
Uh you not only have to pay taxes on the amount that you took out, you also get a I think 10% penalty. Unless there are like a few exceptions. If you do a hardship withdrawal, I think you might be able to uh be exempt from that that 10% fee. But the fact that people are taking money out of their retirement is not a good sign.
And the fact that that percentage is going up is a really bad sign. The top reasons for taking hardship withdrawals last year were avoiding foreclosure. God, it's going to make me cry. It's like so devastating. Avoiding foreclosure and eviction and paying medical expenses, according to Vanguard, the median withdrawal was $1,900.
If you're not angry, I just want you to explain why. Like I I want to understand it. I really do. How how does it not hurt people to see that our country's living like this? It's just not right. But this is what we're dealing with. So, you know, Peter Schiff, uh despite his conflicts of interest with gold and all of that, I I I think that he tends to keep it real when it comes to the Federal Reserve printing money.
He keeps it real when it comes to the reality of our true economic condition. And I appreciate his honesty and his candor. Now, we here at The Young Turks obviously have known what the reality of our economic situation is. It's something that we care deeply about and talk about a lot on the show. But, I think the thing I want to leave you all with is you will get what you are willing to tolerate.
And uh unfortunately, our electorate has been willing to tolerate a lot of garbage with our leadership. And I think it's time that we band together and demand change. Otherwise, our situation will continue devolving and Americans don't deserve to live like this. Every time you ring the bell below, an angel gets his wings. Totally not true, but it does keep you updated on our live shows.
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