Unquestionably, the US is dealing with an unprecedented episode of inflation. According to Consumer Price Index (CPI) data from April, inflation is 4.2% higher when compared to the same month last year.
The large numbers even surprised Federal Reserve Vice Chairman Richard Clarida who went on to say that “We were surprised by higher than expected inflation data.”
Of the most reliable voices warning about the perils of inflation, Peter Schiff has stood out with his contrarian takes on inflation. When most financial pundits believe inflation can never happen, Schiff argues that it’s taking place in real time due to monetary policy. And now, even factions of the ruling class are beginning to recognize this.
Peter Schiff’s recent appearances on Tucker Carlson’s show have put inflation rumors at the forefront of the national economic discourse. Schiff Gold noted that the contrarian economist has emphasized how more printed money chasing fewer goods will inevitably lead to inflation. In Schiff’s view, inflation will clobber the middle class in a way the Wuhan virus pandemic never did.
On Tucker Carlson’s show earlier this month, Schiff talked about the recent CPI numbers and what it means for inflation:
It is the inflation tax. And if you look at how much the cost of living went up, measured by the CPI in the first four months of this year, it’s 2%. So, if you triple that to annualized it, we have consumer prices rising at 6% annually. But if you look at the monthly numbers, every month it accelerates. So, if you extrapolate the trend of the first four months of this year for the entire year, you’re going to get a 20% increase in consumer prices in 2021.
Tucker raised an important question during his discussion with Schiff: If the CPI numbers are correct, will a devalued dollar be an unattractive option for foreigners who otherwise invest in American bonds?
Schiff believes that foreigners won’t invest in US Treasures under these circumstances. In fact, they’ll be dumping US Treasuries.
Anybody that can connect these dots is going to be selling US Treasuries. And the problem is there’s a lot of US Treasuries to be sold.
Schiff also called attention to the surplus dollars in circulation that chase very little goods thanks to the government-sponsored lockdowns and unemployment schemes that have kept people from entering the workforce and being productive:
The real problem is the surplus of money. Whenever you print a lot of money, it’s always a goods shortage because the Federal Reserve can print all the money they want, but they don’t print products to buy with the money. So, we have all this money being printed. We’re not producing a lot. People are sitting at home cashing unemployment checks. This is a tax. It’s an inflation tax, a Biden tax, whatever you want to call it. But when Joe Biden says ‘don’t worry! Only people that make over $400,000 a year are going to have to pay higher taxes to fund all these programs,’ he’s lying. Because every American is going to pay the inflation tax. And it’s going to hit the middle class and the poor the hardest.
Schiff poked fun at the farcical assumption held by Federal Reserve officials who believe that inflation is “transitory”, by noting that inflation is likely here to stay due to the Fed’s concerted action to make easy money the policy of the day:
But these are the same guys that told us not to worry about the subprime mortgage market. Remember early on, Ben Bernanke said, ‘ Don’t worry about subprime. It’s contained.’ Well, now they’re saying don’t worry about inflation. It’s transitory. Inflation is as transitory now as the subprime market was contained. And this inflation crisis is not only going to be worse than the financial crisis, it’s going to be worse than the pandemic. Because the government’s cure is what’s going to kill the economy, not the disease itself.
America’s current inflationary episode is the inevitable result of its flawed monetary policies. Sure, there are supply shocks that have thrown off productivity thanks to government lockdowns. However, the Fed’s loose monetary policies have created the underlying conditions for inflation, while the lockdowns have only accelerated this trend.