The lengths mainstream economic commentators will go to explain why the United States is experiencing unprecedented levels of inflation is simply comedic.
Usually, the run-of-the-mill pundit will blame greedy businessmen but now with major geopolitical events unfolding in Ukraine, Russian President Vladimir Putin has become the latest scapegoat for America’s inflation woes.
Contrarian economics commentators such as Peter Schiff know better than to engage in such petty scapegoating. In a recent appearance on News Nation, Schiff exposed the many flaws in the corporate press’s take on America’s economic problems.
Schiff pinned the blame on the Federal Reserve for America’s growing levels of inflation.
According to Schiff Gold, Schiff stated that “the Q1 GDP contraction will turn out to be the first quarter of this new recession.”
Schiff went into further detail about this prognostication:
This is going to be a very deep recession. It’s going to last for a long time. And it could be the worst recession anyone has experienced.
Schiff stressed that inflation will make this economic downturn pretty nasty. He explained:
Inflation is high and it’s going higher. So, you’re going to have the combination of a very weak economy in recession and high inflation getting worse. And inflation is going to complicate the severity of the recession and make it that much more difficult for average Americans to endure it.
The News Nation host alluded to Treasury Secretary Janet Yellen admitting to the American economy likely facing future reversals and stumbling blocks. Though she stresses that the American economy remains strong on net.
Schiff obviously disagreed and believes Yellen has a weak grasp of economics, which he outlined below:
She had a poor understanding as Fed chairman, and before that, she had a poor understanding when she was a member of the FMOC. She was clueless about the financial crisis that was looming right around the horizon. And of course, she was jumping on the bandwagon more recently of inflation being ‘transitory’ when it clearly was not. So, she doesn’t really know very much about the economy. She’s just there to talk up the economy no matter how bad it looks. She’s going to put positive spin on it. But it’s a disaster.
Loose money is the primary culprit behind any inflationary episode, which Schiff went into detail about:
The Fed is printing a lot of money and the value of that money is going down. It’s going to crash eventually. It’s not about the consumer. It’s about the producer. And I just said we have the worst trade deficit in our history because our economy is not productive. What we’re doing is printing a lot of money and we’re spending that money to buy things that are made in other countries. So, it’s the rest of the world that’s being productive, not America. We’re being profligate. We’re just spending the money that the Federal Reserve prints out of thin air. But that’s inflation. That’s the source of the inflation. It’s not Putin. It’s not the pandemic. It’s the Federal Reserve. It’s the US government running record budget deficits being monetized by a Federal Reserve that’s printing all this money. The money is losing value. Prices are going up. The government is being dishonest about how much because the CPI grossly understates the degree a which prices are rising. Prices are rising at more than double the rate the government claims.
It’s amazing how many people in the US don’t get how the Fed’s monetary policies bring about inflationary chaos. This is stuff that great economists such as Ludwig von Mises have long warned about nearly a century ago. Sadly, Mises and his ilk were largely ignored throughout the 20th century.
That said, the Ron Paul Revolution of 2007 and 2012 created fertile ground for individuals like Schiff to carry on the Austrian legacy and warn about the dangers of out-of-control banking.
Ultimately, a free-market in monetary affairs is needed to maintain macroeconomic stability and protect people’s wealth.
