No. Yeah, right.

They've gone down.

And to put that 5% in perspective, because right now prices went up by 4% during the first nine months of this year.

The last year that Biden was president, for the whole year, prices went up by 2.9.

So in this year, the first nine months were substantially more than the entire final year of Biden.

And in fact, Biden's second to last year, 2023, the CPI rose 3.4.

So this 5% number is going to be higher than the last two years of Biden.

Go ahead.

No. Yeah,

right.

They've gone down.

And to put that 5% in perspective, because right now prices went up by 4% during the first nine months of this year.

The last year that Biden was president, for the whole year, prices went up by 2.9.

So in this year, the first nine months were substantially more than the entire final year of Biden.

And in fact, Biden's second to last year, 2023, the CPI rose 3.4%.

Go ahead.

So how would the economy break? What would break first? What would be things you'd be looking out for?

Well, you know, I think you can see housing.

The housing market is in a very precarious position.

You know, sales are the weakest they've been in over 20 years, which means they're weaker than they were, you know, in the early years after the financial crisis and collapse of the housing market.

And builder sentiment is the lowest it's been in over 20 years.

Because it costs a lot to build a new home and nobody can afford to buy it.

So the whole industry is in a lot of trouble.

So my question to you, though, is does that surprise you that we're still talking about a war that is so catastrophic economically?

Well, and in a, in a way they're, they're trapped because- You know, higher rates just mean bigger deficits, bigger interest expense, right? Which quickly become-

Yeah, I mean, that's the box that they put themselves in.

It's the box that I warned that they would be in years ago, um, before they, they, they created it.

But as they raise interest rates to fight inflation, they actually make inflation worse [laughs] because not only are those higher interest rates a cost that gets passed on to consumers just the way businesses pass on their rents and their raw materials and their wages, but the higher interest rates themselves mean the US government has to pay more interest to bondholders.

And that's...

A, that's kinda like a stimulus in and of itself because now you're putting more money in the hands of the bondholders to go, to go out and spend and push up prices.

But those bigger deficits, um, those, the, the higher interest expense pushes up the budget deficits.

W- what was the market's reaction to this higher than expected inflation print?

How bad could this get? And is there a level on the yields that you're watching for when things could really spiral out of control?

Well, well, first of all, it's going to get a lot worse.

And it's not the strong economy because I don't even know what they're looking at, because GDP growth has been slower so far during the past two years.

You know, Trump's first two years, GDP is growing slower than it was during Biden's second two years.

So by pretty much every objective measure, the economy is weaker now than it was a couple of years ago.

So it can't be the strong economy that is the reason that rates are rising if the economy is weaker than it was before the rates went up.

So that's not the reason.

Tell us about Europe Pacific Asset Management, the Peter Schiff Show, and anywhere else you want to direct people online.

You know, you've been recently highlighting this idea that mortgage companies are actually in far worse shape right now than in the 2008 housing crisis, right?

Oh, I think the Federal Reserve and Fannie and Freddie and FHA have completely devastated mortgage lenders.

If you think about what happened during the 2008 crisis, from about 2007 to 2010, you had about 10% of the mortgages that went into default.

And that was enough to collapse the subprime market, bankrupt Fannie and Freddie.

It took down Bear Stearns and Lehman Brothers.

But the total losses... were about $450 billion in write downs from those defaulted mortgages.

And the reason that lenders lost so much is because real estate prices dropped about 30%.

Is that really just the cost of doing business for them? And what does that fine mean in the context of their net profit margin?

I

never bought into the idea that going into debt is a sign of strength or of wealth.

When people are experiencing an increase in their worth, in their income, they would pay down their debt.

People aspire to be out of debt, to be debt-free.

That's a sign of affluence.

that you don't have debt.

But if you're constantly going into debt and you owe more and more money, you're going backwards.

Where can people follow your work?

Gold doesn't like higher real rates either, so are you doing anything differently?

Well, first of all, I don't think we have higher real rates.

I actually think inflation is rising faster than rates.

Uh, and I think that's gonna continue.

I think both nominal rates will continue to rise, but not as much as inflation.

So I actually think this is quite bullish for, for gold, even though investors have perceived it as a headwind, it's, it's really a tailwind.

But to comment on, on real estate, I'm not exactly sure, you know, the composition, uh, uh, of, of Grant's portfolios.

Yeah.

... is looking at these numbers, they wouldn't have hiked in the first place knowing that it was likely the job numbers and PCE were likely to come in soft, which is what-

Well, even though the PCE numbers are soft, they're still well above the s- the Fed's 2% target.

So they ...

Rates are still too low.

The data, as bad as it is, still supports more rate hikes, not, not fewer rate hikes.

And even the rate hikes that the market is assuming are not enough, uh, given how much inflation is actually out there.

Because again, the CPI is sugarcoating it.

Right.

Um, and the yield on the, the 30-year Treasury almost got to, uh, 5.

5..8, I think.

It was five point...

Or fi- no, 5.74. Maybe not quite.

I th- I thi- I think that was the high.

But what's, what's more significant is not where the, the rates are now, but how much higher they're, they're going.

Uh, th- this is a process that is unfolding here of basically adjusting rates to where they, where they should be considering how much debt we have.

Uh, Peter, how can people work with you at, uh, europac.com, where people can, uh, also, if they wanna look at alternative asset classes, um, you know, outside of the United States, and they're thinking, "Okay, I want gold and silver, but I also wanna, I wanna put my money somewhere else as well," how can people work with you?

What are you seeing now? Yeah, well, this is a major

bear market in bonds.

People forget, but we had a 40-year bull market, and we really rode that wave.

From 1981, mortgage rates were 18% at the peak in 81, and they bottomed out at two and five-eighths in 2021.

And that track to treasuries, 10-year treasuries were at 16% in 1981, and they were 60 basis points in 2021.

So that's when the markets peaked and interest rates bottomed.

We're now six years into what I think is now a major bear market, a secular bear market that will last forever.

So whose boom is this? Is it Washington or is it Silicon Valley's?

Um, go on.

Yeah, no, um, it, it, it's the debt chickens are finally catching up to us.

You know, that, that's, you know, we've, it, we've known that this was inevitable.

In fact, you know, the Federal Reserve, every time the Fed chairman were asked about our debt, they would say, "Well, the debt isn't unsustainable, but, but the path is." And, and, and that's what our, our leaders would say.

It's, you know, w- we can handle it now, but if we continue in this direction, we won't be able to.

Well, I always argued that, well, how do you know i- if you concede that we're on an unsustainable path, how do you know when you're gonna get to the unsustainable destination? Because I think we're there, and I think the markets are finally figuring this out.

And so creditors are going to demand much higher rates of interest to lend money to the US government, or to any borrower, uh, in, in US currency.

How do you know it's not the case? How do you know it is concerns about US's debt?

Right now

...

if I, if I was in charge of the...

If I was the president and I, you know, I was Congress, and I could pretty much, you know, do what I wanted to do, I would dramatically cut government spending.

I would eliminate almost all of the departments and agencies of the government that, you know, most of them we don't need.

And in fact, they, they, they don't just do more harm than good, they just do harm.

They don't do very much good at all.

Do you believe that Trump has made or, or has done everything possible to have investments come back to the United States of America, and that there are companies that are bringing their companies back to the US to manufacture here, and opening up factories to bring more jobs to Americans?

You know, if we look at, as you said, the gold, will it be, do you think it'll be a Bretton Woods backed currency or do you just think it would be sort of gold used as a safe asset replacing treasuries and then there's still the fiat currencies used to

Well, in the near term, it's more likely that central banks around the world will just hold gold instead of dollars and use gold as the reserve to provide value and backing for their currencies.

Not that you can redeem the currency in gold, but the central bank just has gold so that it could use it to intervene in the currency markets to buy back currency if its currency was selling off.

The gold gives it that ability and to have gold instead of U.S. dollars.

But we'll see.

I mean, the market may very well remonetize gold on its own.

Maybe central banks will follow the market.

How do you look at the industry at the moment? Are you concerned about the amount of money that they're spending and the business models there? Well,

Do you think that's possible? Well, I

mean, first of all, it's pretty much a lock that the Republicans are going to lose the House.

So the only question is, do they lose the Senate as well? And if they don't lose the Senate, it's only because the Democrats have nominated some horrible candidates.

that are so far to the left, so radical socialists, that had they nominated a more centrist Democrat, the Republicans would have no chance to keep the Senate, in my opinion.

But they have a chance.

But at best, it's a coin flip.

The president last night tried to influence that by promising every adult American a $5,000 dividend check if the Republicans retain the House and the Senate.

But if it destroys all these jobs, do you think there is a scenario, a realistic scenario, whereby we can just sit around and AI will do all the work and we'll be...

I mean, oh, my gosh,

this guy.

But it's not like Biden was an innocent guy.

Biden pursued policies similar to Trump.

And so the inflation that we're experiencing now is also a consequence of inflation that was created when Biden was in office.

So Trump is now inheriting some of the Biden inflation too.

But again, he is pursuing policies that will make that inflation worse.

Now,

Given where everything stands today, inflation, debt, Treasury yields, do you think we've entered the early stages of that dollar crisis, or is there still enough runway here to correct?

Well, obviously the dollar itself, you know, if you measure it against other fiat currencies, the, the crisis hasn't even really started.

If you measure the dollar's purchasing power against gold, yes, uh, you would argue that, uh, the dollar is losing purchasing power, uh, rather rapidly now.

And if you just look at the overall cost of living in the United States, uh, you can see that the dollar doesn't buy what it used to buy, and the rate of, uh, de- depri- you know, devaluation is accelerating, and it will accelerate.

And I...

Regardless of what the Fed does today, you know, uh, there's a 90% probability now that the Fed is gonna hike rates by 25 basis points.

Uh, and I, I don't recall if there was ever a time where the markets expected the Fed to do something, 90% probability, whether a hike or a cut, and the Fed did not deliver.

Uh, what do you think has kind of caused this lag in gold and, um, you know, why are we not seeing accelerated momentum given this environment?

Even if there's a hung Congress?

It's not necessarily gonna be a hung Congress because once the, um, Democrats control it, um, and Trump is going along with them...

And, and the reason I feel that Trump is going to work with the Democrats, once he, once he, you know, he gets the Democrats in Congress, he's gonna wanna work with them so he can claim like, "Yeah, you know, I, I, I worked with these guys and it's like great- greatest bipartisan achievement" and blah, blah, blah.

But I think behind the scenes, the Democrats are gonna have a lot of leverage with Trump because I think he's done a lot of stuff that, uh, you know, that could be illegal over the last couple years.

Certainly it's, uh, uh, almost everything he's done is unethical, that has enriched himself and, and his family and, and some of his friends.

But, you know, it's, it's...

You know, there's a good chance that there's laws that have been broken, and there's crimes here.

Uh, where do we go to follow you?

The percentage of the value that they have on their balance sheet goes down as well.

Yeah, you mark them the market.

Exactly.

If you're dumb enough to own longer-term treasuries, I would imagine most central banks keep the maturities pretty short so they don't have that risk.

Yeah.

But I do think that you're going to see a change in the composition for all sorts of reasons away from U.S. dollars as a primary reserve asset of central banks in favor of gold.

The deteriorating financial position of the United States.

Disinflation,

Do you think that's possible? Well, I

mean, first of all, it's pretty much a lock that the Republicans are going to lose the House.

So the only question is, do they lose the Senate as well? And if they don't lose the Senate, it's only because the Democrats have nominated some horrible candidates.

that are so far to the left, so radical socialists, that had they nominated a more centrist Democrat, the Republicans would have no chance to keep the Senate, in my opinion.

But they have a chance.

But at best, it's a coin flip.

The president last night tried to influence that by promising every adult American a $5,000 dividend check if the Republicans retain the House and the Senate.

But if it destroys all these jobs, do you think there is a scenario, a realistic scenario, whereby we can just sit around and AI will do all the work and we'll be...

Will, will this be tied into the energy prices, the, the bond, the bond markets?

Well, yeah, the AI story, you know, is obviously, you know, it, I mean, it, to me it looks like a bubble.

Is it possible that it's not? Is it possible that all of this spending and all the CapEx is going to be profitable one day? Yeah.

If that's the case, then, then it's not a bubble.

I mean, we won't know that until after the fact.

But it certainly has all of the, the hallmarks and the makings of a bubble, because it's very likely that the investments are not gonna pay off.

Not because AI isn't gonna work.

No.

the domino effect of, you know, what does run on diesel in our economy?

economy?Yeah, well, you know, there are a lot of generators that run on diesel.

You know, my generator here in Puerto Rico runs on diesel, so if I need it, it costs me more to, uh, fill it up.

Fortunately, I have a lot of diesel, uh, stored up.

But the trucks that are delivering everything run on diesel, and, uh, so the companies that deliver all the goods, look at all these Amazon trucks running around.

Uh, you know, th- they need diesel.

So, uh, uh, prices are gonna have to be higher.

Yeah

So what do you say to someone sitting in an S&P 500 fund right now that has made them a lot of money? Would you tell them to sell it today?

Well, you have to go back and look at how I have expressed my bearish view from the perspective of an investment strategy.

Over the last 25 years, I have not recommended that people stay in cash.

I have not recommended that they short the S&P.

I have not recommended that they buy U.S. bonds or treasuries.

I've said that I'm bearish on stocks, and so you can buy gold instead of buying stocks.

Now, had you done that, you'd be better off.

Is there any price that would prove you wrong? Or is your Bitcoin thesis independent of price?

They should put your face as

like the background.

And somewhere along the way, they added that little gold thing, that U.S. reserve.

That's a bogus number.

I don't even know where that number comes from.

It doesn't really exist.

I think they did that for you.

nice.

What is going on here, Peter, with these bond yields spiking and how do you see the world here at the moment?

Well, first of all, not all countries' bond yields are going up.

Take a look at Switzerland.

Their yields aren't going anywhere.

And that's because the Swiss government is fiscally responsible.

They don't run large deficits, so they're not dealing with the consequences.

But the United States, Japan, France, the UK, even Germany now, all these countries have been running deficits.

Once again, what do you see ahead here for real estate, especially California real estate?