Fed ADMITS They're TOTALLY WRONG About Inflation

0:00I make no friends in the pits and you take no prisoners for one minute you're up half a million and soy beans and the next boom your kids Don't go to college and they've repossessed your fancy are you with me the revolution starts now We have to pass the bill so that you can find out what is in it You are about to enter the Peter Schiff show If we lose freedom here, there's no place to escape to this is the last stand on our the Peter Schiff show is on I don't know when they decided that they wanted to make a virtue out of selfishness your money Your stories your freedom about Peter Schiff show Well earlier today the Federal Reserve did exactly what everybody expected them to do including yours truly

1:02And that was leave interest rates unchanged the Fed funds rate remains at three and a half to three and three quarters Of course the right thing to have done would have been a substantial rate hike But of course that did not happen But what I want to discuss before I get into the details of the Fed's decision and the press conference that followed I want to talk about some of the economic data that came out before We got the news that really set the tone for the markets particularly the precious metals markets We got news on inflation producer prices and this is for the month of February so it's really before Trump started a war And remember last week I went over the horrible GDP numbers

2:02In fact, I went over them on the Schiff Gold Friday market wrap because I think we got the GDP numbers at the end of the week So I didn't address them on my main podcast. I did it at Schiff Gold Make sure you are a subscriber to the Schiff Gold YouTube channel to get the weekly Friday market wraps But I went over the GDP numbers which shocked everybody in how weak it was Q4 GDP grew at just 0.7 annualized Annualized not even 1% economic growth Donald Trump is talking about this economic boom this miraculous turnaround that he has presided over And growth is anemic In fact for all of 2025 GDP grew at 2.2 percent That's 20 percent below the 2.8 percent GDP growth from Biden's last year when we supposedly had the worst economy in the history of the world

3:02And now that we have the greatest economy in the history of the world it's substantially weaker than what Trump describes as the worst In fact there was not a single year where Biden was president where the GDP grew as slowly as it did during Trump's first year So what is this guy talking about when he's talking about a boom right it's all a fantasy No, I had listened to an interview with Chris Christie and I forget where he was interviewed But he was reflecting a recollecting a dinner conversation he had with President Trump And he said that Trump told him and I have no reason to believe that Chris Christie didn't remember this accurately Because it seems like it's a statement that you would never forget He said that the president told him hey Chris you know if you repeat a lie often enough it becomes true Not that if you repeat a lie often enough people will believe it's true But that it actually becomes true that you can kind of will a lie

4:06Into being true if you just say it often enough And that seems what what Trump does with with respect to everything So he's talking about how the economy is great and hoping if he lies about it often enough that the economy will become great Because he lies it into into greatness but we have a very weak economy Now we have more confirmation that inflation is really on the rise And of course Donald Trump has been taking credit for vanquishing inflation It's gone it's dead and buried he killed it right we had horrible inflation under Biden and he's already gotten rid of it The numbers that we got for February just like Q4 GDP numbers were barely growing before the war Right so if the economy was that week before we were having a war

5:07Imagine how much weaker is going to be now that there is a war assuming the war continues The same thing with the PPI numbers These are prices from February Prices are much higher especially for energy oils about a hundred dollars of barrel right now I could check I got the live quote 99 and a half is West Texas a Brent is above a hundred and ten dollars a barrel But so oil prices are at least 50% higher now than they were In February right so wait till we get the March PPI numbers there probably going to be a lot worse but the February was already bad So the prior increase the January increase was point five Which in and of itself is a big number Now the expectation was that it would cool off in February to an increase of point three

6:09In fact point three was the upper end of the range That had been expected the range went from point one 2.3 The actual number I don't have a drum the role but the actual number was Point seven percent increase point seven more than double the upper end of the consensus forecast Think about that number for a minute point seven if you annualize that because unlike GDP numbers that we get this is not an annualized number Prices were up point seven percent on the month so if they did that every month You would be looking at like eight point four percent inflation Eight now this is not consumer prices these are producer prices But obviously if prices are going up for producers what are they going to do they're not going to eat it right they're going to raise their prices right because

7:13The first to feel the impact of inflation are the producers wholesale It's not that they're just jacking up their prices right there costs have gone up And consumers buy retail they don't buy wholesale in most cases And so they only feel the effects of inflation after the Hose seller passes it on So they get the price increase first and then they give the bad news to their consumers by raising their prices So if producer prices are going up Consumer prices are going to go up that's how it works that that's the process So this is bad news on inflation Now people are going to say oh Peter you're you know exaggerated you can't annualize point seven Well why can't I I'm just taking the most recent month and annualizing it But it's also possible that the next few months are actually worse than point seven

8:16So it may be more than eight point four percent Now if you just look at the year over a year number now It's three point four percent so not as bad as my annualized February number but three point four percent That's well above two In fact the prior Year over year increase the January number was two point nine So in one month the year over year increase in producer prices has gone from two point nine two three point four That is a huge move in the wrong direction the Fed wants prices to go down right has to get down to the two percent target We're moving further and further away Before the war before the increase in oil prices now if you take out food and energy it's actually worse the One month increase was actually not worse it was a point five

9:18Which was still Much hotter than the point three day expected but look at the year over year number three point nine year over year increase in Core PPI that's almost four Double double the two percent target that the Fed claims to have So this is really bad news the minute this news came out goal tanked In fact before I even saw the news I saw goal was down about a hundred and fifty dollars. I was like what the hell what happened? I mean and I went and looked at the PPI and then I knew what happened And silver was immediately dropped like two and a half bucks Now the reason for this reaction is the minute this news came out the expectations for Fed rate cuts were paired back significantly And that was later confirmed you know later today when we got the FOMC announced minute we saw the dots and what everybody is projecting

10:22So the expectations of a rate cut were pushed back in fact a lot of people now believe that there won't be any rate cuts at all for the rest of the year and The other opinion is that we might get one which is not that many And and so because The odds of a rate cut went down Gold went way down because gold was pricing in or at least the traders believe that gold is pricing in Rate cuts and now that the rate cuts aren't coming or aren't coming as soon as people had expected The price of gold sold off it's probably programmed in an algorithm you get hot inflation numbers You automatically sell gold, right? You don't even have to ask any questions. You just kind of do it automatically but This is not bearish for gold nor is it bullish for the dollar What this does is validates what I have been saying all along what I have been saying for years

11:27Because the Fed has been wrong wall street has been wrong The Trump administration has been wrong. I've been right What I've been saying is that inflation is not dead and buried. It's alive and well that it's going to Make a comeback and it never really went away because the Fed never Put out the flame that it aborted the fight prematurely that it never should have hiked rates all the rate cuts That started in the summer of 2023 when the Fed funds rate was five and a quarter to five and a half that basic You know 200 points almost 150 Basis point rate cuts or hundreds said whatever it was if they were all a mistake And that the Fed never really put the inflation gd back in the bottle and and now it's you know It's it's running amok and I've been saying that and so what this data confirms is that the Fed is way behind the curve That inflation is running out of control and that the Fed has no ability to reign it back in

12:31Because even if the Fed is going to put rate cuts on hold It's not going to hike that is the key So what is the reality is it's not that the Fed's failure to cut Is bearish for gold It's that the Fed's failure to hike is bullish for gold because it's not nominal rates that count It's real rates. That's what matters and if inflation surges and the Fed sits on its hands Even if it doesn't cut rates real rates are plunging. Let's say the Fed were to raise The Fed funds rate which it isn't even doing But let's say it raised the Fed funds rate from three and a half to four 50 basis points up Oh the Fed is tightened But what if during the same period of time Inflation goes from three percent to six percent What's happened to real rates? They've gone way down. They've gone from positive

13:3250 basis points to negative two hundred basis points We that is bullish for gold that is bearish for the dollar the traders haven't figured that out yet They're not thinking long term. They're not connecting the dots Right, they're not playing chess here. They're just reacting to a move at phase value And they're just saying oh the Fed's not going to cut. Yes, they're not going to cut But the bigger point is that they're not going to hike either Despite what was said today the Fed's not hiking and that is the problem Inflation is running out of control and that's not bullish for bearish for gold That is extremely bullish and you should buy today's dip as soon as this podcast is over Go over to shift goal.com. I got a quick commercial break. We're coming right back. So don't go anywhere A few decades ago private citizens used to be largely that private So what's changed the internet think about everything you've brows searched for watched or tweeted now imagine all of that data Being crawled collected and aggregated by data brokers into a permanent public record your record

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15:42Secure your online data today by visiting express vpn.com slash gold. That's expr ESS vpn.com slash gold to find out how you can get up to four extra months express vpn.com slash gold All right, now before I get to the the fed rate Decision decision discussion. I want to talk about another Data point that came out earlier today That confirms What I have been forecasting and that is the weakness in the housing market In fact the housing market is a bigger bubble now than it was in the 2000s And we're headed for as big if not a bigger decline in nationwide real estate prices now as we did then Which means an even bigger financial crisis Now mortgage applications collapsed in the most recent week

16:42Led down by Refinances that fell 18 and a half percent So the total index was down almost 11% with purchase purchase mortgage purchases were pretty flat But the refined market completely dried up And the purchase market is going to be drying up because Mortgage rates are rising along with bond yields And that's despite the fact that the GSEs purchased 200 billion dollars Worth of mortgage-backed securities in order to artificially suppress mortgage rates to keep Bubble-like home prices from deflating Which of course would help solve the affordability problem But Trump has made it clear that he doesn't want to solve that problem by creating another problem Which is real estate prices going down

17:44Which is going to happen Because when real estate prices are this overpriced And Mortgage rates can't really collapse The only thing that can happen is prices go down because Real estate prices are a function of what the buyers can pay Because ultimately your house is worth what you can sell it for Not what you want to fantasize about selling it for Not what you want to pretend that you can sell it for because anybody can put a house on the market You can list your home for anything and pretend that's what it's worth But at the end of the day, it's worth what you actually get when somebody buys it And we're going to start to see some sales as the economy really goes into recession And the war will help push it there as well as the higher prices that will result And you're going to see big drops in real estate prices Which is going to be a huge problem And that is one of the reason That shares of Fannie Mae and Freddie Mac have been imploding In fact, they were probably the worst performers of the day I think Fannie Mac was at about 13-15 percent

18:48Fannie Mae rather, Freddie Mac and Fannie Mae They're I mean, they're two separate companies But you know, they're pretty much the same trade But Fannie Mae Closed at $4.63 It got to 16 bucks last year Now it was a big run up to 16 bucks On all the talk about an IPO or releasing them from conservatorship And if you remember, I was saying that this was impossible to do That you can't really privatize them unless you're willing to let mortgage rates go up Which Trump doesn't want So he wanted to have his cake and eat it too He wanted to try to privatize it But maintain the government implicit guarantee Which would make the guarantee explicit which you I would be a disaster So I was speculating that nothing was ever going to happen and it was just all a bunch of hype So that some of his donors could cash out the Fannie and Freddie shares that they bought prior to the election But I think one of the reasons that

19:48The story is quickly evaporating Not only because of Fannie and Freddie having bought 200 billion of mortgages that they're now losing money on as mortgage rates are now rising But I think that people are starting to realize That Fannie and Freddie ensures something like seven trillion dollars of mortgages And if this is a real estate bubble which it is and the real estate bubble is going to pop which all bubbles do There are massive losses that are coming for these GSEs Probably bigger than the losses that bankrupted them last time So who the hell wants to buy into that? I had to privatize Fannie and Freddie ahead of massive losses The whole idea was that these businesses are cash cows They're cash cows as the bubble is inflating The problem is you got to give all that cash back When the air comes out You know, that's what happened before before Fannie and Freddie went into conservative ship Yeah, they were making money hand over a fist as they were underwriting and ensuring bad mortgages

20:53Then of course when they all went bad was when all the losses piled up and the taxpayers got stuck with them The same thing is going to happen again. It's ironic. They were talking about hey, let's privatize it Right And I'm you know, I knew this was a huge bubble. Yes, they've been making a lot of money But all the profits of the past simply so the seeds for the losses of the future Yes, the US government has got a lot of money in Pat prior years Because of Fannie and Freddie now they're going to have to give all that money back Because they've guaranteed all these mortgages. They're going to have to make good on the guarantee Only this time it is explicit because they are in conservative ship And so there's no doubt now that everybody who is holding debt that is guaranteed by Fannie and Freddie is going to get paid back The question is where's the money going to come from? Well the money is going to be created out of thin air by the Fed Just like they do everything else. So it's massive inflation But you can see that so we got weak housing data And even the federal knowledge is that housing is probably the weakest part of the economy and the economy is weak overall

21:57And and the president is trying to prop up the market But anything he does to prop up the market Ultimately weakens it further and weakens the fundamentals of the economy But so we've got weak economic data We've got strong inflation data And it was with that backdrop That we got today's FOMC decision It was nearly unanimous, but there was one descent you could guess who that was Moran The you know the president's lackey although Last time there were three descents and I think there were there were two guys that wanted A bigger cuffs or one guy that didn't want any cut, you know when they when they did a cut or I think it was Was that what happened last time was a 20 phase based five basis point cut But there was one descent who wanted a cut 25 I guess 25 basis point cut But what is more significant is that not a single FOMC member wanted a hike

22:59And based on the data A hike is what we need because everything the Fed was claiming Turns out to have been false the Fed has been wrong about everything And they don't even admit that you know when when pal was given his prepared remarks You know He did mention inflation and he described it as being somewhat elevated Which I think is one of the most you know Gross understatement that you can make somewhat elevated It's not just somewhat elevated. It's way above target It's at least 50% above target But if you look at the more recent data. It's more like double the target So how is that somewhat elevated? Yeah, I mean inflation was not anywhere near below The 2% target as it is now above it Mentioned the housing market is weak and again, I think that's an understatement because it's massively weak

24:03It's about as weak as it's ever been I mean just you know before the collapse because the reason it's so weak is that nobody can afford to buy houses Because the prices are too high Well, we know how that's going to be resolved But he said that the Fed is attentive to both sides Of the market but that they are well positioned to deal With either side meaning that the Fed feels That if the economy weakens their positioned To cut rates and if inflation Worse gets worse There's somehow in position to do something there as well, which I don't know what they're going to do I mean not not cut rates because that's not going to cut it right if inflation is getting worse and all you do is nothing You know, you're not going to put out the fire by doing nothing right you need you need to hike rates And you know that ain't happening for a number of reasons um So Pal basically said look we think the Fed funds is pretty much going to stay in the current neighborhood 3.4

25:04Maybe as low as 3.1 over the course of the next year. So maybe a cut right But he also admitted that policy is not on a preset course You know that you know, we're going to remain dated dependent And it depends on what's on what's on what's going to happen Anyway, of course most of the interesting stuff Was not in the prepared remarks But in the Q&A that followed and again looking at the markets Most of the damage in the market so though the the the markets ended up closing on their lows gold was down Close to like 200 bucks $190 silver was down over $4 the Dow was down. I think over 700 points percentage-wise. I think the Nasdaq was down a little bit less You know Bitcoin, which had rallied You know back over 74,000. I think over 75,000

26:05Was down now. It's down about 71,000. It's still hanging in there. I mean, I don't know what's keeping it up I mean, it's going to collapse any day But it got another bounce. I mean a lot of buying from Michael sailor. There's a lot of pumping going on Trying to keep this market from imploding But you know, it was down Um, so there you know, it it wasn't as much But there was one particular comment and I'm going to get to that You know shortly That was made during The Q&A that caused the markets to hit new lows Including precious metals and I want to take a look at what's going on In in the markets right now and that's a and is a good opportunity To introduce a new sponsor to the program What did I do with my my screen? Oh here it is that has it, but we've got it. We got a we got a brand new sponsor Investing.com and it's interesting that investing.com is sponsoring the podcast now because I've actually been using investing.com

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29:21So just my whole name And so if you want data not just headlines guiding your market views This is probably one of the best tools you can use so again click the link in the description To secure access to investing pro at the lowest possible price available One of the things I've already done is I set up a a watch list of a lot of the stocks I own And I'm scrolling through them now you can see that most of the stocks are in the red right because my stocks I own a lot of gold stocks that got clobbered most of the green on my screen Were stocks that went up overnight like in Asia that weren't impacted by the us sell off And of course, I own a lot of oil stocks and the oil stocks were pretty much all in the green today But most of my my holdings were in the red You know the biggest drops in the mining sector But again, this is a great buying opportunity for those gold mining stocks because the traders

30:22Have got it completely wrong we be 55% off not 50% oh maybe they are All right, well, I don't know I guess the I guess the sale is 55% off And then I get an extra 15% on top of that is that is that the deal Anyway, hopefully that's it, but but we either way. It's a great deal So just just use my link, but these This the the gold stocks really sold off they were down like what six percent seven percent Again, investors don't get it Higher inflation is good for gold. It's not bad for gold It doesn't mean that oh no, the Fed is going to just leave rates alone and that's going to do it That's going to do the trick. It's not going to do the trick the Fed needs to go Paul Volker On inflation and that's not going to happen right we had the Fed has to get medieval and you know It there's no chance there's no chance of that happening and you can easily

31:26Figure that out if you listen to the press conference, but anyway, let me talk about some of the stuff that went on during today's press conference So The first question he got We should defend look through the war related Increased in oil prices now first of all oil prices were going up before the war right But now they're going up even faster and defend basically Or power rather Basically said look, we're not even going to think about that right now because we're still trying to figure out the effect of tariffs We're still trying to figure out if the tariff effect is over and that seems to be the more important thing right now Before we start thinking about oil Um And and the guy also said the same guy that asked this question As pal look you know You've been above target for five years

32:27In your inflation Which is true well above target for five years now And he said Does the fact that you've basically been so wrong for so long Does that influence how you're thinking and again Pal just fell back onto tariffs and he said well, you know We've had things happen to interfere with our progress And he said tariffs did that okay, but that was last year 20 tariffs are only an issue in 2025 That's one year out of the five years that they've been way above target So what's your excuse for all the other years you want to blame 20 25 on tariffs? Okay, what about 2024? What about 2023? What's your excuse there? I mean obviously the Fed doesn't have any They don't want to acknowledge how wrong they've been because you go back To their forecasts and it's always two percent inflation is coming two percent inflation is coming And two percent inflation

33:28Never arrives now another reporter asked a good question Said okay given the fact that the inflation numbers have been hotter than you thought What is the basis? for Cutting why is the committee looking to cut rates and by the way of the of the 19 members, right 12 I think that there'll be one more cut Between now and the end of the year and seven Think there'll be no more cuts Right that the cuts won't happen until 2027, right But there's still a bias to cutting right because you got 12 members thinking they're going to cut rates But why if inflation is now higher than it was before Why are you still thinking about cutting rates when you're not making any progress? In fact, you're going backwards, right? And this was his answer again. I'm not making this up

34:32Powell said that the reason that they are forecasting Rate cuts even though inflation is headed in the wrong direction Is because their forecast is that they're going to make progress on inflation Their their forecast is that inflation is going to go down And because they are forecasting that inflation is going to go down They are assuming that they're going to cut rates but Based on what have they assumed that inflation is going to go down based on nothing because remember It at an earlier FOMC meeting Powell let the cat out of the bag He said the reason that they forecast two percent inflation is because that's their mandate And they believe they're going to achieve their mandate So because their mandate is 2% inflation They forecast 2% inflation. Not because there's any actual evidence that inflation is going to be 2%

35:33It's because their mandate is 2% So that's what they want to forecast. And that's what they're doing here They believe they're going to make progress on inflation because they believe they're going to achieve their mandate Because our mandate is 2%, they're not going to say we're not going to achieve our mandates. So they want to say, yes, we believe we're going to achieve our mandate. And because we believe we're going to achieve our mandate, we believe we're going to cut rates. But it's all based on belief and the belief is based on nothing other than a wish. It's a fantasy. It's make believe. This is what they hope. They're basically saying we hope inflation comes down. And because we hope inflation comes down and we hope that we're right, we're forecasting rate cuts based on what we hope happens, happens. That's basically what they're saying and pal actually admitted that he's made no progress. He said, despite the fact that we've made no progress, we still believe we're going to make progress in the future, even though we're basically making no progress in the past.

36:35Now, another question, he said, do you think the higher inflation is based just on the oil shock? And he really didn't have an answer to that. The other he kept saying about oil shocks is that history shows that you should look past them. Not really. I don't know where he's reading that, what history books. In fact, it didn't work out too well when we looked past it in the 1970s, but he immediately pivoted that question back to terrorists and he implied or not just implied flat out stated that the slow progress now was due to terrorists that if it wasn't for these terrorists, maybe we would be at 2%, but the terrorists have got it all screwed up. But he also asked him a good question, said, what gives you confidence that inflation will return to target if your policy is only moderately restrictive, which is a good question.

37:37And the answer is it won't, right? They even admit that they're not very restrictive, they're, they're, they're moderately restrictive. No, I don't think they're restrictive at all. I think they're easy. I think they're accommodative. I think rates are way too low. So they are stoking the inflation fire. They're not putting it out, they're, they're adding fuel, right? And, but the reporter said, well, what makes you so confident? And he didn't even answer the question. He just pivoted over to tariffs again. And he said, well, we're waiting to see what happens with tariffs. He says that we're hoping that when the tariffs worked our way through, that we're going to go back to the low goods inflation that we had of the past. He said, back in the past, goods prices didn't really go up very much. They were flat to negative. And so we're just hoping that it goes back to the way it was in the past. Well, why? Why should it go back to the way it was in the past? Look at all the money we've created. Look at all the inflation we've created. And look at what's happening with the dollar. We know, and look at what's happening with trade.

38:39Why would we go back to the way things were in the past? There's no reason to expect that. It's actually different. The cheap goods that we got in the past are in the past. In fact, Donald Trump has made that clear. The goal of the Trump administration is to stop importing cheap products. That's the whole purpose of the tariffs. That's what Trump wants. He wants the world to stop ripping us off by selling us cheap stuff. Well, the reason we got cheap goods in the past was because of that ripoff. Because we got to import all this stuff. Well, if we can't import it all because the tariffs make it more expensive. And now we got to make the stuff ourselves. When we do that, it costs more money. Well, that benign effect, those low goods prices that Powell is counting on to bail us out to come back. They're not going to happen. You know, he's got like an ostrich. He's got his head in his sand and he can't see what's going on. So he should have no confidence.

39:40There is no way inflation is going back to 2%. Either the Fed knows that and just doesn't want to admit it or they don't know it. Because that's how ignorant they are. Now somebody asked them to how high, like you know, would would prices have to go up? Oh, I'm going to hold that hold out for a second. Now he reiterated that there is a risk that inflation could go higher and there's a risk that the economy and the labor market can get weaker. And Powell said we are prepared that if the economy gets weaker than we think, if the labor market gets weaker, we can cut rates. And that is the appropriate policy for weakness in the labor market is to cut rates. And he said, however, if inflation is higher and basically the way they assess the risks

40:45and at least they assess it correctly. The risk to the labor market is that it gets weaker and the risk to inflation that it gets higher. So there are risks to both sides of the mandate that have opposite policy responses. And he acknowledged that dilemma, although he downplayed significantly the extent of it. But he said we're ready to cut rates if we need to. But if inflation is stronger than we think, we can raise rates because that argues for higher rates. And then he immediately corrected himself and said, well, we can at least not cut them. So at first he said that we may raise raise and he's well, well, no, we'll just not cut them. So that's how they're going to fight inflation by not cutting rates, not by hiking them, but simply by not cutting them. But that's not enough, that won't cut it. If inflation is going up, you need to get ahead of the curve, you need to get aggressive

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46:58Maybe we'll have to raise rates. Now he downplayed it by saying, look, nobody believes we're going to raise rates. Nobody has that in their model, but the possibility did come up and that really hit the markets again. But I'm sure if somebody brought up the possibility, it was quickly shot down, they're not going to do it. And I think that was obvious when pal corrected himself about hiking rates in response to higher inflation and walking that back to not cutting them. So basically there are two things that the Fed is considering, cutting rates or not cutting rates. They're not considering hiking rates, but by any objective measure, that's what they should do. Now of course we have a weak economy. So hiking rates are going to harm the economy, but you know what, that's what you have to do. We had a weak economy when Volker put interest rates up to 20% and in fact it made the economy weaker obviously.

47:59So we've got a big inflation problem and it can't be solved without some sacrifice. You're going to have to weaken the economy, especially when the economy is a bubble. Part of the reason for inflation is excess consumption, excess spending as a result of cheap money. You take the cheap money away, you take this consumption away, you take the spending away. Well, there's all the GDP. So the GDP has to collapse. You can't get rid of the inflation without getting rid of the phony GDP growth that the inflation has created, which is why they're not going to do it. Now one of the most ridiculous responses had to do with stagnation. Somebody asked Powell has the Fed considered the risks of stagnation. Now of course, we already have stagnation. So they're basically saying have you considered what's actually happening? The actual economic environment that we're in can best be described as stagnation.

49:03So it's already there. I mean, so you're basically saying have you considered the actual reality of the current situation? Has that ever come up? And Trump, I mean, Powell immediately caught, you know, distance the economy from stagnation by saying, look, we don't even have anything close to the stagnation. He says, I don't know how you define stagnation, but I define it as what happened in the 1970s and he said there we had double digit inflation. We had very high unemployment and he said today it's nothing like that. He said we have historically low unemployment and inflation is only 1% above our target. So we have low inflation, we have low unemployment. So I don't even consider this stagnation. So I don't know why you're even talking about it, right? So first of all, stagnation doesn't only relate to the 1970s. It simply is a condition of slow economic growth, check, we got that and higher inflation.

50:05Check, check, we got that too. Yes, we don't have double digit inflation yet. We're not in recession yet, but those are not conditions that make stagnation possible. They just mean it's a lot worse. If you have recession, not just stagnation. If you have really high inflation, then I think it's like an inflationary depression. That's really where we're headed. But you can't forget that one of the reasons that if you just do a numbers to numbers comparison, which is what Powell was doing. If you just compare the official inflation rate today to the official inflation rate in the 70s, and you compare the official unemployment rate with the official unemployment rate. You're not making an apples to apples comparison. I don't even think you're making an apples to orange a comparison, right? You're making an apples to bricks.

51:09They have nothing to do with one another because the methodology for computing, both unemployment and inflation, has so dramatically changed over the decades that they have no relation to one another. If you wanted to compare inflation and unemployment now to the 70s, you would have to adjust how we compute it now. You would have to use the same methodology that we use in the 70s to the same data sets. And if you did that, you would find that both inflation and unemployment are at least double what we are currently reporting. And if you double our inflation rate and double our unemployment rate, you get similar to what we had for most of the 1970s, which we concede was bad. We have the same thing today, which is not acknowledging it.

52:09We're pretending it doesn't exist because we've made it disappear through the magic of government statistics. But the other thing that Powell said about the 1970s was he said that the risks that we face now are nothing like the 1970s, meaning that the 70s were way worse than, I mean, we got it easy now. I mean, don't worry, it's not nearly as bad as the 70s. He said all we got now was a little tension between our policy goals, right? Nothing to really be concerned about. I mean, the one thing he got right in a way was what he said that it's nothing like the 1970s. And in that sense, I agree only in that it's way worse than the 1970s. That is the difference. See in the 1970s, the national debt was not even a trillion dollars. It didn't even get to a trillion until the early 80s. So we didn't have all this debt.

53:10You know, I think our debt to GDP back then, I don't know, was it 30, 40 percent? Let me take a look at that, let's see if I have it, national hold on, because I wanted to bring this up anyway, but let me look at the national debt, let's see if it has that just off the top of the head, debt to GDP. So 1980, yeah, so 1980, our debt to GDP was 34 and a half percent, 34 and a half. Now it's 125 percent of GDP. It was 34 and a half, again, this is just a bond of debt. I'm not talking about any of the unfunded liabilities. And obviously during the 70s, it may have been a little less than that because we were racking up a lot of debt, you know, in the 70s. So during the 70s, it was, it was probably a bit lower than that. But let's say, let's, you know, it's 34 percent.

54:11And so we had the ability in 1980 to put an end to the high inflation. We were able to raise interest rates to 20 percent because we could afford to pay 20 percent because we didn't have a lot of debt. And the majority of the debt that we had was financed with 30 year bonds. So even though we had to pay 20% to issue new bonds, we still had locked in a lot of debt at very low rates that we didn't have to worry about. Contrast that to the current situation where we have 39 trillion in debt. In fact, just yesterday, for the first time, the national debt, it clips 39 trillion. So we will be at 40 trillion shortly. In fact, the war is going to make sure we get there even faster. In fact, Donald Trump, they're already thinking about an extra 50 billion in an emergency defense appropriation to fund the war, which of course is just going to be a down payment.

55:15Now nobody is asking for a tax hike to cover that. Nobody is saying, hey, let's cut spending someplace else to offset the extra 50 billion for defense. No, let's just borrow it, throw it on top of the debt pile with everything else. Again, Donald Trump says we have to sacrifice to win the war. And by sacrifice, he means higher gas prices, right? We need some short term pain for long term gain. Okay, how about let's sacrifice and pay for the war? How about government spending cuts or tax hikes to cover the 50 billion, which again, is just a down payment. What about the next 50 billion and the next 50 billion? Where's all that going to come from? Well, we know where it's going to come from. We're going to borrow it. It's going to be more debt and it's going to be more inflation. In fact, I think there is a chance that during the remainder of Trump's term, which is what, about three years, the national debt might hit 50 trillion, 50 trillion. That would be an extra 11 trillion, which is what three and a half trillion a year in

56:19debt. Very easy to do that. We go into recession that lowers tax revenue, increases expenditures. We know interest rates are going up that increases the cost of pay, of servicing the debt. And the war is going to add a tremendous amount of spending, even if we win, we're going to have to pay to rebuild. So even if there's peace, we get stuck with another tab after we pay for the war. So this is going to be a massive increase, but the point I'm making about the comparison between now and the 1970s is that we have all this short term debt. And so if interest rates just went to 10%, let alone 20%, let's not even talk about 20. Let's talk about 10. And obviously, if rates went to 20% in 1980, when we were a much better credit risk than we are now, when our debt to GDP was only 35%, and now it's 125%, when we had a trade

57:21surplus instead of a trade deficit, when we were a creditor nation instead of a debtor nation. In fact, we were the world's biggest creditor, now we're the world's biggest debtor. We were a much better credit risk in the 70s than we are now. And so given the deterioration in our credit quality, we should be paying higher interest rates that we paid back then. But let's assume that it's only 10%. How are we going to pay 10% on 40 trillion in debt? That's $4 trillion a year in interest. The government only collects $5.4 trillion in taxes, but how much tax revenue would the government collect if interest rates were 10% of fraction of what it is now? In fact, my belief is that if interest rates went to 10%, government tax revenue would collapse and they wouldn't even get $4 trillion a year in tax revenue. But we would owe $4 trillion a year in interest on the debt, not right away.

58:23It would take a few years to cycle through. But remember, we keep adding debt. If we're adding $3 or $4 trillion of new debt a year, all of that new debt has to be financed at 10% and all the debt that matures has to be rolled over at 10%. It's not going to be long before our interest expense exceeds 100% of our tax revenue. Now of course, before we got anywhere close to that, we would have a major sovereign debt crisis, which we could be having soon. So when Powell just brushes over stagflation and claims, oh, we got nothing to worry about. It's nowhere as near as bad as the 1970s. We got a lot to worry about because we're in much worse financial position than we were in the 1970s and he knows he can't hike rates. All the Fed is thinking about doing to fight inflation is to not cut rates, but that won't work. If rates are already too low, when money supply is growing, when credit supply is growing,

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1:00:27That's KAC, H-A-V-A dot com code news. Um, another thing that that that Powell mentioned, and they do this all the time to try to deflect blame when he talked about the big inflation that we had coming out of the pandemic. He said that we had this inflation all over the world and it happened everywhere. And the reason the Fed likes to remind everybody that inflation was a global problem and not an America problem is to try to say, look, it wasn't our fault. There was nothing we could do. Inflation happened all over the world so you can't blame us. And that is all BS. The reason inflation happened all over the world is central banks all over the world made the exact same mistake. So that doesn't get the Fed off the hook. Just be false. The ECB had bad policy just because the bank in Japan had bad policy just because all these other central banks had bad monetary policy and they all slashed interest rates and printed

1:01:30a lot of money, doesn't let the Fed off the hook for doing the same thing. In fact, the fact that there was inflation all over the world in response to the fact that every country in the world did the same wrong thing that just proves it, right? No country escaped inflation because every country made this mistake, right? Every country said, oh, we got to cut interest rates. We got to print money. We got to have our people stay home and we got to flood the economy with cash, right? That was a boneheaded move, but all the central bankers made it because they all read from the exact same playbook. The final point I want to make before I sign off for today, Powell did acknowledge that he is not going anywhere. Even after his term is up and we have a new Fed chair, as long as the investigation, the criminal investigation, grand jury investigation against him is open.

1:02:36He ain't resigning. He's staying at the Fed. And I think the reason he's doing that is leverage because he knows that Trump wants him gone so he can, Trump can replace Powell with another one of his lackeys. And so what Powell's going to say as well as long as you're going to continue to investigate me, I ain't going anywhere. And so the only way that Powell's going to resign is if they close the investigation and give him a clean bill of health, which I know from experience, they never do, right? You know, the government investigated me for tax evasion and money laundering for over two years. And that was, you know, 20, 20 is they started the investigation in 2020. They ended it mid 2022, right? Found no evidence that I did anything wrong. So the grand jury disbanded, nobody was indicted, nobody at the bank was indicted, none of the customers have ever been indicted.

1:03:38Nobody associated with the bank was ever indicted. I was never indicted. But the government never closes the investigation. I asked my lawyer about this. He said, look, can we get the government to officially say the investigation is over and we didn't find anything. And they said, no, they never do that. They never admit that they found nothing. They never admit that they stopped investigating you. It's just, they just don't do anything, right? They don't charge you, but they don't say, you know, you're innocent. They just don't do anything. And which I think is unfair, especially when they illegally leak the investigation. And in my case, it was worse because they implied that I was guilty, even though they knew I was innocent. But if they know that the investigation has been leaked, the least they could do is admit, you know what, we didn't find anything, the guy was clean. But they don't do that, even in my case. Now obviously the PAL investigation wasn't leaked, everybody knows, right?

1:04:39You know, it's not a secret investigation. They made the whole thing public that PAL is under investigation by this grand jury. But even then, it would be a stretch to actually get the government to do this. But maybe PAL is trying to leverage the fact that he's got this one card he can play, which is I ain't leaving. And see if you can get the Trump administration and the Justice Department to do something they never do. And that is admit that an investigation is over and that they found no evidence of wrong doing. But anyway, that's it for today again, I'm going to do a shift gold Friday market wrap on Friday. We'll see if we get a big bounce back in the price of gold and silver, maybe cooler heads will prevail. You know, we're at 4834 right now on gold. So we're below 5,000. I've been saying that any move below 5,000 probably won't hold and that we won't stay below

1:05:415,000 for long. We'll see if I'm right. We can get back above 5,000 by the end of the week. Silver is about 75, 66. It's been very volatile, but it's still all the volatility is way north of the $50 break out. So silver is still a massive breakout as far as I'm concerned. So by golden silver, but the biggest pullback has been in the mining stocks. They have been killed 25, 30% from their peak prices still positive on the year, unlike the US stock market, which is negative on the year. But we're going to get some phenomenal earnings, even if the price of gold and silver don't recover if they just stay where they are. The earnings should be phenomenal. Gold companies should have huge beats and I don't even think the earnings that they're going to beat have been factored into their stock prices, let alone the beats. So take advantage and get yourself some of these mining stocks. If you were under invested, now's your opportunity to bring up your investing, bring up your waiting.

1:06:42Do yourself, talk to my advisors at Europe, Europe Pacific asset management, your impact.com, or just buy my fund. You can buy my goal fund, no load. The advisor class EPG IX is on the platform of every major discount broker. So do yourself a favor and take advantage of people who don't understand inflation, don't understand the Fed, don't understand money and don't understand gold and who have been selling into what amounts to very bullish news for precious metals. Bye for now. Yeah, the thing you work most fast from emails and reports to proposals and updates, you're expected to think clearly, write confidently and get it right the first time and every message counts. That's where Grammarly comes in. It gives you everything you need to think, write and finish in one place, or anywhere

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