Markets Tank as Stagflation Rears its Head (Uncut) 02-24-2025

Markets Tank as Stagflation Rears its Head – Ep 1012

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The Peter Schiff Show. Welcome everybody. So it is Sunday night, doing this podcast live.

We’ve got a lot to discuss. You know, the U.S. stock markets got hit pretty hard on Friday. In fact, all the losses of the week and all the indexes closed down on the week.

But pretty much it was all due to the rout on Friday. The Dow Jones closed down about 750 points. At the low of the day it was down just over 800.

So relatively close to the lows. That was about a 1.7% drop. Similar decline for the S&P.

Down 1.7% on the day, about 1.8% on the week. Nasdaq Composite got beaten up a little worse. It was down 2.2% on the day and the week.

So pretty much all the losses happening on Friday. Russell 2000 was the weakest of the indexes. It was actually down 3% on Friday.

So 4.2% drop on the week. You know, the Russell 2000 now is in full-grown correction territory. It’s down 10% from its November peak.

You know, the Nasdaq or the Russell 2000 was a beneficiary of the Trump trade because the idea was that Trump’s economic policies were going to be good for America, for the domestic economy. And so that was going to be particularly beneficial for the Russell 2000, which doesn’t have the big multinationals. It’s more of a pure play on the domestic economy, which was going to thrive under a Trump presidency.

And so a lot of money went into the Russell 2000. Well, the Russell 2000 is not only down about 2% this year in calendar 2025, but it’s actually down 3% from the day Trump was elected. So the Russell 2000 is lower now than it was when we elected Trump.

So that entire trade has reversed. But it wasn’t just the overall stock market that was down. The gold stocks got clobbered very hard, unnecessarily so, which is, again, typical the case for the gold stocks.

The GDX was down about 3.4% on the day and about a similar amount on the week. And the GDXJ was down 4% on the day, which, again, was about the weekly decline. But gold was barely down maybe $2 or $3 on Friday, and it was up about a third of a percent on the week.

So, again, gold went up and gold stocks went down. Now, gold stocks are still up about 15% on the year, so they’re still beating gold, which is up about 10.5% on the year. But they should be up a lot more when gold has been this strong.

And I’m going to get to the gold stocks a little bit later as far as, you know, why they went down. But I want to talk more about why the overall market went down. What was the news that drove the stock market down on Friday? And I think it’s more confirmation of stagflation, which is exactly what I have been predicting all along.

And, of course, stagflation is the one economic condition for which the Fed has no contingency plan. When Powell was asked what his plan was for stagflation, he knocked wood. You know, he banged on the podium and he said, well, we’re just going to hope we don’t have it.

Well, hope is not a plan. But the reason the Fed doesn’t have a plan is because there’s nothing in their toolbox that will work. Right.

The Fed doesn’t have a lot of tools. Right. It can cut interest rates.

It can raise interest rates. It can expand the money supply or it can contract it. I mean, that’s basically it, although it never really contracts it much.

But, you know, it could it could do QE, it could do QT, whatever. But that doesn’t have a lot. But when the economy is weak, that’s when it cuts rates and supposedly prints money.

When the economy is strong, it raises rates. Well, you know, well, what do you do if the economy is weak and inflation is strong at the same time? The Fed’s got nothing. That’s why they just hope it doesn’t happen.

And that’s also why the stress tests that the Federal Reserve develops for the banks does not include a scenario of stagflation. Because I think the Fed knows that none of the banks could pass a stress test if they had a test for stagflation. Which would be a weak economy where inflation and interest rates go up.

Because the worst case scenario that the Fed has asked the banks to stress test is a weak economy where interest rates plunge and inflation goes way down. Right. Which is not that bad.

What is bad is a weak economy where interest rates and inflation go way up. But the Fed did not ask any bank to run the numbers on that scenario. Because I think they know that all the banks would fail.

But that’s exactly where we are headed. And that is what the economic data that came out on Friday confirms. So let me take a look at some of that data.

First, we got the consumer sentiment numbers for February. And last month, the January number was 67.8. And the expectation was for a slight improvement to 68. Instead, we went sharply in the other direction.

All the way down to 64.7. That is a plunge in consumer confidence. In fact, the range of estimates for this number was a high of 70.1 and a low of 67.8. We came in way below. In fact, nobody thought consumer confidence would go down.

Because 67.8 matched the number we got last month. So everybody thought that consumers would be more confident. They just disagreed on how much more confident.

But instead, confidence collapsed. And the main reason was rising inflation expectations. So for the year ahead, 2025, consumers are expecting 4.3% inflation.

That’s unchanged from what they were expecting in January. What went up was their expectations for longer run inflation. Inflation over the next 5 to 10 years.

Consumers now expect 3.5% inflation in the long run. That is the highest that consumers have expected for inflation going back to 1995. So 30 years since, consumers have been this worried about inflation.

In other words, they’re worried more about inflation now than they were in 2020 or 2021 or 2022. You have to go all the way back for 30 years to find a point in time where Americans were more worried that long term inflation was going to be this high. Now, the Federal Reserve puts a lot of stock in expectations.

Powell says that all the time. Because these guys think that inflation is like the field of dreams. If we build it, they will come.

If people expect inflation, we’ll get inflation. They think it’s kind of like a function of a self-fulfilling prophecy. They think if people expect inflation, well, they’ll demand higher wages.

Businesses will expect inflation. So they’ll raise their prices in anticipation. So it’s part of the Fed’s strategy for blaming the public for inflation.

Well, we have inflation because the public, you know, irrationally expects it. And because they expected it, they made it come true. They raised their prices thinking that there was going to be inflation.

And that’s why we have it. Now, this is all a bunch of BS. But the Fed says this.

Whether they believe it or not remains to be seen. But Powell talks about it all the time. And Powell says that inflation expectations remain well anchored at 2%.

He says this pretty much every Fed press conference. Inflation expectations are well anchored. So we’re in a good place, right? Expectations are anchored down there at 2%.

Well, based on what? If consumers are expecting 3.5% in the long run and 4.3% over the next year, on what basis is the Fed concluding that expectations of inflation are anchored to 2%? Because consumers don’t expect 2%. I mean, we way drifted off that anchor a long time ago. So, I mean, is the Fed just lying about it? Where is there any sense of this? There is none.

So consumers expect much higher inflation. Now, they’re right. Inflation is going to be higher.

It’s just going to be even higher than what they expect. And I expect inflation expectations to move up over time. Now, granted, if you break it apart in terms of Democrats and Republicans, the Democrats expect even more inflation.

The Republicans expect lower inflation. But when you average it out and then you throw in all the independents, right, we’ve never had numbers this bad going back 30 years. So if the Fed is trying to claim that it’s got inflation under control based on expectations, it’s clearly wrong.

Inflation is anything but under control. It’s going up. So this is the stagflation indications because you’ve got consumer sentiment down because everybody is worried about inflation.

People are struggling to pay these higher prices, and they believe that prices are going to keep going up. And they’re right. They just are wrong to think they’re only going to go up by an average of 3.5% over the next 5 or 10 years.

They are going to go up much more than that. So that was one piece of bad news that we got on Friday. The other piece of bad news, or we got three pieces.

It was kind of like a trifecta. One of them was existing home sales, which plunged in the month of January down 4.9%. They went from 4.29 million to 4.08 million. And now the year-over-year sales, which are still up, are up a lot less.

So housing sales are falling because mortgage rates have risen, and people can’t afford to buy homes. But I think the worst of the economic news was in the PMI for February. Now the PMI, the composite index, which is a combination of manufacturing, which has been in a recession for a long time, and services.

Now the composite index is the average of both, and that dropped to 50.4. So just above 50, which is the dividing line between expansion and contraction or recession and growth, and that was down from 52.7 the prior month, January. So a pretty big drop in February. Now manufacturing actually moved up a bit from an upwardly revised 50.1. It was up to 51.2 for January, and it came in at 51.6. Now I don’t think we’re going to stay above 50 for long, but we did have a little bit of an improvement in manufacturing.

But where the economy really got hit was in the service sector. So the January number for the service PMI was 52.9. It collapsed down to 49.7, below 50 in recession territory in the service sector, which of course is 70% of GDP. Now again, we blew away expectations.

It was supposed to be up to 53. So instead of going up, it went down. And the range of estimates went from a low of 52.7 all the way up to 54.5, and we came out at 49.7. This is the lowest in just over two years.

You’ve got to go back to January of 2023, just over two years ago, to find another service index PMI that was even below 50. And I think you’ve got to go back to April of 2020, during the COVID lockdowns, to find another one. So we haven’t had in years, really, except for a couple of outliers, a service PMI in recession territory.

So we got weak economic data, but we got strong inflation data. The markets don’t like that. Now, there was also some news story about some new potential coronavirus identified in China.

I don’t know how heavily that weighed on the markets or how seriously that story was. I think there were also some option expirations. But I think it was really driven, in large part, by the news.

And it wasn’t just bad news here. We also got leading economic indicators. That was on Thursday, though.

But they dropped again to minus 0.3. We had a positive number last month. It’s been years and years. We finally got a positive number, 0.1. But that didn’t last.

The expectation was for zero. And we ended up with minus 0.3. And even the weekly jobless claims inched up a bit. They’re still low, but 219,000 jobs.

But pretty much all this data came out weak. But also in Japan, on Thursday night, we got the Japanese CPI. I’ve been talking about this on the podcast.

It is a big deal. And I’m going to get to that, though. I’m going to have a quick commercial break.

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All right, so I’m talking about Japanese inflation, which is a big problem in Japan that is going to get much worse. So anyway, we got the number coming out of Japan. They were expecting 3.9% for the year-over-year CPI, which would have been higher than the 3.6% prior.

We got 4 even, 4%. There is now a 4 handle on year-over-year inflation in Japan. Even ex-food and energy, it moved up from 3.1 or from 3 to 3.2, exceeding the expectations of 3.1 and excluding fresh food and energy.

I guess that’s the core there. It’s up 2.5% and that was above the 2.4% for the following month. Now, when the number initially came out, Japanese bond yields started to pick up.

They were at 1.45 and it looked like I think they had moved up to 1.46. They were starting to go up and then you had the head of the Bank of Japan came out and made a statement and he said, if interest rates rise sharply, we are ready to intervene and buy JGBs. So basically, the Bank of Japan says, we’re going to come into the market and we are going to print yen and buy bonds if interest rates are rising too sharply. And that turned the market around.

It actually turned the yen around too. The yen was up on the news and then sold off, but the yen ended up losing those gains in New York and selling off again. In fact, as we’re speaking, the Japanese yen is now, or dollar yen is down to 1.49. So we broke through the 1.50 level.

We’re now at 1.49. I think it’s Katie bar the door when the dollar drops below 1.40, because I think once we get below 1.40, I think we can start to see a much more precipitous decline in dollar yen. And that’s probably going to coincide with a backup in rates because interest rates in Japan are still a half of a percent. That’s what short term rates are.

But inflation is 4% and accelerating. Now, how are you going to stop that? The most laughable part about it is, you know, you got the head of the Bank of Japan. It reminds me of Baghdad Bob, you know, remember him from, you know, desert storm days who is like, you know, everything is great.

You know, there’s no Americans here. You know, there’s tanks all over the place. And he’s trying to say that, you know, they’re winning the war in Iraq or whatever it was, you know, but I forget the guy’s actual name, but his nickname was he was a defense minister of Iraq and everybody called him Baghdad Bob, but he was clueless.

That was the whole joke. Well, the head of the Bank of Japan is still says with a straight face. He we are making progress and we can really see that we’re going to achieve our, our 2% goal.

Our 2% inflation goal is now in sight in sight. It’s only in sight. If you’re looking in the rear view mirror, because we passed 2% or Japan did a long time ago.

They’re about to pass 4% and they’re still saying they’re making progress toward hopefully achieving 2%, right? They, they achieved way more than that, but they can’t admit it. And now they are stuck in a big predicament because interest rates are going to go up. And the only way they can stop it is by creating more inflation.

So at what point does Japan have to say that if we want 2% inflation, we now need policies to bring the rate down. See the whole time they’ve been pursuing these policies. It’s been, we need to get the rate up, right? So we need easy money.

We need low interest rates because we got to get inflation up to 2%. Now they’re still claiming that they need that. Even though we’re at four, that’s why it’s Baghdad Bob.

So when is the bank of Japan going to admit, Oh, now we overshot we’re way above 2%. So now to get back to our goal of 2%, we need tight money. We need to raise interest rates above the inflation rate.

Who knows that was going to be, if they wait for inflation to be 7% before they admit that, you know, they overshot too. Well, they’re going to have to bring rates up to eight, nine, 10%. I mean, this whole house of cards right in the bond market, there is going to implode and interest rates are going to surge, but it’s an even bigger problem over here because a lot of that borrowed yen is propping up our financial markets, our stock market, our bond market, right? Our real estate market is being propped up on the yen carry trade.

Well, the high inflation numbers in Japan may have been also part of why the U S market sold off and the strength of the yen relative to the dollar. And, you know, by the way, again, our 2% inflation mandate was made up by Ben Bernanke in 2012. So, you know, the Fed was around for 99 years, right? It started in 2013 and they never once spoke about a 2% inflation target until 2012.

Why is that? Because it never existed. And why did Ben Bernanke make it up? Because in 2012 the core PCE, which is what they claim needs to be 2%, right? Not even headline CPI. They want, they look at the core PCE and they’ve divined that 2% is the Holy Grail, right? Of economics.

That’s where it needs to be. At the time, it was 1.8. It was below 2. So the reason they said we need 2 is because they were at 1.8. They were trying to justify continuing the 0% interest rate policy, right? And, and the justification was, well, we’re not at 2%. We need to get the rate up.

Like, like the Fed could actually dial it up. Like it’s 1.8 and we’re such, you know, money magicians. We know exactly what we’re doing.

We can just crank it up a little bit and get it to go from 1.8 to 2, right? But the media believed this. Wall Street believed this nonsense that they needed to move the needle from 1.8 to 2 as if they could actually do that. But the whole time they were talking about, we have a 2% target, we have a 2% target.

It was when they were supposedly below the target, which was their rationalization for the policy they wanted to pursue anyway, which was create inflation. Well, now, of course, that we’re looking down at 2%, you know, they’re stuck, right? They made the bed. Now they have to line it.

They said that 2% was the target and now they can’t abandon it. They’ll look like complete fools, but now, you know, they’ve hung themselves with their own noose because they can’t get inflation back down to 2%. It isn’t going to happen, but they can’t admit that.

So that is the box they’re in. The Japanese are in the same box. They adopted the same nonsense.

We need 2%. Okay, well, we’re way above 2%. And the same thing is in Europe.

I’m going to talk about Europe in a minute. You know, they have a big election in Germany that just went on today. So I’m going to talk about that.

But before I do, I want to get into the gold stock reaction to the news. So gold stocks got hammered even more than the overall stock market when the price of gold was not down very much. Now it’s down about $6 or $7 today, but it’s still, I mean, tonight in the evening, but it’s still 2930.

I mean, the record high is 2942, 2943. So we’re almost at record highs in the price of gold. So why did these gold stocks get clobbered? Well, I think it was more of a buy the rumor, sell the fact on the phenomenal earnings that gold stocks were reporting on Thursday and Friday.

And they bought the rumor, sold the fact. Except nobody really bought the rumor. They just sold the fact.

I mean, nobody was buying gold stocks because of all these great earnings, at least not that many people. But they sure program the computers to dump them as soon as the earnings came out, especially if the earnings missed. So take a company like IAMGOLD, which I own IAMGOLD.

We own that in our funds. That stock was down 9.4% yesterday. That’s a big drop for IAMGOLD, right? And they missed their earnings.

But their earnings were up 717% from the prior year. I mean, that is an enormous increase in earnings. Revenue was $1.63 billion.

That was a 65% increase over the revenue from a prior year. So a massive increase in earnings. And their earnings in 2025 are going to be even greater than they were because a lot of the gain in the price of gold happened at the tail end of last year.

And we’ve had a big move up already in the first couple of months of this year. So earnings are going to be up, but the stock got killed. But it’s trading at 10 times earnings.

I mean, if you’re only at 10 times earnings and you just grew your earnings by 717%, why would your stock go down? Because you didn’t grow your earnings by 750% or whatever it was the analysts had expected. It’s almost like they deliberately have a high expectation so the stock can’t meet it, so it gets clobbered, even though the earnings growth is phenomenal. Now, when Newmont Mining, though, right? Newmont Mining reported, I think, blowout earnings.

The stock was down almost 6%. Almost 6% on Friday. And it’s these type of stocks that are really driving the narrative.

But so Newmont was supposed to earn $1.09 for the quarter. They earned $1.40. So 31 cent beat. That’s a big beat.

Also, their earnings for the quarter. I mean, the rise from the prior quarter was 285% increase in profits. And revenue is $5.6 billion.

But, I mean, almost a tripling in quarterly profits. And the estimates, they beat their estimates by a full 9 percentage points. But the stock went down.

And the bad news, right? What really got people to sell the stock was that they forecast their all-in production costs would be higher in 2024, in 2025 than they thought. I think it was around $140 an ounce extra. Now, why are costs going up? Maybe they’re mining some lower grades.

Inflation is driving up costs. But gold is already up by about $300 an ounce this year. So gold is already up by more than double what they said their costs are going to go up.

So that’s still bullish. Yet analysts ignored the beat and just focused on this negative comment that costs are going up. But completely ignoring that gold has already gone up more and will probably go up a lot more.

Gold is not finished going up. Gold could be $3,500 by the end of the year. Maybe it’ll be $4,000.

But nobody is factoring any of those possibilities into prices. So they just dumped these stocks. Look, I think it’s a great buy.

I think these stocks are going to bounce back pretty strong next week. I think this is a gift, the fact that they were down on Friday. So you should buy them on Monday, as I’ve been saying.

I think buying gold in the ground is cheaper than buying it above ground right now. It’s dirt cheap. So people should be buying gold mining stocks.

They should be buying the Euro-Pacific Gold Fund. EPGIX. I forget it.

EPGIX. Euro-Pacific International Gold Fund. EPGIX is the no-load symbol for my gold fund.

You can buy that at any discount brokerage firm. You can go to EuroPAC.com website, E-U-R-O-P-A-C.com. You can buy the fund right off the website if you don’t have a brokerage account. If you have a larger portfolio and you’d like us to manage a portfolio, a separately managed portfolio of mining stocks, we can do that as well.

Just talk to the representatives at Euro-Pacific Asset Management. We have other strategies, of course, that don’t just focus on the gold mining. But they are really giving these stocks away.

I think this could end up being one of the best years ever for gold stocks. It’s already starting off good. Gold stocks are up 15%, 16% on the year.

They were up about 20% until Friday. So I think they’re already off to a good start. But I think this is slow compared to what I believe is going to happen later in the year as this stagflation scenario really unfolds.

And people appreciate just how bullish this is for gold and how bearish it is for the dollar. In fact, the dollar index has been rolling over. In fact, the euro now is almost back above 105.

Let me take a quick look. Maybe it’s jumped above it. It was just below it.

Yeah, we’re at 105.1, up about 50 basis points so far today. Dollar down against the yen. Down across the board against the Swiss franc.

Australian dollar down against the pound. Look, if the dollar index really starts to roll over, and it started. So, I mean, if it continues.

And the dollar index really cracks below 100. I kind of think that’s a key level for the dollar index. And maybe 140 dollar yen would be around there.

Right now we’re at 106.3 on the dollar index. But then we’re really going to start to see a drop in the dollar. And that’s going to be very bullish for gold.

That and collapsing real interest rates. Because even if the Fed doesn’t cut, inflation is going to go up and they’re not going to hike. But if the stagflation, if the stagnation part of the stagflation combo really rears its head in a bigger way this year, the Fed will cut.

There’ll be all sorts of pressure from the Trump administration and Congress on the Fed to cut rates. And if the economy starts to weaken, they will cut rates. And that means you’re going to have nominal rates going down as inflation is going up.

That means real rates are collapsing doubly, which is extremely bullish for gold and bearish for the dollar. We’ve got a quick commercial break, so stick around. As a small business owner, you don’t have the luxury of clocking out early.

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Terms and conditions apply. All right, so they held an election earlier today in Germany. And as I’ve been predicting, every place they have an election, they want to throw the bums out.

Whoever the incumbent is, whether it’s to the right or to the left, whoever’s been in charge, they’ve got to get rid of because everybody wants change because everything is horrible because these governments and central banks have all been operating from the same failed playbook. In the eurozone, the ECB kept interest rates negative and then zero, but they were actually negative. They did their own quantitative easing, the asset purchase program.

So they financed a massive increase in government and government spending, and they created a lot of inflation to pay for it. And now the people all over Europe are suffering. And so they want change.

It’s not all just about immigration. You know, the central bankers and the politicians have really screwed up the economy over there, just like they’ve done in Japan, just like they’ve done here. Now, you know, I just read about this ridiculous program in Italy, and I wanted to bring it up just as a tangent because it really goes well with my last podcast on waste, fraud and abuse of government programs.

I said you can’t have a government program without waste, fraud and abuse. Well, the Italian program is a perfect example of this. They actually launched a program during COVID where the government would cover 110% of the cost to remodel your house.

I mean, can you imagine that? So the government says, hey, go spend money on remodeling your house, and we’ll give you more than you spent, 110%. So basically, it’s free. We’re going to pay you to remodel your house.

Well, obviously, if the government pays you to do something, you’re going to do it. You’d be an idiot not to do it. And so there was obviously an explosion in remodels.

And so, as I also said last podcast, the program ended up costing a lot more than they thought because they really hadn’t planned on this moral hazard. But also, it wasn’t just that everybody started to remodel. It’s just that all the developers were overcharging.

All of a sudden, costs skyrocketed. Why? Well, because the government was going to pay 110% of whatever you spent. Well, the developers knew this.

So, hey, I’m just going to charge you $300,000 for a $200,000 job. Yeah, fine. Who cares? It doesn’t matter.

You’re not paying for it. It doesn’t matter what the government ends up paying. And in fact, what the article I read said is that a lot of times, they were splitting the difference.

So the homeowner wouldn’t rat out the developer. The developer would give the homeowner cash back to cover some of the excess charges for the remodel. And then, of course, there was complete fraud where there wasn’t even any remodeling done, where it would just be fake invoices.

So the developer would say, oh, we got a $300,000 remodeling job. Here’s some invoices. I’m not actually going to do any work.

And then I’ll give you $150,000 in cash under the table or in euros. And the developer, I mean, out and out fraud. It’s a huge boondoggle.

And the program is so popular that they won’t even get rid of it. That’s the crazy thing. Of course it’s popular.

The government is giving everybody free money. And so they don’t want to turn off the spigots. But apparently, they’re dialing it back.

So I don’t know if it’s next year or the following year. Instead of covering 110 percent, they’re only going to cover 90 percent. Well, who cares? They’re going to inflate the cost anyway.

The government shouldn’t cover any of it. But this is a huge moral hazard. But it’s an example.

You can’t give away free money and expect people not to lie to get it, not to abuse it to get more of it. But this is a perfect example. But anyway, I digress because I’m not really talking about Italy.

I’m talking about Germany. So Germany, so the party in power was the socialists or the left-leaning party, German Social Democrats. So they only got 16 percent of the vote.

That’s the lowest they’ve got since the Second World War. So a complete repudiation of the power in charge. The German Conservative Party, which is a center-right party, they got 29 percent.

So the head of that party is going to be the chancellor. The number two votes went to the AFD party. And that is the party that is being described as the far-radical right-wing party that nobody wants to work with.

So even though, you know, they’re obviously to the right of center, if they’re radical right, you would think that maybe the conservative party would form a coalition with them. Right. And then they can have a strong coalition of, you know, to the right of center.

But no, because nobody wants to associate with this party because, you know, they’re like Hitler. And so the conservatives may actually have to form a government with the Democrats. It’s like the Republicans and Democrats might have to govern together because, you know, they don’t want to go with this other party.

It’s obviously better than the Social Democrats. In fact, they got more votes. They got 19 and a half percent, the AFD party.

They got more votes than the Social Democrats. Yet, you know, the conservatives want nothing to do with them because apparently they’re like the Nazi Party. But, you know, this whole idea, there’s nothing fascist about the AFD where they’re more fascist than the conservatives or the Social Democrats.

You know, first of all, fascism. And I mentioned that before. But again, it’s like inflation.

It’s one of the most misunderstood words in the English language in the modern political spectrum. If you take complete and total government, totalitarianism, absolute government, and you put it on the extreme left. And if you take the total absence of government, anarchy, and you put it on the extreme right.

Because you can organize the spectrum however you want as long as anarchy and totalitarianism are on the opposite ends. So if you do that and you take, let’s say, the Democrats, they are closer to totalitarianism than the Republicans. So the Democrats would be to the left of the Republicans.

The Republicans are to the right of the Democrats because the Republicans want less government than Democrats. Democrats want a bigger government that does more stuff. And the Republicans want a less big government that does less stuff.

They want more capitalism and less government. And the Democrats want more government and less capitalism. So the Democrats are to the left of the Republicans.

We all accept that. Now, if you go even farther left, you get to communism, socialism. Well, what the Democrats wanted to do, because they didn’t like it when they went way left, and they would be accused of being socialist, because, oh, you guys are way to the left, you’re socialist, you’re extreme.

They started calling the Republicans, well, you’re extreme right, you’re a fascist. But fascism isn’t the extreme right. See, fascism, the Nazi party in Germany, everybody will say, oh yeah, that was a fascist government.

Well, Nazi stands for National Socialists. That’s the name of the Nazi party. It’s the National Socialist Party of Germany.

So the Nazis are socialists. It’s a socialist ideology. So if you’re going from the Democrats to the Republicans, and you’re going right towards anarchy, and you pass Republicans, and you keep going right, you don’t go through socialism.

It’s the other direction. The Nazis are socialists. Fascism and communism are two forms of socialism.

That’s what they are. Now, people might think, oh no, they’re opposites, because, you know, the Nazis fought the Russians, they were bitter enemies. The Nazis and the communists, yeah, like the crypts of the bloods, right? They’re bitter enemies, but they’re both gangs.

So you think of the fascists and the communists as rival gangs that are fighting over the same turf. Yes, the communists are further left than the fascists. Now, there are some people that say, well, you know, the communists, they don’t want any government either, right, because the state withers away.

In theory, right, this bullshit Karl Marx theory, after the government takes complete control of the economy, nationalizes the means of production, right, has complete and unlimited power, it becomes a worker’s paradise, a Marxist utopia. And in that state of bliss, the state just withers away because it’s not needed anymore. Right, tell that to the Cubans, right? When did Castro, when did the state wither away? It never withers away, right? You only get rid of it if you have another revolution.

So communism, government takes over everything. Fascism, they don’t. They just regulate everything and tax everything.

You know, the irony of Democrats calling right wing Republicans fascists is that they’re more fascists than the Republicans. In fact, I went to the chat GBT and I asked it, you know, to print out, you know, what are the the tenants of of fascism? And so it gave me the 11 points of fascism that were outlined in the fascist manifesto from 1919 of Mussolini. And German Nazi Party, German fascism is rooted in Italian fascism, right? They added the racist elements of the superior master race, you know, the Aryans.

And we got to purify. We got to exterminate the Jews. All that racist stuff was was added.

But if you look at the economics of it, Hitler’s fascism, national socialism is basically copying Mussolini. And that’s why they were allies. Right.

They were the axis. It was Germany and Italy. But here are the 11 points that were outlined by Mussolini in the fascist manifesto.

This is the type of government that fascists want. You can’t find anything in here, really, that the Democrats don’t also want. And a lot of Republicans, too.

So here’s number one, universal suffrage for all men over the age of 18. Well, I mean, they want we want even more universal suffrage. They weren’t talking about women, but they wanted to make sure everybody votes.

They didn’t want voting restricted based on property ownership or literacy tests or anything like that. Hey, everybody gets to vote. OK, well, check that one off.

Land reform. They wanted to expropriate the land from the from the large land owners and redistribute it to the peasants. Well, they wanted to redistribute the wealth.

Well, that’s what Democrats want to do. Right. Not just with land, because back then your wealth was mainly land.

But the Democrats want to redistribute. They want to take from the rich and give to the poor. Check number two.

Right. They want to redistribute wealth just like the fascists in Italy and in Germany. State control over industry.

That’s number four. Nationalization of arms manufacturing. Well, a lot of them want to eliminate arms manufacturing.

But then it says the creation of a corporate corporate system to regulate industry. Well, we’ve got that. We’ve got massive regulation of industry in the United States right now.

We’ve got so many departments and agencies, so many rules and regulations that permeate industry. So we got that in spades regulation, government regulation of industry. State intervention in the economy.

This is number five. State intervention in the economy to benefit the common good, including measures to protect the interest of the workers and small business. Check, check.

We got that. Democrats 100 percent support that tenant of fascism. Abolition of the Senate.

Well, that’s not appropriate. So that’s irrelevant. Full citizenship for all Italian nationals.

Well, I mean, I guess they want full citizenship for all Americans. Right. Even the illegal some of them.

Right. The Democrats. So put a check mark on that one.

Education reform. Ensuring that education is available to all classes. Well, yeah, I mean, we got that.

And in fact, they want to make college free, too. But we already have K through 12. So, yeah, free education.

Government provided education. That’s what the fascists wanted. Right.

Well, we got that. So check that one. Fascist support for the war and the military.

Well, I don’t know. I mean, although the Democrats were big supporters of, you know, what’s going on in the Ukraine. But I don’t know.

Maybe that let’s skip that one. Rejection of the Treaty of Versailles. Well, that’s irrelevant.

And the last one, number 11, creation of a strong central government. We got that where the authority of the state would override regional and local interests. Well, yeah, I mean, federal law takes supremacy over state and local law.

We have that all the time. Right. The federal government thinks to do whatever it wants.

So pretty much we’re all we’re fascists. I mean, even a lot of the Republicans are fascists. Not because they’re far to the right, but because they’re over to the left.

Right. But anyway, so and the reason I even got into this topic is we’re talking about what’s going on in Germany. But the point of the German election is that the electorate is pissed off because the economy has been weakened by the same policies that have weakened our economy.

And the same policies that are weakening the Japanese economy. They’re weakening economies all over the world. These are the policies that need to be soundly rejected.

Hopefully we’re on the right path in the US. But I’m not as optimistic as a lot of other people that we’re going to make the type of cuts in government that that are being talked about. But at least we’re talking about it.

At least we’re talking about it. Anyway, I want to finish up the the podcast by talking about my father, Erwin Schiff. You may have noticed I put out some posts about my father on X today.

So today would have been his ninety seventh birthday. My father was born in 1928 and he died in 2015, a political prisoner in the United States. He died in a hospital in in Texas, a chain to a bed.

You know, his ankle was handcuffed to the bed. There was an armed guard in his room. And I remember, you know, I asked the guard, you know, could you take off the handcuff? And they said, no, we got to leave it on.

My father was breathing through a tube that was down his throat because he he died a few hours later. And they said that he had to stay shackled to his bed so he couldn’t escape. I mean, he couldn’t even breathe.

He couldn’t walk. So escape was impossible. And again, this guy was there with a with a rifle, you know, to make sure that my father, who’s also basically blind, too.

So even if he, you know, if he wasn’t bleeding to a tube, he could barely see because of the cataracts in his eyes. But, you know, he was in great health when he went into jail 10 years earlier. He’d probably still be alive today if he wasn’t, you know, given government health care, which was horrible because he ultimately died of cancer.

But it was a skin cancer that they never diagnosed or treated. And it was just on his head that they could have just cut it out. But they did nothing.

And so it eventually, you know, went through all of his body. And so he died of lung cancer. You know, I tried to get the hospital records.

They refused to release them because I caught wind of what happened. And I tried to get, you know, but they covered it up because it’s complete government incompetence. And the irony of it is, you know, my father was in a minimum security prison in in New York where we visited him often.

And when he was 80 years old, they said, oh, you’re too old to be in this facility. You’ve got to go to these other ones where we have better, better medical care because, you know, you’re 80 and we need you need to be in this special. And so he went someplace to get better medical care and he got no medical care at all.

He would have been much better off if he stayed where he was, because at least, you know, we could have visited him. It was very difficult to visit him in Indiana or Texas where we lived in Connecticut when he was in New York. And it was an hour and a half drive.

We can go every weekend, every other weekend. It was easy to visit my dad. But I wrote a little, you know, not obituary, but I wrote a little thing, death of a patriot back when he died.

And I put that out on on on X. But I also, you know, I had posted some of my father’s speeches that he had gotten. They made at the Libertarian Party Convention. This other speech I put on my YouTube channel.

So there’s some good talks. If you just Google Irwin Schiff on on YouTube, you’ll see some of the things that I posted. Unfortunately, somebody hacked into his website, pay no income tax dot com.

There were a lot of archives of his shortwave radio show. There were a couple of years worth of archives that I I really wish that I hadn’t. I had copied those.

I never thought about it. And then someone hacked in and destroyed them all. And so we lost those.

I used to like to listen to him because, you know, it was like I was talking to my father because, you know, I can hear his voice. Although it’s interesting when I read his books, like I read his book, The Biggest Con. When I read it in my head, I hear my father’s voice, you know, reading the book to me, you know.

So but anyway, his I found and I have the original copy of this thing that he a video that he produced a seminar. You know, it’s you could date it because the national debt was five trillion at the time. So it was probably in the early 2000s that my father recorded this, this video.

And I know I have the original, you know, in my basement in Connecticut because I remember seeing it’s on, you know, VHS tape or, you know, the originals on some bigger tape. But somebody had put it up on the Internet and I hadn’t noticed it. So I copied this first two hours, two hour and I put it up there and I listened to the whole two hours today to hear my dad’s voice.

And, you know, it really is incredible stuff. And I recommend that everybody watch this. I put it up on the YouTube channel earlier today and listen to my father speak to a group of people.

In fact, one of the people in the audience, you can see him, he’s a taller guy, a little beard guy. Guy name was Kyle Krause. He was my roommate at when I got out of college.

I was living in Newport Beach on thirty ninth and Seashore. And and he had he was renting a place on the beach. He had the bottom floor.

And so I was looking for a place to live and he was looking for a roommate. And it turned out when I went over there that he had read my dad’s book and he was working on a script based on my dad. It never became a movie.

You know, a lot of people in California writing scripts. So he happened to be writing one based on my dad. So we met each other.

I ended up living with him and he died years and years ago. He got, I think, some type of cancer and liver cancer. So he drank a lot.

But so he died, too. So but I had forgotten that he was that he was even there and I see him there around the table. My father is talking about the income tax.

But if you listen to this, you you will be convinced. That my father is correct about the unconstitutional way the government enforces the income tax, the illegal way the government enforces the income tax. Everybody should watch this.

Now, which Elon Musk would watch it because he he’d probably find it fascinating. Maybe he’d spread the word. But any lawyer, any judge, you’re not going to point out where my dad is wrong.

But you’re also not going to see that he’s a criminal. My father, 100 percent, believes everything that he said. You know, he you know, he didn’t lie to people.

He wasn’t trying to scam anybody. He was telling people the law, the way he believed it and the Constitution, the way he knew it. And so there’s a lot in this one in two hour interview.

So I would watch that and he quotes a lot and he has excerpts from his book, The Federal Mafia. If you don’t have that book, you should buy a copy. We still have copies.

I have about 100 of them here in Puerto Rico and I autograph them. So if you go to shiftbooks.com, you can buy a copy of The Federal Mafia and I will autograph it before we ship it out. Now, again, the the significant thing about The Federal Mafia and why The Federal Mafia will be a collector’s item, even without my signature, but it’s rare in books.

It is the only book other than Fanny Hill, which was banned for being pornographic. And if you ever read Fanny Hill, I mean, I mean, you know, it’s nothing compared to actual porn. But the U.S. government banned it.

And this is over 100 years ago. But other than that, the federal government banned my book, my father’s book. They banned him from selling it.

They couldn’t refute a word of it. So they banned him from selling it. And that’s the only book that’s ever been banned other than Fanny Hill.

It is certainly the only nonfiction book that’s ever been banned. But of course, you know, you can’t ban political speech. Right.

My father was pointing out the law. If what my father wrote was wrong, they should have printed something to repudiate it. But they couldn’t.

They couldn’t repudiate anything. I mean, they put him in jail, but they never proved that he did anything wrong. In fact, my father always liked to talk about his conviction, the conviction that, you know, sent him to jail.

Not the last time, but the second time because he went three times. But my father was charged with tax evasion and there was a hung jury. And after several days, the jury came back and they said, does the government have to prove tax evasion? You know, because the government didn’t offer any evidence that my father actually did anything to evade the payment of the tax.

And the judge said, no, the government doesn’t have to prove it. You could find him guilty for some other reason, which, of course, was reversible error. But then the jury came back and convicted him.

Once the judge told the jury that the government doesn’t have to prove their case and you can convict my father anyway. And, you know, the New England Journal of Taxation wrote this up and they were like, you know, does this change the tax laws? Because the judge told Irwin Schiff’s jury that he could be convicted of tax evasion even if he didn’t evade taxes. They, you know, and they said, does this change the law? Because up until then, you know, they thought that you need to have an affirmative act of evasion.

The only thing they had my father on was that he didn’t file a tax return. Well, that’s supposed to be a misdemeanor. But the judge said, no, you know, you can convict Irwin of a felony if all he did was not file his tax return.

And basically the New England Journal of Law or whatever or they said of taxation said, well, Irwin Schiff was a tax protester. So we really shouldn’t take this as any kind of precedence, meaning that when the government labels you a tax protester, you have no law rights. Right.

There’s a different law for tax protesters than for everybody else. Well, that’s, you know, pure political prisoner. My father didn’t protest taxes.

My father had no problem with lawful taxation. What my father protested was the government’s illegal enforcement and collection of income taxes. That’s what my father was against.

The government breaking the law and the government does break the law. I mean, they’re the biggest law breakers out there. I know that now from personal experience.

And that’s one of the reasons I never followed my father’s advice about, you know, not paying federal income taxes, about not filing a tax return. I didn’t stand on that principle, even though I believed in it. I believe my father was correct in his analysis of the law.

And I’ve never met anybody who was able to refute it in all of my life. I mean, I’ve had plenty of conversations even way back where I’ve talked to judges, judges, lawyers who would tell me, you know, technically your father is right. OK, well, if he’s technically right, then he’s right.

Right. How can he be wrong if he’s technically right? It’s like, well, you know, they can’t let him get away with it. Yeah, they can’t let him get away with it because he’s right.

Right. Because it’s the government that is breaking the law. Anyway, I think people will be convinced of that if they watch this two hours.

But get the book. And again, not everybody can, because, as I said, you know, we’ll run out. But I have these copies.

And so you can read the entire book. Not just the pages that he that he excerpts and he quotes from in in this two hour video. But it’s there.

It’s on my YouTube channel. I titled it Irwin Schiff proves the federal income tax is unconstitutionally enforced. See, my father never said the tax was unconstitutional because it’s voluntary.

It’s voluntary. How can it be unconstitutional if you don’t have to pay it? Right. I mean, the government can can make anything voluntary.

But it’s the way the laws in the way it’s enforced and the way the judges protect and empower the government to violate the law. So that’s where my father always focused his criticism. So people that claim, oh, Irwin Schiff says the income tax unconstitutional.

No, it’s the government that’s breaking the law, you know, because they’re not they’re not implementing it. According to the way the law is written, the law was written to be in conformity with the Constitution. That’s why it’s voluntary.

That’s why nobody has to pay. If it was mandatory, then it would be unconstitutional. But, of course, the government enforces it as if it were mandatory.

So for all practical purposes, it’s unconstitutional. But you will come to that conclusion, I bet, if you watch the entire interview and even more so if you read the book, The Federal Mafia. Right.

Because, you know, people pay income tax. I pay income taxes not because I believe the law requires me to pay it, but because I’m afraid of what the mafia will do to me if I don’t. Right.

That’s the reason that you pay protection money. We know when the mafia extorts you, you know, and you pay, it’s not because you’re legally obligated. It’s because you’re afraid.

And, you know, I mean, I don’t want to insult the mafia by comparing them to the government, because at least the mafia is honest when they rob you. Right. They let you know that they’re criminals and, you know, they’re robbing you.

I mean, you know, the government pretends that they’re not right. So it’s very dishonest, you know, the way the way the government shakes you down and extorts money and puts people in jail illegally, at least with the mafia. They’re more upfront about it.

So in many ways, the government is the government is worse, although at least they don’t they don’t break your legs. Right. Or or do some of this other stuff to you.

So I guess we could we could we could we could be fortunate for that, that they haven’t resorted to that yet. Anyway, that’s it for today’s podcast. It should be a very interesting week in the markets.

We’ll see what kind of follow through we get to what happened on Friday, what happens in the foreign exchange markets, in the gold market, in the dollar. Oh, you know, I didn’t even I forgot to mention, you know, I guess I was going to put it on my last podcast. I’m running out of time, but I know that, you know, as soon as they identified a savings from Doge, the next thing they’re talking about is these Doge dividend checks.

And Musk and Trump are talking about sending everybody five thousand dollars. Look, most of these savings. I know I talked in the last podcast about all the people who are 100, 110, 120 getting Social Security.

Probably most of them aren’t. I mean, maybe they got the date, the birth dates wrong. Who the hell knows? I mean, I know there’s fraud there.

There can’t not be fraud there, but it’s probably not going to be on the order of magnitude of what they believe. And to the extent that we do save money, the last thing we’re going to do is send you a check. The whole purpose of it is to reduce the deficit, not to replace the money they find by just sending out checks to people.

But again, this is all the populist mentality, but this is the wrong direction to even have people talk about sending out dividends when the government is broke and doesn’t have any money. You know, it’s just sharing the debt. It’s not sharing any wealth.

But anyway, I’ll get I’ll talk more about that. I know I’m already long. It’s already over an hour.

But a lot a lot of stuff’s probably going to happen next week. Very interesting to see what happens in all the markets. And I will be talking about it all on the next podcast.

So make sure and tune in. In the meantime, if you like this podcast, make sure and let me know in the comments. Make sure and like it.

Give it the thumbs up and tell your friends and make sure they listen to it as well. And I’ll see you in the next one.