Powell Shrugs off Evidence of Rising Inflation (Uncut) 03-20-2025

Powell Shrugs off Evidence of Rising Inflation – Ep 1018

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Well, earlier today, the FOMC, the Federal Open Market Committee, announced that it was leaving interest rates unchanged. Very highly anticipated announcement. So the Fed funds rate is now four and a quarter to four and a half percent.

The expectation remains for two additional rate cuts between now and the end of the year. So I think the markets are looking for a rate cut in June and then maybe another one in December. And then a couple of more rate cuts the year after that.

I think the announcement, though, was on the dovish side. In fact, probably more dovish than even Wall Street comprehends. One of the things that they they did announce, in addition to the fact that they were leaving rates unchanged, was that they were going to slow down the pace of their balance sheet runoff, otherwise known as quantitative tightening.

And so instead of allowing 25 billion of treasuries to run off, meaning that when a treasury matures, they don’t roll it over and buy another treasury. They just kind of let it mature. And so the balance sheet declines naturally.

Instead of allowing 25 billion to run off per month, they are only going to allow five billion, which means they’ll be rolling over more of that maturing debt into new debt. And so that basically amounts to an ease because they are reducing the amount of liquidity they are removing through that quantitative tightening program. Now, they’re not slowing down the pace of mortgage-backed securities.

Which they’ll continue to run off. And just to skip ahead a little bit to the podcast, during the Q&A, he was asked a question about that, about the mortgage-backed securities. And he indicated that the Fed really wanted to get those off their balance sheet.

And so they might continue to allow that runoff, but they may decide to do it in a way that is neutral for the balance sheet. And so what that implies is that they may start buying treasuries again in order to continue to allow the mortgage-backed securities to run down without it having an effect on the balance sheet. So if they allowed 20 billion of mortgage-backed to run off, they would go into the market and buy an additional 20 billion of treasuries in order to offset that so it wouldn’t shrink the balance sheet.

Of course, the Fed should continue to shrink the balance sheet. The balance sheet is much too large. The fact that the Fed is dramatically slowing the rate of reduction, I think it’s just another step in the direction of a return to all-out quantitative easing.

I think that’s coming. But the reason I think that this is a very dovish move by the Fed has to do with the way in which Powell really dismissed the pickup in inflation, as if it’s really no big deal or even denying that it exists and showing that the Fed is still focused on these rate cuts when in reality they should be hiking rates. As I’ve said on this podcast on numerous occasions, the Fed never actually got monetary policy into restrictive territory.

They’ve been too loose the entire time. And rather than discussing interest rate cuts, they should be hiking rates. So the fact that cuts are even on the table is very dovish and is a mistake.

One of the facts that didn’t come up once during the Q&A, and I’m going to get into a lot of that, but one question that nobody asked, which should have been asked by everybody, was the price of gold. Nobody said to Powell, hey, what do you think about $3,000 gold? Because on Monday, gold closed above $3,000 for the first time ever. It closed above $3,000 again on Tuesday, and again today it hit another record high.

It closed at $3,048, and it’s up again the evening another $5. So as I’m recording this podcast live on Wednesday evening here in New York, or I’m not in New York, but New York time, gold is trading in the spot market at $3,053.30, up $5. Nobody brought this up because gold is flashing a warning that the Fed is too loose.

In the Q&A, one of the reporters brought up Alan Greenspan’s old definition of price stability, where Greenspan said, well, price stability is where businesses and workers don’t even bother to calculate price changes into their plans because prices are going up so slowly that nobody really cares. So it’s indifferent in decision making. And he asked Jerome Powell if he would ascribe to that definition and if he believes that we have price stability.

And he did say, yes, I like that definition, but he really didn’t answer as to whether or not he thought we had price stability, kind of dodged that. But the point I’m making in bringing it up is that Alan Greenspan also talked about the importance of gold in setting monetary policy. Alan Greenspan said that even though we’re not officially on a gold standard, he said that he used the gold price as a reference, as a signal to let him know whether monetary policy was too tight or too easy.

What Greenspan said was that if gold gets up to $400 an ounce, that means that he’s too loose. If it goes below $300, that means he’s too tight. So obviously at the time that Greenspan made the statement, gold was probably around $350 an ounce.

And he kind of looked at if it was going above $400, I’m too loose. Maybe we got to tighten policy. But if the price of gold drops below $300, maybe we’re too tight.

We got to ease up. Well, of course, gold’s $3,000 now. So that shows you how much things have changed.

I looked again at the chart going back to the beginning of this century. The S&P is actually down 60% if you price it in gold. I mean, that is an enormous bear market.

And it really shows you that the entirety of the gain in the stock market is due to inflation. It’s due to the destruction of the value of money, not a real increase in the value of the companies that are represented by the S&P 500, but that we are measuring their value in rapidly depreciating currency. And it’s not just the dollar relative to the euro or the yen or the pound because all those currencies have gone down.

And so it’s a global inflation. It’s not just an inflation in the United States. But Greenspan acknowledged that gold was an important market signal.

And he even said, we’re not officially on a gold standard, but it’s kind of like we are because I’m using gold. So if gold goes up, I’m going to tighten. And so it’s kind of like a gold standard, but it’s not a gold standard.

Well, what about now? What is $3,000 gold saying about Fed monetary policy? Well, apparently nobody cares. Nobody even wants to ask these questions. Not one reporter in that room.

There was a reporter who asked Powell about the stock market and its decline. And if the decline in the stock market concerned him at all. But nobody asked him about the rise in the gold market and if that was concerning.

You’d think you would ask the chairman of the Federal Reserve, hey, the price of gold keeps going up. And now it’s at an all-time record high. It just blew through $3,000.

Are you worried about that, Chair Powell? Are you worried that the gold market is saying something that maybe you got your policy wrong? The fact that central bankers all around the world are dumping the currency that you print, right? Federal Reserve notes, right? They’re Federal Reserve notes. They’re notes of the Federal Reserve. That’s what the dollars are.

And all these other central bankers are dumping the notes of the Federal Reserve to buy gold. They are foregoing 4%, 4.5% interest on U.S. Treasuries in order to put gold in a vault. And earn no interest.

Are you concerned about that? Are you concerned that the markets are repudiating your policies? That the markets are telling you that interest rates are too low and that inflation is going to be too high? Nobody is even asking Powell his opinion on that. I mean, I would love to hear his answer, although I’m sure he’d find a way of weaseling out of it like he does for any question that he either can’t answer or is uncomfortable answering. But that is the reality.

That is the real proof that the Fed is wrong. Because you have a market that is saying that the Fed is too loose and that these rate cuts are a mistake whenever they come. The Fed should be hiking interest rates, not deciding when to cut them.

And again, gold is the canary in the monetary coal mine. The canary, obviously, is dropping dead. Gold is shooting up.

It is a warning. But it’s falling on the deaf ears of the FOMC that doesn’t even know what they’re hearing. Or they can’t hear it at all.

They’re oblivious. They’re tone deaf. Because they don’t even understand inflation or monetary policy.

And again, all Powell looks at, when he gets all these questions about inflation, he always responds that he wants to look at the prices and determine why the prices are rising. Is it going to be transitory? It’s hard to believe they’re even using the word transitory again. But is it going to stick? He’s all focused on prices.

But prices going up are a result of inflation. You can’t just focus on prices. Again, it’s like looking in the rearview mirror.

You’re going to get into an accident. It’s the money supply expanding, which is continuing, and credit. Inflation is not just the expansion of the money supply.

It’s an expansion of credit, because credit can be used as money. You can buy stuff with credit even if you don’t have any money. And so the more credit there is in the economy, the more upward pressure there is on prices.

So you have to look at the money supply and the credit supply to know what’s going to happen to prices in the future. If you’re just looking at prices and you’re ignoring all that, you’re not going to fight inflation. And, in fact, if you’re saying, I’m going to wait until I see a sustained increase in prices before I do something about inflation, well, then you’re too late.

You have to be preemptive. You have to understand how the monetary aggregates are ultimately going to impact prices. There is a lag.

That’s why they say don’t let the inflation genie out of the bottle. By definition, if you do what Powell says he wants to do, wait until you see that prices are really going up. Looking through the impact of tariffs, because a lot of the discussion was, well, the tariffs, and how do you know if the price increases are a one-off event by the tariffs or if it’s something more? And, you know, a lot of times, too, when Powell talked about that inflation was a bit higher, he always attributed it to the tariffs or the fear of the tariffs.

You know, when prices were going up even before we had the tariffs. But, of course, he’s trying to pre-blame any inflation on the tariffs. I mean, I know this was going to happen, right? Anything that happens, he’s going to say, well, I guess it was the tariffs, right? That’s how the Fed is going to deflect the blame from its own monetary policies and put them onto the tariffs.

That’s another reason why Trump shouldn’t have done it, because it gives the Fed an excuse and it lets them off the hook because it’s very easy to blame the inflation on tariffs. But if Powell does what he says, you know, just really waits until he can figure out whether the price increases are transitory or whether it’s more permanent, by the time he figures that out, it’s much too late to do anything about it, right? Because, you know, the prices are really going. So his whole methodology of waiting for inflation to become a bigger problem before he tries to solve it means that, you know, he can’t solve it because of the lags.

And, of course, it doesn’t even matter anyway. Inflation is already going to be much higher based on the mistakes that have already been made. You know, the credit supply has been consistently growing throughout the entirety of the rate hike.

And then, of course, the Fed stopped hiking. Money supply is growing. Now they are, you know, shrinking the balance sheet less, which is also going to end up being inflationary.

And now the dollar is weakening. And one of the main reasons that the CPI retraced was the strength of the dollar. It was the dollar moving up that brought commodity prices down.

Well, commodity prices are now rising, and they’re going to rise even faster now that the dollar is falling. So the temporary effects of lower inflation are going to be gone. That’s what was transitory.

It was the dip in inflation that was transitory. That was a transitory decline in inflation. And now inflation is going to resume its acceleration, and it’s going to be particularly fast because the Fed is not doing anything to put on the brakes.

And, in fact, the Fed is still planning on cutting rates. And, again, that was also why I thought, and even the markets would probably agree, that this was dovish in that Powell had to acknowledge that inflation was going to be higher. In fact, they increased their forecast for inflation this year from 2.5 to 2.8. And I think they’re looking at the PCE or the core PCE.

They’re not looking at the CPI. They’re using the index that’s the lowest. But even then, they acknowledged that inflation is going to be higher this year than they thought.

But despite the fact that they had to up their inflation forecast, they still telegraphed two rate cuts this year. Well, if inflation is moving up, and it’s higher than you thought it was going to be, and it’s moving farther away from 2%, then why are you telegraphing cuts at all? Why are there any cuts on the table? Why doesn’t the Fed say, no, we’re not cutting rates at all until we see inflation coming down? They’re still indicating that they’re going to cut rates, even though inflation is going up. And one of the reasons is at the same time in this forecast, they reduced their estimates for GDP growth.

This year, now they’re at 1.7. Of course, they’re ignoring the fact that Atlanta Fed is already negative 2 point something for Q1, so nobody even brought that up. But they reduced their growth forecast to just 1.7%. So they’re reducing their growth and they’re increasing the inflation. What Powell said later on, which is not true, is he said, well, these things cancel each other out.

Higher inflation and lower growth cancel each other out. No, they don’t. They don’t cancel each other out because lower growth doesn’t reduce inflation.

In fact, it may actually accelerate inflation because it increases budget deficits and puts downward pressure on the dollar and is actually inflationary. But he’s trying to say, well, they cancel each other out so we don’t have to change our policy. You know what that is? That’s stagflation.

It’s the one thing that they hope they didn’t have. It’s the one thing they have no contingency plan for. That’s the reality.

Anyway, I’m going to talk more about this press conference, the Q&A and the other side of the commercial break. So stick around. We’re coming right back.

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All right, before I continue discussing today’s press conference, I want to mention the special that we’re having at Shift Gold to commemorate $3,000 gold. We’ve got a special on gold eagles, $99 over spot, again, on the gold eagles. That is a great price for gold eagles.

But even though it’s gold celebration, I still think that silver is the better buy. Silver is still under $34 an ounce. You know, gold has moved up 50% since hitting $2,000 for the first time in, I think, March or April of 2020.

Well, silver is actually lower. Silver was above $35 at its peak. And so gold has gone up 50% and silver has gone down.

I mean, you can’t really find another time period where that happened, right? This is kind of an unprecedented weakness in silver in relation to gold. And again, the reasons for that are that average investors have sat out the whole bull market. It’s the central banks that have been buying.

That’s why the mining stocks are still so cheap. That’s why you’ve got to gift horse, you know, to buy the Europe Pacific Gold Fund or any gold stocks or to buy silver for that matter. So we’ve got a special on silver eagles, $3.69 over spot.

And my guys there are telling me that this is the lowest price in the industry, that you won’t be able to find silver eagles cheaper than $3.69 over spot anywhere. So, you know, and normally at a big bull market like this, the premiums would be going up. The public is still asleep.

They don’t realize what’s going on. You know, the first two times that gold got to 2000, you know, 2011, it almost got there. And in 2020, it got above 2000.

There was a lot of enthusiasm. Investors were buying. Premiums were blowing out.

The phones were ringing off the hook. But when gold got to 2000 for the third time late last year, nobody wanted to buy it, you know. And that’s very interesting because the first two times, you know, when it went up to 2000 in almost 2000 in 2011, then it pulled back to 1050.

But remember, that bull market started from below 300. So gold went from below 300 to 1900 without, you know, any kind of meaningful decline. And then everybody, you know, rushed in near 2000.

And then, you know, it almost got cut in half to 1050. So people got burned. They bought gold near 2000, right? They lost money.

Then it rallied up to 2000 again during COVID and went above 2000. And everyone thought, okay, this is it. Last time it couldn’t get above 2000.

Now it’s above. This is the breakout. A lot of money came in.

And then the market sold off, but not as much, right? Gold held 1600. And then it rose back. But by the third time it got to 2000, the public had been burned twice buying $2,000 gold.

And what guys were telling me at Shift Gold was people didn’t want to buy gold at 2000. They wanted to wait for another pullback. And I kept saying, you know what? I don’t think we’re going to get a pullback this time.

We’ve had the pullbacks. We’ve built an enormous base. And I kept saying on the podcast for several months, 2000 is the floor.

It’s no longer the ceiling on gold. It’s the floor. And I kept saying, buy it.

You know, 2100, 2200, this is cheap. People were reluctant to buy, waiting for a pullback. And here we are at 3000, 50% higher, no pullback.

So I don’t want people to make the mistake of saying, I don’t want to buy gold at 3000. I want to wait for a pullback. You’re probably not going to get a pullback large enough to make it worthwhile.

I mean, can gold go back down to 2900? Of course. But don’t wait for it. Just buy it.

If you want to buy gold, buy gold. Because it’s going to go up. This is just the beginning.

This is going to be a huge rally. But if you don’t want to buy the top in gold, then at least buy silver. Because silver is nowhere near the top.

The top was 50. It’s below 34. So you can load up on silver.

And then maybe when it doubles or triples, whatever, you can sell some and buy some more gold. If silver goes up more than gold, which it should, I think one day we’re going to see this huge rally in the price of silver. So before that huge rally, you know, you can buy yourself some at $3.69. Those are for the silver eagles.

That’s where we’ve got the special. So you go to shiftgold.com to do that. And, again, if you really want to hit the ball out of the park, if you’re a risk taker, go to europack.com and get information on my gold fund, EPGIX, the Euro-Pacific Gold Fund.

That is the symbol for the no-load version of the fund. It closed today at $11.83. So if you look it up. You know, by the way, I noticed I’m not sure.

We were up a little bit today. But as of yesterday, my dividend payer fund was up over 19% year-to-date, you know, with the S&P down. But it’s actually the number one fund in the international value category.

The whole category is up. I think the average was about 13%, but my fund is up 19% because we did some excellent stock picking in that fund. But anyway, let me go over some of the stuff that happened in today’s Q&A with Powell.

I mean, first of all, there was a lot of discussion of tariffs. And, you know, a lot of people wanted to get Powell to blame their higher inflation forecast on the tariffs, obviously, right, because they want to be able to blame it on Trump. And his answers, you know, pretty much to me was yes, because his initial answer to the direct question was some of it, a good part of it.

So if you say some of the higher inflation forecast, a good part of it is because of tariffs. Well, you’re blaming it on the tariffs. But then every time he talked about inflation being higher, he always interjected the tariffs.

So you can see that this is going to be the scapegoat. The Fed is not going to have to accept responsibility for the inflation. It’s going to blame it on the tariffs.

But again, you know, if it is the tariffs that caused inflation, then why didn’t the Fed know that the tariffs were going to cause inflation? And why did they keep cutting rates? Why didn’t they hike rates? So it’s still the Fed’s fault either way. But the real problem is all the money the Fed created, all the credit that they created. It’s not the tariffs.

I mean, the tariffs are taxes. They’re taxes that Americans are going to pay when they buy stuff. So they’re consumption taxes and they’re better than the deficit.

So I’d rather have a tax on consumption than more debt. But what these higher consumption taxes will do is accelerate the recession because the recession has been postponed or hidden by all the excess consumption caused by the deficit spending. Well, the deficits are reduced because we tax Americans for spending.

And so they spend less. We have a smaller deficit. That’s good in the long run.

But in the short run, when you’re talking about having a bubble economy, you’re letting some air out of that bubble. And that means we have an even deeper recession. Now, Hal talked about the data.

He said, you know, the economy overall, he said, we have a strong economy. So he’s still clinging to the fiction that the economy is strong. And Powell claims that all the hard data says the economy is strong.

Now, I don’t know what hard data he is really relying on because I see a lot of weakness in the hard data. But Powell admitted that in the soft data, in the surveys, that there seems to be a lot of concern and a lot of worry about the future. So he acknowledged that and he said there’s a lot of uncertainty.

Right. He used the word uncertainty probably more than any other word. And again, I think this is also trying to blame the Trump administration because that’s where a lot of the uncertainty is coming from.

It’s policy uncertainty in particular related to the tariffs. So he’s kind of blaming a lot of the the concern that is evidence in these surveys on the tariffs. Right.

And that’s what’s going on. But again, he said his base case is that any impact on inflation will be transitory. And that, you know, if there if it’ll go away on its own, it’s like an inflationary impulse or something, he said, that would go away on his own.

But he really dismissed these surveys kind of out of hand. He acknowledged them. But I think one of the most ridiculous things is he was asked about inflation expectations.

You know, are you concerned about, you know, rising inflation expectations? And he said no. He said that inflation expectations aren’t going up. Now, he acknowledged that they’re going up for the short run.

He said, you know, people are concerned about one year inflation going up. But he said, we don’t factor that in. See, all of a sudden now the Fed is qualified inflation expectations because it’s never really done this before.

It’s always said we want to make sure that inflation expectations remain well anchored. And now he’s saying, well, we want to make sure that long term inflation expectations are well anchored. We don’t really care about short term expectations because, you know, they’re too volatile or something or they may not really count.

So now he’s trying to say that because, you know, people are looking for five percent inflation over the next year. Well, we’re not going to we’re going to look past that. We don’t really care about that.

Just so long as long term inflation expectations remain anchored. And that’s what he said. He said, we’ve seen no indication anywhere that inflation five years out, that people expect that to be a lot higher, which is an outright lie.

And nobody pointed it out to him. I mean, two or three people asked him about it as if they realize it. But I talked about it on my last podcast that five year inflation expectations jumped to three point nine percent.

That’s the highest in over 30 years. I think like 32 years. So how can Powell ignore that? That was a big jump.

And this is over five years. Consumers believe that inflation is going to average almost four percent a year for the next five years. And Powell completely dismissed that out of hand that, oh, we don’t really care.

Or maybe we notice these higher expectations, but we don’t believe them. I don’t know what he was trying to say, because he actually said that five year expectations have not moved, that they’ve stayed at two percent when they’re they’re practically double two percent. You know, one of the more ridiculous comments that he made was, you know, somebody said, you know, consumers are really unhappy.

You know, you’re telling us that the economy is really good and that inflation is coming down and, you know, they’re still upset about how expensive things are. Right. And so they’re not buying this.

And what Powell said, he said, well, you know, I understand they’re upset about the price level. Yes, prices went up a lot in the past. And what they’re really worried about is the past inflation.

But we’ve made a lot of progress. Inflation has come all the way down. And so they’re not really worried about current inflation.

Right. It’s just the past inflation as if the Fed had nothing to do with that. And that’s so there’s no reason to worry now because the Fed has already reduced inflation.

But yes, you know, it’s he recognizes that the price level is still very high and that’s painful. But like, there’s nothing he can do about that because he’s already brought future inflation under control. So the consumer just doesn’t realize how good it is because they’re fixated on these high prices and they don’t realize that the Fed has, you know, solved the inflation problem, which it has not done, because, first of all, not only is the Fed responsible for the current elevated price level that Powell agrees consumers have a right to be pissed off about, but because remember, even before this happened, Powell said that the Fed’s policy was inflation averaging.

He said that we need to make up for the fact that inflation was below two percent for so many years. We need to let it run above two percent. So Powell wanted the price level to move up more than two percent because he felt like, you know, consumers got ripped off in previous years because they didn’t get enough inflation.

And so he wanted to make sure that they made up for that low inflation with some higher inflation. But Powell still says that the Fed’s goal is not to take these high prices and bring them down. Powell’s official goal is to make sure that these elevated prices that nobody likes, everybody’s upset about, and Powell agrees that people have a right to be upset about how high prices are.

His goal is to make sure that those high prices not only don’t come down, the official goal of the Fed is to make sure that already high prices that people are complaining about go up every year by at least two percent. And, of course, especially, you know, grocery prices, because, you know, grocery prices go up more than that as long as you can offset it with some other BS that’s part of the CPI. Right.

And, of course, they don’t even want to look at. You know, the headline, they want to focus on the core, which doesn’t even count food and energy. So really, as far as Powell’s concerned, I don’t care how expensive food is because we don’t even look at that.

We only want two percent inflation when you don’t count food. The problem is the Fed should have a policy of reducing prices. See, if the Fed’s goal is two percent inflation per year.

Right. And all of a sudden you get 20 or 30 percent inflation over a few years. Don’t you want to have some deflation? Can’t you have prices go down because it would still have an average? Remember, Powell said that when inflation was running below two percent for a number of years, we had to average it up.

Well, why can’t we average down some of this really high inflation? Why can’t prices fall for a few years so that we can produce an average of a two percent gain? Right. What’s wrong with that? Because it was all BS from the beginning. Powell needs to create inflation.

That’s how they keep this whole bubble economy going, is by creating inflation. And you’re not providing relief for consumers if you’re telling them that the prices that they can’t afford are going to keep going up. Now, maybe some people, if they can get a raise, if they can, if their wages can rise faster than these increases, they can catch up.

But they’re still not catching a break. They’re still being permanently punished by higher prices. They’re paying these higher prices every single year.

It’s not that, OK, prices went up, you know, 20 percent and you pay it for one year. The inflation that the Fed deliberately created is plaguing Americans every year for the rest of their lives. There is no reprieve because the Fed will never allow past price increases to be even partially reversed.

Right. What what an asinine policy right now. Prices can never go down no matter how much they go up in the past.

We can never let them go down. They always have to keep going up. The only thing the Fed wants to do is slow down the rate of increase until all of a sudden it spikes up again.

I mean, what if the Fed actually succeeded in keeping inflation at 2 percent a year for a few years and then all of a sudden it shot up to 10 or 20 percent in one year? Then, OK, all right. Well, I will bring it down to 2 percent. And then they succeed.

And, you know, you have several years of 2 percent. But every so often you have a 10 or 20 percent spike, you don’t have 2 percent inflation. The whole thing is B.S. You know, and the reporters in this room, I guess, are buying it, you know, based on the questions that they ask.

Wall Street buys it. They let these central bankers get away with all of this, all this nonsense. But, you know, Powell admitted, you know, that the consumers, you know, don’t agree that the economy is as good as he claims.

It’s not just the consumers. It’s the voters. That’s why Trump is president, because voters didn’t agree with the Fed either.

Now, let’s see. Yeah. So another really ridiculous point that that that Powell tried to make, this was in response to a question.

Somebody asked him about the composition of jobs, because a lot of jobs are government jobs or government related jobs in education or in health care. And so we’ve had all these public sector jobs and we’ve, you know, at the expense of a private sector job. So he asked, how are you worried about this composition? That too many of the jobs that we’ve created are these government jobs.

And Powell basically said, no. You know, Powell said that, you know, the Fed doesn’t distinguish what kind of job it is. Right.

I mean, jobs are jobs. He says that we don’t care. He said, from our standpoint, employment is employment.

It doesn’t matter where the job is coming from and it doesn’t matter what the person is doing. Right. As far as the Fed is concerned, all jobs are created equal, which is a bunch of nonsense.

I mean, does he really believe that? Is he really that ignorant about basic economics? Of course, all jobs are not equal. A productive private sector job is worth a lot more to the economy than a nonproductive government job. I mean, as far as Powell is concerned, if the government hires one person to dig a ditch and another person to fill the ditch back up, those are two jobs.

As far as he’s concerned, those are jobs. He doesn’t differentiate between those two jobs that produce absolutely nothing of value for anyone. And two people getting actual jobs right at a business making stuff.

Right. He thinks that there’s no difference between those jobs. There’s a huge difference, especially if you’re trying to limit inflation.

Productive employment. Puts downward pressure on prices. Right, because if people are producing more goods, you have more goods in the economy, you have greater supply and that can keep prices down.

But if two people are working and producing nothing and getting checks from the government and the government is running up bigger deficits to give people that produce nothing money to spend. To buy stuff that they didn’t produce. You are putting upward pressure on prices.

So if the Fed’s goal is to have price stability, then they better consider the nature of the jobs because nonproductive jobs add to the inflationary pressures in the economy. Does Powell not understand that? Is he that ignorant about inflation? I mean, that’s supposedly what he’s so smart about. He’s supposed to be an expert, right? The smartest guy in the country on inflation.

That’s why he’s the chair of the Federal Reserve. Yet he doesn’t even understand that the impact that productivity has on prices or the impact that deficits have. Now, I have a feeling he’s got to know.

I mean, this is such basic stuff. But he’s afraid to say, yeah, those government jobs, you know, we’re not good, you know, because he’s talking about how great the job market is. So he doesn’t want to say anything to diminish, you know, the fact that so many of these so-called jobs were nonproductive jobs.

One of the reasons that we have so much debt is because of government jobs. You know, by the way, I recently looked into this. You know, we got a 36 trillion dollar national debt, right? More 36 trillion is probably over 37 right now because the debt ceiling is still suspended.

So they’re not officially adding the debt, but it’s unofficially there. So who the hell knows where the national debt is? I’m sure it’s way above 37 trillion, but it’s still showing on the national debt clock at like 36, you know, and change. But 26 trillion of the 36 trillion, 26 trillion matures over the next four years.

Think about that. 26 trillion. Now, over those four years, the government’s going to run at least another 10 trillion in debt, two and a half trillion a year, minimum budget deficits.

So that means the U.S. government over the next four years has to borrow 36 trillion dollars, 36 trillion. Now, some say, well, they don’t have to borrow it because, you know, they just roll over 26 trillion. That’s borrowing it again, because what happens is somebody owns a treasury that matures, which means they get their money back.

The government owes the money. The owner of that bill has to decide, you know what, I don’t want my money back. I’ll just loan it to you again.

Just, you know, I’ll sign up for another year, another two years, three, whatever. But that’s selling. You have to get the lender to make a decision to loan you the money that they don’t want their money back.

And if that lender doesn’t want to reloan the money, he wants his money back. The government has to find a new lender to loan it the money because the government can’t pay anybody back unless somebody else loans them the money. Right.

It’s running a gigantic Ponzi scheme. I don’t think the government is going to be able to borrow 36 trillion dollars in the next 10 years. Not at four and a half percent interest rates.

Not a chance. So one of two things has to happen. Interest rates have to go way up so that lenders will want to loan the money to the U.S. government.

But the problem is we can’t afford to pay much higher interest rates than the ones we got right now. So if rates aren’t going to go up and no one buys our treasuries, who’s going to buy them? The Fed. Right.

Massive quantitative easing. There’s no other way to avoid avoid default because we can’t pay a market rate of interest. So we have to have massive inflation.

Nobody asked how about that at the press conference. Are you worried about the ability of the government to roll over so much debt over the next four years or finance this debt? And, you know, are you willing to buy whatever the market won’t buy? Are you going to artificially cap interest rates to prevent them from skyrocketing? I mean, none of these things come up. But with the dollar falling the way it is with gold going up, I mean, who the hell is going to want to loan money to the U.S. government at four percent? They should just take that money and buy gold.

That’s what they’re going to do. I mean, you’re going to you’re going to make a lot more than four percent buying gold looking at the way it’s going up. Right.

Or they’re going to buy bonds in Europe. You know, interest rates in Europe are going up. They’ll buy bonds.

Right. If Japanese rates keep going up, they’ll buy JGBs. Right.

There’s a lot of other sovereign credit that the U.S. is going to be competing with. Look what’s happening to the stock market. It shows you the U.S. stock market is going down now.

But where is the money that’s going out of U.S. stocks going? Not in the U.S. bonds. It’s going into European stocks. It’s going into Asian stocks.

It’s going into gold. And those trends are going to accelerate. And the only way to get foreigners into U.S. dollar bonds is going to be to bribe them with a much, much higher rate of interest.

But of course, we can’t do that. And I don’t even know that they’d fall for that because if rates went up that high, we’d have a massive recession and the Fed would go right back to QE and printing a bunch of money. And so there’s really no way out of this.

But massive inflation, which is ridiculous. Again, to see, you know, Powell, you know, just so complacent about inflation is going to come back down to 2 percent. There’s no chance that that’s going to happen.

You know, somebody asked him about the Doge dividends. There was a question like, hey, you know, the savings that are coming out of Doge, which, of course, as I warned, a lot of that is just, you know, hype. You know, and the judges, of course, are already saying that the people that Doge fired have to get their jobs back.

And a lot of the spending cuts don’t count. And of course, Congress voted to fund a lot of the, you know, the fraud and abuse that Doge was supposedly cutting. So government is getting bigger and bigger and bigger.

But somebody asked him about the Doge dividend. And what the Doge dividends are is to the extent that Doge saves some money, that we mail out the savings in the form of a check, like a rebate to the taxpayers. And he didn’t comment because he was asked, you know, what do you think about that? You know, oh, I won’t comment on on on government policy, on fiscal policy, which, again, is not only just a cop out.

It is it is wrong. That is why Powell is there. And especially during his Humphrey Hawkins, he makes the same BS excuse when he actually goes to Congress and he sits before the House and the Senate and they ask him, hey, we’re considering this policy.

What do you think? What do you think the impact of this policy will be on inflation? Right, because he’s supposed to be the genius on inflation, right? So we’re all in a room and you’ve got these, you know, numbskulls in Congress who, you know, weren’t elected because they’re the smartest. Right. Apparently we appoint Powell because he’s really, really smart.

But we vote for whoever gets, you know, has the slickest ad campaign. Right. So the people who are in Congress, you know, they don’t even have to have an economics background.

Right. They don’t have to be, you know, know anything about basic economics. You know, they just get elected.

Right. I mean, AOC was a bartender. Right.

She goes to Congress. What the hell is AOC know about economics? Right. She doesn’t know anything.

Right. But apparently she’s there and there’s a there’s a bill that they’re considering and she wants to ask the chairman of the Fed. Right.

The smartest of the smart. Right. Who’s supposed to be, you know, this real all knowing guy.

Hey, here’s a bill that I’m thinking about voting. I want to know what you’re what you think about it. I’d like to know if you think if we pass this bill, is it inflationary? You know, is it a good idea? Right.

He’s there. He’s at Congress. Right.

To share his wisdom and his knowledge with all these people. But instead of doing that, he says, nope, I’m going to keep my mouth shut. Right.

So even if I think you’re going to do something really, really dumb, I’m not going to tell you. I’m not going to give you any warning. I’m just going to let you do it.

I mean, what the hell is that? I mean, what is the point of having a independent Federal Reserve if he can’t criticize bad policy? And if he can’t give some advice to people who know a lot less than he’s supposed to know, if they’re doing something really dumb. Right. So what he should have said is, you know, those doge dividend checks, that’s a dumb idea.

What is the point of saving all this money to reduce the deficit and then blowing the savings by rebating the taxpayers? You’ve just, you know, defeated the whole purpose. You were supposed to be reducing the deficits. The deficits are too big.

And he should also say that if you do that, it’s inflationary because you would have reduced the deficits. But instead, you sent out money to people to go buy stuff and bid up prices. And of course, that’s not the only mistake.

I mean, just about everything Congress does is a mistake. And it’s a disservice to the country. For Powell not to opine on on fiscal policy, because that does not violate the independence of the Fed.

And again, the Fed is supposed to be independent of Congress and the White House. The White House and Congress are not supposed to go be independent of the Fed. See, it’s not a two way street.

It is a one way street. The idea of an independent central bank is so the central bank does not come under political pressure to do stuff that’s expedient, because the politicians always want, you know, to make things look good for the next election. Even if what the Fed has to do to make things look good for the next election hurts the country in the long run.

So the idea is the central banker is above politics. So the central banker is not going to do something just to help reelect politicians, just to make the economy better in the short run. He’s supposed to or she is supposed to care about the long term health of the country, even if his policy imposes short term pain.

If it’s going to result in long term gain, then we need an independent Fed that’s willing to administer the bad tasting medicine. It’s the Congress and the White House that don’t want any part of that bad tasting medicine because they might not get reelected. So the idea is so that the Fed is independent from political pressure to to do things that are good politics, but maybe bad economics.

But we don’t need independence the other way. There is nothing wrong with the Fed criticizing Congress or criticizing the president. In fact, there’s everything right about that.

That’s what we want the Fed to do. We want the Fed to criticize Congress and the White House. And the biggest irony of it all is I just heard in a recent interview with with Jerome Powell, he was asked, which Fed chairman, prior Fed chairman, do you admire the most? And he said, Paul Volcker.

Well, Paul Volcker did exactly that. He was a huge critic of government. He criticized government spending.

He said, you’ve got to cut spending. You know, you know, he was he was pounding the table for spending cuts, smaller, reducing the size of the deficit. And he kind of forced, you know, more responsibility by jacking rates up to 20 percent.

Right. So, you know, he was telling them what they needed to do and he was raising rates to force them to do what they needed to do. There has been no change in, you know, Fed independence.

There’s been no rules that have been passed since Volcker left office that say that Fed chairman can’t speak critically of Congress or the president. They absolutely can. And they must.

That is their duty to to say the truth, because the politicians won’t do it. The politicians just want to get reelected. The Fed chairman is supposed to be above politics.

And it’s particularly annoying when he talks about, oh, you know, the say the sanctity of the the independence of the Fed. We have to preserve that independence. The reason that we preserve it is so you could be critical of bad policy.

If you’re going to shut up and bite your tongue and refuse to criticize policy that you know is bad, then what is the purpose of this so-called independence? And again, I think the fact that they’re cutting rates and that they’re saying they’re going to cut rates, even as inflation is going up, is a basic admission that it’s all political. The only reason they’re not hiking rates now is the politics, because it’s going to push the economy deeper into recession. It’s going to be a big problem for the government and all the other people that are in debt.

But why does everybody have so much debt? Because of the Fed. The Fed kept interest rates so low for so long that everybody loaded up on so much debt that now they can’t raise rates high enough to put the inflation that they deliberately released back in the bottom. So we’re stuck.

We’re lying in the bed that the Fed made. Anyway, that’s it for today’s podcast. Again, don’t forget, you know, don’t make the mistake of thinking that 3000 is the top of gold.

A lot of people didn’t buy gold at 2000 and now they still haven’t bought it. And now it’s at 3000. Three thousand dollars is cheaper than 4000.

And if you don’t buy it at 3000, you may end up buying it at 4000. You don’t buy 4000, maybe 5000, so you might as well buy it now. And if you want to turn back the clock, buy silver.

Again, we got those specials at Shift Gold. Just go there, call up the reps there or use the shopping cart. Look at these gold and silver mining stocks.

They finally took out the highs, by the way, yesterday. They took out the the April 2020 highs just barely, just barely. But the gold stocks are up like 26, 27 percent on the year.

You know, with the NASDAQ down, Russell 2000 down. NASDAQ was down about 9 percent before today. I think it was up, you know, so now it’s only down maybe about 8 percent.

But this is a huge divergence. But these stocks are still ridiculously cheap. In fact, gold stocks went down today.

And, you know, although they were up by the end of the day. But earlier this morning, you know, gold was down like six, seven bucks. And gold stocks were down a percent, which is ridiculous.

I mean, so gold went from 2035 to 2000, I mean, 3035 to 3028. And people dump gold stocks. Who cares? I mean, there’s gold still above 3000.

I mean, gold stocks would be cheap if gold was at 2000. But it’s not going to 2000. You know, as long as gold is within a few hundred dollars of 3000, even below, the earnings are going to blow away estimates.

So people should not even care. This is noise. Gold stocks should be going up every day, regardless of what the price of gold does, because it can’t go down enough to make these stocks less valuable than they are right now.

They have to go up so much just to catch up to where they are. People shouldn’t even pay attention to the daily fluctuations in the price of gold because they’re actually irrelevant to these stocks. And so buying the gold stocks now is a great idea.

And again, if you’re not a subscriber yet to Shift Sovereign, make sure and get our letter. You know, we’re starting to get more people signing up for the premium products. We have a couple of different products there that you can pay, but at least start in with a free one.

And all you got to do is go to shiftsovereign.com and give us your email address and some other information and you’ll start getting the free letters into your inboxes weekly. There are several per week that we put out. Also, again, if you like today’s podcast, give me the thumbs up.

If you’re watching it on YouTube, like it. Leave me a comment or two. You know, I read them and every once in a while your comments make it into my next podcast because people have questions or those things that they want me to elaborate on.

I read it and I think, hey, that’s a good point. And then I address it on my next podcast and also on other social media. Don’t forget to follow me on X. You know, I’m on Instagram.

I’m on TikTok, Facebook, all the social media channels. Anyway, that’s it. Bye for now.

And I will see you next time for more episodes of The Peter Schiff Show. The Peter Schiff Show.