While Inflation Burns (Uncut) 02-13-2025

Powell Fiddles While Inflation Burns – Ep 1009

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Well, it was not a good day today for inflation or for the Federal Reserve, but it was a very good day for gold and in particular for gold stocks. And I will get into that a bit later. First, I want to talk about the bad news on inflation.

And, you know, I don’t often say, I told you so. But sometimes I just got to say, I told you so. I have been warning on this podcast for over a year that inflation was going to get worse.

That the Fed aborted the hiking campaign prematurely. That the Fed never got rates into restrictive territory. That despite the claim that they were fighting inflation, they continued to stoke the fire.

And that the fact that we pulled back from 9% to, you know, two and a half or whatever we got down to, that that was just a cycle, a temporary pullback that we had formed a base and that we were headed higher. And that we were not going to get to 2%. We weren’t on a glide path to 2%.

We weren’t even going to touch it. And that we would be heading higher. And today’s inflation report came out hotter than expected.

But I think what’s even more maybe shocking to people than the number itself is the way the financial media reported about it. Because they completely downplayed the significance of this report. In fact, it didn’t even come up in today’s Fed testimony.

Powell was up on Capitol Hill for the second day today. This time with the House Banking Committee. I’m going to talk about the testimony a bit later in the podcast.

But this topic didn’t even come up. In fact, during the podcast or during the hearings, Powell continued to say that, you know, inflation is in a good pace. Excuse me.

Inflation is in a good place. And that, you know, we’re headed to 2%. You know, what is he talking about? You know, I guess he didn’t even look at these numbers.

But anyway, the number came out, the year-over-year number, which is the one that they seem to be focusing on, came out at 3% year-over-year CPI gain. January 2024 to January 2025. The expectation was 2.9. So the media is downplaying it as, well, you know, it’s not that bad.

It was only one-tenth higher than we thought it was going to be. Well, I mean, that’s still an important tenth when the Fed is counting on a glide path to two, and now you’re up at three. But if you look at the year-over-year core, which they claim to be more important, that was higher by two-tenths.

It was supposed to be 3.1, and it was 3.3. So that’s even farther away from 2%. But what’s really more significant and what didn’t get a lot of media attention was the month gain. It was 0.5. That’s a lot higher than the 0.3 that they expected.

I mean, it’s 60% higher. That is a big miss or beat, you know, depending on your perspective, with higher inflation. Now, if you annualize 0.5, right, if we got 0.5 every month, that’s 6.2% inflation.

That’s three times the Fed’s 2% target. This is a big deal. Now, I know a lot of people will say, well, you know, it’s one month.

You know, we can’t make a big deal about one month. It’s not just one month. If you look at the last three months, the average is 0.4. That’s 5% inflation, 4.9, 5% inflation.

That is a big deal. Three months is an entire quarter. How do you dismiss that? But also, if you go back another month, we have now had four consecutive months of rising inflation and higher than expected inflation.

We went from 0.2 to 0.3, from 0.3 to 0.4, from 0.4 to 0.5, so 2 to 3, 3 to 4. Well, it’s four months. I don’t know why my – oh, yeah, because it was 0.1 before that. So it went to 0.2, 0.3, 0.4, and 0.5, right? So we’ve had four consecutive months where inflation has gone up.

Now, to me, that sounds like a trend, right? How do you dismiss four months in a row? I mean, if inflation or CPI continued on this exact same trend where next month it was 0.6, then 0.7, then 0.8, right? If it did that, I’m not saying it’s going to do that. I mean, it probably won’t be that bad. But if it did, we’d be looking at 13% for 2025.

I mean, that’s way worse than the worst year of Biden at 9.1, which I think was 2022 or 2021. So that is a big deal. But, you know, I remember a year ago or not quite when we were getting some lower inflation numbers, but we still had a higher headline number on the year-over-year.

But we were getting some lower monthly numbers. Everybody was saying, oh, don’t pay attention to that year-over-year number. Look at the trend.

Look what’s happened in the last quarter. This shows that we’re making a lot of progress because inflation is coming down. Well, the same people who were saying, oh, we really got to focus on this short-term trend when the trend was for lower inflation are completely ignoring the short-term trend now when that trend is for higher inflation.

So this is a bad report all around. The media didn’t even come close to covering just how bad it was. Powell didn’t acknowledge it.

You know, I keep hearing of, you know, when they ask him a question in the hearings, you know, how are you going to react if Trump does this or Trump says this? He says, well, we’re just going to keep our heads down and working. Maybe that’s the problem. Their heads are down.

They can’t see what’s right in front of them. Maybe they should look up and take a look at the data. You know, I’m getting a little bit ahead of myself.

But one thing he said yesterday when he spoke in front of the Senate, he said that inflation expectations remain well anchored at 2 percent. Well, what do you mean? On Friday last week, and I spoke about it on this podcast, we had a huge surge in inflation expectations, the highest since 2008 at 4.1. So if consumers now expect 4.1 percent inflation, how is it that Powell is saying that the expectations are still well anchored at 2 percent? I mean, only Republicans think that inflation is going to be 2 percent. In fact, they think it’s going to be zero.

The Democrats, you know, think it’s going to be 5 percent. But the average with the independents and all that is 4.1. So, you know, Trump is I mean, Powell is just completely wrong. And, you know, of course, if you look at how, you know, the numbers came out, the Democrats jumped all over this to blame it on Trump.

You know, Schumer’s called it Trumpflation. Hey, Trumpflation is here. He looked at the January numbers to say it’s Trumpflation.

Well, Trump was only president for 10 days in January. Biden was president for 20. So how is it Trump’s fault? In fact, none of the price increases in January have anything to do with Trump.

I mean, there’s always a lag. It’s going to be Biden inflation for a long time. Eventually, it’s going to be Trumpflation.

Don’t get me wrong. Trumpflation is coming. We just don’t have it yet.

But the Republicans are I mean, the Democrats are already blaming it on Trump. And, of course, the Republicans are saying it’s Bidenflation continuing. But at some point, they’re going to own it.

Right. They’re going to own this economy. They’re going to own this inflation, which is going to be a big problem for Trump and the Republicans.

And, you know, this is why it’s so important to be critical of of the Republicans and Trump when they deserve to be criticized. And I’m not saying that Donald Trump doesn’t get stuff right. There’s plenty of things that I like that he’s doing.

And I don’t even have to bother to point those out because there’s so many other people who are pointing out all the things that Trump is doing. Correct. Like what’s going on with Doge? What’s going on with U.S. aid and all this stuff is is great that this is all happening.

You know, it’s not enough to save us. I mean, it it mitigates the problem somewhat. It shines a light on government corruption, which, you know, doesn’t surprise me because, you know, the most corrupt people in any country always end up working for government.

I mean, that’s the way it is. You get power in government. And so corruption is drawn to power and power corrupts.

So it’s just that’s how it happens in the free market is where you have honesty because people have to earn a living. They don’t have power. They have to, you know, get people to voluntarily do business with them to make money.

When you’re in government, you use the force of government. People are stuck. You know, you sell your power and it’s it’s it’s very corrupting in in in nature.

But the problem is, since so many, you know, Trump backers and Trump, they’re talking about how great it’s going to be, how great it’s going to be. You know, it’s a golden age of America. Everything’s great when it doesn’t turn out that way.

Trump is going to get blamed. His policies are to get blamed. The Republicans are going to get blamed.

The Democrats are going to say, I told you so. You know, I’ve seen this movie before. I was a big critic of George Bush in 2005 and six and seven, all the years leading up to the housing crisis.

And none of the other Republicans on television would criticize him. Now, at least back then, they still let me on the air to criticize Bush. And I said, look, you know, there’s a financial crisis coming.

There’s a housing bubble. The Fed has made all these mistakes and we’re headed for a crisis. And everybody else was talking about how great everything was because they didn’t want to criticize a Republican president.

Well, I did. But the problem was when everything collapsed. It was all then blamed on Republican policies.

And that’s how we got eight years of Obama. So maybe if more people had been critical of Bush, maybe we would have had a better candidate than John McCain who might have been able to beat Obama. But, you know, that didn’t happen.

And Obama promised to do a lot of things differently, which, of course, you know, was a lie. He didn’t. But the same thing is happening now.

And I think the difference really is that there are networks like Fox. I mean, I get on there once in a while, but I used to be on all the time in 2005, six and seven. They had me on.

I mean, I was on all the time criticizing Bush. I was on CNBC all the time criticizing Bush. CNN, MSNBC, none of those networks will have me on at all except Fox has me on a little bit.

Now, I still go on Newsmax or One American News, you know, but not not really that much. And the thing is that the left stations completely don’t want me on anymore. That’s how polarized they used to let me come on and be critical of Democrats.

Now they won’t. They don’t want they don’t want my criticism at all. And neither do like Fox.

They want people coming on cheerleading Trump. So if you have anything negative to say, well, you’re not welcome there either. So, you know, I’m not welcome anywhere in the mainstream media, really.

I mean, so if you want to hear my perspective, which is the truth, you got to listen to my podcast, you know, or you got to listen to other people’s podcasts where I’m a guest. Right. There are plenty of people who have their own podcasts who invite me out.

I go on other people’s podcasts all the time, but I don’t get the type of attention that I used to get. And that just shows you how much more polarizing the media is, where everybody just takes the side. And you either got to be on one side or the other.

And there’s no room if you’re in the middle, which is where I am. I mean, I’m an equal opportunity critic. I criticize the Republicans when they are deserving of criticism.

And I criticize the Democrats when they’re deserving of criticism. And I tell the truth that I know what needs to be done. I know the real state of the economy.

But that perspective is a lot harder to find, which is why there was nobody in financial media today pointing out how horrible these inflation numbers are and how they prove that the Fed is behind the curve on the wrong track. The Fed is cutting rates when it should be hiking rates. And I think the markets are just starting to figure that out.

And I’m going to talk about the evidence of that on the other side of this break. So don’t go anywhere. We’ll be right back.

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And the reaction wasn’t nearly as bad as it should have been because people are still dismissing how bad the news is. And, you know, I don’t know how long the bad inflation numbers are going to have to continue before people realize the significance. I mean, you know, is the Fed going to wait three more months, six more months? I mean, how long, how high will inflation be by the time the Fed, you know, admits they got it wrong, you know, and then starts hiking rates? But how much, how high will they have to hike them in order to catch up to where they need to be? Of course, they’re not going to hike them.

They’re going to be so far behind the curve that it’ll be impossible to ever catch up. And the damage that they would do would be so incredible that they’re not going to do it. You know, I was wondering, you know, because nobody really brought it up, though.

If somebody did bring up at the hearing today that the recent trend in inflation and if they had asked Powell, you know, what do you think about this? We got, you know, 5 percent inflation, you know, 6 percent inflation, you know, depending on the number. I was wondering if Powell would say, don’t worry about that. It’s just transitory, you know.

Now, maybe he wouldn’t want to use the word transitory again. So maybe he’d say temporary or ephemeral or some other adjective to try to dismiss the inflation. But that’s exactly what they did the first time.

There was plenty of evidence in 2001, early 2001 or even 2000. But there was plenty of evidence that inflation was getting worse and the Fed just turned a blind eye, just like they’re they’re doing now. So the stock market was down, but not much.

The Dow, which was down, I’m not sure if it was down 500, down 450 at least, closed down to 25. That’s only about a half a percent. The S&P was down a little less than that, about a quarter of a percent.

Russell 2000 was the weakest, down almost a full percent, 0.9 percent. But the Nasdaq, you know, seemed to eke out a small gain. You would have thought the Nasdaq would have been down more.

But but again, the bond market did get clobbered. The yield on the 30 year bond is back at 4.82 percent and the 10 year is 4.61. But we are headed much higher. And that means mortgage rates are also headed much higher.

And that’s going to be bad news. That is going to weigh on an already slowing economy. I mentioned the title of last podcast on Friday had to do with stagflation, the Fed’s worst nightmare coming true.

And that’s exactly what we’re going to be. You know, rising inflation, rising interest rates are going to put more pressure on the economy. And I think sometime between now and the end of the year, there’s a good chance that we’re going to officially recognize the recession that we’ve been in for a long time.

And again, the problem is Trump’s going to own this recession. The narrative is he inherited a great economy and ruined it or that’s what it will be. And that’s why it’s important to point out the economy that Trump inherited was not great.

That was a lie. And he didn’t ruin anything. I mean, yeah, he’s got his fingerprints partially on the problem because he was president for four years as the problem got worse.

Right. Not better. And even though he’s helping to clean house with Doge and, you know, they’re doing some good stuff, it’s not going to be enough to overcome, you know, this this huge problem that is going to get worse.

Even if they cut some spending, it’s not going to be enough to offset the growth of spending that they don’t cut. And then the tax cuts will will add to that. But this debt bomb is likely going to explode.

And it’s it’s a global thing. You know, I mentioned the yield in the US. I’ve been talking about the yield on the Japanese government bonds.

Well, they’re up again tonight. We’re now at one point three six. You know, they were just one point three.

You know, I mean, we’re going up almost consistently. This is a big deal. I mean, yes, the yield is low.

But remember, it was just 50 basis points. And before that, it was twenty five. So the yield doubled.

Then they doubled again. I think we’re going to be at one and a half percent relatively soon before the end of this quarter. It even could happen in February.

But certainly, I think by the end of March, we’ll be at one and a half. But we’re not going to stop at one and a half. We’re going to be at two.

And when we break to which we could easily do this year, that’s what I think all hell is going to break loose, because I think once we break to it’s going to be a quick move to two and a half or three. And this is a huge deal for reasons I explained on my last podcast. But nobody’s paying attention to this, you know, slow motion train wreck.

But it is a going to be a train wreck. And it’s going to be a big deal in the United States, not just in Japan. And it could be a bigger deal in the United States.

But the important reaction that I want to talk about is gold. But actually, before I get to gold, the dollar, because the dollar again had the typical knee jerk reaction. When this number came out, the dollar immediately spiked.

Why? Because that’s how the algorithms are programmed to react to inflation news. If it’s worse than expected, you buy dollars. The opposite of what common sense would tell you to do.

You find out that your dollars are losing value faster than you thought. That is not a sign to go out and buy more of them. You’d want to get rid of them because they’re losing value faster than you thought.

You’re getting poorer. But the way the algorithms or the people who program them, right, they think, oh, higher than expected. Inflation delays the rate cuts.

Anything that delays the rate cuts is bullish for the dollar. And so they buy dollars. But this is based on the idea that hotter inflation just means the Fed has to try a little bit harder to beat inflation.

To get inflation down to 2 percent, we just need to keep rates where they are for a little while longer to win. And that’s going to be good for the dollar, you know, because it means higher for longer before inflation goes down to 2 percent. What the traders don’t realize, and this applies even more so to the gold market, is that that’s not what it means.

Higher inflation doesn’t mean the Fed is going to fight harder to win. It means the Fed is already lost. They have surrendered.

Inflation is going to keep going up, and the Fed is not going to do anything about it. It’s not that they’re not cutting. It’s that they’re not hiking.

The Fed should be hiking rates. They should have hiked rates today, intramedic. They should be, oh, my God, we totally got inflation wrong.

We really screwed up with these rate cuts. You know, we need to take all 100 basis points back. In fact, we need to go up 100.

We need 200 basis points right now. We need to quickly go to where we should be before this really gets out of hand. But, of course, they’re not going to do that.

But the fact that they’re not hiking rates, that is the problem, because with inflation rising every month, that means real rates are falling. And that is bearish for the dollar, but it’s ultra bearish for gold. And gold had the best reversal.

So when the news came out, gold was already down about 15 or 20 bucks coming into the numbers, because I think maybe there was some fear already in the gold market that we would have worse than expected inflation. So people were kind of getting ready for it. And then when the number came out confirming that fear, gold went down immediately about like 40 bucks.

Silver also went down. It wasn’t as weak as you might have thought, but it was down 20-something cents, something like that. And then gold started to rally back.

And it actually closed positive $5 or $6 on the day. It closed around 2,905-ish, around there. Now, by the way, on Monday night, and I didn’t do a podcast Monday, but I did an X Spaces on Monday, and I talked about this.

And on Monday night, gold hit a new record high, just above 2,940. And we reversed, and I think today’s low was around 2,865, just above there. We may never see that number again.

That may be the low. I think gold’s going up from here. This was a nice day technically.

We took out yesterday’s low and closed positive. We didn’t take out yesterday’s high in gold. But the fact that gold shrugged off this hotter-than-expected inflation news, because months and months ago, a CPI report like this would have sent gold down for the count that day.

It would have gone down $40 or $50 or $60, and it wouldn’t have recovered. It would have closed near the lows. The markets are waking up to this reality that bad news on inflation is actually good news for gold.

And eventually, we’re going to have huge rallies. Gold’s going to be up $50, $100 when we get bad inflation news, because it just confirms why you need to own gold, because inflation is running out of control, and the Fed’s not doing anything about it. But more than gold is the gold mining stocks.

Now, gold mining stocks had a great day today, because they took out yesterday’s low and then not only took out yesterday’s high, but they closed above yesterday’s high. The GDX was up 1.7%. GDXJ up 1.72% as well. But both of them closed above yesterday’s high.

But the star of the day was Barrick Gold, which I happened to talk about as an example of how badly the analysts have got this stock wrong. And I was saying that we were going to start to get the earnings coming out, and I expected a lot of gold companies to come out with better than expected earnings. And that is exactly what happened with Barrick.

Barrick beat on earnings considerably, and they canceled their old stock buyback and announced a new $1 billion stock buyback. And I think what’s also very significant about the Barrick earnings is the realized gold price. So they ended up getting a realized gold price of about $2,650 last quarter.

And that was well above the $1,986 that they realized in the same quarter a year ago. So a huge increase in the gold price year over year. And that’s why they had a big earnings beat.

But look at where gold is now. It’s already at $2,900. It’s already almost $300 higher than the price they got for the gold they sold last quarter.

So the earnings are going to be even better this quarter. And so this could be a wake-up call to Wall Street, a few more of these numbers. Now, we got Kinross that came out after the close, and somehow they managed to miss their earnings.

They were supposed to earn $0.25 on the quarter, and they only earned $0.20. Now, the same quarter last year, they earned $0.11. So they still almost doubled their earnings in a year, which is a fantastic earnings growth. But for some reason, and I’m not sure all the details, I haven’t looked through it all, they missed. And so that stock was down after hours maybe 5% or 6%.

So that may delay the stampede into gold stocks. Although Royal Gold came out with a really strong beat after the close. Those are the only three gold stocks that reported today, Barrick in the morning, and then Royal Gold and Kinross after the close.

I own all three of those stocks personally. We own them in our funds, the gold fund, even our value and dividend payers fund own Barrick and Kinross. By the way, I looked at the dividend payers fund.

It’s up about 11.5% year to date. But more importantly, it’s blowing its category behind. It’s almost double the category average.

It’s the number one fund in its class of 350 funds so far in 2025. And all my funds, my value fund is doing also way near the top, maybe in the top 2%, not the top 1% like the dividend payer fund. But I think this trend is going to continue in my funds.

I talk about all the redemptions that we’ve been having from gold stocks, GDX, GDXJ, and gold ETFs. Well, all last year, we had net redemptions out of all my mutual funds. All my funds last year, people were selling.

And the same thing this year. Even though they’re top performing funds, people continue to liquidate these funds. My gold fund, again, has seen net outflows.

Yes, some people buy it, but more people sell it. And if my fans, because that’s basically who buys my funds, people who follow me. But if even my clients, my followers are thrown in the towel on their gold stocks, can you imagine what’s going on in the rest of the country? What people are doing? I mean, the guys that listen to me, I feel bad for the people who have sold these funds.

I mean, I’m so optimistic. In fact, I think my value fund, I think by September of this year, it’s going to be the number one fund in its category for every timeframe that Morningstar measures. One year, three years, five years, 10 years.

It’s not there yet because we had a very bad 2015. But as more of that bad performance, because that’s when gold got clobbered. Gold made a low in December of 2014.

Gold stocks got killed, so that really hurt my performance. But that performance, that bad performance, starts to drop off towards the end of this year. And then my performance is going to be phenomenal.

And I think it’ll just continue from there. But this is a great time to be investing in all of my funds. As I said, it was a complete head fake.

The rally in the dollar, the selloff in emerging markets, in gold stocks that we had once Trump surprised everybody and won. I mean, I wasn’t surprised by the victory. I expected it.

But I also understand what’s going to happen. I don’t have this Pollyannic view that everything is going to be better and all the problems are going to be solved because we didn’t elect Harris. Yes, Harris would have been worse than Trump, but he’s not a get-out-of-jail-free card.

We are going to have to pay the piper. And I think that we’re going to see explosive growth, especially in the gold fund. I mean, this could end up being – because the gold fund is already up about 18.5% on the quarter, right? And it’s barely – you know, it’s not even halfway through February.

But it could end up being the best quarter in the history of the fund. And this could be the best year that the gold fund’s ever had. And if it is, I think that next year, 2026, will be even better than 2025.

Now, again, these are my opinions. This is what I think. But I’ve got all my money where my mouth is.

But I would encourage everybody listening to this podcast to do the same thing if they have the same risk tolerance that I do. If you don’t mind taking risk, this is the risk you want to take because it’s an asymmetrical bet to the upside. The upside potential in gold stocks so dwarfs the downside risk that it’s a bet that you have to make.

And it’s a smart bet because all the fundamentals, all the technical skills, everything is aligned. I think we’re going to get more of these earnings reports this week, next week. And then Wall Street is going to say, you know what, maybe we should actually put a buy rating on one of these gold stocks.

Maybe we should recommend that somebody buy it. I mean, right now, nobody’s talking about it. But they’re just going to be so cheap.

And these companies are going to be minting money, right? They’re literally gold mines. And they are going to be buying back their own stock hand over fist. And you know what they’re going to be doing? They’re going to be buying back their own stock instead of looking for new gold mines.

So we’re not going to get a big increase in supply. And when they’re finished buying up their own stock, they’re going to be using their stock as currency to buy up other stocks. It’s going to be a huge consolidation in the industry.

And then eventually the public is going to wake up. Investors are going to want in on this. And then it’s going to explode because there’s very little market cap to go around.

So the prices have to go much, much higher in order to accommodate even a small inflow of investor money. Anyway, we got one more commercial break. We’re coming right back.

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Price varies depending on product and subscription plan. All right. You know, also, I noticed the CRB index.

I’ve been talking about that before. It’s now up about 25% since January of 2024. 25%.

That is a big, big gain. And about a quarter of that gain is this year. So it’s accelerating.

This stuff is going to work its way into the CPI. It happens with a lag. Now, we’re going to get the PPI numbers coming out tomorrow.

And these higher input costs should be in the PPI even before they’re in the CPI. But clearly, I mean, if we have commodity prices up 25% in a year, how is that consistent with inflation being in a good place? How can the Fed possibly believe that they’ve won the war on inflation and prices are going to go back to only up 2% when commodity prices are up 25%? And it’s not just, you know, one or two commodities. You have a broad basket of commodities going up.

You know, one of the only commodities that’s not up that much, although it’s up, is oil. You know, by the way, as Chevron announced today, they’re going to eliminate about 15% to 20% of their worth force. I think we had some type of similar announcement by ExxonMobil not too long ago.

But, you know, if all these big U.S. oil companies are laying off a good chunk of their workforce, how are they going to drill baby drill? I mean, didn’t they get that memo for Trump? I mean, don’t they need those workers to drill baby? You know, obviously, we’re not going to drill baby drill because oil prices are too low. The only way we’re going to get a lot more drilling is if we have much higher oil prices. And Trump wants to get Saudi Arabia to pump more.

So the price goes down to 60 dollars. Well, the lower the price of oil goes, the less oil we’re going to pump. Right.

Because it costs a lot of money to get it out of the ground. Thanks to inflation. Right.

The cost of drilling oil has gone up. And so we’re not we’re not going to drill, drill, baby, drill. And even if we could, it’s not, again, another get out of jail free card on inflation, by the way.

So on Friday last week, and I didn’t really get into it, the podcast. But Trump teased new tariffs on steel and aluminum. Well, on Monday, he imposed a 25 percent tariffs on steel and aluminum.

Now, fortunately, a lot of countries were exempt, like Canada, Mexico. We get a lot of our steel from there. So, you know, it doesn’t apply across the board.

So it’s not likely that prices will rise by the full 25 percent because, you know, but they’re going to rise. And some of the countries that were selling us their steel and aluminum probably will sell it to another country. And we’ll just buy more from the countries that are exempt from from the tariffs.

But there will end up being higher prices. But the government won’t collect much money from these tariffs. Right.

Because, you know, they’ve exempted the country. So but we’re going to pay more. And that, you know, that that’s a negative for the companies that use steel and aluminum.

Right. If you’re a U.S. manufacturer of automobiles or appliances, you know, you need steel. You know, it’s not going to be more expensive.

So what does that do to your price? The price of your products, they go up. Now, if you want to export those products, it makes them less competitive on foreign markets. But it also makes them less competitive in domestic markets.

So now what? You got to put tariffs on on the foreign products, right. You know, one after another. So it’s not going to work.

Yes, the steel companies will benefit. But to the detriment of another company that is now paying paying higher prices. Now, the other tariffs that Trump is threatening are reciprocal tariffs.

And what what that means is he’s going to look around for a country that has imposed a tariff on American goods and wants to impose will have a similar tariff. So if a country, let’s say France, has, you know, a 20 percent tariff on, you know, some, you know, America widgets, then. All right.

We’re going to impose a 20 percent tariff on on French widgets coming here. Right. We’re tit for tat.

We’re going to match whatever you’re doing, which, again, doesn’t help us. It hurts us now to the extent that we can convince the other country to remove the tariffs. That would be a bigger win for them than it would be for us.

But, yes, you know, whenever you have freer trade overall, it’s a win. Right. Everybody benefits from from free trade and comparative advantage.

And the freer people are to trade with one another, the better everybody, you know, higher everybody’s standard of living is going to be right. But no, everybody just bows down to the political pressure of the special interests who benefit from from protectionism. Anyway, I want to talk about some of the comments that came up during these these hearings.

With and it’s semi-annually, so I think it’s twice a year. Powell goes up to Congress to take questions from the banking committee in the House and the Senate. Now, obviously, the reason he’s there, right, is, you know, to help educate.

The congressman, you know, the representatives of the senators, right. Ask him questions. Right.

Hey, we’re considering certain policy. What’s your opinion on this? How do you think this particular bill or, you know, would impact the economy, would impact inflation? You know, you’re supposed to be this really smart genius. Right.

That that, you know, we put in charge of the Federal Reserve. Right. You’re like our top economist.

That’s why you’re there. You know, you know, we’re not really economists. You know, we’re not financiers.

You know, we don’t really know. Here’s some, you know, give us some guidance. Right.

Like tell us what you think. Right. Right.

That’s why he’s there. I mean, why else would he be there? Yet every time they ask him about a particular policy like, you know, how would tariffs impact inflation or how would larger budget deficits? How would this? He says, I can’t answer that. I can’t talk about politics.

You know, I don’t want to comment on the wisdom. This is exactly what he said. I don’t want to comment on the wisdom of what you guys do.

I just want you guys to do whatever you want and I’ll deal with it. I mean, what the hell? I mean, so he’s saying that even if I think you’re about to do something really stupid, that’s going to be harmful to the economy. I’m just going to bite my tongue and let you do it.

I’m not going to give you any warning. I’m not going to give you any benefit of my my wisdom and my knowledge. I’m just going to let you idiots destroy the country because I have to keep my mouth shut.

Who said that? Where does it say in the Federal Reserve Act that the chairman has to keep quiet when he thinks Congress is doing something stupid? Again, the whole reason that the Fed is independent is precisely so. The Fed is free to criticize popular programs that are proposed by Congress. He’s supposed to do that.

I mean, if he’s not going to answer these questions, what is the purpose of these hearings? It’s a waste of time. In fact, all they do is use them as a photo ops. Right.

You have all the Democrats, you know, make speeches about how Trump and his and his co-president, Elon Musk, are destroying democracy and are going to take away your Social Security and they’re peering into your bank accounts. So we have no more privacy. You know, like what about all the other bureaucrats who had access to all this information before before Elon Musk? They didn’t care about that.

They didn’t care about our privacy. Then who elected all those bureaucrats? Nobody. Right.

But no, they want to come in here and they want to grandstand about how terrible Trump is, how terrible Musk is. You know, the funniest quote was today. There was a Democratic congresswoman.

Right. And she said that, you know, Donald Trump and Elon Musk, they want to turn the Federal Reserve into an agency that helps the rich get richer and the banks get bigger. I mean, I almost fell off my chair.

I mean, what do you mean turning into that? That’s what it is. I mean, Alan Greenspan turned it into it 25 years ago. That’s what the Fed does.

Before Donald Trump got reelected, before the Doge Department was created, the Federal Reserve was there to make the rich richer and the banks bigger. Right. The Fed bailed out all the banks when they failed.

And now they’re bigger than ever. Right. All the too big to fail banks are bigger than ever because the government bailed them out and the Fed was there.

Right. Why is the divide between the rich and the poor so great? Because the Fed’s policies have already favored the rich. They were doing that for a generation now.

This is not new. Somehow she thinks that, you know, it hasn’t been like that. And now Trump and Musk want to change it.

But, yeah, you know, the Fed isn’t helping the rich enough. The Fed isn’t helping the banks enough. It just shows you how clueless or they don’t even care.

Right. They just want to be critical. So the Democrats spent all their time criticizing Trump and the Republicans spent all their time criticizing Biden.

Biden this, Biden that. Right. But nobody is dealing with the actual problem.

You know, the debt, the ticking time bomb. You know, again, he’s he keeps saying that the debt isn’t a problem, but the path is. He says we’re on an unsustainable path.

Well, but but that means the debt is a problem because the debt is on that path. I mean, you can’t really separate the debt from the path because look at the path. Right.

It’s continuous and it’s growing exponentially. And we can’t wait until we get to the point where, you know, there’s a crisis. I mean, that’s basically what Powell is talking about when he says that we’re on an unsustainable path, but we’re OK right now.

So, again, you jump off the top of the Empire State Building and on the 50th floor on the way down, you’re on an unsustainable path. But clearly you’re headed for disaster. Right.

You can’t say it’s you know, I don’t have to worry until I hit the pavement, because once you splat on the pavement, that’s it. Right. There’s nothing you could do.

Right. So according to Powell, we don’t have to worry about the unsustainable debt because we’re not on the pavement yet. We only have to worry about it when we have a full blown crisis.

Well, no, by then it’s too late. You can’t do anything about it. Right.

You have to worry about the problem when you can still do something to fix it. You can’t just say, well, we don’t have to worry about it because it hasn’t blown up in a complete, unmitigated disaster yet. Right.

Well, by then, you know, it’s too late to do anything. You are done. So he should be doing everything he can to get us to do the right thing now, which would be hiking interest rates and warning about what’s going to happen.

But, no, he doesn’t do any of that. Let me see what else. I made some I’m just looking at my own post here.

Yeah, it was it was a Yana Presley. That was the Democratic congresswoman who talked about the banks. I think.

Yeah, I you know, I don’t I don’t think I I had many more. Comments on what was said, because, again, it was all nonsense, what they talked about and what was more important is is what they didn’t talk about. And, you know, some people kept asking him, you know, what do you need to see before you start cutting rates? Nobody said, well, what do you need to see before you start hiking rates? Nobody talked about the potential for rate hikes.

And in fact, Donald Trump himself set the stage before even before we got the CPI numbers. He came out and said, we need rate cuts now. He said, we need them to go along with the tariffs.

He said, it’s time for America to rock and roll, you know, rock and roll with rate cuts. You know. We can’t have rate cuts.

You know, Trump campaigned to get rid of inflation. Well, we want to get rid of inflation. We need rate hikes, not rate cuts.

We need the Fed to pick up the pace of its quantitative tightening. But it’s not going to do that. And in fact, the Fed talked about how it’s going to continue to do that.

He they were he was asked again about QE or when might they do that? And he pointed out, well, you know, we only do that once we get down to the zero bound. And he said, so we’re not at the zero bound. And I thought they might break from that recent tradition, because I know there’s going to be a lot of upward pressure on long term interest rates.

You know, once they get above five percent, the 10 year it’s six percent. The only way the Fed could put some brakes on that without sharply increasing interest rates, which they don’t want to do, would be to go to QE. But I don’t think they want to slash interest rates to zero and then go to QE.

So I think the next time they do quantitative easing, it’s not going to be when they’re at the zero bound. They’re going to do it well before. I don’t think we’re going to be able to reduce rates to zero in the face of this high inflation.

They were able to do it when inflation was below two percent. It’s not going to go below two percent, even if we’re in recession. In fact, the recession is going to be caused by rising inflation and rising interest rates.

And so they can’t cut rates anymore. Again, that’s why stagflation is not one of the scenarios that they stress tested because all the banks fail. And that’s why they have no contingency plan.

That’s why all they can do with respect to stagflation is hope it doesn’t happen, because the Fed knows that there’s nothing in their playbook for stagflation. It’s game over. And so they just want to close their eyes and hope it doesn’t happen.

Another thing that I’ve heard discussed on television recently, financial press, is the idea that the U.S. government with Scott Besson, they want to revalue America’s gold and market to market. And that would increase the value of our gold by about 800 billion dollars. Now, what they’re talking about is that now that the U.S. government’s gold was worth 800 billion dollars more, that they would get the Federal Reserve to just create the 800 billion and give it to the government.

And I guess the Fed would take the gold as collateral or I don’t know how they want to structure this deal, because they’re not talking about the government selling the gold to get the 800 billion dollars. They want the Fed to just create the money out of thin air and give it to the government to spend, just deposit it into the general account of the U.S. government so we could just spend the money. And somehow this is supposed to be a new source of funds that’s going to be good.

It’s just inflation. That’s all it is. It’s like QE, where the money is directly injected to the Treasury.

It’s not going through the banks. And then the Treasury spends it right into circulation. So it’s pure inflation, right, in its purest form.

And so all it’s going to do is make prices go up, especially gold prices. Once the government, I mean, just just officially recognizing the obvious. Yes, the gold is not forty two dollars an ounce.

That’s obvious. You know, it’s almost three thousand dollars an ounce, you know. And so just revaluing it doesn’t matter.

But if the government takes advantage of that by having the Fed print eight hundred billion dollars so they can spend it, then the price of gold is going to be four thousand or five thousand. And then what happens if every time the price of gold goes up, they ask the Fed to print more money. Right.

So they can spend that, too. Right. It’s going to be a self-perpetuating spiral.

But the only thing that makes sense with revaluing our gold reserves is if we go back to a gold standard and we need to have a gold price at which we can back our currency. And and that is a price in the tens of thousands, many tens of thousands of dollars an ounce to do that. Or if we want to use our gold to pay down our national debt, we need to devalue the dollar dramatically.

Because even if we sold all of our gold, if our gold is not even a trillion dollars and we use it to pay off our national debt, we wouldn’t even pay off. Well, what? Four months worth of it. You know, we got the numbers that came out today for the Treasury.

They came out with their statement for the monthly deficit. Look at these numbers. So for for January of twenty twenty five.

The expectation was for an eighty nine point nine billion dollar budget deficit. These are the official numbers. Right.

The actual national debt grows by more than that, because all the off budget stuff isn’t even recorded in these official numbers. So they were looking for eighty nine point nine billion. We got one hundred twenty eight point six billion in one month.

It’s a 40 percent increase in the prior month. But year over year, it’s a five hundred percent increase. The budget deficit in January of twenty twenty four was twenty two billion.

It’s one hundred twenty eight point six billion in January. Twenty twenty five. What does that tell you is likely to happen for the rest of the year? Twenty twenty five, I think, is going to be the biggest annual increase in the national debt in history.

But the record won’t last long because we’re going to break it in twenty twenty six. Right. Doesn’t matter about what goes.

I’m tired of hearing Doge is going to solve that. Doge is going to fix that. There are certain things that Doge is going to do.

Expose corruption, maybe put some people in jail, you know, people who have been getting rich. Right. The head of Doge saw her net worth go up by like twenty something million in the last three years.

Where’d she get all that money? Is she some super genius investor? If so, she should have quit her job and and run a hedge fund. No, it’s obvious people that worked at USAID. Right.

When they come up with fifty billion dollar, one hundred billion dollar grant to some cockamamie organization. Right. In Bangladesh or whatever, they get kickbacks under the table.

Right. That’s why they’re funding this stuff. I’m sure millions of dollars are coming back into their pockets.

And who knows? Maybe some of it even got kicked up to the big guy. Who knows how this criminal organization, you know, my father called it the federal mafia. And that’s what it is.

It’s a criminal organization. There’s a bunch of crooks in the government. You know, that’s why they’re upset at what Elon Musk is doing.

Shining a light because, you know, it could shine on them. I mean, some of the people who are protesting the most probably are the most guilty. They don’t want to end up in jail.

Right. So, yeah, we might get some good stuff there. But it’s not going to derail the train that’s headed off the tracks.

So you’ve got to protect yourself. And I don’t care if you want to hope for the best. Fine.

But plan for the worst and get in, buy some gold, buy it now, buy some silver, silver. I mean, we’re getting ready for an explosive up move. I mean, we got below thirty two dollars this morning.

Who knows? Maybe that’s the last time. I don’t know. But you should be buying stocks.

You should be loading up the boat on the gold fund. You know, go buy my gold fund, your Pacific Gold Fund fund. E.P.I.G.X. No, E.P.G.I.X. I always get that wrong.

E.P.G.I.X. That’s the no load symbol. Every discount broker, you can buy that gold fund. I’d be buying it tomorrow.

I think we’ve got a great portfolio. Adrian’s done a hell of a job picking the stocks. But I think we’re going to get an explosive move up in in these stocks.

And so now is the time to to get fully positioned. If you already own some, buy more. And if you’re one of the clients who cashed out, I mentioned people have been liquidating the funds all year.

Buy it back. It’s not too late, even if it’s higher than when you sold. So what if the longer you wait, the higher the price is going to be.

So bite the bullet and and do it now. And, you know, if you get all the information, get the perspectives, make sure you know the risks at my website, EuroPAC.com. So it’s SHIFT Gold for the physical gold and silver. EuroPAC.com for information on the funds.

You can buy my gold fund at my website. If you don’t have a brokerage account, you can buy my funds directly on the EuroPAC.com website. Anyway, don’t forget, again, sign up for the free newsletter at SHIFT Sovereign.

Or, you know what? Sign up for the premium service. It’s well worth the money. It’s not expensive.

And again, if you enjoyed this podcast, not only give it a like or thumbs up, write a comment, but share it with your friends. Make sure more and more people know. I’ve been looking at my YouTube channel.

I’ve been stuck below 600,000. There has been no growth. If you don’t now subscribe to my YouTube channel, make sure and subscribe and then have all your friends subscribe.

I really want to crack that 600,000 level. I got above 1.1 million now on X. And if you’re not one of the 1.1 million that are following me, again, please do so and tell your friends to do it. I think I’m going to do another podcast later in the week, probably Sunday.

Now that there’s no more NFL football, the Eagles surprised everybody and beat the crap out of the Chiefs. But that’s it for a while. And so Sunday nights are no longer football night.

They may be Peter Schiff podcast night. And so I’ll probably be back on Sunday night. So make sure and catch it live.

Bye for now.