Peter Schiff: Household Debt Highest In Nation's History
In a recent interview, Peter Schiff was featured on Real America with Dan Ball.
In analyzing the current economic landscape, Peter shared a perspective that challenges the optimistic narratives surrounding key indicators.
His skepticism extends to reported job growth, which he attributes to individuals taking multiple jobs amid rising prices and stagnant paychecks. Peter also critiqued the inflation report, countering the notion of decreasing inflation by asserting that it is bottoming out and poised to intensify.
He emphasized the stark contrast between official reports and the real experiences of everyday Americans, particularly underscoring the record-high levels of household debt and the government’s role in exacerbating economic challenges. Furthermore, Peter highlighted the potential repercussions of rising interest rates, predicting that instead of alleviating inflation, they would contribute to its escalation.
The interview concluded with a cautionary note on government spending, as Peter advised against additional borrowing when the nation is already grappling with substantial debt.
See below for the interview transcript:
Dan Ball: So, Peter, they put out the CPI numbers, they go, “Oh it’s all great.” I remember the job report last month. They underestimated on purpose and said 122, we got 300 and some thousand. So, they keep saying, “Jobs are up. Inflation’s going down. Everything’s great!” That’s not the true story, is it Peter?
Peter: No, I mean first of all the only reason that jobs are going up is because people are forced to take 2 or 3 jobs, because prices keep going up and their paychecks are not. And of course, we’ve been replacing full-time jobs with part-time jobs, so the numbers would favor extra jobs, but today’s inflation report was a disaster. It really confirms what I’ve been warning for months now. That inflation is bottoming. That we’re not at the peak but we’re at the trough and we never got to 2%. In fact, if you look at the core for the month of January, which the Fed prefers, it was up 4/10ths of one percent on the month. If you annualize that, that’s 5% a year. I mean that’s really where we are, and of course, you’d probably have to double that to get the actual rate, because the government’s rate so understates what’s going on.
Dan: Exactly
Peter: So, the inflation problem is far from solved. In fact, it’s here permanently and it’s going to get a lot worse as the months go by.
Dan: Peter, you’re the numbers guy, so I want you to dispel all these myths that the regime keeps pushing forward about, “These are the best numbers we’ve seen in 50 years.” Okay. But how bad was the economy when Joe took over because of all the COVID lockdowns around the country? Again, you can’t say, “Well the Trump regime handed us a horrible thing…” No no no. States around this country like California, run by Gavin Newsome, Democrats, did tyrannical lockdowns for over two and a half years. They crushed small businesses, medium, and even large businesses. People lost their jobs; they lost their way of everything. And so, of course, if you’re at the bottom, and you start to come up in 3 years of an administration it’s going to look like major amazing growth. But it’s still not even close to back to normal pre-2019 and beyond, behind that before COVID hit. So, explain those numbers and how they’re misconstruing them and tweaking them in their favor, because I’m tired of hearing this crap, “50 years Joe’s got the best economy.” No. He doesn’t.
Peter: Well, you know, figures lie and liars figure. And they’re always going to try to spin these numbers and try to you know put lipstick on a pig. But if you look at Biden’s popularity, which is the lowest of any president in history, and you look at why he’s so unpopular, it’s the economy. When they poll the potential voters as to where Biden scores the lowest, it’s on the economy. And so, if the economy’s as great as they’re saying, why isn’t Biden getting any credit? Why are the people who are living in the economy so pessimistic about the economy that they’re blaming Biden for how bad things are? So, I think that is far more accurate than how the government is spinning it. But even the government data, you know they show us one report with these official jobs numbers, but you have the household survey which comes out the same day and it’s the mirror image of the rosy report they keep touting. All the big companies are announcing layoffs. I don’t know any of them that are hiring. So, we’re not getting good jobs. Meanwhile, if the economy was so great why are people drowning in debt? Why is credit card debt at an all-time record high, despite record-high credit card interest rates?
Dan: Thank you!
Peter: The only reason consumers are using their credit is because they’re broke. You know. And if it was a good economy, they wouldn’t have to depend on credit. They would have the income to buy the things they need. They wouldn’t have to be borrowing money and going this deeply into debt.
Dan: Yeah. Peter, we just put up a graphic that showed an article I think from the website of Zero Hedge which shows how much debt we Americans are in. And you have been hammering this for a year on this program. $1.56 trillion for just credit cards and overall household debt tops $17.5 trillion. That’s the highest number in American history for citizen’s debt. That is astronomical.
Peter: Yeah, and that’s just what they owe on their own. Remember all the citizens are on the hook for their share of the national debt.
Dan: Oh right.
Peter: Because the government is borrowing in our names. And that’s $34.2 trillion. So, if you break it down per household, that’s an even bigger number than the household debt that people have taken on by themselves. And again, if the economy was strong, we wouldn’t be running up a trillion dollars of red ink a quarter on the national debt. Because the strong economy lowers deficits because you get more production, you get higher tax revenues, the government doesn’t have to spend as much on support programs. But what we’re seeing is a fiscal situation that looks like we’re in recession.
Dan: Yeah, and the DOW probably wouldn’t drop almost 700 points. I know it ended only about 450 or 500 down today, but the DOW Jones obviously investors didn’t like this latest CPI and all the job report numbers that just came out in the last week or so, because why would it tank? We have huge gains since January and it took a hit today, right?
Peter: Yeah, investors still don’t understand how bad it is. Investors think that what this report means is that the Fed just has to fight a little harder to win the inflation war. So maybe the rate cuts get delayed a few months. That’s not what it means. It means that the Fed has already lost the inflation fight because the Fed can’t hike rates more, which is what it needs to do. I mean the fact that we have record debt, government and individual debt, proves that the interest rates were too little too late. Because the way rising interest rates are supposed to reduce inflation is by reducing borrowing and spending. But none of that is happening. Everybody is borrowing and spending more despite the rate hikes, and so it’s not enough. And actually, the rate hikes are prices. Interest rates are prices. And they work through the economy just like rents, raw materials, or wages. And so, these rising prices, and higher interest rates, are actually going to cause the CPI to go up.
Dan: Final question and it probably doesn’t help as you just talked about our national debt of $34 trillion on top of the household debt of $17.5 trillion. It doesn’t help when your Senate passes another $95 billion foreign aid bill so then investors and the American people see our government spending more money we don’t have. A few seconds left you get the final say on that one.
Peter: Yeah, well you know, we’re borrowing money from the rest of the world to recycle it back to other parts of the world. Look, we can’t give aid to other nations when we’re already broke. Yes, sure if we had big surpluses and we wanted to share some of the wealth. But we can’t go deeper into debt. At a minimum, if they want to appropriate some funds, they need to cut someplace else. They can’t just act like we can spend whatever we want because all this is going to do is add to the inflationary pressures that are already building in the economy.
Dan: Peter, we always like that you keep it real and bring the facts in numbers, unlike this alleged administration that we have to listen to lie to us every single day. Peter Schiff, chief economist, global strategist, founder of SchiffGold. As always, thank you sir. Appreciate you.
Peter: Thank you