The federal government is borrowing and spending trillions to bail out everybody. The Federal Reserve is enabling this by printing trillions of dollars out of thin air. On a recent InfoWars interview, Peter Schiff asked the question nobody seems to be grappling with: who’s going to pay for all this? Peter reminds us that ultimately we pay – either through taxation or inflation.
President Trump has started talking about opening America up again. That has spurred optimism on Wall Street that the economy will soon be up and running. The Dow Jones was up 558 points on Tuesday (April 14). This plays into one of the most persistent myths surrounding the coronavirus lockdowns – the notion that the economy is just going to restart on a dime once COVID-19 is solved.
But Peter Schiff has been saying since the beginning that it’s not really about coronavirus. The pandemic is the pin that popped the bubble.
This is not to say the coronavirus isn’t a problem. Even a healthy economy would suffer significant impacts with this kind of shutdown. But Peter said the government and central bank response, with trillions of dollars in stimulus, bailouts and money-printing, is making things worse.
This is going to do far more damage than the coronavirus to the economy. I mean, the government’s cure is far worse than this disease.”
Peter reiterated that the coronavirus is a pin that pricked a bubble that was already searching for a pin.
It would have found one. If it wasn’t the coronavirus, it would have been something else. In fact, I think the air already started to seep out of that bubble. That was why the Fed had started cutting rates last year. That’s why the Fed had quietly gone back to quantitative easing, without admitting that it was doing it – it was because the air was leaking out.”
Make no mistake; this is another financial crisis. Keep in mind, 2008 didn’t start as a financial crisis. Initially, it was a real estate crisis. The problem was the people who bought real estate borrowed a lot of money. They were deeply in debt. When the price of real estate dropped, they couldn’t pay their loans. That spurred the financial crisis.
Well, the coronavirus might be a health crisis. But when businesses are shut down and they have no revenues and they have a lot of debt, they can’t pay their bills. So, that’s why it’s another financial crisis.”
Nobody had saved anything for a rainy day. Well, take a look outside. It’s not only raining; it is pouring. And we’ve got nothing.”
The solution seems to be to print more money and encourage even more debt. Peter said everybody has a sense of complacency because it worked after the 2008 crisis.
Now, it only appears to have worked because they were able to inflate a bigger bubble than the one that popped. But it won’t happen this time. There’s no way they’re going to reflate the bubble. And the problem is what they’re doing now is on an order of magnitude greater than what they did in ’08.”
And nobody is asking the most pertinent question: who is going to pay for this?
We’re talking about trillions and trillions of dollars to bail out everybody. And now they want to spend trillions more on infrastructure. Where is the money coming from? Who is going to pay for it?”
Printing money is the most expensive way to pay for government.
We have to pay for government. It’s not free. Either government takes our money or the government takes out purchasing power. And that’s what they’re doing now. By printing money and spending it into circulation, they’re destroying the value of the money that’s already out there.”
Ultimately, every American who has savings, or money in a retirement account, or even earns wages, is going to be stuck with the bill for the bailouts and stimulus.
Everybody’s savings and income is going to lose value. The cost of living is going to go way up. It’s massive inflation. It may even be hyperinflation.”
In this interview, Peter also talks about how the economy can recover with the misallocation of resources caused by the government’s actions – for instance, when the government is paying people to sit at home and collect unemployment.
Ultimately, Peter makes the case that the government response is going to delay the recovery and make the crisis worse.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.