Peter Schiff critiques the Federal Reserve's approach to reducing inflation, arguing that the apparent success in lowering inflation rates is misleading. he attributes the previous drop in inflation to a collapse in oil prices and a surge in the dollar due to anticipated rate hikes, asserting that the Fed has already achieved the desired impact.
Peter Schiff emphasizes the current upward trend in oil prices, indicating a potential rise in inflation. he also questions the effectiveness of the Fed's rate hikes in curbing inflation, pointing out that credit card debt remains high, and government budget deficits are soaring, contrary to the intended reduction in aggregate demand.
Concerns are raised about the impact of higher interest rates on businesses with debt, leading to increased costs and potentially higher consumer prices. Peter argues that the Fed's goal of reaching a 2% inflation target is unrealistic, as the measured inflation rate is already higher when using the 1970s methodology.
and then Schiff turns to the potential consequences of continuing deficit spending, with a focus on the Federal Reserve facing a dilemma between allowing long-term interest rates to rise substantially or reversing quantitative tightening and expanding the balance sheet. The exponential growth in interest payments on the national debt is highlighted as a significant concern, with projections suggesting it could become the largest national expenditure.
finally, Peter Schiff concludes by suggesting that the current path is unsustainable, anticipating a breaking point before the national debt reaches extreme levels.
