Peter Schiff returns to tackle your most pressing financial questions in the second part of this must-watch Speak Up conversation with Anthony Scaramucci. From the Fed’s policies to Trump’s effect on gold and Bitcoin, Schiff delivers sharp insights on today’s biggest financial topics.
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Anthony Scaramucci 0:00
Well, welcome to speak up on the wealthion network. I am Anthony Scaramucci, your host. As you know, we had Peter Schiff on what a great, insightful interview last Friday, as promised, here’s your questions and Peter’s answers. Enjoy you. It. So let’s go to, let’s go to viewers
Anthony Scaramucci 0:26
questions, which
Anthony Scaramucci 0:27
I think are important, Peter and again, thank you for coming on. This is a good one. This is from Robert from New York. How would, how will Trump’s policies affect gold, if at all? Well,
Peter Schiff 0:37
I mean, if Trump actually succeeds in let’s say, slashing government, actually making a meaningful cut in government spending. I don’t expect that to happen, but let’s just say that it did happen. And maybe he even got rid of the income tax and replaced it with some kind of excise taxes or sales tax, you know, tariffs or sales tax, something like that, and there was major deregulation of the US economy. I think that would be bad for gold. I mean, I hope that happens, but, you know, it will be bad for gold. It would be good for the dollar. I just don’t see that as a realistic possibility, given where we are, given the amount of debt that we have, and given the campaign that Donald Trump won, which was one of instant gratification and immediate boom, I know that in order to do the things that need to be done, we have to suffer through a pretty severe recession early in the process, and that’s not what you know, Trump prepared the electorate for. I don’t think he has a mandate for that, and I don’t think that’s going to happen. But, you know, in theory, it could. I don’t think the tariffs that they’re going to put on are going to reduce our trade deficits any more than the tariffs in his first administration, which are still here, by the way. I mean, Biden didn’t repeal a lot of those tariffs, and we have the record, record trade deficits right now. So, you know, the trade deficits are 50% larger today than they were when Trump first took office in 2016 despite those tariffs. You know. So that has to do with the erosion of our own manufacturing base, which continues today, and we grow more and more dependent on the manufacturing infrastructure of the rest of the world, and so I don’t think the tariffs are going to achieve their stated goal. My guess would be the tax cuts are going to get approved. They’re going to increase the deficits. I don’t think we’re going to have meaningful spending reductions, and even if we have some, they’ll be minor compared to the automatic increases that we’re going to get in Social Security and interest on the debt and Medicare and all that. And so I think we’re going to have bigger deficits, more inflation, and that’s going to be positive for COVID.
Anthony Scaramucci 2:57
Okay, very well. Said, Let’s go to the next question,
Anthony Scaramucci 3:07
we’re seeing home sales falling in Florida, and there’s too much supply. Peter, do you think there’s another bubble in real estate? This is Barry from Florida. Well,
Peter Schiff 3:16
you know, real estate prices are very high, and affordability is historically low. So, you know, I would expect home prices to come down, certainly in terms of gold, they’re coming they’re coming way down. But you know, one of the things that’s keeping home prices up is the fact that so many people refinanced their homes during the decade or more of 0% rates. So a lot of people are holding on to three 4% mortgages, and they are holding on for dear life. They don’t want to let let go of those mortgages, so they’re going to stay in their homes. They’ll rent them out. They’ll take on borders or whatever to keep that low payment. But you know, the cost of homeownership is going way up if you own a home. You know, if you have insurance, you know, you’ve seen rates double. You know, utilities are going up. Your property taxes are going up. So the cost of being in a home, and you know, sometimes people get divorced, people die, people lose their jobs, there are things that happen that may force people to sell their homes. So eventually, I think the supply of homes is going to is going to pick up, and that should put pressure on on the prices. And I think mortgage rates are headed even higher than they are now, because I think long term rates are going to keep rising. That’s going to be very difficult to stop. If
Anthony Scaramucci 4:38
you had, I’m going to ask you a follow up, if you don’t mind, because it’s related to all this. Do you ever see a day where housing goes down? I mean long term, secularly, obviously you got this right. In 2016 it did go down, and it busted that mortgage market. But long term, the trend. Has been fairly steady up. Do you see a day where it crashes? Yeah,
Peter Schiff 5:05
well, so what was going on between 2002 and 2008 was very unique, related to how mortgages were being financed at that time, with the subprime mortgages, the interest only, the zero down, teaser rates. I mean, that was a disaster in the making. So, you know, I don’t see the same type of stuff going on. I mean, you still have people getting buying homes that they really can’t afford, because the government subsidizes it. The government, you know, FHA, you know, buys the mortgages, or Fannie and Freddie, and so there’s government guarantees, and so people are able to buy homes with low down payments and stretch it out over 30 years. So prices are artificially high. But I think that measuring houses in terms of dollars, home prices are going to trend higher that, you know, there’s going to be periods of time where they go down, but I do think that in terms of gold, there’s going to be a crash. I mean, I think that housing prices are going to get very cheap if you’re buying a house with gold. I mean that. I mean because, I guess I the prices are just much too high. They’ve got to come down. And they would come down in terms of dollars, if I didn’t expect a lot of inflation. And so that inflation disguises the fact that real estate is coming down, but you know, people’s real wages are going to be coming down, and you know, the cost of maintaining a house is always going to go up. So that’s going to be the big problem for people. Is just paying the bills, yep, and
Anthony Scaramucci 6:45
the property taxes and all that other stuff. So all right, let’s go to the next question. If you’re the US, you get rid of the Fed? John from Pennsylvania, good question,
Peter Schiff 6:54
you know, yeah, it’s, it’s a tough thing, because get rid of it and then replace it with what? Right? So if you’re saying, Should we get rid of the Fed and just hand the printing presses to Congress, you know, or to the President? No. I mean, as bad a job as the Fed has done, Congress or the President would would be even worse. So we can’t just get rid of it in a vacuum. We have to know what’s going to replace it. Now, if I knew we were going to replace it with nothing, if we could go back to the monetary system we had before the Fed, I’d be all in favor that, you know, because that’s when you know we had, we’re on a gold standard. The federal government wasn’t involved. There was no central bank, and paper currency was created by private banks, and it was all backed by gold, right? So everything was good and the government wasn’t involved. But in fact, even if we went back to the original Federal Reserve Act, the way it was originally conceived and passed, that would be a big improvement, because the original Federal Reserve Act made it illegal for the Federal Reserve to own any US Treasuries or any obligations of the US government. And all the Federal Reserve Notes had to be backed 40% by commercial paper and buy gold. And so it was actually an honest central bank. It wasn’t part of the federal government. It was a private banking syndicate that was chartered to issue this currency, backed by real money, gold, and it was supposed to be better than having all these other banks. Is what the Federal Reserve did, is they rediscounted the notes of other banks. So instead of, you know, because let’s say I went, I went. I took a train from New York to California, and I wanted to buy something, and I went to a store, and I had a note from some bank out on the East Coast, and the store on the West Coast never heard of that bank. Hey, how do I know that’s legitimate? The whole idea was, we’ll all take our bank notes and bring them to the Fed, which will reissue it, and now we’ll have this FEDERAL RESERVE NOTE that everybody recognizes, and it would, you know. So it was supposed to improve the system. It was also supposed to provide for an elastic money supply. People don’t realize this. What the original idea of the Fed was, when the economy was growing, they were supposed to expand the money supply along with the growing economy. But when the economy contracted in a recession, they were supposed to shrink the money supply. They do the opposite. Now, they grow the money supply when the economy is expanding, and then when it contracts, they grow it even faster. So I mean, it’s nothing like what it was supposed to be what it was intended to be. In fact, if the Fed, if they propose what the Fed is doing now, they never would have enacted it. No Congressman back in 1913 would have voted for it. But unfortunately, it’s a monster now that we have it was, you know, the camel’s nose under the tent. So I would really like to reform it. It’d be great to abolish it, but you know, not if it means that we just have the government take the reins. Right
Anthony Scaramucci 9:47
and you’re making the point that the Fed and the government has made some decisions, sloppy decisions, that a result of which, rather than doing the right thing, which is either cut services or raise. Taxes to balance things and even things out, they more or less printed money to avoid doing that, and so that’s why we’re stuck where we are. Let’s go to the next question. I heard many say Silver has more upside than gold. What do you think about investing in silver? This is Maria from Canada. Peter, yeah.
Peter Schiff 10:19
I mean, if you go historically and you look at the relationship between gold and silver, because you know that relationship has been around for hundreds of years, and if you measure the price, you know, how many ounces of silver Can you buy with one ounce of gold, silver is pretty cheap right now, and so if it simply reverts to the mean, you’re going to have a bigger gain in silver than than you would in gold. Now there’s no guarantee. Maybe things have changed now maybe, maybe silver is permanently cheap relative to gold. I tend to think that that’s not the case, and that silver is going to have its day. And so my bet would be that you’re going to see a bigger gain in the price of silver, uh, relative to to the price of gold. I expect, you know, both metals to rise. I expect all metals to rise. Because I expect the dollar to fall, but I expect the euro to fall. I expect the pound to fall. Expect the yen to fall, and, you know, I expect Bitcoin to fall eventually.
Anthony Scaramucci 11:18
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Anthony Scaramucci 11:59
You expect Bitcoin to fall eventually. But what if it does it? Then what happens? Would you would there ever come a day where you’d say, You know what? I may have gotten that, let’s say, I don’t know. It’s five years in that bitcoins at 300,000 you would still say, No, right? You say no. This is worth like because let me just give you this theory. I just want to test it on you. There’s millions of market participants, right? And we all know Dean Malkiel spoke the random walk on Wall Street. There’s tremendous amounts of information in the world and so and again, I’m not smarter than the market, so, you know, and there are people that are smarter than the market, you know, you saw something in the housing market? I didn’t see in seven into oh eight. So did John Paulson and so and up. And I’m just saying there’s market participants that are trading this asset at 96 now, maybe it is a tool up. We’ve seen that happen. But what would make you Is there anything you’d say, No, I actually got it wrong. This fact came into play and it changed my view. Or there’s nothing that could
Peter Schiff 13:05
happen. I got it wrong from a speculative investment. Obviously, I could have bought it at a much lower price and sold it anywhere along the way and made a lot of money, right? So I failed to do that right. So you can say that, yeah, I got that part wrong. Now, I never said it couldn’t go up. I just didn’t want to bet that it would. Now, you know, this, this last rise, you know, it’s actually not that big, if you, if you look at it, I mean, in terms of gold, Bitcoin is back to where it was three years ago. You know, it’s kind of, it went down and and now it’s kind of caught back up. But it hasn’t made any real headway against gold since its peak in 2021 despite all this, you know, buying and, you know, all this hype with the government. But look, if, for some reason, the US government actually buys Bitcoin now, I mean, as far as I know, and I looked Loomis doesn’t have any co sponsors of her bill, and I checked the internet, and I only found one congressman who’s come out publicly and said, Yeah, I support it. So I don’t think this thing has a chance of passing. But right now, there’s a lot of hype. But I mean, if the US government actually were to become a major buyer of Bitcoin. And if other governments were dumb enough to do the same thing, yeah, shoot Bitcoin could go to millions of coin, you know, and then that’ll that’ll let you cash out, and everybody who bought Bitcoin will make a huge killing. And all the losses will be the taxpayers. They’ll be, they’ll be the bag holders. You know, what’s Bitcoin worth? Once, when the government owns all of it, it’s like, no, it’s no longer even out there in the private sector. The governments have taken it all away, but they’ve paid a fortune for it, and they can never sell it. So in order to buy up all that Bitcoin, they’re gonna have to create a lot of inflation. The Fed’s gonna have to print a lot of money, if it’s buying Bitcoin at a million dollars of Bitcoin or ten million of. Coin, and its goal is to buy a million Bitcoin, so it’s gonna really have to crank up those presses. But, yeah, some people will have gotten really rich, but a lot of people will get poor. You know, I decided I didn’t want to buy bitcoin. I sure as hell don’t want the government buying Bitcoin for me, using my tax money to buy bitcoin. That would piss me off. You
Anthony Scaramucci 15:21
don’t pay any taxes. Peter, you live in Puerto Rico. I
Peter Schiff 15:23
still pay some. I don’t pay none. I pay. I pay low taxes. But
Anthony Scaramucci 15:27
let’s go to the next question, at least. I just teasing you, Peter, I’m teasing are aging populations in the US and Europe a cause for economic concern? This is Mark from Texas,
Peter Schiff 15:38
yeah. Well, aging populations are always a concern in nations that have the type of system that they have in Europe or the United States, we have this Social Security Ponzi scheme, you know, where we have older people that we’ve promised that for the rest of your life, once you hit 65 we’re just going to pay you money and we’re going to, you know, either print it or take it from the young people. You know, the longer people live, the bigger burden that is on society. You know people that are 7080, 90, a lot of these people, they don’t have jobs. They’re not doing anything, right, but they’re spending a lot of money. And where’s that money coming from? Right? It’s coming from the people who are still working to pay the bills, whether they’re paying the bills directly through taxes or indirectly through inflation. So all of these countries that have made all these promises, and that’s what happened, to see the politicians wanted to get votes, and so they promised the voters all this retirement money, vote for me, and you’re going to get all this money when you retire. And so a lot of people voted for the politicians that promised all these benefits, but nothing was funded. Right? They didn’t take money aside and say, Hey, we’re going to take money out of your pay and we’re going to invest it somewhere, and when you retire, you know you were going to tap into that pool. Now, you know they you. They tried to pretend that was social security with the whole concept of a trust fund, but it was all a bunch of nonsense, because every dime the government collected in Social Security was spent. Nothing was set aside for anybody’s old age. But now that we’re all living a lot longer, you know, it’s, you know, it’s costing a fortune to maintain the Ponzi scheme.
Anthony Scaramucci 17:16
All right, let’s keep going. Great. What do you think about Doge. And of course, this is not the cryptocurrency. It’s the Department of governmental efficiency. Will Leon Musk be able to reduce wasteful spending? This is Joe from Illinois, yeah.
Peter Schiff 17:32
Well, first of all, you know, you know it is a joke in that it’s he named it after his, you know, crypto that was started as a joke to make fun of Bitcoin. And now look where it is. But you know, the Department of government efficiency, which would be an oxymoron if we’re an actual department, is not a department. It’s a private Think Tank. I don’t see that. It’s any different than the grace commission. Some people might not remember that, but Ronald Reagan actually ran as a real conservative, libertarian type candidate, Barry Goldwater, Republican, not the populist campaign that Trump ran, but he actually promised to get rid of the Department of Education, the Department of Energy, shrink government. He’s the one that came up with the drain the swamp. He started. He was going to drain the swamp, those are his exact words, and they established the grace commission to find all the waste, fraud and abuse in the government and make recommendations to Congress and how to get rid of it. Well, the Congress took those recommendations and threw me the trash can. I mean, nothing happened. None of the departments that Reagan campaigned to eliminate were eliminated. It’s very difficult to actually cut government. There’s such a huge constituency for every wasteful dollar in the budget. And the main problem is Trump took all the big stuff off the table during the campaign. You know, no cuts to Social Security, no cuts to Medicare, Obamacare, defense, we can’t cut interest on the debt. So, I mean, you got 80% of the budget, that’s that’s off the table. I mean, so even if you eliminated the other 20% completely, you still would come close to balancing the budget. But they’re not going to do that. So unfortunately, I don’t think much is going to happen. You know, with that department, I think there’s going to be a lot of hype, a lot of fanfare, you know, for the next few months, maybe a half a year, but at the end of the day, I don’t think much is going to actually happen. I mean, even if they come up with stuff, Congress isn’t going to pass it. Certainly the Democrats are not going to vote for it. So you’re going to need, you know, unanimous all the Republicans are going to have to support there’s no way. Half the Republicans are rhinos. They’re not going to they’re not going to vote to cut all these government programs. In the meantime, we’re going to have a recession. And so there’s no way they’re going to cut government spending in a recession and deliberately make the recession work. Right, they’re going to increase government spending in the next recession. So to me, it reminds me of the time where they were talking about how we were going to pay off the national debt. Remember, during the Clinton years, we started running some kind of fake budget surpluses with the way they were keeping that keeping score. And at the time, they were worried, oh my god, we’re going to pay off the national debt. What are we going to do when there’s no more treasuries out there? They’re so important, and there’s going to be no more treasuries because they’re all going to be retired. And we were all worried about what, what was going to happen when there was a zero national debt? And I was laughing about that back then. And, I mean, and so I think the hope that we’re actually going to cut, you know, 2 trillion a year off the government, because we have this Doge commission, you know, reminds me of that.
Anthony Scaramucci 20:49
I think he put Elon Musk and Vivek Ramaswamy in Siberia. And I think he did it intentionally, yeah, didn’t give him real jobs. He just pushed them into Siberia and left people with the impression that they have real jobs. Let’s go to the next one. What are the key factors for success at launching and sustaining a business like you’ve done, Peter, this is Thomas from the United Kingdom.
Peter Schiff 21:13
Well, I mean, I think there’s no real secret to that. I mean, I think it’s the same with any any business, any entrepreneur that’s going to start a business. I mean, first of all, it’s kind of important to try to figure out what you’re good at and try to figure out what you do well. And hopefully, you know, they’re the same thing, right? If you enjoy what you do and you do it well, because if you want to start a business, you’re going to work really hard and you’re going to spend a lot of time, of time. I mean, when I first started, you know, there was no weekend. I worked seven days a week. You know, probably worked 16 hours a day. I mean, I ate at my desk. I mean, I was at my office all the time, you know. I mean, and that’s what it takes to be successful, I recommend. I mean, tell people, if you really want to succeed in life, start a business. You’re not going to make a lot of money as an employee, with a few exceptions. I mean, you know, you know, if you could be a professional quarterback in the NFL, you can get a great salary, but most people can’t do that. And the way most people I know who have succeeded and who have amassed a lot of wealth is they’ve, they’ve started a business, and they’ve, they’ve worked for themselves, and they’ve hired other people, and so, you know, you just got to work hard. You got to persevere. You know, you got to be willing to, you know, to sacrifice. You can’t just run out when your friends, if you’re young and your friends are just taking vacations and and buying fancy cars, you can’t do that stuff if you want to have money to start a business, you know, you could go years without making money. You might lose some money in the short run. You got to have some savings to help pay the bills. So you got to sacrifice in the short run. You got to, you know, live beneath your means and and make it a long term commitment. But if you do all those things and you’re successful, you know that the dividends will be there.
Anthony Scaramucci 22:59
You know, I’m not going to add much to that. I’ll just say that you can’t give up. One thing Peter’s been good at, I think he would agree with with me and say that I’ve been good at. I just don’t give up. I just keep going. Got to keep going. When? What did Churchill say? Peter, when going through hell, keep going, right? That’s what you got to do. Well, you
Peter Schiff 23:17
don’t want to stop you can’t you got
Anthony Scaramucci 23:19
to keep going. So listen, you’ve been terrific and very, very generous with your time here on this podcast. Thank you for joining us on speak up and the wealthy on network. I hope you come back. We disagree on a few things, but that’s what makes it fun and spirited. And I hope you feel like you got a chance to get your voice out there on this show today. Yeah,
Peter Schiff 23:39
I appreciate it and look forward to seeing you again at some point. All right. All right. I never see in Puerto Rico, but
Anthony Scaramucci 23:46
I don’t know, maybe if I go to sell my bitcoin, I’ll move down there with you. You want
Peter Schiff 23:51
to, you want to move down here before you say, before you sell
Anthony Scaramucci 23:54
exactly I’m teasing. I’m a New Yorker. I’m not going anywhere. Good.
Peter Schiff 23:57
That’s the other thing that people think that Trump, they’re gonna eliminate the capital gains on on Bitcoin. That’s another thing that’s, that’s, that’s that people are hoping for.
Anthony Scaramucci 24:07
Yeah, I don’t see that happening. But anyway, you’ve been great, man. Happy holidays to you and your family. Thanks again. I You too.
Anthony Scaramucci 24:14
Had to wrap on another discussion here on wealthion. Thank you for joining us. If you need help being financially resilient, please head over to wealthion.com and sign up for a free, no obligation portfolio review with one of our registered investment advisors, and remember to follow us on social media for the latest news and information to help you invest wisely. If you could like and subscribe to the channel, we greatly appreciate it. Don’t forget to hit the notification bell so you can find out when we post new videos to the channel. Thanks again for watching and until next time, stay informed. Be empowered and may your investments flourish. And if you like this content, please watch this video next.
