Hala Taha: [00:00:00] Yeah, fam, welcome back to the show. My guest today is Peter Schiff. [00:01:00] He's a businessman, investment broker, author and financial commentator. He's the CEO and Chief Global strategist of Euro Pacific Capital, and he is also the host of the very popular podcast I. The Peter Schiff podcast. In this episode we're gonna talk about the 1%, why they aren't so bad, and why capitalism really fuels the economy.

We're gonna be talking about real assets, what that means, and the difference between Bitcoin the dollar. Gold, how we should think about and be investing in each of those. And we're also gonna talk about the potential recession that's about to hit in the upcoming year with this new presidency. So I can't wait for you guys to hear this.

I was really blown away by all of Peter's knowledge. This is one of my favorite episodes about the economy and finance that we've had in a really long time. So without further delay, this is my super insightful conversation with Peter Schiff. Peter, welcome to Young and Profiting podcast. 

Peter Schiff: Aha. Thanks for inviting me [00:02:00] on. I'm happy to be here. 

Hala Taha: Yeah, I'm excited to talk about the economy, to talk about investing. And to kick it off, I really wanted to get your POV related to some general topics, the things that you talk a lot about. And the first place I wanted to start was income inequality.

And income inequality has been a super hot topic in America for over a decade now. So in 2011, if you guys don't know Occupy, wall Street movement was happening, right? And their big slogan was, we are the 99%. And I learned that you actually went down to the protests with a camera and a sign that said, I am the 1%.

Let's talk. And wealth inequality has actually gotten a lot worse since 2011. And I came across a recent stat that said the top 1% of American households held about 30% of the nation's total net worth. So first of all, do you think this is a problem? 

Peter Schiff: Well, first of all, just about the Occupy Wall Street thing that I did.

I, I went down there. It was, I was working [00:03:00] with Reason TV and so they initially sponsored it and the video ended up getting tens of millions of, of views on multiple channels. And this is a while ago when that was a lot of views. I mean, YouTube wasn't as big back then as it is now, so it did really well.

I mean, if you wanna see it, I eventually, a few years ago, I just put a copy of it on my YouTube channel. And even there, I've got over 5 million views. I put it up a few years ago, but it's, it's a great video. You just, I think it's about two hours if you have the time. And it did make a big impact because I still get emails now.

I mean, every week at least I get one from somebody, uh, usually young people who let me know how influential this was. It opened their eyes. To a lot of things that they didn't understand. Now, getting to your income inequality question, I mean, first of all, there's always gonna be income inequality in a free market.

In capitalism, people are not equal. I mean, they're equal under the law, right? That is a tenant of [00:04:00] government that all, everybody is equal under the eyes of the law, but we're all not equal in our abilities, in our intelligence, in our drive, in our goals. And so there are gonna be people that are more successful than other people.

And so they're gonna be wealthier. I mean, that's just what you're gonna have. But under capitalism, the beauty of capitalism is even the poor people can be rich, uh, relative to how they would be in another system. And in fact, the poorest people in America today live better than the richest people did hundreds of years ago.

If you look at all of the things that capitalism has produced that have increased the quality of life. Hundreds of years ago, if you wanted to listen to music, you had to be wealthy enough to afford to have a, a live band play for you, right? You couldn't just, you know, go on the internet and, you know, and listen to stuff.

So a lot of things that you had to be rich to have, now everybody has them. I mean, I remember when the first cell phone came out, I didn't even wanna buy one 'cause I couldn't afford [00:05:00] it. I remember I went to a, a store and I saw this, uh, high def television in like a Best Buy or something. And I was probably maybe in my thirties early, like I couldn't believe the picture, how great it was, but I couldn't afford it.

It was like $10,000, which was a lot of money back then. And Matt, you know, it's still a lot of money, but it was a lot more money in the eighties. But the reason that everybody's got a television of, you know, a high def television, the reason that even people on welfare have cell phones now is because capitalism made them more abundant and less expensive.

But income inequality today. Is actually higher than it's ever been. And the reason for that is because of the monetary policy that the Federal Reserve has pursued. And as a result of that, we have an extreme income inequality that is not the natural byproduct of capitalism and which is a problem, but the solution isn't for the government to try to redistribute the wealth.[00:06:00] 

From the rich to the poor. That always backfires and that will lead to even greater income inequality. What we have to do is change the monetary policy that has enriched the few at the expense of the many 'cause. What the government's been doing is that they've been fueling inflation. They've been.

Running huge deficits, printing a lot of money, creating a lot of inflation. The beneficiaries of that inflation are primarily the wealthy who own assets and who are able to leverage those assets with cheap money to achieve more wealth. But the middle class and the poor suffer because all they end up with is higher prices for the goods and services that they buy.

And they're also encouraged to go deeper into debt, to afford to pay those bills. And so instead of building wealth, they build debt. They get poor and poorer as they continue to borrow money to consume. In the meantime, a lot of the money that should be invested productively, that would result in a higher standard of [00:07:00] living for everybody that would create, you know, more goods and services and lower prices, we end up just fueling speculative bubbles.

On Wall Street. And so the policies that are being pursued are exacerbating the income inequality and they're undermining the collective standard of living. And also the government perpetuates poverty with the, the welfare system that we have where people are paid basically not to be productive. And it breeds a culture of dependency.

And we have a lot of things like the minimum wage law and occupational licensing and payroll taxes and regulations that make it very difficult for people that don't have skills to get jobs. And the most important thing for somebody who doesn't have a skill is to get a job. On the job training is the best way to get skills, and the more skills you have, the more money you can earn.

But if the government erects a lot of barriers to make it harder to get that first job, then you never get on the economic ladder. And so a [00:08:00] lot of people have been trapped in poverty because of the, the welfare state and a lot of these regulations that in some cases are well-intentioned, but they backfire.

Hala Taha: I really love that you explained all this because I feel like it foreshadows our conversation later because I'm gonna ask you about why you feel we're in a bubble economy and economic policies and the Trump administration and what you foresee is gonna happen with all of that. But first I really wanna stick on this like high earner 1% topic.

And I wanna understand what you think is misunderstood about one percenters and also how do they bolster the economy? These one percenters. I. 

Peter Schiff: Well, most people who get wealthy do it because they have created something of value. The way you get rich, honestly. Right? I mean, obviously there could be a thief that could just steal something and then he gets rich dishonestly.

But if I start a business, and that's the way most people achieve wealth. [00:09:00] They, they start a business. And when you have a business, you can't force anybody to be your customer. They have to choose, they have to voluntarily buy whatever it is that you're selling. And people will always act in their own self-interest.

And so if I start a business and now people wanna buy stuff from me, it's because whatever I'm selling makes their lives better, and they value what I'm selling more than the money that they're paying me to, to, to provide them with that. And so that's a good thing because in capitalism, the more money you earn, by definition, the more people that you've.

Helped. You've improved their lives, you've given them a better product, uh, at a higher quality or at a lower price, and they voluntarily gave you their money that they worked hard to earn. They gave you that money to buy your product or, you know, or utilize your service. And generally in the process, if I'm gonna create a business, I usually can't do it all by myself.

I need help. I have to hire some people to help me. And [00:10:00] so now I'm creating employment opportunities for people because a lot of people. Can't start their own business. They don't have the savings, the capital, they don't have the know-how and they can't afford to take the risk. When you start a business, you may not make any money.

I mean, there's a lot of risk associated with setting up a business and usually you have to put up money in order to do it, and you may lose. You may. In fact, most businesses fail. That means the people who start the businesses lose money, but their employees don't lose money. When you hire somebody to work, you gotta give them a, a salary, a wage, whether you make money or not.

If you rent office space, you gotta pay the landlord whether you make any money or not. So the business owner, the entrepreneur, is the last person to get paid, and he is usually the hardest working. I know when I, you know, when I started my business, I was the first one there and I turned off the lights at night.

I worked harder than anybody and for the first several years I made no money. So there's not a lot of people that are willing to put [00:11:00] in that kind of effort. Some people don't wanna work 14 hour days. They wanna work for eight hours. They wanna take the weekends off. When you own your own business, you never have a weekend off.

Even if you're not at work, you're still working. So it's very difficult to be a successful entrepreneur, but it's very important. And if you succeed, you deserve all the money that you make. And the more money you make, the more people you've helped, you've improved our lives or you wouldn't make any money.

And the other beauty of capitalism is if I set up a business and I don't make any money, that means I've failed. That means my efforts have not produced any real value, meaning I hired people to work who could have worked someplace else. I took that labor, which is not unlimited. I took some scarce labor, maybe I rented some space, I used some materials.

I use scarce resources, and I couldn't produce a product or service that I could sell at a profit. That means the people don't value what I'm doing [00:12:00] as much as it's costing me. To produce it. And so I'm net destroying value and so I go outta business. But if I succeed, I stay in business and I make money.

But that's how capitalism works. That's how resources get efficiently allocated. That's why socialist countries are broke. Communist countries have nothing. The people starve because you don't have a profit motive, you don't have the right incentives. When you have a bunch of bureaucrats and government trying to figure out what people want, it can't work.

You need to have individual entrepreneurs incentivize by profit in order to have an efficient allocation of resources in order to create anything, in order to invent anything. People operate in their own self-interest. So if I know that if I start a business. And I do something good. I could get rich.

Well, well, then I'm gonna do it. But if I don't have that incentive, then why should I, why should I take the risk? Why should I put in all the effort if I can't benefit from [00:13:00] that? And so you can't look at somebody who's wealthy and think that, oh, they're, they're a bad person. They're an evil person.

They're not the people who have helped us the most. I mean, everybody, you know, you look, oh, I've got this iPhone that I really like. Well, you think you'd have an iPhone if, if Steve Jobs and his early investors couldn't make any money creating those products, the problem isn't the wealthy people in the free market.

It's the wealthy people in government. It's people who get rich off of government because that's the problem. Because government isn't about. Voluntary transactions, government is about force. A businessman can't take your money away from you. A businessman has to earn your money. He has to convince you to spend your money at his business as opposed to somebody else's, and he can only do that by offering you a better deal.

Government takes your money by force. Government says you have to gimme your money whether you like it or not. And so that's what people have to be afraid of. Big government. Big government can harm you, a big [00:14:00] business can't. All they could do is try to earn your money by providing you things that make your life better.

Hala Taha: Honestly, that's so eye-opening. You know, you're so right. It's the politicians and the government that get rich off our money. That's the bad thing because entrepreneurs, they're taking risks, they're creating jobs. They're making our standard of living so much better through innovation and technology and better healthcare and all these great things, and entrepreneurs really push the world forward.

So sticking on that topic of government, taking our money and taxes, when it comes to the one percenters, a lot of people complain that it's the middle class taking all the burden with the taxes. And even Warren Buffet once said that he gets taxed less than his secretary. So talk to us about that and what you think about that.

Peter Schiff: Well, he doesn't get taxed less than his secretary. But I mean, one thing about Warren Buffet is he worked for free, right? Warren Buffet didn't take a salary because he owned so much stock in Berkshire Hathaway. He was earning his money on dividends. That was his [00:15:00] choice. But Berkshire Hathaway, the corporation, paid a corporate income tax before Warren Buffet got his dividend.

And so when Warren Buffet said, Hey, I earned less than my secretary. That's because he wasn't counting the taxes that he paid on the corporate level before he got his personal dividends. So when you add it together, he, he did pay a higher tax, uh, than his secretary. But you know, people like to use those soundbites as if we need to tax the rich more.

You know, the rich are already paying a lot of taxes. They pay the majority of the taxes. But the problem with higher taxes on the rich, and I'm talking about, you know, not somebody that makes 200, 300, 400,000 a year, you're talking about people that are making 10 million, 20, 50 million a year, you know, making a lot of money.

What do you think rich people do with their money? Most of it is invested. It's not spent, there's only so much money you can blow, and so most money that wealthy people earn, they invest. That [00:16:00] money, assuming they invested productively. The problem is now they just, a lot of it is gambled on the stock, on Wall Street and stuff, cryptocurrencies or nonsense like that.

But without that, the artificially low interest rates and the things the Fed does, most of the money that wealthy people earn and don't spend is invested productively. It goes to help. New businesses start up. All these venture capitalists, all these companies, you know, they get funded seated by wealthy people that have the money to risk.

They put their money at risk to create new businesses which come up with new products and, and new services. And so when you tax the wealthy people, that's what you reduce. You reduce their investments. You don't reduce their consumption because they're gonna buy what they wanna buy. They just invest what's left over.

So the marginal tax rate on the wealthy ends up reducing investment, which means less economic growth and lower prosperity. So just take it from the rich is not [00:17:00] gonna do it. Plus, the more you tax wealthy people, the less incentivized they have to make the investment. They'll screw it. I'm just gonna spend the money.

Why should I invest it when the government's gonna take so much of it? Because if you lose money, the government doesn't share in the losses. They just, they just want a big chunk of the profits. And so that's not a good partner to have. So it's, it's counterproductive to say, Hey, just let's raise the taxes on the rich.

But I do think that in America today, the middle class pays a tax rate that much too high. It's not just the income tax that they're paying, it's the payroll tax, the social security and Medicare tax. And a lot of people don't realize this. They think they just pay their half, they just think they pay half of the Social security tax and the employer pays the rest.

No, the employer doesn't pay any of it. The employer just collects it from the worker. So everybody is paid a little bit less so that their employer can send Social Security payments to the government. All the social security money comes from the worker. [00:18:00] That's why if, if you're self-employed, if you're driving an Uber.

And you're an independent contractor, you pay a 15% self-employment tax, but everybody is paying that. They don't realize it because they don't see it out of their paycheck because the employer already factored that in into the wage. The wage would be higher without that obligation. So every, everybody is overtaxed, I think.

But the reason for that is that we have a huge government that's spending much too much money. And so the way to lower everybody's taxes is to cut government spending substantially. But right now we have a huge budget deficit, which means technically we're not even taxed enough given how much government we have.

We're not paying enough taxes to finance it. And the way we end up paying for that government is through inflation, because inflation is really a tax. And the way the inflation tax comes into existence is, let's say the government collects a dollar in taxes, but they spend a dollar 50. Where do they get that 50 cents?

They didn't get it in [00:19:00] taxes. So. They have to create it, the Fed creates it or they could borrow it. But now the borrowing is, is financed by the Fed mostly. So the government creates that extra 50 cents and they spend it in the circulation. And now the people that get that money go out and spend it, and that bids up prices.

And so the increase in price is the tax. So instead of the government taking your money. Honestly, they take it dishonestly through inflation by taking your purchasing power. So when people are complaining that inflation is too high, it's taxes that are too high, and it's government spending, because that's the real tax, it's how much government spend.

So that's why even when, when Donald Trump, when he claimed that he had this big tax cut when he was president, there was no tax cut because government spending went up every year that Trump was president. And it's the amount that government spends that is the actual tax. That is the burden that government puts on the economy.

And all those resources need to be paid for by the public, either [00:20:00] through direct taxation or sales taxes or income taxes, social security taxes, or they're gonna be paid for by inflation. And recently, more and more of our government is being paid for by inflation. And that's why inflation, despite what Trump had promised to get elected, inflation is going to get worse over the next several years.

Prices are gonna go up more, I think. This year than they did last. 

Hala Taha: I could definitely imagine that, especially considering how much we spent on defense and how much we've sent to Ukraine and Israel, it's been absolutely insane in the past year. So I could imagine that that's gonna trickle to inflation in the country this year.

Peter Schiff: I. Defense spending is gonna go up, but defense is really the only thing the federal government should be spending money on. I think we should spend less on defense, but we need to get rid of almost everything else the government does. That is the problem. The federal government is doing so many things that it has no business doing that it has no constitutional authority to do.

Donald Trump talks about how, you know, a hundred [00:21:00] years ago, we had no income taxes at all. We just had tariffs and we had taxes on liquor and tobacco and firearms, stuff like that. But that was it. That's all the federal government ran on. Nobody paid an income tax. Nobody paid a payroll tax. We didn't have social security and, and America prospered without those taxes.

We had faster economic growth in the 19th century than we did in the 20th century, or now in the 21st when we had no income tax. I. But the reason we were able to exist without an income tax is because the government was tiny. The government hardly did anything, so it didn't spend very much money, so it didn't need a lot of taxes, and so it could afford to raise that revenue through tariffs.

Today, the government is so big that it's impossible to get the amount of money that they need through indirect taxes like tariffs. And so that's why they, they need the income tax. 'cause they take that money right outta your paycheck. You never get a chance to see it before you even get it. The government has it, right?

Same thing with the payroll tax. So without those type of taxes, the government couldn't be this [00:22:00] big. But those taxes are very economically destructive and they destroy individual liberty. I mean, I think it's horrible that people have to even keep track of how much money they earn. My grandfather, my father's father, came to this country as an immigrant.

He had no money, didn't speak any English, and he never became wealthy. He was a middle class guy, but he had a, he was self-employed. He had a carpentry business. He employed a few other carpenters. You know, he worked his whole life. I. He never kept track of what he earned. He had a little business, he paid his workers, whatever money was left over was what he had.

But he didn't, he didn't write it down because there was no taxes to pay. You know, you paid your bills and that was that. You didn't have to have accountants, you didn't have to have lawyers. You just earn money and you spend, that's a free country today. You know, every, you know, you have to tell the government everything you do.

They want to know everything you know, all the money you earn, everything you bought. I mean, so we have a lot less freedom today than we did before we had an income tax. 

Hala Taha: Do you feel like this new department led by [00:23:00] Elon Musk is gonna change anything? Doge, I think it's called. 

Peter Schiff: I don't think there'll be a substantial change such that it makes a difference.

I mean, it's not really a department first, it was gonna be a think tank, but now Donald Trump, uh, signed an order. So now he's kind of brought Doge into the White House. So the people that work for Doge are actually gonna be government employees. So that's more money we're gonna spend hiring these, these workers.

But I think their mission is gonna be more trying to make our IT systems more efficient. Up to date, that might save some money, but in the scheme of things, it's not gonna be enough. I mean, we're not gonna be eliminating government agencies and departments, you know, like Malay is doing down in Argentina.

I mean, that's what we need. We need that type of reform, but I don't think we're gonna get it. I don't think we're. We're desperate enough yet that people aren't, it hasn't been bad enough. It took a long time for the Argentine people to be willing to swallow the the bitter tasting [00:24:00] medicine because in order to really make America great again, in order to go from a bubble economy to a real economy that would really benefit everybody, there's gonna be a transition that's gonna require a severe recession.

We're gonna have falling stock prices, falling real estate prices. There's gonna be bankruptcies. People are gonna lose money. All that is constructive, uh, necessary, you know, restructure the economy, the right way to go back towards savings and production, and away from debt in consumption. They're doing that in Argentina, but we need to do that here.

But nobody is prepared for that. Nobody wants to do it. Donald Trump didn't campaign on it. And so all he can do is try to blow more air into the bubble that's gonna continue to exacerbate the income inequality. It's going to worsen the structural problems, and it just exacerbates the ultimate financial crisis that we're gonna have.

I mean, there's gonna be a day of reckoning. We haven't had it yet. We've been able to kick the can down the road every time [00:25:00] we've gotten close. But it is coming, you know, it's long overdue and it is gonna be a lot worse because you know, it took so long. 

Hala Taha: Yeah. And so basically you're saying until the American people get angry enough about what's happening, nothing's gonna change because nobody's protesting in the streets about inflation right now.

Peter Schiff: I mean, they protested to the point where they elected Trump, but Trump didn't get elected promising to take away anybody's benefits. But the reality is, social security needs to be cut. Medicare, Obamacare, government pensions, there needs to be cuts because there's no money to make the payments, but they don't want to admit that.

So they're just gonna print money, and then that just means more inflation. But until we have substantive cuts, the inflation's not gonna stop. But we also need higher interest rates. They're still too low and the Fed is cutting them, but if we get higher interest rates, well that's a huge problem for the leverage in the economy.

And so they don't want to let interest rates go to where they need to be because of the short term pain that that will create. But that's what's needed. Now, the [00:26:00] pain itself isn't what's needed, but unfortunately it's necessary for us to get to where we need to be because it's higher interest rates that will encourage more savings and it's savings that will result in more capital investment, more economic growth, better jobs.

All that stuff comes from savings and investment. But we're not gonna get that if people are spending all their money. If people are buying everything on credit cards and taking out student loans and all kinds of consumption based loans that starve the economy of the investment capital, it needs to have real economic growth.

Hala Taha: Well, lemme ask you a question and. Just want your honest opinion here. Why do you think America should spend billions of dollars on defense and for other countries than our old and six people in America? I don't understand that logic. I. 

Peter Schiff: We shouldn't really be doing either. And it's unfortunate that a lot of Americans can't afford to take care of themselves because they were overtaxed for so many years while they were working.

That's the problem. The government creates that dependency. But the reason that we can actually get away with all this stuff is because the [00:27:00] dollar is still the primary reserve currency. The world wants our dollars, even though it cost us nothing to create them. And so we're able to finance these massive deficits.

Because of the unique status the dollar has. So we could create dollars outta thin air and use them to buy the goods that other people work hard to produce. And we get it basically for free. So that's really what's allowing us to continue to live beyond our means. There's a point where we're not gonna be able to do that anymore and the dollar will collapse.

So we won't be able to import all these products and we won't be able to rely on foreign savings. I mean, right now the world loans us their savings, the world buys our debt. But when the world doesn't wanna do that anymore, we're stuck. 

Hala Taha: Okay. Well this is a good transition 'cause you were just talking about how the dollar is really worth nothing.

And something else that you always talk about is this concept of real assets. So first of all, talk to us about what a real asset is in your opinion. [00:28:00] 

Peter Schiff: I. A real asset, something tangible or even intangible assets sometimes could be real intellectual property, things like that. But a real asset. When you think generally you're gonna think about real estate, you're gonna think about stocks that are not, that represent ownership in a business.

And you can own your own business too. You don't have to own part of somebody else's business. But you know, if you're working for a living, you have a job and you know you're not gonna start your own company. You pretty much investing in somebody else's company is the, you know, you know the best way to, to get that type of equity, but you own real things that the government can't print as opposed to just having paper like a bond.

If I just have a bond, I've loaned somebody money, they're gonna pay me back. That could be destroyed through inflation because, you know, if, if dollars lose value, I loan somebody a thousand dollars and they pay me back in five years, what's the thousand dollars gonna buy? I don't know. You know, it may not buy very much.

We have a lot of inflation. If I take that a thousand dollars and buy a piece of property or into a piece of property, or I buy shares of a company, if there's a lot [00:29:00] of inflation, well then the price of those assets would go up. It's not like the price of the assets going up, the value of the money's going down, but now you need more of the money to buy, to buy the assets.

So real assets can be a hedge against inflation, whereas paper assets just get destroyed by inflation. 

Hala Taha: So good. I feel like that's so helpful for us when we're thinking about like what we should actually be investing in tangible things, businesses, via stocks, or even buying a business, right? Or investing in a business.

Go ahead. 

Peter Schiff: It's unfortunate because savings is still, it should be a good thing to do. Putting money in a bank, uh, used to be not a bad place for your money. And then the banks could take your money and loan it out. They would make loans. That's how they paid you interest. You used back in the day before the government screwed it all up, you would go to the bank and put your money in the bank and they'd pay you six, seven, 8% interest on your savings account.

And how did the bank get the money to pay you that interest? Well, they, they loaned it out to entrepreneurs who needed the money to start businesses, and then they charged them more, [00:30:00] and then you got paid. And so people put their money in banks. But the problem is now you put your money to bank, they pay you nothing, right?

There's like no interest on a bank deposit. Maybe you get you quarter of 1%, but inflation is many, many times that you're punished. If you put money in a bank, the government is punished you, the government is taxing you. You're losing a value every year that you leave your money in the bank. So you're forced to do something else with it, otherwise you're gonna lose it.

But that's unfortunate because those bank deposits could be vital to helping us grow the economy. And we wanna encourage savings. We don't wanna punish people for saving. 

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So smart. I feel like we're learning so much, like we've had lots of finance episodes, but you are just like dropping so many gems and I feel like it's so useful for entrepreneurs in particular.

Hala Taha: A lot of my listeners are making a lot of money. We need to know what to do with it. You also talk about investing in gold. You're known for showing off. I don't see any gold that you're wearing right now. But you're known for wearing gold all the time. 

Peter Schiff: Oh no, I do. I have. I have a watch on It's gold. 

Hala Taha: Oh, there you go.

You got a gold watch on. So why do you invest in gold? Why [00:31:00] do you feel like it's such a great store of value? 

Peter Schiff: I look at gold, not so much as an investment, but as a store of value. So gold is money. Gold constitutionally. If you know in 1789 when they established the United States and they wrote the Constitution, gold and silver were written in as money.

It's the only lawful money in the country. It's the only thing that states can make legal tender is gold and silver. The only thing the federal government was authorized to do was to take gold and make a coin out of it. Gold and silver. So that's money. And when the country was started in 1789. The dollar.

$20 was an ounce of gold. By definition. That's basically what it was. If you had 20 paper, you know, $20, you had an ounce of gold, and in nineteen thirteen, a hundred twenty years later or so, it was exactly the same. An ounce of gold was 20 bucks in 1913 when they created a Fed. Now you need $2,750 to buy an ounce of gold.

The dollar has lost more than 99% of its value relative to gold, because we've printed so many of them [00:32:00] before we had a federal reserve, the dollar held its value. So when you're holding gold, you're holding real money that doesn't lose its value. And in the future, gold is just like gold went up a hundred fold.

It'll go up another a hundred fold. It's not gold going up, it's just the money going down because they keep printing it in order to fund the deficit spending. So gold is the way you can save your money. Unfortunately, if I save in gold, it doesn't have any real benefits for society because I'm not putting my money in a bank where it can be loaned out.

I'm putting it in a safe, hidden in my house somewhere. But it's unfortunate that people have to just buy gold. Now, you could loan out your gold that you know you could, but nobody does that really. I mean, you just, you just save it. But it's still better than putting money in the bank and getting hardly any interest.

Gold the US stock market over the last 25 years, even though it's gone up fourfold, the Dow Jones is four times what it was in the year 2000. Gold is almost eight times what? So the stock market is actually going down. [00:33:00] If you price it in real money, it's only up. It looks like it's up when you price it in in funny money.

But I don't look at gold as an investment, more of just a store of wealth. So if you wanna get rich, buying gold is generally not how to do it. But I like to invest, like you mentioned Warren Buffet. I like to invest in productive assets. I have some gold and I recommend that everybody, you know, you wanna keep some gold, but you wanna invest in productive assets.

Now, the most I. Probably the most lucrative asset you can invest in is your own business. And again, I said earlier that the people who are really wealthy, that's where their wealth came from. Now, yes, you could lose money in your own business too, but if you're successful and you do it well, generally investing in a successful business that you own and control the return will be better than just giving it to somebody else.

But if you don't have your own business, you're just working for wages, you're not gonna get rich that way. But you can invest in other people's businesses. So you can invest in stocks, but you need to look at the companies. You need to have some [00:34:00] understanding of what you're buying because a lot of people today just buy a ticker symbol that's that's going up.

And a lot of the stocks that people are buying are overpriced dramatically. And that the people who are buying them, ultimately someone's gonna get left holding the bag when the market tanks. So you have to look at undervalued companies. That you could buy that pay good dividends, that have good earnings, that may not be the sexy story that everybody's talking about.

In fact, generally, if you wanna buy something that has value, nobody's talking about it. When everybody's talking about it, it's expensive. When all your friends are buying something, chances are they're overpaying. I mean, I do a lot of that. I have a, in my company, Euro Pacific Asset Management, I have a team of portfolio managers and we're looking for these undervalued companies and we're buying them for you.

I have five mutual funds that I run that people can buy, uh, no load at any of the discount brokerage firms, or they can contact, you know, go to my [email protected] and get information or talk to one of my representatives, but we can help you. Or by buying the right [00:35:00] companies. I'm investing mostly outside the United States right now because most of the good companies in America are very overpriced right now.

That's the problem. And so in order to get real value, a lot of times you're in emerging markets. To get that value. But long-term, and especially if you have a young audience, you got people in their twenties and thirties and they're trying to build a portfolio for when they get to be my age, you know, I'm 61 or older, I think the stocks that I'm buying are gonna deliver much, much greater long-term returns than people who are gambling on what's hot right now.

And that would include anybody you know, who's been, you know, suckered into the crypto craze. 'cause that's the epitome of speculation because you've got absolutely nothing behind it. It's just all air, it's all hype. And so yeah, people can make money off of other people's. Greed and ignorance, but at some point you run out of fools.

It's called the Greater Fool Theory, like you buy something because you expect some other fool to pay more, and that fool buys it [00:36:00] because he thinks another fool will pay even more money than he did. And so far that's worked really well for the Bitcoin and some other things. It can't go on forever.

Eventually you're run out of fools. Now, right now they're trying to force the government to buy it. Donald Trump was able to get a lot of campaign contributions and a lot of votes by pandering to crypto. Now they're expecting, you know, something for that. I don't think Trump is gonna deliver on those expectations.

I don't think we're gonna have a Bitcoin reserve. We may have some more regulation that is less obstructive, which is fine with me. I don't like regulation. I mean, the less the better. And that would include crypto. I just want less regulation and more freedom, and that includes the freedom to lose your money.

People can do foolish things. I don't wanna stop you. You know, if you wanna smoke cigarettes, smoke 'em. I don't advise it it, I don't think it's a healthy way to go, but if you like it, go ahead and do it. If you wanna lose your money in crypto, go ahead. It's not up to me. To tell you what to do with, with your money, but the [00:37:00] government shouldn't buy any of it.

The government should encourage it because, you know, the more resources unfortunately, that go into crypto, the less resources that can go someplace else where they're actually needed. We wanna produce things of real value. We don't want, we just don't want to create worthless tokens. That doesn't give you anything.

I mean, yes, you could make money in crypto, but there's no wealth that's actually created. All that happens is wealth is transferred from the people who buy the crypto to the people who are selling it. You know, it's like at a casino. I mean, if I make money playing blackjack, I didn't, you know, it's 'cause somebody lost money at the table.

There's no wealth that's created from that. Now, maybe the casino makes a little money because they're cutting the pot, but you know, we're not creating any wealth and that that's what's going on with crypto. I, I'd rather see people investing money productively, you know, so that we can have more goods and services to consume, not just more gambling. 

Hala Taha: There's so much that I wanna highlight and touch on and what you just said. First of all, I feel like for my [00:38:00] listeners tuning in, there's a lot of people who wanna be entrepreneurs, and I wanna highlight what you said about the fact that investing in your own business is probably the best investment that you can make.

I remember I started my business in 2020. I took all my money out of the stock stock market 'cause it was like tumbling and I decided I was just gonna pour it into my social agency, my network. I took all my podcaster sponsorship money and my podcast was big back then and I just pumped it into hiring employees and all this stuff.

And I didn't save any money, literally no money, for like two years, and I was just pumping it into my business. My business made $7 million last year on track to make $10 million this year, and I'm doing financially better than I ever would've if I like just put it in stocks, right? I just invested in myself.

Peter Schiff: Yeah. I mean, look, congratulations. And that's still, but you're saying you didn't save any money. You had savings and you invested those savings in your business. But in, see, the way you get savings, and this is how it's all upside down. You under consume, you earn [00:39:00] money and instead of spending it on vacations or a fancy car or jewelry or handbags, right, like a lot of other gals might, you took that money and you forego those things.

Even though those things are fun. 

Hala Taha: I still bought a lot of handbags and closed me. 

Peter Schiff: I'm sure you're buying them now making $7 million a year. You probably have a pretty nice closet there. But the point is that years ago, instead of buying handbags, you invested in your business. So you delayed that gratification.

You under consumed, you lived beneath your means, and that enabled you to grow your business. And in the process, you hired other people, you created other jobs, and you're also providing a service because people listen to your podcast because they enjoy it, because they gain something from the experience.

Either it's entertainment or they get knowledge. So you're helping people and as a result of that, you are making money. And so, yeah, I mean, and you, [00:40:00] you deserve what you've earned. And you know, you, you're, and if you probably look at all the people that are listening to your podcast, you're not actually getting that much money from any one individual, but you add 'em all up.

Right? A lot of people, you make a little bit of money from a lot of people and it turns into a pretty lucrative business. But I'm sure you enjoy what you're doing. 

Hala Taha: Yeah. 

Peter Schiff: That is the key. I mean, I tell a lot of people, look, you gotta go into business, but you gotta figure out what you enjoy because in order to succeed at something, you have to spend a lot of time and devote a lot of efforts into doing it.

And if you don't like it, it's gonna be very difficult to do. Well, there's too, you gotta figure out what you're good at and you gotta figure out what you like and hopefully they're the same thing. And then you have the ability to really, uh, grow a business. And some people maybe not, don't have a lot of the skills that might be required.

And so you might need to take in a partner or have somebody else that might be able to do parts of the business that maybe you can't do on your own. And I'm sure now too, now that you're bigger, you said, you know, you have employees [00:41:00] that you know, you have tasked to do certain things so that it frees up your time to do other things.

Hala Taha:  100%. So I wanna talk to you about Bitcoin because I also was skeptical about Bitcoin. I, I remember I did like basically a documentary series about Bitcoin in 2018. I interviewed like all these experts. It took me three months to put out the project. And then what did I do? I didn't invest in Bitcoin after all of that.

And I, I'm kicking myself now 'cause I would've been so rich had I just done that in 2018 when I was doing all this research about it. But I was always skeptical about Bitcoin too. But I just don't understand really, like, logically how it's actually that much different than gold, right? Gold is a finite resource.

Bitcoin has a 21 million cap, right? There's only 21 million Bitcoin out there. They both don't really have that much utility. So how are they much different? 

Peter Schiff: Well, first of all, there's a, there's a big difference between gold and and Bitcoin. But Bitcoin was modeled [00:42:00] after gold in that they tried to replicate in Bitcoin some of the properties that made gold better money.

Than salt or cattle or other things that have, you know, been used as money over the centuries. That's why Bitcoin is represented to look like a coin, and its color is gold. It's not an accent that they chose gold, right? They wanted to make it look like gold. The way you create a Bitcoin is you mine it.

Well, there's no mining, there's no picks and shovels. Why do they call it mining? Well, because you mine gold, but the way you create a Bitcoin is you solve a mathematical equation. So that's not doing math problems, isn't mining. So they try to kind of counterfeit the properties of gold. They made it visible.

Yes, Bitcoin is scarce. There's 21 million Bitcoin, but you know, there's 2.1 quadrillion Satoshis. That's the smallest unit. So 2.1 quadrillion is a pretty big number, right? So there's, there's plenty of Satoshis to go around, right? Every, [00:43:00] everybody can have several hundred thousand of those things. So it's not like it's scarce in that sense because you can divide it.

You can't, you can't divide gold into, into that smaller particles 'cause they'd blow away. You wouldn't have any idea where they were. And you need a certain amount of gold. Like I, I showed you my gold watch. I'm sure you have a lot of gold jewelry. That is utility. Gold is the most useful metal on the periodic table.

There's more you can do with gold than any other metal. The reason we don't use gold more is because it's too expensive, because it's so valuable. But for certain things, gold is used because there's gold in every cell phone. Gold is a very useful metal in industry, in electronics, in medicine, in dentistry, in aerospace.

They're constantly coming up with new uses for gold because there are things that you can do with gold that you can't do with any other metal. And so the reason that gold is a store of value is because unlike other [00:44:00] metals, gold doesn't decay, it doesn't tarnish. You find a, a wrecked ship that went down in the Caribbean 500 years ago, if you could find that shipwreck, if there was some gold, it's still there.

It looks exactly the way it looked, but the day it sunk, everything else is gone, but the gold is still there and it, it just, it's just as beautiful as it was 500 years ago when the ship sunk. So if you have gold and you don't. Use it to make a product. If I just hold a gold bar, a gold coin in a thousand years, somebody can take that gold coin and do whatever they want with it.

They can melt it back down, and they can use it for whatever they want. So when you own gold, you are storing all of the things that you can do with gold in the future. If I tried to do that with anything else in a thousand years, it might not be there anymore. It's, it's gone. It's disintegrated, decayed, and gold is relatively inexpensive to store for all the value that you pack into a small place.

So Bitcoin. Isn't a store of value [00:45:00] because it doesn't have any actual value. You don't do anything with a Bitcoin. Nobody does anything with Bitcoin. You just hold onto it. You could trade it, but that doesn't mean it has any intrinsic value. You just buy it and selling it. The person who buys it just turns around and sells it.

They don't, nobody does anything with it. Even if you don't do anything with the gold that you buy, somebody in the future could do something with that gold, and that's why it has value today. Bitcoin has a price, and price and value are two totally different things, and Bitcoin's price has gone up dramatically since I first learned about it, you know, when it was under 10 bucks.

But it, it doesn't have any more value. I mean, 'cause the value is zero really. But if long as people wanna buy it, the price can keep going up. The problem is when people stop wanting to buy it, then the price crashes. And why do people wanna buy Bitcoin? Because they think they're gonna get rich. They think the price is gonna go to the moon.

That's why they're holding onto it. But the supply of cryptocurrencies continues to explode. You know, [00:46:00] now they're creating like a million meme coins a day. The Donald Trump meme coin, that has a scare, a limited supply too. I mean, it's a billion of them, but again, I said there's 2.1 quadrillion satoshi, so forget about the numbers, but, and there's a Melania coin and who knows how many other coins, but there's all kinds of tokens before the coins that you could buy that all compete with Bitcoin.

There's an unlimited supply of cryptos that could be created that are exactly like Bitcoin. In fact, a lot of them are better in that. They're cheaper to transfer, and so why not use those, right? I mean, it's a, it costs less money to, to actually send them or try to use them for, for whatever. They're faster and cheaper.

So why would, what's so special about Bitcoin? The only thing that's special about it is that it was the first one and because it's the first one, it's got the most capacity behind it. You have a lot of Bitcoin miners that are out there. You have a bigger network that has been built up. [00:47:00] Surrounding Bitcoin, but that's today.

Who knows what it's gonna be like tomorrow with Bitcoin and that, I mean, the first is never the best. I talked about cell phones. The first cell phone is not the cell phone that people use today. They made better cell phones. They made cheaper cell phones. The first car, the first television, I mean, they, those are antiquated at this point.

I think it's just a, a passive fad. Yeah, it's been around for 15 years or so, but it hasn't really been on most people's radar until the last five years or so. Really? 2017, it kind of like showed up and more people started to talk about it when it shot up to 20,000, you know, out, out of nowhere, and then all of a sudden people start talking about it.

It hasn't really been around that long, but it's not money, it's not digital gold any more than an image of a hamburger is digital food. You can't eat an image of a hamburger. You can't use a picture of a bitcoin. To make jewelry or to conduct [00:48:00] electricity or any of the things that gold is used for. You can't just substitute Bitcoin.

Now, there are a lot of people that say, well, you know, it's digital gold. It's not digital. Anything they confuse, like digital music. I don't need a, a record or even a cassette tape or a disc anymore to listen to music, right? I don't need to buy a physical object. I can listen to music digitally, and that's fine because it's the same experience.

I can dance to digital music, I can sing along to it. I can tap my foot to it, so I don't need the physical record and a phonograph or you know, whatever, you know to do it. But it's not the same thing with food, and it's not the same thing with gold. Gold's an actual metal. I can't just substitute an image of gold, like I can substitute.

Digital music for a record or even a book, I can have a, a digital book that I can read. So I don't need a physical book. I could just read the words on a computer, but I can't do that with [00:49:00] gold. So it doesn't work just because it works for some things. People wanna say, oh, you know, you have analog gold and Bitcoin is digital gold.

No, Bitcoin is nothing. It's digital fool's goal. It's not actual, actual goal. But, you know, initially when, if you go back at the, and read the white paper from Bitcoin, it was supposed to be money, a peer-to-peer monetary system that people would use in transactions to purchase goods and services. But it doesn't actually work for that because it's so slow and so expensive and it's volatile.

So nobody uses it for the purpose that was created. Now, early on, it was used to some extent. You know, they just let Albright outta jail and he did the, the Silk Road. In the early days of Bitcoin, you did have people using Bitcoin to buy things that were illegal. It didn't matter that the price was very volatile because you know, whenever you're laundering money, I mean, you're always gonna lose a bunch, right?

And so if you lose 20% in the vig, because the, the guy that laundered your money [00:50:00] charged you 20 points to clean it up, that was okay. So people didn't mind if they were drug dealers, were selling drugs for Bitcoin. If the Bitcoin went down 20 or 30%, it's okay. I still got 70% left, which is pretty good. But nobody really used it for legal ordinary transactions.

There was no reason to do that. But now nobody does that. They just hold it. All they, all they do is trade it and now you have ETFs that own it and companies have been going into debt to buy it. Like Michael Sailor. I mean that's one of the reasons that the price has not collapsed is you got these big companies, Michael Sailor is borrowing a billion dollars a week to buy Bitcoin.

Does that Bitcoin generate any real income? No, it doesn't generate anything. He's just propping up the price by going into debt to buy more of it. 

Hala Taha: Well, lemme tell the listeners about this. They probably don't know. It's a micro strategy. It's a technology company and they are buying Bitcoin and they have 2% of the world's Bitcoin as their investment.

They've like made Bitcoin their [00:51:00] corporate strategy. 

Peter Schiff: They used to be a software company, and I suppose some tiny software company buried beneath all that debt and Bitcoin. But for all practical purpose, they're now just a Bitcoin, a levered Bitcoin company. Their business model is to go into debt and issue shares to buy Bitcoin, and then they try to encourage everybody else to buy Bitcoin.

That's their business. But the whole thing is going to collapse. At some point, the stock is gonna implode. I think it goes bankrupt eventually. The question is when, but Bitcoin is not digital gold. It's not real money. It's really a digital Ponzi, like a pyramid scheme, A chain letter. I call it a blockchain letter.

The fact that it's digital internet and all that, that's what's new. But the idea of a pyramid that's old. 

Hala Taha: I was gonna ask you could it replace a. The dollar. But you answered that because you said no, it's too volatile. It will never just replace the dollar. 

Peter Schiff: Yeah. It's not gonna replace any [00:52:00] currencies. And it's certainly not gonna replace gold.

I mean, people are gambling on Bitcoin instead of gambling on other things. It's certainly a substitute for other ways that you could gamble with your money, but that's because Bitcoin has been hot. People have been making money. Uh, once. A lot of people lose a lot of money, it's gonna be a different story.

Bitcoin is at a hundred thousand. You know, when it's at 10,000 and people have lost 90% of their money, it's not gonna be so popular anymore. And a lot of people who own Bitcoin now own it through these exchange traded funds they've bought in their brokerage accounts. They just bought it because it was going up and there was, you know, a lot of hype around it.

But when the price really starts to fall, they're just gonna sell. They're not gonna hold on forever. They're going to move on to something else. They're gonna cut their losses or take whatever profits they have left and and move 'em to another casino, and then the price is gonna collapse instead of, you know, right now you have a lot of stories about people who [00:53:00] bought Lamborghinis because they put a little bit of money into Bitcoin and you know, now they've got all this stuff, but they're gonna be replaced by stories of people who went bankrupt.

Because they bought Bitcoin, because they borrowed money to buy Bitcoin. And you know, right now people are still trying to say that you're getting in early, buy Bitcoin and you're, 'cause you're getting in early. It's still early. It is not early. Everybody knows about Bitcoin. Every cab driver, every cocktail waitress, you're not getting in early when everybody knows about it.

There's an old saying, if you know, at a poker player or poker table, and you don't, if you don't know who the sucker is, it's you. People buy it now are the suckers. 

Hala Taha: But if everybody just keeps believing in it and nobody ever stops believing in it, then what will happen? 

Peter Schiff: Yes. But people do stop believing in it.

Hala Taha: Yeah. It's like if what's, people get nervous, it's just gonna crumble. 

Peter Schiff: Nothing that can't go on forever will. I mean, that's why pure MIS schemes, Ponzi schemes, they're illegal. And they're illegal because they can't go on forever. Look, [00:54:00] Bernie Madoff had a Ponzi and it went on for a long time, but they can't go on forever.

They eventually collapse. And so the same thing is gonna happen with crypto, not just Bitcoin. The whole, the whole thing, all these tokens. Now, is there a future to tokenization? Maybe. I mean, they talked about this 10 years ago. We can tokenize real assets. You could take real estate and tokenize it so that ownership of real estate can be evidenced by a token.

And so instead of selling you a physical deed, I sell you the token that that represents ownership. You can tokenize companies instead of having shares on an exchange, a company can issue tokens and those tokens can trade on a blockchain and cut out the exchange and the brokers and all that. So is there a potential to tokenize real things?

You could tokenize gold. I mean, gold can be stored and then, uh, ownership could be evidenced by a token. And now I can go into a Starbucks [00:55:00] and pay for coffee with gold. More importantly, Starbucks. Can receive real gold for their coffee, right? We could tokenize gold and then it can circulate its money. So is there a potential for blockchain and tokenization?

Sure. But so far nobody is even bothered to to go in that direction. 'cause all everybody cares about is creating coins for nothing. When you create a coin out of nothing and then sell it, why create a coin outta something that actually costs you money? When I can create one from outta nothing that costs me nothing.

Now Bitcoin doesn't cost nothing. You actually spend a lot of money to solve those math problems and that's why people think Bitcoin is different than, let's say Trump coin because of the proof of work. If you create a Bitcoin, you had to do the work of solving this problem to get that Bitcoin. And so people think that that work gives it value.

Just like if I wanna mine gold that requires work. I've gotta physically get it out of the ground. It, it takes a lot of effort [00:56:00] and energy. To produce that gold. And it does take a lot of energy to produce a Bitcoin. I'm not denying that. The difference is when you use energy to produce Bitcoin, you've wasted all that energy.

'cause at the end of the day, you've produced nothing. Right? So proof of work doesn't mean anything if my work didn't create anything of any value. If you think about it this way, if I have a, a piece of property and I spend $10,000 digging a gigantic hole in that property, and then I spend another $10,000 taking all that dirt and filling the hole back up so that I have exactly what I started with.

A flat piece of ground, but I spent $20,000. What's it worth? What did I create? I created nothing. 

Hala Taha: Also ha horrible for the environment with all the data centers that it takes. 

Peter Schiff: Yeah, exactly. I mean, Michael Sailor again says that Bitcoin is like digital energy because it takes energy to produce it. Yes. But once you've, you've used that energy, it's gone.

You waste energy. It's not like Bitcoin [00:57:00] is a battery, where if I own a Bitcoin, I can plug it into something and get that energy back out. All the energy that was used to create Bitcoin is gone. The energy that was used to create gold is still there in the gold because now I could use the gold for something.

Bitcoin isn't used for anything. So while using energy to mine, an ounce of gold is a productive use of that energy. Using energy to solve a math problem, to create a Bitcoin, it's a complete waste. That energy should be used for something else, but unfortunately it's being wasted on these digital tokens.

Hala Taha: It's really interesting to hear your thoughts about Bitcoin. My main takeaway from this is. Don't put my cash in the bank, invested in gold because it's not gonna be impacted by inflation. And that Bitcoin is, 

Peter Schiff: if you wanna save your money in a nice, safe store of value, buy gold. If you wanna make investments, talk to my team at at Euro Pacific Asset Management, about finding good quality [00:58:00] investments outside your own business.

Companies that pay good dividends, that are growing their earnings. That I think will be a lot more valuable in the future if you wanna gamble, right? If you just have some throwaway money, you want to gamble with it, you could bet on the Super Bowl, or you could, you could buy some Bitcoin. I mean, I'm not telling people that you can't buy it and you may make money as long as you sell it before the bottom drops out.

You, you could make money, people you know in Bitcoin and maybe it will go higher. I can't say for sure where the top is, but somebody is gonna get stuck holding the bag. The only way you make sure that it's not you is not to buy it, but don't think of it as investing. If you buy it, you're just, you're just gambling and you're hoping that you could sell out before the music stops.

Hala Taha: I. That makes sense. And we saw it with NFTs. NFTs were like, so hot. Nobody's even talking about them anymore. 

Peter Schiff: Well, because it was just, again, it's nothing. I mean, what were they, I mean they, they created all the, the, the hype. They did it with this bele, they had some insiders in [00:59:00] Ethereum or whatever that paid 40 million worth of Ethereum to buy this bele and that set off the craze.

And everybody and their brother just launched NFTs. I remember in Art Basil, I was there one year and they, they're trying to show their NFTs like it's actual art 'cause oh, we got this image of a, of something. I could just take a photograph of an NFT and I have the exact same thing, right? A digital camera, just, you know, just because I own the original image, why not just own a copy?

And they would say, well, you know, you can own a copy of a Rembrandt, but Yes, but that's different than the actual Rembrandt that the, that he painted himself like, you know, 500 years ago. That is actually rare. No, I mean, so there's somebody creating an NFTI mean, I was nothing. It was a bunch of hype and people made some money on it really quickly.

They got in and they got out. All that money, all the profits that people make in those things comes at the expense of the, the money. Everybody else loses those zero sum games or negative sum games. [01:00:00] They're not good for society. If somebody creates a business and the shareholders get rich by investing early in that business, everybody wins.

The investors win. The customers win, the employees win. It's not a negative sum game. It's a productive use of money. Unlike crypto, which doesn't benefit anybody except the people who cash out at the expense of the people who buy in. 

Ad Break 2 01:00:30.80

So good. I feel like I learned so much honestly. Peter, thank you so much.

Hala Taha: Okay. As we close this interview out, the last thing I wanna talk about is the potential of a recession. So I saw you on Tom Biu show last year when you said 2025 might be the worst recession that we've ever seen. You called it, uh, I think potentially a great depression. I know that at that point you didn't know Trump was gonna be president.

So you are famous for predicting things. You predicted the 2008 crash. So what do you predict is gonna happen [01:01:00] with Trump's presidency and do you still think we're gonna see a big recession? I. 

Peter Schiff: First of all, I did think that Trump was gonna win. I was one of the first people publicly to say he was gonna win.

And the reason I knew Trump would win, or I was pretty confident, was that I knew that the economy was not nearly as good as the media claimed as Biden. And then Harris claimed, I thought we were in a recession pretty much all of last year. And I think beneath the rosy statistics, there was a recession.

And when they polled the voters and they asked, why did you vote Trump? The number one response was the economy. Now that's because the economy was bad, right? If it was good, they would've voted for Harris 'cause they would've wanted four more years. They voted for Trump because the economy was bad. All the jobs that were created that, that Biden was bragging about, they were all part-time jobs and they went to people who already had a job or two people were struggling to make ends meet.

They were working multiple jobs that they would rather not have. [01:02:00] People were living on debt. You know, we have record high, uh, credit card debt and household debt. That's not a good sign. And if the economy was good, you'd be paying off your debt. You wouldn't be putting on more and you wouldn't be having record debt.

When credit card interest rates are at 24% and a record number of people right now are just making the minimum payment on those credit cards at 24%. So I think we've had a weak economy and I think it's gonna get weaker. But I wanna tell you something about recessions and the business cycle because recessions.

Are actually good. They may not feel good, just like sometimes medicine doesn't taste good, but it can cure what ails you. And the problem isn't the recession. The recession is part of the solution. The problem is the artificial boom that precedes the recession and that makes the recession necessary. So what happens is the government interferes in the economy by keeping interest rates artificially low and [01:03:00] printing too much money, which is what we did as a result of that.

Resources become a. Misallocated capital is, is mis mal invested. And so projects that should be fund that shouldn't be funded, get funded. So the economy gets all screwed up because of the government intervention, and then eventually the market tries to fix everything that the government broke and put the resources back to where they need to go.

But that process always leads to a recession. But the problem is the government tries to fight the recession. They try to stop it. What they're really trying to do is stop the cure. And the way they stop the cure is they make the disease worse. They do more of what created the bubble that the recession is trying to cure.

You know, an example that I, I gave in, in my book, I've written several books. I haven't written one reason recently, but in the Real Crash, which is the book that predicted the the 2008 financial crisis and the Recession, which came [01:04:00] out in oh seven. I used the analogy of, of a circus, and I don't even know if you're old enough to remember traveling circuses, but when I was a kid, Ringland Brothers, Barnum and Bailey, they would come into town and they'd, they'd have a big tent and you'd go to the circus, but the circus was there for a couple of weeks, and then they left, they pulled up the stakes and all the, the bearded lady and the, the elephants and everybody went to another town, right?

So in my book, I wrote an example. Hey, let's say a circus comes to town and now all the circus, all the, the performers that work at the circus. Start going to a local restaurant to eat. And now this restaurant in this small town is really busy. He's got all, you know, oh my God, look at this. All these people coming.

And he thinks, you know what? I should expand. Maybe I should take on, I should build out more space. I should rent the place next to me. Let me staff up. I need, I need more waiters, I need, I need more cooks. 'cause you know, business is booming. So he does this, he, he does all that. And then the circus leaves and now the business [01:05:00] collapses.

And well, now what does he have to do? Well, I gotta lay people off. I hired too many people. I have excess space. So now he has a recession. The problem is that restaurant owner. Misinterpreted the information he was getting from the circus. He looked at this increase in demand and he thought it was some permanent increase in demand, and so he made investments based on that information that he misinterpreted.

He hired people he shouldn't have hired. He expanded when he shouldn't have expanded, so during the recession, he fixed what he got wrong, and so that's what the government does. The government prints a bunch of money and people spend that money and businesses make decisions on who to hire, on where to invest.

Based on what they think is a real increase in demand. But it turns out it was all false. It was all a bunch of inflation. There was no real increase in demand. People didn't really have that. There's no savings to support that because when interest rates go down in a free market economy, interest rates go down.

When savings go up, when you have more [01:06:00] savings, you have lower interest rates. And people can afford to make long-term investments because people are expressing a preference to consume in the future and not in the present. That's why they're saving their money. And so businesses can invest in capacity that's gonna pay off in the future.

But the government comes in, they artificially suppress interest rates. Businesses misinterpret that. They make investments. They really can't afford the economy, just they make all kinds of mistakes. The recession is when the market tries to fix what the government broke. So we need recessions and all of our policies, the.

That are made to prevent recessions, to mitigate recessions are all misguided and they end up just sowing the seeds of the next recession and making it worse. And so when the.com bubble popped in 2001, the Fed cut interest rates to 1% and inflated the housing bubble. Instead of allowing a deeper recession, we bought time by slashing interest [01:07:00] rates and inflating a housing bubble.

Then that bubble popped and we had a worse recession than the one we had in 2001. But instead of letting that recession run its course, they let they take cut interest rates to zero, and they did quantitative easing. We haven't even had the real crisis. That is the result of these mistakes. 'cause they've been compounded and then they were compounded even more during Covid.

The problems are just so pronounced at this point that the collapse, I wrote the a book in my last book, which I, I wrote in 2013, was called The Real Crash America's Coming Bankruptcy. And that's a book that people could still read. Even though I wrote it a long time ago, the crisis that I was predicting hasn't happened yet, but it will because all the problems that I laid out have just gotten worse since I wrote the book.

And so the Piper's gonna have to be paid and that, and that's coming. I mean, there's still some bright spots out there. There's a lot of promise with AI and the increases in productivity that will ultimately result, uh, from [01:08:00] that. But you know, before we can get to that, we got a lot of stuff that we're gonna have to go through first.

People should understand it, be prepared for it, understand the cause of the problems that you know. So they don't blame capitalism. The free market, you know, the rich, it's about too much government. It's about government central planning and central banking and regulating that, that is screwed up at the economy and the solution is not gonna be even more government.

The ultimate solution is what they're doing in Argentina, which is to take a cleaver to government and just really start, uh, cutting. Not just to waste fraud and abuse, but you have to get into the meat, right? Not just the fat, you gotta cut down to the bone to free up those resources and liberate the economy, uh, from from the government.

Hala Taha: Yeah. In terms of entrepreneurs, how can we prepare for this type of recession and what is our role in terms of like capitalism to help boost the economy? 

Peter Schiff: Definitely recognize that if your business is dependent on US [01:09:00] consumers, you need to recognize that you could see a big downturn because Americans, many of 'em are broke and they're only consuming because they can keep going into debt, and that's gonna come to a stop.

So I think that most businesses should try to focus on, um, trying to find consumers that may be able to afford their products or their services in the future. And so they may be abroad, they may be in the emerging markets. So to the extent that you can have a business that does some exports, that can tap into what I think is gonna be an emerging market, because I think as, as the world stops buying our dollars and loaning us money, they're gonna have a lot more of their wealth for themselves.

And so I think as consumption goes down in the US it's gonna go up in other parts of the world. And so you could profit from that. You can position yourself, I. A profit. You could also, you know, have savings. Again, as I said, have some rainy day money in gold, gold and silver. You know, I've got a company shift gold that people can go to to buy gold and silver.

What are the problems in gold and silver? And the reason that I ended up starting that company when I did [01:10:00] is a lot of people were getting ripped off because they were getting talked into buying new mathmatic. And most of them aren't real collectibles, they're just pumped up. Uh, heavily marked up products.

A lot of gold and silver companies push on their customers because that's the only way to make any real money. There's not a lot of people buying gold and silver. So if you get a customer, you just overcharge 'em for this nonsense. And so we don't sell any of that, you know, so if you go to shift gold, you're just gonna get bullion.

You're gonna get, uh, bars or coins where the markup is very slim. And so if gold goes up 20%, you could sell your coins back and make 18%. The markup is very thin. You go to a lot of these gold companies, you need the price of gold to go up 50% just to break even. 'cause that's how much they marked up the coins that, that you bought.

So you wanna just buy bullion. So you have, you know, the liquidity and it's a good rainy day fund. But I also encourage people, and I've been encouraging people to do this for years now, and this is not just businesses, this is [01:11:00] just consumers. And it's unfortunate that this is the advice that I have to give, but if you have extra money, one thing you can do with it is stock up on stuff that you're gonna need.

Stuff that doesn't perish, things that have a long shelf life, whether it's, you know, razor blades or batteries, or a shaving cream or a toilet paper. I mean, although toilet paper, you know, it takes up more room, but you know, things that are expensive that you know you're gonna need, you might as well buy 'em now because they're just gonna be more expensive later and they could be a lot more expensive.

What I'm, I'm worried about is price controls. 'cause they've already hinted at it. Harris talked about it. Even Trump talked about price controls when it comes to credit card interest. He wanted to try to cap that. But I think prices are gonna start to rise so quickly that there's going to be a lot of politicians looking for price controls to just prevent prices from going up.

And that doesn't [01:12:00] get to the source of inflation. That gets to the consequence of it. It's like if you have a cancer and you, you know, a skin cancer and you put a bandaid on the cancer, you're not stopping it. You're just covering it up. And if you try to control prices, but you keep creating inflation, expanding the money supply, you haven't done anything about the problem.

You're just trying to hide the consequences. But what happens when the government has price controls is that you have shortages. You just don't have products. You have rationing, you have black markets. And so if you wanna buy something, you can't buy it legally because there's nothing there. So you have to go to the black market.

And now it's even more expensive than if there had never been a price control. So rather than waiting for, uh, products to be illegal where you have to buy 'em on the black market, just buy 'em now. Because if you buy something and a year from now, it's 10% more expensive, but you bought it now that's a 10% return tax free on your investment in whatever product you [01:13:00] bought.

So it's better than just putting the money in the bank. And you know what's gonna happen too, as prices really start to go up, people are gonna start hoarding stuff. So then the government says, okay, you can only buy one at a time. And now people have to wait in a long line to get stuff. And eventually you could barter some of these things, you know, so people, people need to buy real things, unfortunately.

So, and businesses, right? If there's. Certain inventory that you need in the business, you can buy that inventory now rather than waiting till you need it when it could be a lot more expensive. If you can invest in your inventory, if you know you have a good that it isn't going down in price, it's just gonna keep going up.

It's better to buy the inventory than to leave the cash in the bank and buy the inventory later when it's a lot more expensive. 

Hala Taha: Such good insight. A little scary, I'm not gonna lie. I am like thinking about like, okay, what storage do I have? I gotta load up on this toilet paper or whatever I'm gonna buy 

Peter Schiff: right?

During Covid toilet paper was valuable. 

Hala Taha: I know. It was crazy. It was absolutely nuts. Well, I hope that doesn't [01:14:00] happen. I hope AI saves us like you were mentioning, but we'll see what happens. So Peter, this has been awesome. I end my show with two questions that I ask all of my guests. You can just answer from the heart.

It doesn't have to be about anything that we talked about today. So what is one actionable thing that my young and profits can do today to be more profitable tomorrow? 

Peter Schiff: I think one thing they could do is start educating themselves, you know, and they're, they're doing that now by listening to this program.

But, you know, I, I've got a lot of content online. I, I have my own podcast. I, I do one or two of them a week. I, I put out a lot of stuff. I put out a lot of interesting stuff just on XI mean, a lot of the news that people get from the conventional sources, sources is inaccurate. It's more propaganda. The news, there's a lot of fake news out there, and I think I do a pretty good job of distilling what's actually going on and telling people the truth.

So, you know, they can make a point to, you know, start following me and listening to what I'm saying and get a better handle on what's actually happening and having a better understanding. And I think that probably could help in their business. And apart [01:15:00] from that, again, they could start investing the right way instead of just chasing what's going up and hoping that it continues to really buy things of value that you can hold for the long run, knowing eventually you're, that what you've invested in.

Will be worth more in the future because of the value that's being created, the business that's growing, the income is growing, the dividends are growing, and people can do that themselves, or they can hire my company to help help them do that. You know, my mutual funds, people can start buying my mutual funds, no load.

I think the minimums are maybe $2,500. I forget it, you know, Schwab or Fidelity. But they could just go there and just all the information on those funds and the symbols, the ticker symbols for the funds they can find on my website. In fact, you can actually buy the funds directly on the website. If you don't have a brokerage account, you could just buy 'em directly from euro pac.com.

Hala Taha: Amazing. And I'll make sure I stick all your links in the show notes in terms of that. You also have a really popular YouTube channel, like you mentioned. He's on [01:16:00] X, very active on X. So my last question to you, and this can go beyond financial. What is your secret to profiting in life? 

Peter Schiff: As I said, I mentioned earlier, you know, you have to find something that you're good at and something that you like.

And then I started my own, uh, brokerage firm years and years ago in the 1990s. And I built it up. And, uh, you know, for the first few years that I worked, I didn't make any money. I made less money than I worked when I had a job. But the reason I even had the money to go a couple of years without any income is because when I had a job, I saved up some money.

I didn't just spend everything I earned because if I did that, I wouldn't have had the resources to be able to invest in my own business. And so that's important that people just not go out there and just buy whatever they can buy because they have the money. Or even worse, borrow money on a credit card to buy stuff they can't afford.

People have to try to find a way to delay that instant [01:17:00] gratification, uh, so that they have the resources to start a business. But the rest of it, I mean, it's good to marry right? You know, you know, you know, have some kids and enjoy your life. I mean, you gotta have a, a mix and you know, I have it now that I'm in my.

Sixties. I mean, I, I don't spend nearly as much time working as I did when I was in my thirties and forties. So, you know, you gotta stop and smell the, smell the roses. But what I do, do, I enjoy doing, I think as I was younger, as a lot of the stuff that I did wasn't necessarily as enjoy what I had to do. It, it's like the grunt work that you've gotta do.

A lot of stuff I that I used to do myself, I now pay other people to do. I have the freedom now to just do the stuff that I like and pay other people to do the stuff that I don't. 

Hala Taha: That's the dream, Peter. Well, thank you so much for joining us on Young and Profiting Podcast. Where can everybody go find you, follow you?

Peter Schiff: I said, I'm on X, just Peter Schiff. I've, I've got almost 1.1 million followers now, so it's, it's starting to grow. [01:18:00] I think that's my biggest social media. But I am on Facebook, I'm on Instagram, I'm on TikTok, so you know, you could find me Peter Schiff on all those, my YouTube channel also. Yeah. You know that one I've got, it's growing.

There's about 600,000 almost subscribers. The podcast that I do, the Peter Schiff show. I put it out on my YouTube channel, but you could also listen to [email protected]. It's on iTunes and Spotify or Stitcher, you know, wherever there's podcasts. If you look for the Peter Schiff show, it's there. When I do 'em, I do 'em live.

So you can listen to 'em or watch 'em on YouTube live or, you know, then they're there. So you can come and you could do it whenever you want. I don't like you, like you're interviewer, you have guests. I don't, I don't do that. I just kind of speak for an hour and then I, you know, that's it. I used to have guests, I did a, a radio show for a couple of years, two hours a day, and I'd have at least a half hour of a guest.

Every time I did one, I'd have, except for Fridays. I was free. For [01:19:00] Fridays, I just took calls, but Monday through Thursday, I, I always had a guest. 

Hala Taha: You got enough to talk about yourself 

Peter Schiff: now it's just me. Yeah. Now, but because now I only do it once or twice a week. I don't do it every day for two hours. You know, I do it once, so it's hard to fill two hours every day.

So I need it. I needed guests to help me. But I, I talk about important stuff. I talk about like, I'm gonna do one tomorrow because we have a fed meeting tomorrow and Powell's gonna give his press conference and he is gonna say a bunch of nonsense. And the market commentators are also gonna repeat the nonsense.

And so then I'm gonna do my podcast and tell the truth and about, you know, what, what should have been said and what was said. And, and so, yeah, so people, I don't know when people are gonna listen to this. Maybe that one will, you know, the live one will be over, but it'll be up on, it'll be up on the YouTube channel or the podcast.

So you can always go back and listen to the prior episodes. You don't have to just listen to the live one. They're all there. I mean, I've been doing 'em. In fact, I'm over a thousand now on my podcast. 'cause I think I just crossed a thousand episodes [01:20:00] a month ago. 

Hala Taha: That's a big deal. 

Peter Schiff: Yeah. 

Hala Taha: Yeah, well you've got a new subscriber and fan with me, so I really enjoyed studying your work.

I really enjoyed this conversation. I think my listeners probably like learned so much. So you've got thousands of new fans. So thank you so much Peter, for coming on the show and for sharing your wisdom with us. 

Peter Schiff: Yes, Hala, I really appreciate, uh, the opportunity to talk to your audience and I wish you continued success in building out this business.

Hala Taha: Thank you. 

And there you have it, folks. Some great pointers from Peter Schiff about navigating today's turbulent economic waters and making smart investments. Peter argues that by focusing on assets with intrinsic value, you're better positioned to preserve and grow your wealth in the long term. While bright, shiny investments like crypto may be hot right now, in some quarters, you need to be wary of investments that don't appear to create much value.

Don't just invest in something because you think you can find a fool to buy it at a [01:21:00] higher price. That may work for a while, but like Peter said, eventually you're gonna run out of fools and the whole thing will collapse. Perhaps the best thing you can invest in as an entrepreneur, however, is yourself.

When I started my business in 2020, I took money out of the stock market and I put it in my social agency. I invested in hiring employees and building out my business. I lived modestly and delayed my own personal gratification. Now, sure, I may have made some money in the stock market over the past few years if I left it in there, but I have so, so much more today because I invested in myself and my company.

I not only have a return on my investment, I have an asset that continues to grow even more valuable, and I've made millions of dollars in the process. Remember, as Peter says, it's not just about preserving your wealth. It's about putting yourself in a position to thrive regardless of what the future holds, whether that means buying stocks, gold or real estate, or maybe just investing in some spare batteries and toilet paper. 

Thanks for listening to this episode of Young and [01:22:00] Profiting. If you listen, learned and profited from this conversation, then before you run out and buy toilet paper, why not share this episode with somebody else who could benefit from it? If you did enjoy this show and you learned something, then drop us a five star review on Apple, Spotify, or wherever you listen to your podcast.

I got a shout out to Yap production team for all their hard work. As always, this is your host, Hala Taha, AKA, the podcast Princess signing Off.