Veteran Wall Street investor and well-known economist Peter Schiff (Peter Schiff) recently talked about US monetary policy, the reliability of inflation data, gold, and reasons to avoid Bitcoin in an interview.

Contrary to popular claims, Peter Schiff believes that the recent rise in gold is not due to geographical conflicts, but to inflation. He said that inflation is the driving force behind the trend of metal prices.

“This is just the beginning of a large-scale repricing of gold, and people haven't even really bought gold in large quantities. The central bank is buying gold, but investors don't even buy gold; neither retail investors nor institutional investors are in the gold market at all. They don't even understand why gold is rising. They attributed this to geopolitical risks, but the rise in gold was actually linked to inflation. The point is that the market's perception of inflation is wrong. Raising interest rates to 5.25% or 5.5% by the Federal Reserve is far from enough to put the devil of inflation back in the bottle.”

The media and Federal Reserve officials are beginning to question the viability of inflation returning to the 2% target, and the inflation metrics they chose might not be as accurate as they thought:

“I have to say [US inflation] is at least twice the CPI. If the government claims that the inflation rate is 2%, then it is 4%. People are struggling, and the economy is sluggish. Inflation has eroded people's real incomes, forced them to work multiple jobs and be heavily indebted, and we are headed for a major disaster.”

What lies beneath the surface of the US economy is the scourge of decades of artificially low interest rates, particularly in the real estate and banking sectors.

“The entire US banking system is insolvent. That's a big problem, and when interest rates stay at zero, all of these landlords refinance their mortgages at a 3% interest rate. Banks own treasury bonds and other commercial paper, and if the Federal Reserve actually raises interest rates to an appropriate level, all banks will go out of business, including those that are too big to fail.”

The signs of economic disaster reminded Peter of his warning in early 2000:

“I've been warning about the mistakes the Federal Reserve is making, and the housing bubble, and the financial crisis that is about to occur after the bubble bursts. People ask when (these questions will come up), and although I don't know the exact time, I know it's going to happen. A lot is happening now, like what happened in 2007, which shows that the day of liquidation is getting closer.”

Speaking about the crypto-gold debate, Peter believes that the value of gold stems from the non-monetary uses Bitcoin lacks:

“They say, 'Bitcoin is a store of value', but it has no value. You can't store what you don't have. The reason gold is a store of value is because I can use the gold I own, and after a hundred years, I can use it to make watches. I can use it to conduct electricity. I can use it medically, in dentistry. Gold has practical uses in the world; it is a commodity used throughout industry.”

He believes that Bitcoin's recent high was driven by Bitcoin spot ETF hype, which is probably a typical example of the “bigger idiot theory” theory:

“The public is selling gold stocks to invest in Bitcoin spot ETFs. But the problem is that when people who buy these ETFs want to exit, they won't be able to get out easily. The market doesn't have enough demand to take over, and the price of bitcoins is about to plummet. We're going to witness the biggest Bitcoin crash ever. These investors are paper handlers (described as investors who can easily panic when the market fluctuates, cannot withstand pressure, and sell assets quickly). They are not diamondists (describe investors who hold firm and hold long-term holdings in the face of market fluctuations).”

Bitcoin and gold are completely different assets, and investing in Bitcoin is a risky bet:

“If you want to invest in Bitcoin, then use the money you originally intended to buy lottery tickets, or if you're planning a trip to Las Vegas, you can use the money you were planning to play slots or roulette to invest in Bitcoin. But don't confuse the relationship between Bitcoin and investment. This isn't even a proper investment speculation; it's just gambling.”

Editor/Jeffrey