Transcription
Gold sold off about 50 bucks. So, gold's around 4135. Silver's down 58 cents.
None of these politicians are willing to do what it takes to actually solve the problems that they created. It's a vicious cycle that you can't get out of. So, and this is a look into America's future because we're on the same trajectory as Japan. We just don't have a big stockpile of foreign assets. We could try to sell our gold. That that would open up a whole new can of worms for the United States.
Gold has sold off again is just an opportunity for people to buy more. The balance sheet expanded by another 11 billion. Warsh is there. They don't care if it crashes after somebody else takes the wheel. They just want to make sure they don't get blamed for it. Just to pay interest on the national debt. This is an incredible crisis in the making. I think that there is a chance that you see pronounced weakness. If the yen breaks down here, this is a big deal. This is a crisis. The Japanese government has about 1.2 trillion in foreign reserves. Vast majority in US Treasuries. That's a disaster waiting to happen.
Now, the gold market, again, is still not reflecting this. In fact, when our markets were closed yesterday, gold was not yesterday, Friday. Gold sold off about 50 bucks. Uh a lot of that, again, is based on the tough talk uh uh um uh from uh Warsh about fighting inflation and price stability. And as I'm recording this podcast, gold's down another 18 bucks on top of the 50. So, gold's around 4135. Silver's down 58 cents. It was down over a buck Friday. So, trading just over 64.
I don't believe any of this tough talk. It's easy to talk tough. The hard part is to walk that walk. It's not going to happen. He's just trying to gain some credibility. He's the new sheriff in town. He's going to try to make a lot of noise. It's going to be different, right? I'm going to I'm going to get rid of inflation. I'm going to do what Powell failed to do. No, he's not. Because for the same reason Powell failed, Walsh will fail. Because he can't fight inflation. Actually, he can't shrink the balance sheet. He can't raise interest rates high enough for the same reason that Japan can't do it. And that's why they're not doing it.
None of these politicians are willing to do what it takes to actually solve the problems that they created. The one thing they can do is pretend that they're willing to solve them, but they can't actually try without exposing the real gravity of the situation that they don't want to acknowledge. So, the fact that gold has sold off again is just an opportunity for people to buy more. The strength in the dollar is the same thing. The dollar has strengthened somewhat based on an expectation that will not happen.
>> The Fed says inflation discipline, but markets still react like liquidity never truly left. As Peter Schiff points out here, a sharp drop in gold alongside aggressive policy language may be signaling belief in future tightening rather than actual tightening. The contradiction appears when balance sheet constraints and debt servicing realities limit how far policy can go. Savers chasing short-term dollar strength may miss what repricing looks like once credibility collides with arithmetic. Next, Peter Schiff exposes what central bank positioning suggests about confidence versus capability.
>> And even if uh the Fed does come through with a couple of quarter point rate hikes, it doesn't matter. It's spitting in the ocean. What the Fed would need to do with interest rates and its balance sheet, it's not going to do. In fact, if you look at the government balance sheet, we got the numbers again uh last week, the balance sheet expanded by another 11 billion. Warsh is there, he's the chair of the Fed. Why did he expand the balance sheet last week? What's he waiting for? If he's going to be tough on inflation, why not get tough now? Again, why didn't he already raise rates? Why didn't Why didn't he vote for a rate hike in his first meeting? Because he doesn't want to. He wants to talk about it, sure. He wants to get credit for talking, but he doesn't want to actually act because he doesn't want to have to deal with the consequences of acting, but the consequences of not acting are going to be much worse. Just like the consequences of Japan not acting are going to be worse for Japan. So, why don't they act? For the same reason that our politicians and our bankers don't act, because they don't want to deal with the problem today. They want to kick the can down the road and hope somebody else deals with it tomorrow. Even though the somebody else deals with a bigger problem with even more profound consequences, they don't care because these are politicians. They don't care about what actually happens to the country. They just care about what happens while they're at the helm of the ship, right? They don't care if it crashes after somebody else takes the wheel. They just want to make sure they don't get blamed for it. But, you know what? Everybody who's had the wheel is to blame.
>> Markets reward the speech today and transfer the cost to savers tomorrow. According to Peter Schiff, the real signal is not the rate rhetoric, but whether balance sheet expansion quietly continues underneath it. Institutions rarely wait for official pivots. They reposition when policy and action diverge. Investors focused only on headlines risk confusing delay with resolution while structural debt pressure compounds underneath. Next, Peter Schiff reveals the timeline where policy theater stops working and markets force the adjustment.
>> All of the past Fed chairman, all of the past presidents, and the BOJ, and the prime minister of Japan that have continued on this path, they all are to blame. Everybody has had the ability to do something about it, yet nobody did. And unfortunately, you know, academia doesn't hold people accountable, the investment community doesn't hold anybody accountable because nobody wants to upset the apple cart because a lot of people are getting rich off of this. And so they don't want to do anything to disrupt that gravy train, even though at the end the gravy train is going off the edge of a cliff. You know, um Adam Schiff, you know, he probably looks at all the people on welfare and food stamps, oh these are the deserving people. What do they deserve? What are they doing? They're not doing anything. Talk about paying your fair share. Those are the people who don't pay their fair share. People living off of government. People who don't even have jobs. People who just get a check from the government. Why doesn't the left ever say, "Hey, you're on welfare, you're on food stamps, you need to pay your fair share. You need to do something. You need to contribute to society." No, they look at the people who are contributing the most to society, who are paying the most amount of taxes, and those are the ones that supposedly aren't doing their fair share. Again, I agree with that. The wealthy are not paying their fair share of taxes. They're paying way more than their fair share. If you want the rich to pay the fair share, then they need a tax cut. That is the reality.
>> Everyone wants accountability after the cycle breaks, but almost nobody demands it while the incentives still pay. What Peter Schiff is highlighting is that markets often reward policy delay more than policy discipline until the consequences arrive all at once. The harder question is whether debt expansion and asset inflation have become politically untouchable regardless of party labels. Wealth preservation starts by recognizing incentives before narratives. Next, Peter Schiff unravels why public fairness arguments rarely match capital flows.
>> Now, I don't like the entire tax system. I agree with Adam Schiff about that. We have a bad tax system. We should eliminate it. Not because I want fewer wealthy people, but because I want more. I want the government to be poor, not the people. I want the people to be rich, and the way you get rich people is to have a poor government. Because the government only has what it takes. So, if you enrich the government, you impoverish the people. That is what the left does. That is That is the empty promise of socialism. It sounds great. Hey, let's just take money away from these rich people so we can have it for ourselves. Stealing from the rich and spending their money, you shoot yourself in the foot. Every country Look Look Look at the Soviet Union. Look at Cuba. Look at North Korea. Look at every communist experiment that has failed. There's never been one that succeeds. Yet, the left wants to keep touting out these false promises. But, the the one thing that they do work at is they get you votes. Because the public they don't know, especially the dumbed-down Americans who are the product of our failed public government school system. They don't know. They believe this nonsense. Yeah, take his money. You know, let You know, let us have it. Right? They They don't understand the consequences. Anyway, speaking of consequences, and I've I've warned about this, but I'm watching this, and everybody needs to pay attention uh to what's going on in Japan. All right? The Japanese yen is starting to really break down. We're at a very uh important, maybe inflection point in in that currency. The Japanese yen is 161 and 1/2. Now, going up means the yen is going down.
>> Currencies rarely break overnight. They fracture after long periods where policy credibility quietly erodes. Peter Schiff's argument suggests the real warning signal is not the headline exchange rate, but the speed at which authorities lose control of expectations. Markets tolerate imbalance until confidence disappears. Then repricing becomes violent. Long-term investors should care less about slogans and more about incentives. Next, Peter Schiff reveals why currency weakness changes bond math faster than most expect.
>> It means that you can buy more yen with your dollar. And about 160 was kind of like a key level. And we're now through that level. And the Bank of Japan is intervening or threatening more intervention to try to kind of draw a line in the sand. But remember, they drew a line in the sand uh in at the 10-year JGB. Remember they said we're not going to let the rate on the 10-year Japanese government bond get above 1/2 a percent. That was their original line in the sand. Well, now it's at 2.65. It's It's It's way above where they said they weren't going to let it go. And if you remember on my podcast, I said at the time, there's no way they're going to defend this. That rates are going a lot higher. The big increase in rates is exactly what I predicted was going to happen. And in fact, the the yield on the 10-year Japanese government bond got as high as almost 2.8, got to like 2.77. Now it's 2.65, but it's going to take out that high. There's going to be a lot of upward pressure on bond yield in Japan. The 30-year Japanese government bond, they don't have as many of those, uh they actually got up to 4% uh not too long ago, a few weeks ago. Right now we're at 3.78, but we're going to go through 4%. But think about the gravity of the crisis that could hit Japan. And this is not about a strong dollar. This is about a weak yen. The yen is dropping against everything. Yes, the dollar index is a bit over 100, but the Japanese yen is falling against the euro, falling against the pound, it's falling against, you know, all these other Southeast Asian currencies, against the Australian dollar, against the Canadian dollar. So this is a weak yen. This is not a strong dollar story.
>> A currency breakdown matters most when investors mistake relative strength for actual safety. This is where Peter Schiff's thesis shifts from gold commentary into sovereign stress mechanics. Yield caps work until markets test them. And once they fail, investors begin repricing everything tied to government credibility. The portfolio risk is assuming currency pressure stays local when debt markets are globally connected. Next, Peter Schiff exposes the contradiction between intervention promises and bond market reality.
>> Although the dollar inching higher is adding to the pressure on the Japanese yen. But debt to debt to a GDP in Japan is about 250%. So it's about double what it is in the United States. They are now running annual budget deficits of about 200 billion. Now I I'm dollarizing this. Obviously, it's all in yen, right? I'm just expressing it in dollars so you have some idea of of what it means. So, their annual budget deficits are about $200 billion, which is about 4 and 1/2% of GDP, which is a big deficit. 4 and 1/2% of GDP. Um total debt, the national debt of Japan is 8.3 trillion. Now, that's small compared to our 40 trillion, but you know, they're a much smaller country. I mean, the whole I mean, geographically, it's about the size of California, but it's a much smaller economy uh than ours. The Japanese government collects about 500 billion a year in taxes. So, if interest rates go to 4%, and they're already about there on the long end, the if you the shorter rates are not quite there, right? You got 2-year government bonds at 1.4, 5-year at just, you know, 1.9, but there's going to be a lot of pressure. But, imagine if interest rates went up to 4%, which is not outrageous. That's about where we are, right? We're at about 4%. Uh what happens if Japan gets up to 4%? Well, then the Japanese government is going to be spending 2/3 of their taxes. 2/3. Paying interest on the national debt. 2/3. If interest rates in Japan get to 6% and, you know, they've been 6% in the past, years and years ago, and they've certainly been a lot higher than 6% in America. But, a 6% interest rate would be enough to consume 100% of Japanese tax revenue.
>> The market never announces a debt trap before it becomes obvious to everyone. According to Peter Schiff, the overlooked number is not total debt, but how quickly interest expense can consume government flexibility. Once financing costs absorb tax revenue, policy makers stop making choices and start managing constraints. Investors protecting purchasing power should watch debt servicing capacity more than growth headlines. Next, Peter Schiff reveals the one pressure point policy makers cannot openly discuss.
>> Just to pay interest on the national debt. This is an incredible crisis in the making. I think that there is a chance that you see pronounced weakness if the yen breaks down here. This is a big deal. This is a crisis. Now, the Japanese are sitting on the Japanese government has about 1.2 trillion in foreign reserves. The vast majority in US Treasuries. They need to sell that at a minimum. But that would only repay about 15 to 16% of their national debt. They're not out of jail if they dump all their Treasuries, but at least it's something. They got to do that. But even without doing that, just a breakdown in the Japanese government bond market and the Japanese yen is going to be a problem. But then, when the Japanese government has to do something about it. But right now they're doing nothing about it. They're They're running these big deficits even though there's a ticking time bomb. They should be running budget surpluses now. They should be paying down this debt. But politically, they can't do it. Meanwhile, if you look at consu- import prices year over year. Now, some of this obviously you could say is war related. But import prices in Japan are up 25% year over year. That's a big number. A lot of that is food and a lot of that is energy, but people need food. People need energy. You've got a lot of upward pressure on inflation that is going to exacerbate if the yen continues to depreciate, which of course directly import impacts import prices and a weakening yen is going to put more downward pressure on Japanese government bonds, which puts more pressure on the JGB to monetize government bonds, to print more yen, to buy more bonds, which weakens the yen, pushes prices up, pushes bond yields up.
>> Official stability narratives fail fastest when living costs start moving faster than policy responses. As Peter Schiff points out here, imported inflation can turn a currency problem into a household problem with surprising speed. Foreign reserves may buy time, but they rarely reverse structural incentives. Investors who only watch equity indexes often miss the stress signals already appearing in bonds and currencies. Next, Peter Schiff exposes why inflation management and debt management eventually collide.
>> It's a vicious cycle that you can't get out of. So, and this is, you know, a look into America's future because we're on the same trajectory as as as Japan. We just don't have a big stockpile of foreign assets. We could try to sell our gold, but that that would open up a whole new can of worms for the United States. Um and, you know, Japan still has um a lot of exports relative to its imports. Even though they're running budget deficits, their trade deficits are are not huge like ours. And Japan is still a net creditor nation, meaning the Japanese still own more foreign assets than foreigners own Japanese assets. So, that gives the Japanese a position of strength to deal with a massive crisis that America doesn't have. We're going to get into our crisis from a position of weakness with huge trade deficits on top of our budget deficits and the fact that we are the the biggest debtor nation. It's going to compound the problem. We just haven't had it yet, but it's obvious that these overly indebted governments are getting closer and closer to a day of reckoning. Nobody is worried about it. Nobody is talking about it. I mean, nobody important. Yes, I mentioned Hank Paulson said we need a plan, an emergency break-the-glass plan, to deal with this crisis when it happens. Not a plan to try to prevent the crisis from happening, because the crisis is inevitable. There's no way we're going to do something to prevent it from happening. So, we just resign ourselves to have to react afterwards, but that's not a plan.
>> The biggest risks usually become visible long before they become politically acceptable to discuss. What Peter Schiff is highlighting is that debt cycles do not end because forecasting improve. They end when financing conditions change. Comparing sovereign balance sheets matters less than comparing resilience under pressure. Wealth preservation is often less about prediction and more about avoiding dependence on official optimism.