Peter Schiff forecasts an economic storm on the horizon – Cryptopolitan

Economist Peter Schiff, renowned for his acumen and known for not mincing words, has once again sent tremors through the financial sector. In a recent interview on First TV’s I’m Right with Jesse Kelly, Schiff, the best-selling author and chief economist of Europac, delivered a chilling forecast of the US economy – the onset of a new Great Depression, one that he predicts could outstrip the severity of the 1930s crisis.

The looming economic tempest

According to Schiff, the United States is on a collision course with economic disaster, powered by the wheels of inflation and the burgeoning national debt. He believes that the current method of tackling inflation – increasing interest rates – is insufficient and contributes to the inflationary cycle.

“Interest rates are prices. It’s the price you pay when you borrow money. The price is going up, just like the price of everything else. And in fact, interest expense is a major part of every business. … As interest goes up, well, that’s just another cost that you need to pass on to your customers through higher prices. So, it’s a self-perpetuating spiral,” Schiff explained.

While many might find solace in the slight drop of the Consumer Price Index (CPI) to 4.9% in April, Schiff has been vocal about the CPI’s shortcomings. He argues that the CPI is designed to mask the reality of inflation, hinting that the actual inflation rate could be as high as 9.8%.

According to Schiff, the key to breaking the inflationary cycle lies in curbing government expenditure, a notion currently at odds with the Biden administration’s fiscal policies.

A crisis worse than the great depression?

Schiff’s prediction of a new Great Depression takes a different form than the one experienced in the 1930s. He believes the economic crisis this time won’t provide the silver lining of falling prices that provided some relief during the 1930s depression.

“It’s probably going to be worse. It is a depression unlike the depression of the 1930s, where the people at least benefited from falling prices that provided some relief. This time, even the people who don’t lose their jobs will suffer because they’re going to lose the value of their paychecks,” Schiff warned.

The economist pointed to a looming sovereign debt and currency crisis as the progenitors of the impending calamity. He expressed concerns over the increasing appetite for raising the debt ceiling, calling it a diversion from the real issue – the debt itself.

As Schiff sees it, the impending crisis could significantly impact the average American’s standard of living. If global confidence in the US dollar wanes, the cost of goods and borrowing could skyrocket, leading to an economic collapse.

According to Schiff, the road to economic recovery requires a proactive and realistic approach to the current economic situation. Whether his predictions come to pass or serve as a dire warning prompting action remains to be seen. In either case, Schiff’s forecasts demand careful consideration and debate in the corridors of economic policy.