hi everyone and welcome peter Schiff joins us today the founder and CEO of Europacific Capital the former economic adviser of presidential candidate Ron Paul and the author of great books such as uh Crash Proof How to Profit from the Coming Economic Collapse uh which I read back in 2008 when the when you predicted uh again since 2006 at least uh housing collapse and uh this is really when I started to follow your work as well so I'm at least a big fan and um yeah I guess the the big uh story is Trump's favorite economic instrument the tariffs which have now been unleashed upon the world and uh it's argued that this will reduce the deficit and re-industrialize America do you share the optimism of the Trump administration uh no i I I do think the tariffs will reduce our trade deficits because it's going to make imports prohibitively expensive for a lot of Americans so Americans will consume less but we're not going to produce much more uh we just don't have the capacity right now to do that and we don't have the regulatory environment uh we don't have the labor uh environment we don't have the supply chains we don't have the infrastructure or the factories um so we're just going to have to do without a lot of the products that are being tariffed and um it's going to be a major problem for the US it's not as a big problem for the world um the world will still sell goods to America just not as many uh and so they will then you know consume those goods themselves there there's billions of people outside the United States that can consume the goods that Americans uh won't be able to afford so it's not a big problem for the rest of the world uh but it's a huge problem for America and you know Trump has the nature of the relationship backwards the world hasn't been screwing us we've been screwing them you know we've been getting away uh with a much higher standard of living than our productive capacity would would ordinarily entitle us uh we're able to consume what we don't produce and we pay for it by printing money and and so the world gets our inflation and we get their stuff so we've got the better end of the bargain now they use our paper to buy our financial assets our stocks our bonds our real estate so they are accumulating assets and they're getting the income from those assets so what we're doing is we're indulging our present and we're sacrificing our future and Trump is right about that and he's right to point out that this is a bad trend that is making America poor but he doesn't understand that in the short run everything looks better on the surface because we get to consume more than we produce also foreigners recycle their trade surpluses into our financial markets and that gives us a higher stock market it gives us lower interest rates so we we we're benefiting in the short run trump is trying to take all that away which is going to produce a massive recession and we're going to be redirecting all that inflation away from Wall Street back to Main Street because now all the money that we used to print and and send abroad is going to stay in America to buy what well not much because the goods aren't coming in anymore uh so it's massive inflation it's recession uh so it's a complete disaster now this was going to happen eventually anyway but Trump is accelerating the process which is a good thing except in this case it's going to be very problematic because Trump did not prepare the nation for the extreme sacrifice that is going to be required nor the big cuts in government spending because in order to free up resources to build factories we can't spend all this money and run these huge deficits to crowd out all of our capital so we need to cut Medicare Social Security national defense and Americans have to stop spending we need to save our money to build those factories they're not going to just grow you know out of thin air so there's a lot of hard work that needs to be done but of course nobody has a stomach for that our whole economy is a house of cards built on the overvalued dollar and our trade deficits and our excess consumption and artificially low rates and all that's about to come toppling down well often the I guess the the argument for tariffs for economic nationalist would be that it's a good way of defending uh national industries so they can gain international competitiveness that is uh um but uh but this would assume that there would be domestic industries to be built but this would be a long-term project wouldn't it to reindustrialize very long term very long like for example people are talking about Nike right you know Nike stocks at a 52- week low today it's down 12% and I hear people talk about well you know cuz the sneakers are going to come in from a Vietnam or China wherever they're coming in and they're subject to like a 40% tariff and and so Nike is going to have to jack up prices a lot and they're saying well to avoid the tariffs they could just build you know make the sneakers here well how are they going to do that the factories don't exist um and in order for Nike to build a shoe factory who knows how long it's going to take plus you got to put together all the supply chains domestically because you can't import you know the leather and you can't you know whatever and then you have to have the workers that know how to do it they're not here because we're not making shoes here 98% of our shoes are imported it's not just Nike it's everybody we don't make anything anymore the whole industry is gone it would take years and years to bring it back but Nike's not going to do it why is Nike going to invest money in building a factory here in America for what reason i mean they have factories in Vietnam they can still sell Nikes in America they just won't sell as many because the price will be a lot higher so America will be a smaller part of their margin of their market but now they can take those sneakers that they're not selling in America and sell them in China sell them someplace else maybe they'll get a little less money than they were getting selling here but that's better than building a factory here and being completely uncompetitive plus Nike still has to sell shoes all around the world why they're going to build a factory here where the only place in the world anyone would buy the sneakers is in America because it's going to be an uncompetitive factory so it's not going to happen this is just all a pipe dream the president is being ill advised by a bunch of economic ignoramuses but uh it looks like this could be again mass stagflation though it will the economy would stagnate you would have yeah combination with inflation but where is this leading then is it I mean a lot of doors are being closed at the moment are we heading towards a collapse or what do you Well we already have stagflation now we're just going to have higher inflation and a weaker economy we're going to be in a recession and there's going to be a lot of inflation and and you know mainly because the tariffs redirect the inflation out of the financial markets back into the real economy you know we've benefited from diverting our inflation to the stock market and the bond market that's all going to reverse and that's why if you look at what's happening today the foreign stocks are going way up i own a lot of stocks today that are up three four five six% uh you know that are in Europe they're they're in Asia they're in South America money is being sucked out of the US right now the opposite of what Trump wants capital is not coming to America it's fleeing America how do you how do you expect the rest of the world to react to the to this you mentioned that now they can you know instead of producing for the United States they can consume their own goods but what would this mean uh uh I guess practically would they have to shift find entirely new markets or well governments don't have to do anything individual businesses will make the necessary adjustments to their production uh to uh fit you know different markets especially if the US dollar continues to fall like it is today because the weaker the dollar gets the wealthier foreign consumers become and the easier it is to sell into those markets uh so you know the markets are going to self-correct governments don't have to do anything to the extent that any governments in Europe or South America or Asia retaliate with tariffs of their own that just harms their own economies the the harm that is being done by the tariffs in America are to America we're not harming Europe we're not harming China we're harming America we're harming Americans uh and and so because we decide to harm ourselves that doesn't mean that European government should harm Europeans you know why it's like you know if we jump off a bridge are they supposed to jump off the same bridge no you know just you know let us jump and you know stay off don't do it yourself but in Europe now there's I hear some voices who are concerned that a lot of the Chinese goods which were going to the United States would be redirected to Europe and undercut uh European industries uh how would you respond to those not really because it's not the same goods i mean a lot of the stuff that they buy from China is not the same stuff that they're they're making in in in in Europe but look it look it will benefit Europeans to the extent that they have access to more goods at lower prices that's good and let the European economy adjust to that you know good thing you know that the whole goal of an economy is to create consumer goods for your people and the more goods you have at lower prices the better so where do the Americans investors go at this point in time though if again the the industries aren't performing uh there's mass inflation eating away at savings and what's a good place to I guess uh they should they should invest abroad right now they should get out of overpriced US stocks they still have a long way to fall and they should get into the stocks that I own the the the value stocks trading outside the United States that are going to benefit benefit from you know these new trade relationships and capital flows they should invest in emerging markets that are really going to be liberated uh from having to prop up the US economy uh they should own mining stocks precious metals mining stocks that will benefit from the rising gold price i mean gold's over 3,000 it's going higher as the world dollizes and you know central banks are going to be buying more gold and less treasuries that's great for gold mining stocks that's not good for the US government because who's going to buy those treasuries you know the deficits are going to be much bigger in this recession i think the Fed is going to buy them and that's going to be even more inflation so not only are the tariffs going to be pushing up prices but so will inflation that the Fed's going to create and the weak dollar is going to add to the pain of the tariffs you know they were originally trying to tell us that a strong dollar was would offset the tariffs and I said that's not going to happen the dollar is going to weaken and it is weakening it's at the lowest today it's been uh uh since October last year but it's down over 2% today and it's one of the worst days in the history of the dollar trading uh and I think we're going to get more days like this i think the dollar is going a lot lower and that's just going to put more upward pressure on import prices that will add to the upward pressure from the tariffs well yeah if it was a different economy sinking it might be one thing but there's been so much the whole world economy has been organized around the United States for so long that is so many countries organized their exports to the US so many have been uh almost investing continuously in the US bond market and uh using the US dollar uh do do you see alternatives uh existing in which there is uh well not decoupling but diversifying at least of course it's very easy to do you know I mean I if you if you think about the US economy in 1944 1945 we had a wartime economy uh all of our factories were making ammunition and and and and tanks and fighter planes and and and stuff to support the war effort Now there were actually economists back then who were worried about the US economy because they thought hey when the war ends uh it's going to be a big recession because you know all these factories aren't going to have to make bombs anymore so what are they going to do right they forgot that before they were making bombs they were making sewing machines and and washer dryers you know before they were making tanks they were making automobiles right but the the the the American economy had retoled to provide stuff for the military but when the war was over the factories didn't shut down the workers didn't get laid off in fact 20 million men got laid off from the army the navy and the marines and they got jobs you know back backstates side so it didn't take long to redirect our capacity to produce from the military to civilian production which of course benefited people you know it wasn't it didn't help me that we made another tank that I couldn't drive but another car yeah that's great that helps the consumer so all the world has to do is turn its productive capacity that already exists and use those factories use those workers use those resources and supply chains and infrastructure to make stuff for themselves instead of making stuff for Americans now in many cases it's the same stuff you don't think the Chinese can wear Nikes you don't think they got feet right so they could buy the same stuff right but sure if they have a factory making American flags all right so make Chinese flags make German flags right make whatever you know I mean how different could it be just put you know a different mold or different dye on the pattern right but so the world has an easy task and and actually a a pleasant task because they get to consume the hard work is here in America because we got to figure out how to consume you know we without you know without factories which we can't do so we have to build non-existing factories that takes a lot of resources that takes a lot of effort uh so we have the difficult road ahead not the world right uh and where is the money going to come from to build these factories to recreate the supply chains uh you know where are we going to get it we have to start saving but then we can't spend but also the government has to cut spending because the deficits are so large if we have to finance those deficits ourselves without relying on the rest of the world because they're no longer subsidizing us and we need to loan the US government $2 or3 trillion a year how can we do that and safe to build factories we can't it's all crowded out so you know th this is the day of reckoning but this is when all the chickens come home to roost it was going to happen eventually but Donald Trump has just accelerated the process well are there any are there any paths now out of this mess i mean if President Trump's tomorrow calls Peter Schiff he asks you you know where do we go from here how what is the best path forward like what are the possibilities because a lot of what's being done now can't really be reversed anymore well the only way out of it is to keep doing the wrong thing and keep kicking the can down the road so if he calls me and I tell him what we need to do you know you know things are going to get bad for many many years but that's better than them getting even worse years in the future because the longer we keep digging ourselves into this hole the more difficult it is to get out so I want to just bite the bullet and and do what needs to be done but if Trump wants to just try to keep the bubble from deflating so he can pretend that everything is great just like he pretends that it was great during his first term so if he wants to go back to that phony economy that he just potentially uh pricricked right he needs to cancel these tariffs he needs to figure out some face saving way to do it so it doesn't look like he just was wrong and and he made a mistake uh and and but you know who knows i mean maybe you can't put the omelette you know back the eggs back together again once you cracked them right i I don't know i mean he may have set something in motion here that he can't stop but we'll see but I don't know that he's going to try i think he's surrounded by people that actually believe this BS and I I think he's going to stick to his guns and so you know until things get really bad then you know then they're going to cave as far as the Fed is going to cut rates they're going to do QE and that's just going to throw gasoline on the fire you know I remember you said that 20 years ago it's better to accept corrections now uh and yeah take the pain as opposed to delaying it we should have done it 20 years ago it would have been be in much better shape now yeah no I I agree it's been 20 years and the situation have gone from bad to much worse uh but are you that much more optimistic about Europe though in on this continent we have again the the British aren't looking too good the French uh neither Italians of course the Germans are now de-industrializing they lost their access to cheap energy they can't afford making well they can't make competitive cars anymore which was their big thing so now the Germans are arguing they have to borrow a lot of money and start building tanks instead do you believe in this German or militaristic Keynesianism or how do you No I I think in the short run this is attracting capital into Germany to finance this it has lifted their markets um and but you know long run I think the the real winners are going to be the emerging markets the brick economies they're in the best shape uh and so they're going to be the primary bene beneficiaries of what's going on but in the short run over the next several years I think European markets will benefit uh from an exodus of capital from the US because I think that's kind of like one of the first places the capital is going to go and that will benefit that will buy them some time having money coming into to Europe uh so uh you know I I think in in the short run I'm very optimistic on the performance of the financial markets there and of the euro but long term you're right i mean ramping up government spending running big deficits that's not that's not a recipe for prosperity um but it is going to you know the the European stocks are cheap american stocks are expensive so there's a lot of money to to leave the US market and go over there and and and and that's going to help yeah you mentioned the BRICS countries since um that was actually my next question as well now uh to what extent do you think they present a viable alternative do you see it being their ability to create alternative payment systems and currencies or is it their control over key supply chains is it technology centers what um what do you see as their main strength or weaknesses in terms of uh preparing for this cuz I I I remember back in 20089 when the when we had the global financial crisis this is really when the Chinese and the Russians began to think about uh well what they refer to then as a most more postamerican world in terms of where international economy well the international finance how it should be organized do you do you see that they are they have things prepared now or do you see the bricks as um more of a talking club i I spoke to Jim Rogers about this he didn't have much uh he he thought it was more of a marketing stunt but they have developed especially over the past 3 years uh quite a lot look I think they're already uh the dollarizing they have a long way to go but that's one of the main reasons gold's above $3,000 and headed higher because they're buying it um but they have the factories uh they have the demographics um you know they have savings u they have resources they don't need America you know maybe they needed America for for defense but now Trump is saying well we don't want to defend you if you don't pay us so if we're not going to you know defend them then what the hell are they doing buying our bonds propping up our markets uh so I think it's you know they're just going to move away from the press and you know the the key to economic prosperity is just limited government uh free markets so the freer the markets the smaller the government the bigger the economy the wealthier the people uh and you know you have more government in the west now uh more regulations uh a bigger welfare state more people dependent on government checks uh and and these bigger bureaucracies so you know they're not going to do as well um but you know the the the the emerging markets I think are really going to be liberated right they're the ones that are going to see a big boom and you know there's only 300 million Americans i mean you know this oh we're so unique because we buy everything i mean so what you know there's billions of them they could buy just as much i mean buying is easy right anybody could buy uh the hard part is to make the stuff they can make the stuff we can't and the only reason we could buy it is because they make it and they lend us the money to buy it which they're going to stop doing which was which was a mistake they'll just buy it themselves you know there's the economic you know Shay's law supply creates its own demand demand doesn't necessarily create supply if that was the case there'd be no poverty you know look at all the poor people in Africa there's plenty of demand there why don't they have stuff you know so you need supply first you know I mean otherwise all you have is desire you know but desire doesn't mean anything everybody wants stuff you got to be able to produce it uh to have you know real demand and and and that's what the world is doing they're producing and that's what America is not doing so So what does this mean for the US China economic war over well leading technologies and yeah markets is this more or less coming to an end do you think uh or have the Chinese won it or will the technologies kind of be a separate i mean we're still we still have a lot of tech here even if we don't make the chips we still have a lot of technology in this country that's one industry that you know we may have lost the hardware but a lot of the software a lot of the brain power there's a lot of stuff that happens here in tech that's still a viable American industry and so the world is still going to want our tech and so you know they're not going to not trade at all with the United States we're you know they're they're going to export to us and import our our tech um but as far as whether we'll lose an advantage we have to China you know other countries that depends you know on regulation and and government but you know it's not that we have nothing in the United States we still have industries uh that you know that we lead in um uh and and that hopefully will continue unless they end up getting taxed too much or regulated too much no I I think you're correct i think the US is gotten itself in some deep trouble but one shouldn't underestimate this uh yeah this giant it's not going away either so I I think you're right especially on the tech front i think the US and China will continue to lead uh very clearly without well I'm not sure who would come in third um but but yeah my my my final question though is that R in bricks the the Russians we in in Europe they well they kind of bought into John McCain's argument that it was simply a gas station masquerading as a country but uh now they're actually yeah growing much faster than other European countries despite you know all the sanctions but they seem to have successfully diversified or decoupled again I'm not sure how much of this is the war economy but what do you I'm bullish i'm bullish there it's unfortunate Americans can't really invest there because of sanctions and stuff because a lot of those stocks are probably going to do a hell of a lot better uh than than the US market uh and we're shut out of it but yeah yeah I think look the demographics in Russia are much better the the fiscal situation they got resources uh they have uh you know gotten closer to China as we are distancing ourselves uh from China uh I think they're also getting closer to you know Saudis and other nations in in the Middle East and the Muslim world uh so I think that uh you know Russia is going to do really well you know and this the the the dispute the war with Ukraine is eventually going to come to an end i mean the sooner it does the better but obviously the biggest winner there is Russia or Ukraine maybe Ukraine isn't because then you know they're but uh but Russia and Ukraine will clearly benefit from the end of that war more than anybody else so they got that going to look forward to great well uh thank you so much for your time i appreciate I imagine you're in business so thanks again in in the meantime though people should you know look at what's going on this is the beginning of a major decoupling a major shift the US stock market's been the only game in town for you know more than a decade and that's all going to reverse so if you're still holding on to US stocks you're going to lose a lot of money uh just like people did in the 1970s if they still believed it was the Nifty50 of the 1960s so the fangs you know these stocks are going to get clobbered uh and the dollar is going to get clobbered you need to own foreign stocks you need to own foreign currencies you need to own commodities everything that worked in the 70s is going to work even better now so you got to recognize this and that's what we're doing at Europacific uh asset management that people want to contact my company talk to the adviserss about having us manage portfolios for you getting out of these overpriced US stocks uh and getting into uh undervalued international stocks that will benefit from from these emerging trends i also have a mutual fund family people can buy my funds no load you can get the information on the website europac.com and if you don't own gold and silver uh you know you should buy some to shift gold but also uh the mining stocks in my opinion are probably the best speculative investment I've ever seen uh and you know you can buy them it's amazing that you can still buy them this cheap with gold over 3,000 uh but you can do it but I don't think you'll be able to do it for long so again you know we've got strategies that focus on mining as well and you can learn about those at Europe Pacific Asset Management at you know Europeac.com does Europe Pacific also deal with uh agriculture focus on this or Well we own we have companies that are in that space we have some you know companies that you know benefit from rising uh you know farm prices so those are in our portfolios but yeah real real things you know uh raw materials uh energy and I think today's selloff in energy is is is a head fake because people are pricing in a global recession and they think there'll be less demand for oil it's not going to be a global recession it's going to be a US recession the rest of the world is going to do better when it no longer has to support the American consumer and so you're going to see more consumption of oil abroad and higher oil prices not lower prices great no I'll leave a link to the Europacific capital in the description so yeah Peter Shiff thanks again all right take care