(Schiff)—The latest buzzword in the mainstream financial media is “soft landing.” Everybody seems convinced the Fed has beaten inflation, and that it has completely avoided pushing the economy into a recession. According to the mainstream narrative, we may see a bit of an economic slowdown in the months ahead, but a recession is pretty much off the table. In his podcast, Peter Schiff explains why a soft landing is impossible.
Wall Street is booming with the growing belief that the inflation war is over, and not only is the Federal Reserve finished hiking interest rates, but it will begin to cut them in 2024.
The markets are excited because their drug pusher is going to show up with more supply. They’ve been away from the drug for a while. The Fed has been hiking rates and that’s not what the markets want. But now the markets are convinced that exactly what they need is going to be supplied as early as next year.”
Another factor driving market optimism is the idea that the economy will avoid a recession and we will enjoy a “soft landing.” It’s a Goldilocks scenario that features rate cuts in the absence of any kind of major economic downturn.
This raises a question: Why would the Federal Reserve start cutting rates and loosening monetary policy absent a significant economic downturn?
Peter speculated that with a lot of economic data weakening, the markets anticipate that the Fed will proactively cut rates to preempt a recession and prevent a crash landing. The thinking is as soon as it sees the economy coming in for a landing, it’s going to cut rates to ensure that landing is soft.
Peter called this “wishful thinking” at best. In fact, he said he expects a hard landing no matter what the Federal Reserve does. But if the central bank doesn’t try to preemptively cut rates, it will be an even harder “hard landing.”
Peter said that it’s difficult to understand why people think the Fed can raise rates from 0 to over 5% and get away without plunging the economy into a recession.
Why would that be if you look at the recent experiences with the Fed having rates too low and then raising them? Go back to the late 1990s and the decline we had in the economy, the recession, the stock market in 2000-2001. Look at the experience in 2008. And look at what happened even before COVID in 2018 when the Fed tried to raise rates from a low level and had to abort it very quickly when the wheels started falling off the bus in the fourth quarter of that year.”
History makes it clear that the Federal Reserve has a hard time normalizing rates. In fact, the attempt to bring rates from around 1% to just over 5% in 2007 led to the greatest recession since the Great Depression.
So, why would anyone believe that the Fed can normalize rates now and not have a similar consequence? Because, after all, the rate hikes expose all of the malinvestments and the misallocation of resources that take place when rates are artificially low.”
When rates are pushed lower than they otherwise would be by artificial means, people act irrationally. The decisions seem rational, but they are based on misconceptions. This drives people to make economic calculations that are not supported by the fundamentals.
Absent monetary central planners, interest rates would naturally fall if people saved money and put off purchases. In that world, economic decisions would be supported by naturally low interest rates. But we don’t live in that world. Americans want to buy now and pay later. We don’t have an economy naturally disposed to low interest rates. That means when the central bank forces rates down, it creates all kinds of problems.
Unlike a situation where rates are low for legitimate economic reasons and where the investments based on those interest rates can be supported long-term, when they’re artificially low, they can’t be. So, all those mistakes are made because rates are too low.”
In the early 2000s, artificially low rates drove a lot of mistakes in the real estate market. When that period came to an end, everything collapsed. As the Fed tried to normalize rates, the markets came in and tried to correct all of the imbalances that built up over the years of artificially low rates.
If that rate hike produced the Great Recession, why would people think that this time we’re going to get away with not having a recession at all even though this time the Fed didn’t stop at one? It went all the way down to zero. And it left rates at zero for more than a decade. So, rates were lower for much longer than they were back then.”
Add quantitative easing on top of that — three rounds before COVID and the mother of all rounds after COVID. Today, on top of rate hikes, the central bank is shrinking its balance sheet and pulling liquidity out of the financial system. That didn’t happen in the period leading up to the ’08 financial crisis.
We had rates lower for longer. We had all that quantitative easing. Now the Fed has raised rates and it’s reversing with quantitative tightening. This is a much bigger shock to the system than what the Fed did in 2008. And we built up over the years that the Fed kept rates at zero far more malinvestment and misallocations. Much bigger mistakes were made for a much longer period of time during this period. So now, there’s a lot more that needs to be fixed. A lot more mistakes need to be corrected. Misallocations need to be undone. So we have to have, by definition, a much bigger recession now than the one we had then. If that was the Great Recession, this is the even greater recession because we have a lot more mistakes to fix, a lot more sins to atone for. “
Despite this, most people believe were are not going to have a recession at all.
It makes no sense that anybody would believe that!”
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
