Peter Schiff Says Inflation Worse than Expected

( For months now, Treasury Secretary Janet Yellen and the Federal Reserve have both argued that the current inflation is only “transitory.” But according to investor Peter Schiff, September’s Consumer Price Index reveals that the “transitory” narrative is going to be difficult to maintain.

In his podcast last week, Schiff said that the September CPI revealed that America is now entering an inflation “super-cycle” and it is possible the markets are beginning to figure that out.

Explaining that the current inflation is of the government’s own making, Schiff points out that the Fed is trying to hide from the public just how bad the inflation is. By pretending that there isn’t enough inflation, the Fed is allowed to get away with its loose monetary policy. Schiff argues that the government’s numbers should be taken with a grain of salt and we should recognize that the actual numbers “are much higher.”

Since the government releases the Consumer Price Index report, Schiff explains, it is deliberately designed to understate the true cost of living increase. But even with that, the CPI numbers show that inflation is still running hotter than expected.

The projection was for a 0.3 percent month-on-month gain when the actual number came in at 0.4 percent, pushing the yearly gain to 5.4 percent. This makes September the fifth consecutive month with year-over-year CPI gains exceeding 5 percent.

If you annualized the CPI through the first three quarters of 2021, Schiff said, the inflation rate is 6 percent. But, Schiff explains, if we used the Consumer Price Index calculation that was in effect in the 1970s, it would show double-digit inflation today.

What’s more, Schiff argues, the Fed is not capable of winning a successful war against inflation. If the Fed tried to fight inflation, it would do significant damage to the economy and the financial markets.

With annualized inflation at 6 percent, the Fed would need to raise interest rates to 6 percent just to drive the real rate to zero. Any small rate hike the Fed adds, Schiff argues, would be too small to have any real effect on inflation.

Listen to Schiff’s podcast HERE.