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Congress is moving toward finalizing a $1 trillion infrastructure bill. Peter Schiff appeared on Newsmax “The Count” with Jenn Pellegrino to talk about the spending spree.
Biden said spending billions on government projects will help America to “build back better.” Politicians have been promising this for decades. But Peter said it’s the wrong approach. We should get government out of the way and let the free market work.
At 2,700 pages, it’s not altogether clear where all of this money will be going. But Peter said a more important question is where is all of that money coming from.
That’s the problem; it’s being created out of thin air. The Federal Reserve is printing all the money that we’re going to be spending on infrastructure. And that is inflation. The inflation comes from the Fed inflating the money supply. And so all the money that we’re going to print in order to spend it on infrastructure is going to drive up the price of everything we buy.”
President Biden said this “investment” in roads, rail, transit, bridges, clean energy and clean water will enable us not only to build back, but to “build it back better” than it was before the economic crisis. This is the typical socialist mindset – politicians and bureaucrats can run the economy. Peter said we don’t want anybody to run the economy.
We want the economy to run itself. The reality is politicians for centuries have promised to build back better. But the best way to build is to have the free market do it. So, to the extent that the government is going to take resources away from the private sector and spend it on infrastructure, they’re going to make the economy weaker, not stronger.”
And how do we get a more robust economy?
If we really want a strong economy, we have to let private enterprise work. We need industry to build. We need people investing their own money guided by the invisible hand and a profit and loss. We don’t want politicians spending the money because that’s the most inefficient way of doing it and it undermines our productivity. It doesn’t add to it.”
Pellegrino asked Peter how he thinks this massive infrastructure bill will impact inflation.
Well, again, the money to pay for the infrastructure sending is going to be created by the Fed. So, all this new money that we’re printing is going to bid up prices. Meanwhile, in order to build the infrastructure, the government is going to have to buy a lot of resources. The government is going to be bidding against the private sector for key resources, as well as labor, and bidding up prices. And remember, any of the benefits from the infrastructure spending — we don’t see those benefits for years, if not decades. Because it takes a long time to actually build the infrastructure before it can actually add to productivity, if it even does that. But in the short run, we have to pay for all the infrastructure spending, and we’re going to pay for most of it, unfortunately, through inflation.”
Pellegrino raised the specter of new economic lockdowns due to the surge in COVID-19. Peter said lockdowns hit inflation from a different angle.
As the government is printing money for everybody to spend, as we’re locked down in our houses, we’re not working. So, we’re not producing the goods and services that people want to buy, but the government is flooding the market with money with which to bid up a diminishing supply of goods and services. So, it’s really a double whammy. And unfortunately, Americans are going to experience inflation to a much greater degree than anything we experience in the 1970s.”
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