Phony Government GDP Numbers Hide Shrinking U.S. Economy-Peter Schiff

Peter Schiff: Phony Government GDP Numbers Hide Shrinking U.S. EconomyBy Greg Hunter’s USAWatchdog.com 

Money manager Peter Schiff claims the real U.S. Gross Domestic Product (GDP) is closer to “$13 trillion” than the official government number of “$16.6 trillion.”  That is a discrepancy of $3.6 trillion!  Schiff explains, “The government keeps telling us the economy is getting bigger, but millions of Americans are leaving the workforce.  We’ve got record numbers of people on food stamps . . . and part-time jobs are replacing full-time jobs.  How is that consistent with a growing economy?  It’s not.”  Schiff goes on to say, “It just makes perfect sense to me the economy is shrinking, yet the government is using phony numbers to try to convince us a shrinking economy is growing.”  So, how does a shrinking economy pay off an enormous growing debt?  Schiff contends, “So, when interest rates go up because the world realizes we have too much debt relative to the size of our economy, consumers can’t spend anymore, and now the economy collapses in size and the debt balloons . . . This is a huge, huge crisis.  The question is: When is it going to come to a head?  I think it’s a lot sooner than anybody thinks”   Schiff predicts, “It’s going to be harder and harder for the U.S. government to borrow money from abroad which means the Fed is not going to be tapering.  They’re going to print more and more money to buy the bonds nobody else wants.  That means the inflation numbers are going to get bigger, and the government is going to have to lie even more.”  Join Greg Hunter as he goes One-on-One with Peter Schiff, CEO of Euro Pacific Capital.

Comments
  1. Oracle 911

    US economy implodes?
    Nope, it will melt down to the big extent.

  2. Jerry

    Greg this interview is one of your best. Peter Schiff has been zeroed in on this “Phony Economy” for quite some time. He is dead on with his predictions. The only reason this system hasn’t collapsed up to this point is because our parents and grandparents built it so well, and the money printing that has gone on. Make no mistake, the reset is coming. There is simply no way out of this debt bubble. The globalist have been planning for it for quite some time, and the progressives that are in our Government are doing everything they can to make sure it happens. Make no mistake “CHANGE” has come to America! Correct me if I’m wrong Greg, but isn’t Congress going to have to raise the debt ceiling another 1.3 Trillion dollars in September just to keep the Government going? And that doesn’t even include the money to fund Obamacare? Thanks again for the fantastic interview.

    • Greg

      Jerry,
      I agree, this was one of peter Schiff’s best, and he has done many good ones!!
      Greg

  3. art barnes

    Greg, Mr. Schiff correctly stated a “lower standard of living” in the near future, but I’ll argue that future lower standard of living is already here in America. Out here on the Western Front the working poor are everywhere, all one has to do is observe. Its starting to look like a third world country with low wages and reduced hours leading the way. Frankly, I don’t know of one small business that is actually striving but mostly holding on with very little growth if any. In the meantime the local counties are raising home & business tax as if the recession was far behind us. Mr. Schiff, as astute as he is, needs to come out west and look around and see for himself the “new” standard of living, he will find his future standard of living already in existence.

    • Greg

      Art,
      Good point. Thank you!
      Greg

    • droidX-G

      Hi Art,
      Wasn’t Peter saying that a middle class had a better quality of life a hundred years ago? That every thing has been down hill since the establishmemt of the fed?

    • Angie

      I have to agree with you Art as the working poor has been around for some time. I remember when I went to L.A. in the mid 80’s. There were illegals lined on the streets waiting to be offered to work. My mom had lived there in the late 50’s and it was not the L.A that she remembered. Of course you had the L.A. that you see int he movies but those ares were developing all over America. No one was talking about them so most thought that the areas that they say were the only one…. wrong! Then all of a sudden kid were no longer working in the local fast food restaurants and other low wadge jobs because adults were competing for them. Now look as us! Our teenagers do not have have a work ethic because the majority of them have never had a job. Now both parents must work just to make ends meet.
      How did we get here… Agenda 21 – no my tin foil hat is not on too tight….

  4. Brian

    I don’t mean to sound like I just fell off the turnip truck, or make myself out to be Captain Obvious, but it would seem to me that the “government” is purposefully misleading us about the future of our currency, and that we are not only being willfully left out to twist in the wind, but for many, we are being enticed further into a dependency on a failing system.

    Is it safe to assume this is being done for our own good? What is the alternative to this possibility? Perhaps our “leaders” and the “movers and shakers” are just as blind and carefree to all this as we are? Is there collusion going on between the folks with power, are they banding together to ensure they retain that power at a great great cost to all of us poor sots and peons and peasants churning in the mud at their feet?

    I don’t know Greg, it is looking real dark up at the top, these people are lying about a lot of things and they know they are, I cannot see that they have anything good in store for any of us not already part of the club. I think it would just be nice to know something concrete regarding what kind of big picture the facts in front of us are creating, instead all we are left with is speculation based on circumstantial evidence, we have a lot of the dots but we do not know how or even if they can be connected. It really is starting to drive me nuts!

    • Wilfong

      It’s not collusion when everyone can now see the answers, however we could classify it as a reaction to another crime, and that crime would be “fraud”. There was fraud on a large scale level that led to us twisting in the wind. So, what you see now is the reaction.

    • droidX-G

      If the government has everyone dependent on it, where do tax revenues come from? Holding the population in serfdom or slavery? Surely no one believes the rich do not have well designed plans to leave. So who does that leave the government to rob? The middle class with their IRA’s and 401K plans that they have worked for their whole lives.

      • dave

        2 thumbs up for the IRA, 401K warning. They are already stealing from those with inflation. I’m sure they’d love to grab all the money,for US Bonds.

  5. Rodster

    Nice interview Greg !

    I always enjoy listening to Peter Schiff’s commonsense views on the state of the economy.

  6. droidX-G

    Wow

    • Greg

      droidX-G,
      That’s what I thought when I first heard his analysis.
      Greg

  7. Charles H.

    Greg,

    Here is how I see everything playing-out. America is the last impediment to a NWO, One World Government. Since power tends to concentrate toward monopoly – the human pretext to solve worldwide problems is a unified, problem-solving body, with – you know – the smartest, the best – all the Darwinians from social/political/commerce/military/etc… saviors set to save mankind by enslaving it.

    America could never be overthrown militarily – too many guns. So how to boil the frog? – cultivate stupidity and laziness. Change Public Education from world-class achievement to functional illiteracy and social conditioning. But the REAL noose is Economic Degradation: debt and gambling is good. (No worries, mate!) Induce the individual to big debt margins (house, car, plastic-cards); play the markets, lottery: then saddle the country with Debt Conduction for governmental profligacy through taxes. The frog still kicking? Need more fuel? Pass a Healthcare Law in the dead of night that nobody read, that cripples the economy, and forces everybody to pay what should cost 12% to cough-up 20%, or more. When America is broke, homeless, under-employed, government dependent, and buys-into entitlement mentality: then it’s ripe for takeover. Those who would rather fight than switch will be a manageable minority. Make no mistake: the guns will have to go. (Ask the UN and FEMA.)

    Look at the world… Russia is a “socialistic”-capitalist oligarchy, who’s military can pull the plug on freedom anytime. And China is a “communistic”-capitalist oligarchy of the same capacity. India has a fixed Caste System which is ‘ready-made’ for governmental dictation. All three comprise about half the world population, and are the economic powerhouses currently? The Eurozone is teetering and trying to task all national sovereignties to economic “stability”. Japan is sunk, but doesn’t yet know it because Fukashima is still being hidden.

    National bankruptcy and bail-in should be the Boiling Point for America as we know it. Voluntary gun “re-patriot-tation” will be the precursor to virtual sequester or outlawing them altogether. Once disarmed – precious metals can be collected and outlawed. Those who bring the former America to the NWO table have to have something more to bargain than just military/intelligence technology, you know. (“What the Primates couldn’t conquer with war: the Vertebrates will with money.” (My quote.))

    • Greg

      Thank you Charles for adding your perspective and analysis.
      Greg

  8. Jerry

    Greg I have one quick question to ask you, that ties into what Peter Schiff was talking about. If the Federal Poverty Level was lifted from $11,490. for an individual to a minimum of $14,856 , and the Federal Poverty Level for a family was lifted from $23,550. to a minimum of $30,656 to accommodate Federal Subsidies for Obamacare, what does that tell you about our economy? If things are so good why would they be handing out all these Subsidies? Or… is this just more Cloward/Piven strategy? Your thoughts.

    • Greg

      Jerry,
      The math simply does not add up and that in and of itself is the big problem.
      Greg

  9. Troy

    I’m shocked I tell ya, really, shocked;)!

    Please tell me the governments not lying to me.

    The Treasury Department’s Financial Management Service (FMS), which publishes both the federal government’s official Daily Treasury Statement and its official Monthly Treasury Statement, is reporting that in July the federal government ran a deficit of $98 billion but that the federal government’s debt remained exactly $16,699,396,000,000 for the entire month.

    The debt has by magic remained at $25 million below the legal limit, as set in a law passed by Congress and signed by President Barack Obama.

  10. wddenis

    Dear Greg,

    This may be your absolute aha moment. An outstanding interview.Maybe thhe best I have heard from this sight. As a consumer defense attorney, I have recently come upon another “program” that has tremendousl inflated the real estate market numbers.

    In the hard-hit forclsure states most of the big banks are offering lease-repurchase programs for clients that have been foreclosed on.

    Now Idont know if this program is state legislative driven or voluntary by the banks, but I do know I have never seen it in my state.

    What is happening is that the banks take back a foreclosed property, when they do this they are actually and technically “buying” back the property at a reduced rate.

    The banks lease it back to the foremerly foreclosed clients for about 3-6 months, If they make payments the clients get to buy the house back at a fair price increase from before ( mainly because of the fees added to the new purchase price).

    Now you have officially (on paper) two real estate sales a significant percentage increase in the price. So within approximately a 2-3 year period the house has been sold and bought three times. With the last sale showing a significant price increase.

    As my co-counsel in Florida calls it all “Fart Gas”.

    There is your real estate recovery.

  11. PeterB

    Nice interview. Ever thought about getting Martin Armstrong on your show?
    He’s made some very accurate calls.

    • Greg

      I’d love to get him on but have not had any luck scheduling-yet. I hope I get him on.
      Greg

  12. Mitch Bupp

    HA HA HA , Aug 1 Mitch emailed Greg about hedonics within the US GDP….. 1/3 of the GDP is fake ….. check out this from 2005…… BTW, it still applies today.

    http://globaleconomicanalysis.blogspot.com/2005/05/grossly-distorted-procedures.html

    http://app.ny.frb.org/research/epr/03v09n3/0309hult.pdf

  13. Don Roen

    You tell it like it is Peter. I’m a big fan of yours and you would make one hell of a great President.

  14. joe

    When Mr. Schiff was mentioning the days when a family had a housekeeper, well, my grandmother, after graduating from college, got a job with a family as a Register Nurse!
    Just think, back then families could afford a registered nurse in the home. Now, families can’t afford insurance.

    • j.c. Davis

      My thoughts exactly Joe. I find myself cutting meals to pay for gas.
      Things are really bad at the lower middle. Selling things I have had for years (Cheep) with little to no buyers. Cant give away a t.v.
      Thanks Greg, and Joe.

      • droidX-G

        As Pres. Clinton told Monica, “I feel you”…the middle class has been devoured by the government for years

  15. Liquid Motion

    Greg,

    I liked this interview because a) I respect Peter Schiff b) The analysis is intriguing and yet worrisome.

    “Cant be proved” but if math shows that it doesn’t add….then unless they changed the laws of Mathematics….its almost a certain 100% that the GDP is at best stagnating or more in line with Peter’s beliefs that its declining (and rapidly). He makes some prescient points about the deterioration of standards of living and the state of the economy. Most people feel it….but cannot make sense of it.

    What Peter didn’t allude to is that with GDP at a point materially below the Federal Debt Level ($17TLN +)…the Government is technically broke. Given that (and I assume) federal tax revenues aren’t increasing…there is a larger portion of the revenue basket being absorbed by debt servicing. We all know the Government works from a deficit for budget purposes…and how is the Deficit funded….UST. Who is buying UST…..THE FED (indirectly of course).
    Which means the Government (via the FED) is creating money/debt to service debt. The Government and the FED are now trapped. Broke and stupid doesn’t cover it and should not be tolerated. The FED is also technically broke because it doesn’t have any capital (once you apply GAAP) left in its balance sheet. It holds, according to Peter, some $1Tln + of worthless MBS…which are carried at nominal value. Its ludicrous and unlawful. Again Peter is absolutely correct in regard to Inflation and the Official deflator used to discount the GDP.
    The point is very relevant and the “distraction” is very real.
    Not only is it prevalent in the GDP/Inflation numbers but also in Unemployment and Real Estate where inconsistencies are abundant. The economy is not getting better (5 yrs and counting) and the middle class is losing with real wages being negative over the better part of two decades.
    When talking about Bali ins = the term “haircut” was used by Peter. I don’t like this phrase because its one that was constructed by the Banking Officialdom. Haircut is a more socially acceptable term for what is generally known as THEFT. Theft by the BANKERS/Governments.
    On the issue of The FED Protecting the banks because of what transpired in 2008 implies = no failures ?? Hmmmm…I don’t quite understand why Peter believes that the FED can stump up enough NEW DEBT to cover the extraordinary losses that will come about through the overleveraged balance sheets of the World’s Banks (via OTC Derivatives). There almost certainly will be BAIL INS and for Peter to only consider the increased Balance Sheet proposition/dollar destruction and debasement, is doing injustice to his credibility. Mind you there most definitely will be inflation and severe doses of it to boot. This is not going to be a pleasant decade. I believe we do not see a resolution to the calamity that is the USD / The FED / runaway Debt/Inflation until the end of this decade / early 2020’s. It will be a drawn out process, one that will eat away at all and sundry in not only the standards of living, but also accompanied by wealth destruction and declining personal mentality/soundness of mind. It literally will drive many to the point of insanity.

    Peter Schiff along with many others (including yourself Greg) need highest praise for facilitating/delivering these very important messages. The battle is being fought between the lies and propaganda issued by the United States …of Amerika & Europe and the financially literate humane citizens who have the welfare,safety and needs of the masses as primary objectives. Hat tip again to you Sir.

    • Greg

      Thank you L Motion for weighing in here.
      Greg

  16. Paul M

    I always enjoy listening to Peter too. What he says almost always makes good sense. You know, I have learn’t over the years that you don’t have to be an expert in a field to know what is plausible and what is not – back to common sense.

  17. MAL

    C’mon Greg…You guys are too pessimistic. The solution is simple. The fed just needs to stop printing money and have the Department of Labor start printing jobs.

    • droidX-G

      Now that was funny…thx

  18. Robert Burke

    Have you ever had David Mcalvany on? very honest, straight shooting guy….

    http://mcalvanyweeklycommentary.com/

    • Greg

      Thank you Robert!
      Greg

      • Robert Burke

        very welcome

  19. Ugly

    Just get ready, friends. Just get ready.

    The time of Jacobs Trouble is here. WWIII?

  20. Angie

    The average middle class family of the 20’s, 30’s, 40’s, and 50’s had live in help? What planet was he describing because it sure as hell was not America? Other than that his insight was very interesting.
    As for what we can expect I agree that inflation is going to be the killer and ObamaCare. Not to get political but we have to pay for something years in advance before seeing it? This is going to be THE slush funds of slush funds. We cannot afford ObamaCare and they know it and that is why we will be taxed to kingdom come without receiving a darn thing – it is perfect for fleecing and sucking down what ever cash is left. As for inflation, anyone who shops for groceries is feeling it now!
    Let’s face it, the USD has lost its reserved currency status unofficially already and it is only time that WE wake up one morning to find that our USD has been replaced with a “new” currency and a low ratio.

  21. george

    Peter Schiff’s thinking that the “Bail In” is somehow more honest than the government printing money to cover the bank loses seems a little out there to me.
    I think that regardless of what happens to keep the banks solvent, inflation will be rampant. If they do “Bail ins”, you will have a stampede toward the bank doors, as everyone with an IQ over 70 will be trying to exchange worthless Fed Reserve Notes for something tangible. I see the same thing happening if we have a crisis where the Fed prints more money. People will understand that the “music has stopped” and they need to find a “chair” for their assets. In either scenario, it will likely be too late to get real money.

  22. Kevin F.

    While I do agree with almost everything I have read from Mr. Schiff, it seems to me that he may be overly concerned about inflation. The Feds bond buying program has done very little for the economy and it has not significantly increased the money supply. Over $2.2 trillion dollars of excess reserves are currently parked in Federal Reserve Banks earning 1/4% interest for the now “bigger than too big to fail banks”. If the Fed sees signs of inflation they could increase the amount of interest paid on excess reserves tempting banks to increase reserve balances and in turn shrink the money supply. If the Fed sees stagflation then they could stop paying interest on excess reserves forcing banks to search for better yields elsewhere. This would have the opposite affect of growing the money supply. Am I missing something or is the sole purpose of the bond buying program to transfer toxic assets from banks balance sheets to the Feds balance sheet? It’s hard to see where tapering would have any real effect on the economy other than irrational action by uninformed investors.

  23. JohnZ

    I’ve learned a long time ago to never trust the government’s mathematical abilities. They should get an F for failure. In fact don’t trust the government at all except to lie to us with a straight face.
    Between you and Dr. Paul Roberts, the only 2 places I know of to get the straight talk about America’s economics. Oops, I forgot about Mr. Celente.
    Great work Greg! Keep it coming.

    • Greg Hunter

      Thank you JohnZ.
      Greg

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