Schiff on Capitalcosm: Central Banks Are Dumping Dollars for Gold

Peter recently joined Danny on the Capitalcosm YouTube channel to lay out a connected story about reserve shifts, rising interest rates, and an overstated economic optimism at the top. He argues that foreign central banks are moving out of U.S. dollars into gold, that America’s record debt is starting to show in higher yields, and that official inflation measures hide the true erosion of purchasing power. He also takes aim at the political spin around the economy and warns of renewed Fed intervention that would only make inflation worse.

He begins by explaining the tectonic shift in reserve policy among foreign central banks and what that means for Treasuries and the dollar:

From the point of the central banks, it’s a movement away from U.S. dollars and into gold. So central banks that had heavily relied on the U.S. dollar as a primary reserve asset, they are divesting of dollars, and instead, they are accumulating gold. And so that is a big change. It also eliminates a big buyer for our treasuries. So the result of that is going to be higher interest rates for Americans as foreigners from the foreign central banks are buying fewer treasuries, but also a weaker dollar.