Last week Peter joined Aaron Hoddinott on the Pinnacle Digest YouTube channel for an interview on Peter’s career, why the Fed can’t get anything right, the perennial gold vs. Bitcoin debate, and Aaron’s disagreements with Peter on the dollar. If you missed it, be sure to check out Peter’s podcast from Sunday!
To kick off the discussion, Peter reflects on how the Federal Reserve’s mistake early in his career motivates his thoughts today:
I’ve had my economic understanding and my suspicions with respect to government and the Fed since as long as I can remember. Obviously, the biggest mistakes that I saw the Fed make first was the Greenspan response to the 1987 stock market crash, which I found problematic….
The Fed just repeats its mistakes over and over. It’s hard for me to understand to what degree the Federal Reserve knows they’re making mistakes.
Continuing his critique, Peter questions the Fed’s self-awareness and accountability, noting that its cyclical errors are tough to stop:
I always have a hard time trying to discern whether or not they’re dishonest or ignorant. It’s one or the other. Or maybe it’s just predecessors who’ve been running the Fed for decades – they went down this path after 1971 and they can’t get off it. They made their bed a long time ago, and this is where we are. Once you go down this path, it’s very difficult to get off it because you have to admit the mistakes, but rather than do that, they just compound them by repeating them.
Shifting the focus to precious metals, Peter defends gold’s status as a competitive reserve asset and questions the stability of fiat currencies:
I would disagree with your position on gold. I think gold is a viable competitor to the dollar. I think that central banks have a choice as to what asset they’d prefer to hold as a reserve to back up their own currency. And I think that gold, hands down, is a better place for central banks to put their trust than the U.S. dollar because foreign central banks don’t use dollars as a payment mechanism – they’re holding them in reserves. Now as far as what other currency private companies could choose to trade in, I think gold also works a lot better than the dollar.
Aaron asks Peter about Bitcoin’s capped supply. Peter points out that this limit only applies to Bitcoin, while other cryptos may not have the same feature:
I’ve never bought into the finite supply argument of Bitcoin because it’s a finite supply of something of which there is an infinite supply of alternatives. Gold is in finite supply because it’s scarce in the earth. But gold has properties that are unique to it. … You know, we decided arbitrarily, somebody decided to limit the supply of Bitcoin. You know, it’s not that there’s some other factor other than a self-imposed limit, but there is no limit to the number of cryptos that can be created.
Expanding on his view of Bitcoin, Peter dismisses its role as money. It is not generally used as a medium of exchange. Instead, it operates more like other speculative financial assets:
To the extent that it’s used today, it [Bitcoin] is more as barter. I mean, yeah, there could be individuals that are accumulating Bitcoin that might accept it as payment because they want the Bitcoin. … I look at Bitcoin more as a collectible than anything. … But what excites people about a collection of Bitcoins is this prospect that it’s going to make them rich because Bitcoin is going to be a million.
Peter wraps with a reminder about the importance of keeping government power in check:
There’s a famous quote that when the people fear the government, it’s tyranny; when the government fears the people, you have freedom. You know, we need to turn the table so that the government is afraid of us, not the other way around. They’ve gotten so big. That’s why they’re able to steal from us with impunity. That’s why these government agencies can get away with all this waste, fraud, and abuse – because they haven’t feared the public in the Constitution.
Tyler Durden
Sat, 02/22/2025 – 09:20
