Well-known Economist Peter Schiff has warned that rising U.S. war spending could increase debt and push inflation higher. As of today, U.S. war spending has reached $28.5 billion as the US-Israel & Iran conflict has reached the 24th day.
Thus, Schiff said higher oil prices from ongoing conflicts may slow growth and force policymakers to support the economy with rate cuts and money printing, which would weaken the U.S. dollar and rise Debt.
Peter Schiff Warns U.S. Spending Could Fuel Debt and Inflation
According to Peter Schiff, higher oil prices leave consumers with less money to spend. This can reduce overall demand and increase the risk of recession.
He further explained that weaker growth would likely expand government deficits, forcing policymakers to rely on monetary easing. In his view, this sequence, recession, larger deficits, and stimulus, would ultimately drive higher inflation.
Schiff further warned that ongoing war spending without tax increases could increase reliance on debt financing. This, he argued, may accelerate inflation and add pressure on the U.S. dollar over time.
He also highlighted the rising national debt, now around $39 trillion, warning it could approach $50 trillion during the current term. He said high debt combined with slow growth increases the risk of stagflation and broader market instability.
Gold Seen as a Long-Term Hedge
Addressing the recent gold dip on March 23, 2026, Schiff stated, “Selling gold because rising inflation will keep the Fed from cutting interest rates, when rates are already too low, makes no sense. Falling real rates are bullish for gold. It is the stock market that needs rate cuts. That is why it makes no sense that stocks are down so little.”
Despite today’s sharp gold sell-off and muted stock movement, Schiff emphasizes that these pressures highlight the need for significant government downsizing, as a gold standard would enforce.
What’s The Impact On The U.S. Dollar and Markets?
Schiff repeatedly has warned that current policies are setting up significant dollar weakness over time because war spending and refusal to raise taxes, as confirmed by Treasury Secretary Scott Bessent, mean that the war will be funded through more debt and higher inflation, not balanced budgets.
Therefore, Schiff argues that short-term market reactions are misguided, while long-term trends favor gold, put pressure on the U.S. dollar, and risk broader market instability. Current U.S. fiscal irresponsibility and war spending could worsen deficits, drive inflation, weaken the dollar, and push investors toward gold despite short-term market pressure.
According to Coincodex, gold could rise from current levels near $4,650 toward the $5,800–$6,000 range by mid-2026. This implies a projected gain of roughly 25–30%.
“Trump’s approval rating just sank to 34%, the lowest of his second term, matching the low from his first term. Biden’s lowest approval rating was 36%.”
Hence, as the war rages, inflation and interest rates rise, and a recession ensues, Schiff expects Trump’s approval rating to hit a new low.
Furthermore, the exploding national debt, heading toward $50 trillion in Trump’s term, and stagflation risks worse than the 1970s, with debt at roughly 125% of GDP, could trigger a sudden dollar crisis, possibly starting in Asia as foreign holders sell Treasuries and dollars.
Markets are underestimating the fallout, focusing on delayed cuts instead of inevitable monetary accommodation and currency weakness. He advocates gold as protection against Washington’s threats being greater than external ones like Iran.
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