Peter Schiff Explained How New Economic Crisis Could Unfold

Published: October 1, 2026 – 10:51 UTC

Peter Schiff warned of a U.S. debt crisis.
In his view, it will be driven by rising Treasury yields despite buybacks by the Treasury Department.
He also named what he sees as AI’s main problem, stressing that the economy still has to pay for the tech boom.

American economist and crypto skeptic Peter Schiff said that rising U.S. Treasury yields amid weak economic data could signal that a large-scale debt crisis is approaching.

In a new episode of The Peter Schiff Show, he also criticized the economic expectations tied to artificial intelligence, saying that AI’s positive impact may only materialize after a period of high debt, inflation, and more expensive financing.

Treasury Yields Rise Despite Weak Data

According to Schiff, the U.S. Treasury market showed an atypical reaction this week: yields rose even as economic signals turned negative. Thirty-year bonds reached 5.62%, while the 10-year yield closed at 5.26%.

At the same time, the consumer confidence index fell to 81.9 — its lowest level in 12 years — and the number of job openings came in below expectations.

At the time of writing, the 10-year yield reached 5.33%, which, according to Schiff’s comments, was the highest since 2002.

This development follows attempts by the U.S. Treasury Department to support the market through buybacks of long-term bonds. In September, the agency led by Scott Bessent increased the maximum size of the operation to $6 billion, and on September 10 it effectively repurchased securities worth about $5.19 billion.

However, the 10-year Treasury yield rose to nearly 4.98% after the operation was announced. At the time, investors remained concerned about the government’s ability to sustain long-term debt amid a large deficit.

Notably, earlier U.S. billionaire Stanley Druckenmiller criticized the U.S. Treasury’s long-term bond buyback program.

In Schiff’s view, the combination of high debt and high rates is “absolutely unsustainable.” He believes that if a weak labor market report also fails to halt the bond sell-off, the gradual deterioration could turn into a much sharper crash.

“A real crisis is coming where we have high debt and high interest rates. That is completely unsustainable, and it’s the worst of all possible worlds,” Schiff said.

Against this backdrop, Schiff called gold the “last safe haven” asset. He noted that after dropping by about $170 per ounce, the metal held above $4,000, while silver hovered around $60. In his view, rising bond yields are primarily driven by excess debt, inflation risks, and a prolonged downtrend in the bond market.

Schiff Does Not See AI as a Quick Fix for the Economy

Schiff also acknowledged that artificial intelligence itself has significant economic potential. According to him, the technology could materially impact productivity, corporate profits, and the economy overall.

At the same time, he pointed out that massive investment in AI has not yet delivered a commensurate return.

“Before we get to the AI promised land, we gotta cross this desert here of debt and inflation and complete collapse, which can unravel in the next few years,” Schiff said.

He added that the economy will first have to bear the costs of building the necessary infrastructure, and only then reap the potential benefits.

The economist also flagged as a risk the competition for capital between the US government and major tech companies, which are actively borrowing to finance data centers and computing infrastructure. In his view, the “race for compute” could further keep interest rates elevated.

Previously, Schiff also predicted that bitcoin would fall below $20,000. In June, he said that after breaking the $50,000 level, the cryptocurrency could quickly drop below $20,000.

However, macro strategist and bond market investor Mark Connors believes that regular buybacks of long-term Treasury bonds could create more favorable conditions for bitcoin to rise and trigger a move toward $180,000.

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Source: Incrypted