February 21, 2026
On Fat Tuesday's episode of The Peter Schiff Show, Peter walks listeners through a simple but underappreciated truth: government subsidies distort prices and consumer behavior. He uses a recent push to limit what SNAP recipients can buy as a launching point to explain how subsidies raise costs across sectors - from junk food to college tuition to housing credit - and why those distortions contribute to policy-driven unaffordability.
He starts with a local policy fight over SNAP (Supplemental Nutrition Assistance Program) benefits and how lawmakers tried to restrict purchases to keep government dollars out of junk food sales:
Kennedy was pushing to have states no longer allow your SNAP benefits to be called food stamps, but to make it so that you can't spend your SNAP benefits on junk food. And that's the kind of stuff that Pepsi is selling. And that's where they [Pepsi] cut their prices. So I think about 15 or so states went along with it. And so now people who get these SNAP benefits can't use that money to buy, you know, chips.
Peter then points out the predictable market response when a subsidy-driven demand drop hits a company like Pepsi: prices fall. He frames this as a basic free-market mechanism and as evidence that subsidies had been allowing higher prices in the first place:
So what does Pepsi do in response to a decline in demand for its products ? It lowers prices. That's how the free market works. But the lesson is the government subsidized consumers to buy junk food by giving them money to pay for it. And so that allowed the companies that sell that type of food to charge higher prices.
He broadens the point into a general rule: subsidies cause higher prices by inflating demand, and removing or reducing those subsidies forces sellers to cut prices. This is the mechanism he says people should apply to other heavily subsidized markets:
When the government reduces the subsidy that it provides, now the companies have to cut their prices. Well, if it works with junk food, it works the same way with everything. Everything the government subsidizes costs more as a direct result of the subsidy. That's what I've been saying on my podcast. Why is education so expensive, particularly colleges ? Because the government subsidizes students to go to college.
He then flags another front where policy makers are trying to inflate demand: the housing market. Peter warns that regulators and politicians are nudging banks to ease capital standards so lenders will originate and hold more mortgages, a move he reads as an effort to prop up housing with more credit rather than with genuine supply or savings:
In fact, I just read, I think that the Federal Reserve is looking at now, maybe I don't know if the Trump administration is leaning on them or, you know, they're just looking where the political wind is blowing. But they're proposing some type of relaxation of capital requirements for banks to make it more lucrative for banks to write mortgages and not only originate mortgages, but hold the mortgages on their books, service the mortgages. So they're trying to reduce some capital requirements to try to increase credit availability, to make it easier for people to borrow money from banks to buy houses, maybe to lower the interest rate that people might pay on loans. So all of this is designed to increase housing demand.
Finally, Peter turns his skeptical eye on the crypto world, using Michael Saylor's recent interviews as an example. He ridicules the financial engineering pitched to retail investors - in this case a preferred/common share structure - and reminds listeners to be wary of flashy arguments that ignore basic economics:
How the hell are you going to pay this dividend ? You know, where's the money coming from ? And he said, well, you know, we got about two billion in cash, right, which they raised by selling stock.... Where does the money to pay the dividends come from ? It comes from the appreciation in the Bitcoin. But what if Bitcoin doesn't appreciate ? What if it keeps falling ? Then where does the money come from ? You're just basically slowly bleeding the common shareholders dry until you've run out of equity.
This article was originally published on SchiffGold.com.