ronpaulforprez2008
11-11-2008, 03:47 PM
Scroll approximately half-way down the page to read the original article (also posted below)
http://globaleconomicanalysis.blogspot.com/2008/11/peter-schiff-hugely-right-enormously.html
Video referenced in article
http://www.youtube.com/watch?v=1Ahaczm7Ahw
Summit Of Winners
In the video, Peter Schiff rants and raves about clueless economists and more spending and fiscal stimulus and states "We need that like a hole in the head". And on that point he is entirely correct.
I totally agree with Schiff. The cause of the economic crisis we are in now is a result of reckless spending and loose monetary policy. If reckless spending was the cause of this mess then reckless spending cannot be the cure.
On that basis I nominated Schiff for my "Summit Of Winners". See Bush to Host Summit of Losers for more details.
Decoupling Missed
After that initial opening, Schiff jumps off the deep end with a "print print print" rant about hyperinflation, a huge rant against Obama, talk of recovery in his funds, and finishing up with "There is no way the dollar can possibly survive what is coming".
The big thing Schiff missed this year was in his decoupling theories. Schiff invested as if the US would crash and that everything else would be fine. The decoupling theory never made much sense. To believe in decoupling is to believe the tail wags the dog. And instead of saying how much his fund is up off the lows, he ought to disclose precisely how his anti-dollar fund plays are doing this year.
What happened was that although the US stock market collapsed, China, India, Iceland, Japan, the UK, and numerous other places collapsed more. So when the dollar rallied on top of that, investments in those places got mercilessly hammered.
Too Anti-Dollar Focused
Even though the US dollar index fell from 120 to 70, Schiff was still looking for a collapse of the dollar. It had already collapsed.
Schiff ignores monetary printing in China, huge bank bailouts in Europe, housing bubbles in Australia, Canada, Spain, and the UK, all bigger than in the US. The stock market bubbles outside the US were even bigger than the stock market bubble here.
Furthermore, there has been more monetary printing in China this year than in the US. And as noted above China just announced the same reckless measures the US did in trying to stimulate the economy.
The UK and ECB are doing the same thing (bailing out banks), and the UK is arguably in much worse shape than the US overall.
Finally, there were many signs the US dollar were going to rally and those signs were pointed out in real time on this blog.
August 8 : Trichet Puts Spotlight on the Euro, Dollar
August 9 : Marc Faber - Bullish On The US$, Bearish On Commodities
August 11 : Currency Intervention And Other Conspiracies
August 18 : Steve Saville On The US Dollar And Gold
September 4 : Telling Action In Euro, Dollar As ECB Holds Rates
September 15 : US Dollar Rally Not Over Yet
October 2 : U.S. Dollar Bulls Still Right, Here's Why
For the record, I am now neutral on the US dollar as the US dollar index came close to hitting my target.
Escalating Inflationary Pressures
Currency Intervention Won’t Halt the U.S. Dollar’s Nosedive
Tuesday, July 1st, 2008
By Peter D. Schiff
Last week the U.S. Federal Reserve moved one step closer to acknowledging reality.
Unfortunately, it didn’t let that admission move it from a policy course firmly guided by fantasy - meaning the central bank opted to stand pat on interest rates, despite the clear escalation of inflationary pressures. ...
Deflationary pressures have never been greater in the US, UK, EU, Canada, Australia, and other countries. Collapsing debt bubbles, rising foreclosures, rising defaults, and rising unemployment are deflationary forces. And those forces are global, not just in the US.
Yes, the US is going to print but so is everyone else. In isolation, what looks awful for the US, does not look so awful in relation to what every other country is doing.
This should be a good backdrop for gold and that is another point on which I agree with Schiff. Intermediate term, we could both be wrong.
And while there will be printing under Obama (by the Fed), at least that printing is likely to go for something. Money spent on infrastructure is far more dollar friendly than money used to blow up Iraq. There is also a chance that Democrats and Obama slash military spending, and if they do, it will be a dollar friendly thing.
I am not here to defend spending programs for the simply reason I do not agree with them. I happen to agree with Schiff. My disagreement is what the net result will be. Japan spent like mad and the Yen still rose. If the rest of the world spends like the US does, it is certainly possible the dollar keeps rising as well. What's arguably more likely is that the dollar stabilizes within a broad range.
One thing that is for certain is that nearly everyone, especially Schiff, failed to see the deflation we are now in. And rest assured it is deflation that central bankers across the globe are fighting.
Schiff needs to get off his anti-Obama, anti-dollar mindset and take a look at the global economy and problems elsewhere, especially in China, the UK, and the Eurozone. That video proves he is not capable of doing so. It equally proves he does not fully understand the deflationary forces of Peak Credit and the global debt unwind that are happening. For a previous debate with Schiff please see Not Your Father's Deflation: Rebuttal and Peter Schiff Replies to Deflation Rebuttal.
Looking ahead, it is quite possible that if all pegs were removed and the Renmimbi allowed to freely float, that the Renmimbi, not the US dollar would crash. Certainly the pound could crash (I think that is likely), and the EU might even break up.
The tremendous irony is that I happen to agree with much what he said in the video. I certainly am not bullish on US equities, nor am I in favor of the programs that are likely to come out of Congress. However, when it comes to global conclusions and the US dollar, I think it's a case of Hugely Right, Enormously Wrong, at least over the intermediate timeframe. After the debt bubble unwinds, then and only then will inflation become the primary threat
http://globaleconomicanalysis.blogspot.com/2008/11/peter-schiff-hugely-right-enormously.html
Video referenced in article
http://www.youtube.com/watch?v=1Ahaczm7Ahw
Summit Of Winners
In the video, Peter Schiff rants and raves about clueless economists and more spending and fiscal stimulus and states "We need that like a hole in the head". And on that point he is entirely correct.
I totally agree with Schiff. The cause of the economic crisis we are in now is a result of reckless spending and loose monetary policy. If reckless spending was the cause of this mess then reckless spending cannot be the cure.
On that basis I nominated Schiff for my "Summit Of Winners". See Bush to Host Summit of Losers for more details.
Decoupling Missed
After that initial opening, Schiff jumps off the deep end with a "print print print" rant about hyperinflation, a huge rant against Obama, talk of recovery in his funds, and finishing up with "There is no way the dollar can possibly survive what is coming".
The big thing Schiff missed this year was in his decoupling theories. Schiff invested as if the US would crash and that everything else would be fine. The decoupling theory never made much sense. To believe in decoupling is to believe the tail wags the dog. And instead of saying how much his fund is up off the lows, he ought to disclose precisely how his anti-dollar fund plays are doing this year.
What happened was that although the US stock market collapsed, China, India, Iceland, Japan, the UK, and numerous other places collapsed more. So when the dollar rallied on top of that, investments in those places got mercilessly hammered.
Too Anti-Dollar Focused
Even though the US dollar index fell from 120 to 70, Schiff was still looking for a collapse of the dollar. It had already collapsed.
Schiff ignores monetary printing in China, huge bank bailouts in Europe, housing bubbles in Australia, Canada, Spain, and the UK, all bigger than in the US. The stock market bubbles outside the US were even bigger than the stock market bubble here.
Furthermore, there has been more monetary printing in China this year than in the US. And as noted above China just announced the same reckless measures the US did in trying to stimulate the economy.
The UK and ECB are doing the same thing (bailing out banks), and the UK is arguably in much worse shape than the US overall.
Finally, there were many signs the US dollar were going to rally and those signs were pointed out in real time on this blog.
August 8 : Trichet Puts Spotlight on the Euro, Dollar
August 9 : Marc Faber - Bullish On The US$, Bearish On Commodities
August 11 : Currency Intervention And Other Conspiracies
August 18 : Steve Saville On The US Dollar And Gold
September 4 : Telling Action In Euro, Dollar As ECB Holds Rates
September 15 : US Dollar Rally Not Over Yet
October 2 : U.S. Dollar Bulls Still Right, Here's Why
For the record, I am now neutral on the US dollar as the US dollar index came close to hitting my target.
Escalating Inflationary Pressures
Currency Intervention Won’t Halt the U.S. Dollar’s Nosedive
Tuesday, July 1st, 2008
By Peter D. Schiff
Last week the U.S. Federal Reserve moved one step closer to acknowledging reality.
Unfortunately, it didn’t let that admission move it from a policy course firmly guided by fantasy - meaning the central bank opted to stand pat on interest rates, despite the clear escalation of inflationary pressures. ...
Deflationary pressures have never been greater in the US, UK, EU, Canada, Australia, and other countries. Collapsing debt bubbles, rising foreclosures, rising defaults, and rising unemployment are deflationary forces. And those forces are global, not just in the US.
Yes, the US is going to print but so is everyone else. In isolation, what looks awful for the US, does not look so awful in relation to what every other country is doing.
This should be a good backdrop for gold and that is another point on which I agree with Schiff. Intermediate term, we could both be wrong.
And while there will be printing under Obama (by the Fed), at least that printing is likely to go for something. Money spent on infrastructure is far more dollar friendly than money used to blow up Iraq. There is also a chance that Democrats and Obama slash military spending, and if they do, it will be a dollar friendly thing.
I am not here to defend spending programs for the simply reason I do not agree with them. I happen to agree with Schiff. My disagreement is what the net result will be. Japan spent like mad and the Yen still rose. If the rest of the world spends like the US does, it is certainly possible the dollar keeps rising as well. What's arguably more likely is that the dollar stabilizes within a broad range.
One thing that is for certain is that nearly everyone, especially Schiff, failed to see the deflation we are now in. And rest assured it is deflation that central bankers across the globe are fighting.
Schiff needs to get off his anti-Obama, anti-dollar mindset and take a look at the global economy and problems elsewhere, especially in China, the UK, and the Eurozone. That video proves he is not capable of doing so. It equally proves he does not fully understand the deflationary forces of Peak Credit and the global debt unwind that are happening. For a previous debate with Schiff please see Not Your Father's Deflation: Rebuttal and Peter Schiff Replies to Deflation Rebuttal.
Looking ahead, it is quite possible that if all pegs were removed and the Renmimbi allowed to freely float, that the Renmimbi, not the US dollar would crash. Certainly the pound could crash (I think that is likely), and the EU might even break up.
The tremendous irony is that I happen to agree with much what he said in the video. I certainly am not bullish on US equities, nor am I in favor of the programs that are likely to come out of Congress. However, when it comes to global conclusions and the US dollar, I think it's a case of Hugely Right, Enormously Wrong, at least over the intermediate timeframe. After the debt bubble unwinds, then and only then will inflation become the primary threat