Mish: Peter Schiff Was Wrong

[Flirple]

Mish goes after Peter Schiff directly. Great article: http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

We all like having an Austrian representative as a regular commenter on financial shows. But my fear is that all the hype Peter is getting right now is going to come back to bite our cause when (if) Peter's investment advice is shown to be wrong.

The easy part (if you understand the Austrian business cycle theory) was predicting that this buble would pop. What is much harder is predicting how one should invest for it. Peter was right about the first part but wrong (at least so far) about the second.

[qh4dotcom]

Conclusion: Peter Schiff is human and like all humans sometimes he is right and sometimes he's wrong. Your gut instinct should tell you when he's right and when he's wrong

[Epic]

Mish goes after Peter Schiff directly. Great article: http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

We all like having an Austrian representative as a regular commenter on financial shows. But my fear is that all the hype Peter is getting right now is going to come back to bite our cause when (if) Peter's investment advice is shown to be wrong.

The easy part (if you understand the Austrian business cycle theory) was predicting that this buble would pop. What is much harder is predicting how one should invest for it. Peter was right about the first part but wrong (at least so far) about the second.

I agree with all of this. Schiff rep is gonna take a hit with a forthcoming WSJ article. As much as I hate intra-Austrian squabbles, the shakedown needed to happen.

[Jeremy]

So I guess we should all stay in the dollar and get out of gold and silver lol

[danberkeley]

Again? Where the hell are the Mods? This is the seventh time this story has been posted on RPF.

[Flirple]

Conclusion: Peter Schiff is human and like all humans sometimes he is right and sometimes he's wrong. Your gut instinct should tell you when he's right and when he's wrong

Yeah. I think the thing that always annoys me about Peter is that he is clearly an egomaniac who lights up at any chance to self-promote his best selling books and appearances. But he is rigid and dogmatic. He won't admit what he was wrong about and adjust because to do so would be to say not to follow the advice in his still-selling-well books.

One of the principles of Austrian economics is that short-term specific market predictions are impossible to do consistantly. There are too many variables in a market. It's unknowable. Long-term trends yes.

I don't rule out Peter's impending hyper-inflation/ decoupling scenario. But I think it's not likely to occur anytime soon and I certainly am not going to bet the farm on it.

Peter could learn a lot from Ron and Mish's more reasoned and humble approaches. And all the Schiff worshipers who are (understandably) ritchously taunting all the fools who laughed at Schiff a few years ago on TV better be prepared for someone putting together a YouTube video of a string of clips of Peter giving crappy personal investment advice on TV that lost people millions. It's bound to happen.

[Flirple]

Again? Where the hell are the Mods? This is the seventh time this story has been posted on RPF.

My apologies. I looked around a bit but didn't see it.

[danberkeley]

My apologies. I looked around a bit but didn't see it.

Fail.

[literatim]

Peter Schiff's advice isn't short term, it is long term.

[tmosley]

The finely done rebuttal: http://www.neithercorp.us/nforum/disinfo_propaganda_media_studies/mainstream_media_circulates_article_attacking_pete r_schiff-t763.0.html

It pretty much demolishes all of Mish's arguments.

[Lucille]

Peter is responding to Mish's argument, as well as in those comments threads.

Peter Schiff Replies to Deflation Rebuttal (http://globaleconomicanalysis.blogspot.com/2007/12/peter-schiff-replies-to-deflation.html)


Peter Schiff says:
Thursday, December 27, 2007, 5:41:22 AM
“There certainly has been a lot of discussion about this topic; I even had a caller ask me about it on my radio show last night. Here is a link to listen to it
http://www.europac.net/radioshow_archives.asp

The show is not posted yet, but when it is it will be dated Dec 26th.

Many arguing the classic deflation case often point to Japan as an example of what will happen here. However Japan is the world’s largest creditor. The United States on the other hand is its largest debtor. The Japanese have high savings, are extremely productive, have enormous trade and current account surpluses, and loan money all over the world. In contrast Americans have practically no savings, our industrial based has been hollowed out, we have huge trade and current account deficits, and we borrow money from just about every other nation on earth. To expect our experience to be anything like Japan’s when our circumstances are so completely different is ridiculous. If you want a more accurate historical comparison to another nation which had similar circumstances try looking at Argentina.


says:
Thursday, December 27, 2007, 9:51:07 AM
“<i>Many arguing the classic deflation case often point to Japan as an example of what will happen here. However Japan is the world’s largest creditor. The United States on the other hand is its largest debtor. The Japanese have high savings, are extremely productive, have enormous trade and current account surpluses, and loan money all over the world. In contrast Americans have practically no savings, our industrial based has been hollowed out, we have huge trade and current account deficits, and we borrow money from just about every other nation on earth. To expect our experience to be anything like Japan’s when our circumstances are so completely different is ridiculous. If you want a more accurate historical comparison to another nation which had similar circumstances try looking at Argentina. </i>

Peter, once again you present a deflationist argument. The very fact that the US has all of this consumer debt (and consumer debt here is the key), is deflationary. This makes the case for deflation in the US, STRONGER not weaker. You yourself have admitted the debt cannot be paid back. The bigger the debt that cannot be paid back, the bigger the deflation.

Comparisons to Argentina are simply invalid. Argentina owed money denominated in US dollars. The US owes money in its own currency. More importantly US consumers owe money to US creditors in US dollars. That is what will be defaulted on and that is anything but inflationary.

By the way, care to send me a copy of your book to see if you can convince me otherwise?

Mish

Woah.


Karl says:
Friday, December 28, 2007, 6:07:38 AM
“I wanted to respond to the following statement:

"Debt that cannot be repaid will not be repaid by definition. It will be defaulted on."

Mish, what I think you are missing is that there are two equally good ways to default on debt. The deflationary method is to go bankrupt and refuse to pay, this is the one you are always talking about. But there is also the inflationary method -- devalue the currency the debt is owed in, and then pay the debt with worthless dollars.

I believe that when all hope is lost and the depression can no longer be avoided, the Feds (Govt and Reserve) will opt for inflationary default. They will wash the debt away in a flood of money (the Fed Reserve can buy up every junk bond, every bad mortgage, every credit card obligation), and the world economy will start fresh no longer burdened by a 350% debt:gdp ratio.

I wonder if that's Denninger.

[Barney]

Schiff's claim to fame was to predict the current economic collapse years in advance of it happening. And he did it in broad daylight on major networks with unyielding certainty to a chorus of laughter and ridicule.

I would like to see a link to an article or blog that suggest Mish saw it coming with equal clarity. Short of that, he isn't worthy.

[Flirple]

Peter Schiff's advice isn't short term, it is long term.

Yes you are correct. His financial advice is long term. But he constantly uses scare tactics that the sky IS falling and you need to take dramatic action immediately. Not make some hedges and precautions, but complete commitment to his thesis. And he often goes on long rants about how he's 100% positive about his decoupling/hyperinflation scenario. And that it won't take long. That's just irresponsible. His dogmatic singing of the same tune over and over again in regards to investment advice is what I object to.

He's fantastic when he is talking about politics and what the government should do (that is...nothing) and educating people about the great depression etc. But that doesn't mean he should be trusted with your money. Investment advice is different than political advice. And I just worry that people falsely placed their money with him because he is so fantastic with his political commentary.

[Barney]

"Note that there has never been hyperinflation in history where real property declined in value. Therefore, if Schiff really believes in hyperinflation, he ought to be suggesting that his clients buy houses.

However, Schiff thinks housing prices will continue to crash. So do I. And if they do, you can kiss hyperinflation theories goodbye."

Is Mish unaware that the Fed and Treasury is throwing everything including the kitchen sink to artificially prop up house prices?! Hyperinflation or not, who would buy anything that is deliberately overpriced?

If house prices were allowed to go to real market value, it would be a good hedge against hyperinflation like any other hard asset.

[Flirple]

Schiff's claim to fame was to predict the current economic collapse years in advance of it happening. And he did it in broad daylight on major networks with unyielding certainty to a chorus of laughter and ridicule.

I would like to see a link to an article or blog that suggest Mish saw it coming with equal clarity. Short of that, he isn't worthy.

Mish is in complete agreement with Peter on all that and praises him for being so prescient with that commentary. We all agree that Peter is great at that. That's not the issue. The issue is that he is responsible for people's financial planning and retirement. He's not a politician (not yet at least) he is a finance guy. He claims to know how to help people escape and profit from the collapse that he accurately predicted. In that regard, so far, Mish mops the floor with Peter. But Mish is not as charismatic as Peter and so likely won't be on CNBC anytime soon.

[MGreen]

It's way too premature to declare someone wrong. When we finally pull out of the depression, then can you look back and judge whether Schiff's investment advice for the depression was correct or totally misguided.

[Flirple]

It's way too premature to declare someone wrong. When we finally pull out of the depression, then can you look back and judge whether Schiff's investment advice for the depression was correct or totally misguided.

Yes I agree fully.

The difference is, Mish isn't guaranteeing he is right and admits he will change his advice in the future based on what the market does (not what it "should" do) in order to protect his clients' wealth.

[tmosley]

Yes I agree fully.

The difference is, Mish isn't guaranteeing he is right and admits he will change his advice in the future based on what the market does (not what it "should" do) in order to protect his clients' wealth.

But he's making BAD CHOICES with his clients money. What kind of bloody retard would be in Treasuries right now? I'd rather hold cash in a safe than have Treasuries.

[Barney]

Mish is in complete agreement with Peter on all that and praises him for being so prescient with that commentary. We all agree that Peter is great at that. That's not the issue. The issue is that he is responsible for people's financial planning and retirement. He's not a politician (not yet at least) he is a finance guy. He claims to know how to help people escape and profit from the collapse that he accurately predicted. In that regard, so far, Mish mops the floor with Peter. But Mish is not as charismatic as Peter and so likely won't be on CNBC anytime soon.

My point is that if Mish didn't have whatever it took to foresee the biggest economic calamity since the '30s, then with what credibility is he speaking with now?

And it has nothing to do with charisma or airtime on CNBC. Just show me a blog or article dated in 2006 where he predicted the current predicament with the same clarity as Schiff.

Art Laffer could just as easily pen an article rightly critical of Schiff's short term investment moves since August. But I wouldn't pay much attention to his long term predictions.

[Liberty Rebellion]

Peter is responding to Mish's argument, as well as in those comments threads.

Peter Schiff Replies to Deflation Rebuttal (http://globaleconomicanalysis.blogspot.com/2007/12/peter-schiff-replies-to-deflation.html)





Woah.



I wonder if that's Denninger.


That article you quoted was from 12/07 from their previous back-and-forth

[Epic]

But he's making BAD CHOICES with his clients money. What kind of bloody retard would be in Treasuries right now? I'd rather hold cash in a safe than have Treasuries.

What?? Short-term treasuries at least give you a little return over cash.

[tmosley]

What?? Short-term treasuries at least give you a little return over cash.

Yeah, until everyone starts dumping them, and you can't get your original investment out. Yields are so low, it's not even close to being worth the risk. At least with dollars, they can't lose purchasing power overnight. Hyperinflation takes some time to ramp up.

[Lucille]

That article you quoted was from 12/07 from their previous back-and-forth

Oops!

[Mordan]

The finely done rebuttal: http://www.neithercorp.us/nforum/disinfo_propaganda_media_studies/mainstream_media_circulates_article_attacking_pete r_schiff-t763.0.html

It pretty much demolishes all of Mish's arguments.

Mish sucks

[Epic]

Yeah, until everyone starts dumping them, and you can't get your original investment out. Yields are so low, it's not even close to being worth the risk. At least with dollars, they can't lose purchasing power overnight. Hyperinflation takes some time to ramp up.

Short-term T-bills would only not pay up if the US Government dies or repudiates its debt. Thats not gonna happen in the next 3 months or 1 year.

[Maximilian American]

Spending
$819
14
700

Cutting
0
0
$0

Ouch that's gonna cost us, even more so because the house is divided. Schiff is right on, its just being slowed down.

[Bman]

This article is just stupid. Another case of near sightedness. The what have you done for me today philosophy that has no bearing on the fact the tomorrow will indeed come just like the day you are living currently.

Markets suck everywhere. Anyone who invested in the past year is going to have to wait on that money. As a matter of fact rule number one was that if you need this money within the next five years. DO NOT INVEST!

My God! Why is stupidity the most commonly taught class in the U.S.

[Malakai]

He was only wrong about 1 thing, the dollar rally thats been going for the last ~7mo.

Impossible to predict the way the deleveraging into the dollar occured. His background philosophy is still quite valid and teh fact that the dollar rally tanked every commodity and oil is proof he was right about the dollar -> prices correlation.