qh4dotcom
03-23-2009, 10:06 AM
http://finance.yahoo.com/tech-ticker/article/216235/Are-Peter-Schiff-and-the-Gold-Bugs-Wrong-Again;_ylt=Ap__CqDdy9rWJCQ23Zvq5l67YWsA?tickers=^g spc,GLD,GDX,UUP,UDN?sec=topStories&pos=9&asset=TBD&ccode=TBD
We really enjoy the critique of guys like Peter Schiff, who slam our system of banking. But in terms of using his philosophy as investment advice, it's dicey, since he's been saying the same thing for years and the collapse hasn't happened yet.
Matt Stiles, who writes at Stockhouse.com, who also happens to identify with the Austrian School of economics, argues why these hyperinflation fears are way overblown, and why we won't see a Zimbabwe scenario here:
It is often said that we live with a "fiat currency" or with "paper money." This is not entirely accurate. A very small portion of our total supply of money and credit is in the form of physical currency. It depends on how you count it, but regardless, it is under 10% of the total. This is what differentiates our monetary system with that of Zimbabwe or Weimar Germany circa 1920's. Their economies were based on nearly 100% physical currency because nobody would accept the promises of government in order to issue credit.
The vast majority of our money supply is in the form of electronic credit. Electronic credit can be destroyed, while physical notes issued by a central bank cannot. This is why deflation is possible in a credit based monetary system, but not in a paper based monetary system.
We really enjoy the critique of guys like Peter Schiff, who slam our system of banking. But in terms of using his philosophy as investment advice, it's dicey, since he's been saying the same thing for years and the collapse hasn't happened yet.
Matt Stiles, who writes at Stockhouse.com, who also happens to identify with the Austrian School of economics, argues why these hyperinflation fears are way overblown, and why we won't see a Zimbabwe scenario here:
It is often said that we live with a "fiat currency" or with "paper money." This is not entirely accurate. A very small portion of our total supply of money and credit is in the form of physical currency. It depends on how you count it, but regardless, it is under 10% of the total. This is what differentiates our monetary system with that of Zimbabwe or Weimar Germany circa 1920's. Their economies were based on nearly 100% physical currency because nobody would accept the promises of government in order to issue credit.
The vast majority of our money supply is in the form of electronic credit. Electronic credit can be destroyed, while physical notes issued by a central bank cannot. This is why deflation is possible in a credit based monetary system, but not in a paper based monetary system.