Mish vs. Peter Schiff

[juggle]

After the stock market tanked beginning in September, I started reading about Peter Schiff. I read both his books cover to cover and felt like I'd be missing a huge opportunity if I didn't invest through him right away.

I finally invested in late October.

Then I found out about Mish through this forum:
His blog is located at:
http://globaleconomicanalysis.blogspot.com/

After following Mish for a couple of months now, I am convinced that his predictions are better than Schiff. Furthermore, Mish calls Schiff dangerous because Schiff is charasmatic and is right on "SOME" things. But overall, he thinks Peter is wrong short term (1-2 years) and that hyperinflation won't happen.

Mish has been predicting deflation (which we are in right now) while Schiff was predicting inflation and hyperinflation (wrong).

Now here is the problem. I've invested with Schiff.
Mish is predicting a technical rally until possibly March. I think Schiff's portfolio will do okay until then. But I will probably sell my positions afterwards.

What do you guys think? Mish or Schiff? Who is correct?

[silverlinkx2]

I'm by no means an economic expert, but what schiff said is that while we are technically in (possibly were now) in a deflationary period, it is temporary in nature and a byproduct of so many people hoarding cash, so many companies deleveraging and selling assets to get cash, so many people saving instead of spending and investors having no trust in investing in anything so they're resorting to cash as well. However, the dollar has started to lose a ton of its value recently, and the size of the monetary base has exploded, which means that inflation is bound to happen sooner or later.

[danfinance2008]

the only way wall st is going higher is because the govt said it would do anything and print anything to keep them up.

no one predicted this

our goverment selling out the people of the usa to keep the rich rich

over 2/3 our economy is retail and people are to dam scared to spend. they have had 1/2 there life savings wiped out on wall st, they seen gas hit 4.00 a gallon, they have seen the greed of our govt and the list goes on.

i cannot see how anyone can predict this was coming

yes the financial crisis was predicted and the sub prime

[clb09]

But who will be right by June 2009.

I am not so much interested in who WAS right.

The next 6 months will most likely be far more volatile than the last 6.

To wit:

http://www.breitbart.com/article.php...show_article=1

The IMF has called for global fiscal stimulus of about two percent of GDP, equivalent to some 1.2 trillion dollars. "Our forecasts are already very dark but they will be even darker if not enough fiscal stimulus is implemented," Dominique Strauss-Kahn told BBC radio.

and this:

http://www.breitbart.com/article.php...show_article=1

"The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

"There is an almost total paralysis from which no-one is escaping," he said, adding that any recovery -- pencilled in by optimists for the end of 2009 and the start of 2010 -- could be delayed if confidence is not restored.

The INTERNATIONALISTS want to make sure that Central Banks Worldwide print up HUGE SUMS OF INSTANT MONEY.

NOTHING LIKE THIS HAS EVER HAPPENED BEFORE WITHOUT THE BACKING OF A HARD ASSET LIKE GOLD OR SILVER.

Actually it has happened before...but deflation was never the result.

Now, what is the opposite of deflation? Hmmmmmm.

[Conza88]

Schiff has been saying hyperinflation long term... which is what WILL happen...

The elites know this... so I believe they will convert to a new world currency or amero style, BEFORE US hyperinflation takes place.

They'll shift before all the "pain" starts to take place.

[Paulitician]

Late October? Did you luckily manage to start investing right after the stock market crash? Because if so, I'd stay with Peter Schiff's advice. I think it will pay off in 3 to 5 to 7 years. I do think the dollar will collapse, but it could take half a year or year yet (and the dollar could rally to 90 until then). Ergo, dividend paying foreign stocks would be a good investment--that's all Peter Schiffs company, EuroPac, does as well as store gold at the Perth Mint, but it's not the only things he's suggesting. His investment advice is more diversified than that. That said, it wouldn't hurt to take some of Mish's advice, because out of all the Austrian bear crowd, he's the one who's been the most accurate with his calls. The only way Peter Schiff's investment advice totally fails is if we have a prologed deflationary great depression. So pick and choose between the two of them, is my answer.

[The_Orlonater]

Schiff has been saying hyperinflation long term... which is what WILL happen...

The elites know this... so I believe they will convert to a new world currency or amero style, BEFORE US hyperinflation takes place.

They'll shift before all the "pain" starts to take place.

+1

[jonahtrainer]

What do you guys think? Mish or Schiff? Who is correct?

I pay attention to both of them. They are both correct on a lot of things and are both very intelligent. I think Schiff has a bigger picture view and a longer time horizon than Mish. Mish actually seems conflicted in some of his writings and does not seem to fully understand the monetary role of gold. His in-depth gold posts are written by someone else. Mish and I actually 'violently disagree' often it seems. At least he is professional about it.

If you are going to have other people manage your money then I would at least have some diversification. Usually people manage other people's money because they are not very good at managing their own. Why keep 2% when you can keep 100%?

I have my own theory that we are in a deflationary credit contraction. The FRN$ system does not so much collapse as evaporate. The FRN$ will be the last layer, after Euro, GBP, etc., to evaporate through hyperinflation. The evaporation could take years .... I think the US tentacles are deeper and more pervasive than either Mish or Schiff give credit.

[Gideon]

Schiff has been saying hyperinflation long term... which is what WILL happen...

The elites know this... so I believe they will convert to a new world currency or amero style, BEFORE US hyperinflation takes place.

They'll shift before all the "pain" starts to take place.

I agree that we are destined for hyperinflation, as that is the only trick remaining for the banksters (remember that $700 Billion - read $4 Trillion they have yet to trickle into the economy?) BUT I think that any new currency will be introduced AFTER hyperinflation catalyzes a clamor for "change" from the sheople.

Cash infusion will also greatly assist in pacifying the masses, thus maintaining the charismatic popularity for Barry Soetero, aka the new POTUS.

[raiha]

I'm reading Crashproof right now and you gotta hand it to Schiff, he was uncannily prescient. Amazing. Amazing. All the other dipsticks who are running things do not even seem to know how to apply common sense...and all the other Central Banks follow suit like lemmings over the cliff.
I like both of these guys hugely. Mish and Schiff, they feel like part of the family.

[aravoth]

I don't think Schiff has ever been a "short term" guy. You know the ol' saying "currents events predict future trends". I think Schiff is right, But Then I also know that his analysis is a 2-5 year window. Just like everything else he has ever said. Mish is also right, but he is more of a short term person, and when I say short term I mean anything from 2 months to 2 years.

Personally, I don't think either of them are wrong.

[Fox McCloud]

this is my take, though I am by no means an expert--I think the dollar is deleveraging right now--people are selling commodities and such to get as much dollar as they can to settle their dollar-denominated debt....this creates additional demand on the dollar and forces the USD Index up, which makes it seem as though it has greater value.

Of course, in this situation, it only lasts so long, then the dollar just tanks, tanks, tanks, and if the nozzles were on full blast, the dollar will just...well, it won't be pretty.

[TruthisTreason]

Both makes some good points, but I believe we are in an inflation of the money supply. We may have some deflation on certain items, but I'm not seeing it at the grocery store. I'm still having to pay a 20% fuel surcharge for electricity, as well.

I sense we are seeing a global interest rate cut war. Our Fed and government hope to devalue our dollar in order to help correct our trade policy. Make our exports cheaper and our imports higher.

[Chase]

Inflation is ultimately a monetary phenomenon. So is deflation. Do you see the government burning piles of money? No? See them printing piles of money? Yes?

We have price deflation (as a result of a bubble collapsing) and we do have a reduction in the inflation rate, but the chances of seeing real deflation are very low.

[lodge939]

the dollar index hit 78 on thursday - if it continues on this trend these falling consumer prices will soon reverse upwards

[jon_perez]

Japan has been on quantitative easing for ten years plus, not only did it *NOT* suffer hyperinflation, it's currency has appreciated heavily.

Why do the people who say that the dollar will weaken because of all the "money printing" (e.g. low interest rates) - people like Jim Rogers - why are they buying yen when the BoJ has been doing for the last ten plus years what the Fed is only now doing?

[lodge939]

Japan has been on quantitative easing for ten years plus, not only did it not suffer hyperinflation, it's currency has appreciated heavily.

Why do the people who say that the dollar will weaken because of all the "money printing" (e.g. low interest rates) - people like Jim Rogers - why are they buying yen when the BoJ has been doing for the last ten plus years what the Fed is only now doing?

currency strength is also a verdict on a country's economy by the international community.

[tropicangela]

Schiff says in the interviews I've seen that he isn't predicting short term.

[ArchPaul]

Schiff says in the interviews I've seen that he isn't predicting short term.

Right. He's a strategic thinker.. at least* 2 years ahead, and usually 5-10 and longer. Also in terms of what is logical, and economically sustainable for everyone.

[Conza88]

Right. He's a strategic thinker.. at least* 2 years ahead, and usually 5-10 and longer. Also in terms of what is logical, and economically sustainable for everyone.

Anything less than the number of years you stipulated.... is not investment, but in fact speculation!

Schiff doesn't speculate

[ArchPaul]

Anything less than the number of years you stipulated.... is not investment, but in fact speculation!

Schiff doesn't speculate

I didn't say he speculated. Specify where I said he takes high risk gambles based on guessing or unfounded opinions. Looking at where a market is going to be in 2 years is not speculation, IF it's based on sound economics.


Definition of speculation does NOT include a time frame.

[gls]

I'm sure it's been pointed out but it's worth repeating. We are in a period of deleveraging which appears to be coming to an end. This is seperate and distinct from deflation, a decrease in the money supply, which when one considers the trillions of brand new "dollars", is obviously not happening.

[theoakman]

Japan has been on quantitative easing for ten years plus, not only did it *NOT* suffer hyperinflation, it's currency has appreciated heavily.

Why do the people who say that the dollar will weaken because of all the "money printing" (e.g. low interest rates) - people like Jim Rogers - why are they buying yen when the BoJ has been doing for the last ten plus years what the Fed is only now doing?

Japan also didn't have about 10 trillion dollars sitting overseas waiting to come flying back to the USA. The yen hasn't appreciated against gold. Just other fiat currencies.

[lodge939]

Japan also didn't have about 10 trillion dollars sitting overseas waiting to come flying back to the USA. The yen hasn't appreciated against gold. Just other fiat currencies.

Actually, the yen has done better than gold.

1. yen
2. dollar (but this is slipping)
3. gold

is how to rank asset classes over the last 4months

[Republicae]

"Mish has been predicting deflation (which we are in right now) while Schiff was predicting inflation and hyperinflation (wrong)."

Don't let yourself become too short-sighted.

Schiff, like Mish, knows that the artifically induced business cycle includes the BOOM and the BUST. We are in the BUST cycle at the moment, but the problem is that while inflation is a real possibility based on the actions of the FED at the moment, the real threat of hyperinflation is also possible. In 95% of the cases of modern historic hyperinflation, it happens during a deep deflationary period because of the actions of either the issuing government or the issuing central bank.

If you think that Schiff is wrong just because you don't see inflation or hyperinflation at the moment then I would say that you are stuck in a deflationary illusion...this is not over by a long shot.

Remember, there are different types of deflation just as there are different types of inflation. The primary causes in monetary terms are based on either an expansion or contraction of the money supply, this is not the case in this deflationary slump. What we are witnessing is not a contraction in the money supply, but the effects of the BUST. At the moment we are seeing a disinflation from the overly inflated BOOM cycle. I do expect, as does Peter Schiff, Ron Paul and others that we will continue to see a deepening deflationary dip, but to counter that dip the FED has gone absolutely nuts. The threat of hyperinflation is very, very real. The problem with the central bankers is that they cannot judge when to turn the the printing press off.

One of the problems at the moment is that there is a great deal of "hoarding" going on, particularly in Treasuries, mainly out of fear, but that log-jam is about to be loosened and when it does and Trillions of dollars flood the economy from all that "hoarding" combined with the multiple Trillions that the FED has and is injecting, the quantitative easing policy that it has embarked on and the unknown tricks they are currently playing...then hyperinflation is a very real danger.

Personally, I would say prepare for it.

[jon_perez]

If the Fed can cause inflation, then why can't they also rein it in by raising interest rates, once signs of inflation start to pick up?? Why should hyperinflation necessarily be the end result? Doesn't the Fed have the power to "mop up liquidity" and hasn't it precisely shown that it has been able to do that in the past? What is different today?

Keep in mind also that Volcker is on Obama's team. Although oh yeah, some people say he is a globalist co-conspirator of the elite foreign bankers so he is still one of those no good-nik people.

[heavenlyboy34]

I'm reading Crashproof right now and you gotta hand it to Schiff, he was uncannily prescient. Amazing. Amazing. All the other dipsticks who are running things do not even seem to know how to apply common sense...and all the other Central Banks follow suit like lemmings over the cliff.
I like both of these guys hugely. Mish and Schiff, they feel like part of the family.

I agree. I'm more familiar with Mish at this point, so I can't decide yet. Oh, the pressure!

[Republicae]

If you have noticed over the last couple of decades the interest rate spread tolerance in the economy has narrowed. At one time the economy could bear an interest rate hike that is no longer the case. That is normally a sign that the fiat monetary substructure of the economy has reached the terminal point in its life-span. There comes a point when the massive debt upon which the entire fiat monetary system rest becomes so saturated that it begins to siphon off all economic viability from commerce. You may have also noticed that at one time it took far less stimulation by the government to induce economic growth, now it takes a great deal, in fact there are some estimates that to achieve $1.00 of economic growth it now takes nearly $7.00 of government direct and indirect intervention. This too is a sign that the fiat economy is in a terminal stage.

Another problem is that such a contraction, via a drastic rise in interest rates, would absolutely destroy the economy within a short period of time. Remember, part of the problem we now face is due to the FED tightening credit a couple of years ago, this pulled back the curtains on other problems, particularly in the housing sector. Every artificially induced BOOM will eventually BUST, the question is what will be the extent of the BUST and the extent of the reaction taken by the FED? Obviously, just judging from the government’s CPI numbers we are not actually experiencing a deep deflationary slump at the moment; in fact even oil is still above 2003 pricing levels. Food prices are, based on the CPI, still hitting over 6% inflation rate, along with most other sectors measured by the CPI. So, something else is going on, something that is hidden from view. That which is hidden from view is systemic insolvency. This government has been technically bankrupt for the last several years, but now we are witnessing it move into effective bankruptcy. The only difference between a business and the government is that the government can continue to print money to use in its bankrupt state, but only for so long.

Now, all these factors are involved with what is happening this is not the same economy it was even 10 years ago. The FED, in its history, has been a dismal failure if we are looking at its mandate verses its record. Any system that contravenes the natural market forces will always eventually fail. Like all fiat monetary systems eventually reach the terminal point in its life span, so too does the manipulation of the market.

The FED is not, nor has it ever been omnipotent when it comes to money or the markets. Since 1913, it has inflated away nearly 97% of the purchase value of the Dollar, that fact alone eventually has an effect on the overall economy. Since every Dollar is nothing more than a legal notification of a debt obligation, in other words, an IOU, the economy can only operate with double liabilities for a determinate length of time. Similar to our “national debt” it is absolutely impossible to pay that debt down or pay it off under a fiat economy. All that has been done, similar to the Social Security Trust Fund, is a huge Ponzi scheme. They swap old debt for new debt, borrowing and re-borrowing to satisfy the debt obligation; that too can only continue until critical mass is reached and the system begins to implode. We are now seeing the beginning of that implosion.

If you look at historic fiat systems you will basically see a similar pattern of destruction that we are now witnessing. Everything associated and dependent upon the fiat Dollar will meet the same fate as the currency itself: total collapse.

The FED has injected more money in the last few months than has ever been injected in the history of our country in an attempt to keep the life-support going, it will not work.

Hyperinflation is not just a monetary event; it is not like regular inflation. Hyperinflation is a combination of rapid and massive monetary injection combined with a loss of confidence in the money. Normally, as I stated, hyperinflation occurs when there has been a deepening deflationary event combined with a massive response from the issuing institution or government. The people lose confidence in both the money and the government, they lose their trust in the government to provide solutions and the lose confidence in the value of their money or in its security.

In such cases there is no way the FED could control any excesses. Likewise, if there is even extremely high regular inflation, it will be very difficult for the FED to “mop up liquidity” in the very fragile economic environment in which we now live, by doing so, it would simply bring about another massive BUST. In fact, we have been seeing cycle after cycle take place as the FED tries to balance on the edge of the razor. This is a very different economy than the one that Volcker had to deal with, in fact, just about everything is different. There are some very odd things taking place and even odder reactions from the FED, things that have never been done in this country. As I said, they are fighting much more than a simple BUST cycle and we should prepare for what comes next.

[theoakman]

If the Fed can cause inflation, then why can't they also rein it in by raising interest rates, once signs of inflation start to pick up?? Why should hyperinflation necessarily be the end result? Doesn't the Fed have the power to "mop up liquidity" and hasn't it precisely shown that it has been able to do that in the past? What is different today?

Keep in mind also that Volcker is on Obama's team. Although oh yeah, some people say he is a globalist co-conspirator of the elite foreign bankers so he is still one of those no good-nik people.

we can't just raise rates and magically stop inflation because the world controls 9 trillion dollars in dollar reserves. We can raise rates to prevent the dollar from going to zero. If we raise rates to 20% (i.e. pull a Volcker), then China will lend their dollars out at 18%, Saudi Arabia will lend their's out at 16%, Europe will lend them out at 14%, etc... You'll have inflation if you raise rates or lower rates right now. Long term, they could have preserved the dollar by raising rates. Instead, they are pushing it off a cliff.

[jon_perez]

we can't just raise rates and magically stop inflation because the world controls 9 trillion dollars in dollar reserves. We can raise rates to prevent the dollar from going to zero. If we raise rates to 20% (i.e. pull a Volcker), then China will lend their dollars out at 18%, Saudi Arabia will lend their's out at 16%, Europe will lend them out at 14%, etc...

How would this cause inflation?