Peter Schiff: The End is Near

[Madison320]

Is that what he predicted in 2008? No? Then how is that a schtick?

If the man believes we reacted to 2008 by blowing bigger and bigger bubbles, and that it's going to be a Big Bang when they pop, then that's his prediction. If that was his whole schtick, he's have been predicting that prior to 2008. He wasn't.

Has this dead cat bubble bounce lasted far, far longer than he expected? Has he denied that?

And how do you square 'Banks fail. Runaway inflation. Gold going a lot higher,' with, 'Eventually there will be another one, and he will again claim he is always right'? Is 'another one' his prediction, or is 'banks fail, runaway inflation' his prediction? Can't you make up your mind?

I agree. I think there's two big differences between predicting a dollar collapse and a recession. The first is that we've never really had a major dollar collapse. The second is that the dollar won't come back from a collapse, it's permanent. For example if we get a recession and stocks go down, eventually they'll go back up. It's cyclical. But if we get a dollar collapse, it's not cyclical, it's a permanent loss of purchasing power. Schiff is predicting a dollar collapse. Anyone can predict a recession. Actually it's the next recession that is probably going to cause the dollar to collapse unless the Fed can get away with more rounds of QE without crashing the dollar.

Also Schiff's theories are almost identical to Ron Paul's.

[dannno]

What does "Krugminator2" mean?

Somebody who Terminates Paul Krugman Part 2?

[Madison320]

Somebody who Terminates Paul Krugman Part 2?

That's what I was thinking. If so it would make his complaints about Peter Schiff kinda weird. Peter Schiff is the original Krugminator.

[Madison320]

The end is always near. Hyperinflation. $5000 gold. Coming in 2009. 2010. 2011. 2012.....

He did predict the last recession. (because he always predicts a recession). Eventually there will be another one- and he will again claim he is always right.

It took you a whole hour and 48 minutes to respond to a Peter Schiff post. Slacker!

[acptulsa]

It took you a whole hour and 48 minutes to respond to a Peter Schiff post. Slacker!

He seems to have gotten fired for it, too.

+rep to anyone who can find the classified ad for his replacement. I'd be interested to see his job description.

[Krugminator2]

That's what I was thinking. If so it would make his complaints about Peter Schiff kinda weird. Peter Schiff is the original Krugminator.

Schiff is chronically bearish. Every shred of evidence refutes that worldview. Being a long term bear on equities didn't even work in Germany which lost two World Wars and half the country became Communist. https://www.amazon.com/Triumph-Optim...stment+returns

Economic views and making money in markets have no connection to on another. My original post was mostly about his bad market views. He is a good salesman and is good at talking about things like the cost of college and microeconomic topics. that said, even his marcroeconomic views are money were all wrong and he makes strong predictions about things that no one can know.. His lack of humility and his unwillingness to own up to being wrong are the worst parts.

Here is an interview from five years ago with a Friedmanite. Sumner got everything right the last 9 years. Schiff is still saying the same stuff. He is a broken record. As I rewatch, I see he railing against the super secret inflation.

[r3volution 3.0]

Anyone with a basic understanding of economics should be able to see the structural problems in this economy that Schiff talks about.

Getting the timing right is another matter, and he's been wrong about the timing (for the collapse of the bond bubble et al) for several years.

That said, I think we're getting close. I don't think the Fed will be able to do a repeat of QE1/2/3 without crushing the dollar and bonds.

And I don't think we'll have to wait very long to test that prediction, maybe a year.

[Madison320]

Schiff is chronically bearish. Every shred of evidence refutes that worldview. Being a long term bear on equities didn't even work in Germany which lost two World Wars and half the country became Communist. https://www.amazon.com/Triumph-Optim...stment+returns

Economic views and making money in markets have no connection to on another. My original post was mostly about his bad market views. He is a good salesman and is good at talking about things like the cost of college and microeconomic topics. that said, even his marcroeconomic views are money were all wrong and he makes strong predictions about things that no one can know.. His lack of humility and his unwillingness to own up to being wrong are the worst parts.

Here is an interview from five years ago with a Friedmanite. Sumner got everything right the last 9 years. Schiff is still saying the same stuff. He is a broken record. As I rewatch, I see he railing against the super secret inflation.

I agree that one reason we haven't seen price inflation is that the Fed is paying the banks to sit on the money they printed. But they can't do that forever.

We haven't seen inflation yet in commodities but we've seen tons of it in the markets, unless you think the stock market boom since 2009 is natural.

All things being equal, prices have to rise in proportion to the amount of money being printed.

[Madison320]

Anyone with a basic understanding of economics should be able to see the structural problems in this economy that Schiff talks about.

Getting the timing right is another matter, and he's been wrong about the timing (for the collapse of the bond bubble et al) for several years.

That said, I think we're getting close. I don't think the Fed will be able to do a repeat of QE1/2/3 without crushing the dollar and bonds.

And I don't think we'll have to wait very long to test that prediction, maybe a year.

I agree although I remember awhile back that you thought printed money doesn't cause price inflation, but it causes bubbles and imbalances.

[r3volution 3.0]

I agree although I remember awhile back that you thought printed money doesn't cause price inflation, but it causes bubbles and imbalances.

I'm not sure what comment of mine you're referencing, but it's true that money printing doesn't necessarily cause price inflation. It always causes prices to be higher than they otherwise would be, of course, but it may not cause an actual increase, depending on what's happening with production (prices are, crudely, money divided by production). That is, if production is increasing at the same pace as the money supply, prices will remain the same (when they should be falling). Or, if production is increasing faster than the money supply, prices will actually fall (but less than they should).

This is the standard Austrian view.

[Madison320]

I'm not sure what comment of mine you're referencing, but it's true that money printing doesn't necessarily cause price inflation. It always causes prices to be higher than they otherwise would be, of course, but it may not cause an actual increase, depending on what's happening with production (prices are, crudely, money divided by production). That is, if production is increasing at the same pace as the money supply, prices will remain the same (when they should be falling). Or, if production is increasing faster than the money supply, prices will actually fall (but less than they should).

This is the standard Austrian view.

I agree. My argument has always been that the sheer size of the increase of the monetary base (like 500% or so) will eventually be seen in prices because there's no other variables big enough to offset that increase. Just because we haven't seen a proportional increase in prices yet doesn't make me dismiss the law of supply and demand.

In addition to what's already been printed, I also expect QE4. I think another factor keeping prices down is that most people think the Fed is still on a tightening cycle.

[r3volution 3.0]

I agree. My argument has always been that the sheer size of the increase of the monetary base (like 500% or so) will eventually be seen in prices because there's no other variables big enough to offset that increase. Just because we haven't seen a proportional increase in prices yet doesn't make me dismiss the law of supply and demand.

In addition to what's already been printed, I also expect QE4. I think another factor keeping prices down is that most people think the Fed is still on a tightening cycle.

The lack of price inflation since QE started surprised most of us, I think. Part of that might be explained by increasing production, but most of it IMO was the "flight to quality" that bid up the dollar for a period of time (made imports much cheaper), and the fact that most of the new money, for whatever reason, seemed to stay in the financial markets, and not leak out to the "real" economy, to be picked up in CPI data. That's changing now, esp. re the dollar in the forex markets.

But, on that note, the ECB is talking about US currency manipulation and how this is hurting European exports (i.e. idiotic protectionism), so I wouldn't be surprised if they ramped up the printing to halt the appreciation of the euro at some point (and because they're probably going to need to do more printing sooner than later anyway, to keep their own bond and other bubbles afloat).

[Madison320]

The lack of price inflation since QE started surprised most of us, I think. Part of that might be explained by increasing production, but most of it IMO was the "flight to quality" that bid up the dollar for a period of time (made imports much cheaper), and the fact that most of the new money, for whatever reason, seemed to stay in the financial markets, and not leak out to the "real" economy, to be picked up in CPI data. That's changing now, esp. re the dollar in the forex markets.

But, on that note, the ECB is talking about US currency manipulation and how this is hurting European exports (i.e. idiotic protectionism), so I wouldn't be surprised if they ramped up the printing to halt the appreciation of the euro at some point (and because they're probably going to need to do more printing sooner than later anyway, to keep their own bond and other bubbles afloat).

Peter Schiff thinks the ECB will have to stop printing when inflation gets above 2% because the Germans won't allow it. But yeah, it could be the cleanest dirty shirt thing that is helping the dollar. But theoretically if everyone hyperinflated their currency the dollar index would remain unchanged. So eventually physics has to catch up.

I'm sure you've heard the "ink in a tub of water" anology regarding inflation. Maybe the ink landed on the stock market and now it's moving into the rest of the economy. If that's true, then stocks will go down and general prices will go up.

[r3volution 3.0]

Peter Schiff thinks the ECB will have to stop printing when inflation gets above 2% because the Germans won't allow it. But yeah, it could be the cleanest dirty shirt thing that is helping the dollar. But theoretically if everyone hyperinflated their currency the dollar index would remain unchanged. So eventually physics has to catch up.

I'm sure you've heard the "ink in a tub of water" anology regarding inflation. Maybe the ink landed on the stock market and now it's moving into the rest of the economy. If that's true, then stocks will go down and general prices will go up.

Yes, money printing never affects all prices equally and simultaneously; the new money begins its life in a specific place and gradually spreads, raising prices unequally and at different times in different sectors, advantaging earlier users of the money over later users (Cantillon effects). This is the only reason it causes problems in the first place. If everyone woke up tomorrow to find that all of their cash balances had magically increased one-million-fold, there would be no change in relative prices, no change in the production structure, no bubble, no redistribution of wealth, and consequently no point in printing the money in the first place.

[Madison320]

Yes, money printing never affects all prices equally and simultaneously; the new money begins its life in a specific place and gradually spreads, raising prices unequally and at different times in different sectors, advantaging earlier users of the money over later users (Cantillon effects). This is the only reason it causes problems in the first place. If everyone woke up tomorrow to find that all of their cash balances had magically increased one-million-fold, there would be no change in relative prices, no change in the production structure, no bubble, no redistribution of wealth, and consequently no point in printing the money in the first place.

I think inflation would still screw things up, even it occurred evenly. Long term contracts would get messed up, like home loans for example. If the currency suddenly lost half it's value the banks would only get half of what they loaned.

But I agree, the reason they create inflation is because the first ones to get the new money are the ones benefiting.

[DamianTV]

"Compound Interest is the most powerful force in the universe."
- Albert Einstein

Interest is already bad enough, and many religions throughout history prior to being taken over by banks and money manipulators identified interest as one of the most immoral actions one man can take against another. Compound Interest, which is nothing short of paying interest on existing interest, is, as Thomas Jefferson said, more dangerous to nations than standing armies.

Interest kills countries. It is the Cancer of great civilizations.

[Zippyjuan]

"Compound Interest is the most powerful force in the universe."
- Albert Einstein

Interest is already bad enough, and many religions throughout history prior to being taken over by banks and money manipulators identified interest as one of the most immoral actions one man can take against another. Compound Interest, which is nothing short of paying interest on existing interest, is, as Thomas Jefferson said, more dangerous to nations than standing armies.

Interest kills countries. It is the Cancer of great civilizations.

Interest is the price of money. If you are an investor, compounding interest is your friend. If no interest was allowed, banks would not be lending money to people or businesses (they could add fees which would basically be interest - that is how Sharia banking works). No loans would mean slower economic growth since business could not borrow to fund expansion.

[Krugminator2]

Interest is already bad enough, and many religions throughout history prior to being taken over by banks and money manipulators identified interest as one of the most immoral actions one man can take against another. Compound Interest, which is nothing short of paying interest on existing interest, is, as Thomas Jefferson said, more dangerous to nations than standing armies.

Interest kills countries. It is the Cancer of great civilizations.

There literally is no civilization without banking. Savings and investment (and savings ultimately is investment) accounts for the productivity growth in a country. Nobody is going to lend money without interest. How are businesses going to get capital to expand? Most housing and property developments come about through borrowing. If you building a factory, how are you going to get that money? A gift from a rich guy with a top hat and monocle? Finance is providing a service just cutting hair is proving a service.

[DamianTV]

Interest is the price of money. If you are an investor, compounding interest is your friend. If no interest was allowed, banks would not be lending money to people or businesses (they could add fees which would basically be interest - that is how Sharia banking works). No loans would mean slower economic growth since business could not borrow to fund expansion.

Uh, yes they would. They would just have more restrictions and would not be able to profit by exploiting the poor? Why is it that the poor are hurt the worst by interest? Its not the rich that suffer, those with the least ability to resist or afford to live that pay the highest interest rates.

If there were ever an Eleventh Commandment, I would expect that it should read "Thou Shall Not Charge Interest".

[DamianTV]

There literally is no civilization without banking. Savings and investment (and savings ultimately is investment) accounts for the productivity growth in a country. Nobody is going to lend money without interest. How are businesses going to get capital to expand? Most housing and property developments come about through borrowing. If you building a factory, how are you going to get that money? A gift from a rich guy with a top hat and monocle? Finance is providing a service just cutting hair is proving a service.

Maybe they should earn the money to begin with instead of thinking that only banks can provide them with the means by which to grow?

The great lie of the Banks is we need them. We dont.

[Krugminator2]

Maybe they should earn the money to begin with instead of thinking that only banks can provide them with the means by which to grow?

But why? Why do you want people to suffer through lower standards of living?

Let's say my American dream is to buy a McDonald's franchise. Setting aside the fact that McDonald's was built on borrowing and expanding, a significant percentage of people who now want to purchase a franchise need to borrow. Everything is done voluntarily. Why should they set aside their goals in life to fulfill your ideology?

And how is someone going to earn money? Most businesses rely on loans. It seems to work pretty well.

If there were ever an Eleventh Commandment, I would expect that it should read "Thou Shall Not Charge Interest".

Thou shall not charge interest is the same thing as thou shall not earn a profit. Nobody would ever lend or produce without a profit motive.

[Zippyjuan]

Uh, yes they would. They would just have more restrictions and would not be able to profit by exploiting the poor? Why is it that the poor are hurt the worst by interest? Its not the rich that suffer, those with the least ability to resist or afford to live that pay the highest interest rates.

If there were ever an Eleventh Commandment, I would expect that it should read "Thou Shall Not Charge Interest".

Interest rates are based on what the borrower and lender agree is a fair amount. If they don't think the amount is fair, they don't engage in the transaction. Should the government be able to say they can't do that? There are many things the poor cannot necessarily afford. Should the government regulate the prices of that too so that they can and aren't "exploited" by those prices? Food? Housing?

Nobody is forced to borrow money. If you do not like the idea of paying interest, you are free to not borrow money and those who wish to can. Liberty.

[devil21]

Maybe they should earn the money to begin with instead of thinking that only banks can provide them with the means by which to grow?

The great lie of the Banks is we need them. We dont.

There's that but also that without various taxes whisking away 50%+ of earnings, people may actually have enough resources to conduct commerce without credit being necessary. Or at least without credit being such an integral part of society as it is now.

Nobody is forced to borrow money. If you do not like the idea of paying interest, you are free to not borrow money and those who wish to can. Liberty.

If that is true then tell us why it is called the 'public debt'? Sounds like people are borrowing money whether they want to or not.

[Zippyjuan]

There's that but also that without various taxes whisking away 50%+ of earnings, people may actually have enough resources to conduct commerce without credit being necessary. Or at least without credit being such an integral part of society as it is now.



If that is true then tell us why it is called the 'public debt'? Sounds like people are borrowing money whether they want to or not.

The public debt is the portion of the US debt held outside the government. Some of the government holdings include Social Security, the Federal Reserve and some government retirement programs for example.

That (the public) is people or banks or investors or retirement funds or the like voluntarily purchasing US Treasuries. Nobody is forced to buy.

https://www.thebalance.com/what-is-t...c-debt-3306294

The public debt is defined as how much a country owes to lenders outside of itself. These can include individuals, businesses, and even other governments.

U.S. Public Debt
The U.S. Treasury Department manages the national debt through its Bureau of the Public Debt. It measures debt owned by the public separately from intragovernmental debt. Public debt includes Treasury bills, notes, and bonds, which are typically bought by large investors. You can become an owner of the public debt by purchasing savings bonds and TIPS. Intragovernmental debt is the amount Treasury owes to some federal retirement trust funds, most importantly the Social Security Trust Fund.

On September 8, 2017, the U.S. debt surpassed $20 trillion. That makes the debt-to-GDP ratio around 104 percent. That's based on the most recent second quarter GDP of $19.2 trillion.

But the public debt was a more moderate $14.6 trillion. That made the public debt-to-GDP ratio a safe 76 percent. According to the World Bank, the tipping point is 77 percent.

Perhaps that's why investors don't insist on higher interest rates. In fact, interest rates are still historically low.

[devil21]

@Zippyjuan
That's a great non-answer explanation to a low info type but you didn't explain how/why it is called the 'public debt' if people are not forced to borrow money? Are the people not part of the 'public' that is on the hook for the 'public debt'? Who pays the interest on the 'public debt', if people are free to to not borrow money?

[Zippyjuan]

@Zippyjuan
That's a great non-answer explanation to a low info type but you didn't explain how/why it is called the 'public debt' if people are not forced to borrow money? Are the people not part of the 'public' that is on the hook for the 'public debt'? Who pays the interest on the 'public debt', if people are free to to not borrow money?

Who is forced to buy public debt?

Who is forced to borrow? The government- when it comes up short. When the government doesn't take in enough money to pay their bills, they issue debt. That is via an auction- investors make an offer on how much they would like to buy and how much they are willing to pay. The bonds are then sold at the lowest price which allows them to sell all the debt they need to raise. Note that it is all voluntary participation. Even the price (interest rate) is chosen by what the market is willing to pay.

But what about taxpayers? Don't they pay? Actually they pay for what the government DOES pay for- before the debt. The debt covers what taxpayers don't. If the debt is eventually paid off, they yes, at that time, taxpayers will be forced to buy back debt and the interest on it.

[devil21]

Who is forced to buy public debt?

Who is forced to borrow? The government- when it comes up short. When the government doesn't take in enough money to pay their bills, they issue debt. That is via an auction- investors make an offer on how much they would like to buy and how much they are willing to pay. The bonds are then sold at the lowest price which allows them to sell all the debt they need to raise. Note that it is all voluntary participation. Even the price (interest rate) is chosen by what the market is willing to pay.

But what about taxpayers? Don't they pay? Actually they pay for what the government DOES pay for- before the debt. The debt covers what taxpayers don't. If the debt is eventually paid off, they yes, at that time, taxpayers will be forced to buy back debt and the interest on it.

You said no one is forced to borrow. Where does the money come from that pays the interest on the 'public debt'?

[acptulsa]

Who is forced to buy public debt?

Who is forced to borrow? The government- when it comes up short. When the government doesn't take in enough money to pay their bills, they issue debt. That is via an auction- investors make an offer on how much they would like to buy and how much they are willing to pay. The bonds are then sold at the lowest price which allows them to sell all the debt they need to raise. Note that it is all voluntary participation. Even the price (interest rate) is chosen by what the market is willing to pay.

But what about taxpayers? Don't they pay? Actually they pay for what the government DOES pay for- before the debt. The debt covers what taxpayers don't. If the debt is eventually paid off, they yes, at that time, taxpayers will be forced to buy back debt and the interest on it.

Are the taxpayers forced to pay interest?

Are they going to be forced to pay this interest "eventually", or do they pay it every single year?

Lay off the doubbllettallkk, Zippy.

[Zippyjuan]

Yes, taxpayers do pay interest on the debt. You found the only example of people being forced to pay on a loan they did not voluntarily enter into.

But technically, government representatives are acting on behalf of the people who elect them. They pick people who spend more money than they collect in taxes so they chose to let the government borrow.

[acptulsa]

But technically, government representatives are acting on behalf of the people who elect them. They pick people who spend more money than they collect in taxes so they chose to let the government borrow.

Speak for yourself.