wayneL
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Peter Schiff has the temerity to once again speak perfect sense.
Obama Will Make Things Much Worse - Schiff
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What Peter does talk about does make sense but I wish he would elaborate more
about the failings of the market. He believes the free market has enough essentially good rational beings, I dont subscribe to that view!
Any Democrat or Republican would make matters much worse. You can only play the hand your dealt.
about the failings of the market. He believes the free market has enough essentially good rational beings, I dont subscribe to that view!
Any Democrat or Republican would make matters much worse. You can only play the hand your dealt.
wayneL
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I don't think that is precisely correct. As an Austrian School economist, it is rather that the market, if left to function properly sans government intrusion will bring people to their senses when they become "irrationally exuberant", more quickly than otherwise.
Practitioners of the dismal science will always get things wrong, but Schiff and the Austrian school have been better predictors thus far in this crisis. Credit is due for that.
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Peter Schiff is always straight up when interviewed.
I agree things will get economically worse with Obama. But he has
been left with a big financial mess too!
wayneL
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Yes, there have been many who didn't agree with his decoupling theory, or who think it may be valid, but not yet.
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He's right when he talks about the sound savings base of Asian economies.
If China re-values the Yuan and/or dumps US reserve holdings and converts them to commodities. Look out
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I bet Hilary Clinton is wrapt she didnt get handed the poisoned chalice!
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If you US dollar collapses what happens here in Australia ?
Stormin_Norman
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fantastic interview. i subscribe to it 100%.
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I agree.
His comments at the end about not even being spoken to by govt are quite funny in an ironic sort of way. Its too hard for the US to deal with the idea that they may actually be a basket case economy.
They will attempt what has worked before - inflate (i.e. inject currency in exchange for bad debt as they are now, but also monetising further down the track), stimulate etc. but the scale of this is so large its hard to see them being able to do it without a heavy devaluation of the USD (which they of course don't want).
If they stay in denial and artificially maintain a high USD then the USD will become a defunct currency and as Peter indicates they'll basically have the equivalent of price protection and end up with a black market economy (as happens in places where the currency is not valued on free market prices).
US productivity is barely able to meet the payments on their debt (after they add the new stimulus costs into it) so the only way that I can see to address this is to reduce the debt in real terms by allowing the currency to devalue, thus enabling their productivity to match the debt servicing levels.
The only thing I have issue with in Peter's interview is the idea that the US economy doesn't do anything for the world. The US doesn't have factories and they don't manufacture flat screen TV's or cars (except their joke of a protected auto industry thats limped along for decades), but they do provide services and products that the rest of the world consumes - including media, television, film, software and intellectual property (brands etc. - Coke, Macdonalds, Reebok etc.). They also produce aircraft and weapons - not always productive for the world but certainly in exchange for goods. They also arguably 'plunder' parts of the world as part of their military activity - e.g. Iraq - they attack, then install government etc. (providing a service) which brings money back into the US economy from that region etc. And they arguably provide a 'security service' for their allies that is indirectly paid for by other countries in the form of weapons purchases, joint military programs and consumption of US culture and products.
How these products/services and activities stack up against what they consume I don't know - but they do form part of US productivity.
There are so many parts of the interview where he speaks plain commonsense and hits the nail right on the head. For example when he discusses job creation. The government creating jobs in a way that is not malinvestment is highly unlikely. Allowing the private sector to create jobs in response to productively directed investment is far likelier to succeed. So the odds are that the extra money the government borrows to fund the job creation programs will actually cause a reduction rather than an increase in productivity, making it even harder for them to service their debt and bringing them further into the quagmire.
His comments at the end about not even being spoken to by govt are quite funny in an ironic sort of way. Its too hard for the US to deal with the idea that they may actually be a basket case economy.
They will attempt what has worked before - inflate (i.e. inject currency in exchange for bad debt as they are now, but also monetising further down the track), stimulate etc. but the scale of this is so large its hard to see them being able to do it without a heavy devaluation of the USD (which they of course don't want).
If they stay in denial and artificially maintain a high USD then the USD will become a defunct currency and as Peter indicates they'll basically have the equivalent of price protection and end up with a black market economy (as happens in places where the currency is not valued on free market prices).
US productivity is barely able to meet the payments on their debt (after they add the new stimulus costs into it) so the only way that I can see to address this is to reduce the debt in real terms by allowing the currency to devalue, thus enabling their productivity to match the debt servicing levels.
The only thing I have issue with in Peter's interview is the idea that the US economy doesn't do anything for the world. The US doesn't have factories and they don't manufacture flat screen TV's or cars (except their joke of a protected auto industry thats limped along for decades), but they do provide services and products that the rest of the world consumes - including media, television, film, software and intellectual property (brands etc. - Coke, Macdonalds, Reebok etc.). They also produce aircraft and weapons - not always productive for the world but certainly in exchange for goods. They also arguably 'plunder' parts of the world as part of their military activity - e.g. Iraq - they attack, then install government etc. (providing a service) which brings money back into the US economy from that region etc. And they arguably provide a 'security service' for their allies that is indirectly paid for by other countries in the form of weapons purchases, joint military programs and consumption of US culture and products.
How these products/services and activities stack up against what they consume I don't know - but they do form part of US productivity.
There are so many parts of the interview where he speaks plain commonsense and hits the nail right on the head. For example when he discusses job creation. The government creating jobs in a way that is not malinvestment is highly unlikely. Allowing the private sector to create jobs in response to productively directed investment is far likelier to succeed. So the odds are that the extra money the government borrows to fund the job creation programs will actually cause a reduction rather than an increase in productivity, making it even harder for them to service their debt and bringing them further into the quagmire.
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Anyone ?
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uh! ...i thought this obama dude was gunna save the world ??? what gives?? reality stepped in ?
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I read his book. It was very interesting. But he doesnt footnote at all which I found disappointing.
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Glen48
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From Wikipedia:
Irwin A. Schiff (born 1928) is a prominent member of the United States group which refers to itself as the tax honesty movement, and which has been referred to by the Internal Revenue Service and other government agencies as the tax protester movement. Schiff is known for writing and promoting literature that claims the United States income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple convictions for various federal tax crimes. Schiff is serving a 13-plus year sentence for tax crimes (with his status shown as "in transit" between prison facilities as of August 26, 2008). His projected release date is 7 October 2016.[1] Irwin Schiff is also the father of stockbroker Peter Schiff, who is credited as a co-author of Irwin Schiff's 1985 book, "The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax".
Irwin A. Schiff (born 1928) is a prominent member of the United States group which refers to itself as the tax honesty movement, and which has been referred to by the Internal Revenue Service and other government agencies as the tax protester movement. Schiff is known for writing and promoting literature that claims the United States income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple convictions for various federal tax crimes. Schiff is serving a 13-plus year sentence for tax crimes (with his status shown as "in transit" between prison facilities as of August 26, 2008). His projected release date is 7 October 2016.[1] Irwin Schiff is also the father of stockbroker Peter Schiff, who is credited as a co-author of Irwin Schiff's 1985 book, "The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax".
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The way I see it, American consumers willingness to take on more debt and loose lending practices have financed China's over-capacity. The flow of dollars into China will slow dramatically and as we are seeing already, over-capacity is leading to rising inventories and lay-offs. China is going to have huge problems adjusting because it can't reform it's economy fast enough. It's political system is too ridged. I wouldn't bet on the dollar going down the toilet anytime soon.
Also, as you will see with oil, steel and other commodities, production cut backs won't stop falling prices. Demand is falling faster than production. When production finally meets decreased demand at the bottom then we can look ahead to re-inflating the economy or even the hyper-inflation Schiff is talking about. It's easy to re-inflate then. But for now it's deflation for domestic assets and if you have a commodity currency like Australia, then you can expect to pay more for your imports as the AUD gets hammered to new lows on the back of falling commodity prices and weak domestic stats all round. I'm happy to bet on the USD (against the AUD) for the next year or two.
Also, as you will see with oil, steel and other commodities, production cut backs won't stop falling prices. Demand is falling faster than production. When production finally meets decreased demand at the bottom then we can look ahead to re-inflating the economy or even the hyper-inflation Schiff is talking about. It's easy to re-inflate then. But for now it's deflation for domestic assets and if you have a commodity currency like Australia, then you can expect to pay more for your imports as the AUD gets hammered to new lows on the back of falling commodity prices and weak domestic stats all round. I'm happy to bet on the USD (against the AUD) for the next year or two.
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The economy is a whole new ball game to Obama. He seems fixated on the idea of spending his way out of recession. It is to be hoped that his advisers are aware that there are limits on how much you can spend with money you don't have. Nobody knows what that limit is, before the dollar crashes.
In the same way he is a novice on foreign policy. His advisers are obviously telling him that doubling the number of troops in Afghanistan is the way to go. Observers on the ground tell us that if Afghans are given the choice between siding with the foreigners and the Taliban, they will pick the Taliban. If the dollar crashes they will have to bring them home anyway.
In the same way he is a novice on foreign policy. His advisers are obviously telling him that doubling the number of troops in Afghanistan is the way to go. Observers on the ground tell us that if Afghans are given the choice between siding with the foreigners and the Taliban, they will pick the Taliban. If the dollar crashes they will have to bring them home anyway.
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I'm told Obama will try to take from the rich and give to the poor, redistribute the wealth. This will cause huge problems and yes I agree he really doesnt have a handle on economics, like all leaders he will try to spend his way out of this but it hasnt helped so far anywhere and let's face it it just wont work so what do they do when the money runs out ?
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