Sunday, February 08, 2009

Peter Schiff: terrible recession or economic disaster?

He's not yet a candidate for US Senate in 2010, but I'm hoping Peter Schiff will throw his name in the hat. And I think we (the Paulistas) may be able to convince him to run. Just yesterday I attended a meeting in Newington with close to 20 other Nutmeg Sound Money advocates.

Anyway, here's a Yahoo writeup by Aaron Task on Peter Schiff's recent thoughts on the American economy:

The fiscal stimulus bill being debated in Congress not only won't help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.

Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a "terrible" recession. But the path of increased government intervention will lead to "unmitigated disaster," says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks.

The problem, he says, is the government is trying to perpetuate a "phony economy" based on borrowing and spending. With the U.S. consumer tapped out, the government is "now taking on the mantle" of consumer of last resort, he continues, predicting the bond bubble will soon burst - if it hasn't already - ultimately leading to a collapse of the dollar and an "inflationary depression worse than anything any of us have ever seen."

Tim White


Anonymous said...

"In fairness though, those policies began decades before Bush took office."

However, Bush avoided listening to the many voices that were crying out, Housing Bubble and that Hedge funds should be regulated. And, his good old appointee, the rock star of economics, Greenspan, repestedly denied the housing bubble which probably amplified the housing bubble; he was also against any controls over derivatives and hedge funds; and believed that the greedy wolves of Wall Street could self regulate themselves.

Anonymous said...

and now we are taking the burst private sector bubble and reflating it with a larger public sector bubble. Swell.

tim white said...

Bush did a lot of things wrong. And some argue that Clinton's Glass Steagall (repeal) or Carter's Community Reinvestment Act were far worse.

I see two other main issues that led to the current situation:

1) Democratic President FDR 1933
2) Republican President Nixon 1971

The two phase transition from Sound Money to Fiat Money... and the ensuing rise of the credit economy.

It seems to me that those two issues allowed / encouraged America to move from a "saving economy" to a "borrowing economy."

Therein lies the major problem that we face today... and all the stuff Bush did (or didn't) do were symptons of the disease... not the disease itself.

Anonymous said...

Don't Congress off the hook, Tim. The Community Reinvestment Act basically was a megaphone at the ear of the banking community telling them to make bad loans.

tim white said...

Congress is complicit. And while I believe many of them (over the past few decades have) lacked the critical faculties necessary for making informed, wise decisions... that's still no excuse.