Is Bitcoin the Future of Money? Peter Schiff vs. Erik Voorhees

On July 2, 2018, Reason and The Soho Forum hosted a debate between Erik Voorhees, the CEO of ShapeShift, and Peter Schiff, CEO and chief global strategist of Euro Pacific Capital. The proposition: “Bitcoin, or a similar form of cryptocurrency, will eventually replace governments’ fiat money as the preferred medium of exchange.”

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It was an Oxford-style debate in which the audience votes on the resolution at the beginning and end of the event, and the side that gains the most ground is victorious. Voorhees won by changing the minds of 15 percent of attendees.

The Soho Forum is held every month at the SubCulture Theater in Manhattan’s East Village. At the next debate, which will be held on August 27, William Easterly, professor of economics at NYU, and Joseph Stiglitz, a Nobel Prize Winner in economics and professor at Columbia, will discuss whether free markets or government action is the best way to eliminate global poverty. You can buy tickets here.

Peter Schiff VS Brent Johnson: The Future Of The US Dollar

In this video from VRIC 2020 Peter Schiff and Brent Johnson debate about the future of the fiat money specifically US Dollar and the gold standard.

Peter Schiff believes the US market has never been as overvalued and over priced. And one of the major warning signs is we blew up the private equity market. This decades dot.com bubble is the private equity market destruction. This destruction will lead to the decline of the US dollar and eventually a remonetization of gold as the dollar loses its place as the Worlds Reserve Currency.

Peter Schiff’s theory is that Central Bankers around the world are under the false impression that a cheap currency is a good thing because it allows them to export more to the United States. However, the US is broke and can never pay for what it’s buying.

And since America is the largest debtor nation in the world and have more debt than other major countries combined and manufacturing is such a small portion of the US economy, there is a complete dependency on foreign goods.

And Relative to Wealth producing components of GDP no other country on earth has as much debt as the United States.

Add in contingency guarantees such as bank accounts, pensions, brokerage accounts that the US government is committed to funding despite the lack of money to pay for these things.

Combine all of this together and there is the potential for a currency crisis the likes the world has never seen. Schiff thinks this because there is an unrealistic level of belief for the US Dollar.

Schiff thinks the dollar will perform worse than other fiat currencies around the world and that we’re going to remonetize gold as the central asset.

Brent Johnson ultimately believes the same ending but with a different theory on how it will all go down.

Brent’s theory is that MMT is that the government will spend more money into existence and the central banks will want to control of the monetary policy. And that the dollar will go up and people will continue borrowing and buying which will ultimately lead to a massive currency crisis.

Every country in the world has over leveraged their economy and Brent Johnson believes that Central Bankers in every country are making the same bad bets across the world.

Brent Johnson makes note of The Plaza accord and that it was put in place in 1986 to artificially weaken the dollar against the other worlds Fiats because it was too strong. He argues that the dollar will be the the worlds central currency until fiat fails.

Schiff’s theory is “Money Is Nothing” and the value is the production and real goods that a country has. Money just lets you divvy up whats been produced. The wealth of the nation is the productive capacity of that nation.

Schiff also believes that in order to have a strong country you need:
*Factories
*Skilled Workers
*Production

Which are things that the US severely lacks and will pay a massive price for the over dependence on countries that do have these things.

The Canadian economy will benefit from a resource and precious metals boom that will help the Canadian dollar.

Schiff on inflation: Inflation initially pushes up asset prices before consumer prices.

Brent believes that digital currencies could be the future of money and likely will be implemented by most countries in the near future.

Brent and Peter agree that The Gold Standard will happen after a general loss of confidence in fiat currency.

Schiff explains MMT Modern Monetary Theory as the practice of taking Quantitative easing to the extreme. Printing Money without creating prosperity. Democrats will rely on the central bank to fund their spending agenda.

Repo rates have spiked to 9% – the market wants rates higher but Americans have so much debt and American can’t afford to service the debt. And international banks have been accessing the FED repo market to a greater extent than the US domestic markets. Repo rates spiking shows a demand for funding from the US dollars.

Americans have so much debt that the US government has to keep rates low other

Marin Katusa postulates that the highest risk lies in the credit market with debt in triple BBB

Nate Heckmann: Peter Schiff is Wrong About Everything

Yves here. I’m of two minds about featuring a post about Peter Schiff, since criticizing him treats him as being a more legitimate commentator than he is. But some targets ask so hard for a debunking that it’s hard to resist.

Schiff has been in the press recently for having said on the Daily Show that some people, such as the “mentally retarded,” didn’t even deserve minimum wage but should be paid only $2 an hour. But being offensive is not the worst of his sins.

Schiff is a money manager who claims to be an economist but has no formal credentials.* He such a terrible money manager that one wonders why the SEC hasn’t come calling. He lost 60% to 70% of customer assets in a two-year period when he was supposedly making correct macro calls. It isn’t just that he made disastrously bad timing decisions. He violated one of the basic rules of investment management, which is diversification (as of the last time his account results were made public, his picks represented only 2 bets: energy and gold, and that via small gold stocks or trusts). And he also appears to loaded up his customers with lots of risk. If so, he might have violated “know your customer” rules.

Mind you, this performance occurred when his public calls were generally correct. One can only imagine how he’s done when he’s been screaming “hyperinflation” and we instead have disinflation tending to deflation.

Now some readers might surmise that the fact that Schiff still has an investment business is the result of personal charm and selling skills, at least in the presence of Important People. Quite the reverse. so gratuitously rude. He got to the studio so late that he nearly missed the hit time (a huge deal in TV) and was unapologetic and haughty toward the tech who had to put up makeup and mike him up in haste. He repeatedly interrupted the host and even the Australian Finance Minister, who dealt with him with unruffled professional calm. And even though we sat elbow by elbow during the shoot, he pointedly never introduced himself and brushed off my move to shake his hand (I guess he’s afraid contact with non-libertarians might contaminate his precious bodily fluids). Mind you, I wasn’t offended but rather much as bemused and perplexed. What was the point of this display of lack of self control and basic manners? Did he really think it meant people would take him more seriously?

My recollection is that on the SBS show, the producers were able to contain Schiff by virtue of both him (and me) and the Australian Finance minister being on remote video. They could cut to someone else when they thought he’d had his say. Philip Pilkington sent this clip of Schiff with Cenk Uygur, “Uyger is the only one who handled him properly.” Of course, a fanboy or more likely, a flack put up overlay attempting to depict Schiff as a victim, as opposed to getting the treatment he deserved.

So let’s turn to Nate Heckmann’s takedown.

By Nate Heckmann, a graduate student at UC Irvine’s medical school who writes about health care, economics, and tax policy. Originally published at Et Vita

“The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.” 
― Stephen Hawking

A libertarian friend of mine who — like most libertarians — subscribes to the Austrian school of economics sent me a video, convinced that I would no longer think about inflation the same way after watching it. The video is of well-known libertarian pundit, investor, and self-proclaimed Austrian economistPeter Schiff.

In the video, Peter Schiff responds to his critics who attacked him for a prediction he made at the end of 2009 about hyperinflation:

You know, look, I know inflation is going to get worse in 2010. Whether it’s going to run out of control or it’s going to take until 2011 or 2012, but I know we’re going to have a major currency crisis coming soon. It’s going to dwarf the financial crisis and it’s going to send consumer prices absolutely ballistic, as well as interest rates and unemployment.

According to Schiff, the reason we haven’t seen hyperinflation yet is because the CPI is flawed, “deliberately designed” by the government to hide the true rate of inflation.

The video was so bad, it compelled me to write this post. First, watch the video above. Then read about what Schiff gets wrong:

1) “I never said the money printing would cause inflation. I said the money printing is inflation.”

Any student who has taken macroecon 101 knows this is an overly-simplistic view of inflation. It’s hard to believe that an “economist” holds this view.

Schiff’s view doesn’t take into account inflationary expectations, the rate of money exchange, or where said money ends up in the economy (e.g. M1, M2, M3, etc). If the treasury printed $1T and buried it in a hole the money would not exert the same inflationary pressure as it would if the printed $1T were distributed to the nation’s poor and middle class. The former would have a much smaller inflationary effect than the later. Schiff, at least, ought to acknowledge the fact that while the Fed has expanded the monetary base from $0.87 to $2.92 trillion, it is holding on to $1.62 trillion of excess private bank reserves. That’s $1.62 trillion sitting in a hole, not being circulated, exerting no inflationary effect. This money parked at the Fed is not inflationary.

This is not a difficult concept to grasp, but Schiff fails to grasp it nonetheless.

2) “But Krugman would say that Peter Schiff is wrong because prices haven’t risen. But, again, the proof that he offers, and that other Keynesians offer, are government-created statistics that purport to measure inflation like the CPI.”

For someone like me that has been following this narrative closely, it’s plain to see that Schiff is misrepresenting Krugman’s critique. I’ll explain.

First, Krugman has criticized Schiff’s predictions of hyperinflation, not normal levels of inflation (i.e. “rising prices”). According to Schiff’s predictions in 2009, we should have sky-rocketing prices by now, but we don’t. And this is exactly why people like Krugman say Schiff’s predictions haven’t panned out.

Furthermore, in Krugman’s most recent post about Schiff, he doesn’t offer the CPI as proof that inflation is under control because he knows that Austrians don’t care for “government-created statistics”. Instead, Krugman offers MIT’s Billion Prices Project as a third-party estimate of inflation. This project monitors the daily prices of over 5 million online transactions in over 70 countries. Guess what? This metric only varies slightly from the CPI and it tells the exact same story — namely, that inflation is not a problem.

According to my calculations, from the end of 2009 when Schiff made his prediction, until the beginning of 2012 when this video was made, inflation has increased by the following:

CPI less food and energy ~5.1%
PCEPI ~5.5%
CPI ~6.4%
MIT’s BPP ~7.1%
Monetary Base (“money printing is inflation”)  ~32.9%
Gold ~51.2%

The first three metrics are “government-created statistics”, the 4th is a third-party estimate of inflation, and the 5th and 6th are the Austrian metrics of inflation. Ask yourself: Which of these measures of inflation is inconsistent with reality? Has your cost of living gone up 30-50% since late 2009 or has it increased somewhere on the order of 5-7%?

3) “The CPI does a lousy job of measuring inflation. And I think it deliberately does so by design.”

By design? Evidence?

4) “In fact, I’m not the only one that’s convinced that inflation is a lot higher than the government admits.”

Schiff’s support for this claim? No, not a third party mathematically driven model like MIT’s or some other equivalent  — a FOX News poll. The poll referenced, however, does not support Schiff’s claim that the CPI underestimates inflation. All the report states is that 41% of people polled felt that rising prices were their primary concern.

5) “Well, if the government is correct, if the CPI is accurate, then why are so many people worried about inflation that doesn’t exist?”

First, nobody said inflation doesn’t exist (see point #2).

Second, this poll does not support the notion that the CPI is inaccurate. Inflation is real and people who are out of a job or underemployed ought to be concerned about rising prices. As a student, I am concerned about rising prices, but this does not mean that I believe the CPI is inaccurate. Nor does my concern mean that I think there is ongoing hyperinflation.

6) “Afterall, what makes more sense? That the government can print all this money, and prices not rise? Or that prices are rising and the government is just not being honest?”

Arguments of incredulity are not only weak, but they often-time reveal a lack of knowledge or understanding in the person that uses them. Also, once again, nobody is saying that prices aren’t rising (i.e. see point #2).

Schiff doesn’t understand that printing money against the zero-lower bound — the point at which the federal funds rate is zero — does not have the same inflationary effects that it would in times of economic prosperity. I’ll outsource the explanation as to why this happens but, in a nutshell, “if interest rates are near [or at] zero, money printed now just gets hoarded, and monetary policy has no traction on the real economy.”

Given Schiff’s definition of inflation, I don’t blame him for not grasping this concept.

7) “The items that I selected for my basket were eggs, cars, milk, gasoline, bread, rent for a primary residency, coffee, dental services, potatoes, electricity, sugar, airline tickets, butter, store-purchased beer, apples, public transportation, cereal, tires, beef, and prescription drugs.”

According to Schiff, the CPI’s basket of goods is deliberately misleading, but his own basket of (20) goods is stable, unbiased, and more accurately represents price levels than the CPI? Does anybody buy this? I don’t.

First, Schiff’s basket is food and fuel-dominant, relying heavily on two factors that are commonly removed from measures of core inflation because of their inherent volatility.

Second, even if we accept Schiff’s high-ball basket of goods as being accurate, we are still left with a decade with only 44.3% of inflation. This is odd because it contains the recent post-recession period of hyperinflation (or high inflation) that many Austrians are angry about, yet inflation in this past decade is still well bellow the 117% increase during the 70s. So according to Schiff’s calculations, we’ve still only seen a fraction of the inflation that plagued us during the 70s.

Did Schiff intentionally show that inflation during this past decade was actually much lower than it was during the 70s, or did he do this by accident?

8) “But it actually gets worse because the government numbers are wrong. And I’ll prove it…”

Schiff continues by pointing out, what he claims to be, specific “inaccuracies” in the CPI. These warranted a fact-check on my part.

I checked Schiff’s claim about healthcare premiums only increasing 4.3% from 2008-2012 according to the CPI. According to the CPI — the CPI that I just looked up — health insurance premiums have increased by almost 20% over this period. The Kaiser report that he references, which by the way only refers to employer provided insurance, shows an increase of 24.2%. This doesn’t seem like a contradiction, but it makes me wonder where Schiff is getting his CPI numbers.

It appears that the CPI is actually referring to a 4.3% increase in the healthcare premium costs per year, but Schiff is — either misleadingly or accidentally — implying that according to the CPI, premiums have increased by a total of 4.3% over the entire five year period of 2008-2012, which, of course, is not true.

9) “So if the government is wrong about newspapers and magazines, if they’re wrong about health insurance, how should we believe that they are right about anything?”

Wait, how did Schiff prove that the government is wrong?

Krugman’s description of the Austrian viewpoint sums it up best:

Substance aside — not that substance isn’t important — Austrian economics very much has the psychology of a cult. Its devotees believe that they have access to a truth that generations of mainstream economists have somehow failed to discern; they go wild at any suggestion that maybe they’re the ones who have an intellectual blind spot.

Schiff is wrong, but he’s sticking to his guns. And, in the process, he’s revealing just how little he knows about economics, policy, and pretty much everything else. Why do people still listen to this guy?

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*Schiff has a BA from UCLA in Accounting and Finance. His father is a well-known con artist who sold books and led seminars claiming no one had to pay Federal taxes and told followers his “secrets”. Schiff’s father is now serving a 13-year prison sentence for tax evasion, his second prison term (he previously served a four year term, again for tax evasion).

The Reason Trump is President – Peter Schiff

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08:12
so the opposite of what everybody
expected happened when we elected George
Bush because the bubble burst under Bush
but here’s a problem when the bubble
burst Bush did not blame that recession
that we had in 2001 he did not say hey
we had a bubble under Bill Clinton and
now we have to deal with the
consequences we have all these
malinvestments because of the stock
market bubble and we’re gonna have to go
through a recession as we work our way
out of these imbalances no he made the
mistake of trying to use Keynesian
stimulus budget deficits and Alan
Greenspan slashed interest rates
to 1% and we were able to mitigate the
severity of that recession it was the
shallowest recession in US history and
we replaced the stock market bubble with
a housing bubble and that housing bubble
created enough phony wealth and enough
phony prosperity to buy George Bush’s
second term but the consequence of that
bubble blew up in 2008 while built while
George Bush was still in office and so
ultimately that bubble collapsed and
that’s what paved a way for Barack Obama
but this time I don’t think George
Donald Trump is going to be so lucky
because I think when the bubble bursts
now and it’s all the same bubble it’s
all a continuation of the same policy
because when the housing bubble burst
instead of lowering interest rates to 1%
the Fed didn’t stop at 1% days passed
when and went all the way to zero and
they stayed there for like 7 years and
now despite all this talk about how
they’re gonna normalize rates and raise
rates they’ve only raised them twice
they’ve raised them by 50 basis points
there’s still half of where greenspan
slashed the middlee you know in 2002 and
so now it’s not just that we reflate
‘add the real estate bubble or reef
lated the stock market bubble because we
have both but now we have a massive bond
market bubble we have us we have a
repeat of the dollar bubble we have the
same dollar bubble we had in the late
1990s we pretty much have a bubble in
everything where we had a bubble in auto
loans a bubble in student loans we have
now so much debt the national debt is 20
trillion right the national debt doubled
under under Bush from 5 trillion to 10
trillion it doubled under Obama from 10
trillion to 20 trillion I mean is it
even within the scope of possibility
that we can go from 20 trillion to 40
trillion assuming that you know Trump
was in office for eight years
but I think at this point and interest
11:08
rates are already starting to rise this
11:10
is going to be the problem this is the
11:12
pin that pricks this debt bubble is
11:14
rising interest rates
11:16
I mean why has the Fed kept rates so low
11:18
for so long because they can’t raise
11:20
them that’s why I mean they want to
11:23
pretend that well you know we’re we’re
11:25
just trying to make sure everything is
11:26
okay look if everything was okay when we
11:29
raise rates it’s because they can’t
11:31
raise rates because the debt is too high
11:33
what would happen to the budget if
11:38
interest rates went up right now we’ve
11:40
got a twenty trillion dollar national
11:41
debt yet we pay less interest on the
11:43
national debt than we paid when Ronald
11:45
Reagan was president and the national
11:47
debt was one trillion so all of this is
11:51
possible because interest rates are so
11:53
low if interest rates went back to 5%
11:56
which is still not high 5% you’d be
12:01
talking about an extra trillion dollars
12:03
a year or an interest on the national
12:05
that every year
12:07
where’d that money come from what if
12:10
interest rates went to 10% oh it’s I
12:12
mean they went higher than that under
12:15
under Paul Volcker but even some of
12:18
between five and ten and then what about
12:19
the housing market where would work
12:22
mortgage rates have been averaging the
12:24
last you know a few years mortgage rates
12:25
three and a half four percent yet
12:28
homeownership in America is at a 60-year
12:30
low what would happen into the
12:31
real-estate market if mortgage rates
12:33
went to 6 or 7% or 8% I mean that’s
12:36
normal for a mortgage nobody could
12:39
afford a house now how the market would
12:41
implode what about the corporate
12:43
corporate sector corporate America why
12:45
do you think the Dow is flirting with
12:46
20,000 it’s not because US companies are
12:49
earning all this money it’s because they
12:51
levered up during the era of cheap money
12:53
and they bought back a bunch of stock
12:55
you know and so we have this gigantic
12:57
bubble and Donald Trump is right you
12:59
know the last eight years have been a
13:00
disaster right our our country is
13:03
littered with closed out factories that
13:05
are like tombstones right people have
13:08
lost good jobs we’ve had massive debt
13:10
but there is no quick fix to all this I
13:13
mean Donald Trump talks as if all we
13:15
have to do is renegotiate NAFTA
13:17
right all we have to do is have smarter
13:19
bureaucrats negotiating and the trade
13:22
deficits are gonna go away no they’re
13:23
not you know and Donald Trump talks
13:26
about how you know the world has been
13:27
taking advantage of America no we’ve
13:30
been taking advantage of the world
13:31
that’s what he doesn’t understand right
13:33
what is the relationship that America
13:36
has with the rest of the world
13:37
well we consume in the world produces
13:40
well I mean well obviously we’re the
13:42
beneficiaries of that we we get to
13:44
consume all sorts of products yes the
13:46
factories are all gone but the consumer
13:49
goods that the factories used to produce
13:50
they’re still here
13:52
how are we getting all these goods that
13:54
we don’t produce because people in other
13:56
countries are dumb enough to give them
13:58
to us now they don’t think they’re
14:00
giving them to us they think they’re
14:01
selling them but they’re not because
14:03
we’re borrowing the money to buy it and
14:04
we’re never gonna pay it back I mean we
14:07
don’t have the capacity to pay it back
14:09
we don’t have the intention of paying it
14:10
back so the world has been conned into
14:13
supporting this this relationship so
14:15
Donald Trump has that backwards the
14:17
world loans us the money to buy their
14:20
products so in order to make America
14:23
great again and Donald Trump talks with
14:24
us all the time we’re gonna have to go
14:26
through a massive recession and the
14:31
scary part is Donald Trump is not
14:32
preparing any Americans for any of the
14:35
pain that is necessary if we’re going to
14:38
write this economic ship if we’re going
14:40
to have real production in America again
14:43
Americans have to stop spending we have
14:46
to start saving we have to start
14:49
investing in plant and equipment you
14:51
know Donald Trump wants to deliver tax
14:53
relief to the middle class how we have
14:56
20 trillion in debt the middle class is
14:58
on the hook for that we have a massive
15:00
government that the middle class has to
15:02
support the only way to deliver tax
15:04
relief is to slash government but Donald
15:07
Trump is talking about more spending on
15:09
the military more spending on
15:10
infrastructure more spending on the
15:12
border we’re not going to make any cuts
15:14
to Social Security we’re not gonna make
15:15
any cuts to Medicare and he’s gonna
15:17
replace Obamacare with Trump care what’s
15:19
that gonna cost I don’t know
15:21
yes he’s talking about some kind of cuts
15:23
to discretionary spending but they’re
15:25
gonna be tiny compared to all these
15:27
increases so none of this is possible it
15:30
seems to me
15:31
that all that all Trump is trying to do
15:33
is make the bubble bigger right he’s
15:35
saying you know we want to I want to I
15:37
want to change it right now right you
15:38
have all this quantitative easing that
15:40
has benefited the 1% benefited the rich
15:43
benefit of Wall Street maybe he wants to
15:45
target monetary policy or fiscal policy
15:47
to somehow benefit the middle class what
15:49
would actually benefit the middle class
15:51
is going to be to free up the economy
15:54
from the burden of government
15:55
unshackle the middle class from
15:57
government but in order to have this
15:59
transition we can’t go from a consumer
16:02
credit bubble economy to a real savings
16:05
base productive economy without
16:08
collapsing the asset markets stock
16:10
prices have to come down a lot real
16:12
estate prices have to come down a lot
16:14
bond prices have to come down a lot
16:16
interest rates have to go way up and
16:18
when that happens a lot of companies go
16:20
bankrupt a lot of banks fail a lot of
16:23
people lose money a lot of people lose
16:25
jobs this has to happen it should have
16:28
happened in 2001 but it didn’t it should
16:31
have happened in 2008 but it didn’t
16:33
because they kept you know blowing the
16:35
bubble up with more and more air and now
16:38
it is just so big it’s just so ignore
16:40
that it can’t possibly not pop and I
16:43
don’t think there is there’s another
16:46
bubble that the Fed has up and sleeve
16:47
and you know Donald Trump of course you
16:49
know he criticized the Fed when he was a
16:51
candidate I don’t think he’s gonna do
16:53
that as president in fact when Donald
16:54
Trump ran for office he talked about the
16:57
stock market he said it was a big fat
16:59
ugly bubble well it’s bigger fatter and
17:03
uglier now but he never mentions it as a
17:04
bubble because now it’s his bubble he
17:07
doesn’t want it to deflate he wants it
17:09
to keep going up he doesn’t want to get
17:11
blamed for all the bad things that are
17:14
about to happen and he’s I think setting
17:16
himself up for a disappointment because
17:18
he’s promising so much everything is
17:20
gonna be so great it’s not and and he is
17:23
appointing a lot of business people
17:26
smart people to the cabinet but they
17:28
have no idea what they just bit off and
17:31
I think the markets and I’ll talk more
17:33
about this tomorrow
17:35
but I think we have a real opportunity
17:36
here because this dollar bubble it is as
17:39
big as the dollar bubble that popped
17:41
when Bush took over because
17:45
when this market when the economy ends
17:47
up being a lot weaker then people
17:50
believe because the economy has been
17:52
decelerate and you know we’re far as I’m
17:54
concerned the only reason we’re not in a
17:56
recession is because the government
17:58
isn’t honest about the inflation rate
17:59
because they take the nominal GDP and
18:02
and they deflate it but a lot of people
18:05
are thinking hey if we’re gonna get this
18:07
fiscal stimulus we don’t need the Fed
18:09
anymore right that’s what’s been that’s
18:11
what helped the dollar and hurt gold
18:13
hey the feds gonna raise rates because
18:15
now they’re not the only game in town
18:17
right before we couldn’t get any fiscal
18:19
stimulus because we had gridlock but now
18:22
that we have Republicans in Congress and
18:24
we have a Republican president we’re
18:26
finally gonna get the fiscal stimulus so
18:29
now the Fed can back off and let rates
18:31
go up they got it wrong the only way we
18:34
can have so-called fiscal stimulus is if
18:37
we get an even bigger dose of monetary
18:39
stimulus to make it possible because if
18:41
the Fed is gonna be letting interest
18:43
rates go up and they’re not going to be
18:44
monetizing debt with QE and we’re gonna
18:47
take the budget deficits and increase
18:50
them dramatically to finance tax cuts
18:52
and more government spending who’s gonna
18:54
buy all those bonds the Chinese aren’t
18:57
gonna buy them they’re selling the
18:59
Japanese aren’t buying them the Russians
19:00
aren’t gonna buy them a Saudis or
19:01
everybody is selling everybody is
19:03
selling Treasuries in fact the bond
19:05
bubble the bull market that started in
19:08
1981 is pretty much over the whole world
19:10
wants out of Treasuries how are we going
19:13
to finance massive deficits in a bond
19:15
bear market where nobody wants to buy
19:17
our debt and if interest rates go up the
19:20
the depressing effect on the bubble
19:22
economy of rising rates will more than
19:25
offset the stimulus of the tax cuts I
19:27
mean just what people are gonna have to
19:29
pay an extra debt service costs are
19:31
gonna destroy whatever benefits they get
19:33
from whatever tax cuts and the tax cuts
19:36
are talking about our minimal they’re
19:37
not even as big as bush they’re nowhere
19:39
near like Reagan there are people
19:40
comparing Trump to Reagan I mean it’s
19:43
just it’s night and day I mean when
19:44
Reagan came in the debt to GDP was 30%
19:48
now it’s over a hundred percent when
19:50
Reagan came in interest rates on 30-year
19:52
bonds were 14% they had nowhere to go
19:55
but down
19:55
short-term rates were 20%
19:58
the stock market was at a p/e of seven
20:00
so we had cheap stocks we had expensive
20:05
money and they cut rates dramatically
20:07
Reagan’s rate cuts the marginal rate
20:09
went from what 70 percent down to 30 son
20:11
was a huge cut in marginal tax rates and
20:13
yes Reagan ran up the deficits but we
20:16
were able to finance him because we were
20:18
a wealthy country when Reagan was
20:20
elected we had trade surpluses in
20:21
America when Reagan was elected we were
20:24
still the world’s wealthiest creditor
20:25
nation not the world’s biggest debtor so
20:28
Trump is coming in at a time that’s why
20:30
I say it’s not morning in America it’s
20:32
midnight in America but people are as
20:34
optimistic now as they were then they
20:36
actually believed that all these
20:37
problems can be solved just because
20:40
Donald Trump is the first person to have
20:41
the courage to actually you know call
20:44
the problems out right to actually say
20:47
what a lot of Americans were thinking it
20:49
didn’t all didn’t buy all this hype and
20:50
all this propaganda about how good
20:52
things were but as the air comes out of
20:55
this bubble when the Fed has to come
20:56
back with more QE when they have to cut
20:59
rates have I gone over oh it’s kind of
21:03
yeah hello it’s counting up I must have
21:05
gone over all right so when the event
21:08
when the Fed has to has to cut rates and
21:10
they have to do QE four and I think this
21:12
next round of quantitative easing is
21:14
going to be bigger than the last three
21:16
combined and what’s gonna really
21:17
surprise people is just as the Fed is
21:20
easing the ECB is gonna be tightening
21:22
because inflation is picking up all over
21:24
the world
21:25
inflation in Europe is picking up it’s
21:28
gonna be above 2% sometime this year
21:30
they can’t have that the Bundesbank is
21:32
not gonna allow they’re gonna have to
21:34
start taping their QE they’re gonna have
21:36
to start raising interest rates so it’s
21:38
gonna be the exact opposite instead of
21:40
the world you know ECB easing and the
21:43
Fed tightening it’s gonna be the reverse
21:45
and I think the dollar is gonna fall
21:46
through the floor and eventually this is
21:49
going to end in a currency crisis
21:50
there’s no way around that that we’re
21:52
gonna have a dollar crisis and we almost
21:55
had a dollar crisis in 2008
21:58
but it was saved by the financial crisis
22:00
we’re not gonna get that lucky next time
22:02
anyway I’ll be at my booth thank you
22:06
[Applause]
22:17
you

Why Is Peter Schiff Destroying His Brand?

This has me utterly baffled. Peter Schiff is a pretty bright guy, and for a long time he’s been a vocal advocate of the sound money and libertarian economic viewpoints. That’s why I’m wondering if he’s had a stroke recently, because he’s done more to marginalize his own point of view over the past six weeks than the army of his detractors has managed in the past decade.

Near as I can tell, he started jumping the shark in December when he posted a video of himself ostensibly protesting against Wal-Mart workers protesting for higher wages. It was tongue in cheek, and not a completely outlandish point to make, but it begs the question: where does a millionaire CEO find the time to protest against minimum wage workers in a Wal-Mart parking lot? And why the hell would he?

It was all downhill from there. He appeared on Joe Rogan’s podcast on January 22 and I couldn’t believe what I was hearing. He spent three solid hours railing against government regulation of any kind and, when pressed on the environmental impact of disasters like the BP spill and the growing sentiment against fracking, his attitude was basically, “F the environment, I’m getting paid.”

But the piece de resistance was his appearance on The Daily Show last Tuesday, where he opined that people should work for anything they can get, and that the mentally retarded should be happy to get $2 an hour.

I’m frankly stunned. Schiff has always been a fringe player, but he could also always be counted on for his rationality. Now he’s either trolling, or he’s legitimately off his rocker. Even if he believes all the things he’s said recently (and I have no reason to suspect otherwise), why on Earth would he be vocalizing them? Has watching his precious gold meltdown sent him over the edge?

Bottom line: this is still a guy with a business to run and customers to serve. How could he possibly think that a Daily Show appearance (where you know you’re going to be made fun of) was a good idea? There’s nothing but downside there. And how could he think that he’d come off as anything other than pompous and petty for protesting against minimum wage workers? The guy is annihilating his own brand.

What do you guys think? Should Schiff see a shrink before he does any more damage? Or is he just trolling all of us?

For reference:

Schiff protesting WalMart workers:

Joe Rogan Experience:

Daily Show:

Peter Schiff Has a Terrible Track Record But Gets Daily Air Time from the Media

The main stars of America’s financial trash TV are broken clocks and contrarian indicators who deliver the same sales pitch day after day, week after week, year after year. That is what salesmen do after all.

Once they have been finally called out for being completely wrong for years, they fight back by changing their talking points to focus on trivial rants, such as when the Fed is going to taper or raise interest rates.

Keep in mind that these talking heads focus on this type of nonsense as a way to distract from their investment failures and lousy predictions.

 

Schiff couldn’t even get this right. The guy is a complete failure, so why does the media promote him constantly?

 

Peter Schiff has become a very frequent participant in this media dog-and-pony show. Schiff receives interviews every day, and many times multiple times per day from every segment of the Jewish media, from CNBC and FBN, to Bloomberg.

He also gets quoted or discussed in in the Wall Street Journal, MarketWatch, Forbes, Fortune, The Financial Times, you name it.

Accordingly, Peter Schiff could be considered the male version of a “financial Kim Kardashian.”

For anyone out there who isn’t too bright, let me make sure you get the point. That was by no means a compliment. 

Think about it. Schiff runs a brokerage firm, Euro Pacific Capital.

So naturally one would expect him to discuss topics like compelling investment sectors and stocks, valuations, earnings, asset allocation strategies and so forth; you know, things competent financial professionals talk about. The same kinds of things an audience wants to hear about.

Even though he is really only a stock broker and not an analyst, he calls himself Euro Pacific Capital’s chief global strategist. But this too is only a superficial designation.

In my professional view, Schiff is really a marketing strategist because that is how he spends the majority of his time. I state this with complete confidence because I have been noting Schiff’s schedule for several years.

Regardless, surely Schiff has people to do “research” for him, letting him know what is going on, right?

Yet, he is constantly talking about trivial topics, like whether the Fed will raise rates over and over instead of talking about relevant issues.

Why might that be?

Maybe, his research results are complete dog shit.

Once you carefully examine Schiff’s track record as well as his record of investment performance and you will see why he has been focusing on trivial events instead of discussing investment and economic forecasts.