February 24, 2009
– Comments (10)
FYI- Not sure if this was posted before:
Classic Schiff here:
If you notice, the great financial minds like Ben Graham and Warren Buffett do not try to predict the markets, because they realize that it is almost impossible to truly predict what the market will do. Rather, they invest based on current valuations (and basic predictions about the future on a firm-to-firm basis).
On the other hand, you have clowns like Peter Schiff. Someone who thinks he knows where the world economy is headed. The phrase A broken clock is right twice a day really does apply here. He's just a talking pundit looking for more media time to promote Europacific and gather up more clients. Not to mention he hypes the industries he's currently invested in, and with all the attention he's been getting lately, I'm sure things are going his way.
Have you ever seen Buffett get on CNBC and start telling people that the economy is going to shit and that you should buy stocks X, Y, and Z? No.
That's the difference between someone intelligent (Buffett) and a clown (Schiff).
"...he hypes the industries he's currently invested in..."
And that surprises you? Why would someone who invests in the market hype stuff that they didn't invest in?
We had a housing bubble that started prior to 2002. He continues to mistate that we're "printing money". We're deficit spending, yes, but there will be future taxes to bring it back in after the economy recovers. We're not printing to pay back debts.
Doing nothing would not have prevented the depression. Sometimes people behave irrationally in markets. Those of us who trade daily understand that there are points in a day when people are "overselling/overbuying". A long term overbuying period is known as a bubble. Bubbles can correct themselves eventually, but just like a daily trend, they can lead to overselling. A long period (several years) of overselling would permenently destroy the well-being of the world economy, would lead to mass poverty, starvation, violence, political fanaticism, etc. Government action is required. The depression was caused by a bank panic, overselling, mass layoffs in response, etc., not government intervention.
Schiff is more right than wrong. I agree that no one can predict the direction of the markets, but that is not what he has been doing. He has been saying for years now, correctly, that the government has screwed this situation up completely, and we would be better off (not perfect or without pain) letting the situation correct itself through existing market action.
I'm sure Schiff's clients do not think he is a clown, as they still have most of their money, as opposed to just about everybody else. As for the idea that "future taxes will bring" money back in to offset this deficit spending, you cannot seriously believe this. Why haven't we done it for the last thirty years then, since we started running deficits? What about the unfunded liabilities of Social Security and Medicare (currently estimated at over 50 trillion dallars) that continue to increase every day?
The reality is that these debts will never be paid off, and cannot be paid off, in real terms. They will be legislated away or inflated away, along with our standard of living. The old system is ending. All the attempts to revive it will not and should not succeed. We need to start over again.
There have been depressions and panics throughout American economic history. Until the creation of the Federal Reserve, there was never a Great Depression. The depressions were brief and very painful. Then they were over. This one will go on and on and on, as long as we keep the old system alive. Look at Japan - 19 years and counting. Why will we be any different?
lol, I love when some Fool with a Bennie hat and (22.06) replies to me that the people I like are wrong, and the people he likes are right? The fact that I have 13600 CAP points and I am #1 in points here in Fooldom, he ignores. (abitarePERFECT #11, clean me, was Top Fool in Nov 08)
Schiff, IMO is a national hero for protecting millions from from avoiding debt slavery ie...home ownership in the bubble and to stay out of the stock bubble.
I also love when some Fool tries to regurgitate some heavily promoted lie to me, with out the brains or respect to cross check the statement.
Ben Graham lost 70% of his money during the Great Depression. That is why he had the time to write and promote his book. Your CAPS performance reflects your leader's wisdom.
What is happening in todays market, even Buffet has not seen and is not prepared for. Don't believe me? Take a look at Berkshire Hathaway stock. Or take a look at Buffets holdings. There is a massive credit contraction plus we have reached "peak credit", imo. Civil disobedience and war are likely to come next, unless there is a major "sea change" or leadership change.
FYI - Another good video here:
You need to re-study your history, before you start babbling about the Great Depression.
The Great Depression was caused by the private cartel the FED creating to much credit in the "roaring 20s". In 1928, the private cartel started to tighten. We then had a crash.
Hoover and FDR took a recession and credit contraction and created the Great Depression by intervening. FDR conficated pesonel gold holdings in 1933 and destroyed the savings and trust of the American citizens by moving the US into a fiat currency.
Maybe this will help: This propaganda film attempts to explain how inflation can bring about happy days.The title of the video is now changed to vintage pro-inflation propaganda. It has been brought to my attention that Roosevelt's policy was in no part influenced by John Maynard Keynes' theory
FYi- FDR speaking about banking
LOVE that last Schiff clip.
When someone criticizes/mocks Graham, Buffett, and the rest of his followers, you know he is truly a fool.
I have nothing more to say. Enjoy your ignorance.
Unfortunately the 2009 Schiff video appears to have been taken down. I normally agree with a good chunk of the stuff you post on here, but I find myself in disagreement with you on inflation (but perhaps your point is simply not clear to me).
Inflation is necessary for a vibrant economy. People are not going to be willing to invest their capital into companies if the value of the nation's currency is rising. Why invest if you know your capital will be destroyed by deflation, while you'll "earn a return" by sitting around and doing nothing? Simply put, no economy is going to prosper if money acts as a "store of value" or even worse, a "creator of value".
Hence, there's little question that inflation is necessary. The only real question is --- how much? I'd argue that 4-8% is an ideal range. 12%+ starts to get into the iffy territory. It needs to be high enough to encourage a good deal of investment, but low enough so that it does not create high levels of uncertainty.
Quite honestly, I'm not real happy about the response of the Feds to this crisis. I didn't like TARP (I don't see any reason taxpayers should be forced to take on distressed assets) and I didn't like the "infrastructure bill" (mostly because it was full of pork and lobbyist handouts and very little in the way of productive infrastructure building). All the same, if the private sector is unwilling to invest capital into the market due to a deflationary spiral, are we supposed to just sit around and allow the situation to get worse and worse?
There's no doubt to me that dumb government action can exacerbate a crisis, just like dumb management at a corporation can lead to its demise, but not all government action is "dumb".
I'd argue that if it weren't for the steps taken by FDR and the Democratic Congress of '33 and '34, we never would've experienced the post-war boom to begin with. The SEC Acts of '33 and '34 created a highly visible reporting system for public companies that made America the safest country in the world to invest in. FDR's infrastructure building moves (including the TVA) helped revive parts of the rural South and create the manufacturing base that was needed to win the Second World War. Yeah --- FDR has some miscues, but they were minor in comparison. Moreover, it's a myth that FDR "prolonged the Depression" --- fear, uncertainty, and major world instability prolonged the Depression (Japan's war in Asia, Hitler's moves in Europe, fascist governments in Italy and Spain, etc). Markets never thrive in those environments.
I hear people blame Hoover for "government intervention", but I've never heard anyone cite which particular policies of his helped worsen the crisis. IMO, Hoover did very little to combat the Great Depression in the first 42 months of the crisis. And the things he did do were boneheaded like --- supporting Smoot-Hawley. In fact, Smoot-Hawley in and of itself was enough to drag on the Depression despite any other measures.
I don't disagree about the Federal reserve helping to create the Depression, btw.
Wow: we need inflation to get people to invest? If the currency were stable, people would be snapping up cash-rich, dividend-paying stocks for their cash flow, not panicking and trying to time a jump into gold and silver. As it is, people are avoiding gold and silver miners for the most part, and shunning gold and silver futures like the plague, and buying tangible gold and silver on eBay at 10-20% more than spot. That's because the threat of future inflation is driving people out of stocks and other investments that have underperformed inflation for some time now. Of course, you have the treasury bubble, but investors aren't always perfect at predicting the future, as our disagreements have demonstrated axiomatically.
Also, bank guarantees, stimulus spending, and attempts at regulation were rampant in Hoover's administration, though his paled in comparison with FDR's. (But then again, fewer people starved 1929-32 than 1933-1940.)
I love how the one anti-freedom action that people still oppose their government taking against them is Smoot-Hawley. That was so bad, but we do need our government to buy and destroy crops and livestock, and seize our gold, and inflate our currency.