December 22, 2010
– Comments (5)
Are YOU Peter Schiff?
If I was Peter Schiff, I'd be writing actual blogs here instead of just reposting his stuff.
what? i thought you in fact were/was Him
Nope, just some shlub who enjoys Peter's stuff.
"burden of government" great point. It is a burden currently in the form of interventions, regulation, penalizing producers, rewarding deadweight, and displacing capital from productive uses. Whether we suffer the cost of it now with higher taxes (which we aren't), or later in other ways (inflation, default) we still suffer it. This confirms my contention that DC does not have a revenue problem, it has a spending problem. It is the spending (the cause of the burden) that must be cut, the revenue will come, now as taxes, later as inflation or both.
And he's right about gold. Not the precise numbers, but the overall scenario, the shape of what's to come. Gold is nowhere near a bubble.
But, I'd add that he's being optimistic. We don't know if the fiat dollar will die a complete death (a crackup-boom) or if only its "fiat-ness" will die. He seems to be assuming the latter. He thinks it will rise, hit a speculative spike and overshoot, then come back down to a reasonable level (about double current levels). You'd want to sell at the top of the spike, ideally, but no one hits exact tops (or bottoms), so you'd want to sell bit-by-bit during the spike. I'd modify that with sell *some* during the spike, but not all, as we don't know the shape for sure: a spike or a crackup. It might NOT come back down. The dollar might die, so don't sell all your gold for dollars as it spikes. If the spike never ends, the dollar goes to zero (and price to infinity), and you'll be sad to be wheeling barrows of no-longer-worth-anything former cash to the store where it will be rejected.
I'm hoping only its "fiat-ness" will die. I.e., I hope some day we come to our senses before the complete dollar death and re-peg it to gold. Make it convertible (back and forth) to and from gold. Give it a solid backing. It will have to be at a much higher level than currently, because we have printed so many of them, but at least they won't be worthless. The shape will be a spike, a partial decline, and a leveling off at a higher level.
But what's that coming, new, "higher level"? Schiff says about $2500/oz, I say he's an optimist. If all fractional-reserve-created fraudulent checkbook money (the electronic balance in your account at the bank) disappears (perhaps forcibly converted into shares of ownership of the bank), then his level may be about right. I'm not certain what the count of physically printed dollars is (especially after the botched printing recently of $1.2T), but I think divided by Fort Knox's reported bullion level it may come out to around Schiff's number. If all such electronic 'money' is backed by gold, too (and no more is electronically printed--ha, good one, like what's going to prevent them from pressing more buttons), the number is more like $40,000/oz.