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The Psychology of Anti-Schiff-ism

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February 03, 2011 – Comments (17)

I've been thinking about this in brevity over the last several months. There is a definitely bizarre relationship between Peter Schiff and ideological opponents.  It's vastly different from the relationship you'll find between those same opponents and the work of other gold investors and libertarians.

I don't get it. And when I don't get it, I think about it. So I'm going to throw out a few ideas and maybe none of them accurately tell the whole story. But I'm sure I'll be put straight in the comment section.

Idea #1 - The guy is just plain annoying

It could simply be a personality trait.  I can't sit and listen to Schiff for more than 15 minutes myself, because after a while he wears on you. There's just something about him. I'm a podcast junkie. I listen to them to and from work, during workouts, etc.  I used to have Schiff's Wall Street Unspun on my subscription list, but after a while I just couldn't take him anymore. He's insightful, but sometimes just annoying. I"d much rather listen to Gold Seek Radio, which is more informative and interesting.

But being annoying doesn't engender the level of animosity I see on CAPS, reddit, pragcap, etc. So there's more to it.

Idea #2 - His performance doesn't match his fame

It's not fair, since Schiff is not legally allowed to make investment decisions for his clients, but his investment funds do not have a track record that matches his fame. Mish Shedlock tried to make a name for himself by bagging on Schiff's performance. Mish's attack was both uninformed and hypocritical, since his deflationary theories never panned out either.  Schiff took a hit, fairly, for predicting hyperinflation immediately after the bailouts.  This upset even supporters in the  Austrian School, such William Anderson who writes the excellent Krugman-In-Wonderland blog.  Perhaps Schiff's fame had gotten too his head.

That still doesn't explain it, but I assume it plays a part.  Schiff's subsequent admission that his timing was off, that he didn't see the brief dollar rally coming in late 2008-early 2009, was more humility than I see from dozens of market pundits.  Yet, ask a Schiff-hater about Schiff's honesty and it's dismissed as another charlatan's tactic. There's more to it...

Idea #3 - Perhaps it's just the price of fame

We all know why Schiff is famous. He called the housing bust. On TV. While getting laughed at by pro-Fed schills on vairous network programs. It's on YouTube. It's a famous clip. It helped increase interest in precious metals, monetary policy, and libertarianism.  Of course, he's not the only one. Several Austrian School economists have documented papers and videos in which they predict the housing bubble and bust with remarkable accuracy. See here.

So perhaps it's the fame itself. Schiff is on TV every 15 minutes, it seems.  Jim Cramer suffers a similar fate in that no matter what he says or does at this point, certain people are always going to view him in a particular way. A Cramer-hater isn't going to change his mind if Jim saves Christmas. Maybe that's Schiff's fate as well. People are envious of fame. That's nothing new.

Again, I think this is part of it, but not the whole story.

Idea #4 - Attacking the low hanging fruit is easy

One of the best pieces of advice I ever received went like this: "Nothing in life worth having comes easy. It was easy, everyone would have it."

That's true even in the intellectual arena. Schiff is an easy target for those that want to discredit libertarian ideas, Austrian School economics, and/or gold investors. He's not going to overwhelm you with discussions on economic methodology. You won't hear the words "intertemporal structure of intermediate goods" during a CNBC interview. I'm certain that Schiff grasps praxeological concepts and catallactics, but it's not something he's going to talk or write about. He keeps it simple.

So it's easy to attack Schiff. He's not the equal of David Gordon or Joe Salerno on economics. He's not the Tom Woods or Robert Murphy of argumentation. He probably can't debate top economic scholars on their terms like they do. His adversaries are also the low hanging fruit: the Kudlows and Steins.

This sets up the "gotcha!" moment. It occurs when a person is peculiarly fixated in opposition to, oh let's call them gold-bugs... They attack Schiff, feel as though they vanquished him (usually through ad hominem), and then remark on the entire culture of libertarianism as though they've pulled back the curtain and exposed the Wizard of Oz.

If only life was so easy. But that's the way the of the world. People want easy answers and if knocking Schiff and "gold-bugs" down every chance you get provides you with comfort, don't let me stand in your way.

But if you really grasped Austrian School economic theories, libertarian philosophy, or gold-bug monetary ideas, attacking Peter Schiff wouldn't even be on your radar. He'd be a petty nuisance and little else. It would be the foundations that you would be after. What are the core conclusions? How did they arrive at those conclusions? In what ways are they ambiguous or incorrect in their reasoning?

Add your own idea.

It's a real phenomenon, and I don't have all the answers.  I open this up to comments. Here's a template you can use to flame me:

Peter Schiff is {perjorative or ad hominem} because {reason unrelated to Austrian School economic theory}. {other unmentioned school of thought or personal belief} is way better than his. {unrelated supporting or -denigrating comment, preferably with poor spelling and/or chat-acceptable spelling}

(Hat tip to Football Outsiders for the template)

David in Qatar

17 Comments – Post Your Own

#1) On February 03, 2011 at 5:34 PM, Valyooo (99.47) wrote:

I like his books and he is insightful, but he says the same things over and over and over and over and over and over and over.  Plus, he is ALWAYS predicting the end of the world as we know it...so the saying "a broken clock is right twice a day", though overused, kind of applies to him.  He is right, but he needs to be more accurate with his timeframes.

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#2) On February 03, 2011 at 5:43 PM, kdakota630 (29.76) wrote:

Peter Schiff smells funny.

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#3) On February 03, 2011 at 5:50 PM, binve (< 20) wrote:

Hey David,

>>Peter Schiff is {perjorative or ad hominem} because {reason unrelated to Austrian School economic theory}. {other unmentioned school of thought or personal belief} is way better than his. {unrelated supporting or -denigrating comment, preferably with poor spelling and/or chat-acceptable spelling}

That is the funniest thing I have read all day!  Thanks :)

kdakota,

He probably eats a lot of egg salad :)

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#4) On February 03, 2011 at 6:23 PM, whereaminow (< 20) wrote:

Valyooo,

You're absolutely right. And that's the price he pays for choosing the format he did. He wanted to be a TV sound bite and that's what he gets.

kdakota630,

I miss his musk.... I miss his scent.... When this is all over I think we should get an apartment together.

binve,

Can't take credit. That one is borrowed and modified from Aaron Schatz at www.footballoutsiders.com.  Great site for serious football fans, btw.

David in Qatar

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#5) On February 03, 2011 at 6:37 PM, AvianFlu (21.31) wrote:

I'll go for idea #1. You'll notice that Jim Rogers, who says similar things is rarely attacked. That is because he is such a gentleman. You just have to like the guy.

I had never heard of Schiff. Or Rogers. Or Austrian school. That is, until I started reading about them on Motley Fool. The arguments made a lot of sense to me. I restructured my investments about 2 years ago and incorporated their ideas. Not only is my caps rating way higher, but I have also made a GREAT improvement in my real life holdings. So you won't hear me bad mouthing Schiff, even though he is not Mr. Humble.

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#6) On February 03, 2011 at 8:23 PM, awallejr (77.67) wrote:

Oh how can I pass this thread up ;p 

I just find him disingeuous, as with Jim Cramer.  I will give him credit for his housing bubble call, but when it comes to  investing it really is a "what have you done for me lately" world. I kind of railed against him enough in other threads and would just be repetitive here.  And as for Cramer, Jon Stewart's video says it better than I ever could.

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#7) On February 03, 2011 at 8:25 PM, awallejr (77.67) wrote:

"disingenuous" ;p

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#8) On February 03, 2011 at 8:38 PM, awallejr (77.67) wrote:

Wish they would put in a "you have five minutes to edit a post" feature.  I should be specific since disingenuous has several meanings.  I mean the calculating one.  So in hindsight it could also be your #3 with a little #1 and #2 thrown in.  With Cramer it is pure calculating, he wants you to buy his books and newsletters.

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#9) On February 03, 2011 at 11:51 PM, motleyanimal (51.77) wrote:

 OK. I'll give this a try.

 

Peter Schiff is {a self-inflatable fart bag} because {Look at what he writes about himself on his website:  Peter Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.} {Gotta love that modesty! Except that we are not in a bear market anymore. Although he called real estate correctly in the years leading up to the crash, along with many other people, how come his clients still lost 40%-70% in 2008?} Bill Gross' commentary at PIMCO is way better than his. Read any of his articles from 2007-2008 and you will find he was fully aware of what was happening.  And at least he figured out how to recover and made tons of money after the crash for his clients. Duh???

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#10) On February 04, 2011 at 1:57 AM, checklist34 (99.73) wrote:

Because in the few videos I've seen of him, usually in blogs here on the CAPs game, he frequently makes flatly incorrect statements or highly debatable ones presented as fact. The ultimate sin for a guy wanting to be a great guru.

 

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#11) On February 04, 2011 at 8:20 AM, ChrisGraley (29.74) wrote:

I didn't like him because I thought his videos were supposed to be about Austrian cooking. Now that I know they are supposed to be about Austrian economics, they make more sense.

;-)

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#12) On February 04, 2011 at 9:45 AM, FreeMarkets (92.43) wrote:

My favorite scene from the Simpsons fully explains why I hate Jim Cramer:

Milhouse: This really sucks, Bart. I'm grounded and spend all day listening to my dad yell at Mad Money with Jim Cramer.
Kirk: You said tech stocks were bulletproof!

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#13) On February 04, 2011 at 1:26 PM, leohaas (31.21) wrote:

The four reasons you mention cover it. Why would there need to be more than that?

He says controversial things in a controversial way. He is the Sarah Palin of his field. OK, surely quite a bit more intelligent. But economics is politics, you know, more than it is science. So if you go out on a limb like Schiff does in his field, expect the kind of reaction you get to politicians who do the same.

Here is my take: he made an excellent call (the housing boom-and-bust), but followed up with his hyperinflation call (suggesting he fails to understand how money is created in a fractional-reserve banking system). Doesn't that bother you?

 

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#14) On February 04, 2011 at 4:27 PM, russiangambit (29.40) wrote:

I actually like him for standing up for whatever he is standing up for . However, I suspect he on purpose dumbs down his points to be more appealing to the general public and he mkes statements about "money printing" which are significantly simplify and distort the reality of the process to put it mildly. This type of personality is very familiar to me from my university days - smart, overbearing, obnoxious, funny and rude. I get along with this kind of people just fine. I concentrate on the "smart" part.

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#15) On February 04, 2011 at 5:13 PM, kdakota630 (29.76) wrote:

russiangambit

"I suspect he on purpose dumbs down his points to be more appealing to the general public..."

That's one of the reasons I like him so much.

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#16) On February 04, 2011 at 11:23 PM, AvianFlu (21.31) wrote:

In general, Schiff's analysis is sound. However, he makes two significant errors.

One: He fails to appreciate that it can take a long unpredictable time for an accurate prediction to play out. The Titanic didn't sink in 5 minutes.

Two: He fails to adequately appreciate that nothing goes down or up in a straight line. The long term trend for the dollar may be down, but there will be periodic rallies along the way.

I can relate. I sold all my tech and internet stocks about a year before the bust. They continued to rise. I felt like an idiot. Later I felt pretty good.

One of my rules of investing that has helped me avoid catastrophe is this: Never rely on some event occurring by a certain date...because it probably won't happen.

 Yes, Schiff may be an annoying jerk, but that does not refute the soundness of his arguments. Of course, they may still be unsound, but his opponents will need to disprove them using facts and sound analysis...not character attacks.

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#17) On February 05, 2011 at 9:26 AM, whereaminow (< 20) wrote:

Here is my take: he made an excellent call (the housing boom-and-bust), but followed up with his hyperinflation call (suggesting he fails to understand how money is created in a fractional-reserve banking system). Doesn't that bother you?

He understands it just fine. Not a single person on the planet knwos what the central planners are going to do besides the central planners themselves. Even the "modern monetary experts" over at PragCap are wrong far more often than they are right.

They missed the commodity price rises. They said we are headed for deflation (which NEVER HAPPENED). They claimed that the housing market would rebound.

Schiff's one bad call does not outweigh his many, many excellent calls, including his call that the US would be right where it is right now. Housing and unemployment still ugly in 2011!!!!!  2011!!!!! 

Jesus people, look at the calender. It's 2011!!! and we still haven't had a positiive housing month or a unemployment under 9%.

LOL, what more evidence do you need?

Anyway, yeah, the so-called "we know how modern money works" crowd has more bad calls than anyone.

David in Qatar

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