This is the guy who predicted the Housing bubble, the financial meltdown, and now he’s saying this.
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Three Government Reports Point to Fiscal Doomsday.
This guy is crazy! Don’t listen to him! lalalalalala
Now Predicts???
He along with a lot of other smart people have been predicting it for years and they are right. If you read Schiff’s books and listen to his past interviews. You learn his prediction about the demise of the dollar would not be brought about by an economic crisis such as the housing market crash but the governments predictable “Print like hell” response to that crisis.
Oh and fark keynesianism
It’s only been predicted by thousands of bloggers. Schiff is like that Celente asshole.
Then I would say thousands of bloggers have it right.
Wow, that’s a hard one to predict. I’d like to predict right now that the Republican assholes that made this mess, and now have all the answers to fixing it, will be re-elected again real soon.
#2 BRM,
“This guy is crazy! Don’t listen to him! lalalalalala”
That’s what everyone said in before the stock market crash…turns out he was right.
There were a few things he was wrong about…BUT… Since then, he’s been vindicated by the market, because his investments have performed much better than everyone claiming he’s wrong.
You’d be a fool to bet against him. Of course, you’d also be a fool if you didn’t listen to people like Micheal Shedlock (aka “mish”).
#6, Grandpa,
For the 1 billionth motherfucking fucking god damn motherfucking time…IT’S NOT the “REPUBLICANS” or the “DEMOCRATS” who caused this crisis. It’s both. Both parties have been driving this country into the abyss for a LONG time now.
MORE IMPORTANTLY, it was the federal reserve who cause the vast majority of our economic woes, the government only served to amplify these problems.
Less here than meets the eye. His assertion that because oil price is denominated in dollars that their oil is our oil is bizarre. The price of oil can be figured versus any other currency or commodity without difficulty. People with euros or yen can buy oil without difficulty. Price oil in euros and people with dollars will still be able to buy oil.
Venezuela doesn’t sell their oil in dollars and yet Valero gas stations still exist. They also sell their gas at about the same price as everywhere else.
China holds lots of dollars, or more exactly T-Bills. China is holding dollars because we have a trade deficit with them. American consumers are indebted so we can’t buy as much stuff from China. Consequently China’s dollar holdings will be reduced.
Schiff predicts runaway inflation on all goods. Does anyone really think that house prices are going back to the moon? Most daily necessities, clothes, and gadgets are getting cheaper(seems like to me anyway).
Japan’s lost two decades are instructive. A huge run up in real estate caused by bad loans led to a credit crunch and overwhelming government spending. Price levels fell or held steady on most things. The Yen was part of a brisk carry trade caused by artificially low interest rates. Pretty similar.
A dollar crisis is certainly possible, but currency exchange works relatively well. I still think that “exotic” financial instruments are a much more likely cause of crisis. The underlying regulatory environment hasn’t changed enough for my liking.
Peter Schiff is awesome…. I’m surprised you haven’t heard his videos and read his other stuff… he predicted the financial collapse and is the upcoming collapse of the dollar.
#8, chris,
You make many very valid points.
So, I’m not going to necessarily argue against them. Many of them are very valid and I would only be disagreeing with details in most cases.
In fact, many of the points you make have been made by “Mish” one of the most well known economic bloggers on the internet. He subscribes to the same school of economic thought as Peter Schiff; the “Austrian school of economics”.
Mish also endorsed Peter Schiff in his run for the senate, despite their opposing views on the dollar. Schiff thinks it will crash, and Mish doesn’t. Of course, mish is a SHORT TERM investor. Peter is a LONG TERM investor. So naturally If you start hearing Mish talking about a collapsing dollar…uh-oh…head for the hills and buy some gold.
The key to know how to solve the puzzle is…to know, What is going to happen to the dollar?
There are many inflationary and deflationary pressures on the dollar.
The deflationary pressures are VERY obvious to all Americans. The inflationary pressures are NOT directly obvious, mainly because no one observes them directly. The main inflationary factors are, increase in money supply, a continued policy of easy money, and the biggest most elusive threat of all…that is…the dollar losing it’s status as the reserve currency.
China and many other big hitters appear to be positioning themselves to get out of the dollar. If that happens, all bets are off.
I propose we do the following to ensure we have sound money…
1. Audit the fed.
2. Repeal all legal tender laws.
3. Allow competing money and currencies.
4. ????????
5. Profit.
please forgive any spelling or grammatical mistakes, I’m now 3 beers deep and tired as crap.
Good night.
Guess he’s short the USD index.
Good to hear, so am I.
The dollar is the unit of trade simply because it is still the strongest currency out there. It has diminished a little in strength while most other major currencies have strengthened considerable.
Libertarians don’t grasp the idea that a currency is as strong as the country behind it. The EU and China have grown so much over the past 20 years. But as a standard of value, items and commodities are quoted in US dollars.
Regardless of what you are buying, if you want to buy it in Euros or Canadian dollars, someone will sell it at the same price as if you paid in US dollars. The old saying still applies, “If the bank takes it, I’ll take it”.
So he’s suggesting that we will have an inflationary spiral caused by international trade and reduction in dollar value vs other currencies.
Except that if we don’t BUY those items they are trying to sell us, there is no inflation — which leads to failures in the external countries as finished goods pile up for lack of demand.
Which is where we are RIGHT NOW. The US is in a major pullback caused by the three or so bubbles we’ve had and the commensurate reduction in viable wealth. Consumers have to trust that they have jobs, can pay their bills, and need or want the items offered to them. Those three points are in heavy duty minus territory.
The commodity bubble from last year managed to siphon off any real inflation, since it managed to wipe out those investors who were pushing the bubble out, leaving real companies and governments to actually buy the materials. China also stopped buying quite a lot over the past year as a few of their big ticket projects completed or had enough materials to continue.
At the moment the huge dumping of dollars to shore up the banking industry (which is all the fed and government is doing) hasn’t filtered into the economy because those people who WERE using the cash to “invest” have been burned enough to not jump into the shark waters yet.
I would start to worry if commodities in general started back up in a strong way similar to how oil jumped ridiculously last year. THAT would tell me that the asshat derivative traders are back in the market and that the banking industry would be setting up for another major death spiral.
There is no major demand out there for imported goods, which is reducing demand in the manufacturing countries, which is, in turn, reducing demand for commodities. If anything, I’d say we’re in for a flat to slightly lower dollar for a while and then a pickup in a few months if there are no other major economic events on the downside. If there are any more major industry buyoffs then the dollar will plummet.
However, that reduced demand will likely percolate into the manufacturing and resource countries, leading to industry slowdowns and potential buyoffs on their end, which would shore up the dollar temporarily.
well heck, the dollar was stillborn.
it was planned to die when *it’s value*
reaches 0. i think if you look at the inflation calculator, it’s at 3¢ or 4¢
now.
…and since time is running at factor of 20x..good chance it’ll be dead no later than February, 2010. -unless someone drags it out further..
but given that oct 15th is the IRS extension deadline for 1000’s of small businesses..we may see a crash
on the 16th or so..as 1000’s close up shop due to the “2009 recovery that wasn’t”
-to bad i didn’t get the hang of this
stuff years ago. I’d probably had lost
all my hair,had several ulcers and been a corrupt CEO by now.. :s
-s
Yeah, no shit Sherlock!
#7:
Sarcasm really doesn’t translate well over the internet.
I love Schiff!
Peter Schiff is good at simplifying a very complex issue. Regardless, it does not take much to understand that decades with trade deficit and a printing press gone mad has to hurt the USD. US economic politics since Nixon’s uncoupling of the USD from gold is where it all started. After that every president has contributed its fair share to undermine the USD, though the Clinton administration very likely was the one to cause most harm with its new banking policies and subprime ‘dictates’.
Brace for impact!
Is his modem blinking out the word “Torture” ind Morris code?
and the unknowns are really just limited to timing or rank order.
Don’t we all—ALL—- already know that if you have long running trade deficits, and long running spending deficits, that eventually the currency will devalue?
Yes, we ALL know that.
You can’t get in the way of people’s greed, and you can’t stop a government from corruption. A few hedge funds called the timing on the financial collapse and made b/millions. I wonder if there are longer term players who are riding these predictable, but still variable, financial curves for the billions to be made?
There is no mystery, just those profiting from misery.
BTW==I’m looking forward to Obermann’s Hour Long Special Commentary of Healthcare Policy and Death. I think Olbermann is GREAT–so like all my idols, I look for the clay feet, the false comment/facts. I invite the conservatives and LIEBERTARIANS to attend to this special and add to the list of errors he makes. Not in the “conclusions” he reaches==but rather the FACTS he uses to get there.
#19 Personal attacks show deeper understanding of the issue.
Venezuela doesn’t hold many dollars. Mostly gold and euros. It also does barter deals, non dollar denominated, with neighboring countries with the stated purpose of crashing the dollar. And it has been doing this since 2005.
Point is currency is converted effortlessly into whatever type the buyer desires.
A currency crisis is possible, but it will have to do with a revulsion at US debt levels. It won’t have to do with tinpot oilmen creating a petrodollar.
Whistling in the dark…
Pessimists have it easy. If they’re correct, they’re instant oracles. If they’re wrong, everyone is so happy. The greenback has been underestimated for over a hundred years. It will stay at centre stage for as long as it is the most easily and affordable way to exchange with Americans. The great US wheat belt is the breadbasket of the world, US technology companies still control a vast percentage of the world’s consumer and industrial equipment markets, the petro-chemical and agriculture industries are run entirely on US manufactured machinery. Wall Street is where all the world’s money eventually goes (including my New Zealand pension). The greenback is good and strong.
#24–sargasso==you are taking a position directly contrary to the one I posted at #20.
I think the most egressious thing you have said is: “US technology companies still control a vast percentage of the world’s consumer and industrial equipment markets,”===so, I ask you to define: “vast percentage.” You act as if speaking from 1960 before the rise of the Rim of Fire?
About as equally bad but more subject to smoke and mirrors is: “The greenback is good and strong.” /// Now, all currency is “exchangeable” as are all commodities, but that doesn’t take the constant fall of the US dollar from ((again)) the 1960’s a strong currency.
Please address the USA’s strength in consumer goods before addressing the rest? I’ve had enough smoke and mirrors.
#22 Chris
Venezuela is just a drop in bucket. Look at as a simple matter of math. Oil alone accounts for $2.3 billion per day in physical trades worldwide, or conservatively about $800 billion per year. (Let’s not even talk other energy commodities or futures).
The USD is reserve currency for oil commerce currently which means that people must buy in USD. However, the sellers are now at massive forex risk and they don’t have the option anymore (bad pun) of traditional hedging strategies due a lack liquidity in the markets. Bad news, switch currencies or go to gold. This means lots of selling of USD on a daily basis and buying other currencies or gold.
This isn’t the only problem with the USD but is part of a dog pile. If it were “normal” times the raising interest rates 1/4 or 1/2 would reverse the trend. The Oz interest rate increase was a signal to everyone that they are breaking with the US policy of artificially low interest rates. Others will follow – and eventually the US will have to follow, not lead. This has been 40 years in coming so it’ll take more than a couple of months to correct.
In a nutshell the US as a whole is grossly overvalued, and the correction is underway. It’s going to hurt everyone, but the US is going to hurt the worst. The rest of the world is taking their losses and getting on with their lives. I suspect that Obama will eventually have to do the right thing and everyone will hate him for it.
Unless the Daily News Egypt is plain out lying, Iran is switching over to Euros. I found an article in the Daily News Egypt when I was there on a recent business trip.
This is my answer to Peter Schiff on youtube:
The truth is we are in unchartered waters and every player is scared shitless. We have a global economy, we are in a financial crises with no industrial base left. Every nation is still looking out for their own asses, not realizing the domino effect will come around to them again. Take your money and book a first class around the world cruise. When the ship comes back to New York, and you’re broke, weigh your pockets down and jump off the stern. It will be far less painful than living through the next ten years. And yes the Democrats will lose a majority next year, and not a damn thing will be done, which might not be so bad.
There are plenty of crack-brained theories out there but none are needed. It’s obvious our economy has collapsed our dollars are worthless and people will soon be hungry all over America.
My question is: Why can’t the supposed high powered analysts come up with suggestions for how to get through it and how to make it better.
My belief is that economy is VooDoo that nobody understands but everybody tries to manipulate and control. This causes our boom and bust cycles that are amplified by crooked bankers and elected officials.
My opinion is the “experts” don’t know what they are talking about or the economy wouldn’t have collapsed.
The only way to get America’s finances fully back on track is to have a strong dollar. Shrub and Co. robbed the U.S. treasury and continue to benefit from a weak dollar. Aside from prosecution for gross negligence on that score for purposefully making the dollar so weak, there’s little we can do about that now. (Of course, there’s plenty else to prosecute him on and other Shrub admin peoples.)
A weak dollar is only useful for a while and only if you make it strong again. It is very, very weak now and needs to be made strong in a hurry. And yes, the Sauds would love to see our currency fail.
Pedro, I worry for you. Really. Cuba and Venezuela just don’t have “shills” all over.
#27
Sorry, I know Venezuela is not the issue but pedro seems pressed about it. Responding there.
The oil/currency issue is sort of separate from the currency/debt issue. I think you could price oil in anything and not materially change the cost to anybody. Doing a currency trade prior to buying oil or a currency trade after selling oil is done all the time. Schiff suggests that by pricing oil in dollars the US has somehow appropriated middle eastern oil. That’s not true. We appropriate middle eastern oil by invasion and power politics.
Now for currency/debt: The next few years are really going to suck if you have a lot of debt. My opinion on the endgame of this crisis is for banks to admit that many of their debts are just not going to be repaid. Until that happens we’ll just grind along.
A lower dollar would help the US make products with our industries and sell those products overseas. Could be good. A higher dollar is good if you have a bunch of dollars. We might even have a lower dollar and lower price levels(for many goods at least).
As long as you identify inflation or deflation and respond intelligently to them I don’t see it as a huge problem.
Hyperinflation or rapid deflation are different beasts. I just don’t see all the other countries coming together and conspiring to push the US into extreme inflation or deflation.
We are too valuable a market AND we have too many weapons.
I’m thinking less back alley beatdown and more ugly looks/snide comments at the next G-20.
I’m banking on massive dollar deflation. It would be nice again to be able to purchase a meal at a resturant again for $2.00