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In Defense Of Peter Schiff
Submitted by James E. Miller via Mises Canada,
The financial television channel CNBC has hit hard times. Nielsen ratings show the network’s viewership is at a 21 year low. This is a far cry from two decades ago. The dot-com bubble of the late 90s and early aughts gave the channel its highest ratings in history. The Federal Reserve’s easy money flooded the market, hitting blue chip stocks like a tidal wave. All of a sudden laypeople fancied themselves market gurus, playing the market and investing for a big pay day some time in the future. Trader and commentator Barry Ritholz described the environment as one where “CNBC was everywhere.” “Gyms, bars, restaurants, any public place you went into that had a TV — even sports bars! — had the ticker strewn channel running in the background.”
One bubble burst and a financial crisis later, the home of hothead Jim Cramer has cooled off significantly. There are a few reasons for this. As Lehman Brothers cratered into bankruptcy, the middle class saw its 401(k)s lose a significant portion of value. Such a loss begged for an explanation. Yet economists and financial experts were caught off-guard by the crisis. No popular orator of the dismal science could explain why the banking system devolved into chaos. CNBC’s most popular hosts and guests could only offer guesses.
One person was the exception: Peter Schiff. The internet video “Peter Schiff was right” collaged all of Euro Pacific Capital founder’s dire warnings about the housing bubble. At the time, he was ridiculed on air. Schiff was a cassandra, spouting crank theories long disproven by economic orthodoxy. But by September of 2008, he had the last laugh. The financial world was in turmoil, and Schiff’s explanation – based on the Austrian school’s theory of boom and bust cycles – was at last seen as legitimate.
But memories can sometimes be short. Half a decade later, and Schiff remains the Rodney Dangerfield of finances. Thanks to a flawed call on consumer price inflation and the price of gold, he still finds himself the joke of many a CNBC broadcasts. His continued warnings about the Fed’s reckless inflation binge and coming dollar crisis provide plenty of excuses for the channel’s on-air personalities to pick on him. On a recent edition of “Futures Now,” Schiff was challenged on his inaccurate assessments of macro-economic trends. Scott Nations of NationsShares called him out on his dour Fed assessment. Nations piled on the contempt, practically questioning how Schiff has a career in investment at all. Exasperbated, Schiff proclaimed, “I am wrong a lot less often than most people on this program… and all you do is hassle me.”
Schiff’s rant doesn’t immediately come off as exonerating; let alone mature. He sounds childishly bitter – entitled to respect for his prescient forecasting. This behavior is not admirable in any setting. Anyone who demands praise for his achievements is treading on shaky ground. Pride before the fall, and all that.
Still, Schiff has a point. He went on national television and endured a deluge of mockery for challenging established opinion. His forecasts, while not always correct, were far more accurate than those of his contemporaries. No one likes an ideologue wedded to a philosophy to the point of redundancy; yet there comes a point when facts are facts. When it mattered, Schiff had both an accurate assessment of the economy and a solid explanation to justify his findings. His advice might have saved the livelihood of millions, had it been taken. To this day, his call was seen as heroically prophetic, even while his philosophical underpinnings are still held in suspicion. He hasn’t earned the benefit of the doubt in the eyes of his Keynesian-minded contemporaries.
The lack of respect – and even off-putting attitude – showed toward Schiff can be blamed on outright bias. Like any thought-sport, there is accepted doctrine and kooky theories. The winning team is naturally suspicious of anyone who challenges their earned position.
When it comes to mainstream economics, Keynesianism reigns supreme. Central banking is widely viewed as a benefit to the economy; not a meddling danger. The orthodoxy is enforced by believers of what James Grant calls the “PhD standard.” The financial press loves the idea of a few select men guiding the economy toward peak employment. Reporters and commentators need to stay in the good graces of decision-makers to boost their own career. No one would know who Jon Hilsenrath of the Wall Street Journal is if it weren’t for his close contacts to Federal Reserve officials.
Schiff’s Austrian-minded approach to markets is a challenge to acceptable opinion, and he pays the price by burning at the stake on television. The Keynesian revolution didn’t just bring the idea that economies can be fine-tuned with the help of central planners; it brought a high-minded smugness to economic science. It taught aspiring dictators that with enough math formulas and aggressive authority, they could be gods among men. Such conceit is paid for in economic depressions, prolonged unemployment, broken family life, and general societal malaise. The misery wrought by the Keynesians consensus is paramount. Yet it’s practitioners seem immune to considering the simple proposition that their worldview could, in any way, be flawed.
Presumption, though attractive, leads to folly. Lives and fortunes have been lost in the gamble known as the stock market because of the hubris built into economic assumptions. You might think that being caught off guard by the biggest banking crisis in 80 years would force observers to show more respect toward an outsider like Peter Schiff. But then you might think that the Keynesianism belief in turning one dollar into several by spending it at the local department store is the stuff of fantasy.
Economic forecasting is a dangerous job. As Mark Twain put it in his novel Pudd’nhead Wilson, “October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” Every wrong prediction could doom a career, or a bank account. Prudence and humility are the only sound tools for building one’s reputation. The talking heads on CNBC appear to know neither. They pledge allegiance to the flag of the tinkering bureaucracy. It explains the loss of ratings, and loss of confidence in the ability of “experts” to see what’s coming down the tracks. Refusing to learn from mistakes will lead to future blunders. Pundits that don’t heed this message are doomed to fail.
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Schiffs biggest problem is he discounts human inginuity and technology. Chris Martenson is the best in class because he's the only one discussing issues from that paradigm.
Schiff also tends to oversimplify. For example, printing dollars means nothing if they sit, and he doesn't seem to understand they're sitting because there is no demand/velocity. Schiff would be more intersting if he came up with theories as to what would trigger the demand and velocity to trigger a major inflation (imo lower energy inputs, which gets back to the human inginuity and technology that he discounts).
Also, Ayn Rand was a fucking atrocious human being and a total hypocrite (she died collecting SS, just one of many other conflicts with the ideology she preached but couldn't follow), and anyone who is over 18 and quoting her or living by her ideology (be a selfish asshole) has serious problems and is probably miserable deep down.
All that being said, I still back him over the CNBC talking heads. He's interesting, anti-establishment, and has conviction, at least.
Peak Oiler Chris Martenson is best in class because he properly discounts human ingenuity and technology?
Now that was a good one!
It's in everyones best interest to be selfish.
Ayn Rand was right about pretty much everything..unfortunately.
According to H.C. Wainwright & Co.:
http://online.barrons.com/articles/picks-in-precious-metals-that-will-fo...
Thus far in 2014, the prices of gold, silver and platinum have disappointed. We note that a number of forward looking mining companies have been able to successfully raise capital, mainly during the summer, while continuing to execute on their individual and fundamental business plans. We do believe the recent selloff in the precious metals space is overdone and note that any potential recovery in metals prices could present opportunity. Further, given these past raises, there should not be any further dilution, in the near term, for companies positioned to expand their resource portfolios, which they can use to increase future mine plans and strengthen their respective balance sheets.
While the overall momentum for precious metals this year so far has been negative, we do not believe that this trend or disfavor is sustainable over the longer term. A key data point to consider is the size of the Federal Open Market Committee’s (FOMC) own balance sheet which currently stands at over $4.3 trillion. History of finance has no exact precedent on how a central bank would unwind an asset portfolio of this magnitude without encountering a devaluation of the underlying currency. We also note the size of the U.S. federal government’s debt, which currently stands at approximately $17.8 trillion.
It is our belief that the FOMC will not be in a position to raise interest rates to historic norms of 4.0%-5.0% for many years, because doing so would stifle the government’s ability to refinance short-term maturing debt and also meet existing interest payments on the national debt. The only longer-term path out of this quagmire of debt is to systematically devalue the U.S. dollar, which plays into the hands of gold and all precious metals.
Great stuff from Schiff on youtube too, lots of topics.
I would open an account with his firm if I had extra money.
In 1997 or 8, a financialsense.com interview with Puplova, I was so impressed I burned
copies on CD and sent out to family. It helped me hold the gold too which I bought in 2001 and helped
me during a divorce.
A couple years ago he was saying all along stocks were ok.
I bought one gold last week, I said here my bogie was 114 GLD and I bought around 113 GLD.
I just keep buying an ounce in lows and I am doing great within one day of every low.
I think the big final low is next year maybe June-July, stock some resources for that one.
That is the one that will save some lives, loved ones, when chit hits the fan, need some form of sustainance.
The big deal is how to survive long enough until the gold really buys a lot for your security. I think too have an awful lot
of silver and use that early on for food. One needs a way to live a long time before actually using the gold, when the
gold really makes the difference.
I got hammered in 2008-09, job loss, divorce, medical bills, everything. I never lost income and went right into another
job after a surgery.
I know now that I needed a litigation exempt property in whole life insurance for that. I know one needs off matrix asset like gold
for that. My current project is capitalizing whole life and a buy a gold now and then in lows.
With all the horror about gold, my average per ounce cost is now about $1325-1350, yeah I'm shaking.
I have a lot, a lot of silver weight.
Next one should be worse than my 2009 better fortune. What I learned about that one, all resources get sucked down maintaining
contracts, liabilities, and encumbrances. I do not make that mistake again. And my health will not be as strong next time.
Your not going to have gold when you need it when involved in paying mortgage interest or other scam liabilities.
Bottom line get lean and thin, get mean, get real and off matrix.
I want to point out that basel-iii Jan 2013 named gold level-1 currency, that is reserve.
I dont know the games around dollar and gold right now, I imagine dollar is the hft computers,
economic war on brics, also sets the premise to take the dollar down again with, ta-da
QE-IV who knows what they are up to. Who cares.
And I dont necessarily think gold is manipulated down right now, all commodities are going down
on economic implosion, demand. I saw that gasoline consumption was down some 50% from
peak. All countries and currencies are in implosion, dollar is relative to other currencies. I guess
the global capital thinks dollar is better than their homie chit right now.
These things arent going to matter in the end game. So you got a strong dollar to buy some gold,
you should like that.
Keep buying it on the lows. I am looking at a low in about 30-40 weeks, it may be coming up
now for about 15-20 weeks, 30 weeks is about July, about when I think is the stock high, 40 weeks
gets into Sep. I am making provision to back up the truck then.
And no one knows, Schiff dont know, you wont know until it opens up a couple hundred one evening futures.
It may be ok to just wait and buy that buy that initiation, who knows.
I just buy what I can when I can.
Fucking hillarious reading all these dupes go weak at the knees and whip out their hand fans to cool themselves down at the mere mention of Schiff's name.
He's a fucking salesman. It's a fucking marketing routine for his demo.
Remember when this fucking cunt was pulling that stunt outside Walmart for yuks? If he had any balls he'd have been down in the Caribbean hassling bankers in gated communties.
If he'd come up to me I would have put an axe through his mouth.
Predicting the future is an impossible task, a fools errand, full of pitfalls. Still we listen and soak in all that is said, we even spend a tremendous amount of money to gain an edge in knowing what maybe just around the corner. If you step back ten years in your mind, I suspect that things have not unfolded as you might have predicted.
When you see how the world has developed, the twist and turns are most unpredictable. Nowhere is this more apparent then in the economy, whether it is in the areas of interest rates and inflation or the rise and fall of companies. Surprise and awe, highlighted with bouts of shock is what we should expect going forward. More on the subject of predictions in the article below.
http://brucewilds.blogspot.com/2013/06/predicting-future-and-hindsight-mirrors.html
Maybe the guy has some points, but the offshore bank promising huge returns looks suspicious to me. If you don't believe me check it out on the web. I'd rather move to Florida and invest with the smooth-talking guy at the country club.
Didn't realize ZH was a Schiff fanboy club. Wow. Some serious credibility loss to this site.