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Peter Schiff Warns This May Be The First Bubble To Burst Without A Pin

Tyler Durden's picture




 

Submitted by Peter Schiff via Euro-Pacific Capital,

It is well known that I don’t think much of the ability of government officials to correctly forecast much of anything. Alan Greenspan and Ben Bernanke have made famously clueless predictions with respect to stock and housing bubbles, and rank and file Fed economists have consistently overestimated the strength of the economy ever since their forecasts became public in 2008 (see my previous article on the subject). But there is one former Fed and White House economist who has a slightly better track record...which is really not saying much. Over his public and private career, former Fed Governor and Bush-era White House Chief Economist Larry Lindsey actually got a few things right.

Back in the late 1990s, Lindsey was one of the few Fed governors to warn about a pending stock bubble, and to suggest that forecasts for future growth in corporate earnings were wildly optimistic. He also famously predicted that the cost of the 2003 Iraq invasion would greatly exceed the $50 billion promised by then Secretary of Defense Donald Rumsfeld, a dissent that ultimately cost him his White House position. (But even Lindsey’s $100-$200 billion forecast proved way too conservative - the final price of the invasion and occupation is expected to exceed $2 trillion).
 
Now Lindsey is speaking out again, and this time he is pointing to what he sees as a painfully obvious problem: That the Fed is creating new bubbles that no one seems willing to confront or even acknowledge.  Interviewed by CNBC on June 8th on Squawk Box, Lindsey offered an unusually blunt assessment of the current state of the markets and the economy. To paraphrase:
“The public and the political class love to have everything going up. We had “Bubble #1” in the 1990s, “Bubble #2” in the 00s, and now we are in “Bubble #3.” It’s a lot of fun while it’s going up, but no one wants to be accused of ending the party early. But it’s the Fed’s job to take away the punch bowl before the party really gets going.”
To his credit, however, Lindsey sees how this is sowing the seeds for future pain, saying:
“The current Fed Funds rate is clearly too low, the only question is how we move it higher: Do we do it slowly, and start sooner, or do we wait until we are forced to, by the bond market or by events or statistics, in which case we would need to move more quickly. By far the lower risk approach would be to move slowly and gradually.”
In other words, he is virtually pleading for his former Fed colleagues to begin raising rates immediately. I would take Lindsey’s assertion one step further; the party really got going years ago and has been raging since September 2011, the last time the Dow corrected more than 10%. (That correction occurred at a time when the Fed had briefly ceased stimulating markets with quantitative easing.) Since then, the Dow has rallied by almost 58% without ever taking a breather. With such confidence, the party has long since passed into the realm of late night delirium.
 
As if to confirm that opinion, on June 8th the Associated Press published an extensive survey of 500 companies (using data supplied by S&P Capital IQ) that showed how corporate earnings have been inflated by gimmicky accounting. Public corporations, upon whose financial performance great sums may be gained or lost, are supposed to report earnings using standard GAAP (Generally Accepted Accounting Principles) methods. But much like government statisticians (see last month’s commentary on the dismissal of bad first quarter performance), corporate accountants may choose to focus instead on alternative versions of profits to make lemonade from lemons.
 
Using creative accounting, bad performance can be explained away, moved forward, depreciated, offset, or otherwise erased. Given the enormity and complexity of corporate accounting, investors have deputized the analyst community to sniff out these shenanigans. Unfortunately, our deputies may have been napping on the job. 
 
The AP found that 72% of the 500 companies had adjusted profits that were higher than net income in the first quarter of this year, and that the gap between those figures had widened to sixteen percent from nine percent five years ago. They also found that 21% of companies reported adjusted profits that were 50% more than net income, up from just 13% five years ago. 
 
But with the fully spiked punch bowl still on the table, and the disco beat thumping on the speakers, investors have consistently looked past the smoke and mirrors and have accepted adjusted profits at face value. In a similar vein, they have looked past the distorting effect made by the huge wave of corporate share buybacks (financed on the back of six years of zero percent interest rates from the Fed). The buybacks have created the illusion of earnings per share growth even while revenues have stalled.   
 
So kudos to Lindsey for pointing out the ugly truth. But I do not share his belief that the economy and the stock market can survive the slow, steady rate increases that he advocates. I believe that a very large portion of even our modest current growth is based on the “wealth effect” of rising stock, bond, and real estate prices that have only been made possible by zero percent rates in the first place. In my opinion, it is no coincidence that economic growth and stock market performance have stagnated since December 2014 when the Fed’s QE program came to an end (it has very little to do with either bad winter weather or the West Coast port closings).
 
Prior to that, the $80+ billion dollars per month that the Fed had been pumping into the economy had helped push up asset prices across the board. With QE gone, the only thing helping to keep them from falling, and the economy from an outright recession (which is technically a possibility for the first half of 2015), is zero percent interest rates. Given this, even modest increases in interest rates could be devastating. Lindsey’s gradual approach may be equally as dangerous as the rapid variety. But the quick hit has the virtue of bringing the inevitable pain forward quickly and dealing with it all at once. Call it the band-aid removal approach; it may seem brutal, but at least it’s direct, decisive and makes us deal with our problems now, rather than pushing them endlessly into the future.
 
The last attempt made by the Fed to raise rates gradually occurred after 2003-2004 when Alan Greenspan had attempted to withdraw the easy liquidity that he had supplied to the markets in the form of more than one years’ worth of 1% interest rates. But by raising rates in quarter point increments for the succeeding two years, Greenspan was unable to get in front of and contain the growing housing bubble, which burst a few years later and threatened to bring down the entire economy. In retrospect, Greenspan may have done us all a favor if he had moved more decisively.
 
Today, we face a similar but far more dangerous prospect. Whereas Greenspan kept rates at 1% for only a year, Bernanke and Yellen have kept them at zero for almost seven. We have pumped in massively more liquidity this time around, and our economy has become that much more addicted and unbalanced as a result. Arguably, the bubbles we have created (in stocks, bonds, student debt, auto loans, and real estate) in the years since rates were cut to zero in 2008 have been far larger than the stock and housing bubbles of the Greenspan era. When they pop, look out below. Unfortunately, the gradual approach did not save us last time (worse, it backfired by making the ensuing crisis that much worse), and I believe it won’t work this time.   
 
In fact, the current bubbles are so large and fragile that air is already coming out with rates still locked at zero. However, unlike prior bubbles that pricked in response to Fed rate hikes, the current bubble may be the first to burst without a pin. It appears the Fed fears this and will do everything it can to avoid any possible stress. That is why Fed officials will talk about raising rates, but keep coming up with excuses why they can’t.   
 
Lindsey will be right that the markets will eventually force the Fed to raise rates even more abruptly if it waits too long to raise them on its own. But he grossly underestimates the magnitude of the rise and the severity of the crisis when that happens. It won’t just be the end of a raging party, but the beginning of the worst economic hangover this nation has yet experienced.
 

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Wed, 06/10/2015 - 16:32 | 6183861 lehmen_sisters
lehmen_sisters's picture

Sold off SPY 6/12 calls, going long in lead, silver, and Ravioli.

Wed, 06/10/2015 - 16:36 | 6183880 SickDollar
SickDollar's picture

keeping up with this illusion is becoming more and more difficult

Wed, 06/10/2015 - 16:47 | 6183919 OrangeJews
OrangeJews's picture

It may not be a pin but it will sure be a lot of pricks!

Wed, 06/10/2015 - 16:51 | 6183939 Boris Alatovkrap
Boris Alatovkrap's picture

And surprise, surprise, collapse will befuddle unexpecting economist.

Wed, 06/10/2015 - 16:54 | 6183957 SickDollar
SickDollar's picture

Tylers

hot hot hot tpp info: fresh and new leaks from wikileaks just got uploaded   a few min ago

https://www.wikileaks.org/tpp/healthcare/

 

Wed, 06/10/2015 - 17:30 | 6184055 waterwitch
waterwitch's picture

It's time for the "flight of the volkerie".  Raise those rates, bitchez.

Wed, 06/10/2015 - 18:13 | 6184231 MillionDollarBogus_
MillionDollarBogus_'s picture

Is Shiff's old man still in prison for non-payment of his federal taxes...???

What kind of life is that...???

Wed, 06/10/2015 - 18:16 | 6184242 El Vaquero
El Vaquero's picture

A principled one.

Wed, 06/10/2015 - 21:23 | 6184823 THE 4th Quadrant
THE 4th Quadrant's picture

When the things burst and collapse is Peter going to move in with Chris Martenson and raise free range American Eagles?

Thu, 06/11/2015 - 20:51 | 6188535 gladius17
gladius17's picture

I'm long tobacco, moonshine, and weed. My first outdoor herb plot, in the middle of a briar patch, is already taller than me. Bring on the collapse. I will get me a few cows, plant a garden, and ride it all out, high, high, HIGH up in the mountains somewhere.

I will be happy to accept gold or silver in exchange for smoke, drink, food, seeds, or gardening consultancy services. Pre-1983 pennies, nickels, junk silver, etc are also accepted.

Wed, 06/10/2015 - 22:01 | 6184940 oudinot
oudinot's picture

MillionDollar Bogus:  You are the most arrogant,fucked up poster on all of ZH.  Yes, you are literate-your sole redeeming characteristic- one would think you were simply a paid troll yet that would be a compliment for your bitter, scarred soul.

Bringing up Schiff's father's past illustrates your inablilty to debate the point so you degenerate to take the  cheap shot.

You are a fucking insolent , spoiled child ,  whom, if I met in a bar and you delivered this type of horseshit on another man's father ,I would lay you out.

However, you would never put yourself in such a position because you are a snivelling, asexual  coward who  clings to anonymity while  bitching, whining, clawing like a neurotic bitch.

Go fuck yourself!!!!!!!!!!

Wed, 06/10/2015 - 22:17 | 6184981 Tall Tom
Tall Tom's picture

If you cannot attack the message then attack the messinger.

 

If you cannot attack the messinger then attack the messinger's associations.

 

Far too many attribute guilt by association without any critical analysis. Crooks associate with crooks for instance, right

 

That is why the Congress and Presidency is so filled with them.

 

Perhaps MDB will be associated with all of us and also end up in a FEMA Camp.

 

Now would that not be the greatest irony?

 

Perhaps 10 will take his place...BUT IT WILL NOT BE HIM.

 

LMAO.

 

 

Thu, 06/11/2015 - 05:47 | 6185630 WOAR
WOAR's picture

I believe you have mistaken MillionDollarBogus with MillionDollarBonus.

The first is a troll, who sucks at trolling.

The second is either a satirist, or the aforementioned swears in your post.

Wed, 06/10/2015 - 17:48 | 6184150 unicorn
unicorn's picture

thx sickdollarman;)

Wed, 06/10/2015 - 19:48 | 6184560 JR
JR's picture

SickDollar, they are just going to join together in one big frauduent control that can be taken down in its entirety in one fell swoop. Things like this just hasten the day when these grand despots will be removed. Obviously the Congress knows nothing about it; they aren't even in the negotiations.

The secrecy in this fascist global grab reminds one of the secret agreement reached in February 1945 in Yalta among Churchill, Roosevelt and Stalin. Even James F. Byrnes, a Roosevelt advisor at the conference, was not told what was in the agreement. For his promise to fight Japan, Stalin was granted extraordinary rights in Asia and Eastern Europe, even though Roosevelt knew at the time the atomic bomb would soon be tested. As it turned out, Russia did not enter the Japanese War until after the first atomic bomb had been dropped. She was at war with Japan for only six days. Later, Stalin violated every Yalta agreement which guaranteed free elections in Europe. In short, secrecy is a killer; highly dangerous. The Yalta agreement was kept secret from advisors because they would have violently opposed it, sharing the obvious facts concerning Stalin's record of duplicity.

Wikileaks is doing the world a service; had Wikileaks been in existence to provide the details on Yalta - a secret personal agreement among three men - Eastern Eurpeans would not have suffered inhumane brutality and death behind the Iron Curtain for decades.

Wed, 06/10/2015 - 17:09 | 6184012 OldPhart
OldPhart's picture

Newest bubble is already in death spiral.

http://www.cnbc.com/id/102746364

 

Wed, 06/10/2015 - 20:17 | 6184633 BullyBearish
BullyBearish's picture

But by raising rates in quarter point increments for the succeeding two years, Greenspan was unable to get in front of and contain the growing housing bubble, which burst a few years later and threatened to bring down the entire economy. In retrospect, Greenspan may have done us all a favor if he had moved more decisively.

They will start sooner than expected and raise faster than telegraphed...

Wed, 06/10/2015 - 20:32 | 6184661 MonetaryApostate
MonetaryApostate's picture

Insurance Corporation are the new Fed Forecasters, raising premiums instead of interest?

Wealth extraction & increased taxes via Health Insurance (Not Health CARE)....

Look, someone needs to just fall off the cliff already, those old bastards may have worked for promises, but like money, they have been broken, and the younger generations will flat refuse to pay for it all, GET REAL WITH YOURSELVES you out of touch political charlatans!

Wed, 06/10/2015 - 16:47 | 6183921 clooney_art
clooney_art's picture

Peter Schiff is going to use his mental powers to burst this bubble. Then Gold will skyrocket to $5000 as he has been wishing since Hillary Clinton was a teenager.

Wed, 06/10/2015 - 16:53 | 6183955 Boris Alatovkrap
Boris Alatovkrap's picture

Sorry, Boris is throw up in mouth little bit. Is easier for imagining continuing expanse of asset bubble than is imagine Hillary Clinton as teenager.

Wed, 06/10/2015 - 17:14 | 6184020 isudas
Wed, 06/10/2015 - 18:48 | 6184349 Winston Churchill
Winston Churchill's picture

Once an ugly bitch, always an ugly bitch.

Wed, 06/10/2015 - 22:46 | 6185092 Umh
Umh's picture

She was actually sort of cute, she was a judgemental person already though. I remember reading that she had a male client who passed a lie detector test, but she knew he was guilty.

Wed, 06/10/2015 - 17:39 | 6184116 Praetorian Guard
Praetorian Guard's picture

Smart man. Invest in guns, grub and gold. The shit will be getting real soon enough. its like a sea of madness, with people running towards it for the best spot... if your looking for a survival community please come join us at   www.gunsgrubandgold.com  tons of survival links, financials, food calculators, and much more! looking for moderators, members, writers, etc. everyone is welcome and its always free.

Wed, 06/10/2015 - 20:59 | 6184741 takeaction
takeaction's picture

Thanks for that link...Great site.  I will be joining tonight.  

Thu, 06/11/2015 - 09:13 | 6185978 Model T
Model T's picture

too funny. people who imagine something useful will come of an internet blog full of armchair heros debating the merits of their Tactical Boy weapons platforms. Aside from your free membership in NSA.com, of course. What possible realistic use could an internet blog be ? What happened to peoples ability to think straight ? I don't know, but it's gone now.

Wed, 06/10/2015 - 21:15 | 6184791 Moccasin
Moccasin's picture

LOUD WARNING! I use no-script and other browser tools to detect website scripts and www.gunsgrubandgold.com has a DHS.GOV script running on the website. IMHO and I must YELL, it is a government honey pot or they would not be running a dhs.gov script inside its home page! SURFER ,YE HAVE BEEN WARNED! 

Thu, 06/11/2015 - 05:50 | 6185633 WOAR
WOAR's picture

Who ISN'T being spied on, and tell me, at this point, what difference does it make?

Let them spy. They'll still be just as surprised when the whole thing blows up in their faces...it gets them more funding and power when they're incompetent!

Thu, 06/11/2015 - 16:44 | 6187761 Moccasin
Moccasin's picture

you sir are stupid and an apologist for government tryanny. get out of my space!

Wed, 06/10/2015 - 20:17 | 6184636 chomu
chomu's picture

Love me some LME Lead

Wed, 06/10/2015 - 20:53 | 6184726 absente reo
absente reo's picture

Nice one.

Still, I'm thinking they're going to gun for 2140 SPX.

Wed, 06/10/2015 - 22:44 | 6185093 RSDallas
RSDallas's picture

Skip the ravioli You are going to need Vienna sausage.

Wed, 06/10/2015 - 23:31 | 6185224 The Rolling Thunder
The Rolling Thunder's picture

Make 5000 bucks every month... Start doing online computer-based work through our website and start getting that much needed extra income every month... You'll get trained by us, no prior experience needed... Find out more about it on following address... www.extra-salary24.com

Wed, 06/10/2015 - 16:36 | 6183878 SMG
SMG's picture

Hey Tylers,

Any truth to this?

Fund Manager: A Derivatives Bomb Exploded Within The Last Two Weeks

http://www.silverdoctors.com/fund-manager-a-derivatives-bomb-exploded-wi...

Wed, 06/10/2015 - 16:46 | 6183915 mendigo
mendigo's picture

I would suspect the DB resignations are related to Greece exposure.

Fraud is being used to cover negligence.

Wed, 06/10/2015 - 16:49 | 6183927 clooney_art
clooney_art's picture

If all the secrecy everywhere has any foreboding, we won't even know when the market crashes.

Wed, 06/10/2015 - 18:00 | 6184191 El Vaquero
El Vaquero's picture

Yeah we will.  We'll wake up one morning to hard capitol controls as opposed to the soft ones that we have now, and people who actually had FRNs in the bank will find them replaced with worthless shares of bank stock. 

Wed, 06/10/2015 - 23:04 | 6185152 Tall Tom
Tall Tom's picture

Watch the Bond Markets. Smart money will move fast to hard goods.

 

Something has gone really wrong. The Greece "Payment Delay" DEFAULT will serve to exacerbate durrent underlying Derivative issues.

 

Only those blind through ignorance or the DENIAL, the unwillingness to see it, will not see it.

 

We are kaput. It is just timing at this juncture.

Wed, 06/10/2015 - 16:54 | 6183960 gmak
gmak's picture

Don't think so unless it has something to do with the collateral market. The actions of the FED and other CBs have created the interesting situations where many CSAs are being modified to permit cash instead of T-bills (or the .gov /sovereign debt instrument of the underlying currency  in the derivatives).

If a Derivatives' bomb exploded, it would be creating all sorts of panic in back offices as re-hypothecation of collateral comes home to roost.

Wed, 06/10/2015 - 17:15 | 6184027 El Vaquero
El Vaquero's picture

You may be correct, as I think we would have heard something more about it by now, but Douche Bank is one to keep an eye on anyway.  They have the largest known pile of derivatives in the world, their CEOs just got nixed, Greece is probably a problem for them and they're in a country that has seen its YoY exports decline by 18%.  Not a good position to be in.

Wed, 06/10/2015 - 16:37 | 6183885 Fun Facts
Fun Facts's picture

The bubble which caused the collapse we still endure today [the real estate bubble] popped soon after the FED began to raise interest rates.

Wed, 06/10/2015 - 16:42 | 6183900 cowdiddly
cowdiddly's picture

Geeze again? They have been jawboning about raising rates since 2010. Go ahead Punks make my day.

Once again for the math challenged dreamers.

Interest payments on the national debt at Zero is running about 270 billion

at a mere 1 percent this becomes a 550 billion

at 2 percent 1.1 trillion a year with a tax base of about 3.1 trillion or 33% of Govt Income just to pay  interest.

3% yea whatevea.

So quit yer yammerin and get after it you broke ass lying Sacks O S. I dare ya.

Wed, 06/10/2015 - 20:21 | 6184638 jmeyer
jmeyer's picture

The Fed will not do anything serious about interest rates unless the markets show evidence of a need. They can also raise by less than 25 bps. The Fed is not certain about the direction of the economy. We may be entering a Japan style deflation, although it would be faster here. Raising rates in that case would be destructive. There is still room do QE. And the Fed can legally trade in any market it wants to trade in even soybeans, gas, whatever. The Fed cannot control a derivative mother of all bombs bringing long bank holidays and frozen accounts; SHTF Defcon 1 mess. IMO.

Wed, 06/10/2015 - 20:59 | 6184743 taggaroonie
taggaroonie's picture

Cowdiddly, can you educate me further - sincerely.

How would an increase in interest rates apply to existing treasuries?

I would have thought a 10-year bond yeilding 1% only paid out that amount of interest at maturation.

By this reckoning, the increase in rates would affect deficit spending, rather than existing debt.

Mind you, I've been wrong before.

Wed, 06/10/2015 - 22:35 | 6185027 cowdiddly
cowdiddly's picture

Correct The outstanding Treasuries would pay out at the rate they were issued at until maturity or sold. Problem is the Fed has about 5 trillion of so of something they have bouught during QE. This amount is constantly being rolled over into new bonds when the ones they bought during QE 1,2,3,4 mature. In effect QE has never ended. As the bonds mature new ones would be issued at the market rate now or when sold. A heck of alot of Govt debt is short term, its not all about the 10 year  bonds.There is the whole curve. When the new issued bonds are paying say 2.5% , who is going to want your 1% bond? Correct again NOONE. it will be traded at a discount. People have a funny notion about bonds being safe but in a rising interest rate environment you can lose your shirt. I know most investors today have not been around long enough to understand this as we have been in a bond Bull market for 30 years with zirp for 7-8 years but the horse has been kicked to death.

Wed, 06/10/2015 - 21:18 | 6184804 THE 4th Quadrant
THE 4th Quadrant's picture

The Pentagon lost 2 Trillion, poof just like that.

"Where dat cheese at yo?"
"Dunno"
"Daaaaaaamm!"

It's just joo confetti, it truly does not matter. The only thing that matters is confidence in their product by the sheeple.

Wed, 06/10/2015 - 16:43 | 6183905 mendigo
mendigo's picture

The talk of impending collapse is an effort to distract from the reality that the collapse has been under way since about 2000. All the fed gyrations are in effort to mask this.

Immigration is also being used to grease the skids - supressing wage pressure.

Wed, 06/10/2015 - 16:46 | 6183918 Rainman
Rainman's picture

truth ^

Wed, 06/10/2015 - 16:59 | 6183981 Fun Facts
Fun Facts's picture

Not only suppressing wage pressure but importantly, hastening the transition of the USA into a serfdom which is of course the desired ZWO gangbangkster outcome.

Wed, 06/10/2015 - 18:00 | 6183984 El Vaquero
El Vaquero's picture

I have no opinion on the reasons for the continued allowing of illegal immigration, but I agree absolutely that the collapse has been under way since about 2000.  It is a process that is going to happen in fits.  I fear that the next one might be the last.

Wed, 06/10/2015 - 21:38 | 6184837 TeethVillage88s
TeethVillage88s's picture

I want to take a look at the data & Legislation and see if I can find forensic evidence for this claim. I noticed that the Credit bubble was clear 12 years ago (2003), so it is important for me to locate some data.

First Debt/Credit to GDP over 50% jumps in 2000 to 51%, and continues trend upward.

http://research.stlouisfed.org/fred2/series/DDDI01USA156NWDB

Second Household Debt doubled from 2000 till 2008.

Households and Nonprofit Organizations; Credit Market Instruments; Liability, Level
2014:Q4: 13,496.88 Billions of Dollars (+ see more)
Quarterly, End of Period, Seasonally Adjusted, CMDEBT, Updated: 2015-03-12

Third, Plateau in 2000, but then Tripled by 2011. Wow.

State and Local Governments, Excluding Employee Retirement Funds; Credit Market Instruments; Liability, Level
2014:Q4: 2,927.47 Billions of Dollars (+ see more)
Quarterly, End of Period, Seasonally Adjusted, SLGSDODNS, Updated: 2015-03-12

Forth, Plateau in 2000, but doubled by End of 2008, and Tripled by 2012.

Federal Debt: Total Public Debt
2015:Q1: 18,152,056 Millions of Dollars (+ see more)
Quarterly, End of Period, Not Seasonally Adjusted, GFDEBTN, Updated: 2015-05-28

Bill Clinton Reigned in this period.

Phil Gramm was involved in deregulation of Corporations & Banks in this Era.

Gramm-Leach-Bliley Act was Passed.

Deregulation Plans, Transportation, Energy, Communication, Finance, Free Trade, Campaign Finance

1964 - Gulf of Tonkin, Congress gives up War Powers, Legislative Powers, and Budget Powers
1971 - Nixon Shock, US went off Gold Standard whether floating gold price or not, Deregulation of Money in a sense, this allows a government to go to war for 13 Years, and allows a government to seek contracts & Business Domination, Hegemony, and Superpower Naval Patrols over Major Shipping Routes
1973 - War Powers Resolution (Allows 60 days combat/war without congressional declaration)
1974 - Federal Energy Administration Act of 1974 (R. Nixon)
1978 - Bankruptcy Reform Act of 1978,
1980 - Depository Institutions (J. Carter, followed by S&L Crisis, 5000 convictions, RTC)
1981 - Executive Order 12287, (R. Reagan, removed price controls on Petrol)
1984 - Caribbean Basin Initiative (Free Imports to USA)
1992 - Energy Policy Act (H.W. Bush)
1994 - NAFTA, Deregulation of Trade, 3 Nations (W. Clinton)
1995 - Community Reinvestment Act, the Clinton Admin urged flexibility,
1995 - HUD advocated greater involvement of state and local organizations
1996 - Energy (W. Clinton, followed by ENRON Scandal)
1996 - Telecommunications Act (W. Clinton, cross ownership)
1996 - Start of a Period of Accounting Fraud in USA which continues today
1997 - M2 Money Velocity Top
1998 - Clinton's Kosovo War (over 60 Days)
1998 - Brooksly Born Rejected on her concerns on OTC Derivatives
1998 - Derivatives expanded and were not regulated
1998 - Citicorp & Travelers Insurance Merger
1999 - Gramm–Leach–Bliley Act (Phil Gramm, W. Clinton, followed by 2008 Financial Crisis)
1999 - bombing campaign in Kosovo (W. Clinton, over 60 days)
2000 - Commodity Futures Modernization Act of 2000 (P. Gramm, W. Clinton, derivatives)
2002 - McCain–Feingold Act (G.W. Bush, Campaign Finance, soft money unlimited)
2005 - Energy Policy Act (G.W. Bush, subsidies, excluded clean air Water acts)
2005 - Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).
2005 - CAFTA-DR Ratified, 2006 El Salvador, Honduras, Nicaragua, Guatemala
2008 - 2014 QE & LIRP/ZIRP (B. Bernanke, J. Yellen, B Obama)
2009 - 2014 Continuing Resolutions in which Congress gives up Budget Powers
2010 - Citizens United v. Federal Election Commission (money is free speech for corps)
2011 - US combat in Libya (B Obama, over 60 days)
2014 - lift ban on crude oil exports (B Obama, Commodities Deregulation)

- (Laissez-faire economic policies)

Wed, 06/10/2015 - 16:45 | 6183908 SUNKNIGHT2010
SUNKNIGHT2010's picture

IMHO the bubbles will start bursting this fall . For a FAR WORSE repeat of 2007-08 .Many people I've talked to ,think this will be gradual drop into misery taking 10-15 yrs . They're seriously WRONG too as financial disasters of this magnitude are NOT controlled or orderly . Take the Weimar Republic for example & we screwed up worse then they did !!!

Wed, 06/10/2015 - 17:34 | 6184090 Handful of Dust
Handful of Dust's picture

The economy is in a tailspin; retail a horror story -- health coasts out of sight -- Obamacare taxes crushing small businesses -- increased taxes -- increased insurance costs -- moar regulation -- and so on.

 

How many small businesses can start up in this envirnment? How many can survive?

Wed, 06/10/2015 - 18:38 | 6184319 countupir
countupir's picture

You ask the question as if they expected anyone to prosper. This is a final push for an asset grab. No one expects most people to make it out. Look to eugenics from the early part of the 20th century for the clues. 

I am on mobile now so no look ups now; just free balling. 

How is it possible for the same financial wreckage happen dozens of times in history and no one in power can make better decisions? Of course they know but it seems no one expected the American experiment that was the United States to work so well and prove freedom in the 19th century turned the status quo on it's ass. For the first time it wasn't about monarchy and birth rights. It was about self ownership of labor and ideas. 

TPTB have to take it back now. Experiment over. 

Wed, 06/10/2015 - 18:41 | 6184320 countupir
countupir's picture

Double 

Wed, 06/10/2015 - 17:57 | 6184160 El Vaquero
El Vaquero's picture

It has been a gradual drop into misery for the last 10-15 years.  Labor force participation rate has been on the decline since ~2000, and the costs of living have not been declining.  At some point, because of the decline, we won't be able to support this overly complex system that we've built up around us, and it will come down.  This is probably going to be the next financial crisis, or a war, which will probably be remembered as the collapse.  That is wrong.  Whatever event it is, it will be the end of the collapse, not the entire collapse itself.

Wed, 06/10/2015 - 16:45 | 6183913 FranSix
FranSix's picture

You have had a massively inverted yield curve with the rise in the $U.S. and the spread between U.S. Treasury bills and Euro long dated bonds. Massively inverted. Screamingly inverted. Doomsday inverted.

Wed, 06/10/2015 - 16:53 | 6183950 konputa
konputa's picture

Have you guys looked at the performance of Schiff's funds?

Get a load of this horseshit:

EPLAX -5.24% YTD, -19.32% 1Y

EPASX +0.17% YTD, -8.16% 1Y

EPHCX +8.76% YTD, +9.57% 1Y

EPGFX -3.69% YTD, -20.13% 1Y

SHTF is already here if you've been investing with Schiff.

Wed, 06/10/2015 - 16:55 | 6183965 Uber Vandal
Uber Vandal's picture

I do believe these are still performing better than Cramer's picks.

http://www.zerohedge.com/news/2015-03-10/10-year-anniversary-mad-money-o...

Wed, 06/10/2015 - 16:57 | 6183973 konputa
konputa's picture

That's an excellent benchmark, no doubt.

Wed, 06/10/2015 - 18:40 | 6184327 TeethVillage88s
TeethVillage88s's picture

EP China Fund (EPHCX) - His only Fund doing well is China Fund. How Ironic that he is complaining about the US Exchange Markets & the FED who has been pumping them up.

Why has the FED been Pumping up Stocks?

Because they are Bankers and all Bankers care about is their damn Stock Market.

Thu, 06/11/2015 - 02:22 | 6185481 RichardParker
RichardParker's picture

Perhaps they should change Jim Cramer's 'Mad Money' to Jim Cramer's 'DEAD Money'?

Wed, 06/10/2015 - 22:13 | 6184967 konputa
konputa's picture

I'm loving the down votes for pointing out facts. This place is the shit.

 

PS, eat dicks. ;)

Wed, 06/10/2015 - 23:20 | 6185195 Tall Tom
Tall Tom's picture

I did not downarrow you...period.

 

But your bias is what garnered the response. Besides only liars are really interested in a consensus,

 

And only FAGGOTS are interested in having other men eat dicks.

 

And the sad truth is that the Shit has already hit the proverbial fan, whether or not you have been "investing with Schiff".

 

And regardless of whther you are parroting the MSM or are being paid...THAT WILL STILL NOT CHANGE THE DISMAL REALITY, WILL IT?

 

You see? I cannot care any less if anybody downarrows this, uparrows this, or jacks off to it.

 

Am I making myself clear?

 

Collapse this FRAUD FILLED and CORRUPTED SYSTEM TO BURNT EMBERS AND ASHES!!! Collapse baby, collapse!!!

 

And may you reap the rewards or suffer the consequences for all that you have done, or, have not done.

Wed, 06/10/2015 - 16:53 | 6183953 centerline
centerline's picture

OT -  Just checked on Lake Mead water level.  Sitting at 1075.80.  1075.00 is supposed to trigger a water shortage declaration.  Less than 9 inches from it now.  I recall back in 2014 it was projected 1075 might be reached in 2016.  Heck, looks like it isn't going to get much past halfway through 2015. 

Wed, 06/10/2015 - 16:54 | 6183958 lester1
lester1's picture

Peter Schiff's podcasts are really great to listen to. I've watched his youtube channel grow big time over the last two years.

Wed, 06/10/2015 - 16:57 | 6183961 buzzsaw99
buzzsaw99's picture

disagree. the fed funds rate is right where it should be (near zirp) given the current climate. however, the fed itself should not even exist because it is a criminal organization that promotes boom busts and loose lending standards for the benefit of a chosen few so i guess i challenge the premise as well.

Wed, 06/10/2015 - 17:04 | 6183998 centerline
centerline's picture

WTF do you think the market is Schiff?  Wall Street? 

Those who have debts don't want rates to rise.  Those with invesments want rates to rise.  On one hand, interest will kill and on the other hand it will save.  Catch-22 when your in the mother of all traps.

Reality - Is game over.  Organic growth rolled over more than a decade ago.  Perhaps, arguably, even further back when Bretton-Woods really croaked.  Since then it has a "papered-over" world.

Yeah, the markets are going to speak alright.  The markets which are the masses.  Not the markets are otherwise defined today.

Wed, 06/10/2015 - 17:06 | 6184005 ElixirMixer
ElixirMixer's picture

Not that I disagree with the general premise, but Peter Schiff is basically now the financial equivalent of those 19th century religious fanatics that predicted the world would end every single year. 

Wed, 06/10/2015 - 17:35 | 6184085 philosophers bone
philosophers bone's picture

Poor Analogy.  He's more like the drug counsellor predicting that the addicted drug addicts (Central Banks) can't stop coming back for more (QE).  Till the addict kills himself (Market Collapse / Hyperinflation).  The fact is that the drug addict is hanging on a little longer than predicted.  But the underlying assumption and predicted end game - total destruction - is dead on.

Wed, 06/10/2015 - 18:01 | 6184169 El Vaquero
El Vaquero's picture

Somebody asked him about that once.  His response was something along the lines of "I didn't expect other CBs to start doing the same thing that the Fed did." 

Wed, 06/10/2015 - 19:49 | 6184564 Fun Facts
Fun Facts's picture

Valid but people in the US tend to be too US centric.

The western CB cabal/cartel is global and it operates globally in a coordinated fashion.

They communicate every day and persue the same global policies. This explains the FED loaning 13 trillion to foreign banks in 08 [covertly].

They conduct coordinated open market operations [covertly].

In this sense, QE has not ended. It rotates from bank to bank. Today, the ECB and BOJ are supporting the UST market as well as their own markets with QE printing.

QE cannot end. The ponzi math behind it all prohibits that.

The only difference between this and madoff is that in this case the printing press is the substitute for ever greater "new investor" money.

It will end only when the "money" [which is not money at all but an unpayable debt] loses it's value, and it will. It would have already absent open market operations and a quadrillion dollar derivative ticking time bomb.

Wed, 06/10/2015 - 20:52 | 6184722 TeethVillage88s
TeethVillage88s's picture

Fun Facts Yes Open Market Operations need an Audit Badly.

You sound like you know FED Banking. I'll have to refresh my memory.

But I don't think it is common knowledge to know that Open Market Ops are going on, nor that it is not normal.

I have thought it was normal the last year... since I don't read enough about the FED.

Wed, 06/10/2015 - 17:17 | 6184016 Pareto
Pareto's picture

The FED has essentially lied (and I know everybody is going to say "duh", but, I'm trying to defeat them at least intellectually), when Bernanke essentially mandated the Phillips curve as his key economic policy with 6.5 and 2 on the unemployment inflation tradeoff as the trigger for halting/reversing the expansion of their balance sheet.  By my estimate they have surpassed this objective - comfortably.  Regardless of whether you believe the Phillips curve theoretical cosntructs is another matter, but, what is important and ought to not be overlooked is that the FED has made a complete mockery of living up to even this - this Keynesian line in the sand - that they themselves defined and set as THE criterion for changing their monetary policy.  They keep moving the fucking goal posts - goal posts which are themselves - not even real.

There are a lot of things that piss me off about the FED - too various and many to talk about here - but this - this fabricated bullshit doublespeak economic hocus pocus bunk - of never intending to do what they said they were going to do - even if you think that what they said they were going to do was bunk anyways (Phillips curve crap).......ITS THIS that pisses me off most.

They are just making shit up.  There is absolutely no credibility and therefore no respect for this institution - because in addition to the severe economic damage it has created - it continues to ignore its responsibilityas a steward of the people's money; distort and destroy meaningful capital formation (and instead has promoted sharebuy backs for crony capitalist gains that benefit no-one but people like Carl Icahn and Warren Buffet) - continue to create all sorts of incentive distortions in capital and derivative markets - and through all of it - they continue to lie about it - the whole fucking lot of them.  They are so dogmatic and fixated on saving their own ass that they are willing to fuck everybody else in the process of spilling their continuous lies and deceit.  Its fucking embarrassing!!

At least - at least when Volker took the chair (he flatly ignored 1/2 of the Phillips curve and never ever believed the other), he cut price inflation off at the head.  He did exactly what he said he was going to do.  I'm not arguing Volker was a hero - I'm arguing Volker was the last credible chair of the most important insitution in the world and that since him we have had nothing but bat shit crazy clowns running things.  Its a shit show that is out of control and we all ought to be writing our repsective .......fuck that - just something - anything to start igniting the idea that weought to be returning to some sort of normalcy before it is no longer recognizable or AFFORDABLE.

Its a fucking joke.

And its fucking embarrassing.

END the FUCKING FED!!

Wed, 06/10/2015 - 18:20 | 6184256 BurningBetty
BurningBetty's picture

Plain and simple. I think you put in words pretty much what we all here feel!

Wed, 06/10/2015 - 18:51 | 6184357 lordbyroniv
lordbyroniv's picture

If you cant beat em.  Join em.  Buy a Warhol or Picasso yourself bro!

Wed, 06/10/2015 - 17:24 | 6184054 cn13
cn13's picture

Agreed and when stocks do start to fall the FED will immediately launch QE4.

QE4 may work for a while, but confidence in the FED's ability will fall.

And once confidence fails, the final collapse will come unlike anything ever before witnessed.

The FED is literally fighting for its life to keep the equity markets pumped. 

Wed, 06/10/2015 - 17:26 | 6184058 wildbad
wildbad's picture

bzzzz bzzzz bzzzz land

Wed, 06/10/2015 - 17:34 | 6184088 BoPeople
BoPeople's picture

The commodity bubble burst first this time.

Last time it was real estate.

The time before the NASDAQ.

The bankers try to mix it up.

Wed, 06/10/2015 - 17:45 | 6184136 kchrisc
kchrisc's picture

The FedRes will raise rates this Fall or early Winter as part of the great dollar "exit" being engineered by Zion.

That is why many have become so truthful about the FedRes' culpability in the coming collapse.

Watch for it, but not while standing under it.

Liberty is a demand. Tyranny is submission..

Wed, 06/10/2015 - 18:24 | 6184268 Citxmech
Citxmech's picture

If the fed substantially raised rates the US economy would pretty much implode instantly.

Wed, 06/10/2015 - 18:38 | 6184318 El Vaquero
El Vaquero's picture

You are correct, excepting maybe a tolken 0.25% raise.  However, if the Fed doesn't raise rates, the US economy will implode anyway.  If you're on the top of a burning building, do you let the fire kill you, or do you jump?  That's the kind of situation the Fed is in.

Wed, 06/10/2015 - 20:36 | 6184676 TeethVillage88s
TeethVillage88s's picture

El Vaquero;

This is what I don't understand. You and Schiff are saying that the Bond & Stock Positions are difficult to get out of, so any 1% move in any Qtr would cause huge losses?

Is there no way to play this? I assume many firms are like valued at $25 B or more, lose 25% in a sell off, they are down to like $18 B value I guess.

But then 1% raise is not the goal so they do it all over again and repeat.

Thu, 06/11/2015 - 01:15 | 6185410 El Vaquero
El Vaquero's picture

I was talking more about the costs of servicing the enormous debt in this country and the likelyhood of blowing up the OTC derivatives market vs fixed income people eating Alpo and having their grandkids think about getting violent.

Wed, 06/10/2015 - 20:44 | 6184697 TeethVillage88s
TeethVillage88s's picture

Does Zion no longer need US Protection for Israel?

I feel that someone has had to have been helping the Chinese. The Chinese are smart people who study & work hard. But think they have been Isolated since the Chinese Revolution from Banking and Modern European Finance.

So question: Have the Zios been teaching, tutoring in banking, and setting up Chinese Banking while transferring Technology, Patents, and Factories to the Chinese Mainland?

Well and if so... Do we know the names of the People Committing Treason? Are they From the Rockefeller Farm?

Wed, 06/10/2015 - 17:49 | 6184152 Magooo
Magooo's picture

These finance 'gurus' haven't got a clue.

 

THIS is the DISEASE - the financial crisis is the symptom --- the disease is fatal for civilization

 

THE PERFECT STORM (see p. 59 onwards)

The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

Wed, 06/10/2015 - 19:02 | 6184390 Westcoastliberal
Westcoastliberal's picture

Thx Magooo, clicked the link and this looks good. I think we share the opinion that these "gurus" are the same ones who got us here.  They sure as hell don't have the solution.

Wed, 06/10/2015 - 19:55 | 6184586 TeethVillage88s
TeethVillage88s's picture

All Citizens & Investors need correct data & Info in order to make decisions, influence communities & Nation, build families & Security, and Balance our Time & Service here.

Thanks. Looks like a good Read.

I needed to make some bullets from the above, but wanted to ask what a Financial Adviser is likely not to include in his analysis:

- part one: the end of an era
- four critical factors: debt bubble, globalization; obscured economic trends, energy-returns cliff-edge.
- part two: this time is different
- implosion of the credit super-cycle (3 Decades)
- part three: the globalisation disaster
- use of debt for consumption
- part four: loaded dice
- distorted data driving policy
- Economic data (including inflation, growth, GDP and unemployment) used for government spending,
- part five: the killer equation, the decaying growth dynamic

What is missing:

- Huge Compensation for those at the top
- Gaming of Investments is known, but often the safe Dividends are not there for the little guy(more of a Game than real business)
- Cutting Public Jobs & Benefits is primary cost cutting measure
- Only now are people asking what is the effect of cutting jobs and Decapitalizing Industry, Outsourcing, Off Shoring, and Greed that sends wealth to Accounts Offshore
- Automation, Robotics Displacing Jobs
- Loss of Middle Class is Loss of Consumer Market to a Large Degree
- Expensive Health Care Industry, Education & Housing are Deadly Trends unless people agree to live in single room apartments like Orientals sometimes do

Now I just have to read it I guess.

Seriously the Outsized Compensation in the USA while providing lousy Health Care Service, Lousy Education, Lousy Government, Lousy News & Reporting (MSM), Lousy Government Spying, Dirty Wars, Corrupt Defense Spending, Private for Profit Prisons... just smacks of Greed and lack of Humanity as Jobs & Middle Class Disappear.

Thu, 06/11/2015 - 01:16 | 6185412 El Vaquero
El Vaquero's picture

The solution was to not manipulate the markets, throw cronies in jail and force people to deal with reality a few decades ago.

Wed, 06/10/2015 - 18:08 | 6184217 Dragon HAwk
Dragon HAwk's picture

But But But.. if we all send Hillary a Buck she will Fix it Right... I agree with the statement, the real markets, as in consumers spending what they can, and cannot  will be the deciding factor in the crash

Wed, 06/10/2015 - 18:12 | 6184230 the_law
the_law's picture

3 monthly check-in: how are those gold and silver positions zerohedgers? bahahahhahahaha phewls. 

Wed, 06/10/2015 - 18:23 | 6184266 European on my ...
European on my shoe Jimmy's picture

I still advocate 'the music plays on' buy with both hands!

Wed, 06/10/2015 - 18:26 | 6184279 European on my ...
European on my shoe Jimmy's picture

Be a contrarian! The voices of doom spell disaster when such voices take hold 'buy with both hands. This bull market has legs!

Wed, 06/10/2015 - 19:49 | 6184561 The Delicate Genius
The Delicate Genius's picture

'positions'?

 

You've been doing some reading

 

but clearly not enough.

Wed, 06/10/2015 - 18:17 | 6184247 who cares
who cares's picture

We will see it start (the bubble burst), but it scares the shit thinking how is going to end!

Wed, 06/10/2015 - 18:29 | 6184284 European on my ...
European on my shoe Jimmy's picture

Never fear jump in on the long side 'make money'

Wed, 06/10/2015 - 18:26 | 6184273 oddjob
oddjob's picture

When criminals get to print money for free, don't count on people paying to borrow it.

Wed, 06/10/2015 - 18:31 | 6184289 IronForge
Wed, 06/10/2015 - 18:59 | 6184381 Westcoastliberal
Westcoastliberal's picture

We're going to wake up some morning to real price discovery, and everything will be priced half-off and dropping like a stone, except for PM's that will accelerate to the Moon!

DISCLAIMER: This is not investment advice.

Wed, 06/10/2015 - 19:05 | 6184398 Bighorn_100b
Bighorn_100b's picture

When spot gold spikes $100.00-$200.00 then let's talk. Until then, your just guessing.

Wed, 06/10/2015 - 19:30 | 6184488 fremannx
fremannx's picture

Gold will not get quite that low but it will decline quite a bit more over the next few years...

http://www.globaldeflationnews.com/gold-elliott-wave-update-for-week-end...

Wed, 06/10/2015 - 19:18 | 6184445 harrybrown
harrybrown's picture

the fed IS NOT fighting for its life, its serving it spurpose as planned to "transfer the worlds wealth" to the FED owners, plain & simple, just look at the ideology of those who control it below. any of it seem familiar?

The Protocols of Zion in Modern English A one page summary…

Goyim are mentally inferior to Jews and can’t run their nations properly. For their sake and ours, we need to abolish their governments and replace them with a single government. This will take a long time and involve much bloodshed, but it’s for a good cause. Here’s what we’ll need to do:

• Place our agents and helpers everywhere
• Take control of the media and use it in propaganda for our plans
• Start fights between different races, classes and religions
• Use bribery, threats and blackmail to get our way
• Use Freemasonic Lodges to attract potential public officials
• Appeal to successful people’s egos
• Appoint puppet leaders who can be controlled by blackmail
• Replace royal rule with socialist rule, then communism, then despotism
• Abolish all rights and freedoms, except the right of force by us
• Sacrifice people (including Jews sometimes) when necessary
• Eliminate religion; replace it with science and materialism
• Control the education system to spread deception and destroy intellect
• Rewrite history to our benefit
• Create entertaining distractions
• Corrupt minds with filth and perversion
• Encourage people to spy on one another
• Keep the masses in poverty and perpetual labor
• Take possession of all wealth, property and (especially) gold
• Use gold to manipulate the markets, cause depressions etc.
• Introduce a progressive tax on wealth
• Replace sound investment with speculation
• Make long-term interest-bearing loans to governments
• Give bad advice to governments and everyone else

Eventually the Goyim will be so angry with their governments (because we’ll blame them for the resulting mess) that they’ll gladly have us take over. We will then appoint a descendant of David to be king of the world, and the remaining Goyim will bow down and sing his praises. Everyone will live in peace and obedient order under his glorious rule.

Wed, 06/10/2015 - 20:28 | 6184655 TeethVillage88s
TeethVillage88s's picture

I'd add that we should pay attention to the people that are yelling the loudest and talk down independent opinion or different ideas too.

Just because a person considers themselves a conservative leader, military or business leader, doesn't mean we accept being told not to question authority, question Elders, question tradition, question memes, or question why things are the way they are or that all wars are the duty of all citizens.

Thu, 06/11/2015 - 00:36 | 6185345 falconflight
falconflight's picture

Hey, pay back's a bitch :)

Wed, 06/10/2015 - 19:27 | 6184476 fremannx
fremannx's picture

This video interview of Schiff is one of the best Austrian School educations available. He correctly warned of the sub-prime and equity bubbles in 2006 and 2008, yet no one wants to listen to him this time...

http://www.globaldeflationnews.com/peter-schiffs-warning-is-deja-vu-all-...

 

 

Wed, 06/10/2015 - 20:21 | 6184642 TeethVillage88s
TeethVillage88s's picture

fremannx;

Thanks for the Advice.

Wed, 06/10/2015 - 22:18 | 6184995 moneybots
moneybots's picture

"He correctly warned of the sub-prime and equity bubbles in 2006 and 2008, yet no one wants to listen to him this time..."

 

No one of importance wants to listen on the up side.

In 2001, 10,000 appraisers petioned the government about appraisal fraud.  Nothing was done.  In 2004, the FBI warned congress of massive mortgage fraud.  Nothing was done.

Don't spoil the party, is the theme on the up side.

The incumbents all want to get re-elected.  The voters get grumpy if the economy is poor.  The housing bubble produced a lot of construction and other jobs, to keep the voters happy and the incumbents in office.

No one is doing anything about sub prime auto loans.  Watch what happens when the market crashes.


Wed, 06/10/2015 - 19:35 | 6184511 Optimusprime
Optimusprime's picture

Schiff, like all Libertarians, is actually working for Rothschild interests (whether or not he realizes it).  So he never asks the fundamental question: whether usury is necessary in the first place.

Wed, 06/10/2015 - 20:17 | 6184635 TeethVillage88s
TeethVillage88s's picture

Yeah I have to admit I am not well read and don't know Schiff or many popular analyst.

I was going to try to approach his work in this article with some respect. He started out sounding like he was laying out typical stuff that gets brought up. I liked that he said GDP feel due to QE Ending not the weather. I had not captured that point yet.

Mostly I think people in the Industry just like people in the Govt can't go after a lot of the truth or issues since they don't want to be sidelined or ostracized or become a target. I like that Schiff makes some noise and asks people to look at things on their own - instead of just believing what MSM says.

Back in the 1980s we talked about Balance of Payments, Trade imbalance, Multiplier effect, Velocity (probably), reasonable federal budgets (and actually created full budgets through a formal process), we talked about American Strength, American Manufacturing Strength... today every paradigm has been turned around... today they spend like drunken sailors and don't even say that it is Fiscal Stimulus for a broken Economy.

Schiff does a little of this. But I wonder if he hasn't shifted his paradigm to accept free trade and the service economy and part time jobs and that the Multiplier Effect is not Relevant. I know he is about Fiscal issues.

Wed, 06/10/2015 - 20:55 | 6184734 bluskyes
bluskyes's picture

Usery is a moral issue, not an economic issue.

If money were sound, one would not have to charge interest to retain the purchasing power of loan's principle.

Thu, 06/11/2015 - 00:26 | 6185334 falconflight
falconflight's picture

Usury is a relative issue, and free and easy money ain't so.

Wed, 06/10/2015 - 19:36 | 6184515 The Delicate Genius
The Delicate Genius's picture

per wiki on Lindsey:

 

"Lindsey is famous for spotting the emergence of the late 1990s U.S. stock market bubble back in 1996 while a Governor of the Federal Reserve. According to the meeting transcripts for September of that year, Lindsey challenged the expectation that corporate earnings would grow 11½ percent a year continually. "

 

Maybe the problem is people laboring under the misconception that economics is anything like real science?

Wed, 06/10/2015 - 20:07 | 6184617 TeethVillage88s
TeethVillage88s's picture

Nice quote.

I am a little slow and thought about that for year maybe three years ago. I've only been on here a year. So maybe I posted something about questioning if Economics could even be considered a Soft Science. Hard Science deserves Respect. Medicine is just a practice based on observations and is not a hard science.

Anyway I think even the slubs that don't read business, finance, or economic don't believe the government or economics. They know policy comes from an Interest group and this leads at least to Bias in gov admins, but more likey is complete Influence by the Wealth & TPTB.

Krugman & Greenspan are likely smart people, but I just think of them as insiders, paid shills like MSM, or CIA/NSA/FCC types.

Thu, 06/11/2015 - 04:49 | 6185591 rex-lacrymarum
rex-lacrymarum's picture

Economics is definitely a science, but it has been perverted by statism and a vain attempt to make it akin to physics. One thing the science of economics is definitely not about, is making "predictions". That is the task of soothsaysers, not of economists. 

Wed, 06/10/2015 - 22:17 | 6184792 Salsipuedes
Salsipuedes's picture

Peter Schiff thinks basic logic rules the world of man. It does not. Corruption and fantasy do. He always says they're all stupid. If you can call a spade a spade Peter, I'd say the word is not "stupid". It's "criminal".

Wed, 06/10/2015 - 21:21 | 6184816 aqualech
aqualech's picture

Schiff always strikes me as possessing great insight and common sense. He speaks the truth. However, listening to him and his kind have cost me about $1m that I might have otherwise made in this bull mkt since 2009. I've just been watching my pm hoard languish. Watching my short trm bonds do nothing. Expecting tsthtf any month.

Will he EVER be right?

Fwiw, started dabbling in inverse bonds. Maybe, just maybe......

Wed, 06/10/2015 - 21:21 | 6184817 aqualech
aqualech's picture

Schiff always strikes me as possessing great insight and common sense. He speaks the truth. However, listening to him and his kind have cost me about $1m that I might have otherwise made in this bull mkt since 2009. I've just been watching my pm hoard languish. Watching my short trm bonds do nothing. Expecting tsthtf any month.

Will he EVER be right?

Fwiw, started dabbling in inverse bonds. Maybe, just maybe......

Wed, 06/10/2015 - 21:54 | 6184923 TheAntiProgressive
TheAntiProgressive's picture

              Well my fellow travelers.  Here is yet another argument about raising interest rates or keeping things the same.  Will the economy / market crash?  I have pushed through about 1/2 of Stockman's "Great Deformation" Economic tome which I highly recommend to all Austrians.  The fact of the matter in reading this book becomes quite clear.  The "politician" and "monetary policy" divorced from "the market" has led us to this huge cliff.  The politician thinks by encouraging or initiating policy changes that things can be turned into Nirvana.  This never, ever happens as numerous examples are detailed in this book and their subsequent failures.  The establishment of the FED and the resultant policy of using market Progressive ideology, with Lord Keynes as an idol, has and is proven a complete and utter failure by example and result.  The chickens are coming home to roost, trillions of them.  Mispriced, misallocated dollars will hunt for a home and found wanting, well, will simply devalue in a massive cavitation or the big reset.

We have piled up trillions of notational debt along with associated derivatives and used it to pay off the parasites in society either corporate or social.  The bill is coming due.  An increase in the discount rate will demand higher payments in interest or "air" to the trillions of dollars of UST bond holders.  The politician will have to "budget" this increase in if they are to keep spending with abandon as in the past.  There will be much gnashing of teeth and vehement assigning of blame, lots of theater for the public.  The politician in the traces can either severely downsize the spending, size and largesse of government  and ultimately their own power to spend or they will attempt to again, raise taxes.  Neither will solve the problem.  They will get significant pushback because everyone wants everything for "free".  Since you can't get blood from a stone and the American taxpayer is about totally tapped out, the future is quite ugly. 

So the FED will raise the discount rate slightly because they are committed, but that will be it, if indeed they actually do.  Of course there could be some other black swan that shows up that totally destroys this supposition.  We are probably headed for a New World Order but not necessarily the one the US central planners have envisioned.  They have lost all control and are now in a tight corner attempting to keep the old game face on and now failing.

 

Wed, 06/10/2015 - 22:04 | 6184925 Dre4dwolf
Dre4dwolf's picture

 

Its not about a recovery or higher asset prices.

What people do not realize is that we are at war, financially.... NOT ECONOMIMCALLY, but FINANCIALLY.

The Fed + U.S. Govt is actively going at it with China and Europe and Russia trying to destabilize their banking institutions so that they can force them into joining some sort of "one world" bank organization . . . a global unified currency...

In order for the Fed + collection of Rothschild owned banks to pull this off they will have to destroy all the national banking institutions (collapse them all at the same time).

 

In order to collapse them all they have to force them to "play a game".

Just like the U.S. managed to defeat Russia during the cold war, they tricked them into expanding their military and govt expenditures to the point of collapse.

The Central Banks of the world are engaged in the same "game" again. . . this time govts will push themselves over the edge with debt to finance debt, instead of debt to finance a war machine.

This time when the banks go down, it will be for good and all the chips will endup in one mega bank, which will in turn become the One-World Bank.

 

This is the plan.

This was always the plan.

 

9/11 was about putting into motion a chain of events that would eventually lead to this "Final solution".

9/11 failed to complete the task, which is why they expanded monetary policy post 9/11 in order to push the markets over the edge ala 2007~2009.... which again failed to produce the results they were seeking,so now having failed with terrorism, and financial fraud, the elitists will simply resort to a "combined disaster" of sorts.... and if that fails. . . it will be full on martial law rule by decree/fiat.

 

They will get their "one world order" one way or another... at any cost even though they know full well a unified system of governance and monetary policy for the entire globe will fail misserably as socio-economic pressures boil over to uncontrollable levels at which point no amount of tear gas can hold it together.

Its not about ruling the world, its about ruling whats left of it.

 

Wed, 06/10/2015 - 21:58 | 6184932 moneybots
moneybots's picture

"But by raising rates in quarter point increments for the succeeding two years, Greenspan was unable to get in front of and contain the growing housing bubble, which burst a few years later and threatened to bring down the entire economy. In retrospect, Greenspan may have done us all a favor if he had moved more decisively."

 

Greenspan needed a housing bubble.  Greenspan wasn't unable to get in front of it, he was promoting it.  Greenspan wasn't interested in doing us all a favor.  We were not his constituents.

Wed, 06/10/2015 - 21:59 | 6184936 Hohum
Hohum's picture

You might as well sit back and enjoy the show because it's one of two paths.  One, total debt rises faster than total output and we all feel wealthier for a while.  Or, two, debt falls off and our precious consumer society circles the drain.

Wed, 06/10/2015 - 22:19 | 6185002 yogibear
yogibear's picture

 "Larry Lindsey will be right that the markets will eventually force the Fed to raise rates even more abruptly if it waits too long to raise them on its own. "

Fisher and Greenspan agreed.

Larry Summers said don't raise rates until you see the whites of the eyes of inflation. Lindsey said by that time your already over 2 years too late.

Wed, 06/10/2015 - 22:37 | 6185070 GoldenDonuts
GoldenDonuts's picture

What you people clearly don't understand is that the gov needs zero percent rate.  How in the world are you going to make war on every country that looks at you sideways with currency that has value.  Tell me  ow are you going to spy and create a police state with money of value?  How are you going to make your cronies richer if you have real money?  They might have to get up in the morning and work.  No we can't have that.

Zero percentrates will continue until the states has won whatever is coming up.  They will continue until the insiders own everything.   Once that happens then rates will rise dramatically, rents too.   The slaves will be pasting then.

 

The next bull market will be in axes and guillotines.

Thu, 06/11/2015 - 06:22 | 6185660 northern vigor
northern vigor's picture

"....the gov needs zero percent iinterest rates"

At a 20 trillion dollar federal government debt...if interest rates go up 2%, I think that is 400 billion dollars per year more expense on the budget? I said "I think", because it was so many zeros that  my calculator doesn't have enough digit space on its screen. I could not trust it so I just did it in my head. If I am wrong I apologize ahead....pun intended.

 

I read during the end of QE, that the fed is scared of rising interest rates because their asset sheet is loaded up of long term US debt at 0%. The ramifications of this is a doomsday situation.

Thu, 06/11/2015 - 00:18 | 6185322 falconflight
falconflight's picture

I enjoyed that episode of Family Guy, wherein the evil Stewie hacked the Koolaid Man to death with an ax.

Thu, 06/11/2015 - 00:45 | 6185357 TomGa
TomGa's picture

    SYRACUSE, N.Y., April 12, "Cheap Money is a stimulant, also an intoxicant," warned Dr. Benjamin M. Anderson Jr., economist of the Chase National Bank of New York City, in an address here tonight. "If the dose is large enough," he said, "a very substantial temporary effect can be brought about, but headaches will follow. It is not the sound way to do it."

. . .

"But if merchants and manufacturers will not use cheap money, he said, speculators will. They will use cheap money in buying stocks, for the prospect of capital appreciation...."

 

-- NYTimes, April 12, 1930

 

History more than just rhymes....

Thu, 06/11/2015 - 01:01 | 6185392 J Mahoney
J Mahoney's picture

I am just a dummy but my prediction is--no interest rate hikes at all--unless the dollar starts a significant freefall. The Petroyuan and AIIB may be the catalyst to do this in a year, maybe 2 years. Schiff isn't Carnac, rather he is an intelligent guy with  lot of common sense. If central banks and governments didn't distort the market and economic data, the results he predicts would be burying us now. A lot of our "allies" have signed on to the AIIB and could cause a lot of dollars to NOT be needed by many countries--when those babies start coming home and getting dropped on us like baby Dumbo, watch out. The fed will get the inflation they have been hoping for and the money velocity to increase-- but only short term as the strained middle class and people on fixed income will have to pay more just to live then run out of funds. And, of course while the fed has been printing money with the dollar on the high side of the FX market, who is going to make a killing on the foreign redemptions when the dollar is on the low side?  Who will get burned on the related derivatives?

Thu, 06/11/2015 - 01:14 | 6185409 Simplifiedfrisbee
Simplifiedfrisbee's picture

Keep going Peter. We all know you have a "financial incentive agenda" like the rest of the economist hoard but you actually seperated yourself by voicing the reality of the issues plaguing our economy when the rest of the tribe were too high on their own supply to care of the consequences. 

Thumbs Up Pete. 

Thu, 06/11/2015 - 06:20 | 6185662 Raoul_Luke
Raoul_Luke's picture

The only way the world gets out from under its debt problem is through rapid inflation.  I think the Fed's BoG is smart enough to know that.  So whether they raise rates now or later makes not a lot of difference because they aren't going to raise them enough to slow inflation.  They are behind the curve already (for a reason) and I expect them to stay that way for quite some time.

Thu, 06/11/2015 - 08:25 | 6185839 lucyvp
lucyvp's picture

people keep saying it's going to blow, but not a lot of credible answers on when. going out on a limb here, i say when old debt cannot be rolled into new debt at a lower rate.

If we take something like the average maturity of all debt, 7 years ???, look at the rates 7 years ago, 4% on T's, and today's rates 2.5%, we still have a while to go before the ponzi is over.  

If rates stick in mid 2 here, then the first time debt cant be rolled over is around 2018.   So far this uptick in rates is not significant, it could just be attributed to noise. A rate of 2.7% held for month, could be considered a non-noise event, and perhaps signal some persistant rate increase trend.  If rates rise more than this, the 2018 number is out the window, as the rollover situation becomes more dire.

Thu, 06/11/2015 - 08:56 | 6185921 SMC
SMC's picture

Change is always happening in the river of life,
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Let go, focus your mind on your desires,
Make them happen.

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