I think it is important to note that Peter Schiff does not even pretend to represent "Austrian economics" OR mainstream economics, regardless which school of thought is most aligned with or in agreement with his assumptions.
Regardless of methodologies, both academics and people like Schiff have the same objectives: to observe and quantify fundamentals, analyze dynamic forces involved, and predict outcomes. It's a classic test of some combination of theoretical and applied, or book versus street smarts. Academics, who are not in the trenches (but are a trench in themselves), have all the book smarts with little street knowledge, while Schiff has an elementary grasp of the book, with lots of the street.
I laugh whenever I hear mainstream academic economists say that economics is not an experimental science. HA!! The hell it isn't. Keynesianism in all its forms is the grandest of experiments ever inflicted onto the world at large.
To say that economics is the study of human behavior makes it sound as if the academics really do see themselves and their discipline as mere passive observers of complex human behavior and systems. Their "non-normative" presumption might be true if their studies actually did occur in vacuo, but since that is not the case, they are anything but passive modelers and observers. Merely stating that, "If you apply pressure to Lever A you will get X result, but if you apply pressure to lever B you will get Y result" is not "non-normative". It is no different than writing an instruction manual for policy makers who rely upon them, and not anything Schiff has to say.
Economics on all scales is not just human behavior, but human influence on other humans' behavior (some combination of enticement, manipulation and outright force) - and academics play an enormous part in that influence (else there would be no Keynesian anything). Mainstream economics plays an enormous part in that entire feedback loop, such that whether they like or admit it or not, they do play a large part in their own uncertainty, given all of their governing assumptions - including interpretative framework - which are relied upon and applied in the mainstream real world.
Peter Schiff, who cannot be accused of being "mainstream", has a relatively insignificant influence on economy-wide economics, and is much closer to a "passive observer" than the whole of mainstream thought, even though both are active participants in the economy. And yet somehow mainstream academics, with all its putative science -- including advanced, complex methodologies and models, was not able to predict the magnitude, let alone the inevitability, of something as large as a housing bubble crash.
