Peter Schiff 'Before Obama Leaves Office' Prediction

[devil21]

If you believe the US is bankrupt (since, presumably, it is on the gold standard), then of course you'd be willing to transfer all your FRNs to me? After all, they are liabilities of a bankrupt government; they are worthless, according to you!

Are you going to agree to the premise or not? I don't understand why you're having such difficulty establishing this simple foundation with me.

 

[AZJoe]

It would also increase all of the historical rates by a similar amount, still rendering the current time amongst the lowest ever rates of unemployment.

That would only be true if the BLS methodologies are never modified and have remained perpetually unchanged, which of course you know is not true. First BLS constantly makes seasonal and other adjustments to its data. These tending to always make the outlook look rosier. In addition they have changed definitions, and methodologies. Each time again always tending in the direction of making the numbers look rosier.

 

[AZJoe]

He hasn't literally said the economy would collapse on June 7, 2014 or whatever. But he's made dire predictions.
He predicted a 15-year depression in 2009: https://www.ft.com/content/ee3e07f0-16b2-11de-9a72-0000779fd2ac, saying people will abandon the dollar and interest rates would rise steeply. He predicted this would happen by 2013. He predicted the stock market wouldn't go higher then 8,000 for at least 10 years.
He predicted hyperinflation and oil in excess for 200/barrel by 2014 here:https://www.thestreet.com/story/110...ejected-as-reserve-currency-of-the-world.html
He predicted a major disaster in 2011, including a sharp rise in commodities:http://www.infowars.com/ron-paul-gold-commodity-prices-big-event-signaling-economic-collapse/

This is outright dishonest. None of links contained the date predictions for which no attacks Dr. Paul. In fact one of the links contains the very portion I quoted in prior post.,

neg rep for the dishonesty.

 

[AZJoe]

The issue with your simple logic is that your presumptions are wrong. The Fed never keeps interest rates down; it always keeps interest rates up. The natural rate of interest is zero.

This statement by No is so logically flawed it is silly.

The natural rate of interest is not zero. For a hard currency it is straight free market time value of money. That depends on savings (supply) and demand.
For a fiat currency the natural interest is the the time value of currency plus inflation of the currency.
The Fed as Dr. No well knows, the Fed sets interests rates by decree, and sets them artificially below even the inflationary rates.
It also suppresses rates of interest for US debt by artificially increasing the demand.

 

[AZJoe]

This is what I mean when I criticize Ron Paul's understanding of the monetary system. So what if the Fed' balance sheet is so high?

QE was an asset swap. The private sector got liquid, stable, non-interest-bearing assets in exchange for less liquid, less stable, interest-bearing-assets. That's costing the private sector nearly 100 billion in interest each year. That's money that the Fed collects and returns to the taxpayer every year. I see no reason why the Fed wouldn't be able to unwind its balance sheet, either.

No, QE by the Fed is not simply "an asset swap". An equal value asset swap would not need the Fed at all. Such items could be sold or swapped on the free market. The mere fact these entities could not get such value on the free market for their toxic "assets" de facto establishes the Fed QE is not an equal "asset swap."

Further, these toxic assets added to the balance sheet were not purchase with existing assets. Rather the Fed simply makes an accounting entry and creates currency "out of thin air" with which to purchase the toxic assets. That is not simply an "asset swap." That is a bail out of the entities holding the toxic asset at the costs of all wage earners and savers. It is purchased through inflation - dilution of the purchasing power of every other holder of or wage earner in the currency. It is theft.

 

[AZJoe]

Why does more debt mean default is going to happen? The US is the issuer of the currency. They cannot go bankrupt. As long as the government is operating and not hamstrung, it can always pay its debts; it can always make its payments.

Simply issuing more currency is a form of default. It is default through inflation. It is saying "Sure, I'll give you your units back, but before I do I am going to cut their purchasing value in half. Here's the units you lent me back."

It is the most insidious and sinister form of default because it attempts to disguise the default. Not only are the lenders (which include so many retirees and Americans with US bonds in their retirement accounts) shamelessly cheated by the scam, it also underhandedly steals the purchasing value of the savings and earnings of all savers and wage earners in the currency. It is a form of default that steals form the lowest and most needy rungs of society.

 

[AZJoe]

I've admitted many times that the dollar collapse is taking longer than I expected. But since the underlying fundamentals that lead to a dollar collapse keep getting worse I don't see how the "paper bugs" can claim victory. Suppose I predict a dam will collapse in 5 years. The water behind the dam keeps rising but the dam doesn't collapse in 5 years. Was I wrong despite the fact that the water continues to rise and is expected to keep rising? Would you build a home on the bank downstream from that dam?

Good post.

 

[Madison320]

No, QE by the Fed is not simply "an asset swap". An equal value asset swap would not need the Fed at all. Such items could be sold or swapped on the free market. The mere fact these entities could not get such value on the free market for their toxic "assets" de facto establishes the Fed QE is not an equal "asset swap."

Further, these toxic assets added to the balance sheet were not purchase with existing assets. Rather the Fed simply makes an accounting entry and creates currency "out of thin air" with which to purchase the toxic assets. That is not simply an "asset swap." That is a bail out of the entities holding the toxic asset at the costs of all wage earners and savers. It is purchased through inflation - dilution of the purchasing power of every other holder of or wage earner in the currency. It is theft.

Also has there ever been a time where a country actually "uncreated" their fiat currency? I think Japan slightly decreased their monetary base around 2003 but it was only about 5 or 10%. As far as I know just about every country in history keeps inflating. It's the path of least resistance for politicians.

 

[Zippyjuan]

This statement by No is so logically flawed it is silly.

The natural rate of interest is not zero. For a hard currency it is straight free market time value of money. That depends on savings (supply) and demand.
For a fiat currency the natural interest is the the time value of currency plus inflation of the currency.
The Fed as Dr. No well knows, the Fed sets interests rates by decree, and sets them artificially below even the inflationary rates.
It also suppresses rates of interest for US debt by artificially increasing the demand.

Since the rate of inflation is low, interest rates should be low as well. And they are. The Fed only sets rates at which banks can borrow money from the Federal Reserve or from each other. These are very short term rates (usually overnight).