Peter Schiff was WRONG!!!!

[dannno]

Yes, a lot of things could be argued, but that's not what Schiff meant. You can't predict that something is "on the verge of happening... long term." On the verge means short term. That's what it means! Seriously, is it not clear to you that in the quote above Peter Schiff is predicting the possibility of the total collapse of the dollar in the very near term and in an extremely catastophic way? If not, I don't know how Peter could have made himself more clear to you. He was not mincing words. His meaning was pretty obvious. I don't know how anyone could miss it.

I've listened to at least 20-25 hours or more of Schiff talking and he always refers to the hyperinflation event being possibly within the next couple years, but maybe 5 or 10 years out.

People misconstrue his statements and he might possibly mis-speak on occasion, but he never purposely makes any claims about what will definitely happen in the short term.

 

[Danke]

The US government has a tremendous amount of debt. And yes, if it was an actual, responsible company running a legitimate pension plan, its pension liabilities should be counted on its balance sheet too, and should be fully covered by its assets. No question. But it isn't. And because it isn't, in all likelihood the terms of the pension plan are almost certain to simply change. Poof! Problem solved. A private pension can't do that.

What? private pensions have been doing that for at least a couple of decades now.

 

[specsaregood]

But anyone who thinks that the dollar is not going to be destroyed by inflation needs to explain to me how the US government is going to meet its roughly $100 trillion (or is it $200 trillion?) in unfunded obligations. It can't except through inflation.

Maybe it doesn't plan on meeting those obligations. Which *I think* would be deflationary.

 

[gwax23]

Im a schiff youtube subscriber and always watch his most recent videos so i thought U guys would find this interesting:

http://www.youtube.com/watch?v=YTICKDjOHR0

 

[cubical]

Peter in 2007 and 2008 repeatedly predicted that hyperinflation of the US dollar was imminent. But it wasn't. Here is just one example of a typical quote from Peter:

The whole idea is to get out of the US Dollar. It is on the verge of collapse. The people who don't get out of the US dollar are going to be completely broke and that is obvious. Look at what Ben Bernanke did. Interest rates are zero. Money is free.

Bernanke is going to run up printing presses as fast as he can. This is pure inflation Latin American style. This is hyperinflation; this is Zimbabwe; this is the identical monetary policy of the Weimar Republic.

I am just as convinced that people who have their money in US dollars are going to be just as broke as people who have their money with Madoff.

I do not know how much time you have. With the dollar dropping 5% a week at this point, could it snap back? But what if it keeps falling? What if it's down 5% next week? And 5% the week after that? And then what if it drops 10%? and another 10%? At some point a year from now the dollar could be dropping 5% a day.

The inflation rate in Zimbabwe is over 100 million percent a year.

The US dollar, it turns out, was not on the verge of collapse.

Anyway, this is just an instance of wrongness of type 2. The other types, 1 and 3, are more important, if you are interested in protecting your wealth.

Do you have a link to these quotes and their context?

If we have hyperinflation within the next 5 years(which peter says is the worst case scenario), you don't think he was right to say what he said? Will the history books say he was wrong? You are talking like a trader. Let me guess, you are in college and think you have it all figured out now.

Peter has been saying to get into gold for over a decade, as it when it was under $300 an ounce. Where were you the other 9 out of 10 years? Your stocks are back to where they were in 2000. Congrats.

Personally, I feel peter is underplaying the collapse. I fully expect hyperinflation.

 

[cubical]

Unfunded liabilities are different than actual debt. Very different. They still are relevant, for sure. But they're different.

Let's look at a young couple. They have a young baby and one on the way. They have no debt and $10,000 in the bank. The husband makes $50,000 a year and the mom can stay home. What is their financial situation? What would you say? Pretty good?

Do you know what another word for "baby" is? "Unfunded liability."

Count in the "unfunded liabilities" and what was a very solvent, strong financial situation can all of a sudden look like an overwhelming amount of crushing and unsustainable debt. The family is maybe half a million in the hole when you count their unfunded liabilities!

This is your reasoning for why the US's unfunded liabilities are not a problem? What if that same couple had 100 kids on the way? All is fine when you can just make up a scenario and say it fits.

Ever heard of present value? Present value of debt has been estimated in the range of 40 to 200 trillion. Here is one example.

http://www.economicpolicyjournal.com/2013/08/california-economist-says-real-us-debt.html

 

[cubical]

Economic declines happened about every four years or so in the last century in the US. Saying one will come is not that big of a step for anyone. Eventually they will be right. That doesn't make one an expert.

A global reserve currency collapse is not something that comes around every 4 years.

 

[Zippyjuan]

If he is so convinced of a dollar collapse he should be taking all of his money out of dollar denominated investments and should be encouraging his investors to do the same. EuroPac should be out of stocks. Maybe even short it. Are they?

And if the dollar and US economy totally collapses it will bring pretty much the rest of the world with it so buying foreign stocks will offer little protection.

In my opinion, Schiff uses fear to sell his own products. Buy my book. Invest in my funds.

Let's check out his US Equity fund. Granted this is a pretty new fund and doesn't have much track record. Since inception, it has returned without including any sales charges (4.5%) annually an average of 3.09%. Add in the fees, it drops to 0.14% a year. Compared to the S&P 500 which has returned 16.2% annually. http://www.europacificfunds.com/stratUS_fund.html

Consumer Staples are 26% of this fund. Biggest holdings are Microsoft, Apple, a Utilities SPDR, Century Link (highspeed internet and phone company), ATT, ExonMobile, WalMart.

His international Value Fund? Without fees, average annual return since inception: 1.96%. With fees, 0.62%. They compare that with the performance of the MSCI AC World Ex US Value Net Index which over the same time period averaged 4.58% a year. http://www.europacificfunds.com/value_fund.html

His International Value Fund's biggest countries are Canada (16.7%), Japan (13.3%- doesn't Schiff say Japan is collapsing too?), Norway (12.7% which seems a large amount for a small country) and Australia (8.7%) which rely heavily on trade with the US- a collapse of the dollar and the US economy would definately hurt them. http://www.europacificfunds.com/value_fundOverview.html

EuroPack Hard Investment Fund (basically commodities): http://www.europacificfunds.com/hardassets_fund.html Since inception without fees: negative (loss) of 9.7% and with fees negative 11.2% returns. Comparable index there is the S&P Global Natural Resources Index which has averaged a loss of 6.63% over the same period.

Got distracted checking out his returns. Was actually looking for holdings in the funds.

 

[Fredom101]

Don't know if this was mentioned already, but Schiff IS wrong, completely wrong about Bitcoin, which he hates.

 

[PRB]

As for the Hyperinflation, its coming, dont you worry.

just like global warming?

 

[Libertomics]

He seems to be doing quite well for himself, as well as his clients.

As for the Hyperinflation, its coming, dont you worry.

Why would Hyperinflation come now?

 

[toathis]

Don't know if this was mentioned already, but Schiff IS wrong, completely wrong about Bitcoin, which he hates.

 

[gwax23]

Thats being owned? Very low bar for "Ownage" indeed.

Im not going to bother getting into Bitcoin. I dont want all the bitcoin fanboys burning me at the stake.

 

[cubical]

I am selling all my bitcoins and moving into Tulip Bulbs.

 

[eric_cartman]

lol... i wouldn't say that peter got owned at all.

peter was right that staples didn't take bit coins.

they accept their gift cards which can be purchased for US dollars. and this guy just converts his bitcoins to US dollars and then buys the gift card.

with the poker, i guess the idea is that if you want to make a deposit on a poker site for $100... you take $100 and conver them to bit coins, then you immeidately send the bit coins to the poker site. and if you win money, say $50.... now you have $150 in your poker account. then you convert the $150 into bit coins (at whatever their value is, it is irrelevent) and then you covert your bit coins into $150.

 

[angelatc]

I'm pretty Ron Paul says much the same thing about hyerinflation and the eventual collapse of the dollar.

I guess he was wrong about blowback since he called it 15 years before it happened, so he's probably wrong about all that stuff too.

 

[dannno]

Why would Hyperinflation come now?

Wake me up when the dollar is no longer the reserve currency of the world.

 

[cubical]

Wake me up when the dollar is no longer the reserve currency of the world.

A cause or result of hyperinfaltion? If you are waiting for that, I'm afraid you will be too late.

 

[brandon]

Good post OP. It's almost comical how completely and totally wrong Schiff has been about nearly everything. It blows my mind some of you are in such a think cloud of denial that you can't think of a single thing he's been wrong on. And not only has his investment advice been totally wrong, but he has a very weak laymans understanding of economics, often asserting things have intrinsic value etc. The only thing Schiff is good at is talking and self promoting.

 

[jon_perez]

Apparently pride comes before the fall. I remember when Schiff was gloating over someone else who he admittedly did own in a particular investment/economics debate. I remember thinking at that time that Schiff was no paragon of modesty. Well, it is his turn to be owned today. His investment advice has SUCKED for at least two years running, if not longer.

It is not that his ideas are necessarily wrong, but when it comes to the markets, TIMING is EVERYTHING. Your thesis may be right, but if you read the mood of the markets wrongly, and do not come in at the proper moment, you can still lose a big chunk of money.

The main argument against QE and stimulus spurring inflation was persuasively made by Gary Shilling who noted that in 2010, iirc, all the money printing and govt spending still fell far short of and could not make up for the deleveraging in the private sector.

The other prime argument is Japan, for which nearly two decades worth of ZIRP and QE have managed to generate only a minuscule amount of inflation, far less than countries who had much higher rates of interest.

If one plotted the amount of inflation vs the price of gold before its bull run ended, it is obvious that gold was more of a momentum play than an inflation hedge and that its price run-up was the result of sentiment rather than actual value appreciation, seeing as how it outpaced actual inflation many many times over.

I still find the thesis of letting the markets rather than the Fed set rates a credible, even compelling, one. At the same time, one cannot willfully ignore empirical evidence that sometimes flies in the face of Austrian economic theory's predictions.

I also harbor a fear at the back of my mind that all the QE may be destabilizing and that we are possibly headed towards a tipping point of either very high inflation and/or very high interest rates. But if evidence proves otherwise, I'm not about to make up stories to stick to any particular economic ideology.

I say that Japan is still the case study to look at, because they are much further down on the money printing road than the USA. If JGBs or the yen plummet suddenly, then the FED had better wake up and take that as a sign to cease and desist.