Peter Schiff was WRONG!!!!

[dannno]

I mean, fuck man, Ron Paul has probably explained the concept that inflation was closer to 8 or 10% rather than 2-3% like a couple dozen times in media appearances and press conferences the last 5 years it baffles me that you are sitting here trying to argue that inflation is 2-3% on Ron Paul forums.

YOU need to slow down and read what I AM saying, not the opposite.

 

[helmuth_hubener]

I already explained it - you completely miss the concept that what Schiff is predicting will happen in the future. It hasn't happened yet. What about that do you not understand?

OK, thanks. Since you didn't tell me what I didn't get(you just told me the stock market wasn't going to go up, and claimed to know exactly why it was going up) I had no idea what I didn't get. Now, I do! Thanks!

So, what I am not "getting" is that although Schiff's predictions have not come true, they will "in the future". Since there is no due date for the most part, this "in the future" is a time that need never come. Any due dates that have inadvertantly or incautiously been tossed out there can be explained away in other ways, such as "could" vs. "will," "well, it was close," and "the Fed messed it up by blowing a bubble; otherwise it would have happened for sure."

So, what I am getting here, or what I am beginning to get, is that there exists in this Universe no possible outcome which ever would nor ever could show any of Peter Schiff's predictions to be wrong about anything. Is that correct? Am I getting it?

 

[dannno]

Do you have any predictions by Peter Schiff that didn't come true that were supposed to already?

And I don't want any of these "could" predictions, I want solid predictions that Peter says will happen by a certain time that hasn't.

 

[helmuth_hubener]

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

Well I am no pension expert. My point is merely that there exist some sort of rules which govern pension plans and that the pension managers can't just change those rules at will. Only the government can do that, because it makes those rules that govern them.

The government's own pension plan, the SS, can be changed at will by the pension manager, because the government is both the manager and the rule-maker.

 

[dannno]

(you just told me the stock market wasn't going to go up, and claimed to know exactly why it was going up)

That's bullshit, I have no idea what direction the stock market is going. It could crash REALLY hard, or they could continue to push inflation into the stock market.

 

[dannno]

Do you have any predictions by Peter Schiff that didn't come true that were supposed to already?

This is really the key - we have a 4 page thread about Peter Schiff being wrong and not one single solid prediction that has been shown to be wrong.

The thing is, even if he did have a prediction that was timed wrong, even if you can show me one, he's still right in the broader sense. It's just pathetic that you can't even do that, when you say a million sentences you are bound to exaggerate or mis-speak somewhere and say something that you didn't mean to which I am sure he has.

 

[cubical]

In 2008 he predicted gold would reach $2000 in 2009.

Not sure if true but, are you really getting on a guy because he said an asset would go up 250% in 1-2 years, but instead it went up 230% in 2-3 years?

 

[helmuth_hubener]

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

Certainly! I always appreciate a bit of skepticism! Here is a link:

http://www.thepeterschiffblog.com/2011/08/peter-schiff-get-out-of-us-dollar-now.html

The context was a radio show, I think; probably his own radio show. Here is the original audio which I, your loyal and diligent helper have dug up, so you can listen to it in his own voice. You can see that the transcript is actually imperfect and very abbreviated.

https://web.archive.org/web/2009032...9/peter_schiff_on_20092010_usa_hyperinflation

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.

Yes, I have it all figured out. I have it all figured out that I do not have it all figured out! I don't, Peter doesn't, we don't. None of us does. That's what I have all figured out.

And yes, I will say he was wrong. He was wrong to think he could predict the future. Whether his guesses end up lucky or unlucky is really irrelevant to my opinion. And that's all they are: guesses, educated though they might be.

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.

I don't understand this question. I have long owned a significant (well, significant to me) amount of gold. Only recently have I determined to hold 25% of my investment portfolio in stocks, in order to be prepared in the event of prosperity. So, I guess the answer to where was I is that I was in gold. Gold happened to do well. I was lucky.

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

But actually, you don't know what will happen. Your expectations could be wrong.

 

[jon_perez]

There was no high price inflation during the 2000s in the US. Gold reliably goes up during actual times of high price inflation, like the 1970s, for very solid theoretical reasons. But since there was no such high inflation in the 2000s, we really don't know why it went up. I feel like at least some of it was probably widespread uncertainty and fears that inflation would come. But we don't really know.

My own theory is: a combination of hysteria as well as pre-emptive action. I believe most market participants understood that the 2008 crisis would likely lead to currency debasement as a "solution" and thus bid up the price of the one currency that couldn't be debased.

In hindsight, we could see that, as is usually the case, markets have overshot the target and went up too far, too fast. Of course, gold is still nowhere near what it was at that time (well under $1000), so one could reasonably argue that the thesis remains intact. Currency debasement DID occur, just not (yet?) up to the level that the [overbid] price of gold implied.

Austrian Economics explicitly and strongly states that economics is all about the actions of individual human beings, human beings who are not inanimate particles with definite and predictable behaviors like in physics. They make choices. They're unpredictable. We don't know what any one of them will do next. Much less a billion of them. That methodological individualism is the very foundation of Austrian Economics.

This is the problem with people like Mr. Schiff. He's out there making predictions and so people think that the predictions he makes are what Austrian Economics has to say about the matter. It's not! Austrian Economics does not say that if the Fed drops a trillion dollars into the market then the dollar will inevitably go into hyperinflation. Austrian Economics does not predict that the price of gold must go to $2000. It is a wrong-headed doomsday speculation industry built on top of Austrian Economics that says silly things like that. There is no empirical evidence that I know of flying in the face of Austrian Economics. Only in the face of loud-mouthed, know-it-all pundits.

To be frank, I DO NOT BELIEVE that Austrian economics is necessarily more correct than other economic theories. In fact, I DO NOT BELIEVE that ANY economic theory will come near to the predictive reliability of a physics theory. Economics is, and likely ALWAYS will be, a dismal "science".

However, I like to think of economic theories as analogous to the parable of the three blind men and the elephant. They were all correct(!) and yet ended up arguing with each other. What they failed to appreciate was that the elephant was a more complex beast than their limited world-views could fully articulate. In fact, even physics theories are never complete, and this applies all the more to economic theories.

Most people on this forum probably have the belief that Austrian ideas necessarily invalidate Keynesian ones. I don't think this to be the case. Rather than being a be-all/end-all description of the state affairs, I submit that there will be contexts where a Keynesian-style analysis might be more constructive approach and other situations where an Austrian-style analysis is more appropriate.

There is in fact this new economic theory I came across (I believe this was in a recent issue of The Economist, a magazine which I often find disgustingly liberal/left, but still...) which does away with the axiom of a homogenous, "rational actor" and instead works with a model based on heterogenous economic actors. Sounds like a model that is a lot more unwieldy, which is probably why it is only gaining currency today, after the shortcomings of earlier models have shown themselves.

 

[dannno]

I submit that there will be contexts where a Keynesian-style analysis might be more constructive approach and other situations where an Austrian-style analysis is more appropriate.

So sometime advocating theft from individuals will lead to a 'greater good' and sometimes it won't? Is that what you are saying?

Keynesianism implies that we need to print money and give it to banks and industry to spur economic development.

Austrian economics implies that this is theft, will lead to mal-investment and inflation.

It's really basic when you boil it down.

 

[jon_perez]

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

Wake me up once Japanese inflation is in danger of hitting 5%. After two decades of ZIRP and QE, they're still trying to hit 2%.

I visited Tokyo in 1982 as a kid and the price of a can of soda was around 100 yen. Earlier this year, before their all-out swear-to-print-as-much-money-as-they-can Abenomics, there were still 100 yen sodas but some were priced at 110 yen which works out to about 0.3% annualized inflation WITH ZIRP AND QE for the better part of those 3 decades!

Now, the US and Japan are not entirely comparable, but since the Japanese have been at it longer and there are enough similarities (burst housing bubble), I would like to see hyperinflation take hold of first over there before being so sure that QE will lead to such. Remember that Japan pioneered the whole "QE" idea.

There is also a paradoxical aspect to the whole assertion that "QE leads to hyperinflation". Jim Rogers has stated that Japan doing bailouts (kind of hand-in-hand with QE/stimulus) is why they are stuck in their lost decade - two decades already by now - whereas Korea, because they allowed liquidation to occur, has experienced healthy economic expansion as opposed to Japanese stagnation. But if you're stagnating, prices tend to stay down!

I'm starting to think that maybe forbidding money-lending with interest is the right idea. Without interest rates to dick around with, perhaps booms and busts will even be less pronounced. Of course, life would be far less exciting, and one can't make (or lose!) as much money trading the markets.

 

[helmuth_hubener]

My own theory is: a combination of hysteria as well as pre-emptive action. I believe most market participants understood that the 2008 crisis would likely lead to currency debasement as a "solution" and thus bid up the price of the one currency that couldn't be debased.

Yes, that is what I'm thinking, too. Of course, it had a long-term up trend long before 2008. So the fears were there all through the 2000s. Maybe. Or maybe there is some other reason that gold was going up.

In hindsight, we could see that, as is usually the case, markets have overshot the target and went up too far, too fast. Of course, gold is still nowhere near what it was at that time (well under $1000), so one could reasonably argue that the thesis remains intact. Currency debasement DID occur, just not (yet?) up to the level that the [overbid] price of gold implied.

Indeed, overshoot is so typical in markets, you can basically count on it.

To be frank, I DO NOT BELIEVE that Austrian economics is necessarily more correct than other economic theories. In fact, I DO NOT BELIEVE that ANY economic theory will come near to the predictive reliability of a physics theory.

Here's the thing: this statement is actually an Austrian statement! This is precisely what Austrian economics teaches! If you believe this, you are at least in that sense an Austrian and just didn't know it. You can listen to lecture after lecture from the Mises Institute (and I have!) explaining why economics is not like physics and cannot be and never will be. It is all/most of the other schools of economics that are holding out hope of trying to make economics a "real" science like physics or chemistry; a science that can actually give us useful predictions about the future. But it can't. Humans aren't missiles. You can't do some calculus and chart their trajectories. They aren't chemicals. You can't say that a combination of A and B will give you C. Humans act. And that simple fact makes economics very, very different than the physical sciences.

Most people on this forum probably have the belief that Austrian ideas necessarily invalidate Keynesian ones. I don't think this to be the case.

The most important, fundamental way that this is true is that Keynesianism believes that humans can be treated like rocks, or electrons, and that you can do enough fancy aggregating and mathematical gymnastics then you'll get an accurate model of the economy that you can use to make useful predictions. But you can't! Since you have already said you, too, believe this, that is, you too believe economics can't ever be like physics, you have invalidated the entire foundation of Keynesian ideas.

That is not to say that Keynesians cannot be brilliant and have great upsights. They can, just as thinkers that happen to be in the Chicago School, the London School, the Public Choice school, or any other school. And maybe that is what you meant. You can use and appreciate a man's ideas and upsight without accepting his whole (possibly flawed) system of beliefs. But the fundamental foundation of Austrianism, that humans act, and thus are never entirely predictable, I think that foundation is the most realistic and true out of all of them.

There is in fact this new economic theory I came across (I believe this was in a recent issue of The Economist, a magazine which I often find disgustingly liberal/left, but still...) which does away with the axiom of a homogenous, "rational actor" and instead works with a model based on heterogenous economic actors. Sounds like a model that is a lot more unwieldy, which is probably why it is only gaining currency today, after the shortcomings of earlier models have shown themselves.

Well obviously individuals are heterogeneous. Have you ever met two homogeneous people? So this seems like it is only sensible to accept this to be the reality which it obviously is. Of course, Austrians have been doing this for a long time.

 

[dannno]

I'm starting to think that maybe forbidding money-lending with interest is the right idea.

Yes, we should make sure drugs stay illegal too, more government is always a great solution.

 

[helmuth_hubener]

So sometime advocating theft from individuals will lead to a 'greater good' and sometimes it won't? Is that what you are saying?

Keynesianism implies that we need to print money and give it to banks and industry to spur economic development.

Austrian economics implies that this is theft, will lead to mal-investment and inflation.

It's really basic when you boil it down.

There is a lot more to it than that, my friend. It is part of Ron Paul's brilliant political and educational entrepreneurship that he was able to water it down and stick to a very certain set of catchphrases such that people were able to catch on and think they understood with only such a crude and rudimentary understanding. And I am very thankful that he did! But if you're interested in this stuff, maybe it's time you learned more? What do you think? Any interest? If so I can make some excellent recommendations!

 

[jon_perez]

So sometime advocating theft from individuals will lead to a 'greater good' and sometimes it won't? Is that what you are saying?

Keynesianism implies that we need to print money and give it to banks and industry to spur economic development.

Austrian economics implies that this is theft, will lead to mal-investment and inflation.

It's really basic when you boil it down.

You need exercise more care when trying to understand other points of view. Not only did you get the spelling of imminent wrong earlier, you completely misunderstood what the word meant as well.

The way I understand it, Keynesianism (as originally articulated) says that it is ok for the government to incur a deficit (not exactly the same as money-printing) IF (and ONLY IF) there is a bad recession and during good times, it can/should pay back the deficit. Of course, just about all governments today have perverted that idea (in cooperation with their citizens of course!)

But anyway, for what it's worth, when Keynesianism was taught to us in college, I felt it was hogwash and voodoo and I still believe that to a large extent. But consider the following scenario:

* Massive recession in the US, a lot of people have no jobs
* US government incurs a deficit and hires people to build/upgrade roads (in the right places!) and the transport system in general
* People start to have money and, at the same time, the infrastructure is improved
* Leads to a virtuous cycle as productivity increases due to more efficient infrastructure and the economy booms

Is it possible to conjure up money out of thin air and then have that money conjure up products/services "out of thin air"?? Apparently so!
The above is NOT a voodoo scenario because an economy itself is all about creating something out of nothing, or creating more from less - and this happens even without having to conjure up abstract money - except that the latter tends to make things a bit easier as long as it is not abused.

The problem with Keynesianism is that it has been grossly perverted and misapplied to serve political interests. Merely spending money DOES NOT improve the economy. It has to be spent in the right places! The economic theory does not tell you where to spend it, so people oversimplify the application of the theory (it's just a theory) and often it fails to work, but that doesn't mean Keynes was not able to contribute some insight.

Now, what I understand of Austrian theory is its analysis of boom-and-bust cycles and how money supply and/or interest rates may exaggerate such. Well, I happen to think Austrian theory also presents a very reasonable analysis there and it definitely explains a lot of what has transpired recently!

So in the cases I've outlined, the two theories are talking about two different situations and do not necessarily conflict with each other.

 

[dannno]

You need exercise more care when trying to understand other points of view. Not only did you get the spelling of imminent wrong earlier, you completely misunderstood what the word meant as well.

I also spelled it correctly several times, and you have a grammatical error in your sentence right there. And I understood it better than you, imminent means that something is approaching, it may be "near" but there is no definitive timeframe as you suggested and something being "near" or "close" to happening can be defined differently depending on the time period you are looking at. 5-10 years is close if you are looking at the history of our banking system or our country or if you are forecasting a huge economic disaster.

Austrian theory says that when the government gets out of people's way they will spend the money on the things that are most important to them and if the government allows development to occur then the right things will be developed by individuals who see a need for those things and can convince others to collaborate.

Keynesian theory is inherently immoral because you are forcing people to make those decisions - even if you made the same exact decisions to do with their money as they would have, you are still stealing it then spending.

But there is another huge problem with Keynesianism as it functions - people with the power to move the money are going to be corrupt and will use that money to benefit their politically connected friends.

So in theory it does not work. In practice it does not work.

I see no reason to give Keynesianism the time of day and reading your post didn't help.

 

[Madison320]

Wake me up once Japanese inflation is in danger of hitting 5%. After two decades of ZIRP and QE, they're still trying to hit 2%.

I visited Tokyo in 1982 as a kid and the price of a can of soda was around 100 yen. Earlier this year, before their all-out swear-to-print-as-much-money-as-they-can Abenomics, there were still 100 yen sodas but some were priced at 110 yen which works out to about 0.3% annualized inflation WITH ZIRP AND QE for the better part of those 3 decades!

Now, the US and Japan are not entirely comparable, but since the Japanese have been at it longer and there are enough similarities (burst housing bubble), I would like to see hyperinflation take hold of first over there before being so sure that QE will lead to such. Remember that Japan pioneered the whole "QE" idea.

There is also a paradoxical aspect to the whole assertion that "QE leads to hyperinflation". Jim Rogers has stated that Japan doing bailouts (kind of hand-in-hand with QE/stimulus) is why they are stuck in their lost decade - two decades already by now - whereas Korea, because they allowed liquidation to occur, has experienced healthy economic expansion as opposed to Japanese stagnation. But if you're stagnating, prices tend to stay down!

I'm starting to think that maybe forbidding money-lending with interest is the right idea. Without interest rates to dick around with, perhaps booms and busts will even be less pronounced. Of course, life would be far less exciting, and one can't make (or lose!) as much money trading the markets.

Don't confuse ZIRP with QE. ZIRP causes bubbles, QE causes a general rise in prices. Until very recently (last year I think?) Japan has not done QE, only ZIRP. That's why they haven't had prices increases. Now that Japan has started QE, prices are rising.

 

[Madison320]

Why would Hyperinflation come now?

 

[Madison320]

"I can predict the future."

But no, Peter, you can't.

Since you can't predict the future what's your investment strategy? Wait for something to go up and then buy it because it will keep going up?

 

[helmuth_hubener]

This is your reasoning for why the US's unfunded liabilities are not a problem?

Umm, no, because I do not claim that they are not a problem, and even if I did, the ability for me to invent this scenario would not provide a very strong basis for that claim. Now would it?

The unfunded liabilities are a problem. They are a very big problem. They are just a somewhat different problem than the actual federal debt. We ought to think about these things carefully to come to a correct understanding, and not just give total credence to a preposterously high number as "the real debt number" because it makes a good tabloid headline and seems to support and reinforce our views.

What if that same couple had 100 kids on the way?

Ahh, good question! Things would change, wouldn't they? Let's make it 5 just since that keeps things within the bounds of realistic imagination. So, they already had the one kid. And they had certain unfunded liabilities for him. Maybe they had decided together that Junior was going to have only grass-fed Omega-3 eggs and the best clothes and the best private/homeschooling education available. Now things are changing. Will these decisions stay the same? No. That's an important characteristic of the couple's unfunded liabilities, like the gov't's: they're not set in stone. There's a lot of ways to raise a kid. With these five newcomers, garage sales have just become a major part of the way for this family. Maybe they've committed that the kids will go to college and they would pay for it. Things are on track (even with the 6 kids. They're savers!), but then suddenly, when Junior is 18 they suffer some financial set-back. Is the family going to blindly pay for college anyway and just go bankrupt? Not likely. Junior may have to pay his own way.

Now the gov't is a lot more likely to do just precisely the kind of stupid stuff like blindly pay for the college anyway, because of the crazy logic of the system. But even for government managers, financial realities do graze their consciousnesses occasionally, or, more often, hit them in the head due to decades of closing their eyes and plugging their ears. And there happen to be multiple solutions to the unfunded liability problems, only one of which is hyperinflation. I listed some; go back and look. So, the point is, hyperinflation is not inevitable when these kinds of problems occur. If it was, we would have had hyperinflation in the 1980s. Instead, we got a raised SS tax. Can you predict which destructive and possibly crazy actions the gov't will choose to take to solve their financial problems? If so, you are a better man than I. Can you predict which direction a careening car of drunken teen boys will turn? These people are out of control and unpredictable.