Friday, March 28, 2014

Fed threatens to end stock market party

So if cutting and taxing are off the table, we can expect borrowing and printing. That is exactly what has been happening. In recent years, the Fed has bought approximately 60% of the debt issued by the Treasury. This has kept the bond market strong and interest rates extremely low. But a country can’t buy its own debt with impunity indefinitely. In fact the Fed, by winding down its QE program by the end of 2014, has threatened to bring the party to an end.

Thursday, March 27, 2014

America borrowing way out of recession

America is trying to borrow its way out of recession. We are creating debt now in order to push up prices and create the illusion of prosperity. To do this you must convince people that inflation is a good thing…even while they instinctively prefer low prices to high. But rising asset prices do little to help the underlying economy. That is why we have been stuck in what some economists are calling a “jobless recovery.” 

The real reason it’s jobless is because it’s not a real recovery!  So while the current booms in stocks and condominiums have been gifts to financial speculators and the corporate elite, average Americans can only watch from the sidewalks as the parade passes them by. That’s why sales of Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors. 

Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt, which at some point in the future must be repaid.

Wednesday, March 26, 2014

Schiff not short markets because of US Dollar

As the Fed has to print more and more money to keep these asset bubbles inflated, it will diminish the value of the dollar.

Although I don't think there's a lot more upside in the stock market, I'm not looking for a collapse. But what I am looking for is a dollar collapse, so that even if the market continues to move higher, it's nominal highs only. It's not real highs adjusted for a loss of purchasing power in the dollar.

Being short the stock market is like being long the U.S. dollar. I don't want to borrow U.S. dollars in order to short U.S. stocks, so I don't have short positions, and I haven't had them

I do not believe that the Fed is going to take away the punch bowl. They're going to keep spiking the punch bowl until the patient dies of an overdose of drugs. That's what's going to happen. The economy's going to completely pass out at some point and it's not going to matter how much stimulus the Fed gives us.

Tuesday, March 25, 2014

Peter Schiff talks economics

When the world figures out that we conned them and they are holding a bunch of worthless IOUs, they are going to stop exporting. It doesn’t mean that they are going to stop producing goods. It just means that their own citizens will consume them. Which will be better for them, but that’s when the party ends in the U.S. Because without the world to supply us with the goods that we don’t produce, there is almost nothing to buy.

If there is almost nothing to buy, it doesn’t matter how much money consumers will spend. There is nothing there, it’s just inflation. All our policies are about putting money in the pockets of consumers. But money doesn’t do you any good if there is almost nothing to buy. And where is this stuff coming from? It’s coming from the productive efforts of people outside of America.

Monday, March 24, 2014

Free money has a price

The red flags contained in the national and global headlines that have come out thus far in 2014 should have spooked investors and economic forecasters. Instead the markets have barely noticed. It seems that the majority opinion on Wall Street and Washington is that we have entered an era of good fortune made possible by the benevolent hand of the Federal Reserve. Ben Bernanke and now Janet Yellen have apparently removed all the economic rough edges that would normally draw blood. As a result of this monetary “baby-proofing,” a strong economy is no longer considered necessary for rising stock and real estate prices.

But unfortunately, everything has a price, even free money. Our current quest to push up asset prices at all costs will come back to bite all Americans squarely in the pocket book. Death and taxes have long been linked by a popular maxim. However, there also exists a similar link between debt and taxes. The debt we are now incurring in order to buttress current stock and real estate will inevitably lead to higher taxes down the road. However, don’t expect the taxes to arrive in their traditional garb. Instead, the stealth tax of inflation will be used to drain Americans of their hard earned purchasing power.

Thursday, March 20, 2014

Stock market gains are paper wealth

 It doesn’t feel like an economic recovery to the average American, because it’s not. We are not getting the type of prosperity that would come from real economic growth; we are just getting a bubble. 

And when people are speculating in the stock market, it doesn’t create real wealth. On paper for some. But we are not building factories, we are not producing more consumer goods, we are not creating good jobs, we are just inflating a bubble. And we are delaying the day of reckoning, which is relatively close at this point.

Wednesday, March 19, 2014

Stock market going up does not mean the economy is getting healthier

There is a limit to how much artificial stimulus we can have. There is a limit to how much money the world is willing to lend. Because once they are coming to terms with the fact that we are never going to pay the money back, they are not going to want to send us their savings and send us their production if we can’t pay for it. 

But we got this phony bubble economy that gets bigger and bigger. People focus on the stock market. They say, “Well the stock market is going up that must mean the economy is getting better.” No it doesn’t. There is just a lot of cash, a lot of inflation created by the central banks. So they are able to inflate a bubble in stocks or in real estate, but they are not able to generate legitimate economic growth.

Tuesday, March 18, 2014

Economy to collapse one day

One of the problems we have in America is that interest rates are too low. We don’t save enough, we spend too much, we borrow too much, we don’t produce enough. So we have these huge external imbalances where we borrow from the rest of the world. We have to import goods, because we don’t invest in productivity. 

We are not producing the goods. But all this is done to try to maintain the illusion of health, so Americans can keep on spending. So politicians can actually pretend the economy is getting better. But all we are doing is actually covering up the symptoms. Beneath the surface, the economy is actually deteriorating. Eventually it’s going to collapse.

Monday, March 17, 2014

US economy is screwed up

Most people think the U.S. economy is recovering, maybe a bit more sluggish than they would like. People talk about a jobless recovery. But the reality is it’s not a recovery at all. We are not recovering from anything. The country is getting sicker.

The U.S. economy is really all screwed up. It’s the result of mainly monetary policy, but fiscal and regulatory policies are part of the problem. I think the major part of the problem is the central bank. The central bank is basically trying to accommodate bad fiscal policy, bad regulatory policy. They are trying to provide a stimulus to the economy to negate the sedative that is being applied by the government. But it’s actually making the problem worse.

Thursday, March 13, 2014

Peter Schiff to speak in Seattle - April 13, 2014

In just over a month I will be speaking in Seattle where the battle for economic freedom is raging in the State of Washington. Drugs laws are being relaxed while wage laws are tightening and economic laws are being flaunted. I will be there to un-spin the fallacies and talk to you about what it means for the future.

Join me there at my Seattle Seminar on April 13th, 2014 at the Nesholm Family Lecture Hall at McCaw Hall in Seattle, Washington for some discussion about what is in our economic forecast. 

I will be speaking at the seminar from 6 - 9 pm and will be available for questions and book signings afterward. My topic will be: Too Big to Bail: Why the Next Financial Crisis Will Be Worse Than the Last. 

Tickets are $25 and each attendee will receive one free copy of my latest book, How an Economy Grows and Why It Crashes: Collector's Edition. You can register for the event here.

Register for event at

Wednesday, March 12, 2014

Why bankruptcy is not evil

Bankruptcy is a positive force in an economy. Maybe it's not positive for the entity going bankrupt, but it is positive for the economy as a whole because it's purging from the body of the economy nonviable companies that are squandering our resources.

Bankruptcy is like when a body has an infection. It fights it off, and that's what the free market is doing by trying to kill off noncompetitive companies. 

Tuesday, March 11, 2014

Government vs Private companies

There are no checks and balances if the government is wrong, if a private entrepreneur makes a mistake, he goes bankrupt, the losses are cut, if he bets wrong, he loses. 

If the government bets wrong, they just get bigger, they just appropriate more money, it's a bottomless pit, because they either get it from the tax payers or run it off a printing press.

Thursday, March 6, 2014

Gold not overvalued even at $2000

Gold is not overvalued at $500, and gold will not be overvalued at $1,500 or $2,000. The real money is buying gold and putting it away.

Wednesday, March 5, 2014

Printing Money vs stealing

Printing money is merely taxation in another form. Rather than robbing citizens of their money, government robs their money of its purchasing power.

Tuesday, March 4, 2014

Peter Schiff video comments from last week

Click play to watch the video above

Monday, March 3, 2014

Keep some cash

If you are a 30 year old guy, I would not have any more than 6 months to a year`s worth of expenses in cash. I would make sure I had a little cash to cover my rent or my mortgage, if you have a mortgage but I would keep very little in the way of cash because it`s going to lose value.