Who should we listen to? Answer: Peter Schiff

[mattnz]

There are alot of people that have strong opinions on what will most likely happen in the World economy in the future, it seems everyone suddenly thinks they are an expert.

Most of these so-called experts never saw the economic collapse coming. One expert who fought defiantly against all the others in predicting exactly what has happened so far is Peter Schiff. Despite ridicule from other economic commentators he steadfastly stood by what he knew would happen.

Here is one such example, in December 2006 he takes on 4 other experts who derided him for predicting that housing prices would collapse in USA.


From: http://www.youtube.com/watch?v=EoB4BS7CGAw

I will try to track down other examples where he picked the collapse of Fanny and Freddy and other events, well in advance of them happening. He is clearly a guy that really understands the situation and has put his reputation on the line time and time again and been proven right.

The scariest thing is if he is right yet again on his current predictions, as it would mean the USD collapsing under hyperinflation and a great depression. He is not alone in these views.

Interested to hear from others and for people to post earlier predictions that he has made that have also been correct (or otherwise) and what he has predicted will happen that is still to occur.

[Dean@Massiveaction]

Dr Chris Martenson has been predicting this since 03/04 as well.

[mattnz]

Yes good point. There are a few commentators that we should really take notice of in forming an opinion of who we should listen to in these troubled times.

[mattnz]

Schiff 6 years ago


From: http://www.youtube.com/watch?v=B0XJu9l3Mfk

Predicts USD declining against other currencies, commodity prices increasing, interest rates rising and a future share market collapse.

[Dean@Massiveaction]

I'm watching that right now. Amazingly accurate, just took a bit longer than he thought.

[mattnz]

part 2 of this:


From: http://www.youtube.com/watch?v=emvMqjtcO7o

Investment in NZ real estate trusts in 2002, great timing to get in, especially for a US based investor when NZD was low. hope he got out again in time.

[mattnz]

Here he is in 2005 saying.....

housing lending standards too lax, housing bubble, all markets linked to the housing bubble, interest rates must increase (which they did prior to the collapse), government inflation figures are falsified (a whole other topic), problems with consumer driven economy.


From: http://www.youtube.com/watch?v=a18pnPYOB84

[mattnz]

Oct '07, oil will go over $100 per barrel.


From: http://www.youtube.com/watch?v=IlqNqGCQV7s

[mattnz]

Schiff against some idiots in 2006 and 2007.

His opposition say merrill lynch and all the financials are a bargain including bear sterns, goldman sachs, WaMu. The dow was 13,000+ at the time.

Schiff says stay away from financial shares, they will get hit and get hit hard. America needs to cut spending. Gold will go over $1,000. Can't get auto loans. Housing will collapse, mortgage market will collapse, no-one will lend to americans creating a credit crunch.

http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=PlayList&p=91F13312A3CC6175&playnext=1&index=35

[Badger]

Its been common knowledge for about 5-6 years in alternative investment forums and sites but not too many here seem to have registered that untill lately...

click the financial sig theres stacks of Peter Schiff and many others in pod casts etc etc.

I remember Schiff laying much of whats unfolded way back in 2005 on a couple of Jim Puplava interviews...

Wanna buy a tin foil hat?

[mattnz]

Here is another one a bit closer to home. Here we have Australian University professor Steven Keen who is predicting that Australian house prices will drop 40% (from other info I have read on him) with Mr Schiff. Unfortunately Peter seems to see this as a US problem. Steven Keen rightly points out that the issues that USA are facing of high consumption, high debt, overinflated housing are equally an issue in Australia (and NZ). They are in agreement that reducing interest rates just makes the problem worse.

My personal take on the situation.....

Australia and NZ are trying to stave off the problem experienced in USA by decreasing interest rates. This just makes the situation worse. The worst case scenario is that we see historically low mortgage rates and house prices actually increase.

Sound like a familiar situation? Hmmm sounds just like USA early 2000s. What will RBNZ and RBA do when inflation starts to rear its ugly head and they need to attract foreign capital again? Raise interest rates.

But hang on, I could afford my $500k mortgage at a 5% interest rate. What am I meant to do now that interest rates are back up at 9% again? This is the worst case scenario that I am dreading for both NZ and Australia. We would follow the US housing market scenario by a few years, but be even worse as our housing bubble is much greater.


From: http://www.youtube.com/watch?v=l9uPEeVQ5Yc

[mattnz]

Part 2 of the same video


From: http://www.youtube.com/watch?v=qAwt3__sJgo

[Tucker]

But hasn't that happened every cycle, interest rates drop housing affordable - interest rates go up housing less affordable - interest rates drop housing more affordable again, nothing new there.

[mattnz]

What is new is both the level of debt vs GDP and the level of debt vs personal income.

So every time they increase interest rates at the top of the cycle, we curb our debt levels a bit. Then the next time that interest rates are down and a bit of confidence returns to the economy again we take on more debt. As our assets increase during a housing bubble we feel richer and start drawing down our housing loans for that holiday, new car, plasma tv, as we "feel" richer. All we are really doing is taking on more debt, the same as America has.

Eventually these cycles result in a position which is unsustainable and fundamentals must kick in again and we are restored back to normal and sustainable debt levels, i.e. where house prices are again around 3 x income.

As Steven Keen states in the second part of the video, the current monetary policy is focused purely on inflation targets, totally ignoring the causes of the great depression of the '30s which was simply people over leveraging on debt. We now carry twice as much debt in real terms as what there was in the '30s and eventually we will need to take our medicine.

[mattnz]

Here is a graph from Keen's website demonstrating the growth in debt to GDP ratio in Australia over the last 50 years. I can assure you that NZ's graph would look the same.

The more that I read, the more I am convinced that the economic school of thought that Keen, Schiff and Nouriel Roubini (spelling) come from is the reason that they are able to so accurately predict what will happen in a debt laden economy, while Neo-Classical Central Bank Economists have no idea of what is happening, let alone what is causing it.

http://www.debtdeflation.com/blogs/wp-content/uploads/2008/12/IMG0014_41473578.PNG