Who should we listen to? Answer: Peter Schiff

[mattnz]

Still not convinced? ok lets take that chart back a bit further. Also from Keen's website.


He refers to this graph in this presentation
From: http://www.youtube.com/watch?v=12kf1aW8Biw

I know that this is a long clip so I will summarise for you. The 2 great depressions of the last 150 years in Australia, (1890s and 1930s) both occurred when there were huge spikes in debt to GDP ratios. The scariest thing is that the level of debt this time around is far far higher than either of the previous 2 depressions. We need to learn from history, and Steven Keen's prediction of a 40% drop in house prices isn't simply being plucked out of the air, it is grounded in economic research and an understanding of the impact that such debt levels eventually has. The amount of deleveraging to take place from where we are today is incredible.

[mattnz]

Ok, so we have presented some historical evidence of debt for Australia, can't you provide anything more recent and conclusive rather than these "coincidences" Matt?

Well Steven Keen has done just that.

In the USA based on their latest data, their private debt to GDP ratio is 290%. I think the only reason they have managed to survive so long and get so out of whack is USD's position as the worlds reserve currency and how much money they have been printing for decades. It has finally caught up with them and caused a massive housing collapse.

Another example, Japan in the '90s through to present. How did they manage to lose 2 decades with 0% interest rates and negative growth? That's right, a high private debt to GDP ratio, you guys are starting to catch on. It hit 120% in 1991.



Now I bet you are all wondering how this could have gone on for so long? Why has it taken 20 years to not flush through the system and improve?

The answer: The government intervened and took on the debts of the private sector. Sound familiar? It should do, it is exactly what the US government is doing today, following the same path as Japan.


Ok here's another one for you.... when is the last time that US private debt to GDP was at the same level as it is today? Answer: 1932!!


Scary stuff huh?

Their economic models, as simple as they are, explain every major depression of the past 150 years, including the coming one in the next few years.

Economic models that central banks are currently using are going to be tossed aside in the next few years as they look for answers and hopefully find them. In the interim they are going to be very confused as things turn from bad to worse.

[mattnz]

Ok, one last one for now, then I must get some sleep.

Here is why Peter Schiff and Chris Martenson think that the USD is about to go into hyperinflation through the Federal Reserve trying to buy its way out of the crisis (by printing USD).



And for some reason most economists think these guys are nuts with their predictions. Amazing really.

[Badger]

And for some reason most economists think these guys are nuts with their predictions. Amazing really

....uber powerful vested interests have much to loose! But to find that out you must go...

*DEEPER INTO THE ABYSS*

where the ruling elite's reside...

[muppet]

Soooooo Badger,
when the s.... has finished hitting the fan,
you will,
since you have been prepared for that day for a long time,
be or should be the richest man on the planet,
(monetary wise I mean)
because you have preached nothing but doom and more doom for a long time.
Well done.

[Badger]

Soooooo Badger,
when the s.... has finished hitting the fan,
you will,
since you have been prepared for that day for a long time,
be or should be the richest man on the planet,
(monetary wise I mean)
because you have preached nothing but doom and more doom for a long time.
Well done.

Thats quite funny

Actually Muppet I preach nothing I just pass on information gleaned from other sources. I like to include my own thoughts on the subjects it makes me think more about what I have read and my own life experiences in business! I enjoy being challenged on my assumptions...

The doom and gloom thing again! Well im not a doomer mate! I own gold not tinned food!

Look a little deeper in to what Im posting about! As a couple of other posters have discovered there are ways to make big money reasonably fast if not, then a real nice income. Just based on how to structure investing into a life style...that is definitly not doom and gloom, thats profits and relaxed life style. It's not based on the bankers hamster wheel of debt +interest but playing the bankers game...with capital not credit!

I have capital! So yep I have a vested interest in keeping that capital in tact. So I dont take to kindly to anyone ripping me off!

Money wise? To a point but I think posters like Steve Netwriter have more grasp than I do. Im still learning...

[Bob Kane]

Schiff 6 years ago


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

He was predicting that back in 2002?
Wasn't he 5 years too early? Or doesn't that matter?

[mattnz]

Bob, where have you been the last few years?

At the start of 2002 the following conditions were in place and all went exactly as he predicted over the following 5-6 years:

1. USD

NZD/USD $0.42 going to $0.80
EUR/USD $0.88 going to $1.60
GBP/USD $1.43 going to $2.00

2. Commodities

Oil going from $21 to $147
Gold going from $280 to $1,000

3. US interest rates

Interest rates went from 1.75% to 5.25%

This eventually caused the housing market and share market to collapse as he also predicted.

4. The Sharemarket

Dow Jones was trading at around 10,000 in Jan 2002, falling to under 8,000 within months. Following a rise to 13,930 we recently dropped under 8,000 again and are in a bear market.

Everything he said was correct in the interview and in the others I posted.

[Bob Kane]

Where have I been?
At least I haven't been hanging out in school yards.
Aren't you using selective data to justify being a Schiff groupie?
Saying oil has gone from $21 to $147 is a bit naughty, isn't it?
Last time I checked (Jeez, I'm now starting to sound like Badger!) oil wasn't $147.
The point I was making is that Schiff was predicting a bear market back in 2002. It finally happened in 2008. Anyone who sold up and battered down in 2002 would have missed the boom.
So Schiff has been right in calling the slump. But then, eventually, one day a slump was going to happen.
For what it's worth, Schiff has been on the money in realising the housing boom was caused by cheap credit. GK was also onto it a few years back. Not many others were - even Matt Gilligan who is a guru property accountant/developer had no idea what was driving our property boom.

[outspoken]

So what are you saying Bob Kane?

You seem to enjoy shooting down others but where is your constructive contribution?

Confused? I bet you are.

[Bob Kane]

Some might say it's constructive to challenge those who are offering us advice.
The title of this thread is "Who should we listen to?"
Some of what Peter says is very good.
But I'm not sure if he deserves blind adoration - do you?

Where's my contribution?
I started the thread 'Property Crash' a while ago and indicated that property is a good investment and would remain so during this credit crunch/melt down.
I'm still pretty happy with owning property and just try to counter some of the doom and gloom folks. Often their claims seem to melt away when challenged.

[mattnz]

Bob, as a US based investor, Schiff was investing in NZ property in 2002, not only gaining the benefits of increases in the property values, but also the exchange rate differential.

I do believe that Schiff has a weakness, like most americans he is very US-centric and sees this as an American problem. As pointed out in this thread, the same problems are actually inherent in NZ and Australia. It is important that we do significant research, take onboard what appears correct and dont blindly follow a single person.

I have discovered that the list of those from the same school of thought that saw these problems coming includes:

Schiff, Roubini and Keen (as covered in this thread)
George Soros
Warren Buffet
Robert Kiyosaki

Thats a pretty heavy hitting list of expert investors.

The Wall Street journal just named Roubini at the top of their best calls list for 2008:

"2. Nouriel Roubini. There are plenty who can lay claim to the title of Dr. Doom — those who were bearish in time to save their clients a lot of dough — but for our money nobody explained what was going to happen as accurately as RGE Inc.’s economist. Here’s what he said in February: “To understand the Fed actions one has to realize that there is now a rising probability of a ‘catastrophic’ financial and economic outcome, i.e. a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. The Fed is seriously worried about this vicious circle and about the risks of a systemic financial meltdown.” Let’s see. That’s, uh, exactly what happened."