The fiscal stimulus bill being debated in Congress not only won’t help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a “terrible” recession. But the path of increased government intervention will lead to “unmitigated disaster,” says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks.
The problem, he says, is the government is trying to perpetuate a “phony economy” based on borrowing and spending. With the U.S. consumer tapped out, the government is “now taking on the mantle” of consumer of last resort, he continues, predicting the bond bubble will soon burst – if it hasn’t already – ultimately leading to a collapse of the dollar and an “inflationary depression worse than anything any of us have ever seen.”
If nothing else, Schiff is an nonpartisan critic of American policymakers, comparing President Bush to Herbert Hoover and President Obama to FDR, and neither in a favorable way.
Peter Schiff: Stimulus Bill Will Lead to “Unmitigated Disaster”
February 8th, 2009 at 10:02pm · 3 Comments
Tags: The Long Wave
3 responses so far ↓
1 deuxsous // Feb 8, 2009 at 10:16 pm
Chris,
I agree, but more importantly Ray Dalio in this weekend’s Barron’s agrees and so does Prof Steve Keen in Australia:
http://online.barrons.com/article/SB123396545910358867.html?page=sp
http://twocents.blogs.com/weblog/2009/02/post-neoclassical-deflation-weconomics.html
Keen’s site is off-line as I write, but can be accessed normally through my site. His opinion is that more debt does not solve the problem of too much debt, and that debt writeoffs are the only way out short of massive hyperinflation. Ray Dalio is more subtle but clearly thinks the same thing. But Dalio assumes we will hyperinflate.
2 Peter VC // Feb 9, 2009 at 4:01 am
Chris,
The above mentioned authors are correct in stating that more of the same is indeed in-sane. One very keen author is Prof. Antal E. Fekete. He observes that deflation is masked by seignorage or debasement if you like and his scenario : deflation (interest and prices) and hyperinflation (debasement of the currency) do not exclude one another.
Keynesians and Friedmanites are presently being humiliated by their own (useless) theories. Prime example: the ex number one of Fortis: M Lippens… whose bank and personal fortune is about to be evaporated !
The tower of derivatives is now resembling the kind that stands in Pisa, with this difference : the tower in Pisa has proven more stable…
3 slenzen // Feb 9, 2009 at 2:53 pm
If this is to be true, what other alternative is there to US treasuries and the dollar? If the US coughs the world catches cold. It seems the game is relative not unlike a money manager losing 10% but “beating the market”. As long as the US seems a bit better relative to other countries how can it happen?
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