Peter Schiff Was Right (again)

[Mdraf]

That depends on who is tracking the record.

I posted the clip not because Schiff is a messiah to be followed and adored but simply because he was spot on on this particular issue while all the gurus were mocking him. That's all.

[Gumby]

That depends on who is tracking the record.

Schiff has a ~30% accuracy:

http://www.economicpredictions.org/pete ... edictions/

[Pointedstick]

The only pundit or "market guru" I think I would ever pay any attention to is MediumTex.

[Mdraf]

That depends on who is tracking the record.

I posted the clip not because Schiff is a messiah to be followed and adored but simply because he was spot on on this particular issue while all the gurus were mocking him. That's all.

In other words, in a roomful of idiots, one is bound to be right about something at some point.

I'm not impressed.

Exactly. And this post proves your theory j/k

[moda0306]

I'm amazed that when we have a guy like HB to look to as a leader in the Austrian/libertarian community, that we'd even give Schiff any of our respect.  HB is the gold standard (pardon the pun) of Austrian economic thinking and market analysis, IMO.  I don't agree with him in some important areas, but we both share the same philosiphy in that we both realize that we could be wrong, but even if we're not, the market can stay irrational longer than we can stay solvent, and drive our emotions crazy in the process.

That's all I ask.  A little humility and perspective alongside insightful economic analysis (even if I disagree with some of it).  HB had more in his pinky than Schiff has.

[Kshartle]

HB had more in his pinky than Schiff has.

God/Zeus/Allah/Gozar/Vishnu/whoever broke the mold with HB.

Schiff is too statist for me but watching him dismantle hack economists in discussions is always entertaining to me. 

[Libertarian666]

I'm amazed that when we have a guy like HB to look to as a leader in the Austrian/libertarian community, that we'd even give Schiff any of our respect.  HB is the gold standard (pardon the pun) of Austrian economic thinking and market analysis, IMO.  I don't agree with him in some important areas, but we both share the same philosiphy in that we both realize that we could be wrong, but even if we're not, the market can stay irrational longer than we can stay solvent, and drive our emotions crazy in the process.

That's all I ask.  A little humility and perspective alongside insightful economic analysis (even if I disagree with some of it).  HB had more in his pinky than Schiff has.

The market can't stay irrational longer than I can stay solvent, because I can stay solvent indefinitely.

That's because I don't use leverage.

[moda0306]

I'm amazed that nobody I've ever met knows who Harry Browne or the PP is.

Tech,

You still have expenses don't you? 

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

[Pointedstick]

Yeah, cashflow is key. Gotta pay your bills, so you need an income or no expenses.

[Gumby]

but watching him dismantle hack economists in discussions is always entertaining to me.

Given his ~30% track record, it must not happen very often

[Kshartle]

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

If gold does plumment like that then we would have an ultra strong dollar, fear about the economy gone because it's doing so well and people are not looking for safety don't you think?

This would be awesome. How likely is it?

[Gumby]

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

If gold does plumment like that then we would have an ultra strong dollar, fear about the economy gone because it's doing so well and people are not looking for safety don't you think?

This would be awesome. How likely is it?

It will likely happen, eventually. We just don't know when. The ongoing (sine wave like) private sector credit cycles were well illustrated by the Ray Dalio video that Mdraf posted.

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When the deleveraging in the private sector is finished, and the private sector starts re-leveraging, you're going to see a lot of spending/economic activity pickup as private credit improves — just as the video explains. Government spending is simply trying to "reflate" the damage in private credit.

It could take up to a decade to reflate a private credit hole of 2008's magnitude, but eventually it will happen. But, the nature of private credit is that it tends to be fragile. And then when the private credit bubble reaches the end of its next cycle, Peter Schiff will correctly predict the next private credit bubble, after years of wait-and-see predictions — and then somehow claim he was right about everything all along. And his followers will eat it all up.

In a way, the PP uses those sine-waves to smoothly motor itself along.

[Kshartle]

Government spending is simply trying to "reflate" the damage in private credit.

The only thing the government can do to help the economy is leave it alone. Now how likely is that?

I'll sell my gold when everyone is convinced the dollar is finished and the printing will never end. That's probably when they'll end it. Not because they printed an improved economy.

[Gumby]

The only thing the government can do to help the economy is leave it alone.

First of all, that's your political bias talking. It's a bad idea to base your investments off of your political biases.

See: Why politics and investing don't mix

Secondly, did you watch the video? How else do you propose that we reflate private credit? Private credit is the most important part of the economy — it's practically the entire economy.

I'll sell my gold when everyone is convinced the dollar is finished and the printing will never end. That's probably when they'll end it. Not because they printed an improved economy.

If you had that attitude in 1980, you would have lost big. Clearly you either didn't watch or didn't understand the lessons of the video. They will stop printing when private credit is reflated — just like every other time this reflationary policy has been used. It's that simple. ...And then, at some point, the next crash will happen as the cycle continues.

[Kshartle]

Private credit is the most important part of the economy — it's practically the entire economy. .

Credit is the economy? Not productivity?

I'll sell my gold when everyone is convinced the dollar is finished and the printing will never end. That's probably when they'll end it. Not because they printed an improved economy.

If you had that attitude in 1980, you would have lost big.

In 1980 people were panic-buying gold because they thought inflation would never end. It was the perfect time to sell what are you talking about?

[Gumby]

Private credit is the most important part of the economy — it's practically the entire economy. .

Credit is the economy? Not productivity?

I meant in terms of its representation for the health of our economy. Just watch the video already. And if you already watched it, why are you asking me questions that were fully explained in the video?

In 1980 people were panic-buying gold because they thought inflation would never end. It was the perfect time to sell what are you talking about?

You said you wouldn't sell your gold until the dollar was "finished". That implies that you would have waited too long to sell your gold in 1980 (since the dollar was never "finished").

Your problem is that you let your politics guide your investments. It's a terrible idea.

[Kshartle]

I'll sell my gold when everyone is convinced the dollar is finished and the printing will never end. That's probably when they'll end it.

[Gumby]

I'll sell my gold when everyone is convinced the dollar is finished and the printing will never end. That's probably when they'll end it.

So.... why in April of 1980 would you have been "convinced" that the dollar was finished? The dollar wasn't ever finished. The boom/bust cycle simply carried on.

[Gumby]

KShartle, did you ever watch the video?

[Libertarian666]

I'm amazed that nobody I've ever met knows who Harry Browne or the PP is.

Tech,

You still have expenses don't you? 

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

I can meet my mandatory expenses from Social Security.

[Gumby]

I'm amazed that nobody I've ever met knows who Harry Browne or the PP is.

Tech,

You still have expenses don't you? 

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

I can meet my mandatory expenses from Social Security.

Wouldn't that be ironic!

(Though, I certainly hope it doesn't come to that for you)

[Libertarian666]

I'm amazed that nobody I've ever met knows who Harry Browne or the PP is.

Tech,

You still have expenses don't you? 

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

I can meet my mandatory expenses from Social Security.

Wouldn't that be ironic!

(Though, I certainly hope it doesn't come to that for you)

I'm not sure why it would be ironic. I have been forced to pay into the SS pyramid scheme for my whole life; if I had my "contributions" and my employer "contributions", I could have bought a real annuity that would pay about the same amount per year. But since I didn't have a choice as to "participating", I see no problem with getting as much of my money back as possible. (Yes, I know it was spent already, so you don't have to enlighten me on that.)

And I think it is very unlikely that it will come to that, as I have substantial other assets that I could tap if necessary. However, the longer I can postpone that, the better off I will be overall.

[moda0306]

If gold does another stretch like '81 to '2000 and you lose your job you could hit some huge solvency issue.  Leverage isn't the only cause of insolvency.

If gold does plumment like that then we would have an ultra strong dollar, fear about the economy gone because it's doing so well and people are not looking for safety don't you think?

This would be awesome. How likely is it?

Gold plummets whenever interest rates are unnaturally high (using one definition of "unnaturally".... essentially positive real rates on nominally risk-free assets).

1981 was the ultimate instance of this.  Not exactly the most pleasant time in U.S. history.  Gold dropping doesn't necessarily indicate health.  It just indicates investors in savings accounts can get a phat RoR.

[Pointedstick]

That's actually fairly bullish for gold since abnormally high interest rates don't seem to be on the horizon, if one examines projected rates of inflation, unemployment, fed reports, etc.

[moda0306]

I can meet my mandatory expenses from Social Security.

Wouldn't that be ironic!

(Though, I certainly hope it doesn't come to that for you)

I'm not sure why it would be ironic. I have been forced to pay into the SS pyramid scheme for my whole life; if I had my "contributions" and my employer "contributions", I could have bought a real annuity that would pay about the same amount per year. But since I didn't have a choice as to "participating", I see no problem with getting as much of my money back as possible. (Yes, I know it was spent already, so you don't have to enlighten me on that.)

And I think it is very unlikely that it will come to that, as I have substantial other assets that I could tap if necessary. However, the longer I can postpone that, the better off I will be overall.

But since the money isn't there, the government has to steal from me to pay your SS benefits.  You're taking your resentment of others having stolen from you to justify stealing as much from me as you can get away with.

That's not very libertarian of you, tech.  Sure sounds like you're advocating the use of force to have me pay you for what you had stolen from you.

I'm afraid this loses you another 1,000 liberty points.

And if I ever see a picture of you holding a poster saying "GOVERNMENT, GET YOUR HANDS OFF MY MEDICARE," I might have to deduct you 10,000 points.

I kid.