Author Topic: Schiff: We're Heading For A Crisis  (Read 1257 times)

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Offline happyg

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Schiff: We're Heading For A Crisis
« on: July 17, 2013, 04:43:51 PM »
Washington is engaged in a massive "campaign" to make Americans believe the economy is in recovery.  But in reality the United States is at the brink of a devastating economic crash that will cause catastrophic market losses and impoverish millions.

That's according to Peter Schiff, the best-selling author and CEO of Euro Pacific Capital, who delivered his frightening warning to investors in a recent interview on CCTV.

"The problem with politicians is they don't want to level with the voters and tell them how bad the economy really is and what the cure for the disease is," Schiff said.

The "disease" Schiff refers to is a toxic combination of our massive $16.4 trillion debt and the Fed's continued devaluing of the dollar through its controversial 7-year long "easing" program.

The Fed is currently purchasing $85 billion a month in Treasury and mortgage bonds, a form of stimulus.

President Obama and like-minded politicians claim this stimulus has pushed the economy forward, boosting GDP and keeping inflation low.

But Schiff says "it's another lie." 

In fact, according to Schiff, the government has done nothing more than create a "phony" economy that is "completely dependent on the ability to borrow more money that we can't pay back."

"The Fed knows that the U.S. economy is not recovering," Schiff said. "It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode."

"The crisis is imminent," Schiff said. "I don't think Obama is going to finish his second term without the bottom dropping out. And stock market investors are oblivious to the problems."

Schiff charged Washington with cooking the books on its latest GDP and inflation figures.

He cites the government's recent move to raise GDP 3% by including items never calculated before and that "no other country on the planet counts." These include such intangibles costs and royalties from books, magazines iTunes song and movies.

The Financial Times reported this strange maneuver as the "U.S. Economy's "Hollywood Makeover."

"That's what the government does," Schiff said. "Whenever they don't like the results, they change the methodology for calculating those results."

"Maybe some of our creditors will be dumb enough to believe the hype," Schiff added.

"The fact is, Schiff said.  "We're broke. We owe trillions. Look at our budget deficit; look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out."

Schiff points out recent market gains, with the Dow topping 14,000 on its way to setting record highs, is yet another lie giving investors a false sense of security.

"It's not that the stock market is gaining value... it's that our money is losing value. And so if you have a debased currency... a devalued currency, the price of everything goes up. Stocks are no exception," he said.

"I think we are heading for a worse economic crisis than we had in 2007," Schiff said. "You're going to have a collapse in the dollar...a huge spike in interest rates... and our whole economy, which is built on the foundation of cheap money, is going to topple when you pull the rug out from under it."

Should American seniors who've been paying taxes their whole lives bear the price of Washington's folly? See the shocking facts by clicking on the video.

A noted economist, Schiff has been a fierce critic of the Fed and its policies for years. And his warnings have proven to be prophetic.

In August 2006, when the Dow was hitting new highs nearly every day, Schiff said in an interview: "The United States is like the Titanic, and I'm here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States."

Just over a year later, the meltdown that became the Great Recession began, just as Schiff predicted.

He also predicted the subprime mortgage bubble burst, nearly a year before the real estate market fully crashed.

His recent warnings, however, have been even more alarming. Will they also prove to be true?

In his most recent book, "The Real Crash" How to Save Yourself and Your Country", Schiff writes that

when the "real crash" comes," it will be worse than the Great Depression.

Unemployment will skyrocket, credit will dry up, and worse, the dollar will collapse completely, "wiping out all savings and sending consumer prices into the stratosphere."

http://moneymorning.com/ob-article/schiff-washington.php?code=117833

Offline jmyrlefuller

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Re: Schiff: We're Heading For A Crisis
« Reply #1 on: July 17, 2013, 05:36:13 PM »
Quote
credit will dry up, and worse, the dollar will collapse completely
Clearly Mr. Schiff has absolutely no grasp of even a high school level of economics. When credit "dries up," that reduces the money supply, propping the dollar UP, not down. That's what happened in 2008 and what happened in the early 1930s.

Fuller's rule of life, #5: If you want to tell a lie, and have people believe it, no matter how absurd, publish a book about it.

Offline Oceander

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Re: Schiff: We're Heading For A Crisis
« Reply #2 on: July 17, 2013, 09:08:15 PM »
Clearly Mr. Schiff has absolutely no grasp of even a high school level of economics. When credit "dries up," that reduces the money supply, propping the dollar UP, not down. That's what happened in 2008 and what happened in the early 1930s.

Fuller's rule of life, #5: If you want to tell a lie, and have people believe it, no matter how absurd, publish a book about it.

So the economy is just fine and dandy, right?

Offline jmyrlefuller

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Re: Schiff: We're Heading For A Crisis
« Reply #3 on: July 18, 2013, 08:19:08 AM »
So the economy is just fine and dandy, right?
I'm not saying that by any stretch.

I'm saying that these fearmongers (Schiff being one of many) have been predicting catastrophic "crashes" in an effort to sell books, gold, or other personal interests for years. Yet they have no basic understanding of how a crash would actually affect things. You can have a credit crunch and a "crash," you can attempt to loosen that and create stagflation, but you can't have a credit crunch and inflation at the same time.

Offline Oceander

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Re: Schiff: We're Heading For A Crisis
« Reply #4 on: July 18, 2013, 01:13:50 PM »
I'm not saying that by any stretch.

I'm saying that these fearmongers (Schiff being one of many) have been predicting catastrophic "crashes" in an effort to sell books, gold, or other personal interests for years. Yet they have no basic understanding of how a crash would actually affect things. You can have a credit crunch and a "crash," you can attempt to loosen that and create stagflation, but you can't have a credit crunch and inflation at the same time.

Doesn't it depend on whose credit is getting crunched?  If credit becomes scarce for real businesses, but remains flush for hedge funds and the banks that lend to them, couldn't this situation lead to a crash in the real economy notwithstanding that the stock markets appear to be doing well?

Offline jmyrlefuller

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Re: Schiff: We're Heading For A Crisis
« Reply #5 on: July 18, 2013, 04:49:54 PM »
Doesn't it depend on whose credit is getting crunched?  If credit becomes scarce for real businesses, but remains flush for hedge funds and the banks that lend to them, couldn't this situation lead to a crash in the real economy notwithstanding that the stock markets appear to be doing well?
Only if those hedge funds and banks hold most of their assets in cash... and most properly managed ones, as I understand it, do not.

Offline massadvj

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Re: Schiff: We're Heading For A Crisis
« Reply #6 on: July 18, 2013, 05:18:18 PM »
In fact, according to Schiff, the government has done nothing more than create a "phony" economy that is "completely dependent on the ability to borrow more money that we can't pay back."

It can, and will, be paid back the way we have paid it back since the Civil War.  By inflating the currency.

So long as the other currencies of the world are in worse shape than the dollar, and so long as we have the strongest military, the dollar is going to be the default currency of the world.  It isn't going to collapse for the simple reason that Bernanke has way, way more chips at the poker table than anyone else, and he's going to put them in the middle and dare the other players to call his bluff.  They won't, because they are all in the same boat as far as being debt-ridden and co-dependent.

There is not going to be a collapse of the economy.  There could be a serious market correction if interest rates go up to market levels rather than being forced down as they are.   But everyone who believes that and therefore has avoided stocks would have missed the market rally that;s been going on for the last several years.

The best strategy is to diversify, diversify, diversify.  Own some of everything: stocks, bonds, real estate, precious metals, investment-grade art and antiques.  As economic conditions change, the asset values change relative to each other, but no matter what happens, if your portfolio is balanced, its total value will tend to remain constant and increase as you accumulate more.


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Offline Cincinnatus

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Re: Schiff: We're Heading For A Crisis
« Reply #7 on: July 18, 2013, 05:36:14 PM »
Agreed: So long as the other currencies of the world are in worse shape than the dollar...the dollar is going to be the default currency of the world.

Disagree: There is not going to be a collapse of the economy

You are not taking into account the Yuan, which is a strong currency, the already developing movement away from the dollar, and the fact foreigners are not stupid. Why should they put their financial future into an asset (the dollar) which is constantly depreciating? Even many Americans are turning to gold and silver just in case.
« Last Edit: July 18, 2013, 05:37:07 PM by Cincinnatus »
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Offline xfreeper

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Re: Schiff: We're Heading For A Crisis
« Reply #8 on: July 18, 2013, 05:37:19 PM »
Clearly Mr. Schiff has absolutely no grasp of even a high school level of economics. When credit "dries up," that reduces the money supply, propping the dollar UP, not down. That's what happened in 2008 and what happened in the early 1930s.

Fuller's rule of life, #5: If you want to tell a lie, and have people believe it, no matter how absurd, publish a book about it.

To say that Schiff has no grasp of economics is folly. To site rules of economics when the fed counter acts them by their own action such as firing up the printing presses is follier. His point that the debt, not even including unfunded liabilities, is at dangerous levels and that actions such as the fed buying $85 B in govt debt each month is insane is reasonable. The economy is a house of cards ready to collapse

Offline Oceander

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Re: Schiff: We're Heading For A Crisis
« Reply #9 on: July 20, 2013, 12:11:45 AM »
Only if those hedge funds and banks hold most of their assets in cash... and most properly managed ones, as I understand it, do not.

Most don't let their investments live or die on the underlying assets - that's what a market is all about, sell what you don't want, buy what you do, and trade against the market's psychology, not the underlying fundamentals.


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