Remember Peter Schiff, who was subjected to ridicule for years for predicting that the housing prices and stocks were in a bubble that would eventually collapse? Well, I sure hope someone can convince me that he’s wrong this time. (Hat tip: Conservative Command)
He’s ratcheting up the dire rhetoric even more than President Obama is. But while I’ve been saying that the need for a stimulus is not so urgent that we can’t take some care in how we spend the money, Schiff says the stimulus will actually make things worse. Much worse. An excerpt from the seven-minute video:
This thing [the financial crisis] is just getting started. Remember that what’s imploding is the entire phony American economy, where Americans borrow money and spend it. What’s happened right now is that the government is now taking on that mantle, the government is borrowing and spending, because Americans are too broke to do it, but what we’re doing is making the problem worse.
And when the bubble finally bursts on the bond market… if the dollar rolls over, which it should, if it begins to fall, ultimately it’s going to collapse, that’s going to knock the rug out from everything the government is doing.
Because when the bond bubble bursts, now the government needs a bailout, the government is broke, and that’s when this crisis is really going to go into a whole new gear.
I think the economy is pretty resilient, but I can’t dismiss Dr. Doom’s predictions out of hand. One blogger recently got a lot of attention by detailing numerous ways “Peter Schiff was wrong” about last year, and Schiff has responded in detail. I don’t know which one to believe. Schiff may have been wrong about some specifics of the crisis, but he was correct in saying a crisis was building. Now everyone acknowledges that we’re in a crisis, perhaps he’s pushing his argument too hard. But in any event, it seems like one more reason to move cautiously on the stimulus.
Schiff is right. The American economy is simply not sustainable in that you can’t simply expect consumers to simply borrow forever. At some point, borrowed money does have to be paid back — a painful lesson that a lot of people are learning right now.
All the government is doing is delaying the inevitable with this stimulus nonsense. For an example of how backward the thinking is in Washington, one common argument against the idea of handing out tax cuts is that Americans will just spend it. Evidently, there prevailing school of thought suggests that the government needs to rush in, save the struggling credit markets and prosperity will follow. Frankly, Americans need to be saving money instead of borrowing more.
The politicians out there who will stand up and relay that painful bit of reality to the American public are part of a dying breed. Those fiscal conservatives that used to be the backbone of the Republican party have been replaced by Bush Republicans who borrow and spend money like they’re Democrats.
The whole mess is just downright alarming. There will come a time when the government’s creditors (primarily Japan and China) will call in their chips and that will be pretty well be all she wrote for our economy.
Actually, Hawg, the Democrats typically TAX and spend… it’s Republicans who BORROW and spend. Ironically, tax and spend is actually (slightly) more financially conservative than borrow and spend.
Thanks for the link!
Schiff is just full of common sense. No wonder he was the economic advisor to Ron Paul during the campaign.
Whatever happened to our “non-phony” economy? You know, the one that wasn’t based on consumption. It’s a wonder that, 50 years ago, our economy was about 50% manufacturing. Today, it’s only 10%. High corporate tax rates, pure free trade, and burdensome regulation have helped ship manufacturing and industries overseas. We’re left with nothing but an economy that rests on debt.
I could go on and on.