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.
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