I'm having trouble dissecting the exact thesis of Pete's book. I've read a few chapters so far, and I'm still not sure what the his whole frickin' thesis is yet! Here's what I've got down so far: 1)Regulation by the State in the USA caused a huge part of the production good economy to move elsewhere. 2)This led the population as a whole to start importing much more than they were exporting. And here, my train of understanding derails... Can you economists help me?
I'm having trouble dissecting the exact thesis of Pete's book. I've read a few chapters so far, and I'm still not sure what the his whole frickin' thesis is yet!
Here's what I've got down so far:
1)Regulation by the State in the USA caused a huge part of the production good economy to move elsewhere.
2)This led the population as a whole to start importing much more than they were exporting.
And here, my train of understanding derails...
Can you economists help me?
More so number 2. The US population is importing much more than they are exporting. We have become a consumer nation, rather than a producer nation.
atrickpay: I'm having trouble dissecting the exact thesis of Pete's book. I've read a few chapters so far, and I'm still not sure what the his whole frickin' thesis is yet! ... Can you economists help me?
I'm having trouble dissecting the exact thesis of Pete's book. I've read a few chapters so far, and I'm still not sure what the his whole frickin' thesis is yet! ... Can you economists help me?
...
Yes. The book is about investing with EuroPac. It's a decent primer for the uninitiated but he can't and doesn't give enough specific info for anyone who would be reading a book this basic, on where specifically to invest. Hence why the last 3rd of the book is devoted to bringing up EuroPac 1+ times per chapter.
I think it's a great book, but it's not going to solve all of your investment problems. It will however lead you to Peter Schiff as your investment consultant.
If you want a crash-proof investment, buy physical gold or silver. If you want a relatively low-risk decent investment, buy an index fund.
I have my own blog at FSK's Guide to Reality. Let me know if you like it.
ViennaSausage: OK, but what is the problem with that? That scenario wouldn't cause any problems if all the exchanges were completely voluntary...So in other words, how is the gov't f'n things up?
ViennaSausage: OK, but what is the problem with that?
That scenario wouldn't cause any problems if all the exchanges were completely voluntary...So in other words, how is the gov't f'n things up?
atrickpay:That scenario wouldn't cause any problems if all the exchanges were completely voluntary...So in other words, how is the gov't f'n things up?
I think, from the comments I've seen on this thread without reading the book, that it would be more accurate to say that the scenario described wouldn't happen if not for government. How, in a voluntary economy, can imports exceed exports? That's just another word for bankruptcy.
The government is ****ing things up via monetary policy.
Other countries are willing to export tangible goods to the USA, in exchange for a piece of paper with a number printed on it. As long as other countries are willing to trade tangible goods for a piece of paper, why bother actually manufacturing anything?
If a foreign country says "We won't export goods for worthless paper anymore", then the US overthrows their government. For example, Saddam Hussein was willing to sell oil in Euros instead of dollars. Those military bases in Europe, Japan, and the Middle East are there to prevent foreign leaders to have any funny ideas about dropping the dollar as a reserve currency.
How can a manufacturer in the USA compete with a printing press?
FSK: That is a myth--FRN's are not worthless. Tons of people accept and want to be paid with them.
Federal Reserve Notes *ARE* worthless. There's nothing that prevents the Federal Reserve from printing 10% more of them and giving them to their friends in the financial industry.
By holding Federal Reserve Notes in my wallet or bank account, I'm letting other people steal from me via inflation.
A more accurate statement is that Federal Reserve Notes have *TEMPORARY* value, but no permanent long-term value. Their value is continually eroded by inflation.
Foreign central banks hold dollars as reserves. Their purchasing power is being lost to inflation and stolen by the US financial industry.
FSK: It's true that they have temporary value. But again, I must reiterate that the statement that they are worthless is a myth. Why? Because lots of people still attach worth to them.
It depends on what you mean by "valuable". I define something as being "valuable" if I can put it under my mattress, come back 20 years later, and it will still have the same purchasing power. Federal Reserve Notes fail that test. Gold and silver pass that test.
Federal Reserve notes only lose their value at a rate of 10%-30% per year (depending on which measure of inflation you use). That's not as bad as losing all their value all at once, but that point is approaching soon.
The bottom line for me is that, by keeping Federal Reserve Notes, I'm letting other people steal from me via inflation. The fact that most other people are fools, doesn't make it morally acceptable.
As a practical matter, I still use Federal Reserve Notes as money. I'm working towards alternatives. I'm thinking of buying some gold or silver, but haven't done so yet.
Okay that's fine FSK.
Now, back to the purpose of the original thread...can someone put forth Schiff's complete thesis?
About the importing vs exporting deal:
There's nothing wrong with importing more than you're exporting. No value judgement can be passed on having a defecit or surplus in trade (international or personal). Net exports just means that you're adding to your cash balance while net imports means you're drawing down on your cash balance. Noone has a goal of having the highest cash balance possible for its own sake. The ultimate goal is always consumption.
Zlatko: that's pretty much the same thing I mentioned in reply to ViennaSausage. The problem has to be where the government enters the picture...
Peter Schiff has made this lecture a couple of years ago where his assessment of the economy is very clear.
By the way, he is an assumed Austrian economist. With regard to investment advices on his book, he says he couldn't be specific in a long life medium like a book because of his license as a broker with some agency.
Equality before the law and material equality are not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time. -- F. A. Hayek in The Constitution of Liberty
Blacksheep: K, I'll check it out if you say it is a clear explanation.
Regarding his investment advice, I don't give a rat's ass about that right now. I want to comprehened this thesis first...
(double post)
(triple..delete)
atrickpay:Blacksheep: K, I'll check it out if you say it is a clear explanation.
I haven't read his book, so I don't know if it is as clear as this video, or even more since the video is more limited... But, from what I remember of the video (seen the thing a while back), I thought the various concepts he presented were pretty clear. Maybe his general view was not very coherent and clear though... I guess he does go over how regulation and stuff strangled the manufacturing, but the main point I got is that the trade deficit is not viable since it's based on accumulation of debt. Maybe because he spends most of the time with metaphors and simplifications of the kind, he might not make his case too deep? (as an ignorant of economics, I can't say if he is being superficial or is there some theories he is failing to address or something...)
atrickpay: OK, but what is the problem with that? That scenario wouldn't cause any problems if all the exchanges were completely voluntary...So in other words, how is the gov't f'n things up?
OK, but what is the problem with that?
I never said that the production/consumption import/export was a problem. I was just responding to the question of what is the main thesis of the book.
OK, there's been 20 posts here, and I still haven't gotten the answer I'm looking for...
Can somewhere lay out Schiff's thesis step by step?
Google is your friend.
Ooh that looks good, I'll check it out.
fsk: Federal Reserve Notes *ARE* worthless.
Federal Reserve Notes *ARE* worthless.
I'll take them off your hands if you have any. :)
"Melody is a form of remembrance. It must have a quality of inevitability in our ears." - Gian Carlo Menotti
Mr. Coward: thanks for that. RPM has a lot of good articles critiquing Schiff's thesis over at Mises.org!
Who is RPM?
ViennaSausage:Who is RPM?
If you follow the link, you get a couple of articles from Dr. Robert P. Murphy on Schiff's book. Murphy is the author of the Politically Incorrect Guide to Capitalism and Chaos Theory.
It's not a big critique: he doesn't actually invalidate Schiff's observations, just pointing out some oversimplifications (like trade deficits being always abnormal, when it's possible for e.g. tourism to make up for it). I'm sure they both share pretty much the same view on the causes of the USA recession.
After listening to Peter I am seriously scared of my future right now. Right around the time I turn 18 the economy will collapse (I am 16 now). We will be referred to as the f**cked over generation. Here is a quote from his book.
"For years the United States has been traveling a course the Nobel Prize-winning Austrian economist Friedrich von Hayek set forth in a book self-descriptively titled The Road to Serfdom. The coming economic collapse may finally bring Americans to that grim destination. But it is also possible that the same dire economic conditions will inspire a return to the country’s constitutional traditions of sound money and limited government, the foundation upon which a viable economy can be rebuilt. There is a fork in the road to serfdom. One choice leads back to freedom, and it is my fervent hope that Americans will take it. (p. 259)"
Based on the intelligence of the american politicians and the american public I am pretty sure we have a one way ticket on the serfdom express. I just got my first job and am saving up for weapons. I have a feeling they will be valuable in multiple ways in the coming economy. Hopefully Peter is wrong and he predicted all the events leading up to now by chance. But I am starting to doubt that.
"The plans differ; the planners are all alike"
-Bastiat
ChaseCola:After listening to Peter I am seriously scared of my future right now. Right around the time I turn 18 the economy will collapse (I am 16 now). We will be referred to as the f**cked over generation. Here is a quote from his book.
Meh...
I wouldn't put too much faith in the doomsayers just yet, chances are we'll just muddle through like all the other times the economy was sure to collapse.
ChaseCola:I just got my first job and am saving up for weapons.
Dude, chicks love motorcycles...
Think of it this way, if it takes a couple years for the malinvestments to work themselves out as the doomers are claiming because of government intervention keeping this from happening all at once so the economy doesn't nosedive then everything will be back on track for the next boom-bust cycle a few years after you get out of college.
Through the next few bad years you can be sponging off the parents and then riding the financial aid gravy train (or still sponging off the parents) through college and when you graduate the next inflationary boom cycle should be in full swing. Jobs galore and all that.
Go read Kerouac or something...
Funny, I read the book and I wasn't worried. Worst case scenario, move to another country,. A US crash will be felt around the world, but it's not going to shut down the bordellos and boulangeries in Paris.
ChaseCola:Right around the time I turn 18 the economy will collapse (I am 16 now). We will be referred to as the f**cked over generation.
I think you have the wrong outlook on that actually. The real people who are screwed are the ones who have been relying on the Fed's constant money printing and a huge trade deficit to build up their wealth. They are likely to lose a lot of it. At 18 you have almost nothing to lose and everything to gain. If I could pick a point in history to invest some money I'd probably go back to the middle of the Great Depression and do it then. 1931-1933 would have been a great time to buy pretty much whatever you could and we'll likely have a similar opportunity in the next few years.
A couple of Schiff interviews for the interested: at Mises , Barron's
I just finished reading the book, and although I had some of the same issues with Schiff's analysis of the trade deficit as Robert Murphy does, the economics are otherwise sound. The basic thesis of the book, as best I can describe it, is quite simple: The U.S. fiat money system has resulted in international overconfidence in the Dollar, but that confidence will soon come to an end. When it does, the results for Americans who hold dollar-denominated assets will be severe. As foreigners start looking to unload the less-valuable dollars Americans will see their purchasing power decline rapidly.The solution is to shift your investment portfolio to foreign investments, specifically those that pay dividends, and to convert a portion of your wealth to gold and silver. The strategies Schiff recommends are actually very conservative...there are no "get rich quick" schemes to be found in the book at all. And even though he does plug his own company several times in the book, he does so with some humility and goes so far as to give you a list of questions to ask should you choose NOT to use his company for your investing.