another way of looking at it

Peter Schiff is a true Libertarian. He paints a very bad picture about the economy. I’m by no means an expert but if the economy does turn around then the government will have some options to pull out alot of the money they have created. That said, if congress and the President do not get their fiscal house in order when that happens, then we could be in big trouble. Schiff’s economic analysis is sound (I believe). You can’t borrow a bunch of money and pump it into the economy and say wa lah! the economy is fixed. It covers up the fundamental issues and it also causes distortion in prices and doesn’t allow them to drop to their natural equilibrium. Take a read. He’s pretty straight forward.

http://www.financialsense.com/fsu/editorials/schiff/2009/1214.html

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4 Responses to “another way of looking at it”

  1. urstupidnourstupid Says:

    Man, what a wet blanket. Show me some articles from him from two years ago that predicted this mess…then I’ll give him some cred. But in his own words he said…unemployment is decreasing…home prices have stopped falling…GDP yardstick shows an economy returning to growth…plus as we know the market is up and more stable…housing starts are up. This is all terrible terrible news!! What is the Obama admin supposed to say? “This is bad news. I’m sorry we have no idea what we are doing.”

  2. urstupidnourstupid Says:

    OK, he did a pretty good job of predicting the obvious–that an ever increasing bubble will eventually pop. We all knew that. I was thinking more about the Wall St. collapse. Obviously they are semi-connected but…did he see that coming?

    He just seems very doom and gloom to me. Many major indicators are heading in the right direction. Psychologically that is important. Banks won’t lend because they are nervous. Well, if they see some good indicators they might not be so nervous and it will become a positive self-fulfilling prophecy.

  3. urstupidnourstupid Says:

    Psychology is not the driving force of an economy. It’s fundamentals. Debt, laws, taxes, infrastructure, education. These are the things that allow an economy to grow and be prosperous. If these are handled properly then a positive self-fulfilling prophecy will follow. The reason he is so doom and gloom is because of the extemely high level of debt our country is in. He is saying that just because you borrow a bunch of money and pump it into the economy, doesn’t mean you have solved the problem. You should not just read his predictions but the reasoning behind them.

    Personally I am still hopeful that we will come out of this but I just cannot disagree with the basic premises he lays out. Free markets and capitalism seem to thrive even when under extreme pressure. But it will be despite all of the things that government does that are not helpful. The fed creating a market bubble, a consumption based culture mired in debt, huge deficits, government intervention in the markets that award failure.

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