Saturday, February 07, 2009

More Financial Wisdom From Economics Guru Peter Schiff

Peter Schiff once again advises his investors, and also sheds tangential light on Boss Godfrey's "goofy" and "hare brained" Emerald City "borrow and spend" malinvestment philosophy

YouTube video... via Yahoo Finance News, and per Peter Schiff: "Stimulus bill will lead to "unmitigated disaster":

You may not like what Mr. Schiff is saying... but trust us... later on you'll be grateful that we kept giving you all an economics "heads-up," while the traditional U.S. news corps softpedaled the news that the U.S. Economy is still uncontrollaby spirally downward in 2009, in a manner that can't even be envisioned by survivors of "The Great Depression."


danny said...

A really good clip to watch.

But I wonder if hyperinflation is in the cards. The arguments for it make sense, but I the level of wealth destruction will overwhelm the money printing.

That's what happened in Japan. Schiff did not touch on the subject of institutional rot, which is what they had, and still have in Japan, and it is what we have, and is what the gummint is really bailing out.

Without a cleansing of the rot (which the market would do if they'd let it), I don't know if there will ever be enough confidence, employment, and demand to create inflation no matter how much money is printed.

Remember, there is still the third world, that will produce things for less than cost of production.

Watch for hyperinflation only in the case of protectionism, which is also a possibility.

Thank goodness for people like Schiff, freedom of speech, the Internet, and things like WCF so people will at least know.

Anonymous said...

We sit and wonder, instead of printing money to create a stimulus, could we instead simply mint one 3 trillion dollar coin, and give it to our Chinese creditors?

Regardless, much of what Schiff expounds, we have known for years.

You cant have an economy based on everyone "flipping houses" to each other, and call that wealth creation.

We need cobblers and cadgers, machinists and mongers, longshoremen and lederers, farm hands and fletchers.
We even think we need a few more lawyers; lawyers that know they are only worth 35 dollars an hour. ;>
The last thing this country needs: more financiers.

Machster said...

Danny, you are a very intelligent person and your last post is spot on.

About the only other concern I have is how are we going to get out of this depression. About the only thing we seem to be able to do is vent on blogs like this. And wring our hands and wait around for the next election and perhaps pray.

As for my simple mind, I believe the only way we got out of the "Great Depression" of the 30's, and the Peanut farmer from Plains Depression of the seventies, was slowly and very painfully. WWII and attendant manufacturing, sacrifices, savings, rationing, etc. helped us out of the mess created by Hoover and extended by FDR for seven years.

What I think I learned back in college was that there is no such thing as Corporate taxes. That is; if you put a corporate tax on business...the corporation or business just passes it along to the consumer, you and me. So you and me are the only ones who ultimately pay taxes. Higher costs for goods and services becomes inflation.

Without Democrat or Liberal bashing, I would submit that ANY group of legislators from either side of the isle which passes "corporate or business taxes" does not understand basic Economics 101, Freshman level Economics.

Today, Utah, as a result largely of Gov. Leavitt and followed by Huntsman, have succeeded in lowering the Utah State Corporate/Business tax from about 18% to its present roughly 8% level. And Huntsman would, if he could I think lower it to zero.

Why? Because Utah is in competition with other States to attract business and corporations. Some States already have no business taxes, making it tougher for Utah to attract business and thus employers. And just as in the halls of the US Congress, there are Congresspersons without one wit of knowledge or understanding of even the most basic truths of Econ 101. There are the Realtors (Racketeers and low life's like GF), Lawyers, Cooks, Bakers and Candlestick makers, who just don't get it.

They buy the usual line from the left which lectures about the haves and have nots and income redistribution, etc. etc. Not evil folks, mind you and in fact they frequnetly seem to believe they are following Biblical edicts "of caring for their fellow man, etc." Trouble with this of course, is the confusion of moral responsibility with fiscal discipline and how although related, are not necessarily the same thing. Different means to the same end - ultimately.

Now, for our Country...the same situation exists, only apparently even worse. I am told we, the US, has a corporate tax rate of 35% and ranks just about at the very top of all Counties in the World.

Some argue this 35% corporate tax rate was once even much higher, again I do not wish to argue left vs. right and who is responsible. But the end result has been, as I think we all know, that American industry, corporations, manufacturing, etc. have been very logically increasing their bottom line and shareholder value by simply moving out of the United States. And those who have not are in process. Leaving us with double digit unemployment (that's right double digit. If the unemployment rate were calculated the same way it was in the 30's, it would already be about 14% nationally), leading to tax deficits, leading to over borrowing, and so on.

So, besides wringing our hands and saving until the next "horror show and bad news" out of Washington DC, whether from the left, right, middle or someplace else. Maybe we should do all we can, within our individual talents, to convince these Econ. 101 flunkies or nonparticipants that the way to economic recovery comes first and foremost not with more borrowing and spending, as the tape points out.

But Congress needs to understand the real solution to both major depressions came from encouraging our own corporations to move back into the USA, (the War mandated it) and thereby rebuild our manufacturing and corporate and business base in order to lower unemployment, the benefits of this seem clear enough.

And how to do that? Eliminate the non existant Corporate and Business taxes. Stop fooling ourselves with the idiological foolishness of "haves vs. have nots", "Entitlement minded citizens", and "redistribution of wealth socialistic non sense" which has historically proven itself over hundreds of centuries to be a recipe for cultural and economic extinction.

"Of the 782,000 residents of Detroit, Michigan, forty-nine percent (49%) can not read a newspaper". Folks this fact (and I might be off on the exact pop. number, but close) is the canary in the mine shaft (our warning) of what continued liberal leadership, whether Dem or GOP, and well meaning, but ill educated (or Machevillian) legislators from either side of whatever isle will get us.

We simply must pay attention and get as many people who are willing and able to listen and understand, to vote for term limitations, do not RE Elect anyone...for any office. And to search out ways to make it once again an honorable thing to serve the public, in order to attract quality and well rounded, qualified public servants at every level.

That, or follow Gordon Liddy's commercial advice and "BUY GOLD" and hide it in your mattress.

disgusted said...

as rj and others before him have suggested in earlier blog articles. what this country needs to do is to start producing things again rather than simple consuming things or flipping things for a profit. less financers and more production people.
one product area that i personally feel that we are prostituting ourselves as capitalists in this nation is in the area of software. im old enough to remember rooms full of people manually inputting accounting information in order to run a business. that same amount of information transfer that used to require a room full of people is now being done by one person. talk about a productivity gain and yet anyone can now buy the software to accomplish this feat for only a few hundred dollars. the us companies should be selling this software for a fortune or better yet charging a royalty fee to run it. us companies need to start protecting their proprietary software advantages for the good of the nation and not giving this intellectual information away.
if for example a chinese manufacturers wants to manufacture shirts and pants and the shirts and pants are made on a sewing machine that is using a us company software to guide the operation of the machine then the software company would be wise to collect a royalty on every shirt or pair of pants made on that machine that is using the software. instead the software company charges a meager up front fee for the software and gives the rest of the world a competitive advantage of the us. the advantage being that the us software company gives them the latest technology for basically nothing and they have the lower cost labor pool. we as a nation need to be think about things like this.

Rafiki said...

That guy talks a lot - I'm not saying he is wrong since I believe anybody with a brain saw this collapse comming a LONG time ago. It is time we allow the dollar to fall and we can start again.

Machster said...


While I definitely agree with your assessment that we need as a Country to begin once again to produce stuff again, the software control situation is not feasible.

And Rafiki, Don't know if you were referring to me or not. I agree with you that the last thing we need is Government interferance. History, if nothing else, teaches the wisdom of market corrections without Governmental interferance. But it seems many on this blog bought into the Obama craze, even as he told us what he planned. More and bigger Govt. and massive spending programs amounting to astronomical debts and borrowing.
As for the long posts, it seems to me many do not understand much of all this and I am simply trying to help. What more can any of us do? Be cynical ass holes who can only bitch and complain? Or post with information, opinions, explanations, and most of all recommendations and solutions.
If anyone would like me to go away, I will.

Back to "disgusted" China and software:

China has no copyright laws and has been that way forever. They have stolen music rights, books, VTRs, DVDs, and yes software of any and all variety plus satellite technology, rocket technology, GPS, Laser technology, automotive and every thing you can name or imagine since at least back in 1970.

In Taiwan, for example, in 1970, still an off shoot of China, with similar lawlessness with regard to all things stealable, we used to go there for our aircraft repair work due to its cost effectiveness and cheap labor. Delivering an F-4 to CCK, Taiwan, for instance and hanging out for a week or so to get away from the war. We always returned with dozens of 7" reel-to-reel custom recorded music tapes (made overnight by the way using high speed recorders also stolen technology), and piles of books (the printing business was amazing and quick) also driven by the continuing market for pirated "everything", none of which cost more than a dollar.

Out side the base gates where street carts filled with thousands with Seiko watches. They lined the streets with pirated and copied Japanese watches. You could pave the streets with Seiko's.

Music and books etc. were black market and reproduced from US publishers, records, etc. And today it is pirated and stolen technology from Japan, Korea, Russia, the US and every country in the world.

That has never changed as Congress is powerless apparently, short of war with China, to do as you suggest.

Recall the incident a couple of years ago when a US Navy subchaser aircraft was forcefully made to land in China. Recall the crew was held virtually hostage for about two to three weeks while the Chinese stripped every wire and black box from the aircraft so they could copy it. The Navy picked the aircraft up eventually as a gaping hull and just pushed the bones of what was left over the side at sea.

As an Air Force officer, pilot, briefed constantly about details of the various threat opposition enemy aircraft. Pilots still are of course. And without getting into anything classified let me just say that it has been obvious for the past forty years that the Chinese (and Russians) steal every bit of techonolgy they can get, whether over the internet, via industrial esponage, outright spies, and intenational black market sales.

To gain access to Quicken or Microsoft XP or Vista, Autocad, Finite Element Analysis or other software is generally as easy as ordering it on line. Hence no R&D expenses to recoup, no patent infringement lawsuits, nor copywright violation legal expenses, etc. That is a major reason they have and are succeeding by stealing us blind. Ask someone who lives near Western ports in Calif. how many barges of our scrap metal are being shipped to China a day. It will astound you. It was the same just before Pearl Harbor with Japan by the way. And the Jap was made from our beer cans but also from the aerodynamic engineering and blueprints the Chance Voit and Curtis aircraft company designed as a foreign military sales aircraft. No one bought it so the Ft. Worth company sold the plans to Argentina where they found their way to the Japanese war machine. Result, we faced better fighters than we had for several years. Sorry Raftki, for the little side bar story.

We have to stop seeing the world as tho it is made up of laws and rules and morays and well; made of just good folks just like us. It simply is not. And we must either accept them on their own terms and understand the differences or be retrograde numbskulls who try to follow the example of the Conquistodors. And I don't think any of us want that. We are not a nation of imperialists and what those who would tear us down would like us to believe.

Rafiki said...

Machster - no my long winded comment was directed at Mr Peter Schiff (video link) who was correct on what was going to happen a couple years ago but now only wants to get his 5 minutes.

I hope us all the best in what ever happens.

My honest opinion is that this was a planned collapse by the rich. They knew full well that they had 8years to get as much wealth as they could and then "boom" bankrupt.

Pretty cool if one was on the "inside", but not so cool for all those that will die over it. Then again "none of us can stop the time"

disgusted said...


i think you hit on the weakness in our software technology.
a weakness that we can fix if we put enough effort into it. our software needs to be protected both by law and by software coding. software can be protected by how its written and what processes the user needs to perform in order to make it turn on. copy corruption coding can be implemented or a virus can be released if the user does not enter the correct code. other processes could include limited time use before the user needs to reregister the software.
there is a way to protect it if the software developer and industry really wants to develop the safe guards but imho i get the feeling they would rather just look to the law. the law needs to be strengthened and the us government needs to take a harder stance.
that said i also feel that most software companies are more worried about getting the product to market and making a quick buck than they are concerned about the longer return gained by royalties. partly because of how management is compensated for short term financial improvements i.e. everyone wants to hit a personal home run and partly because of the fact that software developers are coming out with new and improved versions of the same application almost immediately. with royalty programs a company that signs a software royalty agreement is not going to switch as often just because a new version is created because of the contractual obligation and the additional expense of initiating the newer software. people in the industry can help one another as well by black balling known companies or countries that either directly copy or sell to companies or counties that do. we can make it happen if were willing to stand our ground.

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