July 29, 2010

Why The Fed Will Not Raise Interest Rates


Latest video blog update, July 28th.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

We Need To Restore Free-Market Principles

"We need to restore free-market principles, get government out of the way and put people back to work."

in Schiff for Senate

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

Steve Forbes` Endorsement

"I have known Peter Schiff for several years. He has a deep knowledge of finance and economics. He had long warned of the troubles we now face. As your citizen-Senator he will be a fierce fighter for cutting spending, cutting taxes and repealing Obamacare."

Steve Forbes

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 28, 2010

General Motors Should Focus On Selling Cars To Consumers Who Can Afford The Vehicles

"Making questionable loans, with taxpayer money, in order to buttress sales during a recession is not a sustainable business model and is an abuse of the government bailout. GM should focus on selling cars to consumers who can afford the vehicles."

in Los Angeles Times

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 27, 2010

Why Not Another World War?

There is overwhelming agreement among economists that the Second World War was responsible for decisively ending the Great Depression. When asked why the wars in Iraq and Afghanistan are failing to make the same impact today, they often claim that the current conflicts are simply too small to be economically significant.

There is, of course, much irony here. No one argues that World War II, with its genocide, tens of millions of combatant casualties, and wholesale destruction of cities and regions, was good for humanity. But the improved American economy of the late 1940s seems to illustrate the benefits of large-scale government stimulus. This conundrum may be causing some to wonder how we could capture the good without the bad.

If one believes that government spending can create economic growth, then the answer should be simple: let's have a huge pretend war that rivals the Second World War in size. However, this time, let's not kill anyone.

Most economists believe that massive federal government spending on tanks, uniforms, bullets, and battleships used in World War II, as well the jobs created to actually wage the War, finally put to an end the paralyzing "deflationary trap" that had existed since the Crash of 1929. Many further argue that war spending succeeded where the much smaller New Deal programs of the 1930s had fallen short.

The numbers were indeed staggering. From 1940 to 1944, federal spending shot up more than six times from just $9.5 billion to $72 billion. This increase led to a corresponding $75 billion expansion of US nominal GDP, from $101 billion in 1940 to $175 billion by 1944. In other words, the war effort caused US GDP to increase close to 75% in just four years!

The War also wiped out the country's chronic unemployment problems. In 1940, eleven years after the Crash, unemployment was still at a stubbornly high 8.1%. By 1944, the figure had dropped to less than 1%. The fresh influx of government spending and deployment of working-age men overseas drew women into the workforce in unprecedented numbers, thereby greatly expanding economic output. In addition, government spending on wartime technology produced a great many breakthroughs that impacted consumer goods production for decades.

So, why not have the United States declare a fake war on Russia (a grudge match that is, after all, long overdue)? Both countries could immediately order full employment and revitalize their respective manufacturing sectors. Instead of live munitions, we could build all varieties of paint guns, water balloons, and stink bombs.

Once new armies have been drafted and properly outfitted with harmless weaponry, our two countries could stage exciting war games. Perhaps the US could mount an amphibious invasion of Kamchatka (just like in Risk!). As far as the destruction goes, let's just bring in Pixar and James Cameron. With limitless funds from Washington, these Hollywood magicians could surely produce simulated mayhem more spectacular than Pearl Harbor or D-Day. The spectacle could be televised- with advertising revenue going straight to the government.

The competition could be extended so that the winner of the pseudo-conflict could challenge another country to an all-out fake war. I'm sure France or Italy wouldn't mind putting a few notches in the 'win' column. The stimulus could be never-ending.

If the US can't find any willing international partners, we could always re-create the Civil War. Missed the Monitor vs. the Merrimack the first time? No worries, we'll do it again!

But to repeat the impact of World War II today would require a truly massive effort. Replicating the six-fold increase in the federal budget that was seen in the early 1940s would result in a nearly $20 trillion budget today. That equates to $67,000 for every man, woman, and child in the country. Surely, the tremendous GDP growth created by such spending would make short work of the so-called Great Recession.

The big question is how to pay for it. To a degree that will surprise many, the US funded its World War II effort largely by raising taxes and tapping into Americans' personal savings. Both of those avenues are nowhere near as promising today as they were in 1941.

Current tax burdens are now much higher than they were before the War, so raising taxes today would be much more difficult. The "Victory Tax" of 1942 sharply raised income tax rates and allowed, for the first time in our nation's history, taxes to be withheld directly from paychecks. The hikes were originally intended to be temporary but have, of course, far outlasted their purpose. It would be unlikely that Americans would accept higher taxes today to fund a real war, let alone a pretend one.

That leaves savings, which was the War's primary source of funding. During the War, Americans purchased approximately $186 billion worth of war bonds, accounting for nearly three quarters of total federal spending from 1941-1945. Today, we don't have the savings to pay for our current spending, let alone any significant expansions. Even if we could convince the Chinese to loan us a large chunk of the $20 trillion (on top of the $1 trillion we already owe them), how could we ever pay them back?

If all of this seems absurd, that's because it is. War is a great way to destroy things, but it's a terrible way to grow an economy.

What is often overlooked is that war creates hardship, and not just for those who endure the violence. Yes, US production increased during the Second World War, but very little of that was of use to anyone but soldiers. Consumers can't use a bomber to take a family vacation.

The goal of an economy is to raise living standards. During the War, as productive output was diverted to the front, consumer goods were rationed back home and living standards fell. While it's easy to see the numerical results of wartime spending, it is much harder to see the civilian cutbacks that enabled it.

The truth is that we cannot spend our way out of our current crisis, no matter how great a spectacle we create. Even if we spent on infrastructure rather than war, we would still have no means to fund it, and there would still be no guarantee that the economy would grow as a result.

What we need is more savings, more free enterprise, more production, and a return of American competitiveness in the global economy. Yes, we need Rosie the Riveter - but this time she has to work in the private sector making things that don't explode. To do this, we need less government spending, not more.

in europac

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

Buying A 30-Year Treasury At A 4% Yield Is A Sucker`s Bet

“I couldn’t understand why people were buying subprime mortgages. I couldn’t understand why people were buying dot-com stocks that had no revenues, let alone earnings. People do a lot of foolish things, until they stop. And eventually a light bulb is going to go off in somebody’s head and they’re going to realize that we can’t pay our bills. That buying a 30-year treasury at a 4% yield is a sucker’s bet. There’s no way you’re going to get your money back in real terms.”

www.investingcontrarian.com

Related ETFs: ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (Public, NYSE:TLT)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 26, 2010

Euro, Dollar And Gold Outlook

"I am bullish on the euro, relative to the dollar, I'm bearish on it relative to gold."

in Business Insider

related ETFs:SPDR Gold Trust (ETF) (Public, NYSE:GLD), Market Vectors Gold Miners ETF (Public, NYSE:GDX)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 25, 2010

6th Weekly Decline For The US Dollar


Latest video market update, July 24.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 23, 2010

Fortify Your Portfolio With Mining Stocks

I have long been an advocate of fortifying investment portfolios with precious metals, and I believe one of the best ways to do that is to put your money at the source - mining stocks.

in Euro Pacific Capital, Inc.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 22, 2010

The Senate Passed A Financial Overhaul That Balloons The Role Of Government While Suffocating Small Businesses

Washington did it again.

Last week the Senate passed a financial overhaul that balloons the role of government while suffocating small businesses. It's Washington theatrics at its worst, and I've had enough.

Instead of punishing the fat cats, Washington has given them the opportunity to feed off the American taxpayer and grow even fatter. And in failing to address the root causes of the financial crisis, this bill actually ensures that the next crises will be even worse!

Related stocks: Bank of America Corporation (Public, NYSE:BAC), Citigroup Inc. (Public, NYSE:C), JPMorgan Chase & Co. (Public, NYSE:JPM), Wells Fargo & Company (Public, NYSE:WFC)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 21, 2010

I Want Market Forces To Determine Which Energy Sources Are Developed

"I do not believe in central government planning. I want market forces to determine which energy sources are developed. However I want the government to lower taxes and ease the regulatory burden that is making us so dependent on foreign oil in the first place."

in The Examiner

Related ETFs: United States Oil Fund LP (ETF) (Public, NYSE:USO), United States Natural Gas Fund, LP (Public, NYSE:UNG), PowerShares WilderHill Clean Energy(ETF) (Public, NYSE:PBW)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 16, 2010

Why Is The Dollar So Weak?

The top of the dollar seems to coincided with the divergence that we had at the G20 between Europe that wanted austerity and more budget cuts and America that wanted more government stimulus and more deposits.

It seems that people are voting with their feet and they are voting for the european approach and against the US approach. That is why the dollar is so weak.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

The Dollar Is Going To Fall (Video)


Latest video market update: "The US Dollar Is Going To Fall"

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 14, 2010

This Financial Reform Bill Is Washington Theatrics At Its Worse

"This financial reform bill is Washington theatrics at its worse. It completely ignores the root causes of the 2008 financial crises - the supposed reason for the legislation."

in schiffforsenate

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

Financial Reform: The 2 Scariest Words

Financial reform...The two scariest words coming out of our nation's capital this summer.

Considering the terrible mess Washington has made out of our economy, you'd think Members of Congress and the President would have given up trying to force their iron hand over the free market.

Yet the House has passed the Wall Street Reform and Consumer Protection Act of 2009, guaranteeing that the financial crisis looming in the near future will be even worse. Of course, the only protection consumers really need is protection from government.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 13, 2010

Video Market Update: July 13


Latest video market update.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

People Have To Work To Support The Government

"I think the workers benefited dramatically from the transition from an agrarian economy to an industrial economy. We eliminated women labor in the country, child labor, because of capitalism. You know the reason – you know, my grandmother didn't have to work because my grandfather didn't have to pay any taxes. She was free to take care of eight kids, because that's what she wanted to do. But today, very few women have the choice to be stay-at-home moms. They are now back in the workforce. Capitalism lifted them out of the workforce but big government bureaucracy, high taxes and the social welfare state – that's the reason now that so few women, and men for that matter, can choose not to work. They have to work to support the government."

in www.theday.com

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 12, 2010

Washington Is Destroying Our Future

Financial reform... The two scariest words coming out of our nation's capital this summer.

Considering the terrible mess Washington has made out of our economy, you'd think Members of Congress and the President would have given up trying to force their iron hand over the free market.

Yet the House has passed the Wall Street Reform and Consumer Protection Act of 2009, guaranteeing that the financial crisis looming in the near future will be even worse. Of course, the only protection consumers really need is protection from government.

Washington is destroying our future, and time is running out to stop the political establishment's irreparable damage. If I'm not chosen to be the nominee for U.S. Senate in next month's primary, the chances of actually turning the tide are that much slimmer.

Related stocks: Bank of America Corporation (Public, NYSE:BAC), Citigroup Inc. (Public, NYSE:C), Wells Fargo & Company (Public, NYSE:WFC), Fifth Third Bancorp (Public, NASDAQ:FITB), SunTrust Banks, Inc. (Public, NYSE:STI), JPMorgan Chase & Co. (Public, NYSE:JPM), Morgan Stanley (Public, NYSE:MS)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 9, 2010

How an Economy Grows and Why It Crashes (Book))

Understanding how all the pieces of an economy fit together can be a daunting task—especially when the experts can't seem to do it. But when you get down to the basics, it is much easier than you may think. How an Economy Grows and Why It Crashes uses illustrations, humor, and accessible storytelling to take economics off its lofty shelf and put it back on the kitchen table where it belongs.

This straightforward story of fish, nets, saving, and lending exposes the gaping holes that lie hidden in our global economic conversation. With wit and humor, the Schiffs explain the roots of economic growth, the importance of trade, savings, and risk, the source of inflation, the effects of interest rates and government stimulus, the destructive nature of consumer credit, and many other economic principles that are so frequently discussed and so poorly understood.

The story may appear simple on the surface but it will leave you with a powerful understanding of How an Economy Grows and Why It Crashes.

in Amazon.com

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 8, 2010

Americans Are Going To Be Spending A Lot Less On Consumer Goods

Commercial real estate is in trouble because people borrowed too much money to buy and overpaid for commercial retail, particularly if it is the retail space, because Americans are going to be spending a lot less on consumer goods.

in www.housatonictimes.com

Related: iShares Dow Jones US Real Estate (ETF) (Public, NYSE:IYR), iShares Cohen & Steers Realty Maj. (ETF) (Public, NYSE:ICF)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 6, 2010

Efforts Have Failed To Create Any Meaningful Forward Momentum

"Prior efforts to stimulate with deficit spending, absurdly low interest rates, and a series of government programs designed to support the housing and automobile markets have failed to create any meaningful forward momentum."

Leagle.com

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

There Is A Lack Of Economic Understanding In This Country

"There is such a lack of economic understanding in this country. People need to learn the basic things."

in Lew Rockwell

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 5, 2010

What We Need To Grow Our Economy

What we really need to grow our economy are less government and consumer spending, fewer regulations, lower taxes, more savings, increased capital investment, greater industrial production, and higher interest rates.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 4, 2010

The Job Report Revealed Continued Weakness In The U.S. Economy

Today's job report revealed continued weakness in the U.S. economy and provides clear evidence that prior efforts to stimulate with deficit spending, absurdly low interest rates, and a series of government programs designed to support the housing and automobile markets have failed to create any meaningful forward momentum.

The report qualifies as a major disappointment for just about everyone except those desperate for the government to launch another expensive and futile round of "stimulus." No doubt economists and administration officials will use the dismal results to argue that the prior stimuli were simply too small to jolt the economy back to life.

If the Obama Administration takes the bait, which it seems very likely to do, the United Sates is in danger of losing the confidence that other heavily indebted countries are striving to regain. Not insignificantly, in recent days the dollar has sold off from its recent highs, and has fallen in tandem with the stock market, a reversal of a pattern that we have seen for much of the year.

Any new stimuli, in the form of greater deficit spending, or the extension of the home-buyer's tax credit, should be considered economic sedatives rather than stimulants.

Working off the economic imbalances that resulted from prior stimuli will be difficult enough, adding on additional debt burdens will only make the task harder. What we really need to grow our economy are less government and consumer spending, fewer regulations, lower taxes, more savings, increased capital investment, greater industrial production, and higher interest rates. Unfortunately government stimuli are preventing these positive developments from taking place and hindering any chance we have of a meaningful recovery.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 2, 2010

Financial Bill Will Do Nothing To Prevent The Next Crisis

"The bill will not only do nothing to prevent the next crisis, it will more than likely increase its severity.”

in The New American

Related stocks: Bank of America Corporation (Public, NYSE:BAC), Citigroup Inc. (Public, NYSE:C), Goldman Sachs Group, Inc. (Public, NYSE:GS), Morgan Stanley (Public, NYSE:MS)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

July 1, 2010

The More The Government Stimulates The Economy, The Sicker The Economy Gets

The more the government stimulates the economy, the sicker the economy gets because the disease that it suffers from is an excess of spending, an excess of government, an excess of borrowing, an excess of consumption. The only way to repair the damage is to have more savings, more investment, more production.

in Fox Business

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

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