A Smart Economist

I ran across this guy, Peter Schiff, yesterday, and he makes so much sense it’s a little scary.  He is one of the only economists who predicted an economic crash due to the housing bubble.

You can spend a really long time watching his videos on YouTube, but let me boil down what I know about his positions:

  • America needs to focus on productive, profitable companies and rebuild companies that add value to our everyday lives.  For too long we’ve focused on pretend, service industry jobs which wheel and deal in the financial sectors of our economy.  They are jobs of manipulation, not jobs of creation.  They are jobs which, if the ceased to exist tomorrow, would not rattle the very fabric of human-kind.
  • Our economy is like a heroine addict.  We keep putting off rehab by giving ourselves ‘injections’ of captial – fake money which is mean to give us a quick fix rather than actually solving the addiction and getting the bad stuff out of our system.
  • Companies who are in trouble deserve to fail.  Letting the automakers or insurance companies will not be the end of the automotive industry as we know it.  The factories wouldn’t stand still long.  It would only take long enough for a new corporation to be set up, free from the liabilities of the old ones, to build itself from the ground up, making a profitable business model.
  • The government is partially at fault for fueling the consumer economy, encouraging unreasonable housing prices, and ignoring economic best practices and free-market policies.

Now, the guy gets a little extremist/absolutist when he starts going down the path of complete financial armageddon, but if you take away the shrillness & alarmism, overall he strongly reflects my economic views.

If you are going to watch one of his videos, watch this one:

He makes a lot of great points in this video:

  1. real estate is a place to live, not an investment
  2. companies that make money trump companies that do well in the market
  3. you can’t go back to sound lending practices and keep bubble pricing
  4. work is to produce value, not to just have a job

6 thoughts on “A Smart Economist”

  1. I was quite impressed by a lecture he gave on CSPAN’S BookTV about a month ago. I believe he is a very intelligent economist and addresses a lot of good points about our economy and the world’s economy.

  2. Alex and I sat and watched the whole thing – I thought I’d listen to a few minutes, but it was very enjoyable so we listened to all of it. His point about letting things fail that should fail is right on – bailing out just makes things worse. Anyway, his predictions do make us doubt our upcoming move though.

  3. Personally, I think he goes off the rails at around 1:00:00. I don’t think we are headed toward hyperinflation or currency devaluation. At that point I think he goes into alarmism (see my post about alarmists). I think we aren’t headed in that direction because the FED and Government is now SOOO hyper-sensitive and knee-jerk right now. I think the drunken stupor is over.

    The most interesting thing in here is when he talks about gauging how much a piece of real estate is REALLY worth by its rent values, not its market value, and how “throwing away money on rent” a lot of the time isn’t really throwing away money. In markets where home values are SOOO inflated, renting is the best thing you can do!

    Either way, I don’t see why it should make you doubt your move. I mean, Cali is going to fall into the ocean someday… but other than that… it will be awesome! 🙂

  4. Oh, don’t worry – we’re still going. He was just making us think about where we would want to be if we did have hyperinflation. Anyway, and I guess if we fall into the ocean, we’ll still be fine, since we’re so righteous (and humble)! Now all those wicked people out there, they better shape up…

    What he was saying about renting was very interesting though. We’ve had a mortgage now for about 8 years, so it’s hard to get into the “rent” mentality again, but we do realize that’s the smartest thing to do right now – and maybe for a while.

  5. I think we need to pay attention here and keep track of this guy.I think he is correct in what he’s talking about. Most of what lies ahead will be out of our control- all we can do is try to prepare for the consequences. (Ron and I watched the whole thing, too)Thanks Sam, for sharing this.

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