That's rather extreme. If he always predicts gloom and doom sometimes he will be right. Especially within the last 15 years. Wasn't he predicting the last financial crash for a couple years before it happened?
The boy who cried wolf was eventually correct too. A broken clock is right twice a day. Etc.
Peter Schiff currently believes Bitcoin is going to collapse, that anyone who buys it is a fool and charlatan, that hyperinflation is around the corner, and the only solution is a return to the gold standard. Do you agree with this?
I don’t like Bitcoin (too many grifters) but even I can admit it has value as a hedge asset against systemic shocks. He just doesn’t like that it may supplant Gold.
I don't see that at all. He's basically saying that the way our governments and banking systems interact with the economy is fundamentally flawed and causes issues.
Getting the timing right is not easy, sure. He was right about 2008.
You may choose to believe that 2008 was an isolated event or it was just another systematic failure.
I think we'll see another one soon, following the way governments treated covid.
I wish Bitcoin would succeed and bring us a step closer to anarchy - but Bitcoin doesn't have any backing and it's not a physical asset which can be used, worst case scenario, as jewellery. Its technology can be replicated entirely by a different coin (and it has, already). Its intrinsic value is null.
The reason the price is so high is because people hope to speculate on it and make money (which they have!) and because people expect the market and currencies to do badly, given the high point they reached. Also, governments' stimuli brought a lot of money in the hands of rich people; this money needs to go somewhere given the risk of inflation, so rich people are investing in growth stocks (eg. tech) and cryptocurrencies.
I'll be honest, I was expecting governments to destroy cryptocurrencies by now, but even without government intervention, I don't see Bitcoin ever holding any value or being stable, without backing. Maybe stable-coins will solve this.
I agree that going back to the gold standard would be an improvement, even better, I'd prefer if private companies could just print and back their own currencies.
Instead of backing currencies with gold, you could back them with different commodities (eg: wood, iron, oil, etc).
The machinery of freedom has an interesting chapter about how such a system may work.
He was not right about 2008. Saying that “US stocks will crash because of [WRONG REASON]” doesn’t make you right. Anyone that listened to Schiff or invested with him wound up losing a LOT of money.
Going back to the gold standard would not be an improvement. I highly recommend reading Karl Polanyi’s The Great Transformation for an analysis of the problems of the gold standard.
He has been consistently wrong for 15 years, if he was right, it was a half truth by accident. Let’s look harder at his theses since 2007 or so:
1. US Equity Markets Crash.
Okay, that happened in 2008. But, did it he get the reason why?
He claims it is all about Debt and easy money. That interest rates should be up and ultimately we should be tethered to hard currency. That’s a really, really simplistic and ahistorical take. It’s like saying, let’s cause issues with the financial economy to completely wipe out the real economy because it is “healthier that way”. Seems to be a big price to pay for a very nebulous benefit. Thoughts like that led to World War 1. (I highly suggest “Lords of Finance” from Liaquat Ahmad and “The Great Transformation” by Polanyi).
As opposed to what we ARE doing loosening the liquidity strings to allow the real economy to continue to function, albeit damaged by the lack of regulations + greed in the financial economy causing it to make terrible risk exposure decisions.
Yes there was plenty of bad behaviour in the housing market and in the whole Lon trading and mortgage trading market (which I was a part of in the past, as a wall st software dev). The interaction of mortgage backed securities and collatorized debt obligations propped up too many balance sheets and weren’t properly valued for systemic risk, and amassing credit default swaps as a hedge quickly unravelled the institutional insurers like AIG .... requiring a massive liquidity injection by the Fed and Congress so that everyone from Wall St to Main St didn’t wind up completely broke. Ultimately it was the only practical solution available given the political will.
2. US Dollar will crash (Hyperinflation)
Completely false and made him and his investors lose their shirts
3. Decoupling of foreign economies from the US slowdown
Also false, the US rebounded far quicker due to a variety of Obama era policies, the world still is not really decoupled as Eurozone troubles and Trump’s trade wars showed.
4. Foreign equities and commodities (gold) will grow and are where you should invest.
Except foreign equities crashed worse than US equities back in 2008! And austerity policies prolonged their suffering.
My criticism isn’t “overboard”, this is public record. If you are an investor and listened to Peter Schiff, you’ve lost a lot of money.
You mean because his reasoning is Austrian and not Keynesian it is wrong even when the crash happens which he predicted would happen? That's convenient.
Gold has also done pretty well hasn't it?
You can list wrong predictions all day, but if the guy is occasionally right you need to give credit.
There's still no reason for anyone to carry around a broken watch and no reason to listen to wolf criers who are more wrong than not. Pete Schiff as an anachronistic goldbug is a curious oddity to point out every now and then for amusement. He isn't someone worth listening to though.
There’s an old saying that Austrians claim a lot of things, but ultimately become Keynesians in a foxhole.
There is no “there” in Austrian economic reasoning or modeling: the fundamental premise is to reject empirical evidence in favour of Praxeology. This is useless for forming economic policy.
