*promote

Promoting this video and sending it back into the queue for one more try; last queued Thursday, December 4th, 2008 8:22am PST - promote requested by kulpims.

I must say, I wish they would have allowed him to make a response to the last pundit's point that other nations pulled out of their depression much faster than the US did. That seems a point worth answering, if true, since other nations are much more willing to experiment with socialized services than the US.

I too, would also like to know what caused european nations to pull out of the depression faster then we did.
I agree with Schiff on the fact that we can't keep printing money, but government needs to act. It needs to adjust what its spending on. And we shouldn't put our "faith" in anything, free market or the government. We should use both.

Every fringe commentator on economics on the far-left and far-right thinks this financial crisis is proof they've been right all along.

The problem with predicting that civilization as we know it is going to end, is that when it doesn't happen you're going to lose credibility.

Has any country anywhere, at any time, ever followed the Austrian school of econ? I look and look and look, and as far as I can tell, the answer is no.

Maybe Schiff and Ron Paul should move to Austria they love it so much.

Both Schiff and Paul have many valid points, but I'm sick to death of this "gold standard" "fiat" and "Austrian School of Econ" being the only thing they squawk about. And the crappy attitude they combine it with (I'm right, everyone else is wrong!) is just retarded. Guess what Dr.Paul; I don't think you're right whatsoever. I think you're wrong, so there!

Fucking broken records, and most probably the real reason they lost.

garbage, garbage, garbage

"The tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

^ if you think something is the truth and the only way to get out of this situation, what else should you talk about?

I haven't heard Schiff say much except for "avoid government interference", so I can't really say whether his ideas will help get us out of this mess.

HOWEVER, he was one of the few people who said this shit would happen when the housing market bubble bursts, and guess what! It did!

So maybe you asshats should stop laughing at him and at least consider what he has to say now that his predictions are COMING TRUE!

I'm not saying to follow him like he's the second coming, but at least listen!

The cause of this crisis is fraudulent sales of insurance, by companies who did not have the resources to actually pay out if the insurance policies came due. Credit default swaps are insurance in everything but name. The government does have a legitimate interest in preventing fraud by regulating insurance.

Anyone who resorts to merely laughing at their opponents ought to have their advice treated with great skepticism.

For the record, i've read some of what Hoover and Roosevelt did and i promise you that it was anything but laissez-faire conservatism. They most definitely interfered big time. It's a myth that Hoover sat on his hands, trusting the market. He did a lot to interfere, and Roosevelt did even more. And frankly, i don't think it was wartime spending so much as wartime *production* that really pulled us out. I don't need a gold backed currency, but i do need currency to be backed by something besides printing presses. If we do not produce things of worth, then printing more money simply devalues the existing money. Contrary to popular belief, the overarching shape of these economic systems aren't rocket science that only some erudite experts can fathom. More money chasing the same or fewer goods means the money is worth less. The government should be encouraging a ramp up in production to lower prices. Of course, the out-sourcing and globalization of much commodity production puts a lot of this out of any one government's hands. Which is also why they should be encouraging us to buy local as much as possible, regional next, national next, and global last. Our local and regional multipliers have been shrinking badly with corporate merging and globalizing. If it weren't for that, we wouldn't be worried about the effect of large, failing companies. Anyway, i could go on, but here's the bottom lines:

Currency must be backed by something to have/gain/maintain value.
We need to boost production (of anything and everything), primarily starting local, then regional, then national. The best way you can do that yourself is to shop with that order of preference in mind; if you run a business, work harder to produce more; if you have a business idea, start it up!

^
Re: printing money.
Talking about printing money seems to be a bit of a scare tactic. Printing money is essentially just a hidden tax, giving the government more funds and decreasing the value of existing money. In effect, arguing against printing money is just arguing for a reduction in taxes. Are there any costs to printing money beyond that?

Re: physical goods.
The only case in which service goods could be intrinsically worth less than physical goods would seem to be something like if humankind's economic civilization collapsed and the entire workforce had to concentrate on local food production. In that case, service goods like database management wouldn't be worth much, but then again, neither would computer manufacturing.

Re: outsourcing.
For my business, tech professionals in India can be hired for as low as $2/hr (elance.com). It'd be a waste of the economy's resources to pay someone in a wealthy country $20/hr to do the same thing. Comparative advantage makes everyone more prosperous.

^ Comparative advantage makes everyone more prosperous in the long run. Globalization sucks for the US in the short to medium term, until the other countries of the world catch up to us in terms of prosperity and minimum wages.

This recession is one part of the economic slowdown that is trying to bring us down to the level of the impoverished countries that make our goods. I mean, even if you are saving 18 dollars by outsourcing to India, that's still two dollars that is not going to be part of the American economy anymore. And that adds up for all the outsourcing and manufacturing losses we've had over the last few decades.

Either they will raise their prices, or we will find our economy dropping to their level. It has to equalize someday.

>> ^volumptuous:
Has any country anywhere, at any time, ever followed the Austrian school of econ? I look and look and look, and as far as I can tell, the answer is no.

Of course no government follows the Austrian School, nearly everyone in government follows Keynesian economics because Keynesian theory appeals to politicians' ego in that they can with a stroke of a pen make a natural part of the business cycle go away. (They can't make it go away BTW, they can only delay the inevitable. But at least they're trying right?)

Maybe Schiff and Ron Paul should move to Austria they love it so much.
Both Schiff and Paul have many valid points, but I'm sick to death of this "gold standard" "fiat" and "Austrian School of Econ" being the only thing they squawk about. And the crappy attitude they combine it with (I'm right, everyone else is wrong!) is just retarded. Guess what Dr.Paul; I don't think you're right whatsoever. I think you're wrong, so there!

Really? When you clicked on this video what did you think Peter was going to talk about?

Fucking broken records, and most probably the real reason they lost.

They lost because the Left can't deal with a president who is against the welfare state.
The Right couldn't deal with his anti-war views. A shame IMO because he would have been getting a lot of attention in this current crisis.

>> ^MaxWilder:
^ Comparative advantage makes everyone more prosperous in the long run. Globalization sucks for the US in the short to medium term, until the other countries of the world catch up to us in terms of prosperity and minimum wages.
This recession is one part of the economic slowdown that is trying to bring us down to the level of the impoverished countries that make our goods. I mean, even if you are saving 18 dollars by outsourcing to India, that's still two dollars that is not going to be part of the American economy anymore. And that adds up for all the outsourcing and manufacturing losses we've had over the last few decades.
Either they will raise their prices, or we will find our economy dropping to their level. It has to equalize someday.


If someone wants to do your shitty job for you for 1/10 the price, you're supposed to enjoy the enormous marketplace of newly-cheap goods, accept that you've been moved up the totem pole, and do something that's actually useful for the economy.

That tends to mean things that require local presence, cultural fluency, or possession of skills that people with less education opportunities than you have a more difficult time obtaining.

>> ^chilaxe
If someone wants to do your shitty job for you for 1/10 the price, you're supposed to enjoy the enormous marketplace of newly-cheap goods, accept that you've been moved up the totem pole, and do something that's actually useful for the economy.
That tends to mean things that require local presence, cultural fluency, or possession of skills that people with horrendously worse education opportunities than you have a more difficult time obtaining.


Nobody wants to do your "shitty" jobs for you any more than they want your armies to invade their countries.

The US is, however, a consumer driven economy and the countries less able to offer high wages will continue to sop up your business while your local workers go unemployed. They'd be stupid to turn back easy money...

Guess what happens? Eventually your local workers face the choice of starvation/welfare/taking a shitty job/taking a pay cut and doing their old job.

Outsourcing is fine until you suddenly realise that the outsourced help is cheaper than the standard staff.. Then you just fire the standard staff.

The thing most of the people arguing against Mr. Schiff share in common is ignorance. They make a claim (most of which can be historically checked out for veracity) which is incorrect and then throw all their belief behind it because the alternate is the economy is going to tank in the biggest financial disaster since.. well, ever.

And like the Titanic, in trying to avoid it they will create an even bigger disaster.

Hope ya'll packed your life preservers...

^People would rather do tedious jobs than starve, but you would apparently take the choice away from them.

Schiff is arguing we need to cut back regulation and trust in the free market, and sifters are arguing nations also need to simultaneously increase regulation and limit their companies to producing in their country of origin (no "sending our jobs over seas").

The first step in convincing mainstream intellectuals of your vision would be to stop insulting them (they've read everything you've read, and they've read the rest of the economics literature as well), and the second step would be to pick either drastically eliminating all regulation OR drastically increasing regulation, because you can't have both.

You should have a plan B just in case the economics community is right and civilization doesn't miraculously collapse.

The United States federal government is not paying for its deficit spending by printing excessive amounts of money. It is borrowing instead. Inflation is at 3.66% and falling. It peaked at 5.6% in July, before the economic upheaval.

Peter Schiff is one of our most brilliant and honest economists.

Austrian economics has about as much credibility as scientology. They don't even believe in empirical evidence, for crissakes. Mainstream economics does't have a much better theory - essentially its an extended and mathematized version of Austrian economics. But at least mainstream economists know what the data says and use statistical techniques to analyze it. You know, like real scientists. And regarding the Austrian "theory" of the Great Depression - they pretty much pulled it out of their asses. Its just an attempt to blame the whole thing on the government, and exempt the free market. Austrian economics is a religion - the free market is God and government is the Devil.

Ron Paul: Because Doing Nothing Will Fix Everything.

Also, anyone who believes Ron Paul's nonsense might want to do some reading on the pre-Fed economy in the United States, especially the Panic of 1907 and the Panic of 1873. There's your "unfettered free market" fully at work.

GO SCHIFF ! GO SCHIFF !


HAHAHAHAHAAAAA

>> ^Red:
GO SCHIFF ! GO SCHIFF !

HAHAHAHAHAAAAA


A communist cheering on a free market advocate? Alrighty then...

>> ^jwray:
The United States federal government is not paying for its deficit spending by printing excessive amounts of money. It is borrowing instead. Inflation is at 3.66% and falling. It peaked at 5.6% in July, before the economic upheaval.


Oh really, is that why it takes 3x as many dollars to buy an ounce of gold today than it did ten years ago? Of course the government is printing obscene amounts of money. Stop picking and choosing little short term windows of time where the trend is not apparent, nothing goes in a straight line. Do you even know what monetization of debt means? If foreigners are no longer interested in buying our government debt (bonds) that the treasury issues every year, the Fed has to raise interest rates to lure them in, because that's the yield on their loan to us. But they're LOWERING THEM. Yields are NEGATIVE. You loan money to us, you will be paid back in depreciated dollars that buy less than what you had before you loaned. So now that foreigners aren't doing that, guess who has to step in and buy those bonds? The Federal Reserve. Except that money isn't someone's savings, it isn't backed by a product in the world. It's pure inflation, pure funny money. That's what's coming, their balance sheet is going into the TRILLIONS.

This is the symbiosis that enabled government excess. A tax is an honest appropriation, people see it and are far more likely to resist it. Inflation is arbitrary money creation in a back room that siphons value from existing dollars. You can pull a curtain over that, lie about how much you're doing it, and watch as people see prices go up 10% in health care, food, per annum with absolutely no idea what hit them. After all, the government weatherman says that prices only went up 3%.

http://www.financialsense.com/stormwatch/2005/0624.html

The calculations are a joke, after we left the gold standard in the 70s, they kept changing them to understate real inflation and welfare obligations so they could spend more and more without it being easily noticed. They no longer include homes, energy, or food. Also, they introduced a subjective concept called hedonics adjustment, which negates price increases as inflation by discounting an assumed increase in quality.

The most galling result of this Keynesian nonsense is it blinds people to where inflation is going. Keynesian economics is the equivalent of teaching astrology instead of astronomy. First, they change the definition of inflation to mean prices instead of money supply. The correct definition of inflation is an increase of the money supply with the common RESULT being higher prices. After doing this, they then categorize inflation (to them: prices) into "asset-based" and "goods-based," and tell us that they don't fight asset-based. But asset-based inflation is what causes bubbles in assets like homes and stocks. We want things we own to go up and things we consume to go down, of course, but we don't want our assets to go up from artificial demand created by inflation. That's an illusion. So when inflation goes into tech stocks or homes, nobody sees it as inflation. Not the Keynesian Fed Chairmen, not the Keynesian financial managers, almost anyone with a degree in economics was less reliable than A COIN FLIP. That's when you know when your "science" has a problem. And then boom, when it starts going into commodities futures after the implosion, it exposes the inflation at all once that people were previously blind to.

And then here's a guy like Schiff, Ron Paul's economic advisor and Austrian economist, who was warning the whole god damned time since 2000, telling people to get into gold when it was $275 and getting laughed at by every confused Keynesian educated retard on television.

http://www.youtube.com/watch?v=ucDkoqwflF4
http://www.youtube.com/watch?v=2I0QN-FYkpw

>> ^dtmike07:
Austrian economics has about as much credibility as scientology. They don't even believe in empirical evidence, for crissakes. Mainstream economics does't have a much better theory - essentially its an extended and mathematized version of Austrian economics. But at least mainstream economists know what the data says and use statistical techniques to analyze it. You know, like real scientists. And regarding the Austrian "theory" of the Great Depression - they pretty much pulled it out of their asses. Its just an attempt to blame the whole thing on the government, and exempt the free market. Austrian economics is a religion - the free market is God and government is the Devil.

You are 100% dead wrong on this. Keynesian "empirical data" is bogus, I've only scratched the surface on how they try to complicate simple concepts into a symbiotic swindle by redefining inflation, making up new terms, and it keeps blowing up in their face no matter who's in charge because that's the whole point. For you or Stukafox to even compare this problem to the firecrackers of banking panics (from fractional reserve lending, a legalized form of fraud that persists to this day with government backstops, an entirely different debate) is unbelievable, there's no proportion to a decade long depression and a bunch of shitty banks going under to remind people not to carelessly deposit all their money in banks.

Second of all, economics is a study of human behavior. Keynes was an idiot whose theories arose from a complete misunderstanding of what caused the great depression. He basically threw classical knowledge out the window and decided that economies needed central direction and stimulation by government. See, like the dumbfucks in this video, most people thought letting the banks fail was what caused the depression. It wasn't. It was what came before and after it. The inflation of the 20s was what caused the crash in the first place, you don't have a crash without a Fed-created bubble. You don't have withdrawal without being high on drugs.

But while withdrawal symptoms suck, they're actually the solution to the disease of the high. Hoover and Roosevelt saw the hangover as the disease, and began administering shock therapy. Over the course of many years, they raised tariffs, raised taxrates, and nationalized industry. The economy would have recovered, capital and jobs would have reallocated on its own. Instead, anyone who had any money after that crash had no incentive to invest or employ anyone, because now government was promising to take 90% of your profits if you made any. So unemployment got worse. The tax revenue the government did manage to appropriate, it used to pay for new government jobs that were extremely inefficient (being immune to bankruptcy, financed by theft, and having no competition tends to be an unproductive business model, ask the soviets). FDR also ordered livestock slaughtered and fields plowed under because he believed falling food prices were bad for farmers. No, I'm not making this up. Deflation being bad is another Keynesian myth, they think more efficient production lowering prices makes people sit on their money rather than invest it. Which is totally untrue if you look at the computer sector where prices fall IN SPITE of inflation and have never had problems raising capital or selling well despite falling prices and obsolescence. FDR is the same asshole who allowed Pearl Harbor to be a massacre and issued unconstitutional orders to confiscate gold from the poor, hungry citizens who had just seen the banks absolved for destroying their savings. The man was a fucking monster, it took four terms to get rid of him.

What got us out of the depression was a just war and FDR's death. WWII had the entire country up in arms because we were attacked by another country. People were willing to sacrifice their wants and contribute to the war effort, this was no pushover on a third world country, it took everything we had. People were buying warbonds based on patriotic fervor alone. Massive amounts of infrastructure was built to produce wartime materials. That manufacturing base remained after the war for private industry, taxes came down, trade resumed, and we emerged as a leading producer of wealth in the world. By default. Because the rest of world was in shambles, only the Soviets were left to compete and their socialist economy eventually crumbled. We didn't plan it that way, it just happened. We were also still on a semi-gold standard, we still had a savings rate, and we became the largest creditor nation. We've lost ALL OF THAT. It's all gone, we're the direct opposite now. No gold standard, negative savings rate, largest debtor nation in the WORLD.

Keynes main problem is, politicians have no precise idea what all needs to be produced and created to please everyone in a PEACETIME economy, it's impossible. The free market is millions of individuals with diverse wants and needs, there's no way in hell you can centrally manage that. But they think they can and want to spend, that's why they picked Keynes as a replacement for old models, because his theories completely justified what socialist academics had been wanting to do all along. They honestly believed they could spend money more efficiently than its earner. That's impossible, the earner has a stake in the money. If he throws it away, he loses the labor he spent to obtain it, so he has a natural incentive to be thrifty. A politician spending it loses nothing, they have no incentive to be thrifty. They're people motivated by self-interest, just like you and me, their only legitimate job in the economy was to make sure force and deception is not used when we are out here transacting with one another. That's what graphs and "empirical data" doesn't explain, and it's why history will show Keynes to be a failure.

Far from our free market roots, we centrally fix interest rates, we declare lending standards discriminatory with goofy programs like the community reinvestment act, we redistribute capital from good businesses to failed ones, savers to speculators, and pass all kinds of anti-competitive laws. That's what Ron Paul understood and was going to put a stop to. He was going to end the monopoly on currency that forced us all into accepting the bill for government excess. He was going to end the useless military expenditures overseas. He was going to eliminate the income tax and cripple the ability of politicians to engage in collusive campaign dealings, or "engineer" society by issuing special credits to certain types of marriages, incomes, families, or investments. He knew the enablements, he understood how seemingly innocuous program could change human behavior. Politicians are just lawyers spending and accepting millions of dollars to get a low-paying position of controlling other people's money. That's it. And if you think they should be controlling 50% of our money in life, you deserve everything that's coming to you. Your employers are all going to close up shop to avoid the tax, your education is going to suck, your welfare dollars' value is going to be pissed away on foreign entanglements and overpaid execs, your gold is going to get confiscated (again). It's all coming, comrades.

^Austrian economics occupies a fringe position in the marketplace of ideas. If they're really such geniuses, they should be able to find a way into a more central position. That would be the proactive course of action, rather than just railing against economics "dumbasses".

Your argument is supposed to be that unregulated markets are more efficient, but you're conflating that argument with your moral advocacy of small government and low taxes, thereby limiting the appeal of your efficiency argument to people who agree with your moral argument.

>> ^chilaxe:
^Austrian economics occupies a fringe position in the marketplace of ideas. If they're really such geniuses, they should be able to find a way into a more central position. That would be the proactive course of action, rather than just railing against economics "dumbasses".
Your argument is supposed to be that unregulated markets are more efficient, but you're conflating that argument with your moral advocacy of small government and low taxes, thereby limiting the appeal of your efficiency argument to people who agree with your moral argument.


But that's exactly what's going to happen. Why assume that this should have happened already? One thing that the Keynesians had in their favor and made it look like their ideas were working was that the dollar retained its reserve currency status in 1971 despite severing from what got it there. For 30 years, our now fiat government could build up these excesses because we had the unique position of being able to export our inflation all around the world. Now, though, the market is getting saturated with paper, but not with goods. You have massive emerging economies like China and India that have happily taken our factories and debt in exchange for a lengthy consumption binge. Now they control the source of the world's wealth and will stop buying our paper. They've already got 2 trillion of our money in reserves, they just announced a stimulus plan where they may use some of it on this rally.

Did you really think this trend could go on forever, where we become 100% service based and foreign producers continually loan us their savings to consume their products so that they can go without them and have bigger reserves of our paper?

Your argument is supposed to be that unregulated markets are more efficient, but you're conflating that argument with your moral advocacy of small government and low taxes, thereby limiting the appeal of your efficiency argument to people who agree with your moral argument.

It's not just moral, it's factual and rational. Nobody spends money with more thrift than its earner, thus you want to limit the amount of money non-earners are controlling to duties which truly lead to more benefits than costs. Also, I love the term regulation. Very popular these days, that's how socialism keeps building on itself. Socialist program causing a problem? Good, shift the blame on spontaneous human evolution into becoming more greedy, and create another socialist program to address it. Rinse and repeat. For example, the predatory lending would have never gotten to the extreme that it did had interest rates not been price fixed far lower than the market would have set them. That false signal caused people to make all kinds of malinvestments that they otherwise would not have. Market got drunk, socialist central bank spiked the punch. Who's to blame? According to socialists, the lack of a designated driver program. Um no, that's not it, the problem was that the 5th plank of the communist manifesto is spiking the punch.

^There's no reason to prefer physical production to services, and going against your comparative advantages would be vastly inefficient for yourself and the larger economy.

>> ^chilaxe:
^There's no reason to prefer physical production to services, and going against your comparative advantages would be vastly inefficient for yourself and the larger economy.


The world's production is the foundation for our service economy. When the rest of the world figures out that they don't need our paper and start to become the consumers of their own goods. Good bye service economy, at least as we recognize it.

What's more important, computer manufacturing or software programing ("paper")? One is not much use without the other.

How about the designs ("paper") for the next generation of computer chips? How about anti-terrorism consulting ("paper") for Indian anti-terrorism forces? How about the post-1945 Green Revolution ("paper")?

It's as easy to say that the service economy is the foundation of the world's production as it is to say it the other way around.

So the rest of the world will forever depend on US innovation because they aren't smart enough to design software, CPU's and anti-terrorism advise? What I mean by service economy is retail, restaurants, and other middleman businesses. When Asian countries send us products we give them dollars ("paper") the value of those dollars depend on the scarcity of dollars. We will monetize our debt because China won't lend in the long term because it's totally out of control now. If you had a printing press in your house and you gave me a million dollars for a truck load of TV's that I produced, then a year later the government comes to you with 1 trillion in bonds to be turned into dollars, I'm going to be pretty pissed that my earlier money isn't worth shit anymore because you're diluting it every time somebody comes to you for money. I'd be more reluctant to sell you anything I produced unless you pay me in something that can't be easily diluted.

>> ^chilaxe:
What's more important, computer manufacturing or software programing ("paper")? One is not much use without the other.
How about the designs ("paper") for the next generation of computer chips? How about anti-terrorism consulting ("paper") for Indian anti-terrorism forces? How about the post-1945 Green Revolution ("paper")?
It's as easy to say that the service economy is the foundation of the world's production as it is to say it the other way around.


You're right that we export a lot of services and IP, but the balance of trade is still grossly inequal. We still have to borrow foreign savings to finance our consumption of their exports. Our trade deficit breaks a new record each month, it's around $70,000,000,000 a month now. That is how much more goods and services the world is providing us than we are providing them EACH MONTH.

In the past, we ran deficits as well. The major difference, and the ones all Keynesians are oblivious to, is that deficits prior to 1960 financed increases in productive capacity. Now we're borrowing money to consume imports on credit cards, absorbing products from the world with nothing to show for it but paper notes and a hot printing press. There's a HUGE difference between borrowing to produce and borrowing to consume. One is mutually beneficial, the other is parasitic.

It's a huge, unsustainable scam, and Austrians like Schiff recognize it.

When Asian countries send us products, we give them currency that has a known conversion rate to other currencies. Currency represents labor. There's nothing special about it.

One of the reasons the US economy maintains the highest GDP per capita PPP in the world for nations above 5 million people is because it has a highly skilled workforce. Denigrating that workforce as "non-factory-working" or "paper" is meaningless as long as skilled labor is highly valued.

Make reasonable proposals (everyone wants to reduce the federal deficit), and Austrian economists could increase acceptance of their ideas. Insist that it's either dramatically restructure everything according to your vision or civilization will collapse, and you'll stay on the fringes in the marketplace of ideas.

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If you explain the Great Depression without even mentioning massive job loss at least once, then you have no credibility. I will never understand the Austrian school of economics. Go through history achieving nothing, just analyzing things after they've happened and saying that you were right.

>> ^volumptuous:


Jeremy Siegal = Volumptuous? Hmmm.

BansheeX : What makes you think I'm a Keynesian? I think all the economic theories leave much to be desired. Certainly, the statistics economists use aren't that good. But looking at those gives you a better idea of whats going on than reading the unscientific rantings of Austrian economists like Ludwig von Mises or Murray Rothbard. It doesn't matter if their theory of the Great Depression sounds convincing or not. It was not arrived at scientifically, but rather from armchair musings. The economy is far too complicated to understand that way.

>> ^chilaxe:
When Asian countries send us products, we give them currency that has a known conversion rate to other currencies. Currency represents labor. There's nothing special about it.


What kind of labor is it backed by? A haircut for another American? A consultation session for the government? An insurance policy? How many service jobs are we going to create before the world demands more basic things like soap, cars, televisions, fuel, food, and washing machines. They're not going to be able to meet future demand of these things if they keep throwing their products and legitimate money into our economy in exchange for our services and illegitimate money.

We aren't legitimately competing with the Yuan either, the Yuan is linked to the dollar. That means other countries inflate in sync with us to artificially suppress the value of their currency. They do so because they follow the Keynesian myth that a weak currency is good for exports. But why would you want to export something you make instead of consume it yourself, unless you felt you were getting something more valuable? Why would you INTENTIONALLY devalue your own currency to obtain a currency whose value wouldn't be high against it unless you did so? It's a paradox, but one that Chinese people were willing to make as wall street convinced them that tech stocks and home growth were legitimate. Now they've been burned twice by demand bubbles that they helped fuel by loaning towards consumption. That's why they're suffering now, not because their economy is unsound, but because they took the money we paid them with and recycled it into ours.

If they ever flooded the world with their 2 trillion dollar reserves, it's game over for the dollar. We don't have 2 trillion worth of their currency sitting in a vault to counteract it. Our labor services would become dirt cheap for us and others, but foreign imports would skyrocket in dollar terms. Domestic products would all get exported to richer countries, our standard of living would disappear overnight.


One of the reasons the US economy maintains the highest GDP per capita PPP in the world for nations above 5 million people is because it has a highly skilled workforce. Denigrating that workforce as "non-factory-working" or "paper" is meaningless as long as the rest of the world needs skilled labor.


GDP numbers are worthless, they're adjusted for the CPI. If the government lies about how much inflation they're creating, which I've already explained to you, they can remarkably overstate GDP. That's how despite this horrific mess last year, you still had dumbass economists coming on tv saying that we're not in a recession because GDP was still above 0%. But if inflation was calculated more honestly like it was 30 years ago, we'd have negative GDP every quarter. Instead, we claim to be growing a fraction of a percent despite being the epicenter of the problem.

If you think that we can deficit spend 100x more on military than anyone else, 50x more on entitlements than anyone else, and perpetually convince foreign savers to finance it in exchange for a negative inflation-adjusted yield, then you are sadly mistaken. Unless the Fed hyperinflates, we are going to have to set interest rates higher than they've ever been, possibly 30%, to lure in foreign buyers. Interest rates that high would make the correction of excesses unfold quicker, but hyperinflation is worse because we never recover from that. It looks like we're going that route, and that's what has Peter concerned. Foreigners have stopped buying bonds at these low interest rates, so the Fed has to buy them with pure inflation, new illegitimate dollars unbacked by labor. This is what's called "monetizing the debt," and it fails in every country that tries it. That picture in the video of the lady stuffing her oven with paper money worth less than firewood is from Weimar Republic Germany, a hyperinflationary episode in the 1920s that made people desperate and willing to follow Hitler.

Holy crap, y'all. My dad just got laid off yesterday from his medium-size tech company. After 20 years! This is something I never thought would happen.

I'm sure most people feel the way I do: that they'd like to see Wall Street, brokers, and banks regulated so the assholes that did this can't get rich again, but they DON'T want to see every big company that comes pleading to the gov't to be bailed out.
Is that somewhere between schools?

More government meddling = more prosperity for bureaucrats, kleptocrats, monopolies and cronies.

Less government meddling = more prosperity for everyone else.

Peter Schiff is a reptile.

>> ^HenningKO:
Holy crap, y'all. My dad just got laid off yesterday from his medium-size tech company. After 20 years! This is something I never thought would happen.
I'm sure most people feel the way I do: that they'd like to see Wall Street, brokers, and banks regulated so the assholes that did this can't get rich again, but they DON'T want to see every big company that comes pleading to the gov't to be bailed out.
Is that somewhere between schools?


Shh, you're interjecting reality into this great clash of economic theory.

FYI, what you're describing isn't so much an economic school of thought, as much as a political philosophy. One that calls for us to try to shape our society so things like that don't cause you a tremendous amount of suffering.

Lots of these guys think that's a horrible, horrible thing that makes things worse. I think they're nuts, but I'm pretty sure the feeling is mutual.

In the meantime, I hope things work out well for you, and hope your dad can find another job without too much trouble.

Maybe it's high time for IT workers to unionize.

I don't understand most of this economic stuff because I've never put time into trying to understand it. However, I also don't understand how people who have made a living off of trying to understand it can so often be so completely wrong. How does that work? How is it that people who fail so horribly end up so rich?

Shouldn't we all put our effort into producing something useful to humanity in the most efficient way possible? If someone else is willing to do crap work like tech support cheaper than I am, shouldn't I let them and then do something else useful instead?

Why do people invest in things that they don't understand? Why do people invest in things that they don't think are going to be productive? Why do people feel like they are owed something when they've made a risky investment and lost all of it? Couldn't they have invested in the production of food instead? Or in the development of new technologies to make the production of food more efficient? If the economy goes to shit and people can't afford to buy all this organic crap anymore if there's no way to produce enough of it to feed everyone who needs food, what's going to happen? Will people live shit lives in the rest of their lives so they can continue to eat organic food instead of buying food that can be produced in bulk which will allow them to still be able to afford their house?

I just don't get it... I'd really like to read about some basics of economy so I understand this crap better. Anyone have any recommendations? Something that doesn't give me anyone's opinion but just gives me a factual analysis?

I just don't get it... I'd really like to read about some basics of economy so I understand this crap better. Anyone have any recommendations? Something that doesn't give me anyone's opinion but just gives me a factual analysis?


You must start with your presuppositions. Begin before the beginning. Do not build a house without a solid foundation. Study the purpose for mans very existence first. This will lead you to question, then answer, morality itself. From there you can determine the difference between right and wrong. (There is no point in discussing what is wrong, if you have no concrete answers as to how it can be made right.) Generally, I refer to this body of knowledge (the knowledge of good versus evil) as The Law. Study and apply The Law. A hint at this point: Morality (and thus The Law) is not fundamentally subjective. A man CAN KNOW the difference between right and wrong. If you've come to any other conclusion, go back to before the beginning and start over, taking more care in you're studies.

If you do understand that mankind can, and does, know what is good from what is evil, then perhaps you could begin (properly) understanding economics. The first book that a man should read on the topic of economics is a book written by Frederick Bastiat, titled "The Law". Read it two or three times. Its VERY short (relatively speaking). It will make economics comprehensible.

Someone said before that "the economy" is too complicated for any one man to figure out from his arm chair. That is only true if you believe that men are not individually competent to spend their own money in their own best interests, and must be externally told how to spend. It is not true if you believe a man is competent to do so.

The Ultimate Source of the disagreement is in the presuppositions. It's in the philosophies. It's in the beliefs. The disagreement does manifest itself almost all other areas, however.

Thank you BansheeX, sometimes I feel like I'm the only guy who cares articulate anything resembling a sound position. That was refreshing.

but if you really believe that men are not individually competent to decide whats good for them then you must logically concede that they also cannot be told this externally - since all we have are other people.