Peter Schiff's Prediction

Recently I've become a big fan of Peter Schiff. I read his book, "Crash Proof: How to Profit off the coming Economic Collapse" last Christmas and I've been listening to him ever since. My enthusiasm for Schiff crescendo'ed until January when he was named an economic advisor to the Ron Paul Presidential campaign. Schiff's company, Euro Pacific Capital, specializes in foreign investment. His site contains economic commentary as well as investment advice, and I highly recommend using it as a resource if you are looking to diversify your investments outside of the US dollar.

The clip below is from August, 2006. Schiff is a guest on CNBC's "Kudlow and Kramer" debating Art Laffer, a supply side economist and co-chairman of the Free Enterprise Fund with Larry Kudlow. Schiff predicts the US economy is heading towards a recession, a charge that does not sit well with Laffer. It is worth noting that, at the time of this interview, the stock market(s) were all reporting record (or near record) highs.



It immediately becomes obvious that Schiff is better prepared for the interview, as Laffer offers few arguments of substance beyond the expected ad hominem attacks that inevitably surface whenever an uninformed person responds to someone else's radical position. Laffer's tendency to come unglued upon hearing Schiff's market analysis prompts him to "bet Peter a penny" that his predictions are wrong. The stoic Schiff (yeah, I'm biased) promptly accepts the wager, offering to up the stakes. I found Schiff's comment near the end of the clip, "that's [a penny] is all the dollar will be worth" to be darkly comedic. I wonder if the two ever re-visited the topic, or if Schiff ever collected his penny?

Another interesting part of the clip takes place near the end. Schiff asks a question about why women with children are in the workforce. Unsurprisingly, this question caused both Laffer and the host to bristle. After all, Schiff just challenged our "sound monetary policies" and the strength of the US' two most valuable exports (Greenspan's and Bernanke's brains)...now he's going to attack women in the workforce?

Lost between the scoffs and seemingly pre-programmed PC alarms that went off in Laffer's and the host's heads was the larger point: women (or men, if you like) today are in the workforce because they can't afford to stay home and raise their children as in year's past. The residual affects of poorly raised children are beyond the scope of this post, but we're all familiar with the consequences. I don't think it is too far of a stretch to blame our country's egregious monetary policies for the erosion of quality family life.

I often receive criticism for immediately blaming poor monetary policies for nearly every ill that plagues America. And maybe they're right. But if it is true that money is the lifeblood of any economy, and if those determining policies that govern that economy have mishandled their responsibility, who are we to blame when prices rise and quality of life diminishes?