@tonybonez Poor little guy. You actually think making stupid comments like this is relevant in some way. Well, you're right. It is relevant to the fact that you are a simpleton who has this free market capitalism vs. socialism mind set. Your tiny brain is incapable of understanding all the nuance in between.
You're probably right that the US govt. couldn't let all these companies go down the crapper but it sure leaves a bad taste in the mouth. The same thieving bastards who did all this stuff are the ones receiving all this bailout money.
Don't you find it shocking that all these brain dead idiots who took the time to teach themselves the nuances of austrian economics can't notice the simple facts that Schiff's predictions are way off? There is no hyperinflation, europe is doing worse in this recession than us (despite their higher savings rate and lower debt to GDP ratio), the price of metals are dropping, etc, etc
I do find it odd how they worship this guy. Oh well, if they want to throw their money away investing their money with him then they will get what they deserve for thinking some guy with a folksy way of talking who was vaguely right on one issue but wrong in every other way is the greatest economist of all time.
So, it was the insurances companies? The collective security? The voluntary socialism? Statism? Control? Force? Collectivism? All of the above? None of the above?
I read some of your below comments. One jumped out at me. The one about the Fed hiring 'highly educated' economists. Well, their economic philosophy is more important than the pedigree of their education. The best and the highest of an education in economics will give you worse results if they are of the wrong philisophical school.
When I said highly educated I didn't just mean what school they went to. And I guess you missed the part of the vid where I said that some regulation is good and some is bad. Also, this was a private insuranse scheme.
You have not shown me an argument in favor of gov reg. Preventing a "they will go nuts" outcome is not justification for regs.
You often say "...will go nuts" Many people would agree.Therefore why would these people let nutty banks touch their money ? Answer - because there is gov insurance. Thus gov insurance must go.
Now banks will need to make a strong case to depositers to get their money. Such as originating mortgages with a 25%down payment at certain verified income ratios=sound system.
As I listen to more of your video, it becomes clear how truly misinformed you are. The big ratings agencies are not private - they are licensed by the government.
Piece-meal deregulation creates moral hazard, because other regulations left in place created the expectation for bank managers that they would get bailed out even as they took insane risks with their companies.
So let me get this straight, you think that because the government put some basic regulation on the ratings agencies which mostly just excludes random people from giving seemingly official AAA ratings and you think that ratings agencies are a government contribution to moral hazard? Investors could have banded together and started claiming that Lehman and Merril were going down without gov certification but they didn't. And the gov let Lehman fail so WTF aren't you getting?
I am sick of people just repeating the same talking points and ignoring what I said. Some regulation is good, some regulation is bad. Stop thinking in black and white and accept that it's not a government against private sector to the death match. both entities have their merit and problems.
You are basing your opinion of my beliefs based on your little black and white mind. You see them as anti private sector and therefore pro big government. You have no idea what I think. Your mind is incapable of nuance.
You don't understand the concept of moral hazard; let me explain it to you. Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. The government subverts risk exposure with its various laws and regulations. It creates the expectation that parties will be taken care of by the government should they screw up.
"go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts"
I don't know, maybe because it's fun to watch morons ignore the entire case I present and focus on me saying things like go nuts. You people are a joke and I like to laugh.
Replying to you from your comment from your last video.
So, you say it;s "fair" now that, you said you can be a dick sometimes, which makes it ok for you to "be" the same thing you hate? And that gives you the power to call them dick leeches? Ok, I think I'm done here. You can't just say, oh, I called my self a dick, so that makes it ok to engage in the same thing I hate about [insert a certain part of people in a group you are debating that act childish].
Everything you went over in this video is going under a faulty premise: that the free market allows for banks to have an unlimited supply of money. Banks get their money from the government and depositors. If the government insures everyones deposits (FDIC), then no one cares if their bank makes outrageously risky investments.
The governments action of keeping interest rates artificially low causes cheaper loans which means people will take more of them than if the interest rates were not as low. With cheap money supplied by the federal reserve, people need only find a common asset to invest all their loaned money into. Thanks to the Clinton administration campaigning for banks to lower their lending standards so as to give more home loans to poor minorities, houses became that asset.
This new huge demand for housing caused housing prices to go up, thus causing the housing bubble. The one thing you didn't mention in your scenario is that these banks didn't just make such risky investments because they thought that some company was insuring them. They made those risky investments because they thought that if it did end up hitting the fan, that the government would bail them out . . . and they were right.
My two previous peter schiff vids deal with proportion. Did the money supply get too high? Sure, but that is only part of the problem and basic regulation is part of the way to deal with that.
What are you talking about regulation? It was the federal government itself that forced banks to lower their lending standards under the guise of giving more home loans to poor minorities! watch?v=ivmL-lXNy64 Having more government regulation at that time would have only meant that the government would have had even more tools at their disposal to enforce their agenda of lowering lending standards to give more loans to poor minorities.
Like I said in the vid, some regulation is good and some is bad. Of course you can point to cases of failed regulation which contributed to the problem but removing the regulations which restrained them was a bigger contributer than getting them to include more minorities. And what about Countrywide forgeing loan applications to approve more? The system isn't perfect but neither is the private sector.
Yes. Kind of. They can learn from their mistakes and make adjustments accordingly. Now that everything has gone so bad many educated people at universities and various think tanks are studying the issue and they are making recommendations to the regulators, who can also hire new people with new ideas.
how can you possibly be so trusting in a few individuals who have been so terribly reckless in their actions especially since the bursting of the dot-com bubble and shock of 9-11? Give me your honest answer. I'm not arguing just to be right.
so am i right to assume that you believe Greenspan didn't know what he was doing when he slashed interest rates to 46 year lows after the Nasdaq bubble burst?
Have you read "Gold and Economic Freedom?" Greenspan wrote this is the 60's:
"When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage.
The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves...
and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed."
They put too much money into a minor recession but the people who have analysed the Great Depression will mention that fact but go on too say that doing the exact opposite, nothing, in 1930-31 extended the recession and deepend it into a depression.
That's simply impossible. In the quote I just cited Greenspan admitted that it was the injection of capital that first created the speculative boom in turn leading to the bust.
Without the boom there wouldn't have been a tremendous bust. As Greenspan stated, it would have just been a "mild contraction."
No, the injection was keep a speculative boom which was already in progress going. That doesn't change the fact that the contraction was allowed to progress too much in the early 30's. Economics is a balancing act and extremes in either direction are bad.
Few things. Why would you want to keep a speculative boom going? What's wrong with contraction? And "Keynesian" Economics is a balancing act... because the free-markets aren't permitted to balance themselves
See that's the thing, they did make the mistake of increasing liquidity far too much in 27. But the contraction of the early thirties was still worse.
It had to be to offset the the capital that was injected into the system. What do you think's going to happen today given the amount of credit we're creating? How do you honestly see this playing out? Today's boom is even more speculative than in the 20's due to weak economic fundamentals and tremendous deficits.
And we've crashed far more than in 27. We are approaching 32 levels so it's time to be concerned about wealth destruction rather than inflation. We have already deflated massively. We're not just reinflating a bubble at this point, we are stabalizing a battered system.
My biggest concern comes down to this. The U.S. is (not so gracefully) passing the torch over to the eastern emerging and developed markets. Our economy is a shell of what it once was judging by increasing unemployment and trade deficits. How can we stabilize an economy based on these fundamentals? How can we ever expect to pay back unprecedented levels of debt short the invention of a miracle renewable energy? If we will see any stabilization, it will be an illusion masked by inflation
No, markets do not need to offset nearly as much as you are suggesting. Markets adjust to mild inflation quite well as long as inflationary policies aren't continued after an appropriate adjustment.
Politicians are not master economists. They're politicians. They don't know the first thing about how artificially low interest rates or forcing artificial demand on an asset will create asset bubbles. They just know how to get elected. You might as well have kindergardeners on the board of bank regulation. At that time, the government's motto was to put every single american family in a house. If they had more regulation, they would have enforced that motto even more.
That's why the Fed is independent of Congress. They DO hire highly educated and experienced economists on their Board of Governors and their regional banks are run by bankers nominated by the private member banks who are obviously educated in economics and finance.
Sure, keynesian economics: the economic system that created the asset bubble. While all of the economists from the austrian school of economics predicted that exactly this would happen, the fed and the government refuses to listen to them. It's ridiculous. On one side you have a guy who's predicted everything to a T and on the other side you have a guy who continues to get everything wrong to a T, and you choose to listen to advice from the guy who was wrong about everything?!
Except that pete wasn't write to a T and there were plenty of non Austrian analysts who saw the bubble. They didn't go on to invest in oil futures after the crash because they felt that inflation would make commodities skyrocket. pete's been wrong on many counts. He also shorted the dollar right after the crash not anticipating the flight to safety and lost big. The world doesn't agree with how he thinks it ought to be and he loses huge because of it.
In the beginning of this bubble gold was at $270. Now it's skimming $1,000. A quadruple return doesn't sound too bad to me. We're talking about macroeconomics here. Any time frame below 3 years or so is speculation and attacking someone's macroeconomic outlook because it didn't happen in a particular year is cherry picking.
What if you bought in this time last year at 1050? It hasn't reached a thousand since so you'd be down. You'd certainly be disappointed since the whole 1500-2000 or more hope didn't pan out. What if you bought gold at 875 back in 1980? You'd be quite disappointed today as you'd be down significantly. Especially since an investment in stocks back then could very well be up today. Way up in some cases.
Of course there were banks that got suckered into thinking the government would never stop inflating the bubble. That's their mistake and they should go bankrupt for it. And once again, in a free market, there's no fed. The banks only money would come from depositors who would be a LOT more cautious about their banks investments because their deposits aren't insured (no FDIC). This means that those wanting to keep their wealth would only deposit in banks that invest in flat assets.
I doubt people would be as discriminating as you suggest. As I explained in this vid AIG had no reason to expect a bailout. Neither did the big investment banks. In fact, Lehman was allowed to fail.
We're talking about people's life savings here; all the money that they have saved for their entire lives. You don't think they would be cautious about how they want it invested? Simple stock market tip: if you want to keep your wealth, invest in a flat asset with a minimum up and down channel. If you want to conservatively invest, go for an asset with a slow uptrend. If you want to be a gambler and throw the dice, go for an asset that's shooting up or falling down (thinking it hit a bottom).
The stock market isn't covered by the FDIC and yet people put their money into it anyway. Even mutual funds they thought were save went down. People put their faith in the private sector assets they were putting their money into and not because the FDIC said they'd insure bank deposits up to $100 000 or whatever it is in the States.
Also, there are already tons of regulations and tax structures in place from the government that encourage businesses to grow and grow rather than pay out dividends. The US stock markets pays ridiculously low dividends compared to the rest of the world meaning instead of investing in new businesses the old ones bloat.
Setting interests rates artificially low also robs people of the opportunity to get a legitimate return on their savings by lending them out the legitimate entrepreneurs.
How did I know you people were going to miss the point and just repeat pete's talking points? As I said, AIG had no reason to believe they would be bailed out, they thought they were making sound decisions. They, and a bunch of people who were not bailed out, were wrong and it had nothing to do with the gov.
i think the point is lost on you actually. Whether AIG deliberately set aside no counter party risk protection because of some pre-arrangement for government bailout money in the event of economic meltdown is irrelevant. Peter is merely saying that the government should get out of the way and allow irresponsible, inefficient companies to fail.
Your video makes me feel like I am taking a basic Money and Banking class in college again. Your argument is too simple in attempting to explain a complicated problem. I would like to see your response to LibertyDefender84 because they have made a counterargument that you have yet to address. Have you ever attempted to study Austrian economics? It seems like you are only looking at economic problems through the Keynesian perspective.
so in short, it was the "too big to fail" moral hazard imposed by government that caused these companies to make such bad decisions, not the lack of regulation. there would have been no need for regulation if the government had just stayed out of the private sector and let the free market handle things.
Loooooooong post buuuuut YES EXACTLY RIGHT! That is the beauty of free market capitalism. It self-regulates by constantly moving the wealth from the hands of the incompetent to the competent automatically destroying companies who take risky and stupid actions like the credit default swaps. But consider another option. Government introducing this moral hazard for the exact purpose of pinning the blame on capitalism when it was rigged behind the scenes from the gitgo. Never waste a good crisis
but if the government did not set the president of too big to fail, then there would be no need to regulate them because these companies would be making much more responsible decisions (since they know that they will go bankrupt if their bets turn out wrong). and if these companies still make bad decisions regardless, then we want them to go bankrupt so that more competent companies can come in and take their place.
companies would not have made such risky loans. it was the moral hazard of government bailouts that allowed these companies to make such risky investments (without fear of bankruptcy) rather that the deregulation. so i suppose if the government introduces the moral hazard of "too big to fail", then yes, you sure as hell better regulate them because they are going to do all sorts of crazy things because of the implied government guarantee (continued...)
however, where the government moral hazard comes in, is in the "too big to fail" mentality. These companies knew that they were too big to fail and that the government would bail them out if they got into too much trouble. So the government gave them free reign to make all the risky investments because the companies knew that the government would bail them out if they got into trouble. if the government would have let them fail, maybe these (continued)...
companies from the economy. We don't want these types of companies to operate in our economy because they are incompetent. So if we let them fail, then the assets will be taken over by the competent people, and the economy will be stronger as a result. It is virtually impossible to expect the government to be able to regulate otherwise incompetent companies in hopes that the government regulation will make them act more responsibly. (continued...)
congratulations... most of what you said in this video is actually factually correct (unlike all of your other videos).
but in my opinion, it is not the government's job to prevent bad companies from making bad decisions. if a company like AIG or Bear Sterns makes bad decisions and takes a lot of risks, then they will go bankrupt. Even though bankruptcy causes some temporary problems, bankruptcy is actually a good thing. Bankruptcy is the free market's way of eliminating bad (continued...)
put the bong down----
ugghhh systemic risk, socialism rocks===did i mention systemic risk
tonybonez 1 year ago
@tonybonez Poor little guy. You actually think making stupid comments like this is relevant in some way. Well, you're right. It is relevant to the fact that you are a simpleton who has this free market capitalism vs. socialism mind set. Your tiny brain is incapable of understanding all the nuance in between.
dsglop 1 year ago
You're probably right that the US govt. couldn't let all these companies go down the crapper but it sure leaves a bad taste in the mouth. The same thieving bastards who did all this stuff are the ones receiving all this bailout money.
707hoser 2 years ago
I agree. It was distastefull. But it's better than a deflationary spiral.
dsglop 2 years ago
Another great video.
Don't you find it shocking that all these brain dead idiots who took the time to teach themselves the nuances of austrian economics can't notice the simple facts that Schiff's predictions are way off? There is no hyperinflation, europe is doing worse in this recession than us (despite their higher savings rate and lower debt to GDP ratio), the price of metals are dropping, etc, etc
And they call us sheeple
idigl7220 2 years ago
Thanks.
I do find it odd how they worship this guy. Oh well, if they want to throw their money away investing their money with him then they will get what they deserve for thinking some guy with a folksy way of talking who was vaguely right on one issue but wrong in every other way is the greatest economist of all time.
dsglop 2 years ago
So, it was the insurances companies? The collective security? The voluntary socialism? Statism? Control? Force? Collectivism? All of the above? None of the above?
rflosi 2 years ago
It was a combination of many factors.
dsglop 2 years ago
Hi dsglop,
I read some of your below comments. One jumped out at me. The one about the Fed hiring 'highly educated' economists. Well, their economic philosophy is more important than the pedigree of their education. The best and the highest of an education in economics will give you worse results if they are of the wrong philisophical school.
pixelsmart 2 years ago
When I said highly educated I didn't just mean what school they went to. And I guess you missed the part of the vid where I said that some regulation is good and some is bad. Also, this was a private insuranse scheme.
dsglop 2 years ago
You have not shown me an argument in favor of gov reg. Preventing a "they will go nuts" outcome is not justification for regs.
You often say "...will go nuts" Many people would agree.Therefore why would these people let nutty banks touch their money ? Answer - because there is gov insurance. Thus gov insurance must go.
Now banks will need to make a strong case to depositers to get their money. Such as originating mortgages with a 25%down payment at certain verified income ratios=sound system.
pixelsmart 2 years ago
This is a red herring.
Peter Schiff never said that "all" regulation was bad or should be abolished.
So there goes your case out the window.
Atom299 2 years ago
Learn how to use Powerpoint and video capture you moron!
JejuLee 2 years ago
I wish more people would listen to the vid and try and look at the big picture before commenting.
dsglop 2 years ago
As I listen to more of your video, it becomes clear how truly misinformed you are. The big ratings agencies are not private - they are licensed by the government.
Piece-meal deregulation creates moral hazard, because other regulations left in place created the expectation for bank managers that they would get bailed out even as they took insane risks with their companies.
thrashertm 2 years ago
So let me get this straight, you think that because the government put some basic regulation on the ratings agencies which mostly just excludes random people from giving seemingly official AAA ratings and you think that ratings agencies are a government contribution to moral hazard? Investors could have banded together and started claiming that Lehman and Merril were going down without gov certification but they didn't. And the gov let Lehman fail so WTF aren't you getting?
dsglop 2 years ago
I am sick of people just repeating the same talking points and ignoring what I said. Some regulation is good, some regulation is bad. Stop thinking in black and white and accept that it's not a government against private sector to the death match. both entities have their merit and problems.
dsglop 2 years ago
Comment removed
EyeKnowNothing 2 years ago
You are basing your opinion of my beliefs based on your little black and white mind. You see them as anti private sector and therefore pro big government. You have no idea what I think. Your mind is incapable of nuance.
dsglop 2 years ago
Comment removed
EyeKnowNothing 2 years ago
Comment removed
EyeKnowNothing 2 years ago
You don't understand the concept of moral hazard; let me explain it to you. Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. The government subverts risk exposure with its various laws and regulations. It creates the expectation that parties will be taken care of by the government should they screw up.
thrashertm 2 years ago
well explained, dude.
elshizzo 2 years ago
The rest of you guys just keep repeating schiff's talking points about too much money. I reviewed that in previous vids. It's all about proportion.
dsglop 2 years ago
"go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts go nuts"
Why does this kid keep making videos?
HughJass33 2 years ago
I don't know, maybe because it's fun to watch morons ignore the entire case I present and focus on me saying things like go nuts. You people are a joke and I like to laugh.
dsglop 2 years ago
Replying to you from your comment from your last video.
So, you say it;s "fair" now that, you said you can be a dick sometimes, which makes it ok for you to "be" the same thing you hate? And that gives you the power to call them dick leeches? Ok, I think I'm done here. You can't just say, oh, I called my self a dick, so that makes it ok to engage in the same thing I hate about [insert a certain part of people in a group you are debating that act childish].
Betty5150 2 years ago
You are just seeing things the way you want. Whatever, I don't have time for that kind of nonsense.
dsglop 2 years ago
Ohh, well, I tried to explain, but if you see it that way, so be it.
Betty5150 2 years ago
Everything you went over in this video is going under a faulty premise: that the free market allows for banks to have an unlimited supply of money. Banks get their money from the government and depositors. If the government insures everyones deposits (FDIC), then no one cares if their bank makes outrageously risky investments.
JacobSpinney 2 years ago
The governments action of keeping interest rates artificially low causes cheaper loans which means people will take more of them than if the interest rates were not as low. With cheap money supplied by the federal reserve, people need only find a common asset to invest all their loaned money into. Thanks to the Clinton administration campaigning for banks to lower their lending standards so as to give more home loans to poor minorities, houses became that asset.
JacobSpinney 2 years ago
This new huge demand for housing caused housing prices to go up, thus causing the housing bubble. The one thing you didn't mention in your scenario is that these banks didn't just make such risky investments because they thought that some company was insuring them. They made those risky investments because they thought that if it did end up hitting the fan, that the government would bail them out . . . and they were right.
JacobSpinney 2 years ago
My two previous peter schiff vids deal with proportion. Did the money supply get too high? Sure, but that is only part of the problem and basic regulation is part of the way to deal with that.
dsglop 2 years ago
What are you talking about regulation? It was the federal government itself that forced banks to lower their lending standards under the guise of giving more home loans to poor minorities! watch?v=ivmL-lXNy64 Having more government regulation at that time would have only meant that the government would have had even more tools at their disposal to enforce their agenda of lowering lending standards to give more loans to poor minorities.
JacobSpinney 2 years ago
Like I said in the vid, some regulation is good and some is bad. Of course you can point to cases of failed regulation which contributed to the problem but removing the regulations which restrained them was a bigger contributer than getting them to include more minorities. And what about Countrywide forgeing loan applications to approve more? The system isn't perfect but neither is the private sector.
dsglop 2 years ago
you're completely right. But who do you want regulating the system? The same people that de-regulated it in the first place?
HughJass33 2 years ago
Yes. Kind of. They can learn from their mistakes and make adjustments accordingly. Now that everything has gone so bad many educated people at universities and various think tanks are studying the issue and they are making recommendations to the regulators, who can also hire new people with new ideas.
dsglop 2 years ago
how can you possibly be so trusting in a few individuals who have been so terribly reckless in their actions especially since the bursting of the dot-com bubble and shock of 9-11? Give me your honest answer. I'm not arguing just to be right.
HughJass33 2 years ago
As I said, plenty of new ideas from plenty of sources are being explored.
dsglop 2 years ago
so am i right to assume that you believe Greenspan didn't know what he was doing when he slashed interest rates to 46 year lows after the Nasdaq bubble burst?
HughJass33 2 years ago
He kept them down too long. That's for sure. But he made a mistake. He even knows that.
dsglop 2 years ago
Have you read "Gold and Economic Freedom?" Greenspan wrote this is the 60's:
"When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage.
The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves...
HughJass33 2 years ago
and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed."
Bernanke's doing the same
HughJass33 2 years ago
They put too much money into a minor recession but the people who have analysed the Great Depression will mention that fact but go on too say that doing the exact opposite, nothing, in 1930-31 extended the recession and deepend it into a depression.
dsglop 2 years ago
That's simply impossible. In the quote I just cited Greenspan admitted that it was the injection of capital that first created the speculative boom in turn leading to the bust.
Without the boom there wouldn't have been a tremendous bust. As Greenspan stated, it would have just been a "mild contraction."
HughJass33 2 years ago
No, the injection was keep a speculative boom which was already in progress going. That doesn't change the fact that the contraction was allowed to progress too much in the early 30's. Economics is a balancing act and extremes in either direction are bad.
dsglop 2 years ago
Few things. Why would you want to keep a speculative boom going? What's wrong with contraction? And "Keynesian" Economics is a balancing act... because the free-markets aren't permitted to balance themselves
HughJass33 2 years ago
See that's the thing, they did make the mistake of increasing liquidity far too much in 27. But the contraction of the early thirties was still worse.
dsglop 2 years ago
It had to be to offset the the capital that was injected into the system. What do you think's going to happen today given the amount of credit we're creating? How do you honestly see this playing out? Today's boom is even more speculative than in the 20's due to weak economic fundamentals and tremendous deficits.
HughJass33 2 years ago
And we've crashed far more than in 27. We are approaching 32 levels so it's time to be concerned about wealth destruction rather than inflation. We have already deflated massively. We're not just reinflating a bubble at this point, we are stabalizing a battered system.
dsglop 2 years ago
My biggest concern comes down to this. The U.S. is (not so gracefully) passing the torch over to the eastern emerging and developed markets. Our economy is a shell of what it once was judging by increasing unemployment and trade deficits. How can we stabilize an economy based on these fundamentals? How can we ever expect to pay back unprecedented levels of debt short the invention of a miracle renewable energy? If we will see any stabilization, it will be an illusion masked by inflation
HughJass33 2 years ago
No, markets do not need to offset nearly as much as you are suggesting. Markets adjust to mild inflation quite well as long as inflationary policies aren't continued after an appropriate adjustment.
dsglop 2 years ago
Politicians are not master economists. They're politicians. They don't know the first thing about how artificially low interest rates or forcing artificial demand on an asset will create asset bubbles. They just know how to get elected. You might as well have kindergardeners on the board of bank regulation. At that time, the government's motto was to put every single american family in a house. If they had more regulation, they would have enforced that motto even more.
JacobSpinney 2 years ago
That's why the Fed is independent of Congress. They DO hire highly educated and experienced economists on their Board of Governors and their regional banks are run by bankers nominated by the private member banks who are obviously educated in economics and finance.
dsglop 2 years ago
Sure, keynesian economics: the economic system that created the asset bubble. While all of the economists from the austrian school of economics predicted that exactly this would happen, the fed and the government refuses to listen to them. It's ridiculous. On one side you have a guy who's predicted everything to a T and on the other side you have a guy who continues to get everything wrong to a T, and you choose to listen to advice from the guy who was wrong about everything?!
JacobSpinney 2 years ago
Except that pete wasn't write to a T and there were plenty of non Austrian analysts who saw the bubble. They didn't go on to invest in oil futures after the crash because they felt that inflation would make commodities skyrocket. pete's been wrong on many counts. He also shorted the dollar right after the crash not anticipating the flight to safety and lost big. The world doesn't agree with how he thinks it ought to be and he loses huge because of it.
dsglop 2 years ago
In the beginning of this bubble gold was at $270. Now it's skimming $1,000. A quadruple return doesn't sound too bad to me. We're talking about macroeconomics here. Any time frame below 3 years or so is speculation and attacking someone's macroeconomic outlook because it didn't happen in a particular year is cherry picking.
JacobSpinney 2 years ago
What if you bought in this time last year at 1050? It hasn't reached a thousand since so you'd be down. You'd certainly be disappointed since the whole 1500-2000 or more hope didn't pan out. What if you bought gold at 875 back in 1980? You'd be quite disappointed today as you'd be down significantly. Especially since an investment in stocks back then could very well be up today. Way up in some cases.
dsglop 2 years ago
Of course there were banks that got suckered into thinking the government would never stop inflating the bubble. That's their mistake and they should go bankrupt for it. And once again, in a free market, there's no fed. The banks only money would come from depositors who would be a LOT more cautious about their banks investments because their deposits aren't insured (no FDIC). This means that those wanting to keep their wealth would only deposit in banks that invest in flat assets.
JacobSpinney 2 years ago
I doubt people would be as discriminating as you suggest. As I explained in this vid AIG had no reason to expect a bailout. Neither did the big investment banks. In fact, Lehman was allowed to fail.
dsglop 2 years ago
We're talking about people's life savings here; all the money that they have saved for their entire lives. You don't think they would be cautious about how they want it invested? Simple stock market tip: if you want to keep your wealth, invest in a flat asset with a minimum up and down channel. If you want to conservatively invest, go for an asset with a slow uptrend. If you want to be a gambler and throw the dice, go for an asset that's shooting up or falling down (thinking it hit a bottom).
JacobSpinney 2 years ago
The stock market isn't covered by the FDIC and yet people put their money into it anyway. Even mutual funds they thought were save went down. People put their faith in the private sector assets they were putting their money into and not because the FDIC said they'd insure bank deposits up to $100 000 or whatever it is in the States.
dsglop 2 years ago
I would submit that many people including myself simply believe that government IS ALMOST ALWAYS the least "perfect system"
myeyepie 2 years ago
Bingo Again
myeyepie 2 years ago
Bingo
myeyepie 2 years ago
Also, there are already tons of regulations and tax structures in place from the government that encourage businesses to grow and grow rather than pay out dividends. The US stock markets pays ridiculously low dividends compared to the rest of the world meaning instead of investing in new businesses the old ones bloat.
Setting interests rates artificially low also robs people of the opportunity to get a legitimate return on their savings by lending them out the legitimate entrepreneurs.
iamacyborg 2 years ago
The ratings agencies are a government enforced monopoly.
The point with the FDIC is that if it wasn't there, consumers would care if their banks were engaging "schemes". As it is, they don't.
The SEC prevented neither Enron nor Madoff.
To leverage, you need to borrow money. The F.R. made interest rates artificially low = cheap $ for leverage.
iamacyborg 2 years ago
How did I know you people were going to miss the point and just repeat pete's talking points? As I said, AIG had no reason to believe they would be bailed out, they thought they were making sound decisions. They, and a bunch of people who were not bailed out, were wrong and it had nothing to do with the gov.
dsglop 2 years ago
i think the point is lost on you actually. Whether AIG deliberately set aside no counter party risk protection because of some pre-arrangement for government bailout money in the event of economic meltdown is irrelevant. Peter is merely saying that the government should get out of the way and allow irresponsible, inefficient companies to fail.
HughJass33 2 years ago
And people like you don't understand the word systemic.
dsglop 2 years ago
i'll look up "systemic" when you look up "spin"
HughJass33 2 years ago
Deal. How bout the spin the schiffs use to try and convince people that income tax is illegal?
dsglop 2 years ago
not exactly sure what you mean. it's not spin if that's what they believe.
HughJass33 2 years ago
Your video makes me feel like I am taking a basic Money and Banking class in college again. Your argument is too simple in attempting to explain a complicated problem. I would like to see your response to LibertyDefender84 because they have made a counterargument that you have yet to address. Have you ever attempted to study Austrian economics? It seems like you are only looking at economic problems through the Keynesian perspective.
kushaze 2 years ago
Regulating the market doesn't work.
The question you should ask is "Why are people, who can't afford to lose their money, investing in the market in the first place?"
Is it because we went off the gold standard and inflation went through the roof, wiping out their savings.?
People have no choice except to invest in a risky market in the hopes of retiring comfortably because of bad monetary policy.
It has wiped out the only safe way to accumulate wealth and that is savings.
diamondknife 2 years ago
so in short, it was the "too big to fail" moral hazard imposed by government that caused these companies to make such bad decisions, not the lack of regulation. there would have been no need for regulation if the government had just stayed out of the private sector and let the free market handle things.
LibertyDefender84 2 years ago
Loooooooong post buuuuut YES EXACTLY RIGHT! That is the beauty of free market capitalism. It self-regulates by constantly moving the wealth from the hands of the incompetent to the competent automatically destroying companies who take risky and stupid actions like the credit default swaps. But consider another option. Government introducing this moral hazard for the exact purpose of pinning the blame on capitalism when it was rigged behind the scenes from the gitgo. Never waste a good crisis
myeyepie 2 years ago
(continued from previous comment)
but if the government did not set the president of too big to fail, then there would be no need to regulate them because these companies would be making much more responsible decisions (since they know that they will go bankrupt if their bets turn out wrong). and if these companies still make bad decisions regardless, then we want them to go bankrupt so that more competent companies can come in and take their place.
LibertyDefender84 2 years ago
(continued from previous comment)
companies would not have made such risky loans. it was the moral hazard of government bailouts that allowed these companies to make such risky investments (without fear of bankruptcy) rather that the deregulation. so i suppose if the government introduces the moral hazard of "too big to fail", then yes, you sure as hell better regulate them because they are going to do all sorts of crazy things because of the implied government guarantee (continued...)
LibertyDefender84 2 years ago
Peter Schiff is a fear mongerer, however I did hear him say that fannie and freddie should have been more regulated
TsunamiTruth 2 years ago
(continued from previous comment)
however, where the government moral hazard comes in, is in the "too big to fail" mentality. These companies knew that they were too big to fail and that the government would bail them out if they got into too much trouble. So the government gave them free reign to make all the risky investments because the companies knew that the government would bail them out if they got into trouble. if the government would have let them fail, maybe these (continued)...
LibertyDefender84 2 years ago
(continued from previous comment)
companies from the economy. We don't want these types of companies to operate in our economy because they are incompetent. So if we let them fail, then the assets will be taken over by the competent people, and the economy will be stronger as a result. It is virtually impossible to expect the government to be able to regulate otherwise incompetent companies in hopes that the government regulation will make them act more responsibly. (continued...)
LibertyDefender84 2 years ago
congratulations... most of what you said in this video is actually factually correct (unlike all of your other videos).
but in my opinion, it is not the government's job to prevent bad companies from making bad decisions. if a company like AIG or Bear Sterns makes bad decisions and takes a lot of risks, then they will go bankrupt. Even though bankruptcy causes some temporary problems, bankruptcy is actually a good thing. Bankruptcy is the free market's way of eliminating bad (continued...)
LibertyDefender84 2 years ago
to deregulate you would have to go back to hard money ... do you agree with hr1207??
popomp1 2 years ago
the federeal reserve is privately owned by space aliens
deerrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
howthefagworks 2 years ago
which movie did you like better, pork chop hill or moby dick? Gregory Peck was a pretty damn good actor in my book.
FatGuyWithAKatana 2 years ago