An Unmitigated Disaster
ByPeter Schiff seems to have an economic crystal ball, and he’s expecting things to get worse before, or if, they get better. It all depends on the government’s actions. Video can be found here.
The fiscal stimulus bill being debated in Congress not only won’t help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.
Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a “terrible” recession. But the path of increased government intervention will lead to “unmitigated disaster,” says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks.The problem, he says, is the government is trying to perpetuate a “phony economy” based on borrowing and spending. With the U.S. consumer tapped out, the government is “now taking on the mantle” of consumer of last resort, he continues, predicting the bond bubble will soon burst – if it hasn’t already – ultimately leading to a collapse of the dollar and an “inflationary depression worse than anything any of us have ever seen.”
Schiff isn’t the only one predicting disaster if the pork-laden stimulus bill passes. George Melloan, writing in the Wall Street Journal, explains that China and Japan won’t be willing and/or able to continue financing the American spending spree for long. Once our funding source is cut off what will happen then?
There is only one answer. The Obama administration and Congress will call on Ben Bernanke at the Fed to demand that he create more dollars — lots and lots of them. The Fed already is talking of buying longer-term Treasurys to support the market, so it will be more of the same — much more.
And what will be the result? Well, the product of this sort of thing is called inflation. The Fed’s outpouring of dollar liquidity after the September crash replaced the liquidity lost by the financial sector and has so far caused no significant uptick in consumer prices. But the worry lies in what will happen next.
We should all be very concerned about what happens next. The Obama administration and congressional democrats’ lack of concern is alarming.
H/T Hot Air
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I really liked Sciff’s comparison of Bush & Obama to Hoover & Roosevelt. The similarities are really stunning. And if this new New Deal passes, we’re going to see something very similar to the great depression…probably much worse.
Obama’s plan reminds me of a popular expression when I was in the Navy: “Do something, even if it’s wrong.” I like better, “don’t just do something, Stand there!”
[...] believe this bill will fail to bring about economic recovery, some believe it will lead to economic catastrophe. Isn’t that what the President’s been warning us about? Why would he push for something [...]