Economics

Reason.tv: Peter Schiff on the Dismal Future of the U.S. Economy

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"We have to cut $1.5 trillion out of this year's budget," says investment advisor, author, and radio host Peter Schiff. 

Reason's Nick Gillespie sat down with Schiff at July's FreedomFest in Las Vegas.

Schiff, whose most recent book is How an Economy Grows and Why it Crashes, says that the economic downturn of 2008 is only a mild preview of what's in store for the U.S. economy in the future and predicts much higher unemployment and huge inflation over the next few years. The only way out of this mess, says Schiff, is for the government to get out of the way and let the inevitable market correction occur. "It would be painful to cut spending by that degree," he acknowledges, "but not nearly as painful as it's going to be if we don't cut spending by that degree."

Shot by Jim Epstein and Zach Weissmueller and edited by Zach Weissmueller.

About 5 minutes long.

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Held every July in Las Vegas, FreedomFest is an annual gathering of about 2,000 free-market and libertarian enthusiasts. This year's speakers included Reason's Nick Gillespie and Matt Welch, Sen. Rand Paul, Judge Andrew Napolitano, and scores of others. Reason.tv conducted interviews with more than two dozen speakers, which we'll be releasing over the next several weeks. Our growing playlist can be watched online here.

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  1. Note to self: Buy more ammo and seeds.

    1. nope – schiff schills GOLD like beck so the sky will keep falling…& falling…&

      1. What’s your investment advice for us?

        1. u mean survival advice fm schiffs doomsday scenario? liquor, gunz, & womenz aint a bad start.

          1. Liquor guns and women are never a bad start for any scenario.

      2. Yeah, and it’s not like he has a track record of accurately predicting previous downturns or anything. Oh wait, he does.

        1. I’ll give him points for predicting almost everything that is happening now, ALMOST. He was also a big pusher of foreign stocks and currencies like the euro.

          1. He is definetly on the money when it came to the US financial crisis. Though I do not understand why he is bullish on China. That nation shows every indication of a massive infrastructure/financial/real estate bubble, coupled with the fact that their economy is becoming increasingly more centrally planned. As bad as things are for the US, and its pretty bad, China is not any better.

      3. no, O’bama is propping it up with a rainbow and pot of cash maybe related to gold

    2. shit, that reminds me. I was curious about the shelf-life of rice recently and googlestumbled on a site talking about how to really make your food and seedstock last. google “shelf life of rice”, it’ll be in the top results.

  2. Speaking of economics:

    Gold may have hit a near-term bottom. If you think (a) it hasn’t peaked yet and (b) have been looking for a buying opportunity, this could be a good time to get in.

    Disclosure: I am long gold, but not planning to add any more at this time.

    1. Are a registered investment advisor, RC? Or just another dude on a blog?

      1. What would it matter? Gold isn’t an investment; it generates no income.

        It is merely a shiny yellow metal that attracts the laydeez.

        1. What would it matter? Gold isn’t an investment; it generates no income.

          Kinda like most stocks.

          1. You’ve never received dividend payments from your stocks? Must be buying the wrong ones then..

  3. His economic projections coincide perfectly with his political opinions. Very impressive. (But someone should tell him that tax rates are at a 40+ year low.)

    1. tax rates are at a 40+ year low

      Only if you don’t include state and local taxes. Owning property has become a real bitch these days.

    2. (But someone should tell him that tax rates are at a 40+ year low.)

      And per capita spending rates are at an all-time high.

    3. http://www.youtube.com/watch?v=6drf0DsnHRw

      This is a discussion he had comparing today’s taxes and those in 1950 for a similar income level. Not only federal tax rates, but payroll taxes, deductions, state taxes, sales taxes etc. The people who claim we are at 40 year low tax rates ignore what is truly the issue, taxes paid. Rates are merely one part of the equation, the part most manipulated by congress is what is defined by taxable income. Overall taxes paid are at all time highs.

      1. “The people who claim we are at 40 year low tax rates ignore what is truly the issue, taxes paid.”
        It’s a question whether this is intended or a result of stupidity.
        Most times, I’m guessing the later; they read it on Kos or some such and repeat it.

      2. Overall taking inflation into account?

    4. Is there a way to compare how many actual pages of tax code/regulations past and present instead of rates?

      Wouldn’t that comparison explain the problem better than arguing about rates?

      Reagan simplified tax code and it allowed him to raise rates and not kill the economy. Business needs certainty to plan ahead, uncertainty is the real job killer.

  4. “It would be painful to cut spending by that degree,” he acknowledges, “but not nearly as painful as it’s going to be if we don’t cut spending by that degree.”

    Have no fear. There is still a fairly large number of people who did not buy more house than they could afford and then default on the loan, did not go into deep student debt with an unmarketable skill and a useless degree, have abjured the supple government teat, have been saving for their retirement and generally lived within their means.

    The government will both completely fail to provide any leadership and good decisions on this matter and make sure that this pain is evenly distributed among these productive people and those who will willingly share the fruits of their bad choices with the rest of us. It’s the new American way.

  5. Schiff, whose most recent book is “How and Economy Grows and Why it Crashes”…

    Interesting how Gillespie purposely gets wrong the name of a rival book.

    1. It’s three books in one!

      1. He fixed it, making me look THE FOOL!

  6. Life is an abyss. Scream into it and know that you are alone.

    1. i likes that. keep up my lonely work

  7. If Ron Paul or Gary Johnson don’t get the republican nomination, I’d love to see Peter Schiff make a run as an independent.

  8. People like to say this guy likes to preach doomsday, I see his critics actually do the same though. If TARP did not pass, if Greece does not get a bailout, if the US debt ceiling is not raised etc. etc. then the world would end.

    I do not see doom, but I agree with the guy, the market must correct itself, the longer it does not, the worse the pain.

    1. The whole point of the establishment is that when IT speaks YOU do not question. Is that understood citizen 29824567?

  9. Ha ha.

    Peter Schiff is about as reliable a source of information and analysis about the US economy as is a basket of puppies.

    He sat on a panel with Doug Henwood two years ago and embarrassed himself by repeatedly claiming that US “no longer manufactured anything” and that “productivity was way down” when, of course, productivity has been flat for 10 years while wages haven’t moved in 40 years.

    http://www.youtube.com/watch?v=H9PQiC9n1CU

    That productivity is mostly of war machinery, of course, but naturally that Keynsian jobs-program fact of life would be invisible to a corporate fellator and promoter of Austrian fairy tales such as he.

    I wonder if he got a room with the Jacket? What goes on in Vegas…

    Ha ha.

    1. “Keynesian jobs-program fact of life”

      What a fuckin’ riot you are, Orel.

      1. Put down the Rothbard and the crayons. It’s time to graduate.

        http://en.wikipedia.org/wiki/Military_Keynesianism

        You’re welcome.

  10. Going down into the shitter folks. Looking at history, no big country in the past has ever turned around a snowballing debt situation. The demographics are bad so a lot older folk have to die off in one way or another. Hate to say that but what else will re-balance the equation? If violence comes, the younger usually win. But we could vote another 1/3 out in 2012 and maybe turn the ship around.

  11. Peter, I agree with many of your views because I recognize in them the views espoused by the Austrian School of Economics. Im my Instablog on http://www.seekingalpha.com (just type “Mike Holt” in the search box at the top right corner of the screen on that website) have incorporated many of these same concepts into my analysis of the global macro (and sometimes not so macro) risks that have taken center stage over the past year. In fact, in my most recent article titled “Epilogue to TREM ’11: The Global Macro Risks That Jeopardize Investors in Rare Earth Mining Companies” I have included some discussion of the Austrian Business Cycle Theory which, as you know, is at the heart of the financial crises that we have been experiencing. I encourage you to review my articles because I think it is important that more people understand that true nature of the challenges we face — and the direction we need to be going in order to get on the Road From Serfdom, rather than the Road to Serfdom.
    More recently, I have also posted a number of comments to articles authored by others on the Seeking Alpha website that reflect concepts not yet as fully developed in my articles. In sum, we are at an historic fork in the road, and the question we must ask ourselves as we decide which path to take is which TARP we think makes more sense:

    the Troubled Asset Relief Program; or

    the Trust Accountability & Reason Program.

    I advocate the latter approach, and hope that you and many others will agree.

  12. The only way out of this mess, says Schiff, is for the government to get out of the way and let the inevitable market correction occur

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