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Peter Schiff, a CIA agent, and a couple of fund managers debate about the health and insolvency of US banks.
I think Peter brings up a very important point that almost all people with a bank account forget: they are the creditors of banks.
Yes, when you put money into a bank, you are a depositor, but when that money is used as an asset and loaned out by the bank, you instantly become a creditor and the FDIC only insures so much of your deposit. The FDIC also doesn’t have enough money to cover everyone’s losses, because just like fractional banking, insurance relies on only having to pay out a tiny portion of their guarantees.
Technically, if a complete collapse of the banking system took place, every single depositor would become an unsecured creditor with nothing to show for their deposits. Because the only leverage we receive when we deposit money is the FDIC insurance. Other than that, we are operating on good faith that the bank will remain solvent, not lose our money and return it on demand.
The reality is that banks leverage our money and they themselves get some sort of security against the loans they make but that security or leverage is not transferable to depositors. We are simply allowing them to use our assets/money in return for “secured vault storage” and, if lucky, a tiny return on investment.
Banks can come after your assets if you fail to repay their loans but you cannot do the same. Not to the banks that loaned your money and not to the borrowers who took out the unpaid loans. You’re S.O.L.
The good news is that there are alternatives and people are finally seeking them out and moving their assets.
Schiff thinks the real reason why the federal government is suing the S&P rating agency is because it downgraded U.S. Treasuries last year. Schiff says, “The reason why they’re being sued is not only because of what they did but to send a message to the other ratings agencies that you better not downgrade U.S. Treasuries.” Schiff predicts, “People who own Treasuries are going to lose a lot of money.” Join Greg Hunter as he goes One-on-One with Peter Schiff of Euro Pacific Precious Metals.
Coincidentally, I just adjusted my mom’s investment portfolio last night and I dumped 85% of all her treasury holdings.
I’ve done really well for her so far and I hope I made the right call. I also suggest that others move out of treasury holdings and find their way into whatever investment they can which focuses on precious metals, multinational corps that focus on emergent markets or foreign corps that do the same and perhaps even agriculture.
Disclosure: I personally have zero investments outside options and preferred shares in the firms I work for/with and some physical gold and silver. I stopped trading in 2007 and I liquidated all holdings in November of 2007. I got out at the perfect time, not that I was a genius or an oracle, because I felt uncomfortable by the growth rate of the market. Thankfully, I’m not a greedy weasel.
The U.S. will win the global currency race to the bottom but decimate its economy in the process, economist Peter Schiff said.
With global central banks using currency manipulation to spur growth, capital markets have been awash in talk of what the fallout will be for investing strategies and consumers who may have to bear the weight of inflation.
LongtimeFederal Reservecritic Schiff said the central bank is being forced to prop up an ailing U.S. economy and the only way it can is by weakening the dollar.
“There is a currency war going on,” Schiff said at the Inside ETFs conference presented by Index Universe. “The irony of a currency war which makes it different from other wars is the object is to kill itself. Unfortunately, I think the U.S. is going to win the currency war.”
The CEO of Euro Pacific Capital in New York has been one of the market’s most outspoken supporters of gold as a hedge against inflation specifically and global turmoil in general.
He believes the metal will be a prime beneficiary of the currency war, while consumers will be its main victim.
“Anybody who believes there is no inflation isn’t shopping,” he said.
Government cost-of-living indexes such as theconsumer price indexare a “total fraud. Consumer prices in the U.S. are moving up much faster than indicated by the CPI. It is manipulated. It is deliberately designed to mask inflation, not report it,” he said.
As for U.S. economic prospects, Schiff believes they are gloomy.
Gross domestic productindicated a slight contraction in the fourth quarter, though most economists expect that to change in future revisions and growth to be steady but modest through the year. In the meantime, the European sovereign debt crisis is beginning to return to the news as well, though the stock market hasn’t seemed to mind any of it.
But that could change quickly.
“We’re broke. We owe trillions. Look at our budget deficit, look at the debt to GDP (ratio), the unfunded liabilities,” Schiff said. “If we were in the euro zone they would kick us out.”
For Schiff, such talk, though incendiary, is fairly routine.
He found a good deal of interest at the conference, though, with attendees crowding him after his panel discussion even as some other participants were beginning to catch flights out.
“The Fed knows that the U.S. economy is not recovering,” he said. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”
Sometimes the consistent propagation of doom & gloom, especially from a well known and trusted source, causes the doom & gloom to come into fruition.
Even if I didn’t believe the US dollar was ready to collapse, which I do, I’d still bet that it would due to so much talk and preparation of it. The sell-offs will come and the investments will shift and it will all happen very quickly by those that have large sums of capital and the sophisticated machinery to detect and move said capital, leaving the unsophisticated investors at the bottom of the leftover rubble.
My advice to small time players is to get out and never come back in or know how hot of a fire they are playing with.
Peter Schiff: The fiscal cliff is a “propaganda win” for the federal government.
Nailed it.
We’re being sold a band-aid to stop the bleeding from a gun shot wound when in reality what we really need to do is stop getting shot at.
Das Kruuug claims Peter Schiff didn’t warn about the Housing Bubble:
Some readers may recall the “Peter Schiff was right” campaign of 2009, a sort of public-relations blitz claiming that Schiff, an Austrian-oriented commentator, had foreseen everything correctly. It wasn’t really true even then…
Hey, who are you gonna believe, Paul Krugman or your own lyin’ eyes?
Peter Schiff is a Doom & Gloom type investor, guys like him and Marc Faber are ALWAYS pointing out the weaknesses in the markets and are always calling out where the fundamentals will fail and the bottom will drop.
Then again, Krugman is intellectually dishonest so I don’t expect anything less from him. Krugman is relying on the theory that most of his readers don’t like Peter Schiff and don’t understand or credit Austrian Economics in any way shape or form. And he’s probably right. Most of his readers will champion Krugman’s revisionist history and completely ignore the mountains of evidence.
Peter Schiff: Operation Screw: The Fed goes all-in on QE
Ready for another Housing bubble?
Peter Schiff vs entire msnbc panel
This is pretty much normal for him.
This panel is full of loons and idiots that don’t even understand simple Supply & Demand concepts. “Businesses want to supply more, so that makes demand go up.” BWHAHAHA. I’m just going to make a billion of something, it will make people want it and I’ll be rich!!! LMAO.
If you want to get smarter, watch everything MSNBC broadcasts and then make sure you do the opposite.
(via moralanarchism)
