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(9 hours ago)
For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
The markets seem to be cheering the Obama stimulus plan. It can't work, and Obama i...
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For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
The markets seem to be cheering the Obama stimulus plan. It can't work, and Obama is being very poorly advised. There are many people working part-time who would like to work full time. He is creating more jobs in the government sector, which will destroy more jobs in the private sector. Sure we need roads and bridges repaired, but those aren't free. The resources must be taken away from the private sector.
Whether through taxes, by borrowing, or by printing money - the government must get its money from somewhere. And the government always spends money much less efficiently than whoever they took it from. Our standard of living is going to fall through the floor as a result of these policies. If the government were to do nothing, then we would have a vibrant manufacturing industry within 5 years.
Supporting the jobs of the companies that are failing hurts the economy. Those workers will remain employed in a job that destroys resources rather than making us all prosperous. The market is wrong. Just because it is going up today doesn't mean that it accurately reflects the long term trends.
We are now suffering the consequences of too much government. Now to add insult to injury, we are getting more government and regulations.
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(10 hours ago)
For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
It is time to position yourself in dividend paying stocks. You need to invest overs...
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For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
It is time to position yourself in dividend paying stocks. You need to invest overseas. Not because you are looking for more risk, but because you are looking for less risk. It is extremely risky to invest in dollar-denominated assets. If the value of the dollar collapses, then you could lose everything. That is what the Federal Reserve is going to do, too.
There are utility companies, oil and gas companies - sound business all over the world that are pretty good deals. You can find dividend yields above 10%. If you follow financial advice in the United States, you will be told to buy a stock because the broker thinks that it is going up. But why should it go up? You want to share in the profits of your companies, not speculate on the quoted value of the company.
More importantly, the dividends will come in the form of Australian dollars, Euros, etc. As the dollar weakens, those dividend checks will be stronger and stronger. You are able to position yourself to be on the winning end of the upcoming transfer of purchasing power. The fact that we have consumed so much today means that we will need to consume less in the future. People around the world who have saved will get to enjoy the consumption that they have set aside for the future.
Wage earners are going to see the value of their paycheck erode. If you are still in the labor market, then you will see your paychecks able to buy less. You will be in for a hard time. But if you have already accumulated savings, there is still time to put your money into strong assets.
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(10 hours ago)
For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
If the price is going up for food and energy, then there will be little money for a...
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For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
If the price is going up for food and energy, then there will be little money for anything else, especially if we all have to make interest payments overseas. In the last few years, we have relied on the inflated values of real estate. But that is all going to come to an end. People were making the same arguments about real estate as they were about stocks in the 1990s. They said that revenue and cash flow didn't matter. The price always goes up. They were wrong back then, and they're wrong now.
As the prices start to come down, the banks will have to reinstate stricter lending standards. When you rent an apartment, you would need to pay first and last month, and a deposit, and you need to prove some income. But no one had to do this in order to buy a house. It was cheaper and easier to buy than it was to rent. As the banks start to see the real estate for sale, they are going to get worried. They'll start requiring a 20% down payment. The only reason that real estate was a good investment for most people is that it is forced savings. At some point, you can pay off your mortgage and retire. But when people are taking interest only mortgages, this entire rationale disappears.
Why should a condo that was worth $300,000 a few years ago, why should it be worth a million dollars today? Nothing has changed. The people within the industry had a million different reasons to justify the high prices, but they are all nonsense. They absolutely could not see that they were in a bubble.
When the dollar finally collapses, the people of the Asian countries will begin to have a much higher standard of living. For everything that dollars lose in value, the currencies over there will gain. You can benefit by this by keeping your assets denominated in currencies besides the Dollar.
You spent a lifetime accumulating your wealth. You need to take action now if you want to preserve it.
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(10 hours ago)
For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
Working is only a means to an end. The end is that we all want to consume and to en...
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For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
Working is only a means to an end. The end is that we all want to consume and to enjoy our lives. But Americans have tried to skip the production component.
During a bubble, capital is allocated inefficiently. All kinds of hair-brained businesses were started up because they had access to cheap money. The bust would have allowed all of those malinvestments to be purged. But when Bush came into office, he decided that he didn't want a recession to occur on his watch. So he stimulated the economy. This caused Americans to go on a borrow and spend binge. We have been told that we had a recession around 2001. But we never really had a recession. It wasn't allowed to occur. Politicians don't like the bust, because it is the painful part of the business cycle. It's just like getting off of heroin. It feels good when you are on it, but you need to withdraw if you want to get healthy. The Federal Reserve shoots up the economy with the drug of cheap money. When you try to take that drug away, all of the bad decisions need to be corrected.
A recession is characterized by cutting back and paying down debt. But that didn't happen a decade ago. Instead, people took on more debt. To get away from the pain of the stock market bubble, the Fed blew up a housing bubble, which is the biggest bubble of all time. Bush figured that if a major recession happened during his second term or when he was out of office, then that would be a much better result than if it happened during his first term, which could jeopardize his chances of getting reelected.
As interest rates rise, the ability of Americans to service that debt will be diminished. That doesn't even account for the trillions of national debt. More than half of that debt is owned by foreigners. As the interest rates rise, it will be nearly impossible to pay that debt. Every dollar that we pay on that debt is a drain on the American economy. As Americans have to pay more and more interest in order to pay for the consumption in the past. They won't be able to enjoy as much present or future consumption.
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(13 hours ago)
For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
Eventually, someone is going to get wise to this borrow and spend cycle. The reason...
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For the latest Peter Schiff, go to http://PeterSchiffBlog.com -
Eventually, someone is going to get wise to this borrow and spend cycle. The reason that people produce something is so that they can trade it for another good. It doesn't do anyone any good to collect a bunch of paper. That is what the Chinese have done. They have produced and traded a lot of goods for pieces of paper. They are IOUs on future goods. But it doesn't look like the Americans are going to begin producing anytime soon.
The whole concept that the Asian people depend on us for demand for their products is nonsense. Without us, the Chinese have enough demand on their own to consume all of the goods that they have produced.
A group of men are stranded on an island. They decide to divide up the work. One will be the fisherman, one will gather vegetables, one collects firewood and tends the fire, and one of the men is assigned the job of cooking. One of the men is an American, and he gets the job of eating. Every day, the productive men go out and gather food for the meal. A modern economist would look at this situation and determine that the American is the key to the whole island economy. Without him, all of the other men would be out of work.
It is similar to Tom Sawyer. Tom Saywer got his friends to whitewash a fence which was one of his chores. Not only did he convince his friends to do the work for him, but they had to pay him to do it.
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