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History never repeats itself, but it does often rhyme. We cannot have a decade of 0% interest rates and expect no consequences. Peter Schiff predicted this fro

• notch898a 4y ago
  >There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed knows this. They should make it explicit to the common, ~100 IQ, joe six pack American. It's infuriating watching them act so carefully as to pretend to try and not spook anyone.
  • fijiaarone 4y ago
    You’re making the weird assumption that the people at the Fed have greater than 99 IQ, or any desire at all to learn about the effects of their monetary decisions other than their own short term personal gains. And there is no indication of either of these suppositions.
• e_i_pi_2 4y ago
  I nice twist I heard recently - it's more like a song, and I'm getting really tired of going back to the same chorus over and over again
• vkou 4y ago
  > The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next decade. How on Earth is providing short-term liquidity[1] until the long-term low-yield bonds owned by those banks mature translates into double-digit inflation? And why should we listen to this [2] prediction of double-digit inflation? [1] At least in the US. Switzerland is doing its own thing with the UBS/CS merger, good luck to those folks, that sounds like a fun garbage dump to dig through. [2] Similar comments predicted 15 of the past ~1 years of double-digit inflation.
• brigandish 4y ago
  Consumer Price Index...?
  • OJFord 4y ago
    Yes, i.e. 'inflation', but there are different ways of measuring that. In the UK at least the main ways are CPI & RPI - Consumer & Retail. Broadly speaking RPI is CPI + mortgages & rent prices, but actually there's a newer one that's exactly that which tracks lower. They're different 'baskets of goods', used in differnt cases, but generally CPI is what's meant. (RPI is used for student loan repayments for example.)
• zoltar 4y ago
  Is that the same Peter Schiff that said gold was going to $5,000/oz in 2012?
  • sph 4y ago
    Person that made a bad prediction in their life should never be listened to ever again, for everything they say is wrong. Show me anyone that predicted two consecutive macroeconomic trends, ever.
    • contravariant 4y ago
      If, as you your second sentence seems to suggest, nobody ever managed to get it right twice then we shouldn't listen to people how made a good prediction either.
    • paulpauper 4y ago
      he made many bad predictions, and continued to double down on them: dollar collapse, $5k+ gold, emerging markets boom, bitcoin crash, hyperinflation, bear market, recession, etc. every year He never deviated from his predictions or view even when shown to be wrong. He never stopped to consider maybe he was wrong, not that the economy is wrong.
      • Operative0198 4y ago
        He isn't wrong on any of those predictions. The dollar has never been at a more precarious position (on a hyper-inflation course and the BRICS are pondering about adopting the Yuan). Bitcoin (who knows what's coming next, but for sure never seeing 70K again) Hyperinflation (pretty obvious) Bear market (most of 2022 was in one, and most probably this year will follow) Recession (high certainty this will happen. Fed's soft landing is a mirage, history shows a rate cut after aggressive hiking usually leads into one) Schiff is not outright wrong on his predictions. He just never gave time stipulations for his predictions.
        • riffraff 4y ago
• drstewart 4y ago
  >There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next decade. I love how confident people are with their predictions. Since you're so confident about what's going to happen, why does CPI matter to you? You can invest in the market in such a way you're going to be rich anyway. Anyway, I'll happily help make you richer: do you want to make a long term bet that there won't be double digit inflation for the next decade (let's say there won't be annualized inflation >= 10% over the period from March 25th, 2023 to March 24th, 2033)?
• flangola7 4y ago
  Is there a reason you think it is inevitable that we have to experience one of them?
  • lazide 4y ago
    Human behavior. When everything is going up, people expect it to keep going up, and their behavior tends to keep pushing it up - until some core limitation gets reached anyway and things get too broken somewhere. When it keeps going down, same - until it becomes obvious to everyone there is no further down to go. With lots of head fakes along the way of course. Humans tend to be kind of terrible at being consistent over long periods of time.
• Dalewyn 4y ago
  >bailing out the banks My understanding this time around is the depositors rightfully got bailed out (both to maintain peoples' trust in banking, and because losing your money to others' failures fucking sucks), but the banks themselves were left out to dry.
  • kneebonian 4y ago
    Sure the depositors that had more than 3x my annual salary just sitting in their account.
    • jzymbaluk 4y ago
      Of all the "evil" things one could do with gargantuan wads of cash, having it sit in a bank account is just about the most innocuous thing I can think of to do with it. It seems like a wise, cautious move actually, and it seems like it'd be bad to punish businesses for being cautious with their money
      • sneed-oil 4y ago
        Their money is being used to make investments and they're getting paid interest for it. If their deposit was above the amount insured by the FDIC then they knew it could all be lost if the bank collapsed. I wouldn't call lending more than 250k to a bank "cautious" (that's what you do when you "deposit" your money in a bank), they could have bought Treasury bonds instead. But maybe they were smart and had guessed that in this third world financial system, if your bank is too big to fail, depositors get bailed out by the government anyway.
        • bruce511 4y ago
          It kinda depends on scale doesn't it? For an individual 250k in cash seems like a lot (although can easily happen just before or just after a large purchase.) For even a "small" business though it's quite small. We're small (<50 employees) but payroll is around 1.5m per month. We keep about 2m as "working capital". This is cash that is literally flowing all the time. In this context 250k is tiny, and wouldn't cover our day to day balance.
• quags 4y ago
  If we go by another Peter, Peter Lynch in this case he would say no one can predict inflation or interest rates long term. Secondly his words is there is always something to worry about when investing - like when oil went to 40 and there would be a depression or when Japan was going to take over the world leading to Americas downfall - or when Japan was crashing and going to cause a depression. Or when oil went from 40 to 10 and would cause a depression. Or when in 82 the prime rate went to 20 and there was stagflation that no one predicted in 80 or 81. Now Schiff may be right and we are heading for this finally after years of slow growth from 2010-2018 when inflation was lower than the feds target of 2% something no one would have predicted in 2008. Schiff may be right after predicting multiple large depressions to finally get one right.
  • safety1st 4y ago
    Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically: * Ports on both the Atlantic and Pacific * A very effective transportation system in between * In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway * A market of 350 million high income people (by global standards) under one regulatory framework No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat. There will be crises but the key insight for me was that because of these advantages the US is almost always going to be better prepared to weather those crises than the rest of the world. That is why it enjoys such a huge inflow of capital and immigration (currently #1 recipient of FDI in the world, most immigrants of any country in the world). It's just a big risk to bet your money against the success of the US, no matter how dumb its leaders get. It probably also helps that Americans tend to flip out and go full doomsday mode when anything goes wrong inside of their borders, I mean it's stressful, it's not very well planned, but it does make problems hard to ignore.
    • ciconia 4y ago
      > No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat. You left out the most important advantage: the US has plenty of oil and gas;
• paulpauper 4y ago
  Peter Schiff predicted this from the moment the fed bailouted the banks in 2008. He predicted dollar collapse, hyperinflation for 11 years, and a bunch of other stuff the didn't come true. Major broken clock syndrome on his part. Inflation finally spiked, but after being wrong since 2008. Gold still has not done much in a decade. The inflation was from the post-covid recovery, which was so strong that supply chain could not keep up, not as a consequence of 2008. It's very easy to predict something will eventually happen. Anyone can do that. Way harder to predict when,
  • fyzix 4y ago
    It's better to be wrong until you're right than right until you're wrong...because you will get the last laugh. The fundamental problem is that price controls never work and the interest rate is the price of money. If you understand this, then it's easy to predict the endgame, whether it takes 10 or 20 yrs to fail, you will still be right once you position yourself for the windfall.
    • remexre 4y ago
      Not too knowledgeable about macro -- is that tantamount to saying that monetary policy doesn't work? And what's the windfall in this case, given that the dollar is the reserve currency; RMB-denominated assets?
    • Aunche 4y ago
      >It's better to be wrong until you're right than right until you're wrong...because you will get the last laugh. Peter Schiff gets to laugh despite being wrong for 9 out of the last 10 years because he's not the one deciding monetary policy. For all we know, if he had his way, the US would be in a perma-recession and made into a vassal state of China by now. Also, the business cycle is something acknowledged by literally every economist. The fact that we have mild economic turmoil after a global pandemic shouldn't be a prediction that Peter Schiff is proud of.
    • Dylan16807 4y ago
      Position yourself for the windfall how? Let's say Alice will be wrong several times and then right once, and Bob will be right several times and wrong once. Both of them start with $10k. To give Alice every advantage, let's say her bets pay out 10x or nothing, and Bob's bets pay out 4x or nothing. We'll also say Alice magically knows which time she'll be right, but Bob won't know which time he'll be wrong. Alice will obviously bet all her money on the time she's right, and come out with $100k. Bob can invest 2/3 of his money each time, repeating every time he's right. Let's say he happens to be right 8 times, then is wrong. After those 8 right bets, he'll have $6.6M. After he makes his wrong bet, his fortune will drop to $2.2M. Then he'll retire. Looks like Bob has a much better windfall to me.
• sanp 4y ago
  Yes. Peter Schiff has predicted 20 of the last 0 collapses and depressions.
• fsckboy 4y ago
  > Peter Schiff predicted this if Peter Schiff was any good at predicting this type of stuff, Peter Schiff wouldn't have to work for a living.
  • humanizersequel 4y ago
    The internet seems to think he has a net worth in the ballpark of 70 million dollars — I don't think he does.
• juniordev7 4y ago
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• ren_engineer 4y ago
  Capitalism is based around bad decisions being punished, which didn't happen in 2008 because of the bailouts. Nobody went to jail, nothing extreme enough was done to actually enforce cultural changes in the finance industry, so of course having the same problems occur was inevitable. Adding to the problem is that the economy is actually going to get less efficient on a fundamental level due to the geopolitical situation with Russia and China, plus the after effects of all the Covid restrictions and stimulus that distorted the economy in many ways. Living standards are going to drop unless the AI hype is real and AI actually manages to improve productivity dramatically also laughed at this line from the post >While there is tremendous uncertainty, given that the banking sector drives credit creation and subsequent economic growth bankers really think they are the drivers of growth, that's how you end up with all your manufacturing in China. These people are clowns
  • beepbooptheory 4y ago
    I don't think the language models have much living standards to worry about other than having a ton of electricity.
  • Jochim 4y ago
    > Capitalism is based around bad decisions being punished What constitutes a bad decision in your view? My perspective is that Capitalism actively encourages and rewards the kind of behaviour most would consider to be morally and ethically bankrupt. The simplest example would be monopolising control of a limited but necessary resource, thereby granting you what is effectively absolute power over those who need it. Think oxygen supply on a moon base or fresh water on deserted island. Take cigarette companies also. The "good" decision under capitalism was for them to knowingly deceive society on the health risks of their product. All so they could continue to profit.
  • danaris 4y ago
    > Capitalism is based around bad decisions being punished Where did you get that idea? Capitalism is based on people who have more money/wealth (aka capital) making more money. In our system as it exists today, the capital owners have managed to use their vastly disproportionate wealth to influence the government to prioritize their needs over all others. This is a nearly inevitable outcome of unfettered capitalism, combined with legalized bribery of elected officials (lobbying, PACs, etc). Now, it's certainly true that no system is going to remain in balance long if people can make decisions that hurt the system and suffer no negative consequences themselves—all the moreso if those decisions actually benefit them. But that's not at all the same as saying that capitalism—or any economic system—is based around those kinds of feedback loops.
• locallost 4y ago
  "Predicted this in 2008" is a funny sentence. If I now predicted that what the Fed is doing will result in an amazing economy, would it really count if it happened in 15 years? Peter Schiff is always predicting doom. It's not that he's talking complete nonsense, but objectively he is more wrong than right. His opinions corelate less to being correct and more to the fact that he invests a lot in gold, and his interest is that everyone else gets scared and does too.
  • tfourb 4y ago
    If I recall correctly, the general consensus is that while there are people who do very well in predicting future events and developments (google "super forecasters"), nobody can do so reliably beyond a time horizon of five years or so.
  • TheAlchemist 4y ago
    Agree with the second part. As for the first part - yes, it would count. Timing of things is impossible to predict of course. But being right in the first place, shouldn't be underestimated ! Let's take crypto as an example - one can predict it's going to 0, and one can say it will go to 1M$. Even though you don't know when, being right is the only chance you make something out of it.
  • polski-g 4y ago
    Peter Schiff has predicted 23 of the last 2 recessions.
    • listenallyall 4y ago
      Easy to laugh at him, I'd say it's more like the doctor who tells you to quit smoking or it's eventually going to kill you. The fact that you haven't died yet doesn't exactly prove the doctor is an idiot or wrong.
• euroderf 4y ago
  Years ago The Economist had a front-page story saying that negligible interest rates are going to be around long-term. If an influential and bold assertion like that is not effectively refuted, some people are gonna take it as gospel truth. Caveat lector
• mushbino 4y ago
  Peter Shiff predicts a million things and about 2 per decade end of being correct, aside from the obvious ones. 0% interest can work just fine, but not in the trickle down model.
  • elefanten 4y ago
    Agree on Schiff. Got any names or search terms for the 0 interest point? What political economy does it work with?
• 64bittechie 4y ago
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• LoveMortuus 4y ago
  If the inflation does reach (although in EU it already is) double digits, could that be a big of a hit to destabilize the US dollar and pave the way to the next global reserve currency? I'm asking because I've had these thoughts on my mind ever since Ray Dalio uploaded his video Principles for Dealing with the Changing World Order [0]. [0] (Video length: 43:43) https://youtu.be/xguam0TKMw8 https://youtu.be/xguam0TKMw8
  • gitfan86 4y ago
    The USD is the least worst option. That could change some day. Maybe India becomes a much bigger economy or the US govt gets overtaken by socialists who print like crazy and create hyperinflation. But for now there is no better option.
• kevinfat 4y ago
  I often hear the interest rates yielded this result of massive inflation or massive recession. But I'm not sure I believe that. I'm not convinced that the 0% interest rates lead to the massive inflation. So a non-mainstream economist Richard D. Wolff asked the elephant in the room question which no one seems to be asking which is to point out that we don't know how much of the price increases is simply due to companies just wanting to make more profit. And his point is how do you rule out that companies increased prices just for more profit irregardless of what the interest rates are?
  • karmakurtisaani 4y ago
    That's a very good point. I don't have any data, but I feel like many industries have been consolidated into the hands of few companies since the crisis of 2008. Now they all can raise prices together using inflation as an excuse. See the big oil and its record profits last year for an example.
    • Super_Jambo 4y ago
      Much easier for that consolidation to come about when those doing it are near the exit chute from the money printer.
• emptysongglass 4y ago
  Every time I see the fed adjusting these levers of debasing a money they print I shake my head and wonder why no one questions these levers as leading to a healthy economic society. Now my money is worth this much less tomorrow so now I must work this much extra for a raise to cover the loss. Doesn't this strike anyone as an absurdist parody play starring us its marionettes? If crypto isn't the answer, what is? I think inflation and deflation are awful levers of monetary policy and should not be wielded by government institutions like the fed. They've proven themselves time and again bad stewards.
  • kevviiinn 4y ago
    What I wonder is why a bunch of programmers seem to think they know economics and finance better than the fed
    • TheOtherHobbes 4y ago
      Because if the fed wrote software it wouldn't stay in business for long.
      • kevviiinn 4y ago
        I wonder how long a financial system would stay running if the programmers took over, probably about the same
        • k2enemy 4y ago
          We don't have to wonder. DAO, FTX, Genesis, Three Arrows, BlockFi, Celsius, etc.
    • Yiin 4y ago
      It's like asking why nurses think they know more about hospital processes when management is making bad decisions that doesn't solve real problems. I wish you are right though.
• ornornor 4y ago
  For those wondering like I did, CPI is Consumer Price Index. My understanding is that it’s a standardized basket of goods that supposedly represent the average household, and it calculates inflation on this basket on a regular basis. This doesn’t reflect anyone’s reality however and I think a quick and dirty way to calculate your own CPI would be to check the difference year on year for all your rent and living expenses (including fuel if relevant etc) + your groceries (food toiletries etc), and figure out how has this changed year on year.
• saos 4y ago
  > We cannot have a decade of 0% interest rates and expect no consequences Correct.
  • imtringued 4y ago
    Japan had more decades than the US.
• imtringued 4y ago
  >The government numbers are rigged and everyone's reality differs... Someone doesn't understand how averages work...