Peter Schiff: Economic Predictions for America, 2009-2012

We had better listen to Peter Schiff.  He predicted the stock market crash of 2008 and the real estate bubble bursting.  Here are his predictions for the immediate future, including 2009-2012:

“So, the question is, what are going to be the consequences of what we’re doing now?

“And what I think is going to happen is that, ultimately, people like the Chinese and the rest of the world — the Saudis and the Japanese and everybody else — they’re going to figure this out, and they’re not going to want to play this game any more. We’ve got them conned right now.

“In my book, in Crash Proof, I compared it to Tom Sawyer. You know, there was that passage in Tom Sawyer where Tom gets everybody, all the kids in the neighborhood, to whitewash his fence. And he gets them to pay for the privilege of doing his chores.

“And when Mark Twain wrote that passage, he probably had no idea that it would one day form the basis for the entire global economy. But we’ve got the world painting our fences. Like they don’t have their own fences that need painting.

“But the world is not going to accept this, this economy. You had Hillary Clinton from when she went over to China, a couple weeks ago, to get them, to beg them to buy our bonds.

“She’d tell them, “We’re all in this together.” And basically this is what she tells the Chinese: “You need to take money away from your citizens and loan it to us, so we can give it to our citizens so they can use it to buy products made in your company to keep your people employed.” That’s the deal that we’re making with them.

“Now, what the Chinese should say to Clinton is, “You know what, I got a better idea. Why don’t we just leave our money with our own people and then they can use the money to buy their own products. That way we get to keep our stuff.”

“The way it is now, we get all the stuff and all they get is the jobs. Well, what good are jobs without stuff? That’s slavery.

“So they’re going to figure it out. And what’s going to happen is they’re not going to buy our bonds, and the Fed’s going to start buying all the bonds, and the dollar’s going to plunge. And this crisis is going to end up being a currency crisis. And when it becomes a currency crisis, then you’re going to have higher consumer prices and you’re going to have higher interest rates.

“Right now, we’re creating a lot of inflation. A lot of people are talking about, “Oh, there’s not inflation, it’s deflation.” That’s all nonsense. Real-estate prices are falling because they’re too high. Stock prices are falling. But that’s not deflation. That’s just falling prices. There is no contraction of the money supply, it’s growing like crazy.

“And this crisis is going to end up being a currency crisis.

“But the expansion of the money supply is not immediately showing up in rising prices for commodities or consumer goods, because there are other temporary factors that are pushing prices down at the same time inflation is pushing prices up. You’ve got deleveraging; you’ve got bankruptcies, going-out-of-business sales; you’ve got a lot of companies liquidating their inventory; and you have the dollar strong.

“And what happened was, paradoxically, when this crisis began, money flowed into America instead of fleeing America, which it will do ultimately. Can you imagine there’s a giant explosion and everybody’s running towards the blast? That’s what’s going on.

“And when people look around the world and they say, “Well, people are coming to America because as bad as it is every place else, it’s so much worse here.” That’s nonsense. That’s just what they’re saying to explain it. Just like they tried to justify the real-estate bubble or the Internet bubble. That’s all nonsense.

“The reason it’s so bad in the rest of the world is because they loaned us so much money and we can’t pay them back, and now they’re losing, based on their bad loans.

“And what’s really causing the global credit crunch is that we’re borrowing so much money right now, we’re crowding out everybody else. The fact that people are loaning us so much money means that private businesses around the world can’t get capital. Why? Because it’s all going to the US government, that’s why.

“So the world is suffering, not because our economy is collapsing, but because they’re foolishly trying to prop it up.

“And when they figure this out, then we’re going to get a real economic crisis. Because when the dollar starts to plunge — and it will — then we’re going to see prices rising, sharply, for consumer goods, and interest rates rising.

“And if we think we have problems now, wait till we see how much worse they get when we throw rising consumer prices and rising interest rates into the mix. And there’s nothing the government’s going to be able to do about it.

“Right now, unemployed people are getting the benefit of lower prices. Imagine when you’re out of work and your prices are going up, because that’s what’s going to happen. And then this is going to be a real economic crisis and then we’re going to be in for very, very difficult choices.

“And, unfortunately, the worst-case scenario is one that is looking increasingly more likely, which is hyperinflation. And if we get that, that’s where nobody will lend us money.

“And, so, the Fed buys all the bonds in order to keep interest rates down and to maintain deficit spending. And, then, the velocity money really starts to pick up. Nobody is going to want our money — not even American citizens will want our money and they will try to spend it as quickly as they can.

“The government might try to keep it together a little bit longer, with regulation. Maybe we’ll have capital controls. Maybe they’ll make it illegal for American citizens to do what I’m doing with my clients right now — buying foreign currencies, foreign stocks. Maybe they’ll make it illegal to buy gold.

“As prices really start to contract, to escalate, private parties will try to make contracts with payment in gold or other currencies. Maybe the government will make that illegal. There might be stores or people that actually don’t want to accept dollars because their value is dropping too rapidly. The government will make that illegal.

“And that means that we’ll have a black market. That means if you want to buy something, you’ll have to buy it on the black market, just like they did in the Soviet Union. The only reason you could buy anything there was because you bought it illegally.

‘A lot of these things are going to happen. I think early on, probably even in Barack Obama’s first term of office, I think we’re going to have price controls.

‘I think prices will be rising so rapidly, maybe even by next year, that they’re going to impose price controls on a number of products; probably energy, probably gasoline, probably milk, bread. And we’re repeating all the mistakes of the 1930s. We might as well repeat the mistakes of the 1970s.

‘And, so, when they put on price controls, what’s that going to mean? Shortages, power blackouts, long lines for gas, long lines for food. A lot of things are going to happen, I just mention that. Everybody now, of course, is talking about the 1930s and saying, “Oh, no, we can’t repeat the mistakes of the ’30s.” Well, that’s exactly what we’re doing.” ***

Most will not heed Peter Schiff’s advice; they will continue to go headlong over the cliff, following the other sheeple.  We have been warned.  There will be a few who will study out the warnings and make appropriate moves to not only preserve their wealth, but also prosper.  “My people are destroyed for lack of knowledge,” said Yahweh through his prophet for that  hour.  And it is through this economic knowledge that we can make it through the hard times.  Kenneth Wayne Hancock

***From his speech at the Autrian Scholars’ Conference, March 13, 2009


Filed under Economy, One World Government

12 responses to “Peter Schiff: Economic Predictions for America, 2009-2012

  1. Angela

    well Kenneth, l know exactly what your talking about, l love Peter Schiff, there are not many people left on the planet with common sense, but he is at the top of my list for making all the sense in the world, we have serious trouble ahead.


    • rob sol

      it is now nearly 2014; where is the hyperinflation?

      if you believe that the government is lying, fair enough, what about the MIT billion price project?

      I am getting wary of Peter Shiff.

      • America is using hundreds of billions of dollars to buy goods, and those dollars are flying out of our country to the seller countries around the world. The hyperinflation will occur, some say, when those billions come back to the U.S. like pigeons, as those very foreign governments redeem their bonds and quit playing the game. When the world refuses to purchase any more of our bonds, then inflation runs rampant. Right now a slow inflation hobbles us…85 billion of QE each month is an ominous sign to those who can read the economic tea leaves…

  2. Thanks, Angela, for your comment and your visit. Yes, very serious trouble lies ahead. The wise (those in awe of God) will make the necessary changes through study and preparation to weather the storm. The foolish will sit on their rooftops painting SOS signs, crying for someone to save them from their self-imposed calamity. It’s always been that way.

  3. Sharra Moller

    What do we do to prepare for these bad times? Stock up on food, supplies, protection?

    • Sharra, I believe that the best thing that we can do is to turn our paper dollars into legal tender gold and silver american eagle coins. The dollar will inevitably be devalued. There will be massive inflation, and the dollar will be undermined. As the dollar goes down, gold and silver will go up. “Get out of dollar denominated assets” is the advice that has been given by the experts in the know concerning the crash that’s coming. All of the above that you mentioned is important as well. Hope this helps.

      • Sharra Moller

        What are, and how do you recognize, “dollar denominted assets?” Real estate, or just stocks?

      • Sharra Moller, dollar denominated assets are anything not reckoned in dollars. Holding a commodity like a few ounces of gold or silver, for example, is real and tangible. A certificate of deposit or bond, for example, or actual paper currency is just a blimp on a screen somewhere. If the “dollar” goes down in value, and it is doing just that–your paper dollars are losing. We see this as inflation, when a tangible good goes up in dollars, it is not a nice thing to have a lot of dollars hanging around because we are just losing big time. So owning something tangible is much better: real estate, gold, etc. wh

  4. troll

    So what happened to the rampant inflation? It’s almost 2012 and it still hasn’t come. Maybe it’s time to admit that we were wrong…

    • Hey, troll. There is a correction in commodities going on right now, but to say that there is no inflation right now is disingenuous. A bill of groceries will witness to this. Also, with QE 1 and 2, and 3 soon to come, prices will be rising even more–which is the very definition of inflation: inflating the amount of currency created out of nothing. When I was in high school in the sixties, 29.9 cents a gallon of gasoline was the benchmark for that era. Then Vietnam, etc. and pow! up the prices went. They are borrowing like desperate drunks right now. Just wait and you’ll see; 2012 is not past yet. kwh

      • troll

        Hey, buddy. Now 2012 is virtually past and your explosive inflation just didn’t happen. Well… Basically all Peter Schiff said didn’t happen and yet in face of all this I can see you published another post saying how awesome he is. You’re the typical example of a person who doesn’t learn from their mistakes, before trying to figure out what’s wrong with the USA you should first look at a mirror.

        Shame on you, old man.

      • Thanks, Troll, for your comment. “Nothing to get hung about” here, Troll. Goodness. You would think I had really done damage to a lot of folks by believing Schiff’s predictions, who was right before in predicting the eco. collapse of 2008, several years ahead of time. If the pundits had believed him back in ’06 and ’07, they would not have led their followers into a 50% hit on their retirement savings. Why would not sane people listen to someone who was right before? Although things did not go belly up exactly when he said they would for this year, people still made out pretty good in getting out of the dollar and into precious metals and commodities. It can be difficult to predict the extremes the Central Banks of the World will do to artificially prop up their fiat currencies in their nefarious desires to sheer the sheep “one last time.” So, Troll, no harm no foul. Just know this, as someone said, Every fiat currency will eventually be used as wallpaper and kindling. QE will continue to happen. They gotta pay the interest bills, you know. It is just going to take a few more years for the dollar and its satellite currencies to crash and burn into hyperinflation, which I believe is inevitable. For they will not default on all the loans. The Fed will continue to “print” enough currency to buy all the bonds needed to take care of us “old men.” I think it was Bruce Hornsby who said it best: “That’s just the way it is.” kwh

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