Peter Schiff: We haven’t seen anything yet
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Peter Schiff, may become the first, Monetarist member of the US Senate. He is running for the Senate seat soon to be evacuated by Chris Dodd, Democrat from Connecticut. Schiff recently gave an interview with the John Thomas, the Mad Hedge Fund Trader, and expounded on his understanding about the future state of the US and world economy and where we should be investing to see the next round of long term gains.
Schiff, is one of the few voices that spoke about the housing bubble formation as early as 2005, much to the ridicule of his investment colleagues. He is of the Austrian Economics school, who believes that the bailout, increased federal spending and quantitative easing are creating malinvestment, which will ultimately create a crash in the dollar, hyperinflation and real bust in financial assets, including stocks, credit and housing.
Civil unrest is coming, says Schiff, gold and emerging market stocks will be the only place to hide out and preserve your wealth. China is least likely to crash, as it has enormous savings with which to bolster its own economy. The next financial crisis, will be far greater than the last, and will be triggered when emerging nations decide to quit recycling their ballooning surpluses into US Treasury bonds, and start reinvesting in their own economies (See http://bit.ly/dfbCGs).
Over the long term, well beyond 2010 there are a lot of reasons to be optimistic about some of these emerging markets. And I think as the US market submerges, there will be a lot of benefit to these emerging markets. They will focus their industrial output rather than sending their money to the US, recycling their trade surpluses into treasuries and Mortgage Backed Securities. They will simply invest in their own economy, making their own economy more productive and more efficient.
And I think that there could be a real global economic boom outside the United States, once the world withdraws their very expensive subsidy of the American economy. And of course when America loses that subsidy that is when we have to deal with much more direct consequences than what we have had to face thus far.