–Peter Schiff: Wrong in 2009; still wrong.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is
the gap between rich and poor.
•Austerity is the government’s method for widening
the gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..


Way back in 2009, we published the post, “Peter Schiff and the money-supply myth.” We quoted his comment: “Almost every dictionary defines inflation as an expansion of the money supply, not rising prices.”

Of course, he was dead wrong. While libertarians say the formula is: Inflation = Supply, the vast majority of knowledgeable people (and virtually all dictionaries) say: Inflation = Rising Prices = (Demand/Supply).

By leaving Demand out of the equation, Schiff and the libertarians always are able to fret that we are in a perpetual state of high inflation (so we should buy the gold and other nonsense the libertarians love to push.)

The rest of the rational world says U.S. inflation has been down around 2.5% for the past few years, and now hovers around 1.5%.

monetary sovereignty

Now here comes Peter Schiff, again . . . still selling his “sky-is-falling” pitch, and still wrong.

Peter Schiff on Greece, Puerto Rico, and America’s Looming Economic Crisis

“What’s happening in Greece and what’s happening in Puerto Rico is going to happen in the United States,” says investment guru and radio host Peter Schiff, CEO of Euro Pacific Capital.

“Once the Greek creditors began to question the solvency of Greece they demanded higher interest rates,” Schiff explained during a recent interview with Reason’s Matt Welch.

“The minute our creditors figure out we are in the same position as Greece or Puerto Rico, they’re going to demand higher interest rate from us and we can’t pay either.”

Ah, Peter, Peter, Peter, will you never learn the difference between Monetary Sovereignty (the U.S.) and monetary non-sovereignty (Greece)?

See if you can understand this:

1. The U.S., being Monetarily Sovereign, has the unlimited ability to create dollars. It can pay any bill of any size at any time. The U.S. never can run short of its own sovereign currency, the dollar.

2. By contrast, Greece has no sovereign currency. It uses the euro. It does not have the ability to create euros at will. The Greek government can obtain euros only by:
a. Taxing
b. Selling goods and services
c. Borrowing.

So Greece can, and has, run short of euros.

3. The U.S. creates dollars simply by paying bills. It doesn’t need to tax or to borrow its own sovereign currency. Even if all taxes and all “borrowing” (issuance of T-securities) fell to $0, the U.S. government could continue spending, forever.

4. It is the Fed that determines our interest rates, not creditors. (Apparently, Schiff has no explanation for why U.S. interest rates are so low. He must believe our creditors are too stupid to “figure out we are in the same position as Greece.”)

One day, the Fed will decide to raise interest rates. Note the words: The Fed will decide.” Then, and only then, rates will go up.

Why does Schiff spout such ignorance? I can’t say for sure, but perhaps this is a clue:

Peter Schiff is the President & CEO of Euro Pacific Capital.

Euro Pacific Capital offers a means for American investors to gain exposure to those areas of the global economy that have largely avoided the crushing debt burden that has swamped many developed economies.

Not sure what’s “crushing” about a debt the U.S. government has the unlimited ability to pay.

Based on the irresponsible policies of the Federal Reserve and the continued failure of the United States to put our fiscal house in order, we believe that the U.S. dollar is at risk of falling relative to currencies of more economically vibrant nations.

Changes in currency valuation, often ignored by many investment consultants, could have significant impact on long term results.

In short, Schiff and his team make their money by warning you about the endlessly imminent demise of America. So to protect your money, you should put your investments into their hands.

Heaven forbid I would put even one cent into the hands of someone whose knowledge of economics seems so meager, he doesn’t admit the fundamental differences between a Monetarily Sovereign nation and one that is monetarily non-sovereign.

Peter Schiff: Wrong in 2009; still wrong. But as H. L. Mencken said, “No one ever went broke underestimating the intelligence of the American people,” and lots of people make fortunes.

Right, Peter?

Rodger Malcolm Mitchell
Monetary Sovereignty

Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.


One thought on “–Peter Schiff: Wrong in 2009; still wrong.

  1. The “perpetual state of high inflation” does not appear to help gold, which has dropped from $1889 to $1132 per ounce over the past few years. How does Schiff explain that?


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