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I remember seeing a roundtable of top economists from
Posted on: January 9, 2023 at 23:01:26 CT
JeffB MU
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around the world discussing "The Great Recession" some time after the world financial system was saved from a total collapse by all out money printing by the Federal Reserve. See this very interesting video that gives some scope to the absurd amount of money that was required to reinflate "the Mother of All Bubbles":
One Hundred Million Dollar Penny
https://www.youtube.com/watch?v=3dl1y-zBAFg
That round table discussion was hosted by The Economist. At one point the host, alluding to the fact that Austrian economists were jumping up and down warning about the coming catastrophe for about 10 years before their predictions happened almost exactly as they described, asked something along the lines of "How far in advance can people predict a catastrophe before people disregard them for 'crying wolf'?"
Someone put together some video clips of Peter Schiff making dire predictions in TV interviews in 2005 and later. Financial news shows would interview him and juxtapose interviews of mainstream economists and financial gurus. At the time the financial gurus & mainstream economists would attack his views as absurd, with at least one of them openly laughing at him. They also interviewed Ben Bernanke, the Federal Reserve Chairman, who calmly and confidently refuted Schiff's warnings that there was a big housing bubble and that when it popped it was going to cause financial chaos throughout our economy.
He noted that never in our country's history had the entire housing market gone down significantly across the board. He said that there might be some localized hot spots where housing might be temporarily over priced, but that over all the fundamentals were all there to support the then current housing prices, despite the fact that they had been on a real tear for some time. The job market was strong, earnings were strong and so on.
For several more years Schiff gave his solid reasons supporting his assertion that there was a huge housing market bubble caused by the Fed's artificially low interest rates over a long time period.
When the bubble burst it showed that the Austrian economists had a solid handle on how the economy worked vis a vis the smoke and mirrors understanding of the mainstream economists. You've probably already seen the video, but have another gander at the point in history when it became so apparent that:
Bernanke was wrong while Peter Schiff was right
https://www.youtube.com/watch?v=goBjOIdvFMs
But the Austrian economists' paradigm is primarily a macroeconomic one. They have a good understanding of how things work and the longer term ramifications of government policies and of those of the elephant in the room, the Federal Reserve.
There are a lot of moving parts and timing markets is notoriously difficult sans insider information. Predicting the prices of individual stocks or commodities a year or two out is extremely risky, even if someone has a good handle on the underlying dynamics.
I am no fan of Keynes, but he was spot on when he said, "Markets can stay irrational longer than you can stay solvent." Many very smart financiers have learned that lesson the hard way. They can be very right about stocks or commodities being way overvalued or undervalued but can lose their shirts because they mistimed the markets. They were right, but too far ahead of what would eventually transpire.
I personally wouldn't go all in on Schiff's predictions of where to put one's money and when, but I think his macroeconomic observations are well worth listening to.
In contrast, beloved mainstream economists like Nobel laureate, Paul Krugman, of the NY Times may get things right in the short term but are veritable idiots when it comes to understanding the underlying dynamics of the economy. When the wheels came off of the world financial system in 2008, he wrote an article entitled, "How Did Economists Get It So Wrong?" https://historynewsnetwork.org/article/116466
Unfortunately, he doubled down on his stupidity, just like the Federal Reserve did. I saw a couple of articles on Seeking Alpha probably a couple of years after the crash discussing the Fed's evaluation of what happened. They did a study that, of course, exonerated them completely of any blame for the catastrophe that the Austrians had been warning about for several years. "No one could have seen this coming" or something along those lines was the headline of one article by Peter Schiff. He detailed the absurdity of the report from the Fed trying to explain why it wasn't their fault. He also linked to several articles he had written 3 to 5 years or so earlier giving almost an exact line by line rendition what what was about to happen.
A couple of interesting side notes: People pulled up a Krugman NYT article or two in which he had been calling upon the Fed to blow a housing bubble in order to get the country out of the doldrums from the bursting of the dot.com bubble they had blown... and that is exactly what they did. He claimed that he was just joking when he became the butt of so many jokes, but his claims really didn't hold water. No one took them as jokes at the time and he never attempted to set anyone straight.
Even more absurdly, during The Great Recession he wrote a column claiming that the government could/should pull us out of the pain and suffering they had caused by instituting a war against a fake alien invasion. He was only slightly tongue in cheek over that one. He clearly believed and argued for the "broken window fallacy" that had been refuted by Bastiat long ago. He honestly believed that having our government borrow and spend to use scarce world resources to build weapons to fight non existent aliens would help make the world in general and the US in particular more prosperous.
One Hundred Million Dollar Penny
https://www.youtube.com/watch?v=3dl1y-zBAFg
That round table discussion was hosted by The Economist. At one point the host, alluding to the fact that Austrian economists were jumping up and down warning about the coming catastrophe for about 10 years before their predictions happened almost exactly as they described, asked something along the lines of "How far in advance can people predict a catastrophe before people disregard them for 'crying wolf'?"
Someone put together some video clips of Peter Schiff making dire predictions in TV interviews in 2005 and later. Financial news shows would interview him and juxtapose interviews of mainstream economists and financial gurus. At the time the financial gurus & mainstream economists would attack his views as absurd, with at least one of them openly laughing at him. They also interviewed Ben Bernanke, the Federal Reserve Chairman, who calmly and confidently refuted Schiff's warnings that there was a big housing bubble and that when it popped it was going to cause financial chaos throughout our economy.
He noted that never in our country's history had the entire housing market gone down significantly across the board. He said that there might be some localized hot spots where housing might be temporarily over priced, but that over all the fundamentals were all there to support the then current housing prices, despite the fact that they had been on a real tear for some time. The job market was strong, earnings were strong and so on.
For several more years Schiff gave his solid reasons supporting his assertion that there was a huge housing market bubble caused by the Fed's artificially low interest rates over a long time period.
When the bubble burst it showed that the Austrian economists had a solid handle on how the economy worked vis a vis the smoke and mirrors understanding of the mainstream economists. You've probably already seen the video, but have another gander at the point in history when it became so apparent that:
Bernanke was wrong while Peter Schiff was right
https://www.youtube.com/watch?v=goBjOIdvFMs
But the Austrian economists' paradigm is primarily a macroeconomic one. They have a good understanding of how things work and the longer term ramifications of government policies and of those of the elephant in the room, the Federal Reserve.
There are a lot of moving parts and timing markets is notoriously difficult sans insider information. Predicting the prices of individual stocks or commodities a year or two out is extremely risky, even if someone has a good handle on the underlying dynamics.
I am no fan of Keynes, but he was spot on when he said, "Markets can stay irrational longer than you can stay solvent." Many very smart financiers have learned that lesson the hard way. They can be very right about stocks or commodities being way overvalued or undervalued but can lose their shirts because they mistimed the markets. They were right, but too far ahead of what would eventually transpire.
I personally wouldn't go all in on Schiff's predictions of where to put one's money and when, but I think his macroeconomic observations are well worth listening to.
In contrast, beloved mainstream economists like Nobel laureate, Paul Krugman, of the NY Times may get things right in the short term but are veritable idiots when it comes to understanding the underlying dynamics of the economy. When the wheels came off of the world financial system in 2008, he wrote an article entitled, "How Did Economists Get It So Wrong?" https://historynewsnetwork.org/article/116466
Unfortunately, he doubled down on his stupidity, just like the Federal Reserve did. I saw a couple of articles on Seeking Alpha probably a couple of years after the crash discussing the Fed's evaluation of what happened. They did a study that, of course, exonerated them completely of any blame for the catastrophe that the Austrians had been warning about for several years. "No one could have seen this coming" or something along those lines was the headline of one article by Peter Schiff. He detailed the absurdity of the report from the Fed trying to explain why it wasn't their fault. He also linked to several articles he had written 3 to 5 years or so earlier giving almost an exact line by line rendition what what was about to happen.
A couple of interesting side notes: People pulled up a Krugman NYT article or two in which he had been calling upon the Fed to blow a housing bubble in order to get the country out of the doldrums from the bursting of the dot.com bubble they had blown... and that is exactly what they did. He claimed that he was just joking when he became the butt of so many jokes, but his claims really didn't hold water. No one took them as jokes at the time and he never attempted to set anyone straight.
Even more absurdly, during The Great Recession he wrote a column claiming that the government could/should pull us out of the pain and suffering they had caused by instituting a war against a fake alien invasion. He was only slightly tongue in cheek over that one. He clearly believed and argued for the "broken window fallacy" that had been refuted by Bastiat long ago. He honestly believed that having our government borrow and spend to use scarce world resources to build weapons to fight non existent aliens would help make the world in general and the US in particular more prosperous.
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I remember seeing a roundtable of top economists from - JeffB MU - 1/9 23:01:26