Peter Schiff and the Austrian School of Economics

Kavs

After watching this video I think this guy has identified the reason for alot of the economic problems the developed world has today, is Ireland hell bent on going down the same road again of which he is warning of in the video?

https://www.youtube.com/watch?v=1AIew3RN4R4

I think these people have every right to be angry, they're just misguided?

-Just to take a break from all the Trump threads!!;)

johnnyskeleton

Mod note:

Hi Kavs, please provide a summary of the video and set out your own views on the issue in order to being the thread into line with the charter.

Suryavarman

I'm not going to waste my time watching an hour and a half long Peter Schiff video and neither you nor anybody else should either.

Peter Schiff is a professional scaremonger that has predicted 10 of the last 1 recession. His consistently inaccurate predictions are probably down to the fact that he relies on Austrian economics which is about an accurate description of the economy as the geocentric model is of the solar system.

johnp001

Peter Schiff's thesis is that it is not possible for the Federal Reserve to normalise the ultra low interest rates the Fed has had for the last 9 years without crashing the markets.
Until or unless they prove him wrong by returning interest rates to normal levels it is a valid viewpoint to hold.
US and European bond yields are currently increasingly quickly despite the low Fed and negative ECB rates and this disconnection could be an early indicator that the central bankers have lost control of the global financial system and the inflationary effects of QE, bond buying and other money printing programs of the last decade will start to be felt.

Suryavarman

johnp001 wrote: »

Peter Schiff's thesis is that it is not possible for the Federal Reserve to normalise the ultra low interest rates the Fed has had for the last 9 years without crashing the markets.
Until or unless they prove him wrong by returning interest rates to normal levels it is a valid viewpoint to hold.
US and European bond yields are currently increasingly quickly despite the low Fed and negative ECB rates and this disconnection could be an early indicator that the central bankers have lost control of the global financial system and the inflationary effects of QE, bond buying and other money printing programs of the last decade will start to be felt.

And the theories Schiff uses to come to those conclusions are bunkum.

Rightwing

johnp001 wrote: »

Peter Schiff's thesis is that it is not possible for the Federal Reserve to normalise the ultra low interest rates the Fed has had for the last 9 years without crashing the markets.
Until or unless they prove him wrong by returning interest rates to normal levels it is a valid viewpoint to hold.
US and European bond yields are currently increasingly quickly despite the low Fed and negative ECB rates and this disconnection could be an early indicator that the central bankers have lost control of the global financial system and the inflationary effects of QE, bond buying and other money printing programs of the last decade will start to be felt.

Certainly an interesting development. Trump is seen as high risk with inflationary policies, but the rise in yields will put also put a cap on equity growth. Stagflation more likely than inflation.

Permabear

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realitykeeper

Suryavarman wrote: »

And the theories Schiff uses to come to those conclusions are bunkum.

Not so. Peter Schiff is correct. The FED said they would raise interest rates 4 times in 2016 but so far they have failed to raise them even once this year. A December rate hike is still of course possible but if that does happen it will be because the FED are running out of both excuses and credibility.

Naturally, even a small move by the FED will cause a selloff in the markets which have already priced in all the expected rate hikes but which have so far failed to materialize.

The people who like to talk up the markets say that contrarians like Peter Schiff are nearly always wrong but if that were true, Peter Schiff would not be in the 1%. Indeed, other contrarians like Mike Maloney, Gerald Celente and people who take their advice have also done well by positioning themselves in the right place before each economic crash.

It is sad, and a touch ironic, that these contrarians come in for so much flak from the very people they are trying to help.

Suryavarman

Permabear wrote: »

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It's bunkum because it's wrong. It doesn't give an accurate description of the business cycle. It rejects the concept of empiricism because it is more a political ideology than an attempt at science.

realitykeeper wrote: »

Not so. Peter Schiff is correct. The FED said they would raise interest rates 4 times in 2016 but so far they have failed to raise them even once this year. A December rate hike is still of course possible but if that does happen it will be because the FED are running out of both excuses and credibility.

Naturally, even a small move by the FED will cause a selloff in the markets which have already priced in all the expected rate hikes but which have so far failed to materialize.

The people who like to talk up the markets say that contrarians like Peter Schiff are nearly always wrong but if that were true, Peter Schiff would not be in the 1%. Indeed, other contrarians like Mike Maloney, Gerald Celente and people who take their advice have also done well by positioning themselves in the right place before each economic crash.

It is sad, and a touch ironic, that these contrarians come in for so much flak from the very people they are trying to help.

Most investors expect a rate increase next month. The markets continue to trade around their all-time highs.

Peter Schiff is rich for the same reason almost any investor is rich. He's rich because he is lucky, not because he has any particularly accurate insight into the markets.

johnp001

Suryavarman wrote: »

It's bunkum because it's wrong. It doesn't give an accurate description of the business cycle. It rejects the concept of empiricism because it is more a political ideology than an attempt at science.



Most investors expect a rate increase next month. The markets continue to trade around their all-time highs.

Peter Schiff is rich for the same reason almost any investor is rich. He's rich because he is lucky, not because he has any particularly accurate insight into the markets.

I expect a rate increase next month too but could you clarify in what way Austrian economics rejects the concept of empiricism?

alastair

Bunkum prognostication: http://www.cnbc.com/2015/12/20/the-peter-meter-assessing-schiffs-predictions.html

realitykeeper

Suryavarman wrote: »

Peter Schiff is rich for the same reason almost any investor is rich. He's rich because he is lucky, not because he has any particularly accurate insight into the markets.

To become wealthy on the markets you need to know what you are doing. If you rely on luck, you will consistently lose.

Permabear

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Brian?

Permabear wrote: »

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I don't know either way. How accurate are his predictions? An approximate hit/miss rate.

johnp001

There are examples of Peter Schiff and/or Austrian economics based predictions for the market direction being wrong in a particular time-frame and a particular set of circumstances and examples where those predictions were right (again, relative to time and circumstances).
I am really interested to hear people's opinions on what these theories predict when applied to the current situation of vast money printing coupled with deflation and low money velocity and what the probable impacts are for the global economy.

Suryavarman

johnp001 wrote: »

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I'm not entirely sure how this needs be clarified. Austrian economists don't test their theories empirically, preferring instead to use praxeology.

realitykeeper wrote: »

To become wealthy on the markets you need to know what you are doing. If you rely on luck, you will consistently lose.

You really don't need to know what you're doing. There's a reason the vast majority of investors underperform the market. It's because luck is far more important than skill when it comes to picking stocks.

Permabear wrote: »

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Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe. Austrian "economics" might not fit that definition but mainstream economics most definitely does.

Behavioural economics most definitely does use empirical analysis. To say it doesn't suggests you know very little about behavioural economics.

Just because Austrian economics enjoys some popularity among libertarians doesn't mean it has any usefulness. Any aspect of economic activity that Austrians economics tries to describe can be better and more accurately described by other economic theories.

johnp001 wrote: »

There are examples of Peter Schiff and/or Austrian economics based predictions for the market direction being wrong in a particular time-frame and a particular set of circumstances and examples where those predictions were right (again, relative to time and circumstances).
I am really interested to hear people's opinions on what these theories predict when applied to the current situation of vast money printing coupled with deflation and low money velocity and what the probable impacts are for the global economy.

Broken clocks are correct twice a day. Believers of Austrian "economics" may make accurate predictions occasionally but Austrian "economics" fails to accurately describe what actually happens or has happened in the past.