Schiff Report - 10/23/2009

[Kevin_Kennedy]

[youtube]WXABN4NGUcI[/youtube]

 

[Neubarth]

I am beginning to think that Schiff is crazy. He appears to know nothing about international trade.

 

[Kevin_Kennedy]

I am beginning to think that Schiff is crazy. He appears to know nothing about international trade.

What's your specific critique?

 

[Paulie]

His only problem is that he doesn't seem to understand that other nations are going to debase their currencies to keep ours propped up.

He thinks eventually they'll stop doing it, but those countries know what will happen to them if they do. I think we've made that example pretty clear in the last 10 years or so.

You don't play ball, you eat bombs.

The Dollar will always be the world's hegemonic currency until someone can either legitimately challenge us militarily, or the international powers that be decide to go with a one world currency.

You can't just go with "get out of the dollar". You have to still play the FOREX game which is incredibly difficult for the average investor. I like the yuan, personally. I like the Swiss Franc.

I mean, he picked good international currencies to go with back in '08, but he just didn't anticipate that they would all debase almost in lockstep with us to keep us propped up. Because if they hadn't done so, he'd have actually been right that the Dollar would collapse.

International trade needs a currency that has the military strength to keep it backed, and right now we're the only game in town on that front. China sure does seem to be someone that's becoming a player though.

If you're going to pick a foreign currency, or even foreign equities...especially for a buy and hold long term investment, pick China.

 

[Toro]

There is only so far that the dollar can fall against other fiat currencies before it begins to seriously damage the rest of the world. That's why the dollar will not collapse against other currencies.

 

[Neubarth]

Paulie and Toro, you two have spoken well for me. I need not add to your comments.

 

[Paulie]

There is only so far that the dollar can fall against other fiat currencies before it begins to seriously damage the rest of the world. That's why the dollar will not collapse against other currencies.

Unless or until another currency became the world's reserve currency, correct?

So either someone invades us, replaces our regime, and installs a new currency (China, for example)...

Or the world powers-that-be decide to go with one currency for the whole world.

Is this the correct way of looking at it?

 

[Toro]

There is only so far that the dollar can fall against other fiat currencies before it begins to seriously damage the rest of the world. That's why the dollar will not collapse against other currencies.

Unless or until another currency became the world's reserve currency, correct?

So either someone invades us, replaces our regime, and installs a new currency (China, for example)...

Or the world powers-that-be decide to go with one currency for the whole world.

Is this the correct way of looking at it?

Perhaps, but I'm just looking at the economics.

If the euro fell to say, $3, American products would become so cheap around the world, it would put Europe out of business, and European manufacturers and other companies would relocate to the United States to take advantage of the cheap currency.

We aren't talking about Argentina here. If Argentina collapses, who cares? Is Daimler really going to start pulling its manufacturing out of the Rhein and relocate to the suburbs of Buenos Aires if the Argentine currency collapses? No. But they will relocate to Kentucky or Alabama.

We're talking about the largest, most dynamic economy on the planet, with strong property and contract laws and a strong judiciary. Capital will flow into America if the dollar gets too cheap.

That's what guys like Schiff fail to understand, amongst other things.