For the first time in a long time, Connecticut voters will actually have a real choice when voting for their U.S. Senator. This past week, economist and financial advisor Peter Schiff announced his Republican candidacy for the Connecticut senate seat currently held by Democrat Chris Dodd. Barring any manipulations from the Republican establishment, Schiff’s entry into the race guarantees that important issues which are often ignored by establishment candidates will be addressed. Once addressed, Connecticut voters will come to the conclusion that Schiff is the only candidate capable of cleaning up the financial mess produced during Dodd’s 5 terms in the Senate.
“What America has succeeded in creating is not an economy impervious to shocks, but merely one which enables their consequences to be postponed to a later date.” – Peter Schiff
No politician of either party will admit this, but Peter Schiff is absolutely right. What has been built during Dodd’s close to thirty years in the Senate is an economic system that is prone to booms and busts due mostly to the easy money policies of the Federal Reserve. So, we have a boom in the dot com sector fueled by low interest rates and then the bottom falls out. What does the Fed do? It lowers rates to one percent to stimulate the economy. This in turn causes the next boom in housing. What does the Fed do again? You got it – lower rates practically to zero. Once recessions set in, the politicians turn to the central bank to pump in more money in to ease the pain. This approach has worked so far to delay the inevitable, but in the end all we will have is a huge national debt and a calamitous financial meltdown the proportions of which have never been seen in modern history.
It is issues like this that are ignored by the establishment candidates in our political contests. Another issue that Schiff is focused on, which the Washington establishment is ignoring, is the current reserve crisis at the Federal Housing Administration. Reserves at the agency have fallen to $30 billion while the total amount of mortgage debt insured by the agency has risen to over $1 trillion. Schiff asks correctly, “Didn’t we learn anything?” from the most recent crisis. How will the agency insure so much debt with so little reserves? Again, as long as the printing presses are rolling at the Fed, official Washington will sweep this bad news under the rug. But, Schiff has rightly pointed out that the day of reckoning will come when the dollar has lost so much of its value that foreigners will no longer buy our debt and our standard of living will be in the dumper.
Article comments
— go to most recent comments1 - Clavos
Mr. Schiff sounds like an excellent candidate for the times, Kenn.
I hope he wins.
2 - handyguy
If it weren't for the work of the Federal Reserve during the last 12 months, the Great Recession might have been much worse. Rhetoric is cheap. Results are more meaningful. The obsession of Paultards with slamming the Fed at every opportunity is quite ludicrous.
I'm no fan of Chris Dodd, but the association of Schiff with Ron Paul should be enough for the residents of Connecticut to look elsewhere for Dodd's replacement.
3 - Dave Nalle
I wish Schiff would take clear positions on some issues, hell any issues, other than the economy. I think he's a very appealing candidate on that issue, but he has no track record and hasn't issued any position statements on anything else.
Dave
4 - wuastwais
handyguy, you are right the fed has made it better than it would have been.
After clinton's tech stock bubble burst in 2001, the fed stepped in with cheap money and with the help of congress blew up the housing bubble to replace it. This is why the 2001 recession is the only one on record where new housing starts did not decline.
Bernanke is simply doing what greenspan did in 2001, only on a larger scale. So we will feel less pain until we are faced with the next crash.
If "to-big-to-fail" companies would have went under and the fed had raised interest rates, we would have had some pain in the short term.
Instead we are going prop up failure, and pass the cost on to all dollar holders by devaluing the dollar through inflation.
The boom is where the destruction is done to the economy, the recession is the cure that liquidates malinvestment made during the boom. Failure to allow this to happen is what made the great depression great.
Also, do you know who owns the private federal reserve bank?
5 - Ruvy
The big issue facing Americans (whether they want to admit this or not) is the issue of fiscal responsibility. Most other issues relating to the economy and to national security all are tied in intricately to fiscal responsibility. That is not a pleasant truth, but it is the truth. Almost all other issues, other than those relating to individual liberty, are all tied in one way to fiscal responsibility.
Americans got rid of one nasty cross, racism, by being willing to elect a man perceived as a black man. But if the man they elected is not willing to try to figure out how to lead his nation to fiscal responsibility, Americans will be carrying an even nastier cross on their backs.
6 - Dave Nalle
Bernanke is simply doing what greenspan did in 2001, only on a larger scale. So we will feel less pain until we are faced with the next crash.
Perhaps a policy which prevented further crashes would be somewhat more desirable.
Also, do you know who owns the private federal reserve bank?
Wait, wait. Let me guess. Is it the evil Joos?
Dave
7 - dx
handyguy,
the FEDS caused this mess. Schiff and Ron Paul see the feds for what they are: A private banking cartel that is illegal under the Constitution. This patchup job the Feds did for the past 12 months will only delay the inevitable: the crash of the dollar and U.S. economy.
8 - Ruvy
do you know who owns the private federal reserve bank?
Wait, wait. Let me guess. Is it the evil Joos?
Actually, as an accredited representative of the evil joos (check out www.eviljoos.com for the body parts of IDF soldiers wholesale!), I am authorized to tell you all that the evil joos do not own the US Federal Reserve. It's the evil WASPS who own the US Federal Reserve and stick stupid ambitious joos up as managers, massaging their egos like phallic organs so that they THINK they own the Federal Reserve.
9 - Dave Nalle
dx, I'd love to see the part of the constitution which outlaws "private banking cartels" or any kind of private business operation.
Dave
10 - Kenn Jacobine
Dave,
"I wish Schiff would take clear positions on some issues, hell any issues, other than the economy."
Schiff is a libertarian, thus it is easy to know almost all of his position without him stating them. That is the beauty of libertarians - we are consistent. I am sure he is pro-choice, anti-drug war, for a non-interventionist foreign policy, pro gun rights, etc....
11 - zingzing
"That is the beauty of libertarians - we are consistent."
that had better not be true.
12 - Baronius
Rob Simmons has a much better chance of beating Chris Dodd. His record on defense may not win him any libertarian friends, but on social and fiscal issues they should find him acceptable. He's also got a boatload of government experience, and he knows how to run a campaign.
But it all comes down to whether or not the voters of Connecticut can walk away from Dodd.
13 - Dave Nalle
Schiff is a libertarian, thus it is easy to know almost all of his position without him stating them. That is the beauty of libertarians - we are consistent. I am sure he is pro-choice, anti-drug war, for a non-interventionist foreign policy, pro gun rights, etc....
Sorry, Kenn. As a long time Libertarian and libertarian, I know that not to be true. Not only do LP members disagree on many issues, including foreign policy and aborition, but there are many who CALL themselves libertarians who you and I would not consider libertarians, including the venerable Dr. Ron Paul whose positions on many social issues are absolutely unlibertarian.
Dave
14 - waustwais
Dave Nalle,
First off the federal reserve is owned by international banking interests.
Second, ron paul claims to be paleo-conservative, defending the constitution as a principaled stand. Personally, i have little faith in the document, as it cannot defend itself, but i understand that having a bill of rights at least allows us to defend ourselves somewhat.
15 - Christian
Dave Nalle,
Article 1 Section 10 of the Constitution requires only gold and silver coin legal tender in payment of debts. That does NOT authorize a private central bank to create fiat money out of thin air.
Schiff has taken a stance on the issues that are most important to America right now: fixing the economy, downsizing government, and cutting foreign spending. He wants to bring troops home from Afghanistan.
handguy, the Federal Reserve caused the crises. And the recession has not ended. Rather, it WILL turn into a depression because of the combined actions of the Fed and the government. The stock bubble that the stimulus money created has not brought back the millions of job losses. You really should educate yourself on the damage the Federal Reserve has done to this country. Read "End the Fed" by Ron Paul and "Creature from Jekyll Island" by G. Edward Griffin. Also the second half of the film "Freedom to Fascism" by Aaron Russo will help educate you.
handguy,
By associating with someone who has actively and consistently fought for liberty, limited government, and sound money (Ron Paul), the residents of Connecticut should look somewhere else for Dodd's replacement??
Wuastwais,
The Fed is not "owned" by anyone. Rather, it was created by the Rockefellers, Rothschilds, Morgans, Chases and Warburgs and is still controlled by elite bankers.
Baronius,
So Simmons has a boatload of government experience ruining the country, and for that he has a better chance of beating Schiff? Schiff's advantage is that he has NO experience ruining the country.
Schiff speaks the truth and has a stronger understanding of economics than all senators combined. Connecticut needs to elect him to the Senate to educate the other Senators that they are the problem. You guys should watch Peter's accurate history of predictions and read his book "Crash Proof". Peter is for the people. He wants to get in the Senate, fix the mess, then get out. He is NOT a self-serving politician.
16 - bgodley
handyguy,
I have read quite a bit of the public relations statements that circulate regarding the Fed and their actions taken to reduce the effects of recession. Let's try and analyze your point and see exactly how these financial titans have saved us from ruin.
Let's see, well....
Maybe they produced a lot... No, actually they don't produce anything. Maybe they improved manufacturing or created new technology... No, not that. Ok, they improved business models or helped with resource allocation. ...uh, no again. Well, maybe they got the government to be more financially responsible... ha, no, definitely not that.
Geez.. What did these guys do? ... Let's see, well, they provided banks and other institutions with liquidity... hmmm, liquidity, that sounds important, how did they do that? Well they either gave out a bunch of money or bought bad stuff for high prices. Well, did they have lots of money in the basement behind a door that is marked ONLY OPEN IN CASE OF EMERGENCY? Well, not exactly, no. So how do they hand out money especially to cover the governments high-rolling ways? If we analyze their balance sheet maybe we will get a clue.
They have been buying a lot of bad US assets from foreign interests, especially foreign central banks who have been buying them direct with a lot of the money. So how does the money come back to the states? The foreign banks make a deal and purchase Treasury bonds. This gives money to the govt and helps prop up bad US assets. Well, that doesn't sound bad. Yeah, but SOMEBODY must have paid the bill. Well that would be the US taxpayer. The citizens will eventually have to pay the govt debt back and in essence are propping up the increased spending, AND the buying up of toxic assets. You mean WE are actually paying for the whole mess. Not the Fed, not the banks, not the rich, not the executives of the bad institutions .... the bleepin' US citizen? Yup, their ingenious plan is basically to indebt every man, woman and child in this country? Yeah, but wait, the deal gets better. So how exactly did the Fed get the money to buy the toxic assets in the first place? Maybe they just printed it. Actually printing is so passe' in the computer age. They just added some zeroes in an account and there you are. So this private organization is in control of printing the money and not the government? Yes. But does printing or should I say digitizing money have any effect on an economy? You bet, it's called killing your currency and creating hyper inflation. More money, same goods - money buys less. More money, same or less amount of production - things cost more inflation. So who pays then for the printing of the money? the US citizen through higher inflation. The stuff we buy gets more expensive to cover the extra dollars in circulation. You mean the US taxpayer has to bail out the govt, bail out the toxic assets, AND cover the cost of printing the money. YUP.
So it appears that they are facilitating the bankruptcy of the country and are able to bail out bad companies and bad executives at the same time. But maybe your right. Maybe we shouldn't concern ourselves.
.. after all they saved us from a recession, right?
17 - pablo
Excellent post bgodley
18 - waustwais
Christian,
If you like "controlled", better than "owned". I think controlled sounds more like the federal reserve is the victim, where owned is closer to true.
19 - roger nowosielski
I happen to agree with bgodley's assessment of the merits of the Fed.
20 - Clavos
I concur, Pablo.
21 - Kenn Jacobine
Dave,
I am talking about little "l" libertarians. The LP is a mess and that is why I am no longer a member.
Ron Paul is a libertarian - his social issues stands are consistent with libertarianism.
Christian - You are absolutely right. Experience in government is the reason Simmons shouldn't win. How is trading a Budweiser for a Bud Light any better - you still have bad beer. That is what we do in this country is trade a Dem for a Rep and then a Rep for a Dem. Both are bad candidates.
22 - Baronius
Bgodley is a little quick to write off the benefits of liquidity, as well as to use the term "hyperinflation", but for this particular crisis the Fed's actions were not helpful.
23 - handyguy
To Roger and Clavos, who chimed right in with the wingnuts concerning the Fed:
I am simply aghast.
Not that you have to agree with me, but to simply sign off on extremist, reductionist nonsense is something you're both too smart for.
24 - roger nowosielski
Handy,
Speaking for myself, I'm not in the habit trying to ascertain first who the speaker is. I'm dealing with the message. And yes, I don't have a great deal of confidence in the merits of the Federal Reserve Bank. In fact, I'm very skeptical of the history and the operations of this institution. But aside from that, really, I responded to the content, the message. And yes, it seemed more right-headed to me than not.
And yes, for all the appearances to the contrary, trying to do good and fix our problems, I'm not all that certain that the Fed isn't much more implicated in the reign of corruption that characterizes our financial institutions than meets the eye.
But it sure talks a good game.
25 - handyguy
Roger, most economists would disagree with you, strictly in pragmatic, results-based terms, concerning the last 12 months.
Not that the Fed is without flaws, or that Bernanke is a deity. But he has made some bold moves in this crisis that a great many people, who know more about the economy than you or I, believe saved us from a depression, a complete collapse, a catastrophe.
Those who are ideologically opposed to the very existence of the Fed will of course disagree. I would never have guessed that you were a member of that generally very far-right group.