Chris, Peter Schiff would have been right, but a few external events aided the flailing US economy. Schiff could not have predicted the Bush tax cut, the Federal Reserve 1% Fed Funds rate, and little known: the Bank of Japan would print 35 trillion yen to buy $320 billion of US Treasuries in 2003, reflating the global economy and creating the US housing boom. If the BOJ had not done that, the housing bubble would have popped in 2003. Now, in spite of any efforts to reflate, the US consumer cannot service any more debt.

I think Peter Schiff is great, although I disagree with him on the commodities boom. Looking back at 2000/2001, when the US had a tiny capital spending led recession, but the US consumer kept spending. What happened is that the stock markets all over the world plunged, and so did commodities (except gold). This time, it will be even worse. Commodities and global stock markets will take a big hit as the world’s #1 consumer cuts back on spending. What can save the export countries is if they would stop relying on exports. China is a bubble waiting to pop.

Schiff is right, that we should keep our assets outside of US dollars.

In the 1980s, the dollar lost 50% against the yen, and in early 2000’s, the dollar lost 30% against the euro. I think the next leg down is soon. Timing these things is difficult, as I have been waiting for a recession for over a year, that is finally approaching. Even now, I am amazed that stock investors are not pricing in the upcoming recession. I am early too, like Schiff, but our logic still holds true and what he predicts is likely to pass. His arguments are solid.