Thursday, November 27, 2008

Peter Schiff: The Real Thing

Here is investor and free-market economist Peter Schiff predicting exactly what is going on in our world now, up to two years before it happened -- and being laughed at (literally) for doing so. And laughed at by "experts" who are telling people to buy Merrill Lynch, Goldman Sachs, and Washington Mutual. (Hat tip to Terence Corcoran.)

This clip makes it pretty clear why he could be such an excellent prophet: he knows what will happen because he knows which effects go with which causes. In other words, he has the right theory. Can anyone think of a single, solitary Keynesian who saw all of this coming down the road?

One odd thought provoked by Schiff's now-famous exchange with Laffer: Schiff says that the soaring prices in speculative booms in the stock and housing markets are "not real wealth," and Laffer says "of course they are!" That of course is not per se an economic issue but a philosophical one. (The appearance of the word "real" is strong indicator of that!) Schiff, like the Austrians, thinks that what economics is about, at bottom, is real people making real goods and services. The others seem to have some sort of alternative view. What that view is, I'm not really sure, partly because the Austrian view seems so blindingly, intuitively obvious to me.

One of the effects of the other view, I suspect, is that it makes it possible to think that war is generally "good for the economy," even though it destroys real things and kills off the people who make them. If that is good for "the economy," then what the hell is an economy?
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