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  • Peter Schiff: After two years of rally, the deluge of hyperinflation

    Posted on May 21st, 2009 Peter Tjernström No comments

    All professional investors are asking themselves the same question right now: “Is the recent surge on the stock markets world wide just a bear market rally or does it mark the end of the financial crisis?”.

    According to Peter Schiff, the financial crisis is far from over. In fact, the worst is yet to come, but first everyone will party on President Obama’s stimulus for two years.

    Peter Schiff, President & Chief Global Strategist of Euro Pacific Capital, is according to himself one of the few non-biased investment advisors to have correctly called the current bear market in U.S. dollar denominated assets before it began.

    Peter Schiff

    Peter Schiff

    As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned in the U.S. and world wide. His best selling book, “Crash Proof: How to Profit from the Coming Economic Collapse”, was published by Wiley & Sons in February of 2007.

    It shall also be said that it seems like Mr Schiff has been unable to turn these predictions into investment returns for his clients. Allegedly, his strategy also caused huge losses in 2008. It is difficult to understand why he, if certain of the crash, didn’t centre his strategy around shorting U.S. stocks.

    In a recently published article, Mr Schiff argues that the Bernanke/Obama massive stimulus will buy us a two year rush before the hangover sets in. According to him, we were already suffering from the doping injected by Greenspan/Bush in 2001, which “prevented a much needed recession and bought us seven years of artificial growth”. The multi-trillion dollar bill was due 2008.

    He argues that inflation can sometimes look like growth but “it is no more capable of creating wealth than a hall of mirrors is capable of creating people.”

    I do agree with him that the massive stimulus is a punishment for those holding cash and that these people need to seek more inflation-secure assets, such as common stock. As long as money is virtually free, it is burning in the pocket and asset market bubbles are inevitable.

    In Swedish context, I have noticed few critical comments about the very-low-interest-rate-immense-stimulus strategy. Two articles (one recent) in SvD denote exceptions.

    But if Mr Schiff is right about all this, even about the 2 years, you as an investor have no choice but to follow the trend and invest in the stock market or even in property. You just have to know when to exit.

    Mr Schiff’s article in full.

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    2 responses to “Peter Schiff: After two years of rally, the deluge of hyperinflation”

    1. Nice writing. You are on my RSS reader now so I can read more from you down the road.

      Allen Taylor

    2. Peter Tjernström

      Hi Allen,

      Thanks for commenting and for the kind words.