In an interview last week, Peter Schiff (an economic commentator, stock broker, and author of Crash Proof: How to Profit From the Coming Economic Collapse who famously predicted the current economic crisis), articulated my worst fears.  According to Schiff, President Obama is correct to say that, if the Pig Bill does not pass, the economy will, indeed, be terrible.  But if the Pig Bill does pass (the most likely scenario), it will be “an unmitigated disaster.” 

The video below shows Schiff explaining his forecast, which is brilliantly based on a “perfect storm” of sorts.  In essence, Schiff says that our economy is and was a “phony economy” because it was based on borrowing and spending.  The bubble of excess that resulted has now burst, but the government, by intervening with all these bailouts, has now taken over the borrowing and spending. 

The current system (rapid government intervention and ownership of the private sector) is doomed to burst as well because the U.S. Dollar will crash, taking on U.S. debt will fall out of favor, the bond markets will fail, and we will enter a period of hyperinflation.  In other words, not only are we heading down the road to becoming France (we may already be there), we’re going full steam ahead towards becoming a South American country like Argentina.

Instead, says Schiff, our government should be aggressively raising interest rates and allowing a deep recession to proceed, unchecked, so that the excesses of our phony economy are purged and a more viable economy replaces it. 

Watch this video, and be prepared for your skin to curl.    

 

I cannot believe that our government is stupid enough to pass this Pig Bill.  I fear, however, that Peter Schiff’s warnings will go unheard.  I can only hope that 2010 will bring a 1994-like Republican revolution, and that 2012 will bring a MItt Romney or Sarah Palin-like, principled conservative to the White House who will aggressively cut taxes and roll back Obama’s enormous growth of government. 

After all, government is the problem that got us into this mess.  Less government, not more, is the answer.

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