Dave Ramsey and Peter Schiff are two men that I respect because they exist within a group of little known “truth tellers,” speaking out on the perils of personal debt and a troubled U.S. Economy. But there are two distinct differences in their perspectives concerning our U.S. Economy and monetary policy that I find puzzling. Scroll down to watch Schiff’s top interviews.
Also, listen to what Dave Ramsey said about Peter Schiff in January 2008.
In a recent radio show (early January 2008) Dave Ramsey was asked about the state of the American Economy. He joked and said that the media had predicted “36 out of the last 2 recessions”, implying the media was anxiously reporting any negative news in regards to the state of our Economy. Ramsey then went on to mention that GDP and Net Worth figures were steadily rising – and pointed to these facts as proof that talk of recession is nothing more than ‘fear mongering’.
Since Peter Schiff (whom accurately predicted the housing bubble meltdown) is currently predicting the outright collapse of the U.S. dollar and our Economy, I decided to purchase his latest book ‘Crash Proof – How to Profit from the Upcoming Economic Collapse’ to harvest Peter’s thoughts on this very subject – and he delivers.
The Net Worth argument
Peter wastes no time attacking the Net Worth argument (smacks it down in the preface) stating that booming optimism “relies heavily on the familiar but erroneous argument that declining savings rates are belied by high household net worth figures, which we know reflect inflated housing and paper asset values.”
In other words, Americans have record low amounts of Savings (lowest since 1933) – but that’s supposed to be alright because they bought a house three years ago, which has doubled in ‘market value’, so the acquired equity represents Net Worth. As we are currently witnessing, Net Worth based on home equity is dropping sharply. Likewise, paper asset values such as stocks and investments will also drop, because they are based on a maintained global market ‘faith based’ value of the U.S. Dollar. The Dollar is on the way down, along with any markets based on its value. Since most American’s ‘paper assets’ are based on investments backed in U.S. dollars, the Net Worth attached to these paper assets are likely to crash and burn.
How does Dave Ramsey not comprehend this?
The Gross Domestic Product argument
Moving on to the ‘GDP is growing – so the Economy is great’ argument. Peter invalidates this fantasy on page 2 of Chapter 1. The problem “is that most Americans, including most economists and investment advisers, have confused conspicuous consumption with legitimate wealth creation. Our impressive gross domestic product (GDP) growth, dominated as it is by consumption, is not a measure of how much wealth we have created but of how much we have destroyed.”
Our inspiring GDP is based on borrowing and consumption (bad), not savings and production (good). It sounds wonderful to be able to say that life is good because people are spending money. But when you analyze just beneath the surface there is a horrifying catalyst: The Savings of American Citizens are gone, personal and national debt is at an all time high, and the money was used to purchase garbage.
If this is how you measure success – count me out.
Gold investments and the Gold Standard
In regards to monetary policy Dave Ramsey is not a promoter of Gold. Although Dave doesn’t mention hard money or a Gold Standard, he does degrade the precious metal as a poor investment. In Dave’s latest book ‘The Total Money Makeover’ he had this to say about Gold: “The truth is that gold is a lousy investment with a long track record of mediocrity. The average rates of return tracked as far back as Napoleon are around 2 percent gain per year. In recent history, gold has a fifty-year track record of around 4.4 percent, about the same as inflation and just above savings accounts………..It is important to remember that gold is not used when economies fail. History shows that when an economy completely collapses, the first thing that appears is a black-market barter system…” (pg. 55).
Although I don’t doubt that Ramsey’s facts are accurate, his assessment of Gold is backed by his above mentioned confidence in the U.S. Economy. If the value of our U.S. Dollar were to crash – Gold would remain a viable investment (protecting an individual’s wealth by maintaining value on the global market).
This is where Peter and Dave’s philosophies differ.
If Peter Schiff turns out to be correct about a Dollar meltdown – Dave’s investment strategies would fail (they’re based largely on Wall Street Economics). Peter’s attraction with Gold is reinforced by his admiration of the American Economy and Government when our currency was on a Gold Standard. The Gold Standard restricts the creation of credit and helps to keep Government Spending under control. Peter understands this and believes that the next dominating ‘reserve currency’ will be backed by the luscious Gold.
Dave Ramsey is on the right track regarding most of what he says. He encourages all Americans to get 100% out of debt immediately. Ramsey accurately explains that obligations to debt prevent wealth building.
However, after retreating from the debt trap I highly recommend adopting Peter Schiff’s investment strategies (based on foreign markets and precious metals). I know it’s difficult but let’s try and look beyond Wall Street, or as Peter would say “Nations are not served by citizens who refuse to face the truth. Blind optimism, shrouded typically in patriotism, abounds and is going to lead us to disaster.”
Peter Schiff VS The Empire (Compilation)
Peter Schiff on CNBC 11-20-2008
Peter Schiff on ‘The Gold Market’
Peter Schiff June 26 2008 Fox Business News – Cavuto
Peter Schiff on the Glenn Beck Show – THE BAILOUT
Wiki Facts
David L. Ramsey III (b. September 3, 1960) is an American financial writer, radio and television host.
His syndicated radio program, The Dave Ramsey Show, is promoted with a tagline that it is about “Life and Money,” and is heard on over 300 radio stations throughout the United States and Canada, and also on XM and Sirius satellite radio. He has written over 14 books, three of which have been on the New York Times Best Seller list. His books and broadcasts often feature a Christian perspective that reflects Ramsey’s own religious beliefs.
Ramsey’s current company, The Lampo Group, is headquartered in Brentwood, Tennessee, and oversees three divisions geared toward financial counseling.
He has been featured on many media outlets including The Oprah Winfrey Show, 60 Minutes, and The Early Show on CBS. He has also recorded a pilot and six episodes of a reality show named The Dave Ramsey Project. He is the host of The Dave Ramsey Show at 8pm ET and repeated at 12am weekdays on the new Fox Business Network.
Peter Schiff is the president of Euro Pacific Capital Inc., a brokerage firm based in Darien, Connecticut. Schiff frequently appears as a guest on CNBC, Fox News, and Bloomberg Television and is often quoted in major financial publications. He is known for his extremely bearish views on the United States stock market, bond market, the US dollar, and the United States economy in general for which he has earned the nickname “Dr. Doom.” His father is tax protester Irwin Schiff.
Schiff wrote a book called “Crash Proof” (2007) and also hosts a live internet radio show called “Wall Street Unspun.”
Peter Schiff on subprime homes and lending standards
Irwin Schiff is the father of Peter and Andrew Schiff. Born in 1928, Irwin is a prominent member of the United States group which refers to itself as the tax honesty movement, and which has been referred to by the Internal Revenue Service and other government agencies as the tax protester movement. Schiff is known for writing and promoting literature that claims the United States income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple convictions for various federal tax crimes.
Schiff is serving a 13-plus year sentence for tax crimes at the Federal Correction Institution at Terre Haute, Indiana. His projected release date is 7 October 2016. Irwin Schiff is also the father of stockbroker Peter Schiff, who is credited as a co-author of Irwin Schiff’s 1985 book, “The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax“.
The following video is an interview with Irwin Schiff on Hannity and Colmes. It’s amazing how even Hannity, Mr. Liberty and limited government himself, berates Irwin for not paying his fair share. It never ceases to amaze me how even the most honorable of talk show hosts will manipulatively shake down a great man in order to foster America’s path to ruination and marxism to protect their own career. These talk show hosts are not the GREAT AMERICANS they claim to be. Great Americans are the ones who stand up for truth, even when it puts their lives and wealth in harms way.
The same Sean Hannity who takes up for Big Government (in the above video) is the same Sean Hannity who recently released his Top 10 Items for GOP Victory in November. Hannity had this to say:
3) The Candidate Pledges to support Tax CUTS, and fiscal responsibility:
a) The American people are NOT under taxed, Government Spends too much
b) The Candidate who Pledges to ELIMINATE and VOTE AGAINST ALL Earmarks
c) The Candidate pledges to BALANCE the budgetThat Government’s do not have the ability to solve all of our problems, and to take away all of our fears and concerns. We need their pledge that we will be the candidate that promotes Individual liberty, Capitalism, a strong national defense and will support policies that encourage such…
It is our fundamental belief that limited Government, and Greater individual responsibility will insure the continued prosperity and success for future generations.
We the people who believe in the words of Ronald Reagan, that we are “the best last hope for man on this earth,” “a shining city on a hill,” and that our best days are before us if our Government will simply trust the American people.
Well, there are those in life who do, and then there are those who talk…..
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