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Thursday, May 14, 2009

We don't need stimulus!

Peter Schiff warned that stimulus spending is misguided and will drive the economy deeper into debt.

"What we should do is let the recession unfold and allow businesses to fail and asset prices to fall," he said during his keynote speech to the New Brunswick Securities Commission Fullsail Summit.

"We don't need more stimulus," he said. "We need to come down from this artificial high and rebuild our economy. And that isn't something that can be combated with monetary fiscal policy."

"It means allowing the recession," he added. "That is the cure and we simply need to allow it to run its course" . . . .

Schiff has been in the limelight since his shocking predictions of a crash in the housing and stock markets - laid out in his 2007 book Crash Proof: How to Profit from the Coming Economic Collapse - came true. . . .

He cautioned that the cash for government stimulus projects will likely come from governments printing more money, which means that even if taxes aren't hiked taxpayers will pay because of inflation and less valuable paychecks. . . .

In October 2007, during a TV interview with Fox Business, Schiff forecasted the global economic meltdown and that the Dow Jones Industrial Average would fall below 10,000 points.

"The U.S. economy was headed for a major crash because our economic growth over the last seven or eight years has been phony," he said.

"Our growth has been a function of how much we've borrowed and spent, not how much we've saved and produced."

The executive's guidance for investors is to include precious metals in their accounts - gold, silver and other "inflation hedges-" and to rethink stock portfolios.

"The idea is to sell your U.S. stocks and replicate a portfolio of diversified stocks outside the United States," Schiff said.

-- from "Allow the recession to run its course / Peter Schiff warns that stimulus spending is misguided and will drive the economy deeper into debt" by Brett Bundale at http://nbbusinessjournal.canadaeast.com/journal/article/665386 (HT: http://lewrockwell.com/).

A classic, Austrian-economic prescription for what ails the economy from one of the few people who predicted the bust and meltdown.


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