C.W.

Bruce, You and I are defenders of reason, laissez faire capitalism, students of Austrian economics, and great admirers of Ayn Rand, aren't we? Yet, that doesn't give either of us a free pass, does it? No, and it shouldn't. I am afraid that some have read his book and looked at all the things they like and ignored the rest. I am not being critical of that attitude. We all want to find people out in the world that we can like and support. Schiff's targets are certainly our targets. My complaints are that his arguments concerning the U.S. economy are often unsupported leaps. Maybe he feels that he needs to make these big claims to gain attention. I, as a defender of reason, etc., want my arguments to be as sound as I can make them. I am sure that is true of all on this forum.

The question isn't if the U.S. has anything that is best in the world. Schiff argues that we have become a service economy, no longer manufacture, and thus have nothing to offer the world. That is chapter one of his book. His statements are pretty clear on that point. So are the little stories he offered. My contention is that we are competitive in many areas. We may be the best in many of those areas, but I would leave that consideration to experts in those areas. I am saying that the actual export figures undercut his stance. For example, from the U.S. Export Fact Sheet of the International Trade Administration: or . I will allow that the businessman buying millions of dollars of machinery is going to buy the best at the price he can afford. I will accept his judgment. The U.S. is nearly every nation's biggest trading partner. There is a reason for that. It is a valid reason.

I intend to look at his other writings. Your comment about my reading his book, however, while probably well intended, didn't come off too nicely. If you go to the blog listed below, you will see that I looked at his book (the original) closely. I will have the chance to see his revised edition soon.

Andrew, The economics of von Mises, Bernstein, Salsman, Anderson, Hazlitt, et al., do not have a use for the concept of “macro economics”. It is a term invented to try and avoid the problems that Kaynes, Roosevelt, and the liberals encountered with economics. Probably, it is an anti-concept. Also, the issues we are discussing concerning money have to do with monetary policy, not the federal budget per se. More importantly, please, just a little respect for your fellow forum participants. My comments concerning Schiff are not meant to disparage his political ambitions. From what I can tell, he would be an improvement, especially considering the current representation from CN. I think that it is important that we, Objectivists, have a clear understanding of the limitations of Schiff’s views.

Eiuol, You and others have stated repeated ly that Schiff knows what capitalism is. Admittedly, I have not looked at all of his writings or videos. I did read his book closely and reviewed it. The book contained no positive statement about capitalism. In it he did say that money expansion was bad, and gave a backhanded swipe at regulation, but nothing really positive about capitalism. The index contains no reference to capitalism. Why do you say that he knows it? Regarding “less stuff”, my complaint is his emphasis. I can’t tell if he realizes that capitalism will produce more or not. Schiff doesn’t say. An advocate of capitalism would say that the initial purchase of less stuff would lead to a better standard of living. Capitalism is good for you. Schiff, being quiet, leaves people in the position of wondering if Schiff is advocating sacrifice like Obama. I am sorry, Eiuol, your not being able to think of anything is not an argument. That foreigners and U.S. citizens find plenty to buy from the U.S. is all the evidence necessary. A currencies worth, as with anything in an economy, is what people are willing to trade for it. Gold as a currency is most important because it cannot be manipulated in the long run. It makes people independent of the government. The dollar is not a “pretend” value because Kyle could buy lunch (a good one I hope) with it. The lunch was real. The problem with a fiat currency is not its medium of exchange aspect, but its failure as a store of value. You can still buy some pretty good stuff with the dollar, just not as much as you used to, and less tomorrow.

Brian, I can show you at least a couple different Schiff scenarios for China to begin dumping dollars. I don’t want to get into what China “realizes” today or may "realize" tomorrow, but I have't seen any evidence that they are either as ignorant, gullible, or stupid as that argument requires. Are you aware that China’s surpluses are China’s policy, not ours? For example: http://www.voxeu.org/index.php?q=node/1150 The 2007 Euro – China deficit was 55B Euros (same source). Not as big as our is, but significant. The Euro is also a manipulated currency.

To the sense of your comment, I agree. I agree wholeheartedly. I am not sure that Schiff means that, however. If you are right, good. I think that the dollar will fall, as it has fallen. I agree with you generally, although what I find crippling is not the single year deficit, but 30 years worth. It is hanging over us. Even if we could get the Fed to stop the money pump today, we would have that accumulation still hanging there. But Schiff does not say that the dollar is going to fall (Sometimes he does become unclear what he really means, however. He once said what sounded like the “crash” would be slow.). The word Schiff uses is "Crash". He says "dump". He does not mean that the dollar will annually drop 10%, 15%, or even 25% against other currencies. He says it will loose all value. The sky will fall. The actions that may be taken in China and Japan will, I am sure, be responses to the dollar's troubles, and Obama's insanity. Neither set of leaders, however, is going to cause an additional mess in their own economies, and undercut their reserves by "dumping" the dollar and causing a "crash". Schiff claims they will. I will allow that something out there could cause what no one really wants, a real "crash". Just like our recent panic, things can go crosswise fast and badly in our over regulated world, and none of the leaders understands economics. But, that isn't Schiff’s claim either.

I didn’t realize how much of a following Schiff has here. Do any of you follow the Objectivist economists as closely? John Lewis recently published a dire warning, which is a much greater disaster coming upon us that what Schiff’s “crash”. My "completely misunderstood" response to Schiff is based upon Schiff's statements. Either he doesn't speak or write well, or he does not really understand capitalism. (Schiff is often not clear. Between his book and the few videos I have seen, he has called inflation at least four different things.) A little decorum would be appreciated. Yes, today's theorists claim that an economy is consumption-driven. Please, sir, understand that just because our opponents say that does not make it so. In order for it to be consumed it must be produced. Any attempt to do the opposite (which can not actually be done) results in lowered production. Freedom, actual capitalism is a production powerhouse. To imply, as Schiff does, that returning to a rational, free, capitalistic system is going to result in deprivation or less stuff is to have things reversed. Capitalism results in a higher standard of living. In case you hadn't noticed, there is no currency in the world on the gold standard. All currencies are fiat currencies. All currencies are worthless. This is another of Schiff's claims: that the U.S. economy produces nothing of value; that the U.S. economy is a zero. Schiff presents no proof. (I am just now getting my hands on his revised book.) Yes, we have gotten free goods for decades. No, it isn't good for us. But do not ignore that it is a trade deficit. Last year foreigners bought $1.84T of goods and services from the U.S. That was well short of what we bought, granted. But it does not allow you or Schiff to then claim that the U.S. does not produce. The foreign buyers are not irrational idiots. They are spending their money for the best products they can find in the world, just as you would. We are a very productive society. Our government has done lots of disgraceful things, but most Americans are very productive. As far as the borrowing goes. Foreigners have about $11T. Our federal debt is about $11T. I don't have the figures as to what debt they have, but most of the debt is here, in the U.S. (Last I checked, the Fed. had about $800B.) The dollar, compared to other countries, should be lower than it is. But it is not "worthless". I certainly hope that, most readers of this forum realize that the dollar is not worthless. It is certainly worth less.

I hope that my thoughts on Schiff's book qualify as "thoughtful". I certainly didn't think much of it. Compared to what we normally hear, Schiff’s line is good. He falls down at the end of the first video interview though when he says, “we don’t need to buy more stuff.” It sounds as if he doesn’t realize that we live in capitalism, and unfettered, capitalism will allow us to buy lots of stuff. Lots! He sounds as if he thinks that we will need to suffer a lot to get rid of the mess we are in. The amazing thing about capitalism in the U.S. is that we can solve this mess quickly, once our creative ability is turned loose. The national debt, the trade deficit, the problems with medicine and retirement incomes would not be problems if we can be free to produce. Does Schiff know this? Another problem with Schiff is his insistence that foreigners, he most often mentions China, are going to dump dollars, because the dollar is worthless. As this expectation of his fails to occur, he is going to lose traction. He will be the man who shouted the sky is going to fall, and it didn’t. I don’t think that we want to be very closely connected with his claims. The consequences of our 30 years of exporting made up money will be bad enough without having to fight reactions to Schiff’s claims as well. After going through his book with a fine toothcomb and finding very little good reasoning or economics, I can’t be very excited about Schiff.