Home Forums Hunting & Shooting Hunter's Campfire Excerpt from _The Real Crash_ by Peter Schiff

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Excerpt from the excerpt:
Government can slow the fall of housing prices, and so our politicians make sure that it does. For example, Obama has used TARP to keep people in their homes�often only delaying foreclosure and thus making homeowners even poorer. Fannie Mae and Freddie Mac ramped up their subsidies, thus keeping demand for homes higher than it would be. The Federal Housing Authority is subsidizing mortgages to the point that people are once again putting down zero percent�this applies upward pressure to home prices,slowing their fall.

But falling housing prices are part of the cure. Inflated prices are part of the disease. It�s as if a doctor saw a patient had an inflated count of white blood cells�the cells that respond to and fight infections�and so he decided to remove the white blood cells.

Along the same lines, government can keep interest rates low, and so it does. But low interest rates contributed to the disease. High interest rates are part of the cure that we need. Again, government makes sure that we never get the cure.

Falling prices and wages are another cure the government won�t let us swallow (more on this in chapter 3). Ask an economics writer today, and �deflationary death spiral� is the biggest threat facing our economy today. This is bogus. In the Depression, falling prices were a rare boon. They were a saving grace for anyone who lost his job and was spending down savings.

Today, Washington does everything it can to prevent falling prices. Mostly, this means (1) Keynesian stimulus to drive up demand for goods and services, and (2) inflating the money supply.

Falling prices would be a cure, and so government pumps up prices.

In other words, the market is trying to cure the economy, and the government won�t let it. The government�s �cure� for the market�s cure is more imaginary wealth.

I like this guy. He agrees with me. mike762 will like him too, and Penguin, I think, will like some of what he has to say about manufacturing. denton probably won't appreciate his failure to be terrified by the prospect of deflation.

Or so I think.