The Problem With Peter Schiff, and, How to Think for Yourself.

I wish I didn't have to do this because 80% of what I know about economics I learned from Peter Schiff, but it is time to excommunicate him from our freedom loving community.

Peter Schiff is brilliant at explaining basic economics. This is not the keynesian or marxist lies you get from the universities, main stream media or federal reserve open committee releases. It is good old fashioned capitalist, free market Austrian school economics.

For some background, as a scientist I know how to work numbers and am very good at finding anomalies. I also followed politics very closely since 16 years of age. By 2004 it was already very obvious to me the housing market was completely out of control. I knew from the 2000 census that the household income in my county was $46,000 a year (not per capita, per household) but home prices were approaching $500,000 by the end of 2005. I remembered at the time that not too long ago a run of the mill San Fernando Valley house was $150,000. What the hell was happening?

With people making $46,000 a year, $150,000 for a house makes sense. $500,000 is completely absurd. There are historical ratios on what a healthy home market looks likes, ie home prices at 2.5 or maybe 3 times income, here it stood at over 10 and rising. Another way to state the same concept is the difference between what people earned and what they needed to earn to afford these expensive houses was $74,000! The difference was larger than the income itself! In other words in order to buy a house (safely) at half a million dollars you should be making at least $120,000 a year.

This all assumes a normal lending market. The mortgage industry is not rocket surgery. 20% down payment, job, credit score. Done, Right? With these standards the ratio stays healthy. Anyway, the purpose of this article is not to be a retrospective of what caused the bubble and why bailouts have nothing to do with capitalism because they reward criminals and punish honest people.

A love affair begins. While the real estate bubble was very apparent to me there was only one response from the keynesians and marxists. All the professors, federal reserve chairs and media pundits could say was "higher". When it came to real estate they saw no bubble and laughed at and humiliated anyone who tried to explain there was a major problem and why. Then, on one of the shows I heard Peter Schiff and was so impressed with his thesis I became a fan for the next 15 years. This is verification I know how to think for myself. I didn't blindly follow some one as some kind of cult of personality, it was more of a "hey, that's exactly what I was saying!" moment. So I listened to his podcasts, bought his books, watched his interviews and read his articles (his articles on europac are my favorite).

Peter is very knowledgeable and most importantly doesn't care what people think of him. This isn't high school. The truth is much more important than being in some sort of club of deluded fools. One of the things the movie Idiocracy got so right was how the idiots always laughed at the smart people, while saying stupid things. The idiots always thought they were the smart ones in the room, oh, and also the "cool" ones. So there was Peter standing his ground surrounded by laughing hyenas who were totally clueless. He handled himself well and was very direct.

His knack for humor and analogies is legendary. He can boil down free market economics into concepts the average person can understand. He uses the "demonstrate the absurd by being absurd" tactic very well.

You know how much I liked Peter? When the nobel prize committee gave the economics award to the sweaty moron krugman I wrote to them in protest and provided examples of Peter's work. When he lost his Senate bid in the CT primary to the world wrestling federation I was devastated.

But now comes the importance of being able to think for yourself. I was stunned one day to hear that Peter Schiff did not understand supply side economics. He said every tax cut must be matched with an equal cut in spending. But this is not true. Every tax cut in history was followed by increases in revenues to the treasury. This is immediately anti intuitive but if you think about how important incentives are in economics it makes total sense. jimmy carter's economic disaster stems from the fact that his highest tax rate was 70%. People do not get out of bed in the morning if the split is 70 - 30 and their take is the 30 part. This was true when Coolidge reduced taxes, same with JFK, same with Reagan. All those tax cuts resulted in increased revenues to the treasury! Is government too big? Yes. Should it be cut? Yes. Should it be cut drastically? Yes. Does every tax cut need an exactly correlated matching decrease in spending? NO! When taxes are cut revenues increase. FACT. So it is definitely disappointing Peter fails to understand that. Strike one.

Around the 2016 election Peter's thoughts on immigration were also greatly flawed. I won't get into details but it was definitely strike two.

Bitcoin is strike three. Peter Schiff is wrong about Bitcoin.

Normally when some one gets three strikes they are out. I was willing to give Peter Schiff an exemption because of the great education he's been giving the world over the last 15 years. But there's a problem.

What he should have said was, "Look kids, I'm over 50 years old and I sell precious metals for a living. I'm not very good with technical gadgets and I do not understand Bitcoin. I never even tried to understand what it is or how it works. I did not take the time to do proper research. So just call it a hunch, I'm not feeling it. I don't want any and I don't think you should buy it either."

Had Peter just been genuine and stated the above and let it go I would not go through the trouble of writing this article and I'd still be on team Schiff. Unfortunately he insists on harping on the topic on a daily basis. Bitcoin is not a pyramid scheme or beanie babies, it is money. He is spreading misinformation about Bitcoin and it is unacceptable. You know some one gifted him Bitcoin and he lost his private key? Had he researched Bitcoin from first principles, if he knew what it was and how it worked he would not have lost his private key.

The day this article was posted, a Sunday, I saw a Bitcoin transaction for $206,000. The transaction fee was 0.003%, or $6 and change. You can do this 24 hours a day, seven days a week. And it is borderless, it is international. Things have got to be seriously misfiring in your brain if you can't see the power in that. Day after day he is saying things about Bitcoin that simply aren't true and it has reached a boiling point. What's worse is he knows his following is so huge he can actually affect Bitcoin's performance and thus future with his comments. He could have been gracious, but he decided to be nasty.

Peter Schiff is now a pariah in our Libertarian community. Time to unsubscribe, time to downvote, time to boycott. If you were thinking of opening an account with him, don't. If you have an account with him, close it. His anti Bitcoin campaign has reached such aggravating levels it is time to excommunicate him from our freedom loving community.

Goodbye Peter, nice knowing you.

Let this serve as an example to everybody how important it is to do your own research and not follow people blindly. Get information from multiple sources and run it through your own mental calculator to arrive at the truth. It is vital to know when relationships are good and when to cut ties. Look for an exposé regarding tone vays coming soon.

The silver lining to this goodbye will be a new series here called Bitcoin Myths. Of course the two main sources of misinformation will be Peter Schiff and Chris Duane but we will be searching everywhere to correct the record. We will be addressing every Bitcoin myth we can find, one by one. The lies must stop.