Peter Schiff - Austrian Scholars Conference

[guerilla]

This is an amazing speech by Peter Schiff at the Austrian Scholars Conference last week hosted at the Mises Institute in Auburn Alabama.

You could pretty much listen to this, knowing nothing about Austrian Economics, or even economics at all, and be so much smarter for it.

It's over an hour, but you won't regret listening.

The Lew Rockwell Show - 104. Peter Schiff: Why Was Anyone Surprised By the Crash?

If you have any interest in Austrian Economics (what I call rational economics), the Austrian Scholars Conference is really cool. They don't have the video out for the most recent one (yet), but you can find past years here, and some of the speakers are just, seriously, it's amazing.

Mises Audio/Video Browsing Austrian Scholars Conference 2009

These are my favorite segments from 2008 (video)

Thomas E. Woods

Martin Fridson

 

[guerilla]

If you don't listen to the whole thing, at least listen to this one segment

[ame=http://www.youtube.com/watch?v=2bLe9Sy4q8g]YouTube - Peter Schiff 3/13/09 - Speech at Austrian Scholars Conference [Part 5][/ame]

Priceless.

 

[erect]

Your thread didn't go unnoticed ... listened to all 3 earlier (the last guy sucked).

The Chinese need their money! Funny but true, most of us wouldn't consider stiffing creditors ... but a billion + Chinese and we all have no problem with it.

 

[Nikko]

Peter was right on about gold when I hooked up with him in '07, but he totally missed the boat on the BRICs. I took him up on his offshore bullion brokerage services, but had to fend him off when he was pressuring me to invest in India and China. I told him I was gonna wait until the global econ shook out some, then I would think about the BRICs. Had to brush his agents off, they were pretty insistent, but I'm glad I held out.

Come summer 2010, I'll be loading up on stuff like China waste reclamation, India bollywood asian distribution, and Brazil wireless and aerospace. The Russkies can go hang, I doubt they'll get their shit together by then.

 

[guerilla]

Your thread didn't go unnoticed ... listened to all 3 earlier (the last guy sucked).

The Chinese need their money! Funny but true, most of us wouldn't consider stiffing creditors ... but a billion + Chinese and we all have no problem with it.

I think if the Chinese get paid or not is irrelevant really. The game to watch is when they stop lending. That's going to signal a massive shift.

I shouldn't have posted Fridson I suppose. I'm such an econ geek now. Two years ago, I couldn't have cared less, now learning econ is like crack for me.

Tom Woods was the ghostwriter (according to some) for the Revolution Manifesto.

 

[guerilla]

I don't invest with Peter, but I think he does a great job of explaining that what people believe, is not what is necessarily true.

Come summer 2010, I'll be loading up on stuff like China waste reclamation, India bollywood asian distribution, and Brazil wireless and aerospace. The Russkies can go hang, I doubt they'll get their shit together by then.

Whoever figures out fresh water production and distribution in China and India, and whoever invests in those solutions, will be very wealthy 20 years from now.

 

[Nikko]

Whoever figures out fresh water production and distribution in China and India, and whoever invests in those solutions, will be very wealthy 20 years from now.

There's a groovy company out of Hong Kong that is already kissing major-league Beijing partyboss ass, those guys are cornering the market on wastewater reclamation facility contracts. They've already got something like 5 major facilities approved to go up in the next three years in the bigger manufacturing provinces, places that are basically drowning in their own piss.

Do your due, and you'll be smilin' ear to ear in 7-10, not 20 years.

 

[Andrew Scherer]

Good stuff, listened to the video.

 

[vinny lingo]

Thanks for sharing this. I've enjoyed a lot of Peter Schiff's other stuff on youtube, and this was an enlightening session.

 

[barman]

i'm listening to the whole thing... great shit

 

[Rage9]

Love Peter Schiff. Just listed to it, he's so good at explaining why things are the way they are, and why your an idiot for thinking the way you do about some things.

 

[riddarhusetgal]

A university in Alabama, lol.....
Sorry, I couldn't resist
Actually I have never hear of Peter Schiff, he probably doesn't spend lot of time in DC or Stockholm. But in the interested trying to understand this view of the world I am going to listen and try to learn something..

 

[riddarhusetgal]

Hey, that actually wasn't a complete waste of time. However, his contention that you should "let all the companies fail" ignores the realities of the "too big to fail" phenomena. Also, I think it's a bit simplistic to assume that the entrepreneur's motives are solely motivated by economic profits - I don't think that's fully consistent with human behavior.

In other words, it ignores the fact that for some owners there are positive externalities associated with behavior that is financially illogical - not just owners, society in GENERAL....

Example: you hire a couple of American linkbuilders at $10/hr even though you can hire some Slovenian link builders at $5/hr and ceteris paribus, get the same quality of work...
But why do you do that?


There's a positive externality associated with your hiring of American employees or to make it even personal, maybe you went to high school with some of these guys and you know that the money you are paying them will help the keep a roof over their heads, help to pay for their kids (your god sons' education), etc, etc...

Since you earn $5 million a year (in this example), the incremental value of an extra $5 dollars (difference in the two wages) is less valuable to you than the feeling you receive from knowing that you helped some friends out. Not just friends, fellow American too! Call it one part economic patriotism, one part "emotional profit" seeking.........


Incidentally, the quintessential example that exemplifies this is education:

From Wikipedia:
Austrian School economists advocate strict adherence to methodological individualism – analyzing human action from the perspective of individual agents.[citation needed] Proponents of this method, praxeology, argue that the only means of arriving at a valid economic theory is to derive it logically from basic principles of human action. Proponents of this method hold that it allows for the discovery of fundamental economic laws valid for all human action.

This is always the problem I have with those that are so attached to the "supremacy" UNBRIDLED laisez faire capitalism.

Notice I said "UNBRIDLED capitalism" I made no critique of capitalism that takes into account that a)owners aren't always motivated simply by economic profits (i.e. the owner above that seeks to maximize his "emotional" vs "financial profit and b)the role of both positive (and negative) externalities on how the "invisible hand" works....

I would be curious to know what Peter Schiff has to say about the wrench that externalities play with regard to how the invisible hand works.

Maybe I will pick of a book of his to learn more....

 

[guerilla]

Maybe I will pick of a book of his to learn more....

Schiff is not a scholar, he is an investor.

If you want to understand Austrian economics, you need to start with Rothbard (Man, Economy and State | Ethics of Liberty) and Mises (Human Action, haha this is massive, good luck).

All 3 are available online in PDF, HTML and maybe even audiobook, for free.

If I get time later, I might come back and address the portions of your post I am capable of addressing.

 

[guerilla]

However, his contention that you should "let all the companies fail" ignores the realities of the "too big to fail" phenomena.

It is the phenomena of collectivism. The group of businessmen and investors, cannot be allowed to fail, even if it drains all of the middle and lower class wealth to maintain them. Too big to fail, is a modern spin on the rich and politically connected over everyone else.

Economically, there is no such thing as a firm too big to fail, and in fact as the size of firms grow, they trend towards inefficiency. A dynamic marketplace is flat, not vertical. The collapse of an inefficient firm redistributes capital to more efficient operators. It is necessary for a productive economy to experience creative destruction this way. It's also a check on monopoly.

Also, I think it's a bit simplistic to assume that the entrepreneur's motives are solely motivated by economic profits - I don't think that's fully consistent with human behavior.

It's a semantic misunderstanding on your part. You linked to Praxeology. It's key to understanding the Austrian school. Praxeology is the social study of "why man acts" and is based on the action axiom.

Austrians understand that everyone is always working to profit, whether it is financial, emotional, spiritual, what have you. No one (rational) acts to lose. Economic profit is generally understood amongst Austrians to be profit by exchange (action) not necessarily a fiduciary gain.

In other words, it ignores the fact that for some owners there are positive externalities associated with behavior that is financially illogical - not just owners, society in GENERAL....

See above.

Example: you hire a couple of American linkbuilders at $10/hr even though you can hire some Slovenian link builders at $5/hr and ceteris paribus, get the same quality of work...
But why do you do that?

Because you might want to donate the $5/hr saved to donate to the poor. Or to buy your child piano lessons. Or you might want to support the Slovenians whose business model is predicated on volume. Austrian economics doesn't claim to understand why people choose what they choose, and does not claim to be able to model aggregate human behavior. It's not inductive, it is deductive.

From Wikipedia:
Austrian School economists advocate strict adherence to methodological individualism – analyzing human action from the perspective of individual agents.[citation needed] Proponents of this method, praxeology, argue that the only means of arriving at a valid economic theory is to derive it logically from basic principles of human action. Proponents of this method hold that it allows for the discovery of fundamental economic laws valid for all human action.

This is always the problem I have with those that are so attached to the "supremacy" UNBRIDLED laisez faire capitalism.

Notice I said "UNBRIDLED capitalism" I made no critique of capitalism that takes into account that a)owners aren't always motivated simply by economic profits (i.e. the owner above that seeks to maximize his "emotional" vs "financial profit and b)the role of both positive (and negative) externalities on how the "invisible hand" works....

Like I wrote above, you don't seem to have a grasp on Austrian Econ, and can only start by (1) ending the assumption it is like any other capitalist or right-wing school of thought, and (2) grasping the basics of praxeology. Unbridled capitalism, in Austrian speak means "free market", as classic liberals such as Frederic Bastiat would have used it. In order to bridle (restrict) capitalism (trade) you have to exercise coercion, on non-violent, non-coercive, voluntary action.

I would be curious to know what Peter Schiff has to say about the wrench that externalities play with regard to how the invisible hand works.

Austrian Economics has advanced capitalism far beyond Adam Smith. If you're really ready to expand your perception of markets, trade, and human action, take the time to delve a little deeper into it than Wikipedia, which no one seriously consults as a scholastic resource (although the Praxeology page is particularly well maintained).

 

[Nikko]

Economically, there is no such thing as a firm too big to fail, and in fact as the size of firms grow, they trend towards inefficiency. A dynamic marketplace is flat, not vertical. The collapse of an inefficient firm redistributes capital to more efficient operators. It is necessary for a productive economy to experience creative destruction this way. It's also a check on monopoly.

<-- snip for brevity -->

Austrians understand that everyone is always working to profit, whether it is financial, emotional, spiritual, what have you. No one (rational) acts to lose. Economic profit is generally understood amongst Austrians to be profit by exchange (action) not necessarily a fiduciary gain.

Amen to that. No such thing as real altruism, everyone does whatver they do because they seek to gain on some level. Even Mother Teresa did what she did because it made her feel good to do it.

Personally, I think as soon as an entity claims it is "too big to fail", that's when it's time for the people to take it out behind the woodshed and put it out of our collective misery. Oh wait, didn't we used to call that "antitrust"? That quaint, archaic 'unfairness doctrine' thing again...

 

[guerilla]

Amen to that. No such thing as real altruism, everyone does whatver they do because they seek to gain on some level. Even Mother Teresa did what she did because it made her feel good to do it.

Precisely, which is sort of an Objectivist or Randian point of view. Rand was a great admirer of von Mises and the Austrian school.

The way I have had it explained to me, is that in the 16th century, the mercantilist presumption was, in order to have trade, someone has to take advantage of someone else in order to profit.

But the praxeological view of trade is, if I have an apple, and you have an orange, and we agree to trade, we are both better off, because we got something we wanted, for something we wanted less.

To put it into dollars and cents, if I am selling apples for $1 and you buy one, it means you think the apple is worth more than $1, and I think the $1 is worth more than the apple.

Then if I offer you another, you might pay $1 again, until you no longer feel it is worth $1 to accumulate another apple (marginal utility). Perhaps you feel the $1 is better spent elsewhere (or saved).

This stuff is all pretty simple, but I will admit, I had never considered it before.

The reason why free trade is good for example, is that the more trades people make, presumably the better off they are. They are continuing (even if it is only in their own mind) to trade up to goods of higher utility and satisfaction and order themselves to produce these goods naturally based on the division of labor.

A grocery store today, and a grocery store 25 years ago are remarkably different in the quality and variety of goods for sale. That is the free market in action. All prosperity comes through voluntary trade and co-operation.

Personally, I think as soon as an entity claims it is "too big to fail", that's when it's time for the people to take it out behind the woodshed and put it out of our collective misery. Oh wait, didn't we used to call that "antitrust"? That quaint, archaic 'unfairness doctrine' thing again...

Too big to fail is such nonsense it's barely worth discussing. If a big firm collapsing poses a systemic risk, then the system is poor. A vibrant, global economy with billions of individual actors, should never be so centralized that the bankruptcy of a couple banks or insurance companies will reduce everyone to living like cavemen.

It's mostly scare mongering.

 

[riddarhusetgal]

@guerilla - tx for taking the time to share some interesting results not riddled with expletives and excessive ideology. Well some of it is dogmatic, but hey you obviously really believe in these ideas/ideals, so it's all good!

Unfortunately, in my view of the world anything too extreme rarely gathers the support of the masses or is effective in the long term. "No intervention" is just as bad as "too much" government.

The "too big to fail" theory is not about individual firms being rescued or not; it's about the intricacies of the fractional reserve banking system and how the toppling of money center banks can bring down even healthy financial institutions. Very few people a) are aware or how the fractional reserve system works or b)understand this.

In that respect I do agree with the guy's argument that we need to get off the debt crack, and return to the gold standard....

 

[guerilla]

@guerilla - tx for taking the time to share some interesting results not riddled with expletives and excessive ideology. Well some of it is dogmatic, but hey you obviously really believe in these ideas/ideals, so it's all good!

It's not that I believe in them. They are based on objective reality. I also "believe water is wet" for example.

Unfortunately, in my view of the world anything too extreme rarely gathers the support of the masses or is effective in the long term.

At one time, the earth was flat. Or so the masses thought. They also believed the constellations were gods. That you had to burn witches.

The masses never define the direction of humanity, they just follow along.

I don't define the quality of my ideas by the lowest common denominator (the mob).

"No intervention" is just as bad as "too much" government.

That's a non-sequitur. No intervention means freedom, too much government has traditionally meant totalitarianism. If we believe it is good, and right and natural to be free, why would we want any intervention?

A lot of people who hold such conflicted ideals, which are Orwellian doublethink at their best, and dangerous collectivism at their worst, have never really considered the consequences or irrationality of insisting that freedom can be found through submission.

The "too big to fail" theory is not about individual firms being rescued or not; it's about the intricacies of the fractional reserve banking system and how the toppling of money center banks can bring down even healthy financial institutions. Very few people a) are aware or how the fractional reserve system works or b)understand this.

I am probably the closest thing you will find to an expert layman on fractional reserve banking. I am well aware of the intricacies of a system that is based on counterfeit and forces banks to operate in an insolvent manner by design. The only systemic risk, is that we might have to collapse these horrible central banking schemes, and get back to honest money which would really throw the charlatans for a loop.

In that respect I do agree with the guy's argument that we need to get off the debt crack, and return to the gold standard....

What is needed is a free market in money, which is what Schiff endorses. No more legal tender laws. Allow people to transact in the manner that best suits their needs instead of politicizing and monopolizing control of money in the hands of several hundred Washington elites.

 

[riddarhusetgal]

reality is based on variables

It's not that I believe in them. They are based on objective reality. I also "believe water is wet" for example.

That's just plain silly guerilla. Reality is NOT objective. For the sake of shooting the shit, it's been well been proven first of all by neuroscientists that the RAS (reticular activating system) filters information we process through our 5 senses based on WHAT IS ALREADY THERE - i.e. what we already believe.
Furthermore, if you define beliefs (mathematically or logically....it's easier to understand)
as:

B= I + (E)^2

where B is Beliefs the dependent variable and
the two Independent variables are:
Information (I) and (Experience) it becomes quite clear that each of our beliefs are based on quite independent VARIABLES - that the information we have had access to (along with the filtering of information as described above) affects the "B".

If you have two independent variables that output "B" the likelihood of the equation always being the same is quite minimum.....

If you don't believe me, indulge me for a 5 seconds.....go ahead:
close your eyes and remain as still as you can for 5 seconds - as still as death.











Now what is the definition of "still" according to the oxford dictionary?
still1


• adjective 1 not moving. 2 (of air or water) undisturbed by wind, sound, or current. 3 (of a drink) not fizzy.











The average person would say that based on "objective reality" - i.e. the the evidence of their senses they or in this case "you" were indeed standing "still" and they would indeed "believe" that as "objective" reality and as true. To question that would be a complete "non-sequitor" in their eyes....







BUT recall my definition of Beliefs

B= I + E^2 (if you've looked closely you'll notice that as E is squared, it tends to play more of a factor on what we believe. As an example, having begun my career on the street in the bastion of UNBRIDLED CAPITALISM, I once believed that "all" countries where alot of government regulation existed where the market was allowed to "run free as the wind", led to a society where people were unhappy. Until I moved to one, collected different "I" (information) and had different "E" (experiences) and thusly changed by beliefs. By the way, do these people look like unhappy socialists to you?? I digress....



Now back to my point. The definition of "still" is:

still1


• adjective 1 not moving. 2 (of air or water) undisturbed by wind, sound, or current. 3 (of a drink) not fizzy.













Now the average person who observed you would say that it's "objective reality" that you were standing "still" as I said before.





I however would reject that contention...........




To me you WERE MOVING faster than the speediest individual and I could make that contention WITHOUT HAVING OBSERVED YOU....

To me it was/is an is "objective reality" that you are moving HUNDREDS OF MILES PER HOUR....



Why is that? Because I am working with a different set of "I" variables......



I know that while others were observing you as "standing still" I observed you as a human on a planet - ROTATING AT JUST OVER 1,000 MILES AN HOUR.


So the question is who is right whose beliefs was/is "objective"? The answer is BOTH.

As I said, reality is FLUID...


The person who said you were standing still based their "beliefs" on something very LOGICAL:

B = I + (E)^2


They didn't throw in any ridiculous variables, they simply developed a belief based on the (information) and (experience)^2 they had collected.


But the point I am laboriously making here is to challenge your notion that somehow YOUR reality is OBJECTIVE and based on "fact" and that because your "B" is different from my "B" you are right and I am wrong (OR VICE VERSA!)


Now I'll go check statcounter.........