In Defense of Peter Schiff – Ludwig von Mises Institute Canada.
The financial television channel CNBC has hit hard times. Nielsen ratings show the network’s viewership is at a 21 year low. This is a far cry from two decades ago. The dot-com bubble of the late 90s and early aughts gave the channel its highest ratings in history. The Federal Reserve’s easy money flooded the market, hitting blue chip stocks like a tidal wave. All of a sudden laypeople fancied themselves market gurus, playing the market and investing for a big pay day some time in the future. Trader and commentator Barry Ritholz described the environment as one where “CNBC was everywhere.” “Gyms, bars, restaurants, any public place you went into that had a TV — even sports bars! — had the ticker strewn channel running in the background.”
One bubble burst and a financial crisis later, the home of hothead Jim Cramer has cooled off significantly. There are a few reasons for this. As Lehman Brothers cratered into bankruptcy, the middle class saw its 401(k)s lose a significant portion of value. Such a loss begged for an explanation. Yet economists and financial experts were caught off-guard by the crisis. No popular orator of the dismal science could explain why the banking system devolved into chaos. CNBC’s most popular hosts and guests could only offer guesses.
One person was the exception: Peter Schiff. The internet video “Peter Schiff was right” collaged all of Euro Pacific Capital founder’s dire warnings about the housing bubble. At the time, he was ridiculed on air. Schiff was a cassandra, spouting crank theories long disproven by economic orthodoxy. But by September of 2008, he had the last laugh. The financial world was in turmoil, and Schiff’s explanation – based on the Austrian school’s theory of boom and bust cycles – was at last seen as legitimate.
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