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Sacred Cow Tipping: Schiff Hits the Fan

Daymond Steer
The Conway Daily Sun
April 16, 2012

NASHUA -- America's youth are strangled by debt and entrepreneurs are buried deep in regulation so anyone seeking opportunity and freedom should consider fleeing the country, said economist Peter Schiff in his keynote address at the 2012 New Hampshire Liberty Forum.

About 500 people attended the event which was held at the Crowne Plaza Hotel in Nashua on Feb. 24.

Many in the audience were probably participants in the Free State Project -- those who came to New Hampshire seeking more liberty than they had in their home state. The night's theme was "voting with your feet." That apparently meant moving to some place you like and away from someplace you don't.

Schiff is CEO of Euro Pacific Capital Inc., an author and a radio show host. He predicted the 2008 housing crisis in his 2007 book "Crash Proof: How to protect Yourself from the Coming Economic Collapse." In 2010, he made an unsuccessful bid for U.S. Senate in Connecticut. He's appeared on several cable news networks as a commentator.

Despite what many mainstream experts say, Schiff believes the economy is heading for a much larger collapse than the 2008 meltdown. Reckless government spending, overbearing federal regulations, gargantuan student debt and the flight of talented Americans to other countries will create a perfect storm that will make life unpleasant in the near future.

"The real crisis is coming," said Schiff. "What's going to happen in this county is going to be horrific. It's going to be a lot like what's happening in Greece only a lot worse."

Unfortunately,Schiff might be right again. Discontent with the status quo can be seen in the form of Occupy protests from Maine to California -- and even Conway Village. No doubt, the civil unrest will become much worse when there are shortages of food and energy, as Schiff predicts.

"When you're waiting in long lines for gas and food tempers flare," said Schiff. "Things could get pretty violent. This crisis is coming. There is no preventing it."

He also believes the Federal government will curtail civil liberties as it tries to maintain control. As evidence, he cited the Patriot Act and elements of the National Defense Authorization Act. The latter allows for American citizens to be imprisoned without trial.

Some of the reasons for the discontent that Schiff mentioned certainly apply to many people. My financial goals are being crushed by rising gas prices, out of control government spending and student loans that seem like they will never go away.

Sky high gas prices have more to do with the Federal Government and Federal Reserve than conflict with Iran, according to Schiff.

"The high oil prices are a tax," said Schiff. "That tax is going to get higher and higher and higher as more money has to be printed to buy all these bonds because the government isn't collecting enough in taxes to pay for everything it's spending. At some point there will be a limit to how much inflation they will create."

For Conway, the rising gas prices are especially problematic. Fewer people are going to make the trek north from Massachusetts if gasoline reaches $5 per gallon. A lack of tourism will create havoc for our local businesses.

In addition to gas prices, business across the country are also at the mercy of government bureaucracy. Schiff says overbearing regulations make it difficult for employers to create jobs.
As more evidence the country is in decline, Schiff said only three of the 30 wealthiest self-made Americans of all time were born after the Civil War. Only one was born after WWII. 

In regards to the college loan crisis, Schiff said he once advised a young sociology major with $190,000 in college loans to leave the country. Otherwise, he said, she'd probably never get out of debt. Other places he said are more free than the United States include Canada, Australia, New Zealand, Hong Kong Switzerland and parts of South America.

Today, America's top college talent wants to go Shanghai.The government is so concerned about the flight of smart young people that it enacted a $450 fee for renouncing one's citizenship -- an action that used to be free.

"They are thinking we have a lot of young kids who we need to tax the hell out of if we're going to keep our promises to the people who are waiting to collect social security," Schiff said of the government.

As examples of out of control spending, Schiff said Social Security is paying out more than it take in. Over all the federal government is spending $1.40 for every $1 it collects in revenue. Money printing results in a loss of purchasing power.

Then Schiff also brought out that old Republican line about the pitfalls of over taxing job creators. He mused about who would be likely to create the most jobs with Warren Buffett's money -- Warren Buffett or Barack Obama?

Billionaire Buffett is oft quoted as saying he doesn't pay enough taxes. But Schiff says Buffett "goes out of his way" to reduce his own tax burden by paying himself a relatively small salary of $500,000 and leaving the rest in his company, Berkshire Hathaway.

Berkshire Hathaway trades at 20 times earnings and Buffett owns a third of the company. For every $1 Buffett doesn't pay himself in salary he makes about $7 in stock. Then the stock is only taxed at 15 percent when Buffett goes to sell, according to Schiff.

"Why does Warren Buffett work so cheap?" asks Schiff. "Because he doesn't want to pay the taxes."

Schiff would like a consumption tax rather than an income tax because he says it would allow job creators to do their thing. That idea is interesting, but I have no idea if it would really do any good or not.

By the end of the conference I wondered if it's worth while for Conway to bother contemplating turning off street lights to save money. When asked, Schiff said municipal government should try to tighten their belts wherever possible.

"You might as well do what you can do," said Schiff.