Peter Schiff Advocates for New Treasury Head

“Peter Schiff of Euro Pacific Capital, who in 2006 publicly warned the subprime crisis would drag down financial markets, said Obama's policies will only re-inflate the credit bubble.

"As any drug addict knows, if you stop using drugs you will go through withdrawal. Government is making the situation worse," said Schiff. "We don't need any more stimulus. We are suffering from the stimulus we have already been given."

He joked years of misguided U.S. fiscal policy has created a Ponzi economy, where new Treasury bonds must be sold to repay existing investors just to keep Uncle Sam solvent.

"I don't know why we have Bernie Madoff in jail," Schiff said. "We should appoint him secretary of the Treasury."”

http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54S5Y020090529

Peter David Schiff is the president of Euro Pacific Capital and is a frequent commentator on American financial news programs on CNBC, CNN, CNN International, Fox Business, Bloomberg TV, and Fox News. He is best known for having predicted the economic crisis of 2008. He is the author of the 2007 book Crash Proof: How to Profit From the Coming Economic Collapse, published in 2007.

His comment as to the wisdom of present and future stimulus plans to re-inflate the credit and housing markets is worth noting. Trying to restore us to 2006 is not a good strategy for the future, since as time and technology march on, the U.S. and world economy somehow will remain in a time warp. A far better strategy would be to take the “lumps” inherent in any economic reversal, but then move on to the next growth area.

Bernie Madoff cannot be secretary of the Treasury, of course, until his release from prison that will be announced about a month from now (June 29). The point is well taken, however. A Ponzi scheme centers, of course, on the perp paying off some client accounts with the investment of subsequent clients. The practice of the U.S. government over the past several decades has been similar. As Treasury bills are redeemed by older investors, new investors are found to pay off not only the principal but also interest. What the U.S. Treasury has done for decades would put others in prison.

A Tdj by Jim Davids.