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The Real Crash: America's Coming Bankruptcy---How To Save Yourself And Your Country (2012)

by Peter D. Schiff(Favorite Author)
3.86 of 5 Votes: 1
1250004470 (ISBN13: 9781250004475)
St. Martin's Press
review 1: One of the clarifying metaphors Schiff uses in this book to explain current economic woes is about a patient who presents to a doctor with symptoms of illness in his hands, feet, face, eyes, dick, brain, etc. etc. (I forget all of the body parts that were featured) The doctor, seeking to find a root cause for the various maladies, checks the patient's blood, which courses through the whole body, so chances are that something wrong with the blood would be causing problems in all the patient's various extremities. The blood in this metaphor stands in for money, which courses through and gives life to the whole body that is the economy. But something is wrong with this blood. The heart, standing in for the Federal Reserve, has created too much blood through a process of blood... more inflation, and now all the blood is worth less than when there was a competitive amount of blood to use for creating jobs at the various organs of the body (I would never work in the intestines, personally, no matter how bad the blood economy is).Of course, the doctor makes note of this excess blood in the patient, and prescribes a treatment of bloodletting, attaching leeches all over the patient...you know what, it's not a perfect metaphor. Let's forget the metaphor and just talk about the actual economy.In 1995, there was $3.5 trillion in circulation. As of 2011, there was $9 trillion. If the government were tied to a commodity standard (such as gold) for its currency, this level of inflation (increase in the money supply) would be impossible. It already should be impossible because the United States Constitution specifically forbids the government from creating fiat (paper) currency, and only allows for fixing the standards of weights and measurements so as to regulate the amount of gold and silver in coins minted by the Treasury.Being tied to a commodity standard would prevent the government from spending money it does not have, or creating excess money (quantitative easing) in the form of fiat currency (paper dollars) that then devalues all the currency in circulation. This destroys the idea of savings, since money you set aside now is guaranteed to have less purchasing power in the future as prices rise. As an individual, you can stay ahead of inflation by making more money each year than the rise in inflation, but even then, your wealth is not as great as it would be if the dollar were tied to a commodity standard and could not be manipulated by government regulation and the Federal Reserve.As for those who are not able to make more money than the rise in inflation, they are effectively poorer each year even if their wages remain the same, since their cost of living increases. For that reason, any person who is not in debt should want deflation in the money supply, as that will increase the value of the money in circulation, and increase the value of savings. Those who are in debt, like, say, THE FEDERAL GOVERNMENT, do no want deflation, as this raises interest rates on borrowed money, making it harder to pay back. But as Schiff explains in this book, it is effectively impossible for the government to pay back the interest on its debts, let alone the debts themselves, even if everyone in the country were taxed at 100%.Schiff argues that many of the taxes levied by the government are unconstitutional and illegal anyway, chief among them the income tax. And even if the income tax was constitutional, there is so much slippage in lost productivity through compliance that the same amount in total revenue could be generated by variations on sales tax or bank transaction fees. Schiff also makes the strong point that the income tax by definition values labor at zero, since all wages you earn are taxed, compared to only profit taxed on capital gains. The argument against this idea is precisely what creates so much slippage in collecting the income tax: that value of labor is nothing until someone pays for it, and then we must take that cost, not value, into account. But if you were to list as deductible all the sunk costs made towards that labor (a place to sleep, food to eat, clothes to wear to work, transportation to and from work, etc.), you are just creating more problems for compliance in trying to find the fair taxable amount for that labor. Again, it is better to abolish the income tax and generate that lost revenue through some form of sales tax, if at all.There are also several proposed solutions in this book for how exactly government can cut its spending, but most of these boil down to the elimination of regulations that artificially manipulate demand. It is the height of foolishness to tell someone else what they want, and the height of cruelty to coerce someone into doing what they do not want to do under threat of imprisonment. Any reasonably intelligent child realizes this, and when the real crash arrives, chances are the government will be forced to realize it as well (probably for about 70 years or so until they try fiat currency again).
review 2: Full of a fair amount of information I had heard of or already knew. As well as some things I did not know, such as the fact that it is perfectly legal for politicians to engage in insider trading. Even if they are voting on things that have a direct influence on a particular company's future. I would have given it 4 stars but for a handful of reasons: 1) he touches on some subjects very fleetingly. Like environmental issues, and gun issues, that while they do have economic implications, he doesn't spend enough time on them to justify their inclusion. 2) He spends a little bit of time at the very end hocking his brokerage company... but I can't really say I blame him for it. If I owned my own company and wrote a best selling book, I'd take the opportunity to advertise a little. 3) And this is more of an editing gripe than a gripe on the content, there are numerous editorial and grammatical errors, that if I were him I'd consider getting a new editor or publisher. less
Reviews (see all)
Interesting economic overview of the possible near future and it's causes.
As usual, Peter Schiff is spot on and highly entertaining. A must read.
scary stuff, don't agree with everything but a lot makes sense.
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