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Schiff vs Mauldin Debate Gets Heated - Whose Predictions on Debt and the Dollar Came True?

Published on Mon, Feb 25th 2013 Travel & Events Rectangular HD

A panel on the creating and preserving of wealth featuring Rick Rule and Grant Williams boils into a heated exchange between Peter Schiff and John Mauldin.

Looking back at this panel from 2013 and the conversation is more relevant than ever.

The highlight is a classic faceoff between Peter Schiff and John Mauldin that takes place around 7:30 in and goes on for several minutes and really heats up at 8:50.

Timestamps:

2:13 - Grant Williams on governments actively trying to take a bigger piece of the pie.
3:54 Peter Schiff - Paper money isn't wealth, it can represent a claim on wealth, but those claims are very tenuous right now.
5:33 - John Mauldin's predictions on the US Dollar.
7:43 - Peter challenges John's assumptions and says the dollar is going to grow.
8:50 - Debate between Peter Schiff and John Mauldin heats up.
12:00 - Rick Rule weighs in
15:19 - Grant Williams - It all comes down to the math and the numbers are unsustainable.
16:50 - What does the panel see for the future of the resource sector.

Notes From The Panel

The panel is entitled Creating and Preserving Wealth and the biggest debate is around the world governments' ability to deal with debt.

Governments don't produce anything, they are merely a confiscatory mechanism to take money away from people who produce it.

Interest rates are going to stay low and quantitative easing will not slow down any time soon. When QE does slow down it's likely not going to be their decision.

You need to have a good proportion of your wealth in gold and real assets.

The funny thing about a currency war is that it's different than a conventional war in that the object is to kill yourself.

America is going to win the currency war. If you earn dollars, you lose. The real winners in a currency war is gold and things that the central bank can't print.

Resources, precious metals and companies that return dividends are what you want to hold.

If we put the deficit on some sort of sustainability path in the next 5-6 years - we can run a 400-500 Billion dollar deficit we're not falling behind.

We could get the US deficit under 400 Billion by restructuring entitlements and the oil revolution, we could have a positive trade surplus within 10-12 years.

The value could become remarkably strong if the US had a trade surplus - regardless of whether or not the FED keeps printing money.

We could see a really strong doll

We can't suppress interest rates indefinitely without a strong dollar and we won't be able to afford the interest on what we've already borrowed.

If we solve the deficit the dollar gets stronger.

If we shrink the deficit we'll strengthen the economy

Peter - "[The] phony economy has to be allowed to collapse before it can be replaced with a viable sustainable economy that's based on investing, production, and savings."

The Keynesians are right in the short term. - John

GDP = Consumption + saving and investments + government spending + net exports

John says you need to reduce government spending at a time when consumption and spending increases to avoid disaster.

You need to be a contrarian and an investor in value in order to keep the money you've earned.

US 30 year treasury is return-free risk.

John says he and Peter probably put their money in the same things.

John says you're probably better off giving your money to Rick than anyone else.

The level of debt that the governments have is absolutely unsustainable. At some point, that's going to matter. Mathematics will eventually win the day.

The wounds of the resource industry are self-inflicted. We got what we deserved, a good bear market. 60-70% of the junior stock are on their way to their intrinsic value, which is zero.

The big money is in pension funds and endowments, and it's very difficult to get them to put any institutional money into the resource sector or gold.

One of these days, we're going to make new highs and they're going to keep going.


The debate took place February 24, 2013 at Cambridge House's California Resource Investment Conference in Palm Springs.

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