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Schiff brings debt discussion down to earth

NOVEMBER 22, 2011
By Sara Morano ’14, Contributing Writer

“The shelves of Wal-Mart will be empty!”

Just hours after the Congressional Super Committee announced it would not meet a midnight deadline for cutting $1.2 trillion from the federal debt, Peter Schiff, global strategist and Chief Executive Officer of Euro-Pacific Capital, was speaking on campus Monday night about the implications of the debt crisis.

The Thanksgiving holiday and the nominal opaqueness of his subject resulted in a modest crowd of about 60 students, professors and community members in the Watkins Room.

The hour-long program defied expectations of a dry and inaccessible discussion on one of the most complicated problems in current politics, however, and Schiff’s arguments informed and stirred chuckles from the thin crowd.

The successful international investor’s apocalyptic predictions for Wal-Mart came at the conclusion of a discussion of the sustainability of the United States’ trade deficit with China.

Schiff reasoned that growing debt will force the U.S. to restructure, rather than repay, devaluing the dollar and restricting the country’s ability to import the Chinese-made goods that stock Sam Walton’s retail giant.

Other pointed thoughts on cell phones and tight-fitting pants served, as did Schiff’s Wal-Mart comment, to illustrate his economic ideas in a way that avoided his use of such terms as “PE ratios,” “T-bills” and “basis points,” which peppered but by no means dominated the lecture.

Schiff’s overall forecasts were characteristically grim. At the peak of real estate prices in 2006, he earned the nickname “Dr. Doom” for predicting a coming collapse in the housing market.

During Monday night’s lecture he asserted there has been no real economic recovery and that the coming recession will entail high interest rates, rising food and fuel prices, and a decreased standard of living for Americans.

If Schiff’s predictions were dire, however, the solutions he proposed were simple.

“One of the good things about debt is counterbalance,” Schiff said. “It took me a long time to get dressed for this event because I couldn’t find pants that would close. I’m too cheap to go out and buy all new clothes; I’ve got to lose weight. We’ve been buying stuff from the world on credit for 40 years. The world’s biggest consumption binge is ending. We need to recognize the problem and allow real market-based solutions.”

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