Peter Schiff Down On Obama Stimulus

“Americans blew the money they borrowed from the whole world.” — Peter Schiff, January 2008

The next wave is 2012, although now with the Obama Stimulus it might be triggered a bit early.  That wave has been on the radar for quite a while already — it’s the demographic tsunami swell of social security and medicare payments to boomers that won’t be supported by any new money.  Dark, dark times ahead and more debt doesn’t seem to be the answer, as you can glean from listening to Schiff.

Here’s what I would do:

-get your emergency nets in place now, whatever that means to you.
-have multiple sources of income.  Not just investment income.
-buy physical gold, keep it safe.
-get in touch with your support networks: good friends and family.

I don’t want to advocate the “bring your gun and dog up to the cabin” strategy; I’m not trying to be overdramatic.  I just think that Americans really need to wake up now.  There isn’t a lot of good stuff on the economic horizon nationally.  I don’t want to say “pay off all your credit cards,” because if inflation runs through the roof, maybe it will shrink up all the debt.  Then again, if your wages don’t keep up with inflation, your debt will become even more burdensome, so perhaps you really should pay it off now if you can.  Sell your second car.  Sell your Wii’s and videogames and old computers.  Use the money to get rid of your debt and buy some physical gold.

Yes, I’m a little freaked out today.  England dropped its rates to 1.5% and has massive retail layoffs. It’s clear that the American economy is broke and a new one is needed.  Gathering up all the debt and hoarding it under the goverment’s roof is not going to fix it.  They say the problem began at the level of the consumer, and there it must be solved as well.  But does it really make sense to be telling Americans they should be going out and spending money on cars, etc. when that is basically what got them into the mess in the first place (ie., being financially overextended)?  It doesn’t to me.

Banks ARE lending again.  LIBOR has improved, but the effects aren’t rippling through the system yet or quickly enough.  I’m starting to get the sense that the Obama Stimulus is the last stop on the trip.  If it doesn’t work, no one is going to know what to do. So I say do the basics: have emergency savings and spend below your means.