We are in the midst of the most artificial economic boom in history. The stock market is flying high but do not be fooled. Economist Peter Schiff is at it again – calling the stock market a bubble and predicting the collapse of Bitcoin.
Who’s Peter Schiff?
For some investors old enough to remember, he’s the economist who, in November 2006, stood up in front of over 200 mortgage brokers and Wall Street banks that the housing boom was months away from collapsing.
The mortgage brokers and bankers scoffed at Schiff. This market was different, they said. They made up numbers to talk themselves into believing that the boom would go on forever. Schiff knew better. The underlying economics were troubling. The number of subprime loans being underwritten defied conventional underwriting standards. In other words, loans were being underwritten that had no business being underwritten – to applicants who couldn’t afford these loans.
Of course, Schiff was right. By October 2008, the subprime collapse plunged the global markets system into chaos. The stock market shed more than 50% in value and entire national (Iceland and Greece) banking systems approached collapse.
In hindsight, it’s easy to see Schiff’s foresight. So why is nobody listening to his latest warnings? Especially that the stock market is a bubble?
Here are some recent headlines:
“Stock Market: There is room for further upside in the market.”
“Dow could hit the 40,000-point level next year, analyst says.”
Instead of receiving accolades from Wall Street, Schiff was shunned. He was a fly in their ointment. He was ostracized from the Wall Street speaking circuit.
In response, Schiff took matters into his own hands to fight the Wall Street machine. He took to YouTube and appeared on alternative media outlets to issue his warnings.
What is Schiff’s latest warning? Since the last Financial Crisis, he has been on a crusade against artificial and unsustainable indicators.
After a decade of artificial stock prices and growth, Schiff is declaring that America is set for an economic reset of a degree we’ve never seen before. The market is set to purge all abnormalities, deformities, and defects in the system – starting a new economic cycle based on sound economic fundamentals.
Because Schiff has been issuing his warnings for more than a decade, the Wall Street elites and Bitcoiners are declaring victory. Schiff was wrong. The reset will never happen. The stock market has no ceiling and Bitcoin will continue to the sky.
We are in an era of cheap money that will eventually come home to roost. The trillions of stimulus funds pumped into the economy following the Great Recession and in response to the COVID-induced recession will come back to bite us. The rise in the stock market isn’t a result of underlying economic strength. It’s merely a product of investors throwing their stimulus checks at the stock market and Bitcoin to see what sticks.
The signs of market madness that Schiff warned about are everywhere. Recently, Elon Musk became the world’s richest man without ever turning a profit. Bitcoin is flirting with a $50,000 price with many predicting a doubling in price within just a matter of months.
Schiff’s not the only one crying “bubble.” Many other analysts are on the bandwagon as well, but why isn’t anybody listening?
It’s because Wall Street and social media are controlling the narrative.
They don’t want the gravy train to end so they’re perpetuating the lie. They have too much to lose from a market collapse so they’re complicit in propping up a fake economy.
So what’s so wrong with this economy?
The market is fueled by pure speculation – by investors armed with stimulus checks who don’t care if they win or lose. Some of these investors are even banding together on forums like Reddit to manipulate stock prices. The elites like free trading platform Robinhood fight back by limiting trades to protect hedge funds. It’s a lose-lose for everyone else.
On the one hand, you have reckless, maverick day traders artificially driving prices and on the other hand, you have Wall Street elites doing their own manipulating.
Why participate in the madness?
Many of us know how this story is going to end. Maybe this new breed of day traders driving up stock values and Bitcoin prices are like the Joker from the 2008 Batman movie Dark Knight Rises – agents of chaos who “just want to see the world burn.” That makes the market even more dangerous than ever – when investors don’t care if they win or lose.
Maybe it’s time to consider other avenues for placing your capital – avenues that already adhere to sound economic fundamentals.
It’s Wall Street and other speculative investments like Bitcoin that will experience Schiff’s great reset, not the assets that already adhere to the principles the eventual economy will aspire to.
Real assets and sound income-producing businesses already operate by sound economic principles. Those will be the assets that will shield investors when the sky falls.