432 of 459 people found the following review helpful
on September 24, 2007
I enjoyed this book even though I was previously aware of its economic arguments and suggestions for portfolio allocations. Mr. Schiff is passionate and sincere and that tone comes across in the book. For that, thank the excellent John Downes who has co-written several other good business books. Many other reveiwers here discuss the contents of the book so I won't go there.
I worked as a bullion dealer in the 1970's so this is my second "crash" cycle. Many people thought the US would collapse in the 70's due to inflation and a national debt of $1 Trillion dollars. Many thought gold would zoom to the moon. Instead, gold crashed and languished for over 20 years. That's because the US was able to shift gears.
Reagan pulled the US economy up from its tailspin by switching from printing money to issuing debt. He took advantage of the low US debt/GDP ratio to inflate debt by selling bonds to Americans and foreigners. It accomplished the same thing - letting the economy expand with a near infinite supply of cash liquidity. George W Bush then doubled the US national debt to $10 Trillion in only eight years. Low interest rates sucked in the public who took on enormous personal debt.
The US now can't rapidly inflate because the dollar would collapse and can't take on more debt because investors doubt it can be repaid in sound money. People don't accept the possibility of an economic crash because they think the US/Bernake/Fed will always be able to pull another rabbit from the hat. This complacency will lead to disaster for most investors.
The US is tapped out on debt both public and personal. The US has so debased the dollar that it has fallen tremendously since Bush II took office and continued the pattern of reckless spending.
If you don't want to believe Schiff when he warns of what's ahead then listen to Greenspan as he touts his recent autobiography. He states directly that the US will have inflation for the next 25 years. He says the outlook for stocks, bonds, and the general economy is 'gloomy' for the forseable future. He says the dollar will likely lose its reserve currency status. This is "The Maestro" talking. He says it's going to be bad. Schiff tells you how bad and what to do about it.
Some people here crticize Schiff for touting his firm's services. So what. He tells readers what to do, but most won't act for themselves. So, he provides the service. Currently, gold is at 725 (September 2007). That's not cheap, but it won't be cheaper in 2009. The US will have to reduce the rate of gov't spending and that will feed back into jobs and consumption. I doubt that the dollar will totally collapse, but when it's all said and done, we'll get a combination of "manageable" inflation and rising interest rates. Most other nations will also inflate as they prop up their economies and scramble to get their share of the world's increasingly costly oil.
The only asset that trumps oil is gold. Bite the bullet and get your share. Reduce your US stock exposure and don't go within 20 miles of a long-term bond. Your financial advisor will be of little help in these matters. Their loyalty is to commissions. You'll have to start thinking for yourself and acting on it even though it will make your stomach churn and give you a migraine.
I'd suggest a general portfolio of 25% gold (ETF or coins), 50% cash, and 25% international stock index fund. If inflation is gradual, the foreign stock will keep pace. If war or rapid inflation strikes, gold will win big. Hold cash to provide liquidity and to take advantage of opportunity. You shouldn't have to wait too long. The politicians will paper things over until the 2008 election. At least hold enough gold to offset declining purchasing power of a fixed pension. If you need 30k a year to live on, then hold that much gold - at least. Live cheap and get out of debt.
Peter Schiff's book is certainly worth reading. We'll see the truth of that within a few years.
147 of 153 people found the following review helpful
on November 23, 2007
I read this book around early summer after hearing about it on a financial webcast I stumbled accross. Thank heavens I did. I read the author's explanations of what has happened and what will and I have to say that it makes sense to me. I had macroeconomics 25 years ago and barely paid attention but after reading this it all came back to me. Schiff doesn't just preach gloom and doom. He lays out a good case for his predictions. I didn't just trust this book. I read two others that basically say the same things. What I liked was that it validated thoughts and questions I'd had for years.
"how can we all be so wealthy yet save nothing?" "How can we have had such a run up in home prices even though we haven't added that many people to the nation?" "How can inflation be officially low even though so many things have gone way up in price (food, fuel, insurance, education, health care, and even home prices till recently)". "How can we manufacture relatively little and sell each other services and still become more wealthy?" If that was possible I'd stay home and cook my wife meals while she mowed the lawn for me and we'd just get rich that way.
Maybe I just like how Schiff shares my natural pessimism and distrust of politicians being put in charge of our national statistics. But I used a simplified form of his advice, bought gold via ETFs, an international bond fund, with the balance in a treasury money market fund, and in just a few short months I've made quite a bit more than I did in any single year since I've been investing. And unlike in past years, I feel very confident that the trend in my investments is going to be up. The underlying economic picture simply demands that these products will do well. I realize that 3 months of good results (up 20%) does not prove anything, but I read this book way before I heard anything in the news about the dollar decline or housing bubble. Now that I've read the book, I tune in daily and the news just confirms the book's premise.
We have had a debt based too-good-to-be-true affluence. Like a drunken college kid on a spending spree, it will end eventually. The housing bubble alone might not sink us. The consumer credit crunch alone might be something we could work with. But add in the astronomical federal govn't obligations ($50 trillion unfunded?) and it's just a matter of time before the ride gets wild.
I would like to thank Mr Schiff for writing this book. I honestly feel that it has saved my financial future. I am in a business where one cannot work into old age, and instead of seeing my traditional stock investments knocked back down in value, I may actually be able to make a nice profit that will help us get through the hard times ahead.
I'm no expert, just a small business owner, but I looked hard to find an honest rebuttal to this book before investing my money in gold (I dont' want to lose money!) , but all I have been able to find were cheerleading tomes to the stock market that were short on logic and long on boasts and how great things were and still are. I find those to be total BS and so I can't trust their theories. Post a comment here if you know of one who actually makes a good argument for staying in the US stock market.
739 of 806 people found the following review helpful
on March 13, 2007
Peter Schiff, son of American patriot Irwin Schiff, has written a very useful book that can not only assist you to take the concrete steps necessary for financial survival, but also change your individual psychology toward the storm on the horizon that is rapidly gathering strength. Today, we have the illusion of prosperity, and the sooner we break through that delusional state, the sooner we can prepare for darker days.
At this point, there are so many possible triggers for the Second Great Depression, it's striking that it has not already begun. The sub-prime meltdown may just be such a trigger that brings down the house of cards, once it becomes more clear which entities actually hold all the risk created as part of the Housing Bubble. Wall Street, sub-prime lenders, and the large banks have been ingenious in their ability to push risk onto other parties, but it's not clear if the counter-parties will have the ability to weather the defaults. Thus, the risk may yet reside with the banks, which normally would have been more restricted in the number of loans they could create by more traditional standards. So much debt has been created, and so much risk obfuscated, that it is hard to imagine our present illusion of prosperity can be maintained much longer.
Mr. Schiff breaks through our modern mythology by shattering these illusions, and here is where he shines best. A bear's bear, Mr. Schiff steps down from the towers of the economic elite to provide analogies that can be readily digested by more casual readers. The analogy of the Asians and the American trapped on an island together is apropos, as it reveals much about the true state of international trade. The Dollar Bubble heavily distorts trade in favor of America, which benefits disproportionately from the inflated value of the dollar.
Mr. Schiff also understands very well the entitlement crisis brewing, and aptly names Social Security a Ponzi Scheme. Most people in Generations X and Y understand that we're the bagholders scheduled for the Ponzi Scheme, but many Baby Boomers love to be delusional about this tragic farce, thinking it's a form of savings rather than our government writing worthless IOUs to itself and lying to the American people. They think Gen X "owes" it to them! Ha Ha! The sooner we can end social security, the sooner we can start saving real money with real assets. Until then, we are slaves waiting for generational emancipation.
I remember the first time I heard Mr. Schiff speak on CNBC. The discussion was about inflation, and I couldn't help but notice Mr. Schiff's definition diverged significantly from the definition used by the brainless cheerleaders on CNBC, and for that matter, our government and most of Wall Street. The proper definition of inflation is "debasement" and secondarily, "an increase in the supply of money which causes a rise in prices" (Webster's 1982). Note the difference between these two definitions and the more commonly used definition today, which is simply "a rise in prices."
CNBC would have us believe that money supply doesn't matter when you can fool people into believing that the risks associated with exuberant money creation won't be felt by anyone, or only by parties "most able to bear that risk." How convenient! What the government doesn't want you to know is that the Federal Reserve creates inflation, and both government and the Federal Reserve benefit from this inflation at everyone else's expense. In the history of every mania and crash, rampant money creation is behind the genesis of every one. Usually, it takes a unique form. In this case, it was the Housing Bubble. So, inflation and the Housing Bubble are intimately linked. As many have often pointed out, the Housing Bubble was needed to replace the Nasdaq Bubble that popped in 2000-2002.
Finally, the juicy part - how to survive. Mr. Schiff advocates foreign equities that are sound and pay excellent dividends, which due to the Dollar Bubble, might do very well. So long as there is sufficient domestic demand (abroad) after a currency revaluation, this appears good advice. Although, one has to wonder if the U.S. catches cold, would Asians follow?
Next, buy gold and silver, and mining shares. This is pretty standard advice from the "Gloom and Doom" crowd as we are sometimes named. Lastly, he recommends staying liquid, which generally means reducing debt and keeping assets in a form that can be readily converted from one type to another. He recommends leveraging overvalued home equity in other currencies and storing small amounts of imported goods likely to rise in price, and a few other measures.
The piggy bank on the cover is a nice touch, and the list of books for further reading is most helpful for those who have not already read many of the titles.
A very quick read, easy to understand, and very well put together. I highly recommend this book.
102 of 108 people found the following review helpful
on May 6, 2007
I thought I had already done a review on this book but I don't see it as I scroll down, so here goes.
I have been reading several books by the "sound money" faction of economists, and I find this book to be a fine contribution.
The one point he made that was brand new to me was the assertion that the United States is not serving as a means for China to bootstrap its way to prosperity, but, rather, is an albatross around its neck. And, the related point that the coming economic depression will not be a worldwide phenomenon, but will primarily hit only certain economies such as that of the United States, with the emerging economies like China chugging along without much of a stumble. He makes a pretty good case, in my view.
As to Euro Pacific Capital, so what if he mentions it? I actually inquired with them about starting an account, but I decided not to because I found it far too tedious to analyze the companies of the stocks they recommended (and from a very cursory glance it looked like they didn't fit my investment philosophy, which is deep value.)
So my approach is: read and enjoy the book and then continue to invest in undervalued commodity stocks such as those of oil companies and small Canadian gold exploration companies that own good gold deposits but sell at $20-40 per ounce of gold in the ground.
184 of 200 people found the following review helpful
on October 3, 2007
Consider this scenario: The domestic manufacturing sector is all but gone. Housing prices crash and billions of dollars of unrealized equity evaporate almost overnight. Consumer spending drops and the US service economy, driven by consumer spending and propped up by foreign investment and trade deficits, crashes. Foreign investors see the weakness and stop buying dollar denominated assets, furthering the dollar's free-fall. Our interest rates shoot skyward, and at the same time we suffer hyperinflation. This catastrophic chain of events leads to a tremendous depression that leaves millions of Americans penniless and unemployed.
That is just one of the possible scenarios foreseen by Schiff and Downes in their 2007 book Crash Proof: How to Profit From the Coming Economic Collapse (Lynn Sonberg Books). This book makes for an interesting read, though one to be taken with a grain of salt. The book combines dire doom-and-gloom predictions with a healthy dose of mistrust for the government. If the authors were not so absolutely correct about many of the points in the book, it wouldn't deserve a second look. The authors' predictions are proving valid with each day that goes by, though, so I think this book is worth reading.
The book spends the first seven chapters discussing why the US economy is about to collapse. The author delves into the shift from a manufacturing to a service economy and the possible consequences. He examines inflation and convincingly explains why he believes that the government manipulates inflation indicators to hide the truth. He predicts a sharp decline in the dollar for many reasons, including the possibility that the dollar may no longer be the world's reserve currency after a few years.
He goes on to consider the chaos that has affected the stock market in recent years, and how the tech bubble never really burst but rather shifted into housing. He predicts a decline in housing on par with or greater than the tech crash at the beginning of this decade. He predicts that the same dollars will go towards creating a commodity bubble and result in even greater inflation. Before giving us his answer to these problems, he caps his analysis with a coup de grace - the problem of debt in the US. The author is very concerned about the levels of consumer debt, lack of home equity, and US government debt that threaten to overwhelm both US citizens and the economy as a whole.
Finally, we are given the answer to this impending crisis in three simple steps: move most of your investment dollars into foreign dividend-paying stocks and gold, and hold a reserve of liquidity (preferably in foreign currency) to allow you to take advantage of investment opportunities as the domestic economy comes crashing down around you.
I liked this book for many reasons. For one, it presents a worst-case scenario that deserves serious consideration given the veracity of some of the authors' claims. Second, it presents interesting reading. I particularly enjoyed the authors' analogy of the current world economy to an island on which six Asians work around-the-clock to feed, clothe, and shelter the sole American - who benefits the Asians by giving them a reason to produce.
Most interestingly, the author hit the nail on the head with respect to both housing and the declining dollar. An investor in February, 2007 (when this book was published) would have done very well moving his portfolio to gold and foreign stocks.
However, there were some major problems with this book, in my opinion. First and foremost, the book ends with a shameless plug for the authors' investment company. If his ideas are that excellent, he should not need to plug his brokerage....clients will find him regardless. Also, he presents his company as the single outlet for implementing his plan. I would appreciate two or three unbiased options (low-cost foreign index funds, for example) - otherwise his entire book seems like a fear-based ploy to increase his own business with little regard for his clients.
The authors also make a strong case for dividends over capital appreciation. However, if you are a believer in efficient markets, singling out dividend-paying stocks will not result in a greater return than the market as a whole.
Lastly, a major premise of the book is that the lack of manufacturing in America will lead to a decline in the dollar, inflation, and recession. However, I think it is important to note that a declining dollar may serve to bolster our manufacturing sector by making our products more competitive both domestically and internationally. So the very problem the authors present could potentially solve itself.
Overall, the authors do an excellent job of considering the potential for a decline in the US economy, and present some interesting strategies to mitigate the effects of the crash. Even if you disagree with the authors, some of their strategies (including investment in foreign securities and gold) have a place in almost every portfolio.
88 of 94 people found the following review helpful
on April 24, 2008
I hesitated to buy this book for quite a while because of the negative reviews claiming it was more of a sales brochure for the author's investment company. I find this claim to be absolutely unfounded, and regret that I took so long to finally purchase the book.
Notice, that I'm not saying Peter Schiff doesn't repeatedly plug and promote his company; he does, but that in no way takes away from the quality of the book's content. Crash Proof clearly lays out Schiff's investment philosophy and his opinions on the US/world economic situation.
At the very least, after reading Crash Proof, you will view economics in a refreshingly practical, non-conventional way. Mr. Schiff has a gift of breaking down complex financial information into language the common person can understand. Even more importantly, he exposes the smoke and mirror approach that's so prevalent with economists and cable news financial analysts. The view behind the curtain is very disturbing, to say the least.
No book can provide a magic bullet. In Crash Proof, you will be provided with the author's philosophy, and whether you invest with his company or not, you should be a more informed person after reading the book. I'm not a financially minded person, so I totally appreciate the informative, yet non-technical nature of Schiff's common sense approach to investing and the economy.
98 of 106 people found the following review helpful
on March 17, 2007
For the past two years I have been aghast at the insanity of the American economy, as exemplified by the "housing bubble". Time after time the "experts" have said "there is nothing to worry about", "we have bottomed", "this won't spread", but they have been wrong, time and time again. What would you expect Ben Bernanke or Hank Paulson to say, "We think it's time to RUN! RUN!". No, they just keep trying to pretend everything is fine. They all have a vested interest in keeping you happy. Their incomes and jobs depend on keeping you fat and happy, in debt and voting for the status quo.
Peter's book backs up, and illuminates the conclusions I myself have drawn about the health of our economy and its future. Inflation has been used as the panacea for all economic ills. Simply "printing" money (an apt term for the government borrowing without limit) makes everything appear great, however, life is like that when you borrow from the future. It is only when it comes time to pay it back that the pain begins.
Two weeks ago, the sub prime mortgage lenders imploded. They were revealed to be rotten to the core, though the "experts" on Wall Street had just upgraded them to "market outperform" the day before. Yes, that is true. Doesn't that tell you that the people in charge of the big money are hiding some very bad news from you or even worse, are in the dark themselves? Neither choice is good. This serves as an omen and example of what is coming to the broader economy. The "experts" keep telling you everything is ok, like they have many times before and been wrong. But take it from someone who has made lots of money shorting the housing market, the worse is yet to come.
As scary as this is, the solution to each American's possible, upcoming, personal tragedy is rather simple. You can essentially boil it down to "invest in non dollar assets". When you do this, every decline in the American dollar becomes a rise in your own net worth. In this book Peter goes into the details of how to do this. It isn't hard at all.
Time has run out. No nation, however great, can belay the laws of physics and economics.
Crash Proof has two important messages, it explains why we are in this situation, and how an individual can evade the upcoming crash. The language used is simple yet accurate. The examples and analogies he uses illustrate the problems and solutions without complexity. They get right to the issue without confusion.
45 of 47 people found the following review helpful
on May 20, 2008
I first heard the author last August during a TV interview. I was impressed because the points he made rang true to what I was seeing but not what the "experts" were saying. I bought the book, read it, and I enjoyed it very much. I now have a much better grasp on what's going on (e.g. oil prices going up, inflation, etc.) and I have made changes to my own financial portfolio which are playing out very well.
I highly recommend the book to anyone who wants to learn more about what is really happening in the US economy and I would encourge them to visit his website for more helpful info.
24 of 24 people found the following review helpful
on April 28, 2008
I'm an 18-year-old with an entrepreneurial mindset. I work hard and I plan to go far in the world of business. That's why I'm grateful to Mr. Schiff, who has prevented me from blindly following the seductively optimistic BS that most financial "experts" purvey.
Mr. Schiff's logic in Crash Proof is based on principle. (Unlike his naysayers, whose reasoning appears to change to fit each market movement and economic cycle.) From what I've studied about economics, I've discovered that - while the technicalities can be complex - economics is a very simple science. In fact, not only is it simple, it's almost inherent to anyone with a clear understanding of human nature. What Mr. Schiff has done with Crash Proof is great. He has brought that simplicity back to economics. He has an enviable ability to explain economics through simple analogies and stories, making this book easy to read and easy to understand.
Many people would have you believe Mr. Schiff is a gloomy and eccentric pessimist... who probably spends his weekends with fellow prophets of doom, such as Eeyore and Dr. Strangelove. In fact, you sometimes get the idea that major media outlets only have him on their shows so that the other commentators have something to do besides smile happily at each other. However, it's my impression that Mr. Schiff is a very optimistic guy with a lot of hope for the future and for the country. He is just one of the few willing to face reality.
I've noticed that some reviewers are irritated by the fact that Mr. Schiff plugged his brokerage firm in this book. Mr. Schiff is clearly a good businessman, looking out for his own good and that of his company. I'm sure that promotion of his firm was a driving force behind the writing of this book. But I genuinely believe he has a deep-seated concern for the average Americans who tend to swallow whatever manufactured garbage the mighty financial gods on Wall Street and in the media decide to feed them. You can't really blame him for providing an alternate route. To use Mr. Schiff's own analogy, he's warning of the shipwreck; should you resent the fact that he also offers a lifeboat?
Needless to say, I think you should waste no time in buying and reading this book. Think of it as an insurance policy on your financial well-being.
47 of 51 people found the following review helpful
on March 1, 2007
In Crash Proof, Peter Schiff provides a thoughtful economic and common sense analysis of the US economy. Topics range from inflation to the housing market to foreign investing to gold, all of which fit into a broader picture of the fundamental weaknesses in our economy that are ignored by 99% of wall street brokers.
The first 7 chapters lay out a convincing case for an inevitable decline in the US financial markets, and the final 3 chapters outline investment advice and strategies to protect yourself during such a decline.
This book is a must-read for investors. It's insightful, intelligent, and will certainly change the way you assess the strength of the US economy.
And Schiff sure is one heck of a writer and storyteller.