– Bloggers note: Reader’s Peter Schiff is one of the few economists who REALLY saw this downturn coming before it happened. Many jumped on the bandwagon after the fact, but not Mr. Schiff. He is a great forecaster, and extremely succinct writer, I recommend following him. —
This is a partial reprint of Peter Schiff’s Article on Financial Sense Website
Peter Schiff, Euro Pacific Capital | October 27, 2008
Insanity is often defined as repeating the same action while expecting a different result. Recent Congressional activity to push through this year’s second economic “stimulus” package certainly indicates that many of our political leaders may have special needs.
Responding to the $150 billion stimulus that was passed at the beginning of the year, I made the following observation in my February 15th commentary Upping the Inflation Dosage : “The failure of the stimulus plan to cure the economy will cause the Government, and the Wall Street brain trust, to conclude that it was simply too small. Their next solution will be to administer an even stronger dose.”
It’s interesting to recall that at the time, just 9 months ago, the $150 billion package caused much hand wringing, especially from Republicans still clinging to notions of Federal restraint. This was before an avalanche of more than $2 trillion in new spending initiatives — before Bear Stearns, wide open discount windows, AIG, Fannie/Freddie, Federal Mortgage Auctions, Detroit loan guarantees, and preferred shares in the banks. In retrospect, the $150 billion stimulus seems quaint. It is not surprising that the latest package is expected to be twice as large. When this one fizzles, look for “Stimulus III” to be even larger.
