Let me say from the off that I think Peter Schiff rocks but when it comes to austerity in Europe he is completely clueless.
First of all why is Peter Schiff clueless about Europe.
The number one reason has to be that he is based in the US, this means that the majority of his news, if not all of it, comes from the media and probably none of it comes from the man on the street.
If Peter Schiff had contacts on the street in Europe he would know the real story.
So what does Peter Schiff think is happening in Europe?
Well lets look at Greece as a real world example. Peter Schiff is under the impression that there is austerity in Greece, that the Greek government is cutting back massively and the Greek government is cutting its deficit.
This is not correct.
In Greece the government deficit is the same as it was in 2008 ie around 2 billion Euros a month. And this is in an economy that is 20% smaller than in 2008. In today’s terms the government deficit has increased by 20% in relation to GDP.
This is not down to government austerity in Greece. It is down to tax increases and a government that has refused to cut back in any meaningful way.
On the evidence I see, there is a massive PR operation in effect which is aiming to blame the private sector for the problems in Europe. The propaganda offensive that is under way is trying to show that government has the answer because the private sector is clearly not working.
So what has caused the problems in Greece?
In short, big government. I outlined what has happened in Greece many time but I will go through it again.
The first thing the socialist regime in Greece did was to sabotage the private sector. The first “austerity” measures in Greece were, if you look at the evidence, designed to bring down the private sector.
This was done by massively increasing the cost of living in Greece through increasing consumption taxes, increasing fuel prices, increasing income tax rates, reducing the tax-free limit on earnings and imposing emergency taxes on businesses.
These measures weakened the Greek economy massively, it increased unemployment and it also made reductions in the government much harder as government workers were entering a jobs market that was much smaller.
Only after these tax increases took effect did the Greek government start to reduce spending.
This is not austerity. Austerity gives the impression that people would be spending less and getting less and slowly but surely the government would bring its finances under control. This is not what happened.
In reality the cost of living for Greeks has gone through the roof and at the same time the government is spending less than it was before. This is not austerity.
Why am I highlighting Peter Schiff’s misunderstanding of the situation?
Because I believe at some point he is going to be put under the spotlight as to why austerity is not working in Europe.
He is banging the drum for austerity at the moment and he is saying what is happening in Europe is a good thing.
He is going to be asked to explain why so-called austerity in Europe is leaving the economies of Europe in ruins.
I am sure he is going to be accused of having beliefs that lead to poverty and that capitalism only serves the rich.
Peter needs to start asserting himself when it comes to the subject of austerity and he needs to start calling out the talking heads and pointing to the evidence that shows there is no austerity in Europe, only tax increases.