I must start this article by confessing that I’m not only a YouTube fan, but also the nerdy type that watches speech footage from the likes of economists Milton Friedman as well as various financial services thought leaders. Recently, I watched a broker-dealer owner give testimony to Congress. Listening to his testimony compelled me to feature his opening comments as the centerpiece of this article for two reasons. First, the content of his testimony was an onion of truth bombs. Second, his testimony reflected many of the thoughts and concerns that broker-dealer owners discuss in private but are afraid to say in public for fear of regulatory backlash.
The speaker, Peter Schiff, is the owner of the BD Euro Pacific, Inc., which is a full service broker-dealer specializing in foreign markets and securities. As we’ve seen an explosion of Fed money printing since 2008, Schiff has been talking up physical gold and silver as protection from our flat currency. Back in 2006, Schiff was known for being vocal about his bearish views of the U.S. economy as he warned about an impending crash of real estate and financial markets, which earned him ridicule and mockery by numerous commentators on CNBC.
Peter Schiff’s Remarks Before Jobs Committee
Here are excerpts from Peter Schiff’s testimony in September 2011 before the House Government Oversight and Reform Committee, specifically the subcommittee on regulatory affairs, stimulus oversight and government spending.
“I guess you can say I’m in the economic and financial doom and gloom business. Thanks to this body, President Obama and the Fed, business is booming. I would rather profit from America’s success rather than her failure, which is the reason I’m here today. We have some serious structural problems underlying the U.S. economy and we cannot solve them until we understand them.
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“As a nation, we have borrowed and spent our way into a gigantic ditch. We are not going to get out of the ditch by spending more. We have to reverse the mistakes of the past, not repeat them. Government stimulus will never grow this economy, it will never create jobs and it’s the equivalent of trying to put out a fire by pouring gasoline on it.
“We have to understand that the housing bubble, the financial crisis of 2008, two events I had predicted and warned about, were the consequence of Government stimulus. We stimulated our way into this problem and were not going to stimulate our way out. In fact, the stimulus is actually a sedative. The stimulus is preventing the free market from unraveling the problems that years of bad monetary and fiscal policy have created. We don’t need more spending, we need the opposite of spending, what we need is under consumption.
“What the economy lacks is savings, investment and production. If we try to preserve the jobs of the bubble economy with more reckless money printing, borrowing and government spending, all were going to succeed in doing is preventing the restructuring we need and preventing more productive jobs from ever coming into existence.
“I want to talk specifically about jobs. I’m an employer of about 150 people. I would probably employ about 1,000 more if it weren’t for government regulations that have inhibited my ability to hire and grow my business and force me to move portions of my business overseas in order to escape the regulatory burdens here. The questions are, why do I hire people and where are these jobs coming from? Jobs in a free market come from two things. They come from profits or the profit motive and they come from capital. You need both to create jobs and in a free market there are going to be plenty of jobs. If there are not enough jobs, congress has to ask themselves, “What are we doing to inhibit this process?” How are we preventing jobs that would normally be here from coming into existence? Now, in order for me to hire someone, I need to be able to make a profit which means the person I hire needs to deliver to me more value than the cost of employing them. The cost of employing them is not just the wages I pay them but it’s all the mandatory benefits, taxes and more importantly, the legal liability that I incur when I hire someone. In fact, one of the riskiest things you can do in America is to hire somebody and because of all the liability from government and from lawsuits that you have put on employers, most small businesses concerns are not how to hire people, but rather, how can I grow my business and hire as few people as possible? That is not something that happens in a free market rather that is something that happens as a consequence of government.