Peter Schiff - The Real Crash: Americas Coming Bankruptcy---How to Save Yourself and Your Country

Additional Praise for The Real Crash

Americas political leaders should have taken Peters 2007 book, Crash Proof, to heart before they tried to borrow, print, and bail us out of trouble. Today, theyalong with all Americansabsolutely must take heed of The Real Crash. Peter Schiff understands the marketplace, and he understands the consequences that occur when government attempts to manage that marketplace. Pay attention, America!

Gary Johnson, former governor of New Mexico and presidential candidate

Peter Schiff has been painfully right about the downward spiral of the U.S. economy over the last four years. Easy money, rising tax rates, and unbridled debt are a prescription for economic disaster. Lets hope Barack Obama reads this.

Stephen Moore, economist and Fox News commentator

While many of us have justifiably focused on how high taxes are economically corrosive, Peter Schiff does a great job of explaining why government spending and debt are even worse. As we continue grappling with the monster of a runaway federal government, this book is one of the best assets conservatives can turn to in making the case for fiscal responsibility and capitalism.

Grover Glenn Norquist, president of Americans for Tax Reform

Peter Schiff was one of the few pundits who predicted correctly the 2008 economic and financial collapse. Now, he makes a compelling case in a highly readable book that the day will come when the world stops trusting the dollar and the ability of the U.S. government to pay its debts. I agree with him that Then well get the real crash.

Marc Faber, editor, the Gloom, Boom & Doom Report

You need to know his casewhether he is right or notif you are going to be prepared for this decade.

Jim Rogers, investor and bestselling author of A Gift to My Children and Investment Biker

Although there were many people and groups that I had considered for this dedication, I feel compelled to risk redundancy and once again credit my father, Irwin Schiff. As I re-read the material, the echo of his voice clearly resonates throughout. It would be disingenuous to avoid the fact that no single individual had a greater influence on the development of this material. Unfortunately, as a quasi political prisoner, he cant speak for himself. Im happy to be able to do it for him. Hopefully his courage and idealism will play a part in restoring the American spirit that once beckoned people like my grandparents to come to these shores in the first place, so that my son, Spencer, his generation, and those that follow might also enjoy the blessings of liberty.

Acknowledgments

This book would not have been possible without the help and support of many people.

I am grateful to the team at St. Martins PressSally Richardson, George Witte, Matthew Shear, Laura Clark, and Joe Rinaldifor immediately recognizing the importance of this book and publishing it with such skill and energy. Once again, I am indebted to my brother, Andrew Schiff, a crucial member of the Euro Pacific team, for his marketing savvy and dedication to getting my message out. And I want to thank Tim Carney for his invaluable and steadfast help in crafting the text through many revisions as well as my agent, Lynn Sonberg, for her professionalism and editorial support.

Disclosure

Data from various sources was used in the preparation of this book, the information is believed to be reliable, accurate, and appropriate; but it is not guaranteed in any way. The forecasts and strategies contained herein are statements of opinion, and therefore may prove to be inaccurate. They are in fact the authors own opinion, and payment was not received in any form that influenced his opinion. Peter Schiff and the employees of Euro Pacific Capital implement many of the strategies described in the book. This book contains the names of some companies used as examples of the strategies described, as well as mutual funds that can only be sold by prospectus; but none can be deemed recommendations to the readers of this book. These strategies will be inappropriate for some investors, and we urge you to speak with a financial professional and carefully review any pertinent disclosures before implementing any investment strategy.

In addition to being the CEO, Peter Schiff is also a registered representative and owner of Euro Pacific Capital, Inc. (Euro Pacific). Euro Pacific is a FINRA registered Broker-Dealer and a member of the SIPC. This book has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation to buy or sell any security or instrument, or to participate in any particular trading strategy. Investment strategies described in this book may ultimately lose value even if the opinions and forecasts presented prove to be accurate. All investments involve varying amounts of risk, and their values will fluctuate. Investments may increase or decrease in value, and investors may lose money.

Investors should carefully consider the information about Euro Pacific Funds, including investment objectives, risks, and charges and expenses, which can be found in the Euro Pacific Funds prospectus or summary prospectus. Copies of the prospectus or summary prospectus are available at the Funds Web site, www.europacificfunds.com. You should read the prospectus or summary prospectus carefully before investing or sending funds.

Contents

Part I:

Part II:

Introduction

I GUESS YOU WERE RIGHT about the crash, Peter.

I hear that a lot, in reference to my 2007 book, Crash Proof, where I predicted an economic catastrophe in the United States. Since late 2008, when the housing market had collapsed and major banks went to the brink of failure, whenever people credit me with calling the crash, it pains me to tell them that what they saw in 2008 and 2009 wasnt the crashthat was a tremor before the earthquake.

The real crash is still coming.

Just as the housing bubble delayed the economic collapse for much of the last decade on the strength of imaginary wealth, today twin bubbles in the U.S. dollar and Treasury bills and bonds are providing a similar prop. But the day will come when the rest of the world stops trusting Americas currency and our credit. Then well get the real crash.

During my run for Senate in 2010, I constantly encountered politicians and journalists who blamed the current economic troubles on capitalism and free markets, arguing that more government was needed. When the bigger crash comes, the attacks on capitalism will become louder, and the proposed government interventions will become even more extreme. This makes sensepoliticians want more power, and they know that crises and panics are the best opportunities to get people to surrender their freedom for the promise of security. Thats what Rahm Emanuel meant when he said, after the 2008 election, You never want a serious crisis to go to waste.

But the government was a chief architect of the mess that were in, and every day, government is making it worse.

I invest for a living. I look for where other people are making mistakes. I look for companies or commodities that are mis-valued by the market, and I study who is investing where. Its glaring that American companies are still not making capital investments. American familiesafter a brief period of paying down debt and increasing savingsare borrowing more than theyre saving.

Just as in 2008, we have too much consumption and borrowing, and too little production and saving. Since the depths of the economic downturn in early 2009, most of the wealth weve created hasonce againbeen imaginary.

Real estate is still grossly overpriced. Most stocks are still overpriced as valuations are based on earnings and artificially low interest rates and both are unsustainable. Companies that are hiring are probably making mistakes they will soon regret. The fundamentals of the economy are not soundnot even close.