Below is an abridged transcript.
Q: Last year, a friend of mine sent me a YouTube video of an exchange you had on CNBC with Arthur Laffer in 2006. After you made your case for the pending recession, he insisted that “the United States economy has never been in better shape” and vehemently denied any possibility of fundamental economic problems. He then bet you “a penny and your honor” that you would be wrong. Four years later, history has vindicated your prediction. But what I really want to know is this: has Mr. Laffer fulfilled his bet?
A: Not only did he not pay me the penny or write me the letter of apology that was part of the bet, to this day he actually denies that he lost. He's trying to claim that in mid-2007, when we had that bet, that the economy had never been in better shape, and that for some completely unconnected reason – like the shift to Obama and the Democrats – that it all collapsed in a way that no one could have predicted. What I tried to explain on CNBC, and you can look at the video which has gotten over 400,000 views, was that we didn't have a good economy. We had a phony economy. We had a bubble. I tried to explain to Art Laffer that the rise in the stock market and home prices didn't represent real wealth, and he said it did. It was in illusion.
He said I was completely absurd and totally off-base and that I had no idea what I was talking about. Now, Art Laffer's not a bad guy. He's saying a lot of good things now about the problems in the economy. I just don't know why he can't be man enough to admit that he didn't see this coming in 2007 and that I did and that I was right and he was wrong. At least I can respect that when somebody admits that they got something wrong. But for him to keep making fun of me and diminish foresight and cling to the idea that he was completely right, it's kind of infuriating.
In fact, I poked a little bit of fun at Art Laffer in my new book, ,which is a cartoon fable explaining an economy and how it works and why it doesn't. It's a great book to understand economics, but I do have one page in there where Art Laffer makes a cameo appearance. He's saying there saying, “the economy's never been in better shape and everything's great” right before the whole thing crashes.
Q: Here's a question that comes in from one of Benzinga's readers, Courtney. She writes: I am a 26-year-old, single, female working professional. From an economic perspective, what, if anything, do I have to look forward to for the future?
A: A lot of that depends on the path that we take as a nation and the policies that we pursue. I'm running for the United States Senate. I know it's kind of a long shot at this point, of course I still have to get on the ballot, but I should have submitted enough signatures and maybe I can beat Linda McMahon and get elected to the Senate. But if I can help change the course of Washington – right now we're marching down Hayek's Road to Serfdom, and we're almost there – but if I can somehow build a fork in that road and make sure that we veer on to the right path, if we can start dismantling the enormous government we've erected over the years, if we can start repealing the rules and regulations and letting free market forces allocate resources in this economy and determining which companies survive and which fail, if we can cut government spending enough, if we can abolish enough agencies and departments so that we can reform and reduce taxes in this country on hard work and production and savings and investment, we have a bright future and there's a lot to look forward to.
But if on the other hand, we don't do that and continue to move along in this direction and get government more involved in economic decisions and the economy, have bureaucrats and legislators make these key decisions and increase taxes and spending, then there is no opportunity in this country. But the good news is that there's opportunities in other countries. You know, just like my grandparents left Eastern Europe and came to America and had great lives, Americans can do the same thing. There's other opportunities and if people want to succeed and work hard, they can leave the country and pursue their dreams elsewhere. That's a very unfortunate development if that happens and it's very sad for this country. But individuals have to make decisions and do what's in their own self-interest. If that means emigrating to another country, that's what it means.
Look for part two of this interview to hear more from Peter Schiff on his senate campaign, holding physical gold vs. exchange-traded funds like SPDR Gold Shares GLD and where to find the world's best investments.
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