Getting Lean and Mean - Interview With Peter Schiff - Zing Talk

Peter Schiff is the president of EuroPacific Capital. Peter is a widely-followed financial commentator and author of the book, How An Economy Grows And Why It Crashes.

He was nice enough to grant Benzinga another interview on Benzinga's Podcast: Zing Talk.

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First things first - in your last interview with Benzinga, you said that you felt that gold was going to go up to 5,000 an ounce. Do you still feel that's true? What sort of timeline are you expecting?

I think it’s going to go there, it’s just a matter how long its going to take, I don’t think it’ll take 10-20 years, it can do that in a year, or two years, or six months, I don’t know. But I do think the price of gold is going higher, so from that perspective you don’t have to know how high it’s going to go, just that its going higher than it is today.

Now that the primary season has ended and your campaign is over - do you intend to stay politically active this electioncycle? Possibly run as an independent?

I’m not running for office as an independent, so the answer to that is no, might I do something to help other candidates? I might, I’m certainly open to helping other candidates.

Any candidates in general?

I’ve endorsed Rand Paul, he’s running for Senator in Kentucky. He hasn’t approached me for active support, though.

In 2008, you were an advisor to Congressman Ron Paul for the presidential election. What do you think about his son, Rand Paul entering politics?

Rand understands the problems, and he understands the solutions, so I support him. I think he’s sincere. Very familiar with Rand’s father, he has a lot of integrity, and I think his son shares that. I think we need more people like Rand running for office.

Are the midterm elections going to have a big impact on the market, or is that just an exaggerated idea?

I think gridlock would be better than what we have now, anything that we pass is just doing damage. So the extent that we can put the breaks on the Obama agenda - that’s a positive. The market is still going down, and the depression is still going to proceed, but the Republicans aren’t going to do the right thing either. They might stop the Democrats from doing more than they would otherwise do.

You feel the Republican Party isn’t offering a better direction?

No. The Republicans - some of them are objecting to the things that Obama is doing, but if Bush were doing them, they’d support him. Why weren’t the Republicans opposed to George Bush? Are they going to push for what we need? Cuts in government spending? Cuts in entitlement spending? No. Are they going to get the government out of the housing market? No. The problems are still going to be there regardless.

Do you advocate getting rid of Fannie and Freddie entirely? Privatize them?

Well, there’s no way to privatize them. They were privatized before, with government guarantees. Without government guarantees, they’d go bankrupt.

Last time we spoke the economy seemed like it may have been on the path to recovery. Now even the Fed is worried about a possible double-dip, and they’re ramping up their quantitative easing strategy to combat that. Where do you think the economy is headed -- and what can we do sustain a recovery?

The only people who thought the economy was recovering didn’t understand why it was sick, so they believed it was recovering when it was becoming more infected with the same disease. The problem is because of the cost of the government stimulus, the economy is sicker now than it was before. We have greater imbalances, we’re deeper in debt and worst of all, we have socialized more of the economy. So we’re moving away from a market based economy to essentially a planned economy, and that’s just compounding the problem.

The reason the economy was in trouble is because interest rates were too low for too long, government subsidies to housing caused Americans to spend too much money. Now reality is coming back, and Americans have realized that they’re broke, and they’ve rightly making decisions to stop spending, and start saving. We have to move from a phony economy where we just spend borrowed money, to a real one where everyone is saving money and we produce things. The recession is the bad medicine we have to swallow to get better.

Any initatives that might be done that could help that process (the recovery) along?

We need the government to get out of the way. There are certain things the government can do legislatively that won’t cost any money - they can deregulate health care. They can stop subsidizing education - cause college to become cheaper. Cut the pay for government workers and entitlement spending. If we can repeal these rules and regulations, we can make America more competitive and attract foreign capital. We can right this ship.

How would education come down if we remove the subsidies?

The government guarantees student loans, much like mortgages - so they have more money to spend. Without subsidies, colleges would be forced to lower the prices. What we need in colleges is a seventy-five percent off sale.

One more question - has Art Laffer paid up?

No. In fact, Laffer says I haven’t won the bet. He says the economy was in great shape. The only reason it collapsed a few years later was because of mistakes made. He says the economy was the best ever.

Interested in profiting from the upside in gold? Check out SPDR Gold Shares Trust GLD, iShares COMEX Gold Trust IAU, or ETFS Physical Swiss Gold Shares SGOL, all of which hold physical gold bullion. If you share some of Peter's concerns about our economy, you should consider owning physical gold. John Burbank also recommended owning physical gold in his interview with Benzinga.