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Peter Schiff vs. a Marxist

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Peter Schiff recently appeared on RT’s Crosstalk and ended up in a debate with a Marxist.

The focus of the discussion was a “K-shaped” recovery where some people benefit economically, but we’re left with many permanently mired in an economic underclass. Peter said you can talk about a K, L, U or V-shaped recovery, but none of it really matters because when you boil it all down — there is no recovery. And the root of the problem? We’ve abandoned true capitalism and embraced socialism and central planning.

Richard Wolff serves as Professor Emeritus of Economics at the University of Massachusetts Amherst and recently wrote a book titled, “Understanding Marxism.” He framed his comments in typical Marxist terms – the pandemic has led to the rich getting richer and the poor getting poorer, and he focused on wealth inequality.

Peter had a different take.

I don’t care what letter you want to use to describe it. My problem is with the word recovery. Because I don’t think we’ve recovered at all. Sure, there has been a recovery in the stock market in that the market recovered what it lost in the early days of COVID. And yes, this recession that we’re currently in began with a very substantial collapse. And yes, there’s been a bit of a bounce off of that collapse. But we’re still in recession. So, I don’t know if recovering to being in a less-severe recession than we were in at one point really qualifies as a recovery. And I don’t think we’ve seen the lows. I think we’re going to relapse. I think we’re actually going to go down and there’s a good chance that the stock market might make new lows as well. But regardless of what happens with that bubble in the short-run, the reality is that Main Street’s pain has actually been Wall Street’s gain – it’s precisely because the economy remains so weak. And what’s really at the root cause of the weakness is not capitalism. It’s the failure to have capitalism. It’s the Federal Reserve that is monetizing massive government debts that are only inflating asset bubbles. But at the same time, it is depriving the real economy of the recourses that it actually needs to grow and build a real recovery that would, in fact, lift all boats. Instead, we’re settling for a fake recovery because that’s the easiest one to create. Because in order to have a real recovery, we’re going to have to have some short-term pain in order to make that possible. Because what has to recover is not consumption but production. We need more savings. We need more capital investment. And to enable that, we actually need higher interest rates, not lower interest rates.  And we need a smaller government, not a larger government. So, everything that we have done since the pandemic began is actually weakening the economy and we’re compounding all the mistakes we made before the pandemic.”

Wolff bristled at Peter calling the mechanization of the Fed a “mistake.” He said, “This is how capitalism flares out.” Peter said, “Don’t confuse what America has now with capitalism.”

I mean, what’s left of capitalism has been destroyed by socialism. So, it’s the socialism that’s crept into the system that is responsible for the problems and this mass disparity in wealth.”

Peter also said Wolff is making a bad assumption if he thinks this is going to end well for the rich.

I assure you, it’s not. These asset bubbles are temporary. A lot of this wealth only exists on paper. … What is coming is a major collapse in the value of the dollar.”

The rich will “get theirs” too and everybody will ultimately be impoverished by one degree or another by these policies.

Peter and Wolff went on to debate the root of the problem. Peter said we’re in this gigantic hole because we’ve abandoned capitalism and embraced a socialist form of government.

We have government central planning. We have central planning on interest rates. We have price-fixing and market manipulation. And we have an economy where we’re trying to generate growth by printing money and giving it to people to spend. And that is not going to work.”

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