Justin Fox, Time magazine's business and economics columnist, discusses Financial Armageddon:
There are those who fret that current troubles in real estate will lead to an economic slowdown, maybe a recession. Then there's Peter Schiff. "Our standard of living is going to decline," the Connecticut stockbroker confidently declares. "There's no way around it, and it has just started."
Schiff owns Euro Pacific Capital, a smallish firm that specializes in moving clients' money into nondollar assets like foreign stocks and bonds. Over the past couple of years, he has become a regular, hectoring presence on cable-TV business shows--on CNBC they call him "Dr. Doom." Now he has a book out, ominously titled Crash Proof: How to Profit from the Coming Economic Collapse.
It isn't the only such cheery tome on shelves these days. In Financial Armageddon: Protecting Your Future from Four Impending Catastrophes, trader Michael Panzner warns of an economic meltdown that will lead to Zimbabwe-style hyperinflation and possible martial law. In Empire of Debt: The Rise of an Epic Financial Crisis, which briefly hit business best-seller lists in 2005 and will feature next year in a documentary film by the makers of acclaimed crossword-puzzle geekfest Wordplay, financial-newsletter authors William Bonner and Addison Wiggin draw parallels between the early 21st century U.S. and the decline of Rome and imperial Spain. There are more such jeremiads on sale. I just don't want to use up all my space listing them.
We have heard such pronouncements of impending doom before, of course. Howard Ruff's How to Prosper During the Coming Bad Years was a top seller in 1979. Ravi Batra's The Great Depression of 1990 hit No. 1 in 1987. Ruff's book did in fact ring in several very bad years, and there was a recession in 1990. But doom was averted, the economy came roaring back both times, and the lesson learned was that betting against the continued prosperity of the U.S. was a losing strategy.
When I bring this record up with Panzner, he has a ready retort. "History didn't begin in the postwar period," he says. "History didn't begin 20 years ago." Living memory includes the Great Depression, begun in 1929 and stopped only by global war; stocks didn't fully recover until 1954. The scary scenarios painted by Panzner and his ilk are not outside the realm of historical experience. What's more, they're all grounded in the incontrovertible truth that much of our economic growth of the past 25 years--and almost all the growth of the past five--has been funded by debt.
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