Trend: A number of influential predictors have been dead wrong about the 2008 financial crisis.
Arthur Laffer is a supply-side economist who became influential during the Reagan administration as a member of Reagan's Economic Policy Advisory Board (1981-1989). He is best known for the Laffer curve. (via Wikipedia).
Laffer is famous for his free-market optimism.
Peter Schiff, president of Euro Pacific Capital Inc., adheres to the principles of the Austrian School of Economics and the Ludwig von Mises Institute. Schiff points to the low savings rates of the United States as its worst malady, citing the transformation from being the world's largest creditor nation in the '70s to the largest debtor nation at the turn of 2000. (via Wikipedia)
Schiff goes against the herd opinion and is ridiculed.
Link: Peter Schiff vs. the World, 2006 to 2007 - BusinessWeek.
Ben Steverman at BusinessWeek says:
What’s unnerving to me about this video is how certain both Schiff and his critics are that they are right. Obviously Schiff was proven right, to his credit. But at the time, you could agree with Schiff’s general critique of the U.S. economy (that the country is too indebted, for example), but you could find little evidence that it would get as bad as he predicted.
That’s one reason everyone else looks so baffled on this video: At the time, Schiff often sounded like he was from another planet. His view of the world so differed from both the market consensus and from certain supposedly objective measures of the U.S.’s financial strength.
I don’t think the lesson of the financial panic of 2008 is “always listen to Peter Schiff” or “we need better prognosticators.” It’s “you never really know what’s going to happen,” and “pay attention to evidence, not predictions.”
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