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A Minute with Peter Schiff

The Internet star, potential Dodd challenger and talking head who was right elaborates on his philosophy

Fairfield Weekly

Thursday, March 12, 2009

By Phil Maymin

By vocation, Peter Schiff is the president of brokerage firm Euro Pacific Capital, and as we chatted in his Darien office, he had the occasional client meeting or other business to attend to — and he also had a radio show, a Forbes interview and a CNN show booked for the afternoon. We even paused our conversation for him to do a 10-minute radio interview over the phone.

Why all the media? Largely, it is because Schiff was one of the few to predict the economic crash — he even wrote a book in 2007 called Crash Proof: How to Profit from the Coming Economic Collapse. A video called "Peter Schiff Was Right," collecting many of his early prognostications with the mocking, incredulous responses from talking heads, has become an Internet meme.

A recent independent movement has been launched to encourage Schiff to run for Senate in 2010 against incumbent Democrat Chris Dodd. If he won, he'd knock out the chairman of the Senate Banking Committee. As a former adviser to Ron Paul, Schiff shares many of Paul's libertarian views and supporters, but he has not yet decided to run, saying such a decision is at least a year away.

But though his economic views are widely known — no bailouts of any kind, let companies and banks fail, abolish or alter the Federal Reserve, return to a currency backed by gold, phase out FDIC insurance, etc. — his other political views were not as well known. Until today.

Maymin: What would you do as Senator? What needs to be done?

Schiff: The thing that the U.S. government needs to do is shrink — at least by two-thirds. What I would try to do to help the American people is to cut as much government spending as I possibly could. I would shrink the military dramatically. I would try to take our troops home from wherever they are around the world and just try to have a military that defends the borders of the United States.

So take them home from Korea, from Germany, from Iraq and Afghanistan?

Just have our military here. Protect the coasts. We don't need to police the world. There might be a couple of small strategic bases, but we don't need to have people in Western Europe. They're still in Germany. What are we doing in Germany? We don't need all these troops there. So I would take them home. We gotta abolish a lot of departments, like education, energy — all these departments just need to go.

Labor?

Yeah, labor. We gotta abolish them. We gotta fire everybody that's working there. We've got to dramatically reform and phase out entitlements like Social Security and Medicaid. Try to find a way to pay something to people who that's their only source of income, but certainly guys with means, certainly a Warren Buffet or anybody with any decent wealth, has no right to a Social Security check. So try to find a way to phase those programs out, and just dramatically shrink government. Repeal a lot of unnecessary and burdensome regulations.

I mean, look, we've got the SEC. Get rid of it! ... Look at Bernie Madoff. People have gotten their life savings destroyed with Wall Street with the SEC protecting them, with FINRA protecting them. What the hell do we need these entities for? Get out of it. Let the free market function. Let the people do more due diligence. I'm sure that if there were no SEC, Bernie Madoff never could have existed. Because it was the SEC auditing him and saying that he was okay that made everybody think, "Oh, he must be good. The SEC is auditing him; he must be legit." There's no way he could have pulled off that Ponzi scheme without the SEC. Because people would have done their due diligence.

Shifting gears, how do you feel about civil liberties, the Patriot Act?

It's a disaster. There's nothing patriotic about it at all. Obviously it's an unpatriotic act. It is the one of the most unpatriotic pieces of legislation they've ever passed.

How would you feel about the Fair Tax, a national sales tax to replace all federal taxes?

We should abolish income taxes entirely. We should abolish payroll taxes. I think it is ridiculous that American citizens have to keep records, have to hire accountants, have to go through all this effort to pay their taxes. So we need to abolish it, and the government needs to collect revenue when we spend money, not when we earn money. And it's very simple. Just put a tax on every transaction. The rich will pay more than the poor because they spend more than the poor. There'll be no tax evasion. There'll be no underground economy. Everything will get taxed. But it encourages savings. So if you earn a million dollars and you don't spend any of it, if you put it all in the bank, and therefore it's available to be loaned out to entrepreneurs, you're not going to pay any taxes. You're not going to pay any taxes until you try to enjoy your money.

Which is fine, because if somebody is earning millions of dollars and living in a little shack and not spending anything, he's like a saint. He's basically a benefactor. He's just putting into the economic pot and he's not taking anything out for himself. Why should you tax that guy? That's better than charity. That's the best thing you can do for society ... And the reforms we need for health care. We just need to go back to get[ting] the government out of health care. The only insurance that people should have for health care is catastrophic major medical, which is inexpensive and everybody can afford it, and it should have nothing to do with your job, it shouldn't be provided by your employer — you should just buy it. That way people will take care of themselves and the hospitals — if people are really too poor, there'll be plenty that are charitable.

Why would you run as a Republican, not a Democrat?

It seems that philosophically I've got more in common with the Republicans than the Democrats.

Current Republicans?

Well, the Republicans talk about smaller government, less government. They don't govern that way but at least that's their rhetoric. Take out the religious elements — where I'm not necessarily on board — or the social conservative aspect, but the small government wing, the Ronald Reagan, Barry Goldwater types that are in the Republican party, they're not in the Democratic party. There's obviously Republicans that still believe in small government, in sound money. It's just none of the elected officials ever govern that way. That's one of the reasons you really need to put some people in office who really don't want to be in office. They're just there to do a job and get out. And the job is of dismantling the government and shrinking it and restoring it to its proper function.