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Peter Schiff’s new book, “The Little Book of Bull Moves in Bear Markets” is awesome. I’m only at Chapter 2, but it’s already one of my favorites. Here are some of my favorite quotes so far.

Foreword by Marc Faber
“Many regular folks may be tempted to look at economics much as they look at quantum physics: concepts that lie beyond the reach of casual understanding…Government leaders have seized upon these theories as a means to deploy a smoke screen between their own actions and the impact those moves make on the economy. However…Peter Schiff…shows us with common sense…not only how to avoid costly investment mistakes, but how to capitalize on opportunities that will preserve and enhance our wealth.” (pp. xviii-xix)

Author’s Note
“For price changes to be meaningful, nominal values must be converted to real numbers, meaning there has to be an adjustment for inflation…Currently I estimate real inflation at between 8 and 10 percent despite the CPI reflecting only a mere fraction of that number, around 4 percent.” (p. xxiii)

“Long-term investors must understand the nature of the secular bear market now well under way, and resist the temptation to buy into the various upside reversals that occur along the way.” (p. xxiv)

“Like Merrill Lynch, Wall Street generally is ‘bullish on America.’ It wants its public to think we’re either in a bull market or near the end of a bear market…which is to say a market perennially favorable for buyers of what the Wall Street firms are selling.” (p. xxiv)

“The strategies I recommend in the pages that follow are based on my conviction that the U.S. dollar will continue to lose purchasing power as an expansionist monetary policy, in a futile effort to revive our consumer-based economy, creates additional inflation. With the dollar on a clear path toward collapse, cash and bonds are held at one’s peril; and the stock market…has…been in a secular bear market…that will last well into the next decade.” (pp. xxiv – xxv)

“Running concurrently…has been a worldwide secular bull market in agricultural, natural resource, and precious metals commodities.” (p. xxv)

“To show the dangers of overpaying for stocks at bull market peaks, the Dow was worth 20 ounces of gold in both 1929 and [1965], but bottomed at near one ounce of gold in 1932 and 1980. The recent bear market began with the Dow priced near 43 ounces of gold, and is worth less than 12 ounces today, on its way to retest the 1932 and 1980 lows.” (p. xxvii)

“The book focuses on strategies of mine that will help readers avoid getting hurt by the collapsing dollar and enable them to participate in bull markets elsewhere [i.e., outside of the U.S.]. The goal is to help you preserve and enhance wealth that can be reinvested in America after fundamental economic reform takes place.” (p. xxix)

Introduction
“The current economic slowdown is being dismissed as the sort of cyclical decline that the American economy has shrugged off numerous times over the past generation and a half. Unfortunately, we will not be so fortunate this time around. It is in fact the beginning of the economic collapse that I foretold early last year.” (p. xxxii)

“The basic problem was that almost everyone confused reckless consumption with legitimate economic growth, and asset bubbles with genuine wealth creation.” (p. xxxiv)

“The phantom wealth created by booming real estate values engendered massive spending on nonproductive consumer goods, such as residential real estate, home remodeling, appliances, plasma TVs, SUVs, vacations, clothing, food, and energy. However, now that home equity is disappearing and teaser rates are resetting, we simply cannot afford to pay the money back…more importantly, our creditors are arriving at the same conclusion and cutting off the funding.” (p. xxxv)

“Lenders will rediscover the prudence of prior generations, as it becomes painfully clear that banking is not really about lending money at all, but about getting paid back.” (p. xxxv)

“The next several years will be increasingly difficult as the various proposed government cures will only worsen the underlying economic disease and delay any meaningful recovery.” (p. xxxvi)

“Do not follow the typical Wall Street buy-and-hold mantra and the advice to simply ride out the economic storm. This is a category five monster, and it will destroy all who foolishly remain in its path. This is not the time to hunker down, but to simply get out of the way and let the storm pass you buy. This book will show you not only where to go, but how to get there.” (p. xxxvi)

CH 1 – Let’s Do the Time Warp Again: What Happened to Our Purchasing Power?
“My focus will be on where to put your money at a time when the American economy is flat broke and the wealth creation is happening elsewhere.” (p. 2)

“Consumer debt was fueling consumer spending that the government was misrepresenting as legitimate economic growth signifying a healthy economy.” (p. 3)

“[By 2007] America had become a nation of consumers, and producers were disappearing.” (p. 6)

“[ By 2007] the national debt…exceeded $9 trillion, a staggering and unrepayable figure yet only a small part of the overall debt picture. Unfunded liabilities, such as Social Security, veteran benefits, and loan guarantees raised total government obligations to over $50 trillion. Foreign currency reserves held by the United States Treasury declined to a mere 1 percent of world reserves.” (pp. 6-7)

“On a personal level, the American population was up to its eyeballs in debt and the national savings rate had justed turned negative for the first time ever.” (p. 7)

“As fellow [CNBC] panelists cited GDP growth as evidence of a strong economy, I countered that 70 percent of GDP was consumer spending on imported goods using borrowed money. That, I argued, was not wealth creation as the term economic growth implied, but wealth destruction. It was not as though we were importing capital goods to be used to produce consumer goods.” (p.

“The end result …will be the destruction of [America’s] economy by massive inflation.” (p. 11)

“The phantom wealth created by booming real estate values engendered massive spending on nonproductive consumer goods, such as residential real estate, home remodeling, appliances, plasma TVs, SUVs, vacations, clothing, food, and energy…”

What the hell are nonproductive consumer goods? a new economic term?

I just love these experts…illuminating the obvious, pandering to our fear and selling books while they’re at it.

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