NORTH HAVEN – The two worlds of Peter Schiff merged over the weekend at a Holiday Inn hard by I-91, where he pitched investment advice and his U.S. Senate candidacy to Tea Party activists.
Schiff covered subjects never broached in last week’s tepid debate with two rivals for the Republican nomination, things like the merits of burying gold vs. stashing it off shore.
He was invited to give two talks, one on his candidacy and the other on how to use gold as a hedge against an economic collapse that he has been predicting since 2007.
Over three hours, Schiff seamlessly mixed business and politics, telling his audience some things it wanted to hear and a few it didn’t.
Republican U.S. Senate candidate Peter Schiff speaks to Tea Party activists
“Nobody in Washington thinks I can get elected,” said a smiling Schiff, who preaches cutting Social Security, Medicare and unemployment benefits. “I have stepped on every political third rail that exists.”
And then some.
Schiff is the president of the Westport brokerage firm, Euro Pacific Capital, and a frequent commentator on CNBC, CNN, Fox and Bloomberg known as “Dr. Doom” for his apocalyptic views of the U.S. economy.
He claims credit for calling the 2008 recession on the air and in print. In early 2007, he published, “Crash Proof: How to Profit from the Coming Economic Collapse.”
But here’s the thing: The 2008 recession is not the collapse he is talking about. If one considers Schiff a financial evangelist, then think in biblical terms of what he sees in store for the U.S. economy.
Schiff sees the U.S. economy unraveling. The debt is unsustainable, made tolerable for the moment only by interest rates kept artificially low by a meddling central bank, the Federal Reserve.
He likens the government’s fiscal and monetary policies to a Ponzi scheme, destined to collapse when when China and other foreign lenders finally cut off credit.
“At some point, they are going to look at the U.S. and decide we can’t pay it back,” he said.
The dollar will crash. Interest rates will rise, fueling inflation that could leave currency worthless. And that’s where the gold comes in.
“You have to have real money, gold and silver,” Schiff said.
It was unclear if Schiff found the right demographic at the Holiday Inn for his pitch about gold or his candidacy. Organizers had to pass the hat to offset the $650 cost of the conference room, and not even Tea Party leaders like predicting where the movement’s activists will show up on election day.
Tanya Bachand, one of the organizers, said she likes Schiff’s economic message, but a significant portion of the movement are opposed to abortion.
“He’s pro-choice, and that’s difficult,” she said.
Monique Thomas of Greenwich said abortion opponents are unlikely to find an ally who is a serious challenger in the mix. At some point, being against the status quo is not enough.
“You have to choose someone else,” she said.
Palin Smith of Woodbury was one of the audience members who has found it easier to oppose incumbents. He introduced himself as the originator of a dump Chris Dodd web site. With Dodd out and Richard Blumenthal in the race, Smith has shifted gears, printing buttons that say, “No Blumen Way.”
He has no pro-Schiff buttons, but he may get there, Smith said.
“I like him,” he said.
But Schiff is off message with elements of the Tea Party, seeing no need, for example, for tightening the borders against illegal immigrants. That bothered Philip Balestriere, a Republican town committee member from Stamford.
“We should lock our friggin’ borders,” he said. But he added, “Otherwise, he’s a great guy.”
Like most of his audience, Schiff bemoans the U.S. decision to go off the gold standard in 1971, leaving U.S. currency as paper backed only by a government drowning in debt.
Schiff recommended the Perth Mint of Western Australia as a safe place to buy and store gold bullion.
“It’s a good thing to store precious metals off shore, especially if we get into confiscation,” he said. Having assets off shore also is good “if things really, really get bad and if you have to leave.”
He also suggested keeping some gold on hand, buried in the backyard if necessary,
Schiff said he is days or weeks from launching a new subsidiary, Euro Pacific Precious Metals.
“We’re going to be selling primarily for physical delivery,” he said. “We will be very competitive on price.”
Schiff warned about storing gold in a bank safe-deposit box, in case the government bans the private ownership of gold.
“If you have it buried in your back yard, I don’t think they will dispatch agents to your backyard with metal detectors,” Schiff said.
He said that precious metals are the only safe hedge against hyper-inflation on the scale suffered by Weimar Germany after World War I. Schiff told the story of a wealthy woman whose assets were rendered worthless by inflation in a year.
“We are right there,” Schiff said, holding a microphone in one hand and chopping the air with his other like a metronome. “We are right at that point right now.”
(He said later that the Weimar Republic is not part of his stump speech. “This is an audience of people that want to know about why you should own gold,” he said. “Normally, I am not bringing up the Weimar Republic.”)
Schiff argues that the federal government has grown beyond the role envisioned by the founding fathers or authorized by the U.S. Constitution. It is a message that resonates with Tea Party adherents, who see much of the federal government as unconstitutional, including the federal income tax.
Nationally, the movement has veered off into areas that Schiff sees as foolhardy, including conspiracy theories on 9-11 and the economy.
During a Q&A period, the second question posed was about the need for a commission to resolve “unanswered questions” about 9-11.
“I’m not aware of any unanswered questions,” he said. “I do know there are people out there who believe that 9-11 was somehow planed by the U.S. government. I think our government is incompetent. I don’t think they are evil.”
Schiff warned that talk of conspiracies will cost the movement credibility.
“We can’t be led down those roads and think that everything is a result of conspiracy,” Schiff said. “There are people who think I’m a double agent in this conspiracy because I’m Jewish. They think, hah, I must be in league with the bankers.”
The moment seemed awkward.
“I don’t believe in any of these conspiracies,” Schiff said. “I don’t think Elvis is alive. I don’t think the government is hiding aliens in some silo in New Mexico.”
His audience laughed.
The next question came from Joe Markley of Southington, a former Republican state senator who is running for state Senate again. Was there anything in Schiff’s past that could haunt his candidacy?
“There are no scandals in my background,” Schiff said.
His opponents can “take things out of context” and paint him as unpatriotic for advising clients to invest overseas, he said. And they can talk about his disinterest in voting for much of his adult life.
“And, of course, there’s my father,” he said.
His father is Irwin Schiff, an imprisoned tax protester who has insisted that the U.S. has no authority to collect a federal income tax.
After talking for nearly three hours, Peter Schiff later sat with a reporter, sipping water from a paper cup. He said he agrees with his father about the income tax, but that’s not his fight.
His father tilted at that windmill for more than 30 years. For his troubles, he was convicted three times in federal court, most recently four years ago at the age of 78. He is serving 13 years in a federal prison in Terre Haute, Indiana.
“It was his life,” Schiff said. “He was committed to this cause. He was obsessed. He was like Captain Ahab, fighting the great white whale. And that wasn’t what I wanted to do. But I have a lot of respect for what my dad did, and his willingness to put it all on the line the way he did.”
A woman interrupted to compliment his performance in last week’s debate. He smiled and nodded.
Peter Schiff was 5 and living in Connecticut when his parents divorced. He was raised by his mother in New York, south Florida and California.
“Always with my mom,” he said. “My dad was always off doing his tax thing.”
Schiff wondered if his father will become an issue.
“I did work with my dad for a couple of years when I was 19 and 20. They could try to hold that against me,” Schiff said. “My name is on one of his books, ‘The Great Income Tax Hoax.’ “
For now, his Republican opponents, Linda McMahon and Rob Simmons, are ignoring Schiff.
Simmons, a former three-term congressman, is attacking McMahon for the off-color content of her family’s business, World Wrestling Entertainment. McMahon is attacking Simmons for being a former three-term congressman.
That leaves Schiff free to preach the gospel of economic doom, a message that was ridiculed prior to 2008.
He was asked if he ever thinks his message sounds a bit paranoid, especially when he talks about possibility keeping assets off shore, in case living in the U.S. becomes untenable.
“I’m not saying this is definitely going to happen,” Schiff said. “I’m just saying what will happen if we continue on our present path. I know that everything we are doing is undermining the economy further. We are laying the foundation for a greater collapse.”