Crash Proof: How to Profit from the Coming Economic Collapse

by John Downes and Peter D. Schiff

Book Overview

The economic tipping point for the United States is no longer theoretical. It is a reality today. The country has gone from the world's largest creditor to its greatest debtor; the value of the dollar is sinking; domestic manufacturing is winding down - and these trends don't seem to be slowing. Peter Schiff casts a sharp, clear-sighted eye on these factors and explains what the possible effects may be and how investors can protect themselves. For...

• Format: Hardcover
• Language: English
• ISBN: 0470043601
• ISBN13: 9780470043608
• Release Date: February 2007
• Publisher: John Wiley & Sons
• Length: 272 Pages
• Weight: 1.12 lbs.
• Dimensions: 1.1" x 6.2" x 9.3"

Customer Reviews

Excellent macroeconomics refresher, solid advice for pessimists

I read this book around early summer after hearing about it on a financial webcast I stumbled accross. Thank heavens I did. I read the author's explanations of what has happened and what will and I have to say that it makes sense to me. I had macroeconomics 25 years ago and barely paid attention but after reading this it all came back to me. Schiff doesn't just preach gloom and doom. He lays out a good case for his predictions. I didn't just trust this book. I read two others that basically say the same things. What I liked was that it validated thoughts and questions I'd had for years. "how can we all be so wealthy yet save nothing?" "How can we have had such a run up in home prices even though we haven't added that many people to the nation?" "How can inflation be officially low even though so many things have gone way up in price (food, fuel, insurance, education, health care, and even home prices till recently)". "How can we manufacture relatively little and sell each other services and still become more wealthy?" If that was possible I'd stay home and cook my wife meals while she mowed the lawn for me and we'd just get rich that way. Maybe I just like how Schiff shares my natural pessimism and distrust of politicians being put in charge of our national statistics. But I used a simplified form of his advice, bought gold via ETFs, an international bond fund, with the balance in a treasury money market fund, and in just a few short months I've made quite a bit more than I did in any single year since I've been investing. And unlike in past years, I feel very confident that the trend in my investments is going to be up. The underlying economic picture simply demands that these products will do well. I realize that 3 months of good results (up 20%) does not prove anything, but I read this book way before I heard anything in the news about the dollar decline or housing bubble. Now that I've read the book, I tune in daily and the news just confirms the book's premise. We have had a debt based too-good-to-be-true affluence. Like a drunken college kid on a spending spree, it will end eventually. The housing bubble alone might not sink us. The consumer credit crunch alone might be something we could work with. But add in the astronomical federal govn't obligations ($50 trillion unfunded?) and it's just a matter of time before the ride gets wild. I would like to thank Mr Schiff for writing this book. I honestly feel that it has saved my financial future. I am in a business where one cannot work into old age, and instead of seeing my traditional stock investments knocked back down in value, I may actually be able to make a nice profit that will help us get through the hard times ahead. I'm no expert, just a small business owner, but I looked hard to find an honest rebuttal to this book before investing my money in gold (I dont' want to lose money!) , but all I have been able to find were cheerleading tomes to the s

Act Now or Suffer Later

I enjoyed this book even though I was previously aware of its economic arguments and suggestions for portfolio allocations. Mr. Schiff is passionate and sincere and that tone comes across in the book. For that, thank the excellent John Downes who has co-written several other good business books. Many other reveiwers here discuss the contents of the book so I won't go there. I worked as a bullion dealer in the 1970's so this is my second "crash" cycle. Many people thought the US would collapse in the 70's due to inflation and a national debt of $1 Trillion dollars. Many thought gold would zoom to the moon. Instead, gold crashed and languished for over 20 years. That's because the US was able to shift gears. Reagan pulled the US economy up from its tailspin by switching from printing money to issuing debt. He took advantage of the low US debt/GDP ratio to inflate debt by selling bonds to Americans and foreigners. It accomplished the same thing - letting the economy expand with a near infinite supply of cash liquidity. George W Bush then doubled the US national debt to $10 Trillion in only eight years. Low interest rates sucked in the public who took on enormous personal debt. The US now can't rapidly inflate because the dollar would collapse and can't take on more debt because investors doubt it can be repaid in sound money. People don't accept the possibility of an economic crash because they think the US/Bernake/Fed will always be able to pull another rabbit from the hat. This complacency will lead to disaster for most investors. The US is tapped out on debt both public and personal. The US has so debased the dollar that it has fallen tremendously since Bush II took office and continued the pattern of reckless spending. If you don't want to believe Schiff when he warns of what's ahead then listen to Greenspan as he touts his recent autobiography. He states directly that the US will have inflation for the next 25 years. He says the outlook for stocks, bonds, and the general economy is 'gloomy' for the forseable future. He says the dollar will likely lose its reserve currency status. This is "The Maestro" talking. He says it's going to be bad. Schiff tells you how bad and what to do about it. Some people here crticize Schiff for touting his firm's services. So what. He tells readers what to do, but most won't act for themselves. So, he provides the service. Currently, gold is at 725 (September 2007). That's not cheap, but it won't be cheaper in 2009. The US will have to reduce the rate of gov't spending and that will feed back into jobs and consumption. I doubt that the dollar will totally collapse, but when it's all said and done, we'll get a combination of "manageable" inflation and rising interest rates. Most other nations will also inflate as they prop up their economies and scramble to get their share of the world's increasingly costly oil. The only asset that trumps oil is gold. Bite the bullet and get your share. Reduce

good contribution

I thought I had already done a review on this book but I don't see it as I scroll down, so here goes. I have been reading several books by the "sound money" faction of economists, and I find this book to be a fine contribution. The one point he made that was brand new to me was the assertion that the United States is not serving as a means for China to bootstrap its way to prosperity, but, rather, is an albatross around its neck. And, the related point that the coming economic depression will not be a worldwide phenomenon, but will primarily hit only certain economies such as that of the United States, with the emerging economies like China chugging along without much of a stumble. He makes a pretty good case, in my view. As to Euro Pacific Capital, so what if he mentions it? I actually inquired with them about starting an account, but I decided not to because I found it far too tedious to analyze the companies of the stocks they recommended (and from a very cursory glance it looked like they didn't fit my investment philosophy, which is deep value.) So my approach is: read and enjoy the book and then continue to invest in undervalued commodity stocks such as those of oil companies and small Canadian gold exploration companies that own good gold deposits but sell at $20-40 per ounce of gold in the ground.

Gets right to the point in language just about anyone can understand.

For the past two years I have been aghast at the insanity of the American economy, as exemplified by the "housing bubble". Time after time the "experts" have said "there is nothing to worry about", "we have bottomed", "this won't spread", but they have been wrong, time and time again. What would you expect Ben Bernanke or Hank Paulson to say, "We think it's time to RUN! RUN!". No, they just keep trying to pretend everything is fine. They all have a vested interest in keeping you happy. Their incomes and jobs depend on keeping you fat and happy, in debt and voting for the status quo. Peter's book backs up, and illuminates the conclusions I myself have drawn about the health of our economy and its future. Inflation has been used as the panacea for all economic ills. Simply "printing" money (an apt term for the government borrowing without limit) makes everything appear great, however, life is like that when you borrow from the future. It is only when it comes time to pay it back that the pain begins. Two weeks ago, the sub prime mortgage lenders imploded. They were revealed to be rotten to the core, though the "experts" on Wall Street had just upgraded them to "market outperform" the day before. Yes, that is true. Doesn't that tell you that the people in charge of the big money are hiding some very bad news from you or even worse, are in the dark themselves? Neither choice is good. This serves as an omen and example of what is coming to the broader economy. The "experts" keep telling you everything is ok, like they have many times before and been wrong. But take it from someone who has made lots of money shorting the housing market, the worse is yet to come. As scary as this is, the solution to each American's possible, upcoming, personal tragedy is rather simple. You can essentially boil it down to "invest in non dollar assets". When you do this, every decline in the American dollar becomes a rise in your own net worth. In this book Peter goes into the details of how to do this. It isn't hard at all. Time has run out. No nation, however great, can belay the laws of physics and economics. Crash Proof has two important messages, it explains why we are in this situation, and how an individual can evade the upcoming crash. The language used is simple yet accurate. The examples and analogies he uses illustrate the problems and solutions without complexity. They get right to the issue without confusion.

From a FinancialSense.com listener...

Peter Schiff, son of American patriot Irwin Schiff, has written a very useful book that can not only assist you to take the concrete steps necessary for financial survival, but also change your individual psychology toward the storm on the horizon that is rapidly gathering strength. Today, we have the illusion of prosperity, and the sooner we break through that delusional state, the sooner we can prepare for darker days. At this point, there are so many possible triggers for the Second Great Depression, it's striking that it has not already begun. The sub-prime meltdown may just be such a trigger that brings down the house of cards, once it becomes more clear which entities actually hold all the risk created as part of the Housing Bubble. Wall Street, sub-prime lenders, and the large banks have been ingenious in their ability to push risk onto other parties, but it's not clear if the counter-parties will have the ability to weather the defaults. Thus, the risk may yet reside with the banks, which normally would have been more restricted in the number of loans they could create by more traditional standards. So much debt has been created, and so much risk obfuscated, that it is hard to imagine our present illusion of prosperity can be maintained much longer. Mr. Schiff breaks through our modern mythology by shattering these illusions, and here is where he shines best. A bear's bear, Mr. Schiff steps down from the towers of the economic elite to provide analogies that can be readily digested by more casual readers. The analogy of the Asians and the American trapped on an island together is apropos, as it reveals much about the true state of international trade. The Dollar Bubble heavily distorts trade in favor of America, which benefits disproportionately from the inflated value of the dollar. Mr. Schiff also understands very well the entitlement crisis brewing, and aptly names Social Security a Ponzi Scheme. Most people in Generations X and Y understand that we're the bagholders scheduled for the Ponzi Scheme, but many Baby Boomers love to be delusional about this tragic farce, thinking it's a form of savings rather than our government writing worthless IOUs to itself and lying to the American people. They think Gen X "owes" it to them! Ha Ha! The sooner we can end social security, the sooner we can start saving real money with real assets. Until then, we are slaves waiting for generational emancipation. I remember the first time I heard Mr. Schiff speak on CNBC. The discussion was about inflation, and I couldn't help but notice Mr. Schiff's definition diverged significantly from the definition used by the brainless cheerleaders on CNBC, and for that matter, our government and most of Wall Street. The proper definition of inflation is "debasement" and secondarily, "an increase in the supply of money which causes a rise in prices" (Webster's 1982). Note the difference between these two definitions and the more commonly used definition today,