When a doctor delivers an unwelcome prognosis, one may seek a second opinion, but attempts to disparage or discredit the physician would not be a logical response.
A select few individuals have stepped into the spotlight by speaking their minds about the global financial crisis, a troubling outlook for the U.S. economy, and the impaired condition of the fiat U.S. dollar. Despite the bravery they exhibit by sticking to unpopular opinions just as the masses grow hungrier for green shoots and mustard seeds, these bearers of frightening forecasts are often battered by detractors.
The time has come to stop shooting the messengers. I suggest a Foolish approach, where diverse perspectives are weighed on the merits of evidence in a spirit of mutual respect. To get started, I've selected three individuals with timely and compelling economic forecasts. Peter Schiff, Jim Rogers, and Jim Sinclair have each communicated their holistic perspectives, and all three have absorbed negative responses as a result of their views.
Fools will recall Schiff's many guest appearances on cable news outlets just as rifts in the housing market were beginning to materialize. Famously, as pundits sought to ridicule his dire forecasts, Schiff turned out to be absolutely correct about the unsustainable nature of America's debt-fueled consumption. In August 2006, Schiff advised that "rather than the recession being resisted, it should really be embraced, because the disease is all this debt-financed consumption."
After the indiscriminate sell-off in global equities and the collapse of commodity prices that defined the second half of 2008, Schiff's detractors mounted an offensive. When punishing declines hit shares like BHP Billiton (NYSE: BHP ) and China's CNOOC (NYSE: CEO ) , blogger Mike "Mish" Shedlock declared the decoupling theory debunked. Undeterred, Schiff replied that it would "take time for the world to realize that what had been decoupled from the economic train was not the engine but the caboose." I believe Schiff is right, and I have been busily documenting a range of re-emerging indicators that the decoupling debate is far from over.
What is Schiff saying now? He sees the present rally as a mirage, opining that the "premature conclusion ... that the crash of 2008/2009 is now a fading memory, is just as delusional as [the] failure to see it coming in the first place." On the massive fiscal response to the crisis, he believes that: "By throwing money at the problem, all the government is creating is inflation. Although this can often look like growth, it is no more capable of creating wealth than a hall of mirrors is capable of creating people." As much as I'd love to believe otherwise, I share Schiff's view that the entire reflation strategy is fundamentally unsound.
The legendary adventure capitalist and co-founder of the Quantum Fund shares Schiff's disdain for the reflation strategy. In March 2008, Rogers cautioned CNBC viewers that: "Inflation is not good for the world. A collapsing currency is not good for the world. It means worse recession in the end." When asked what his first two actions would be if he awoke in Ben Bernanke's shoes, he boldly replied: "I would abolish the Federal Reserve, and I would resign."
Where is Jim Rogers investing now? In December, I posted this Bloomberg interview to my CAPS blog, in which Rogers lamented: "I'm afraid that the U.S. dollar in our lifetimes is a terribly flawed and maybe even a doomed currency." He recommends exposure to commodities rather than "impaired" blue chips like Citigroup (NYSE: C ) and General Motors (NYSE: GM ) :
The fundamentals for Citibank are impaired. The fundamentals for General Motors are impaired. The only thing I know where the fundamentals are not impaired are commodities. In fact, the fundamentals for commodities are improved by what's happening.
Rogers' own commodity-focused index, tracked by the Market Vectors RVE Hard Assets Producers (NYSE: HAP ) , offers heavy weightings in energy and agriculture, including familiar names like ExxonMobil (NYSE: XOM ) and the resurgent PotashCorp (NYSE: POT ) .
Take it from a Fool who knows, those proposing exposure to gold as the ultimate safe haven from currency crises are no strangers to vitriolic opposition. Jim Sinclair, a leading precious-metals expert, has been forecasting $1,650 gold since 2001. Sinclair summarized some of the perspective that readers of his blog enjoy in a Bloomberg Radio interview on Feb. 20. The interview is too packed with golden nuggets to capture in selected passages, so instead I recommend a trip to my blog to discover the treasure yourself.
At this particular moment, when sheer human nature leaves investors susceptible to unchallenged optimism, I believe that insights from these straight-talking messengers provide a critical wake-up call. In tumultuous times, the line between hopefulness and denial can grow quite thin, and Fools are reminded to remain alert.
But enough about what I think. Tell me what you think in this Motley Fool Poll. Use the comments box below if you want to expand on your vote.