Dick Morris

Really bad stock tips from Dick Morris

How many things does the Fox News commentator get wrong while touting an investment advice newsletter? Let's count


Andrew Leonard
August 31, 2009 9:38PM (UTC)

Dick Morris, the Fox News commentator, political consultant and alleged foot-fetishist, has a stock tip for you: If you want to be prepared for the upcoming era of Obama "hyperinflation," sign up for Nicholas Vardy's Global Stock Investor newsletter.

Let me give you a stock tip of my own. Don't invest your money on the advice of people who don't understand the English language. Inflation might be a long-run threat, but hyperinflation is not.

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The term "hyperinflation," technically speaking, refers to inflation that is completely out-of-control, rising, for example, by at least by 50 percent a month or worse. As Ryan Avent told us a few months ago, Weimar Germany suffered through "a monthly rate of inflation of about 3,000,000 percent" in 1923. That's hyperinflation. Not even the bad old days of the late '70s during Jimmy Carter's presidency (with which Morris makes more than one Obama comparison) qualifies. Inflation was high, by American standards, but not hyper. Avent has it exactly right:

Some even manage to worry about hyperinflation, that is, extremely rapid and uncontrolled increase in the price level. This strikes me as extremely wrongheaded. It fails to place the current American debt-load in any kind of historical context, and more importantly, it posits a world where the Fed wouldn't respond to several years of double-digit annual inflation by raising interest rates. That's just not the world we live in.... An America with rates even close to [that of Weimar Germany or Zimbabwe] is one in which the nation's political institutions have all completely collapsed.

A side note: In a column in early March, when the stock market was testing its post-Obama election lows, Morris warned us about Obama's "coming inflation" and told us that "the stock market has figured out his priorities and is responding accordingly."

As of today, the U.S. stock market looks set for its sixth straight month of gains. Again, not to make too much of Wall Street's froth, but is this the guy you want to take investing tips from? If you did, you certainly missed that rally.

Then there's this:

Obama's stimulus package has failed to accomplish a single positive goal -- but it has raised unemployment to 9.5 percent, ballooned the deficit, driven up interest rates, and is dead certain to trigger Carter-style hyperinflation.

The misuse of the word "hyperinflation" aside, there are at least three other misstatements in that sentence. Interest rates, last I checked, are still extremely low, whether you're looking to refinance your home, or at the yield on a government bond. No matter what you think of the composition of the stimulus, it is absurd to argue that it has "raised" unemployment. Just the money funneled to state and local governments has prevented public-sector layoffs that undoubtedly would have otherwise occurred. Without the stimulus, unemployment would be higher than it is now.

As for ballooning the deficit? According to Bruce Bartlett, a former Treasury official under Ronald Reagan, if you look at the deficit projections from the Congressional Budget Office before Obama took office and calculate what would have happened if McCain had been elected and no stimulus bill had been enacted, you would end up with a budget deficit for 2009 of $1,361 billion.

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That's about 14 percent less than the current deficit projection from the Obama administration.

(Another HTWW stock tip: Morris cites a figure of $1.8 trillion for Obama's deficit, which is now out of date  -- the current projection is $1.6 trillion -- as I noted last week. Please, dear readers, don't follow the investment advice of someone who can't be bothered to stay current with the news.)

Dick Morris pretends to be forthright:

Full disclosure: I receive a percentage of each Global Stock Investor subscription sold, but I wouldn't do this if I did not believe in his abilities.

Which I translate as: "I wouldn't do this if I did not believe that I could use partisan fear-mongering to make a buck for myself, at the expense of the Fox News TV audience."


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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