Deflation: A Concern So Stupid only an Intellectual Could Be Worried
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- Опубліковано 28 вер 2024
- The Peter Schiff Show (4/17/2014)
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It's nicer listening to Peter on his radio show because nobody is trying to talk over him.
It never ceases to amaze me. After the 50 year experiment of communism and subsequent collapse of the Soviet Union people still believe central planning can work--if managed by the right people, of course.
***** Milton Friedman used to always say that a system cannot work if it depends on the merit of the people running it/leading it--i.e., "it would work if we had the right people running it". Just like we're a nation of laws and not of men, we need an economy of markets, not of men(planners, regulators, etc.).
Never will have the right people. Too much incentive for special interests to force the wrong people. Constitutional anarchy is a far better prospect for free people and free markets.
It can work if it is for the people. What they are saying it is a communism for the rich or pretty much like a type of Nazism because nazis were National socialists. the merging of corporate interests with a powerful centralized government.
It’s called pure stupidity.
It's scary to think where my ideologies might lie had a never met Peter Schiff on UA-cam. Thank fucking God you do this.
ibsd I most certainly do. They are the only ones who make damn sense in this world!
Austrian economics is some of the stupidest nonsense on the most ridiculous part of the Internet. Educate yourself.
Andrew G Not an argument.
If you understood just how destructive deflation is to any economy then you would understand just how silly the notion is for any currency to be backed by gold.
You should read your question becaus it makes no sense. I think you are trying to say would I like to pay a higher price for gas because of inflation? My argument would be that with deflation we would have lower prices, but with deflation comes lower incomes. Deflation does not lower your debt which will then become unsustainable. Cut your wage in half with deflation and then try and service the same size debt. Not all debt is bad some of it is investment into productive assets and you would destroy those businesses as well. The bad debt which is non productive needs to be managed fiscally to deter it rather than with a blunt instrument like interest rates.
Schiff knows his Schitt !
The data doesn't lie.
Peter can see right past the forest and pick out the trees. Thanks for the info and I dig your attitude. The patients are indeed in charge of the asylum.
Great commentary, Thanks Peter.
I learnt more watching this video than listening to my Econ class lecture!
Exhale......okay, take a deep breath of fresh air. Enjoy the truth as displayed in this video. And when you exhale, make sure you spread this around so others can inhale some truth and common sense.
Fucking hilarious, comedian/economist :-) love it
Mr. Schiff is red hot on the issue of price inflation good for him.
Great Show Peter!
It's crazy to hear this in 2017 exactly spot on
Deflation was only thing that was going for Japan. With Abenomics (two percent inflation target with massive government spending) coupled with the recent rise in consumption tax, Japan may never recover again. Inflationary currency is the currency of despair, deflationary currency like bitcoin is the currency of hope (value goes up in time)! The "ship" of Japan is sinking, and all we can hope for is that the captain will not be like that South Korean mass murderer (murder by negligence and incompetence) captain who ran away from his ship as soon as the ship started to sink!
Peter is really good in this one, his sarcasm is quite funny to listen to.
30:00 Right on. Intelligent people don't even know how much extra they pay by using credit cards (love you honey!). Minimum payments = Maximum profit for credit card companies.
It amazes me that people still bury themselves in credit card debt. If you don't have the money, don't buy it. Period.
Why would people want higher prices, I'd imagine even businesses won't want higher prices since it's not making more profits it's just high prices to make up for inflation.
I really enjoy your radio show on 1530 AM in Chicago. Thank you Peter.
Cracking tf up, just bumped into this podcast. Janet Yellen going to Sesame Street!! Lmfao
There has been a concerted effort to sell to the public the fear of "Deflation". Since prices of everything has been rising all of the time they have to redefine the word. In "debates" with people claiming deflation they answer the facts of all the rising prices by saying "Price inflation is not what is important, it is the deflation from debt destruction which counts".
Now memes telling everyone that deflation is everywhere and the function of conning the public into supporting policies which harm them directly.
If consciousness were higher among the public they could vote away inflation and over taxation by choosing the better candidates like Gary Johnson.
Instead they vote for larger government and redistribution of everyone's money to the well connected.
People tend to get what they deserve.
Wasn't Janet Yellin one of the "Lollipop Guild" munchkins in MGM's 1939 'The Wizard of Oz'? She's not a munchkin? She looks like an ugly old one I reckon, mmm hmm, with a nice lawn to get mowed, right below the ears, mm hmm, yup, I reckon.
kaminoneh
LOL, you are an idiot. You must avoid political cartoons as well huh? They often engage in the same sort of sarcasm and exaggeration of the object of scorn in a comedic way and have a long history in print. Keep your stupid asinine opinions to yourself, you don't know how to respond. Sarcasm with regard to appearance is a legitimate form of political criticism. Dimwit.
kaminoneh
Sure thing there "word Nazi" you know best. Make sure you correct everybody and straighten everyone's "speech" out. Dimwit.
kaminoneh
Why do political cartoonists in newspapers everywhere around the world exaggerate and focus on physical appearance to make their points? Why are caricatures in art focused on specific individual physical characteristics to parody a person? If you are in public office and are answerable to the people you are fair game. Why does every answer or discussion have to be "ultra" serious in nature? Why can't there be comedic relief? Not all people's sense of humor is the same sometimes they are different hence a reason for a country that has free speech unlike other countries when you made fun of the "king" they tortured or executed you. Sorry, but your points aren't valid.
kaminoneh
That's right, sometimes "sarcasm" has no specific point other than to provide an outlet for stressful conversation anxiety. This is true, my point was to be funny, sorry you don't like my sense of humor. Must we all be the same or have the same perception of things? That sounds like fascist control freak rhetoric. I comment seriously 95% of the time in the other five percent I engage in sarcasm which is often excoriating and off topic just for the fun of it. I see people do it all the time and if I like something that makes me smile I'll even "like" it.
kaminoneh Was he trying to make a point? If you don't think it's funny so what, trying directing your anger at these moronic trolls instead. Actualy I don't think that was a "criticism " as he said
The notion that 1-2% deflation would cause people to not spend anything is an absurd judgment on the average person's time preference. If that were the case, then nothing would be spent NOW because all of their money would go into bonds that accumulate 2-3% annually.
33:32. So true & funny.
what a tragedy it would be to have falling prices.
Anthony G it would mean the price of labor i.e. wages would fall as well, which would cause job losses, because employers tend to avoid wage cuts and cut staff instead
FirebirdCamaro1220 doubtful, cheaper prices usually means demand goes up! well that's what econ101 teaches us. but basic economics doesn't apply in this fake manipulated paper ponzi scheme anyway.
Anthony G but labor gets cheaper as well, and due to law of sticky wages, an employer will cut staff to reduce labor cost rather than cut wages across the board to keep everyone on. This is because cutting wages is taken negatively by workers and leads to them quitting or being less productive. Last time I had my wage cut, I put in my notice right then, and did leave after it was up
FirebirdCamaro1220 and i especially enjoyed the lower housing prices in 2010. i bought my house for 45k in 2010. paid for free and clear now for 7 years. no mortgage! too bad more Americans can't live free like i do. free from debt.
Anthony G Good for you, however the people who purchased homes before deflation become underwater, meaning their homes are worth less than the loan. In a deflationary environment, the loans are worth more than houses, which means less people buy homes. Stocks also fall, stores close, less people hire.
Peter Schiff is my hero!
LOL@ at the 'There is something about Mary' analogy comparison. Only Red Pill Men and economists can see things like that and compare them to economics.
Amen Peter. It is so.
I'm a fan of Harry Dent who believes in deflation. He makes a lot of sense and he backs it up with demographics. He's been dead on accurate most of the time
Peter has been noting but wrong since 2009. wrong on the dollar, wrong on equities, wrong on gold. wrong on oil. maybe he'll end up being right but the fact is that if you've taken schiffs advice since 2009 you are massivly underwater
***** USD/AUD begining of 2009 : 1.40 April 17th : 1.07. Peter also said that the stock market would go up because of QE and since the begining of QE the stock market is up. Gold January 1st 2009 : $887 April 17th $1293. You need to learn to add and substract.
Maxime Meis I remember a video peter did about a year and a half ago titled "why silver is a buy now" silver was about 35/ozt. now it's 19.50ozt. i can only imagine the thousands of people that bought silver because he said so and you know we all make mistakes but it would have been nice to have had peter come out and say he was sorry for that one but did he? no
***** Does it really matter? People that are foward-thinking enough to buy gold and silver don't really care about its price. You do it because you're protecting yourself from the inevitable failure of the dollar. It's akin to people buying a home. The value doesn't really matter--you are buying it for a place to live. Value is all relative.
okay since the price doesn't matter then i'll sell you all you want at $30 a ounce. Yes price does matter. It's people like Schiff and Maloney that have brainwashed you into believing that. Oh yeah, they'll tell you to get rid of your worthless fiat paper dollars and get into "real money" which is gold and silver and never to get rid of that but lucky for you they will actually sell you the stuff they tell you never to get rid of and they'll take the stuff they tell you is worthless. maybe that's one of the reason they are multi millionaires and the average silver stacker is dead broke.
Thank you for bringing common sense into explaining economics. Today we have so many "qualified" individuals talking about consumers but are so out of touch with reality - on your comment on how consumers spend money and reaction to higher prices
Excellent point with Japan. Economist thought there would be a pick up in spending before the tax increase this month. However, the household spending declined 2.5 percent in March. High inflation, low wages is going to jack Japan up. Throw higher taxes, Christ.
Banking collapse/ indefinite bank holiday where cash becomes king and the price of tangible assets goes down because of lack of available currency and digital assets disappear over night would be a DEFLATIONARY COLLAPSE leading to physical printing of money resulting in hyperinflation. Very possible and plausible despite Peters well informed opinion on the matter.
I have watched Yellen several times, and she sounds so lost and confused. She is vague and unwitting. She seems very distance from reality.
I remember reading a headline about Yellen going to a job fair in Philly last year. She was "shocked" at the poor jobs being offered. She'd hid under a rock for the last six years, apparently.
I wonder how this is related to the "pure and perfect competition" doctrine. Under this idea, things businesses do to reduce the cost of production, like investing in better tools and machines, is not allowed so that the only way businesses have to compete with one another is to shave their profit margins ever thinner, competing at how close they can come to zero profits. More money circulating in the economy would increase prices, allowing businesses to make profits even under "perfect" competition.
One bad idea leads to the next one.
A fiat world reserve currency is definitely uncharted water for our civilization. Since its all an experiment, of course there are strange number patterns.
Deflation makes the governments debt more, inflation makes the debt less.
anyone notice that gold and silver markets were frozen on Thursday after gold took a hit?
She is back.
Some Americans DO wait to buy, Peter. I put off buying an HD tv for years and kept my little 13" color tv/vcr combo (which I still have and works great). I bought my first hd tv LAST YEAR at a pawn shop (42" for $250) and it's a VIZIO. I just bought an Xbox 360 last year. A college student sold it to me a YEAR after his family bought it for him NEW. I got it with the Kinect and a couple of games for $120. I buy all used games for it. I never succumb to peer pressure to buy the newest $60 game. I just bought "Mass Effect 3". Got it for $5. I found "Thief" for $5 in the bargain bin at the local grocery store (it's still $19.95 at GameStop). Most gamers would say, "Oh, you're so behind the times!" So what!! I use the built-in deflation of prices on these kinds of items to allow me to survive on $30k a year and still have cool stuff.
+EricEsoteric Video game prices falling is due to vaining attraction rather than inflation. When Assassins Creed 3 came out I assume it cost like 59 usd, and some time later Assassins Creed 4 came out and it cost 59 usd too. That is how I would measure the inflation; the price two comparable products at launch. In this case inflation in the time period would be zero.
BTW, you notice very few people talk about what's going on in the economy through the lense of economic warfare... Even less so how this all is rhyming eerily closely with 1929-1940's, including the rise of fascist dictators and culminating in WWII.
Great channel. Gives good insight into economics from an interesting point of view.
ONE OF YOUR BEST VIDS IN A LONG TIME PETER!!!!
LOVED IT!!!!!!!!!!!!!!!!!!!!!!!!!!!
It can't be real inflation if wages are flat, what it is is wealth transfer from workers to owners
it's called the limbaugh theorem. rush realized this February 2013. he says that obama distances himself from his policies by campaigning.
Deflation means lower prices which means lower tax revenue for the local, state, and federal government. I think that's why they are terrified of deflation as it means less money. This is why the fed will continue to print as it will be easier to pay down debt. Problem is that the thermostat fed is using is hooked up to a nuclear reactor...they could very easily loose control resulting in hyperinflation.
Peter you don't get it. When Yellen talks about inflation, she's not talking prices, She's talking monetary growth. But then the fed defines inflation as CPI. However she's saying we need 2% monetary growth, which is probably good. Now don't think I'm a fan of the fed, just trying to explain how TPTB twist the truth and definitions of words to suit their needs.
Janet Yellen performed differential calculus on definition of price stability.
I bought a used car because of Peter! Niiiiice!
Without inflation, how do you get the proles to work harder to buy the assets you own?
JUST LIKE YOU PREDICTED.
It's time for wage inflation..Without the Tax !
as soon as you hear "full employment" you know its a load of shit. I live in red deer alberta. The unemployment OFFICIAL figures here is 2.6%. Companies have to advertise on bus stops and park benches "come work here hiring anyone!" hardware stores leke Gregg distributors FLY IN people from Ontario to sell parts at a desk! Its not just oil rig jobs that people do that. People from BC come here and work as waitresses for 6 months then go home, sometimes restaurants are closed because they cant fill in a full shift. One time I wanted some food, and the place said "sorry we are closed until the cook comes back form picking up her kids from school"
somehow, this place still has 2.6% unemployment. You want a job? the meat packers in town pays $14 per hour to put a plastic bag in a cardboard box, and place it on a conveyor belt, and the person whos job is to pass a plastic bag to the person putting the bag in the box makes $12 per hour. are you going to tell me someone cant do that job?
"Full employment" doesn't mean 0% unemployment. It is defined by the majority of mainstream economists as being an acceptable level of unemployment somewhere above 0%. The discrepancy from 0% arises due to non-cyclical types of unemployment. It has also been called the structural unemployment rate.
The United States defines "full employment" as 3% unemployment for persons 20 and older and 4% for persons aged 16 and over, according to the Full Employment and Balanced Growth Act (1978).
Taxations of imports into the United States is part of the solution to the American unemployment problem. Tax imports until is cheaper to manufacture products in America than it is to import.
Or just stop printing money?
This guys father is serviing a 13 yr. Federal.sentence in federal prison. Hooy shit.
That is one reason something tell me Peter Schiff is for real. Plus his common sense
+hugelawn yeah, for writing a book about how income tax is illegal and unconstitutional. And for calling out the IRS for the fraud that it is.
Austrian economics is some of the stupidest nonsense on the most ridiculous part of the Internet. Educate yourself.
better than krugman economics. "To get out of debt you have go into debt" -Paul Krugman. Umm no krugman to get out of debt you have to pay principal plus interest.
This is freaking hilarious!
Jam tomorrow! Is the universal promise of all religious belief.
Personally, I have not eaten for several years since I am waiting for the price of food to go down...
Peter,.. Be careful,...Janet Yellen just might a witch in Lord of the Rings! LMAO
Peter is missing the point, with inflation, asset holders are alot better off with the wealth effect. And with lower interest rates, more loans are borrowed. It all comes down to taking on more debt, like it or not.
www.investopedia.com/terms/w/wealtheffect.asp
the way i learned it was more pessimistic but ultimately the same conclusion. basically with inflation people are scared hey will not have enough money for retirement, so instead of hording their money they buy stocks and the businesses use that money to create wealth. something to the effect anyway.
In part, you are correct. Although, this is an artificial and purposeful stimulation of the marketplace. The counter affect is spending and borrowing for consumerism and not much production; thus, we remain a credit based and service based society with low product creation. At the same time, your money is devalued and used to pay off government's debt. If the Feds did not sponsor inflation and suppress interest rates , they could not pay off the debt and our system would correct or collapse. At a minimum, this Fed induced inflation and low interest environment always steals from your savings and leads to another drastic bubble. And with time, all bubbles will resort to a mean.
With ZIRP, less loans are made since there is less incentives to loan it. Look up crashing money velocity. Most of the printed money ends up parked at the Fed.
dutchrjen
Most of your reply does little to counter argue the assertion that a lot of money has been parked at the Fed. There is some overlapping between different measures of money stocks (M1, M2, etc.) but the BASE supply is pretty much what it is on its own. Yes, when JP Morgan or another primary dealer buys a Treasury at an auction, the money the Treasury gets is spent to pay bills and vendor invoices, but ultimately, it does seem that does money does not circulate very much and, yes, seems to be used by those who are the closest to the Fed window
My point was that ZIRP prevents bank from pricing risk accordingly and his counter productive to what they publicly say to would want to see happening. But I don't think more debt at the moment would be any use.
You are correct, the only way the system can sustain itself is if people take on more debt. But, that doesn't sound like a very sound system, does it?
I always thought that the point of capitalism was competition. The companies with the lowest price and do the best job is the most successful.
When I go quoting for work I find that most people want the cheapest price. People do not say "I want to pay more". if you're price is too high you won't get any work unless of course you run a protection racket, or you are the government. The government want higher prices so that you don't notice how much they are ripping you off.
If there is deflation the governments debt will fuck over everyone. The banks will also get fucked. Deflation is good for individuals and consumers.
He's hilarious.
Die-hard Keynesians today who keep insisting that the government's "stimulus" spending would have worked, if only it was bigger and lasted longer.
This is one of those heads-I-win-and-tails-you-lose arguments. Even if the government spends itself into bankruptcy and the economy still does not recover, Keynesians can always say that it would have worked if only the government had spent more.
The typical man on the street represents the UMCSI. It's sitting at a 2.6% GDP growth right now. New market highs coming in 6 to 12 months.
Some say that deflation causes firms not to make capital investments because in a deflationary environment it is profitable to just "sit" on your money. Can someone point out flaws in this argument?
Firms making capital investments? Individuals will still make investments if prices go down. That's what savings are supposed to be for - making investments. But what's the point of saving if you're saving in worthless dollars?
I enjoy this video peter...specially the part of Seasame street lol. I wouldn't be surprised if even the kids at seasame street know more about economics than janet Yellen.
The US economy won't be healthy until they get rid of fractional reserve banking. That is not likely to happen so the economy is screwed.
Come on Peter, you know why they like inflation...because you can't tax deflation
Not that anyone needs more reasons to dislike Yellen, but her voice is unbearable for me to listen to. Does anybody else feel that way? If a have to listen to bad economic propaganda, can we at least get somebody else to read it to me?
I believe the best way to measure GDP is to sum the annual income of each person. And obviously, like any other measure, we need a good, reliable way to calculate this.
we could trust the irs
reardelt That's basically the same thing. By definition, Gross Domestic Product = Gross Domestic Income.
GDP = Consumption + Government + Investment + Net Exports = Rents + Interests + Profits + Statistical Adjustments + Wages = GDI
Wouldn't deflation be counterproductive when you're in debt?
If I borrow from the bank 1,200$ (and return back with interest 1,230$), then deflation hits, I'd have to pay back from a value viewpoint +1,230$.
So, I'd pay back those 1,230$ _on paper_, however with deflation, the value exceeds 1,230$.
+Trexmaster12 If there is inflation then you need to borrow to maintain the same purchasing power (for the short term at least). If prices are getting lower rather than higher then there is no need to borrow more and more.
emomarten Yes, however, think long-term. The example with 1,200$-1,230$ is, indeed, rudimentary in order for it to be understood without complications.
+Trexmaster12 Thats why you pay off your debts. Well thats how it used to be anyway.
+Trexmaster12 Yes, what I mean is that inflation and hyperinflation are short term reliefs that make the problem worse in the long run. Inflating away debts is similar to defaulting on the debts but with the consequences of the money losing its value and causing the business cycle, malinvestment fueling booms which inevitably result in a bust
You are correct. Your income would collapse. Your LVR would increase and repayments would be impossible. You would go broke, thus causing more deflation in the economy. Debt only decreases with inflation.
full employment? All USA manufacturing are in Asia!
What the hell? Does the Fed think they're modern day Oracles? Why do they talk in terms of certainties in a system dominated in a large degree by randomness?
Not randomness, psychology. The Fed tells the world human nature can be analysed with formulas. What would people say if a psychologist worked in the same way? They talk nonsense.
Yellen in the Simpsons .
One thing that really struck home for me on this: Those that are fortunate to have jobs are struggling to make ends meet. A lot of people don't have any job and are desperate for any kind of income. Most employed people don't realize how incredibly hard it is to find any job in this country for some people. A lot of long term unemployed people including myself are finding that companies/businesses won't hire you simply because your unemployed (which of course they won't admit but it's the reason). Not trying to sound like a lazy unmotivated person, but honestly, the so called rich and generous wealthy job creators are not creating jobs, which they blame on slow economic growth, which in turn comes from wealth inequality. Growth is going to be slow anytime people don't have jobs and or making low incomes and can't afford to spend on anything besides life basics. Basically the United States like most of the world is heading in this direction: the rich are getting richer and the poor are getting poorer, not sure at this point if there's any real feasible way to change the way it works, but maybe someday there will be more livable wage jobs for people and better economic equality for all. Good luck to all long tern unemployed people out there, I hope yours and my situation improves.
While I sympathise with you, please be informed that the age of jobs is coming to an end. The industrial job system is ending and times are ripe to create your own profession.
Hard to start a business or anything else for that matter when you no money and banks won't lend you a single dime. Honestly, sometimes I wish I was born some where else on this planet like maybe Germany or France or something, America is going in the wrong direction and most likely will be a third world country someday, if I had some money I would get out of this place.
CeNTuRiOn33100 If you have internet access and basic grammar/spelling/punctuation skills, you can start a freelance writing business very easily. You don't need to have any money or take out a loan, although you will probably have to work long hours for low pay. Just go to Textbroker.com or Zerys.com and sign up. It's that easy.
Yes, listening to Janet Yellen stammer out a litany of econo-cliches makes me feel very safe and secure.
All you have to do is spend a little time out in main street America and talk to business owners and unemployed workers and you will know Peter Schiff has a solid handle on what's really going on. Janet Yellen? How could she have any clue? She's an academic, like all of those over educated "economists".
The problem with deflation is that people have debts (education/home/car/etc.). Even though nominally they would have to return the agreed quantity of money because the money now values more they in fact have to pay more (in real terms) to lenders yet their wages and jobs will be affected by the same effect on business.
Businesses have debts too. Deflation would drive their profits down but the debt payments would be (in real terms) higher which would affect workers wages and jobs. Deflation is not good.
Nonsense. Without government intervention, there will be neither inflation nor deflation.
Prices will fall however, based on productivity improvements, demographics and the workers' skill in bargaining for a piece of the productivity improvements in the form of higher real wages. You will get high savings rates and low interrest rates at the same time, resulting in more capital investment, productivity growth and wage increases. The virtuous cycle.
It's true that a debtor's salary may be falling nominally, but not as fast as nominal prices. The difference, added to nominal rates, gives you the real interrest rate, which will still be low due to the high savings rate.
Increasing prices (what you call inflation) is just a symptom of "savings" created without being backed by real goods and services. You get the benefit of lower interest rates, but not the benefit of lower prices. For that you need real production - or vendor financed imports (enjoy it while it lasts).
Inflation is good for some bad for others. You are correct If you have lots of debt Deflation is generally bad and inflation is good. Ask yourself who has the most debt and who would gain the most from inflation.
Jesse Brown Answer: Santa Claus - the elves are getting restless. They want to get paid.
Seriously though, my post was a response to the utter falacious nonsense uttered by Arnes, starting: "The problem with deflation..."
I am fully aware why those in power prefer inflation over deflation, but that has no bearing on the objective virtues of deflation.
Credit naturally goes to the most productive - those who can use some of their productivity for debt service.
It doesn't go to those merely looking for a way to postpone paying the bills.
Unfortunately, governments have the power to steal productivity and can thus compete for credit.
The solution comes in 3 versions of increasing strength:
1. Shrink government. Doesn't appear to work. Government has gone from minuscule to huge. The processes at work are too strong to reverse in a democracy.
2. Ban the use of confiscated productivity to service government debt. Debt service can only come out of the returns on true government investments. If an investment fails, it is treated as any other failed business.
Likely won't work 100%. The crooks will find ways to pervert complicated constitutional law.
3. Just ban all government debt instruments. There really is no reason why credit should be diverted to non-productive uses in government. The state can save up for any of the so called "investments" that politicians come up with.
*****
" Nonsense. Without government intervention, there will be neither inflation nor deflation."
Christian, inflations/deflations have occurred MANY times before fiat currencies.
"Prices will fall however, based on productivity improvements[...]"
or you mean increases in real goods compared to the medium of exchange (money)? Yes, that's pretty much deflationary state.
"It's true that a debtor's salary may be falling nominally, but not as fast as nominal prices. The difference, added to nominal rates, gives you the real interrest rate, which will still be low due to the high savings rate."
Something tells me people who have home/education/car/etc. debt that they have to pay for the next 20 years or so will not get their debts "attuned" to the new value of money.
Also, you and cbboegh seem to think that government is the one that creates majority of money. If that is so you need to read up a bit. It's the private banks that create most of money by simple scam they've been doing since middle ages - credit expansion yet none here nor Peter Schiff seems to attack private banks. Why not? You talk about increasing productivity, ask the bankers NOW why don't they create money for productive purposes instead for overconsumption? Surely, being not public but private institutions they are fair and well-minded organizations working for the benefit of the people?
Arnes Arnautović Google gives you a choice of personality when posting. I always get it wrong. Christian and cbboegh is the same person - me. Sorry for any confusion.
"inflations/deflations have occurred MANY times before fiat currencies"
Credit expansions/contractions yes. Without fiat, true inflation depends on gold miners "creating" more currency.
"people who have home/education/car/etc. debt..."
People have planned and made dispositions based on the current environment. That still doesn't make inflation a good thing. It makes inflation expedient to perpetuate until it eventually ends in tears - as it ALWAYS do.
"you need to read up a bit"
Government has a monopoly on creating fiat money. Certain private institutions have a government sanctioned license to create credit - up to a certain arbitrary maximum ratio. Inflation pertains to the first. Credit expansion to the latter. Inflation/deflation is often used about both - confusing the matter.
"ask the bankers NOW why don't they create money for productive purposes instead for overconsumption"
Everyone is broke, hence there's no demand for product, hence there's no demand for capital investments, hence bankers go to the casino when they aren't doing carry trades - funneling 0% money to the only remaining borrower with any credit worthiness - the government and state guaranteed schemes. That's why there's a bubble in housing, education and government. It's all based on debt guaranteed by the state.
The overconsumption is a secondary effect, caused by the "wealth effect", which is the result of all the state debt and guaranteed credit being pumped into the system. Normally it would result in price inflation as the credit isn't backed by goods and services. When the world stops vendor financing the US - overconsumption turns into severe underconsumption.
Don't prices go up if there is more consumption, thus creating inflation? Isn't inflation a measurement for how much demand is in the market?
it could also be a higher supply of money
the problematic inflation is the decrease in supply(labor) with an increase in demand brought about by an expansion of the money supply
Deflation encourages savings. savings = investment. Investment grows the economy. Growth is better than the alternatives.
Intellectual = person trying to pass off a sheet of paper as knowledge, intelligence & creativity; your standard college graduate w/ a degree in arts or humanities with no real world skills or experience.
-FFM
people wouldnt notice 1 or 2 years of deflation if its 1% or 2% like really, its not gonna stop people from shopping. kinda stupid actually
America has, by and large , been living with trading dollars , ( nothing for more of nothing) the result has been the change Obama has professed , America has stopped on a dime and been given 9 cents change and most people are now living on that change : SMALL CHANGE . Your caller Tom couldn't be more correct . America needs to Produce and Reproduce even ...
go spend on anything! (except barbarous relics like gold and silver)
👍👍
If you are so smart why have you lost so much money for your clients and moved off shore?
just started listening, but have to note: "sesame street" :)
What even is the argument about Deflation being bad for the economy... genuinely curious
The typical argument would be something like
Lower prices -> Less profit -> Decrease in production(which would make the prices go back up but let's ignore that) -> Higher unemployment -> Less spending -> lower prices
The real problem though is that in our economies overloaded with debt a sudden rise in deflation would make it much harder to repay that debt, leading to mass defaults and bankruptcies.
Another argument could be that while it's easy to rise and lower prices to follow inflation/deflation, and from an employer's perspective it's easy to rise salaries to match inflation, lowering salaries to match deflation is much harder, especially if you have minimum wage laws in place. It would force businesses to fire long term employees and hurt job stability.
the word sounds 'bad', it sounds 'negative', the public is too ignorant and financially illiterate, they don't understand what money is, so they can't understand deflationary currency just means your money becomes more valuable because it is scarce, it gives you more purchasing power per weight so your money is even more portable. They pretend that this causes people to hoard money because everyone believes prices will forever just keep dropping in price when in fact this is not the case, there are people who are always going to need to purchase goods and services, no one can hold out forever thinking prices will go to zero. Prices of gold and silver can't ever go to zero, it just makes people have to price their goods more honestly or more competitively. The value of your money going up doesn't cause the economy to stop working, people will always have needs that they want met and they are willing to pay. There is no point in history these mongs can point to that shows their hypothesis, but you can show them periods of time where money was gold and silver, and they were the most prosperous times in history.
lol Sesame Street
lala land
its as if when Obama was realizing what he was reading was making him look bad..lol... wth are they trying to make him look like a loon?
You're ranting!
This would have had far better impact if compressed into ten minutes or less
She says "um" far too many times.
Also, the reason there has to be inflation (money printing), the money supply(debt) has to increase or there wouldn`t be any money to pay the interest on the money already being recycled.
well, wages will also fall eventually in a deflation scenario…so it's all square
Yes, wages would fall if there was some deflation. But just like during inflation, where wages are the absolute last thing to increase, in deflation, wages would be the last thing to fall! :)
easyBob100 yea you're right. If I had to choose, i'd pick deflation. basically the economy of today relies on debt, and debt is easier to pay back during inflation than deflation. Now who's the greatest debtor? ah yes, the government. now you know why they like inflation. a few years of deflation and you'll start seeing defaults on a massive scale, bringing an end to this ponzi scheme.
Inflation to pay back debt is a zero (possibly negative) sum game. They always forget that even if they 'reduce' their debt through inflation, everything else costs more, negating the effects of inflating away debt. It seems that the only thing one gets is more debt to pay for the higher prices of everything else. This very well could be a negative sum game.
easyBob100
Hey man, do you have a citation for "...just like during inflation, where wages are the absolute last thing to increase, in deflation, wages would be the last thing to fall"? I Googled it and couldn't find anything, but that's interesting if true. Thanks!
Namely because of how people agree to work. Most people get a set wage (hourly or salary) and work at that rate until a raise. I don't see why it wouldn't be the same under deflation, except that most wouldn't need a wage increase, as their money becomes more valuable over time.
Of course, the economy is crazy complex, so there would also be other things affecting wages. Even if we had a stable currency (absolutely no inflation or deflation), wages in different industries could still go up and down, depending on supply and demand of the product/service being produced, as well as the supply and demand for labor in that industry.
lol @ sesame street
welfare does not pay enough money to buy stuff Peter, what r u talking about? you cant even rent 1 studio apartment with welfare money , lol
Can some please explain to me how we would go back onto the gold standard if we went off of it because there wasn’t enough gold in the first place?
Gold can be divided in many ways. Example : gold receipts. By weight
There's always enough gold...it's just a matter of price...
Turned it off after 4 minutes. Anyone who thinks the entire establishment is clueless in macroeconomics is suffering from a paucity of understanding. Schiff may have some insights that other people don't factor into his models, but I've listened to him enough that he's not cognizant of his own errors. Models are great, but if you extrapolate them too far, their incorrectness magnifies.
so whats your position on the inflation/ deflation debate, do you hold a view?
I prefer a slight inflationary policy. Deflation is damaging to both production and employment. The goldbugs tend to only think along one dimension of 'efficiency'; forgetting that we want people to be working and we want people to be producing. People prefer working, it's better for their morale.
İnflation is erodes cost of goverment debt. It is not healthy, but government debt decreases in inflationary environment. However, goverment bonds can yield high value in deflationary environment: Your yield is Interest minus inflation. If it is deflationary, your money value increase with even with negative interests.
But, the problem is increasing cost of exports. If factories do not scale salaries to the deflation, you cannot compete in the international markets...
If you hold the view that the entire establishment is not clueless in macroeconomics, you have to explain how despite their leadership, the world's economic situation has never been worse!
See how that turned out! Maybe you should stick around for more than 4 minutes the next time.
Oil prices don`t go down. There is no economies of scale. Discretionary goods will come down in price as people are going to pay more for food, land and energy. We need an alternative to cheap oil.
Imagine how cool hyperdeflation would be.
It's bad for loaners though. Thats about it
but don't wages drop relatively, if not more, meaning you have less purchasing power still?
bkershaccount
That depends on how you are paid.
Commission may decrease but then again you may make it up on volume because everything is on sale and getting cheaper.
If you had fixed income you would be in the money.
My comment is really to make people think it really is all relative and based on your position.
Inflation or deflation it really doesnt matter, its just your position for that environment.
But for there to be hyper deflation something serious would have to happen.
A massive decrease in supply of money or massive technological advancements that bring down costs of manufacture and distribution.
The second being a great situation.
Playboysmurf1 thanks for the response. i am fixed on an income below 50k /year. i have no debt except abou 5k in my auto.
i have diversified my assets as much as i feel i can with what little i could store awwy...bit of gold and silver, still have my 401k, etc.
i feel inflation is high but the market is manipulated to let the cat fully out of the bag, ie the Fed.
i do tend to think something serious is going to happen, so i'd like to know what moves i could make to protect against a deflation coming after hyper-inflation to the point of massive debt forgiveness.
You will probably have to try to pick or spot the turn around from (hyper)inflation to (hyper)deflation.
Hold hard assets and stocks during inflation, if you dont mind risk borrow to buy assets.
Hold cash and bonds during deflation.
It kills me how it's become the accepted belief that house prices should always continue to rise. How is it ever good for anyone in general, but risk takers and bankers that house prices rise? Should a home be a risk? It's not even necessarily good for the real estate market as they'd be selling more homes if they didn't. It's a complete scam.
Going back to this podcast in late september 2022 has another feeling ahahahhahha. Keep up the great work peter!
To be perfectly honest, I think Fed "Chairmen" simply read a script that's handed to them.
Haha I love this show, rolling over the floor laughing half of the time because of the irony and humor but it all makes total sense at the same time! Sad really but so funny