Peter Schiff makes the case of inflation intead of deflation

[Youreallsheople]

Peter Schiff is correct. Japan and the US are different. Japan had a future then when it went thru its crisis. The US has no future. When it defaults on the payments as it eventually will, there will be no recovery. High interest rates will not work ultimately. In the short term, it might 'work' for a while and the US can sell some more debt, but in five years, it will all come undone.

[30percentplusreturns]

I agree with robert prechter how we will have years more of deflation. There has been so much credit destruction that we will be in a deflationary spiral for years to come. So far every asset class from real estate to commodities have cratered and are having no bounce, except oil, but that only because oil cratered. Im not buying the inflation argument. People are forclosing and losing their jobs like crazy.

[gaguy1967]

I think the will be somewhat successful reinflating t he bubble, thus creating an even bigger economic collapse in 2012-2014

[zurichdublin]

One thing is for damn sure;

You can't base models related to this financial crisis on the Depression Era.

Its just pointless. There are no similiarities other then the name of the country.

[jamesat6]

March 08 - "there's no chance that the dollar will appreciate" Good One mate

[elliottwavenews]

Deflation is here. And here to stay for a while.

[ctrader09]

as far as I'm concerned, that will only be in REAL terms. in nominal terms, prices are going through the roof, simply by the logic that the dollar will collapse. it has to. how can the dollar be worth anything if no country wants it? its simple supply and demand

[czrart]

The US dollar will not collapse any time soon nor in the near medium to long term future. Instead, the US dollar will outperform every other currency out there because the US dollar is the most debt-inflated currency in the world; i.e., more debt is denominated in US dollars than any other currency. As such, as the current and ongoing debt implosion continues to its worthlessness state, the US dollar will rise. (see Eliott Wave International's financial forecast and Theorist reports).

[ctrader09]

i do read EWI reports. there could be short term deflation due to demand and thus price erosion, but long term the dollar is certainly toast. Also remember you can have deflation in one asset class and not in another. i think this will be an inflationary depression in which asset prices (i.e. real estate) in real terms (in terms of GOLD) fall but consumer prices (and possibly some asset prices) rise in dollar terms. either this will be a deflationary or inflationary depression. time will tell

[florgat91]

this is a Peter Schiff imposter ? ... voice sounds different ?

[tomniemiller]

No, that's definitely Peter.

[freekrolik]

ok let's see how FNM and FRE plays out .. asia is going steady ... lets see europe and the US...

[grimesgw]

Right now, it seems Robert Prechter's deflationary outlook is more accurate than Schiff's hyperinflationary outlook.

oil, stocks, gold, silver, real estate, other commodities -- are are DEFLATING in nominal (fiat) terms, not just real (gold) terms.

[julebuggy]

But inflation is running at a multi decade high? Let's get real.

Commodities are subject to noise, and it's certainly plausible that central banks are trying to manipulate the price downward (flooding the market with supply, etc) so the boyz can buy them up at a bargain from individual investors who think the sky is falling.

Deflation first, maybe. There is no way out of this other than stagflation or hyperinflation.

[jdcremin]

Its the strength of the dollar that matters - not over-supply of commodities.

M3 is falling - the dollar is rising - commodities and assets are falling - simple enough. It appears Schiff was wrong - the FED obviously does not have the power (or motives) attributed to it.

I still can't make sense of them not lowering rates further. Perhaps they (FED) want deflation after all.

Sep 16th will be big.

[BansheeXYZ]

Groceries and gas have never been more expensive, home prices are still ridiculously overvalued, the dollar is as well. No one complained about inflation when it was in tech stocks, then housing, now that it's finally filtering into commodities and everyday expenses, people are running for the hills. So sure, tech stocks and homes are "deflating," but that's because the inflation has moved into food, oil, gold, etc. And it will continue to regardless of what the Fed does.

[jdcremin]

Inflating?

Gold, oil, and agricultural commodities have all been going down over the last 2 months - what are you talking about?

Further, M3 (from shadowstats) has been dropping for the last 4 months.

[visionvictory]

is this for real, people are basing the inflation/deflation debate because of whats going on in the last 3 months?

Don't forget, the dollar rallied for the entire year of 2005. Look at the big picture.

[jdcremin]

So what's going on? Where is this great power of money creation that we were told about by Schiff and his father? I believed them and now

I'm 30% down. You'd think that the FED would have acted by now don't you think? I'd love to be wrong btw.

[bakinjoo]

You are a fucking idiot..

You bought Peter at the high...

it will come back if you can withstand the pain...my thinking is that you won't...

[jdcremin]

go fuck yourself. all you can do is talk shit- care to explain anything? No, because you have even less insight than I do.

[bakinjoo]

sure..here's the explanation...

the market's job is to weed out the weakest players (eg, YOU)...when you have reached the point of maximum pain, you will unload your investments, and that will mark the bottom. The same psychology permeated your tiny mind at the TOP...

Old trader wisdom - when you are in a trade or investment, and you feel like you want to vomit because it's so bad, that's usually the time to double up...

[jdcremin]

ok, genius - the mart play would have been to set up for deflation (inflation may still come but that;s not what's happening right now). Schiff never said a thing about deflation.

out of schiff and prechter (both books I read, did you wise man?) prechter so far is right.

[bakinjoo]

yup...Peter missed that one...he will be vindicated in the end because what's going on right now is so unbelievably inflationary that its not even funny. Deflation simulation is all that we are seeing now. It's totally artificial and temporary. Prechter is a broken clock...

[Myndir]

@bakinjoo So unbelievably inflationary that inflation is at 1%.

Schiff got it wrong.

[stealthswimmer]

well really only the Fed knows what M3 is doing.

Another thing I've heard is that M3 actually increased recently but that stuff like cost of oil has gone down due to decreased demand from the recession.

I dunno though, I haven't looked into it personally, I'm just sayin what I've heard.

[balbuto2]

It seems that Mr. Schiff's argument depends on the US economy suffering more than the rest of the world, but right now it seems that Europe and Asia are worse off than we are. For this reason the US greenback may well survive this crisis without all these predictions of massive printing of more dollars. However the survival of the dollar may be worse for everyone, because a rapid decrease in "electronic dollars" and investment instruments, would in effect be deflationary. To be continued...

[balbuto2]

The decrease in debt and investment instrument would in effect result in a decrease in the money supply, giving more buying power to the physical greenback. Sounds good at first, but the effect is the grinding halt of the banking system and in turn of industry, followed by high unemployment. This in turn leads to falling prices due to the smaller money supply and decreased ability to purchase goods.

[julebuggy]

Do you honestly think that the government would allow that to happen without ordering the Fed to go on a massive printing spree the likes which have never been seen before? Dollar is KING for a small time (so physical is good), then it's trash. Argentina had limited currency supply, yet still had hyperinflation.

Remember, Ben is called Helicopter Ben because of his famous speech that earned him that moniker.

[balbuto2]

In a word, yes. I think too many people have confidence in the Fed to bail out everything. I, on the other hand, tend to believe in a crisis of confidence, and I'm not sure exactly how that would play out. It's just my gut feeling that the Fed's power to create money out of thin air is limited. At some point our debtors are going to want more. Perhaps that will mean the end of the dollar, but I don't think so.

[BansheeXYZ]

Think so. With our country's debt, unfunded entitlements, trade deficit, negative savings rate, the fed raising interest rates will deflate the excesses which have not been allowed to correct for a decade. Trillions abroad will come home to roost. The fed will instead choose hyperinflation and cross its fingers that China stupidly stays pegged and inflates alongside us like they have been doing all these years to subsidize our consumption at their expense. What nice options to be left with, ha.

[balbuto2]

I may be wrong, but a credit crisis is a deflationary animal, so it all depends on what the fed will do and is able to do. For one thing hyperinflation, would involve the fed going against its mandate to stabilize the dollar. If things fell apart too fast the apparent absurdity of all of a sudden creating that amount of money might cause such an outrage that it could tie the fed's hands. I just believe there's a limit to just about everything, including money creation.

[jdcremin]

Then what are they waiting for?

M3 has fallen forthe past 4 months.

[mcnoodles76]

I agree with you jd..that the recessionary forces and credit freeze has caused falling commodities and falling M3, I beleive Peter is right though. The gov are hell bent on shifting up the gears on the printing presses. Lets see where M3 is heading after all this global cash injections.

[jpschubbs]

I agree with everything you said...except for the part about the end of the dollar.

[balbuto2]

jpshcubbs, so you think this might be the end of the dollar? I think the dollar might survive this, but it really depends on what decisions will be made by the big players rather on economic forces.

[jpschubbs]

That's a good point balbuto2. It seems though, that even if the big players wanted to save the dollar, they seem to be facing insurmountable challenges every way they turn.  I'm of the opinion they may use this to usher in the Amero. Time will tell though.

[balbuto2]

jpshcubbs, time will tell, but perhaps I was a little too vague on who the "big players" are. China--last I read--has over $1 trillion in foreign currency reserves, and much of that is in greenbacks. They also are heavily invested in Fannie and Freddie. They have an immense interest in the survival of the dollar, and that's no light-weight country. I think F&F will fail but the dollar will survive.

[BansheeXYZ]

I believe Schiff's feelings on this is that China would be better off cutting their losses and letting their currency appreciate than these incessant bad investments on the U.S. that have given them nothing but inflation. Pegs are for immature economies, China is plenty mature and productive, I have no idea why they keep thinking lending us money to buy their exports is driving their growth.

[Ouirallwun]

Why do both of these fools keep talking as if the governments create the money? The Fed does and thank god for that. The truth is Bernanke has been doing a heroic job. Had he followed the hard money philosophy the Fed did during the great depression the economy would have already been ripped apart. Schiff's only main talking point is that foreigners hold a lot of dollars. He doesnt address the fact that wealth is dissappearing at breakneck speed.

[BansheeXYZ]

The fed is the arsonist with the firefighting duties. Even after they put out the last inflationary fire their existence enabled, it nonetheless resulted in damage that otherwise wouldn't have existed. So enough "hero" talk. Also, don't discount the fed's inflation of the 20s, they made an artificial environment dependent on easy credit, then when the bubble popped they artificially sat on the inflow of gold from abroad. FDR followed with fifteen years of insurmountable socialism.

[He101A]

Inflation during good economic times-> deflation slowing economy(recession)->hyperinfla­tion(social programs+trade deficiets+bailing out financial & corporations institutions)->Depression

[myroseaccount]

Peter Schiff seems to be forgetting that many of the goods that the US imports from Asia, Europe and elswhere are made by AMERICAN owned multinationals. They can employ Asians more cheaply which is why the located there. It's true this may change, and the AVERAGE American is going to poorer, but the US ruling class who own the corporations will be fine!

[rich232399]

silly man, peter shriff tea bags this guy

[prescottbill]

Doesn't matter who prints worthless money, government or the FED (owned by member banks). What matters is nothing real backs the dollar, they are just IOUs. They pay you with more worthless IOUs. Think in terms of having a limitless American Express card that everyone will take for payment, and you never have to pay it back. That is what the US government has and the FED issued the card.

[BlueEagle8]

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." -Thomas Jefferson

[tommyenglish1]

Schiff should work for the Fed. He actually gets what's going on.

[alanhowitzer]

He should take Ben's job. Peter's first any only act would be to dismantle the FED.

[alanhowitzer]

He should take Ben's job. Peter's first any only act would be to dismantle the FED.

[collectivity]

The main difference between Argentina in 1999 and the U.S. now is that the U.S. owes debts that are denominated in its own currency. So, as the currency inflates, debts actually become easier to pay. That helps the U.S., of course, as it is the largest debtor among nations. But this also would seem to create an additional incentive on the part of the U.S. to pursue an inflationary path (if it even has a choice). The reality is lots of money, fewer goods.

[navtel]

the currency deflates, prices and money supply inflate. if you owe 100,000 dollars for a home worth less than the mortgage and prices of goods go up you had better hope your wages triple.

[collectivity]

Yes, that's right. I mistyped in stating that the currency inflates; I meant to say that as inflation occurs, and the currency becomes less valuable.

[HousingShrugged]

Yes but further inflationary policies create their own incentives to spend more & save less - at some point it will come to a head. But having our debt in $US does push the day of reckoning out further.

[HousingShrugged]

This was meant as a response to collectivity below.

[markymarkuss777]

The Economy is going to go into Severe Recession, then once it enters that Severe Recession, it's going to cascade in on itself.

- Economist David Tice

[maggs10111]

This Elliott guy has a SEXY voice...I love him!

[joalajoala]

I love that Helicopter Ben picture ^^

[holdingcompany]

I can only laugh at America. As your country sinks into depression you will be forced to eat worms by digging them out of the earth with your iPods!

[markymarkuss777]

"PETER" Schiff, and Ron "PAUL" telling us the financial truth of the day, just as the Apostle "PAUL" and Apostle "PETER" told the truth in their day. Great video!

[Tasadaru]

Funny how people say "We want change." Yet, when it's staring them right in the face, they dismiss it. That's why I will defend Ron Paul reputation and spread the word of Peter.

[obsidian2012]

I have great respect for Peter Schiff and his opinions. But consider Argentina which Peter suggests is the economic paradigm for where the US is headed. Argentina had 3 distinct economic phases. Hyperinflation of 5000% in the 1990s, followed by a deflationary collapse in 2001, followed by inflation. So both extremes can be appear on a country's economic timeline. One thing I think we can all agree on is, regardless of the outcome, you should own precious metals as a hedge.

[julebuggy]

Yes, silver/gold/platinum/paladium = MONEY! :)

[obsidian2012]

I have great respect for the opinions of Peter Schiff. I am not entirely convinved however that we will not fall into a deflationary collapse. Consider Argentina as the example. It went through 3 distinct phases. Hyperinflation (%5000) during the 1990s, followed by a deflationary collapse in 2001, followed by inflation. So the two are not necessarily mutually exclusive.

[julebuggy]

Point taken. It's all a matter of how unstable things get. I think Peter believes the situation would not necessarily be uncontrollable hyperinflation, but rather a borderline scenario, high double digit inflation. In that particular scenario, you might not get this pendulum action between massive inflation/deflation. It all depends on how wildly supply/demand swing back and forth. We shall see :(.

[obsidian2012]

Didn't mean to post twice. I didn't see my comment appear so I typed it in again.

[truthsabre7]

I am amazed how most prople do not understand Peter Schiff's analysis of the US Economy. Even when he is on the business channels the so called experts do not get it.

[ewetubular]

Very well argued.

The caller took on the arguments I've read most articulately presented by Mish Shedlock. Schiff very convincingly argued his case in this clip.

It's one thing to worry about the implications of the governments inflationary policies over the years. Today, it's surreal to watch this phenomenon play out day after day... as if we're watching a fire touch accelerant and begin to roar in recent weeks...

[sh200kr]

Peter Schiff is the man!

[InTheSticks1881]

Schiff makes his argument well. Thanks for sharing.

It's amazing to me that the caller has a hard time accepting the significance of the Fed. The Fed will print and debase the dollar. The government will also bail out the banking system. To pay for that, the Fed will have to monetize the debt. There are many reasons that will 'force' the Fed to print money destroying the dollar and taking it to unbelievable lows. Imports are apart of most goods sold, will cause prices to rise generally.