Peter Schiff, John Lonski, Dennis Berman - on Inflation, Deflation & Recession

4 Aug 2011
[Peter Schiff looks very happy that the DJIA has fallen by 500 points and more signs are pointing to a recession re-emerging. John Lonski looks happy too -- perhaps Moody's has some moves it can make here]

Peter --
The market is selling off because people are finally coming to the conclusion that the stimulus didn't work. Recession is coming back. And people are calling it a double-dip. I think it's part of one big depression [Amazing] that was temporarily interrupted by stimulus spending but all we did was spend ourselves into a deeper hole. And I think we are facing a bigger economic contraction now because of the stimulus and the bailouts than what we faced before."

Presenter - Even thought the macro numbers don't support that view at least in terms of contraction.

John Lonski --
"You've got to keep your eye on jobs growth. If we do grow payrolls by more than 50,000 for the month of July that would be a positive sign. It would tell us at least that we are not in a double-dip. We should also consider that a lot of the downside risk has been exhausted by the beating the economy has taken. How much lower can house prices go? I think with this latest dip in the Treasury bond yields the mortgage yield is going to go to 4% if not lower. And right now BAA industrial bond yields are at their lowest level since 1966. They're not going to go up, this is an older America! This is Japan like, interest rates are going to remain under 3.5% for a longer period of time than we imagine."


John - Inflation is going no place!
Peter - No it is not it's going up we're spending all this money
John -- No it's going to go lower because of high unemployment after labor day.
Peter -- Wages can go lower, real estate prices can go lower, but consumer prices for things like food and energy they're going to go up!


Presenter -- watching these treasuries you have to wonder what the heck were all these rating agencies talking about, what were these so-called leaders of ours in Washington talking about a debt downgrade? I mean the Treasury market is flooded.

The Wall Street man Dennis Berman --
"You have to consider what is happening in the global economy right now. We are the least worst option. [This has to be true] Do you want to buy euro-denominated bonds?? Do you want to buy a Greek bond, an Italian bond, a Portuguese bond or a Spanish bond?"

Peter Schiff --
You can buy gold!

Peter Schiff -- Government policy is getting in the way of the restructuring that we need. There's too much spending, too much debt. Too much government. We need more individual savings [Yes for the most part], higher interest rates [Maybe not?] we need to produce more and export more [Absolutely].

John --
We need a more aggressive energy policy [Very valid point] The Canadians think nothing of going to the Alberta Tar sands and extracting oil and we're nervous about the north shore of Alaska that's in the middle of nowhere! What about the development of natural gas reserves in New York State? [Isn't natural gas a very risky production process...] We have to bring the price of energy down. That would give a boost for the economy. Oil is down, gold is down.

Peter -- Oil is still at $90. People are selling everything because they are leveraged and need to sell. [If you could only show why this is you could go to the Fed and ask them to start targeting asset prices]

Presenter -- "This is a broad market sell-off by asset class".


[On balance it looks like the deflation side is overpowering the inflation side. This would explain why central banks want as much inflation as they can get. This is a tough sell though because they also have a policy mandate to keep inflation low. What a world we live in.]

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People & Blogs

Tags:

• Inflation
• Deflation
• & Recession Peter Schiff
• John Lonski
• Dennis Berman