[The Land Of] The Rising Sun Sets On Peter Schiff's Senseless +M1 = Inflation Argument

Feeling all hot and flustered, Dr. Dumm? You just had to open your fat mouth and invite us to make a video to hammer it back shut again. You probably thought you could score points by attacking your 'critic' - and now, you've ended up embarassing yourself miserably - and made yourself the numero uno laughing stock of the economics and financial sectors yet again.

What a riot.

It probably took you hours to think of that analogy about the auction - since you are wheeling it out like its some great advancement in logical thinking. Haha - its an extremely dumb analogy with serious logic flaws - cookies for the reader who comes up with the right answers as to why.

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[SchittReport]

one more important point here is that idiot schiff is saying that assuming all things are constant and only money supply changes. well, sorry, peter but oil supply and demand, supplier concentration, buyer concentration, etc. change every second of the day - so your analogy was flawed from the beginning.

it must have taken you hours to think of this analogy? hahaha. fail.

not to mention the most important point of all - that US M3 money supply is not even growing. hahaha. fail.

[SchittReport]

btw. i should also point out that idiot schiff mixed some elements of the real-balance effect into his argument, when these are actually two distinct concepts.

thats how dumb he is.

[SchittReport]

the conclusion is a cookie for all my friends here - everyone made good points in relation to this subject :)

[SchittReport]

japan is a good example of where consumer spending has been maintained, but the prices of goods are falling.

in reality, the whole aggregate demand model is antiquated, STATIC and linear to the point of being not very useful at all (you would trust a dumbell like peter schiff to use examples like this). most economists use DYNAMIC models now to understand how money supply (as well as other factors) influence pricing. i will post some SCP slides i wrote many years back for reference.

[SchittReport]

therefore, there is in effect, no direct correlation (and certainly no linear effect) between an increase in aggregate demand and increase in price levels for a particular item. price levels for a particular item are determined by a number of other factors - production costs, availability of substitutes / competing products etc.

for example, with $1000, people may pay the bare minimum or try and get a discount for what they consider to be non-core items but bid up necessities.

[SchittReport]

well, we all know what the objective of QE is: to stimulate aggregate demand. and thats precisely what an increase in money supply does; stimulate aggregate demand. the presupposition is that people will buy more at the SAME, EXISTING price levels. it does not mean that people will pay more. it also does not mean that people will plunk the whole $1000 into that particular item on auction, they may pay $100 for oil and use $900 to buy other items at other auctions.

[dsglop]

Where's my cookie? Maybe you had a different idea. You're probably thinking that buying bonds simply puts cash on banks balance sheets and needs to be loaned out before it goes into circulation, and that hasn't happened enmasse yet. That's true, but I think the commodities market is the bigger factor.

[jetmanisme]

The most charitable interpretation of Schiff's argument that I can come up with is that he's arguing MV=PT and then pretending that V and T are always constant/don't exist?

[dsglop]

Didn't pete say -on another video- saying that oil spiking in the 70s was caused by leaving the gold standard? What did the OPEC embargo due to supply? And wasn't that the moment oil spiked? Coincedence? Just like oil spiking now just happened to be at the same time people are worried that the ME will fall to anti US nuts- other than pete. His ability to create arguments to fit his world view amazes me. If it weren't for that, he wouldn't have a single skill.

[dsglop]

"Those charts on Japan are fake! They make pete look stupid so the BoJ must be liars! Just like the Fed! I just don't understand how deflation can happen with low interest rates. I'm a genius! If I don't get it, it's not true!"

Says the cult member.