Good inflation/deflation debate today on Schiff radio

[shocker315]

"Today's guest is Robert Prechter, founder and president of Elliott Wave International, on why America's gravest current threat is deflation, which is covered in his new book."

Starts at the 21:40 min mark

http://www.schiffradio.com/programhighlights

This was a fascinating 20+ min debate today. Basically they both believe a major collapse is unavoidable. Prechter argues that a deflationary collapse will take place (including a fall in commodities) because austerity measures will eventually be put in place. Schiff says our government is too irresponsible for any austerity, and will continue to paper over losses until we get massive inflation.


Worth a listen to hear cogent arguments from both sides of the inflation/deflation debate.

 

[Pennsylvania]

Prechter came off as a bit naïve in that interview. The trend is your friend Bob.

 

[Austrian Econ Disciple]

What austerity measures? Any way you look at it we default. The only course of action that doesn't default us in the here and now is to continue on the path we are on now, and that will completely destroy the entire country (massive hyper-inflation). The Fed is stuck in the cycle now whether they wanted it or not. If they raise interest rates to even 5% all the banks default and so does the Government. Right now we are financing short-term debt at about ~1-2% and that is costing roughly 500-700 Billion a year. If we started to roll-over Government debt (this is just federal mind you, not to mention the mass of debt in all levels of Government), at the rates needed to curb inflation (at least 14%+), that would skyrocket our interest payments to well over 4 trillion a year. We can't afford that. How in the hell are we going to pay that?

There will be no deflation. It is impossible given the math. The whole society has been so corrupt for so long it was enivitable. Good riddance. Let's start from ground zero. At the very least have 50 independent states.

*Caveat -- the only possible way we do not default is if we cut Government spending by at least 50% across the board. This country does not have the will for such things, nor will the Republocrats allow it. They are so far indebted to voting blocs they dare not give up their 'power'. Even Rand won't come out for 50% cuts.

 

[TomtheTinker]

What austerity measures? Any way you look at it we default. The only course of action that doesn't default us in the here and now is to continue on the path we are on now, and that will completely destroy the entire country (massive hyper-inflation). The Fed is stuck in the cycle now whether they wanted it or not. If they raise interest rates to even 5% all the banks default and so does the Government. Right now we are financing short-term debt at about ~1-2% and that is costing roughly 500-700 Billion a year. If we started to roll-over Government debt (this is just federal mind you, not to mention the mass of debt in all levels of Government), at the rates needed to curb inflation (at least 14%+), that would skyrocket our interest payments to well over 4 trillion a year. We can't afford that. How in the hell are we going to pay that?

There will be no deflation. It is impossible given the math. The whole society has been so corrupt for so long it was enivitable. Good riddance. Let's start from ground zero. At the very least have 50 independent states.

*Caveat -- the only possible way we do not default is if we cut Government spending by at least 50% across the board. This country does not have the will for such things, nor will the Republocrats allow it. They are so far indebted to voting blocs they dare not give up their 'power'. Even Rand won't come out for 50% cuts.

Painfully true.

 

[low preference guy]

Even Rand won't come out for 50% cuts.

He comes for a 40% cut in the first year he is in the Senate. That's pretty close.

 

[shocker315]

archived link added to OP.

 

[Austrian Econ Disciple]

He comes for a 40% cut in the first year he is in the Senate. That's pretty close.

I would love to see Rand filibuster the debt-ceiling. ::shivers down leg::

 

[low preference guy]

I would love to see Rand filibuster the debt-ceiling. ::shivers down leg::

I just wanted to make a comment about your specific point, not start a new topic.

 

[cubical]

we have to cut spending 50% now to save for the coming social security and medicare bomb. it won't happen though. either the government defaults or inflates. either way its bad for the dollar and good for gold.

 

[anthonyca]

Has anyone been able to get the debate to play on an iPhone.

 

[cubical]

just listened to it. There were some good points made by the deflationist. I do not see what the big event will be that starts all the defaults. To me it seemed as though their views each came down to what the fed would do and the each believed they would do the opposite.

 

[hugolp]

just listened to it. There were some good points made by the deflationist. I do not see what the big event will be that starts all the defaults. To me it seemed as though their views each came down to what the fed would do and the each believed they would do the opposite.

This is the reality. It all depends on what the government does.

If the government had not decided to inflate and apply the depresants (what they call stimulus) then there would have been a deflationary correction. The correction was not allowed to happen and the inflated away. And will continue to do so in my opinion.