Peter Schiff: 'Fed Has No Possibility of Withdrawing Stimulus'

[dannno]

One of the most infuriating things about the Fed haters — i.e. the people who predicted massive inflation and dollar debasement as a result of quantitative easing — is that they've never really admitted they got it all wrong.

Maybe a few have, but for the most part, the people predicting doom and gloom and Weimar Germany-like outcomes continue to say the same thing, without regard for actual evidence.

This is what makes folks like Paul Krugman so infuriated and why he is so harsh toward his critics, because he regards them as intellectually dishonest.

There's more evidence of that Thursday, courtesy of a great Bloomberg piece by Caleb Melby, Laura Marcinek, and Danielle Burger in which they called up various signatories to a 2010 letter that warned former Fed chair Ben Bernanke about impending inflation.

The upshot: For the most part, they don't accept they were wrong.

Here for example is Jim Grant, editor of Grant's Interest Rate Observer and an intense critic of Fed easing:

http://finance.yahoo.com/news/well-just-embarrassing-fed-haters-150538633.html

This is another time table issue. You say somebody is "wrong" before the events even happen....wtf?

The ultimate crash will come, as I said, either when market determinism kicks and the market manipulators can no longer reign it back in or when the market manipulators push the economy over the edge. There is no telling which way it will happen, unless you are a market manipulator.

 

[NACBA]

Schiff has been calling for another collapse since 2008. Six years. Still waiting. He has said gold could go to $5000 an ounce since 2009. Still waiting. How much longer?

Exactly--he is consistent so he will be right eventually..and meanwhile how are his clients doing?

 

[Zippyjuan]

Probably because they haven't. The only thing keeping inflation down is historically low velocity. Lower than it's ever been (since it's been recorded). The inflation is here, it's just not being felt in prices... Yet. You are confusing monetary inflation and price inflation. Normally, there is a correlation, but velocity has never been this low. That will change.

Historical velocity: Note that it was at its highest in 2000 when inflation was relatively low. High velocity does not always corelate with higher price inflation. Highest modern inflation was seen about 1980. Compare these two charts for the post-1985 period.

http://raynoreport.com/13/07/shocking-collapse-in-money-velocity-might-be-scaring-fed/

https://www.frbatlanta.org/-/media/Images/pages/econ_rd/macroblog/090208lg.jpg

 

[ctiger2]

Fed has already withdrawn stimulus. QE ended in October.

LOL! Anyone with a brain knows QE was just shifted to Japan. It's a game of musical chairs.

Bank of Japan stuns market with even more stimulus - Oct 31, 2014
Japan Prime Minister Shinzo Abe Approves $29 Billion Stimulus Package

I'd suggest everyone just sits on the golden chair and waits it out. Better to be years early than 1 day too late. Enjoy the ride.

 

[dannno]

Exactly--he is consistent so he will be right eventually..and meanwhile how are his clients doing?

So you admit that he will eventually be right, gold will go to $5,000, but we shouldn't listen to him because......?????

Most of his clients have done just fine and will be far better off than the people who don't listen to him.

And you have yet to refute the points in the short post I've asked you to read. You anti-Schiff folks are really bad at debating, although you are great at misdirection and obfuscation.

 

[CaptUSA]

Historical velocity: Note that it was at its highest in 2000 when inflation was relatively low. High velocity does not always corelate with higher price inflation. Highest modern inflation was seen about 1980. Compare these two charts for the post-1985 period.

We just did this in another thread. Want to play again?

What does high monetary inflation + rising velocity mean? It means price inflation. It's coming - you just think the planners will be able to control how fast it comes. They might be able to - I'm not sure. But I do know that there will be price inflation. So NACBA's post about there being no inflation due to QE is entirely premature.

 

[dannno]

Schiff has been calling for another collapse since 2008. Six years. Still waiting. He has said gold could go to $5000 an ounce since 2009. Still waiting. How much longer?

Peter Schiff and Ron Paul have both admitted it could be 5 or 10 years away, but essentially it is whenever the petro dollar collapses. There is a chance they might be able to rig the game longer, but I really doubt it.

 

[Zippyjuan]

Again, it depends on how much velocity changes. A slow change means lower price changes. High change in velocity- higher price changes. What happened with the higher velocity we have seen for the past 20 years? M2 (money supply) was growing at about the same rate it is today while velocity was much higher. Where is that price inflation?

 

[dannno]

Where is that price inflation?

I'm guessing it's being exported, temporarily.

 

[CaptUSA]

Again, it depends on how much velocity changes. A slow change means lower price changes. High change in velocity- higher price changes. What happened with the higher velocity we have seen for the past 20 years? M2 (money supply) was growing at about the same rate it is today while velocity was much higher. Where is that price inflation?

Wow, talk about your cherrypicks~!

Here's an overlay with a better date range.

 

[acptulsa]

Again, it depends on how much velocity changes. A slow change means lower price changes. High change in velocity- higher price changes. What happened with the higher velocity we have seen for the past 20 years? M2 (money supply) was growing at about the same rate it is today while velocity was much higher. Where is that price inflation?

You say excessive money supply and high velocity are both required to see the lower value of the dollar reflected in higher nominal prices, you admit that money supply is being increased and this amount of increase has caused nominal prices to rise in the past when velocity has been higher, you see prices on everything but gas and televisions going up but admit velocity is very low, and ask where the inflation is?

Is this a rhetorical question, or just a stupid one?

 

[Zippyjuan]

Money supply has increased but not dramatically. Velocity is low which means money is not circulating rapidly. For prices to rise, we need either high demand for goods, low relative supplies of them, and/ or lots of money moving quickly through the economy. How many of those factors do we see in effect today? How fast are prices rising?

and this amount of increase has caused nominal prices to rise in the past when velocity has been higher,

Actually if you read what I posted earlier, I did say that high velocity has not necessarily mean higher prices in the past.

 

[Danke]

Fed has already withdrawn stimulus. QE ended in October.

Stimulus remains, just in a more traditional way for the Fed, low (now zero) interest rates.

 

[acptulsa]

Money supply has increased but not dramatically. Velocity is low which means money is not circulating rapidly. For prices to rise, we need either high demand for goods, low relative supplies of them, and/ or lots of money moving quickly through the economy. How many of those factors do we see in effect today? How fast are prices rising?

Surprisingly slowly, if one is dumb enough to believe all the declarations of recovery, announcements of a fixed economy, and general full-volume performances of the song Happy Days are Here Again we've seen linked to and transcribed by you over the last six years...

 

[CaptUSA]

Wow, talk about your cherrypicks~!

Here's an overlay with a better date range.

So, I updated it with a second graph. Now, understand that the economy does not operate in a vacuum. The reasons for low CPI inflation in the 90's with such a high velocity are many, but a big one is because of where the money was going. We were filling up a housing bubble - inflating home prices. There was also a dotcom bubble being inflated. Not to mention that we began the 90's with a relatively slow period of monetary inflation. You cannot correlate this to anything that is happening now.

But like I said earlier, there may be a new bubble to inflate with the inflation. If the planners can find a home for it, they may be able to stash it for awhile.

 

[Zippyjuan]

So, I updated it with a second graph. Now, understand that the economy does not operate in a vacuum. The reasons for low CPI inflation in the 90's with such a high velocity are many, but a big one is because of where the money was going. We were filling up a housing bubble - inflating home prices. There was also a dotcom bubble being inflated. Not to mention that we began the 90's with a relatively slow period of monetary inflation. You cannot correlate this to anything that is happening now.

But like I said earlier, there may be a new bubble to inflate with the inflation. If the planners can find a home for it, they may be able to stash it for awhile.

Dot com bubble was roughly 1997- 2000. http://en.wikipedia.org/wiki/Dot-com_bubble Housing bubble started in 1999. Velocity peaked before then. But you are right- there are many more factors than just velocity and money supply.

 

[acptulsa]

But you are right- there are many more factors than just velocity and money supply.

Name some of those 'many more factors'.

Near as I can tell, the only factor outstanding is the inflation we've already had, combined with stagnant wages--a pair of factors which has deprived the economy of its driving engine, which was the middle class before it was made poor.

 

[Zippyjuan]

You mean like supply and demand? Relative scarcities?

Historically, the concept of a "middle class" is a recent and rare one. In terms of our lifetimes it is what we have known for a while but over the centuries, it has not existed long- only about a hundred years or so. It doesn't go back before the 1800's. The middle class really emerges after the end of WWII. http://www.post-gazette.com/local/r...oots-of-the-middle-class/stories/201111200308

 

[acptulsa]

You mean like supply and demand? Relative scarcities?

Historically, the concept of a "middle class" is a recent and rare one. In terms of our lifetimes it is what we have known for a while but over the centuries, it has not existed long- only about a hundred years or so. It doesn't go back before the 1800's. The middle class really emerges after the end of WWII.

Your excuse for a whole extant swatch of American society being robbed blind is we got through the Dark Ages without a middle class?

Machiavelli would be proud, but I'm not impressed.

 

[Zippyjuan]

I wasn't excusing anything.