Peter Schiff (Inflation) Debates Harry Dent (Deflation)

[acptulsa]

You cut a lot of corners to avoid some of the complexities of the issue, IMO

You go to great lengths to discourage people from learning form history. Which is hardly surprising when one is shamelessly promoting a candidate with no history of supporting liberty or being a friend of the working man, IMO.

No amount of complexity can hide the facts that fiat was sold to our great-grandfathers as a tool for preventing recessions, but it has not done that, and that the value of the dollar has stopped fluctuating up and down, and has dropped ever since--at a pace wages cannot and have not been able to rise fast enough to counter.

And the evidence is clear that the wealth is now held in far fewer hands than it was then. What good is it to grumble about Bernie supporters but defending the policies which created them? If so-called conservatives can defend legally-mandated money which shrinks like wool in a hot dryer, no wonder people are willing to give socialism a chance.

 

[ArrestPoliticians]

You go to great lengths to discourage people from learning form history. Which is hardly surprising when one is shamelessly promoting a candidate with no history of supporting liberty or being a friend of the working man, IMO.

There's history on both sides of the issue...which you seem unaware of.

No amount of complexity can hide the facts that fiat was sold to our great-grandfathers as a tool for preventing recessions, but it has not done that, and that the value of the dollar has stopped fluctuating up and down, and has dropped ever since--at a pace wages cannot and have not been able to rise fast enough to counter.

Yes, but thats not the debate.

And the evidence is clear that the wealth is now held in far fewer hands than it was then. What good is it to grumble about Bernie supporters but defending the policies which created them? If so-called conservatives can defend legally-mandated money which shrinks like wool in a hot dryer, no wonder people are willing to give socialism a chance.

Who here is defending fiat money? I obviously don't mean both Schiff and Dent are right about Gold as money lol, I am talking about the inflation/deflation debate.

So much red K from you crybaby types lol....

 

[acptulsa]

What history are you charging that I don't know? The Cross of Gold Speech? What?

If inflation did not redistribute wealth and concentrate it in the hands of the few and powerful, there wouldn't be a debate about it at all.

You say gold and fiat are irrelevant, or at best parenthetical, to the inflation/deflation debate, but the glaring fact remains that there is no deflation with fiat money. So, tell us again how the thing that eliminates deflation is parenthetical to deflation itself. We could all use a good laugh this morning.

So much red K from you crybaby types lol....

You publicly cry about it, pretend to laugh as you cry, and accuse everyone but yourself of being a crybaby. You seem to be a mite confused...

 

[ArrestPoliticians]

What history are you charging that I don't know? The Cross of Gold Speech? What?

If inflation did not redistribute wealth and concentrate it in the hands of the few and powerful, there wouldn't be a debate about it at all.

You say gold and fiat are irrelevant, or at best parenthetical, to the inflation/deflation debate, but the glaring fact remains that there is no deflation with fiat money. So, tell us again how the thing that eliminates deflation is parenthetical to deflation itself. We could all use a good laugh this morning.



You publicly cry about it, pretend to laugh as you cry, and accuse everyone but yourself of being a crybaby. You seem to be a mite confused...

You really did completely miss the point

 

[fisharmor]

You really did completely miss the point

....I'm sorry, did you make a point in this thread?
If you did, I missed it too.

 

[ArrestPoliticians]

....I'm sorry, did you make a point in this thread?
If you did, I missed it too.

The video?

 

[fisharmor]

Just finished, and I'm not sure who is supposed to be knocking out whom.

This is my first time hearing Dent's argument about debts collapsing equals less money chasing the same goods equals DEFLATION.

His interpretation is (I guess) that so much of that has happened that even though we've been inflating the money supply at record levels, there hasn't been any inflation.

Is there a response to this?

Personally, I think the idea that there has been no inflation is indefensible. You only need to compare prices from 2008 to prices today. Or the explosion in the number of thrift stores, Aldis, and other places where you can get the same things at 2008 prices only used or with worse service.

 

[XxNeXuSxX]

His interpretation is (I guess) that so much of that has happened that even though we've been inflating the money supply at record levels, there hasn't been any inflation.

Is there a response to this?

Inflation: An expansion of the money supply:
Rising prices: A symptom of inflation

Rising prices are correlated with inflation; however inflation is by definition expansion of the money supply; which devalues the unit of account is worth less than it otherwise would be.

Deflation is a contraction of the money supply: falling prices are associated with deflation, among many other positive factors such as technological improvements, innovations, and improved allocative efficiency inside the market.Falling prices means that you have more purchasing power, and thereby more wealthy.

 

[fisharmor]

Deflation is a contraction of the money supply

Right, I get that it's an increase or decrease in the actual number of dollars in circulation.
What Dent appears to be saying, is that writing off debts is de facto decreasing the money supply.
A borrower borrowed money and didn't pay it back, the lender wrote it off, and it is therefore removed from the money supply.
He appears to think that so much of this has happened that it has balanced out.

And now that I type it out again, it occurs to me that the answer is that we don't know the origin of the money that was originally lent. In all likelihood, it was money created through inflationary fractional reserve banking to begin with, so removing it from the economy when the debt is written off is removing money that was inflated in the past, and so it's not really offsetting the newly inflated money.

 

[Zippyjuan]

Technological progress always leads to a higher standard of living. The thing is, the greater wealth of society due to the amazing technological progress of the last century has mostly gone to the richest, while the gains of the working class have been comparatively flat. Flat enough that those things which technology affects less, like food and housing, are eating our lunches, while our much vaunted 'greater purchasing power' mostly translates into an ability to buy toys that weren't available at any price--before they were invented.

As a percent of disposable income, food prices have fallen significantly over time. We used to spend about 30% of incomes on food while today it is about 11 percent- and we have a vastly larger selection of food items to choose from.

Housing has changed less (chart is percent of disposable income spent on housing).

And the evidence is clear that the wealth is now held in far fewer hands than it was then. What good is it to grumble about Bernie supporters but defending the policies which created them? If so-called conservatives can defend legally-mandated money which shrinks like wool in a hot dryer, no wonder people are willing to give socialism a chance.

Is that evidence clear- as compared to say 100 years ago before fiat? But that is not caused by monetary policy or using fiat or gold for currency or price inflation or deflation. That is the history of mankind. But if you are concerned about that, socialism might be something you can try. (It won't get rid of it either- kinda like cockroaches).

 

[Zippyjuan]

Found a cool chart. http://visualeconomics.creditloan.com/100-years-of-consumer-spending/

Noting on things like transportation that in 1901 nobody owned a car and today every house seems to have multiple cars.

 

[fisharmor]

It doesn't mattet how cool the chart is if it's that obviously misleading.
If you only consider health insurance premiums subtracted from gross pay where employees get full coverage benefits, it might be correct. If you add in the employer contribution then it's closer to the housing figure.

 

[NoOneButPaul]

5 years ago I would have aggressively defended Peter's position and thought Dent a fool.

Now it's hard to say... what every Austrian minded thinker, like Peter, continues to ignore or fail to see is that there's no other currency to park your capital into. The Yen? The Euro? The dollar is still king.

We are deflating because the rest of the world doesn't have a good currency to run to. Everything Peter says and believes is correct but if the rest of the world keeps using your broke ass currency will it ever break? So far the answer is no and has been for almost 50 years...

 

[openfire]

5 years ago I would have aggressively defended Peter's position and thought Dent a fool.

Now it's hard to say... what every Austrian minded thinker, like Peter, continues to ignore or fail to see is that there's no other currency to park your capital into. The Yen? The Euro? The dollar is still king.

We are deflating because the rest of the world doesn't have a good currency to run to. Everything Peter says and believes is correct but if the rest of the world keeps using your broke ass currency will it ever break? So far the answer is no and has been for almost 50 years...

$200+ Trillion in liabilities...

 

[Bossobass]

As a percent of disposable income, food prices have fallen significantly over time. We used to spend about 30% of incomes on food while today it is about 11 percent- and we have a vastly larger selection of food items to choose from.

CPI has been revised so many times to distort the true rate of the inflation of the USD as to have become a number with no relevance...

Williams points out that one of Greenspan’s manipulations of the CPI involved the consideration that when steak got too expensive, the consumer would substitute hamburger for the steak. So, Greenspan argued, the inflation measure should reflect the costs of buying hamburger, not steak.

“Of course, replacing hamburger for steak in the calculations would reduce the inflation rate,” Williams commented, “but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival.”


Read more at http://www.wnd.com/2007/11/44391/#APaagbW2r0Mt3sDE.99

So, any charts made using the distorted number are, by default, distorted. Useless, IMHO.

 

[NoOneButPaul]

$200+ Trillion in liabilities...

And you think Europe or Japan is better?

Like I said... I agree with everything Peter says but the bottom line is until China or Russia or the BRICS or whomevers offer the world a more stable currency the dollar is still king. All of the unsustainable debt issues in America don't matter so long as the rest of the world's are worse.

This is why Austrians cannot time the collapse because what they are predicting is the day the world wakes up and stops using the dollar. When is that going to happen? What is on the horizon that will displace it? These are the questions they cannot or will not answer.

America is raising rates while the rest of the world goes negative. Capital is flying into the country and it's deflating asset prices. This will continue until they reverse on rates or on QE or both.

In my opinion the Fed is juicing the dollar up so they can bring it back down in a time of crisis. By collapsing all the other currencies into the dollar and deflating everything they make our debt situation worse which makes them more likely to create more currency in the long run - It's like a snake eating it's own tail. I'm not saying anything about it is sound i'm simply saying that so long as the rest of the world runs to the dollar in times of uncertainty it's hard to see how this game falls apart any time soon.

When there's another legitimate currency on the horizon threatening the dollar we can revisit this but for the time being the dollar is still the cleanest dirtiest shirt and even Peter has described it that way. In the meantime he's going to continue to pump the inflation angle because he sells gold but the reality is this - Gold, and all commodities, have collapsed over the past few years despite the Fed creating more currency than they ever had in history. There's real reasons for this and it's not some conspiracy...

 

[Zippyjuan]

CPI has been revised so many times to distort the true rate of the inflation of the USD as to have become a number with no relevance...



So, any charts made using the distorted number are, by default, distorted. Useless, IMHO.

CPI is updated every ten years. That is because what people can and do spend their money on changes over time. Shadow Stats uses the 1980 basket of goods - which includes things like VCRs and phonograph and cassette tape players and leaves out things like computers and cell phones and LCD TVs because they weren't invented yet.

 

[Zippyjuan]

$200+ Trillion in liabilities...

$200 trillion in unfunded liabilities is measured by taking what people expect to get paid out in things like Social Security for the next 70 YEARS with today's (this year's) budget revenues.

 

[AZJoe]

CPI is updated every ten years. That is because what people can and do spend their money on changes over time. Shadow Stats uses the 1980 basket of goods - which includes things like VCRs and phonograph and cassette tape players and leaves out things like computers and cell phones and LCD TVs because they weren't invented yet.

This is false. Shadowstats uses the same methodology as 1980s but does not keep a fixed basket of obsolete goods no longer in demand. It uses equivalent goods and does not use the hedonics to artificially adjust the inflation down.

For instance, in 1980 the BLS CPI statistics included steak. The government has decided people don't eat steak as much and so has replaced it with ground beef. Those are not equivalent products. It is replacing a higher quality product with a lower quality product to artificially give the impression of less inflation. Sure people eat less steak. But that is because it has become more expensive both in absolute and relative terms. Steak has still gotten more expensive. The BLS is using the people's response to inflation to artificially pretend prices are not increasing as much as they are.

Further, the BLS uses hedonic adjustments to also artificially misrepresent inflation. Using the television example. A high quality TV in 1980s would be a cathode ray TV. Today a high quality TV would be LED and high resolution. While the high end TV in 1980 cost $300, the high end TV today costs $1400. The difference in technology is a reflection of technological advances. Both Shadowstats and BLS use what consumer demand reflects - the new technology. High end TV 1980 vs high end TV 2016. Via Shadowstats using the BLS's prior methodology however, this would reflect a four fold increase in price over 36 years (roughly 4.4% annual inflation) . BLS however would do the same but then apply a "hedonic" adjustment. BLS methods say the new TV has increased technology and the new technology has increased value 2 fold and so the adjust the equivalent price to $700 and then say the inflation was only 2.3% annualized.

The hedonics does measure something - it measures advances in technology, but NOT inflation. Using hedonics to artificially suppress inflation is a fraud. Certainly there are greater technologies today than in 1980. But technological advances is completely separate from the effects of the dilution of the currency. To reflect inflation you must compare equivalent consumer demand across time. So a high end luxury car in 1980 would be compared to a high end luxury car in 2016. A mid range 1980 vs. a mid range today, etc. Yes today's cars have more technology, but that does not mean cars are getting cheaper. Technology is simply advancing and consumers demand current technology.

 

[Zippyjuan]

Shadowstats has started to update their measure to the 1990 CPI basket from the 1980 one. When they did, suddenly their rate of inflation was cut in half- dropping from around ten percent to below five percent. They recognized the old basket was too out-of-date.

http://www.shadowstats.com/alternate_data/inflation-charts

And steak has not been replaced by ground beef in their basket of goods. But the substitution bias would OVERSTATE the rate of inflation by giving more weigh to the more expensive item rather than counting that a substituting consumer bought a LOWER priced item instead. Then you have a quality change bias- improvements in goods meaning getting more for your money such as fancier phones or TVs. Also not everybody buys the same things or has the same income so is is just the AVERAGE person. Costs and inflation can also vary by region or even from city to city. No, it isn't perfect but there isn't a better measure currently developed.