| User Info
| Lauren Skewers Peter Schiff in forum [Market-Ticker]
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Natew
Posts: 66
Incept: 2009-12-16
IN
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Listening now. I like Schiff a but he is off the mark too often for me.
Stagflation here we come!
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Truthseeker
Posts: 8476
Incept: 2007-10-07
NorCal
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Genesis wrote..This is yet another example of why Capital Account is must-watch if you are interested in a display of critical thinking on television by the host And she's pretty easy on the eyes, too...
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"...But people better realize that the worst-case scenario could actually happen.9/11 happened. This can happen. An economic 9/11, the likes of which we've never seen." Gerald Celente
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Pietertvl
Posts: 3591
Incept: 2007-12-05
NFA
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I have been in your camp for a decade Karl. But Schiff isn't completely off base.
The credit bubble has been blown, is still being blown, and will burst.
But we are all just as well aware that we have a monster treasury bond bubble blowing too -- the final leg of that bubble. And Schiff is correct, the US gov. is much less credit worthy than 10,20 30 yrs ago. Its just the least ugly horse in the glue factory, of course.
I can still imagine the day when SOMETHING constrains or overpowers the Fed, the bond bubble they are holding 'underwater' becomes TOO large for them to prop up, and suddenly, everyone wants out. Then Schiff's thesis that the discounted REAL price of everything crashes as rates abruptly return to sanity and reflect what you contend they should. (What happens to nominal prices at that point isn't clear, if they print to infinity.)
There's an angle out there -- yet to be found -- that resolves this conundrum, where both sides to my mind seem to make sense, of a credit bubble bursting and money that is legitimately collateralized becomes hyper scarce. The closest answer that begins to bridge this divide that I've seen, is where some folks distinguish between digital dollars and actual currency. I don't think that is THE distinction that resolves it all, but thinking along those lines begins to point us in the right direction.
The IN-De debate has not been resolved with clarity here. The jury is still out.
Kudos to Lauren for continuing to be the best financial journalist I've seen in my lifetime. She gets better and better, whether I'm looking or just listening.
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"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation." ~ John Adams
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Medicdan
Posts: 8020
Incept: 2010-02-11
Scottsdale, AZ
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What would a 2% rise in interest rates do to our economy?
Then 4%, etc.
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Zarathustra
Posts: 5961
Incept: 2009-04-29
Funkytown
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.What would happen if rates just reverted to the mean?
KABOOOOOOOM
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"And in knowing that you know nothing, that makes you the smartest of all." - Socrates
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Sean
Posts: 1766
Incept: 2009-04-21
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Quote:.What would happen if rates just reverted to the mean?
KABOOOOOOOM YEP! 
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* I think Ann Barnhardt is more and more right. God help us!
* Progressives / Marxists / Communists are many things, STUPID and IMPATIENT are not two of them.
* A hot civil war is coming.
* And people wonder why I prep!
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Dusty88
Posts: 126
Incept: 2011-10-21
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I don't know of EVERYTHING Schiff has said, but what I hear him predict is SEVERE inflation, not hyperinflation. Lauren implied he has predicted hyperinflation, but I'm not so sure about that.
I don't know exactly numerically when inflation becomes "hyper" but the reality is we ARE seeing inflation in most essential items and we haven't seen anything to reverse the potential of it becoming much worse.
IMO, it depends not only on the Fed continuing to print (which they probably will) but also on China and others decoupling from us. If they decouple, then it could get bad very quickly. There is a point where inflation scares almost every buyer off of treasury bonds OR interest rates rise rapidly. Even Schiff discusses our situation as requiring interest rates to rise to provide the correction. The question is will we go through much of an inflationary phase BEFORE interest rates rise, how severe will it be, and how long will it last?
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Joshua_d
Posts: 163
Incept: 2010-08-26
Lenoir, NC
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I like Lauren, and Peter, but I wouldn't call that interview a skewering per se. But what do I know? I'm a novice. In any case, I do recall watching several videos by Peter where he has predicted a hyperinflation following a currency collapse, so I do get the impression he's walking it back a bit. Or, maybe he's just trying to clarify his view.
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Crzymorse
Posts: 1191
Incept: 2010-06-25
Maryland
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And that's why rates are going to stay where they are for a long time. Because unlike Greece (which is small enough to******and pillage) a bond vigilante going short Japan, UK, Germany or US is just putting a gun in his mouth and pulling the trigger. Even if you win on the bond bet you lose everything else asset wise in the process.
Japan might have lost two decades of GDP growth but unemployment is only 4.5%. Prices are dropping every year in Japan and the yen is strengthening despite the deficit spending. Just the opposite to what you would expect. I do know when they hit the wall or where the wall even is for matter.
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Pay_lay_ale
Posts: 253
Incept: 2010-09-16
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Yes, the dollar has held its own, but only against other currencies which are competing to see who can devalue the most. When measured against goods and services, we have 70s style stagflation. Sure, that doesn't qualify as hyperinflation, but a 10% annual inflation with nominal wages declining and stagnant employment crushes the middle class.
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Flappingeagle
Posts: 1227
Incept: 2011-04-14
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Quote:Peter has long argued for "coming hyperinflation." He's been dead wrong. He's wrong because the inflation already happened through the issuance of bogus credit.
Doubt me? What do you call stock prices going up by a factor of 14 over the last 30 years? So stock (and other, housing?) asset prices way outstripped gains in productivity/wages/etc. The $64 question is, which way do things go to get back to any semblance of equlibrium? Do wages/money supply/whatever rise or, do asset prices fall? I'm just afraid that the average joe like me needs things to do one way and the big corporations and government need them to go the other. Flap
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Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
"You can't build a house of cards on a shaking table." - Tony Johns
The January 2015 AMZN put at $130 (cost $4.25) will be a winner.
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Ktrosper
Posts: 1500
Incept: 2010-04-06
ft collins co
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I wouldn't call it a skewering, either... Two grown-ups having a reasonable conversation, one of which is a journalist... GASP! Actually behaving like a true journalist should! LOL!
We wouldn't be in this mess if we had an honest press full of journalists like her.
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The unexamined life is not worth living.-Socrates
The only stable state is the one in which all men are equal before the law.-Aristotle
Liberty exists now in the spaces government has not yet chosen to occupy.-Doc Zero
I anticipate that 10 Dallas Cowboys Cheerleaders will blow me this evening.-K.D
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Pietertvl
Posts: 3591
Incept: 2007-12-05
NFA
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Current policies (esp. monetary policy) are NOT supporting investment and real wealth producing growth. Just fake transitory borrowing induced growth.
So eventually the rubber will meet the road.
'THEY' might be able to keep nominal prices for stuff levitated (via printing and currency debasement) for a time, but those very same policies are REDUCING everyone's real standard of living, and eventually that will squeeze them politically out of their current policy. Printing (or any kind of credit expansion) without expanding real production is just money illusion, as its called in Econ 101.
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"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation." ~ John Adams
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Drkshapiro
Posts: 630
Incept: 2012-09-12
Southern CA
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I agree with Pietertvl that the jury is still out.
The issue with Peter Schiff is that he thought (this I'm basing on his original version of Crash Proof)
The Chinese have a lot of well, Chinese.
They can provide their own market with their consumers, and with some others around the world.
Forget the American consumer, who is debt-laden.
This will lead to a dollar decoupling, and the Chinese (& others) will pick up the slack.
His issue is timing.
This may happen, but Schiff thought that it would already have happened.
Similar with hyperinflation. Not using KD's definition, but rather a complete loss of confidence in the currency, making it nearly worthless, fast. I think that may happen--it just hasn't, but if it does it could be a race to the door.
Time will tell. How can you time these things? It's like predicting the weather in a turbulent system, there are too many variables.
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Honesty may be the best policy, but it’s important to remember that apparently, by elimination, dishonesty is the second-best policy. --G Carlin
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Nelstomlinson
Posts: 124
Incept: 2011-12-21
Juneau Alaska
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My understanding of inflation is that it is an increase in the money supply (or, an increase relative to the supply of goods and services which the money can buy). The money is worth less because it is less scarce. This can increase your liquidity preference - you might want to hold more cash to meet your daily needs.
My understanding of hyperinflation is that it is a complete loss of confidence in the currency. By this definition, everyone's liquidity preference is zero - nobody wants to hold any cash because it will soon be worthless, not just worth less.
Inflation is a matter of money printing, by this definition. Hyperinflation is a matter of money velocity, by this definition. Hyperinflation can happen even if money printing stops, as long as we all agree that the money isn't going to be worth having in the future.
There isn't some numerical threshold at which inflation becomes hyperinflation, by these definitions. They are completely separate phenomena, although inflation can lead to a loss of confidence and thus lead to hyperinflation. As long as the central bank can keep your liquidity preference from going to zero, there is no danger of hyperinflation, regardless of what the inflation level is. We could go from deflation or mild inflation to hyperinflation literally overnight, if some event caused enough of us to simultaneously lose confidence in the central bank's ``money.''
As Karl keeps saying, the inflation is baked in the cake. The money is already printed, and the printing continues. The only question now is whether some black swan will cause us to lose confidence in the Federal Reserve's con game, and tip us into hyperinflation.
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Genesis
Posts: 130747
Incept: 2007-06-26
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Hyperinflation is extremely difficult to have occur so long as the currency remains debt-backed.
The day Congress passes a law to issue the equivalent of Lincoln's "Greenbacks", you better read that law very carefully.
It is either the end of the screwing around or it's the end of the currency.
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Maitski
Posts: 130
Incept: 2009-01-13
Atlanta
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Are you saying that the Federal Reserve is lying to us when they say they want to lower rates by QE all the while they really understand that QE will actually raise interest rates? If so, what is their motive for them to want to increase interest rates?
I'd love to have you explain:
"Hyperinflation is extremely difficult to have occur so long as the currency remains debt-backed."
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Genesis
Posts: 130747
Incept: 2007-06-26
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Why yes, I am saying exactly that. Arithmetic is never wrong and diluting the value of a currency in the future tense means that the value of time expressed in interest must be higher after you do it than it was before you do it.
What is their motive? They don't give a **** about anything except enabling the government's continued ability to lie about false economic demand -- a goal they share and cooperate with the government in achieving. How do you do that?
Deficit spend.
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Drkshapiro
Posts: 630
Incept: 2012-09-12
Southern CA
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Karl you are just too damm logical and mathematical.
We are dealing with human emotions. Just like you said the other day about tearing up the treasury bonds over that Santa Barbara spying incident. Would that be logical from the government's point of view, since they are dependent on the Chinese to some extent? No. But you called for it because you were rightly bothered about this intrusion.
Now here's the catch: YOU are much more logical than those in government. And you can add. And you care. You are not THEM.
So, let's say that holders of trillions of dollars of US debt start worrying that one of the other holders is dumping their dollars (we are moving that way, right? with countries already in and continuing to craft alternate currency trades with other countries) and then there is a completely MAD rush to the door to get rid of those dollars.
What in the world does that have to do with whether the currency is debt backed, or not? It would be based on hysteria not any laws or rational response.
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Honesty may be the best policy, but it’s important to remember that apparently, by elimination, dishonesty is the second-best policy. --G Carlin
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Genesis
Posts: 130747
Incept: 2007-06-26
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Quote:We are dealing with human emotions. Just like you said the other day about tearing up the treasury bonds over that Santa Barbara spying incident. Would that be logical from the government's point of view, since they are dependent on the Chinese to some extent? No. On the contrary -- that is an entirely-consistent and logical response to an invasion. And whether that invasion happens with bullets or electrons it remains an invasion when a government-sanctioned set of operatives are involved. Shredding the Treasuries would present an amusing paradox; many would argue it would cause an immediate hyperinflation. Nope. It would do exactly the opposite; the dollar would get MUCH stronger. Why? Because you're destroying circulating credit which makes it MORE SCARCE! And the funny part of it is that any nation that tried to counter it by "dumping" their Treasuries would simply feed into it, because we could always do it again, and again. There is no "getting rid of" said dollars when the issuer can shred the credit money as fast or faster than it can be "dumped." This so-called "threat" is a chimera and all the people who tried to put forward such a "run" would accomplish would be their own ruin. Put me in charge of Treasury and give me free rein -- my answer to China would be simple: Go ahead -- make my day.They'd fold like a cheap suit.
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Flyanddive
Posts: 578
Incept: 2008-10-10
Detroit
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Hyperinflation is not a monetary phenomenon, it is a government scam. It's impossible to get hyperinflation out of the system we have today, but as Genesis points out Congress has the power to make it happen and when they do, with Skynet running things your account will go to zero in milliseconds. My guess is Congress steps in and does mass devaluations of the dollar against a standard like gold or something else. That removes the threat of the dollar-debt deflation for a while and prevents complete currency collapse.
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"I've seen people go into real poverty trying to pretend to be rich."
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Genesis
Posts: 130747
Incept: 2007-06-26
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Such an attempt would happen milliseconds before a revolution did, as that level of impoverishment would lead to instant and irrevocable loss of civil order in every major city across the nation.
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Themortgagedude
Posts: 8853
Incept: 2007-12-17
saint louis
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Rates can not revert to the mean. Because of the Kaboom. I don't anticipate we'll ever see a 4% 10 year bond again. If you do I certainly wouldn't buy it. Because mathematically and politically we can't pay it off. We've written checks that won't cash.
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I'm already visualizing you with duct tape over your mouth.
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Bertdilbert
Posts: 2661
Incept: 2008-12-22
CA
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Karl, I don't think the world markets would appreciate tearing up Chinese treasuries. The reason treasuries have value is because they are considered safe. If you act in a manner that suddenly throw them into the maybe not safe category, it would negatively reflect in the demand and value of treasuries.
And what of US corporate assets in China? What would happen to the stock market and how would the tension affect the price of oil? Would oil producers feel comfortable holding treasuries or would they demand payment in something other than dollars?
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Dear Euroland: Relax, Germany has a plan for your money!
Political Capital Defined: We are out of money but will tax our citizens for whatever it takes to "SAVE" the Euro.
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