Anybody read: Debunking the Hyperinflation of Peter Schiff...

Yes, there is still faith in the JPY YEN, that is why the currency retains its value. There are still plenty of people who have faith in the system, gotta remember that a lot of the way the market works is based on psychology. Once things start getting really REALLY get bad in Japan (and they will!), people will begin to question the nation's ability to service its debts and will start to flee the yen for better stores of value, resulting in a lowering in its purchasing power.

No offence to you Richard, but i disagree with your conclusion based again on the increasingly rising scarcity of CHEAP energy combined with global overpopulation and the destruction and consumption of our resources. Those things have been, and continue to be pretty much the basis of how economics works - we're not gonna get the required growth to pay the debts back or even go back to the way things were simply because we physically cannot do so. How do we get economic growth with petrol at today's prices (and rising)?

If you really wanna know what i mean then PLEASE watch this fun little doco here:

http://www.youtube.com/watch?v=VOMWzjrRiBg

Resources and energy are the drivers of growth and we've run out and there are too many people to change that.

So yeh, i see inflation/devaluing of currencies eventually to a very high extent.

 

If you say the full title of the book and author three times in a mirror on halloween ........

 

Well, US government is bound to pay its debt and cant default on its obligations. (at least thats what their constitution say at the moment) Quite easy to pay your debts down with hyperinflated dollars eh? Dollar is a dollar after all ....

 

I don't think any Govt specifically chooses hyperinflation - hyperinflation is simply the result of their policy response(s) to impending deflation or default.

It's not like one day there's lots of debt and then the next there's suitcases and wheelbarrows full of cash with lots of zeros on them.

Edit: I'll shutup now

 

I think the analysis that "deflation = cheap everything" is too simple.

If there is massive deflation, then the general economy will be very uncertain and risky. Is this a situation where people will dump their safe-haven assets for peanuts? Historically the answer has been no, thus gold has done well even in a deflation.

Personally I think we will see (further) biflation, an inflation in hard assets and things you need, and a deflation in debt-based assets such as real estate.

Also, there is no doubt that in a big drop in (paper) silver prices, physical inventories will be cleaned out extremely fast (or the stores will just refuse to sell it at those low prices).

Hyperinflation or not, "growth" by exponentially growing debt and can kicking will come to a grinding halt because of declining ore grades and rising energy costs. Some minerals are already in low supply.

 

The book only apposes one opinion of PM's. Those of us who view gold as a stable currency in and of itself know that gold doesnt care if there is inflation or deflation or stable prices across the board.

 

When their (bank) investments become unattractive. Like national bonds ( already happening) or equities ? Then the money will flow out of bonds and will go ? The key is interest rates. When interest rates rise bonds will be dumped, banks will lend money again and watch this space.

 

Are you implying that these banks will never ever lend again...? FOREVER...?

They just going to sit on their hands forever with all those monies bubbling up in the back room?

I don't know how the situation is going change in the future, but I know one thing for sure, the bankers never let free monies go to waste. And situations DO change!

 

You are right, but an example of Irish banks and their current approach granting credit / loan any sort of finance is clear example of bankers letting go of free monies (up to the point),
right now our banks are closing/tightening business ability to overdraft. Surely its not all their fault, for many of the business are permanently on overdraft but heck, not all of them.

Conclusion: yes they do let free monies go to waste, but there is a reason for it now (post 2008)

 

RMoh said (March 2012):
Most likely overall scenario, nutshell version: considerable Fed monetization sooner or later, positive surprise in no high consumer price inflation as a result, no dollar crisis (near or long term), tax revenues leaping at some point (with or without rate hikes), no stampede out of US Treasuries (ample demand), real estate prices fully recover, US growth resumes, stock market has a great 2010-2020 decade while gold and silver prices tank. The crisis was 2008/9; no SHTF is ahead. Unemployment levels I do not predict.

Revisiting this thread from 5 1/2 years ago. Folks, all my predictions above from 2012 on this thread have turned out prescient, and my book written in early 2009 during financial chaos has also been fully vindicated. Might consider giving it a read. Still no SHTF is brewing despite what Schiff and many others doggedly insist upon.

I am certain I can return in another 5 or 10 or 20 years and be vindicated again - no SHTF, not even double digit USD inflation. Modern inflation theories are just not much good and guys like Schiff fail to understand what they are talking about on many levels.

Best regards,

Richard Moheban

 

Thank you mmm....shiney! I guess "leaping" can certainly be criticized and may not have been a great choice of words at the time. What I was trying to get at was that the popular idea espoused by Peter Schiff and others that deficits must spiral out of control was bunk, which it was. Even in very sluggish GDP growth US tax revenues (which experienced only a couple of minor rate hikes) have grown most years by around 10% since I wrote that in 2012.

2012 Revenues were $2.45 trillion; 2015 Revenues $3.25 trillion three years later, an increase of 32.6%. http://www.taxpolicycenter.org/statistics/federal-receipt-and-outlay-summary Whether that constitutes a leap is I suppose up to the beholder.

As for the idea of needing strong exports to prosper, it's not really true. (Certainly helps though as China proves.) Here's a thought experiment for you. Suppose that tomorrow all countries decided to join together and become one country. So overnight all national borders would be erased, earth becoming a single country. "International" trade would now be just trade between provinces. But nothing really changes economically. Certain areas which excel at producing goods of particular quality, or lowest cost, would continue doing what they do well. And the idea that one-country Earth's prosperity would require exporting to another planet is revealed as absurd. A closed system could prosper just fine. No exports needed. "Exporting" to the customer down the street from you is fundamentally no different from exporting across a border - it's a sale either way.

It's funny how the older style quaint Economics writings a la Adam Smith often talk about how micro economies work at the town or village level, the specialization of labor, supply rising to meet demand, etc. These old texts never say trading with another town is required, viewing a town as a somewhat closed system. But modern thinking somehow has been perverted to think that if a country runs consistent trade deficits (failing exports) it will eventually wreak havoc. It doesn't; it just transfers ownership of that country's assets to foreigners over time. Maybe not ideal to some but those foreigners pay property and income taxes just the same as citizens. There's really not a dire long term effect of running trade deficits.

I've said all along that foreigners would continue putting a high value on US paper and it's been even stronger than I could imagine. The USD has actually risen some 20% against most currencies in the last 3 years, and the dollar index sits at around 97. I recall Schiff back in 2010 when the dollar index was at 73 saying that the future for it was free fall! Imminently, oops! I certainly did not predict the dollar rising strongly (and its been bad for my foreign stock holdings) but clearly Schiff does not understand that the value foreigners place on US dollars is complicated, not at all driven by his simplistic mental model.

Thank you again,

R. Moheban