Jim Rickards and Peter Schiff debate deflation vs inflation (Part 3/3)

by birtanpublished on August 4, 2020

All right we have a few minutes left so i have one last question for the both of you what are the major risks that you're looking out for today we're already living through the worst pandemic in recent history

We're seeing a recession that some analysts would say is even worse than the great depression of the 1930s and in response we're seeing monetary stimulus on a historic level

Jim let's start with you how could things possibly get worse from here yeah well first of all i encourage everyone to stop using the word monetary stimulus there is no monetary stimulus there is money printing

Yes there is money printing and debt monetization but it has no stimulative effect you don't get inflation from printing money you get it from velocity which is psychological which the fed doesn't

Understand but the biggest threat is deflation peter you've you've argued that we could see inflation as a tax so uh how would you respond to that well first of all the only thing you're going

To see deflation measured in is gold but in terms of fiat currency prices are going to go up dramatically because they will continue to print the dollar uh in in until until it no longer has value

That's the only thing that's going to stop it but look what we've seen so far uh you know even with the civil unrest and the riots and the looting this is just a small dress rehearsal for

What's coming because when the dollar crashes you know and and and prices skyrocket right these stimulus checks you know or you know whatever welfare benefits the government wants to dispense

They're not going to be worth very much i mean they're because you're not going to buy anything and i think the government is going to respond to the surge in consumer prices uh with

Price controls kind of the way we did in the 1970s but prices are going to be rising much faster now than they did back then but i think there's going to be controls on all

Sorts of consumer goods and that means shortages that means long lines and i think there's going to be power rationing and so i think you're gonna see a real blow up

Particularly in in the cities there's gonna be a lot of crime a lot of violence associated with widespread shortages and a lack of food and power outages so things are gonna get pretty bad as we go

Through a a monetary crisis it's not you know this is not just a financial crisis this is a us dollar crisis and a sovereign debt crisis that's a whole other ball game jim i'll let you respond and close the

Argument yeah well i agree with peter that the fed wants inflation but they don't know how to get it and they haven't for the last 12 years well that's the one thing they do know how to

Do they can cause inflation that's all they can do they can print money they can't they can't pay they printed seven trillion dollars in 12 years and we got no inflation assets yes but

I'm talking about i mean prices are higher than they were seven years ago consumer prices but we inflated a stock market bubble we inflated a real estate bubble we inflated a bond market bubble

I mean asset prices went way up uh we distorted the economy based on all that inflation and look consumer prices have risen right i mean i don't care the way the government wants to keep track of them

With their you know with the cpi the cpi is not an accurate reflection of what's actually happening with consumer prices uh it's uh it's pretty good look if you want to count assets you're

You're right but you're changing the it's moving the goal post you're changing the definition no if you count assets yet if you can't assets yes but i count consumer prices or pc core deflator

Because that's how if you want to predict fed policy that's what they look at so you need to consider what the fed looks at i care about reality you know and prices prices are going up but that's not

Inflation because if the fed didn't create all this inflation maybe those prices would have really come down maybe consumers would have gotten the benefit of a lower cost of living

But the fed stole that benefit away from them by creating inflation but look all of this inflation is going to come home to roost all of a sudden we're going to catch up and we're going to see dramatic

Increases in consumer prices and then when you go back over the entire period you can say oh look prices are up 10 a year or whatever they're going to be because all of a sudden they're going to shoot way up and it's not going to

Matter that they were benign uh for a while when all of a sudden they skyrocket and catch up to where they should have been but the cause was all the inflation the federal reserve has been

Creating the entire time well they i agree that the fed didn't do what they did we would have had more deflation in a way they were just fighting it to a standstill but we haven't had inflation for 12 years

Asset prices yes but that's not the definition of inflation the definition of inflation is an expansion of the supply of money and that's what we've had in space with this is the greatest

Definition of the world has ever experienced you can make up your own definitions be a definition of inflation it's higher prices jim i'm not making up the definition it's it's people today you go back and get a webster dictionary

From 100 years ago and you read what inflation is and it'll it'll it'll say inflation is an expansion of the money supply supply of money and credit rising prices are an effect of inflation

Right prices don't exist prices go up and they go down money supply inflates you it's inflate is to expand right you don't expand prices what what is being expanded is a supply of money

That's inflation inflation is an expansion of the money supply deflation is a contraction of the money supply the effects of inflation are def and deflation are on prices when you have inflation and you're

Late in my supply prices will go up and when you're deflating it prices will go down but sometimes you can inflate the money supply and prices don't go up because the inflation is preventing

Prices from going down but don't confuse changes in prices with changes in money supply money supply is in freight is inflation prices are just prices the problem here look we're talking

We're talking past each other because we have two different definitions if you say that prices are flat but that's inflation fine that's not how any central bank in the world or any

Economist thinks about it yes the central bankers want to pretend that inflation has to do with prices because they don't want to be blamed for it when when you accept the real definition of inflation which is an

Expansion of the money supply then you know who causes it it's government it's central banks that cause inflation but governments want to blame inflation on the private sector

That's why they want to redefine it as prices and you're playing into to their propaganda by trying to perpetuate the idea that inflation is caused by greedy businessmen raising their prices or

Slaves right now you're now you're way over the language you're saying inflation is prices going up you're putting words in my mouth that i never said i said that uh yeah inflation is measured by prices

That's just that's just how you do it if you have a different definition that's fine inflation is measured by the money supply thank you very much jim records and peter schiff for being on the show

Uh it's a tremendous honor once again to have both of you so i do appreciate it and if you haven't watched parts one and two of this panel interview the links are down below thanks for watching until the very end

I'm david lynn of kikko news stay tuned you

Related Videos

Yamana gold has recently launched a new standard in tailings management and here to talk to us about this initiative is senior vice president of health safety a...
He's peter hogg director of precious metals here at kikko peter welcome back it's good to be here michael uh everybody was predicting this uh precious m...
Gold traders took profits this week as the bullion saw the largest single day drop in years on tuesday but how are hedge funds an institutional investor's p...
Gold prices have taken a hit tuesday but can this downward trajectory continue uh here to talk about this correction and his long-term forecast for gold is joe ...
He's will ryan ceo of granite chairs will welcome to kitko thank you michael good to be back let's talk precious metals versus treasuries in a note toda...
Gold took its largest single day drop in years on tuesday what happened here to talk about this and answer this question is gary wagner editor of the goldforeca...
Gold is seeing a lot more volatility this week as bond yields have finally started to rise joining me today to talk about his macro views and what to look out f...
Welcome to kitco news i'm niels christensen the gold market continues to see surging momentum but can this momentum last in an environment where we're s...
Okay let's shift gears now to the base metals uh elon musk in his second quarter earnings call uh has made this statement i'm just going to read it tesl...
As gold hit the much anticipated two thousand dollars announced this week our next guest warns that more volatility is coming up joining me today is george giro...
Our next guest is frank holmes a guest everyone's familiar with on our show he's been calling for gold prices to hit all-time highs for basically ever a...
All right we have a few minutes left so i have one last question for the both of you what are the major risks that you're looking out for today we're al...
gold futures hit new record highs speeding 2011 year highs of 1920. anna's remained very bullish on gold stating that the two thousand dollar price tag is ...
On the same day police have made - at first unrelated of arrest they arrests a gentleman named Al and they caught him red-handed selling drugs so it's an op...
What I want to do in this video is get a better understanding of oligopolies and we'll be talking about it I'll they got pulleys we'll be talking ab...
What I want to do in this video is think about why it's so hard for a monopolistic monopolistic competitor to make money in the long run and just as a remin...
We've spoken a lot about monopolies monopolies monopolies and we've spoken a lot about perfect competition perfect competition and we kind of view them ...
What I want to do in this video is review the revenue and cost graphs for a monopoly for a monopoly so let's up here let's draw the demand curve for the...
For those of you who are curious and have a little bit of a background in calculus I thought I would do a very optional and when I say it's optional you don...
Based on what we've done in the last two videos we've been able to figure out what the marginal revenue curve looks like for the monopolist here for the...