Schiff Interviewed on FSN
In a previous post, I discussed a debate between Peter Schiff and Diane Swonk, in which Schiff expressed a suspiciously Austrian-sounding view on the issues. Jim Puplava interviews Schiff on Financial Sense News Hour (June 24 hour 3, at about 30:28 into the show.) It turns out that he has read the Austrians, and calls Rothbard and Mises "basic economics", which he contrastst to monetarism and Keynesianism, which he calls "fairy-tale economics".
In this interview, he goes into more depth about why falling prices are a good thing. That natural tendency of prices in a market, Schiff says, is to fall. When prices fall, most people have more purchasing power, and therefore a higher standard of living. The expansion of money and credit, he goes on to say, prevents prices from falling and denies consumers the benefit of a rising real income. He rebuts the view that falling prices are dangerous, and that the central bank must ensure continued inflation. Instead, inflation is a "tax" that the government uses to redistribute purchasing power from the public to itself so it can "spend it on vote-getting schemes". Schiff also gives a thumbnail of how inflation disrupts economic calculation which creates malinvestments, driving boom-and-bust cycles.
The interview is worth listening to in its entirety.
Comments (7)
Happy-lee
Excellent!
Published: June 30, 2006 7:03 PM
Chris
It's very refreshing (and very rare) to hear Austrian economics discussed on CNBC. I give Schiff much credit for properly defining inflation for CNBC's viewers, even though he was laughed at in the process.
Published: July 1, 2006 7:53 AM
David C
There once was a story about a guy who locked himself out of his house....
Upon realising it, he first banged on the door with his fists hopeing to get it to open without success, then he kicked on the door hopeing to get to open with still no success, then he body-slammed the door hopeing to get it to open with still no success.
Finally, the fusterated man walks over toward his truck, turns on the engine, points it toward the door and starts rolling..... BAMM .... the door finally breaks open, but so do the supporting pilliars and whole house falls down.
Well, this story is about the fed. They locked themselves out by saturating the economy with more debt than it can apsorb. So now they dump out some money hopeing that it will relieve the situation, but it makes the deflation worse because the inflation of money drives up the prices, but the technology and trade based deflationary forces in the economy prevent it from driving up pay and profit margins too. So they water down the dollar some more, but once again that makes deflation worse, because it drives up prices, but not pay - making it even harder for people and the economy to pay down it's already maxed out debts.
So now what is the fusterated fed going to do about this condrum? Well they are going to stop publishing the M3 and dump out so much God forsaken money that the dollar becomes toilet paper and the whole freaking golbal western economy blows up in a glorious BAMM.
Even worse, instead of warning people to start saving up precious metals, and warning them to minimize their debts or else. What does the fed do - just the opposite. They hide the M3, and use shady market opperations to manipulate the masses into a false sense of security. When the collapse happens, and the millions suffer, Greenspan and Bernake truely deserve to be nominated for crimes against humanity.
The only redeeming hope now is that the US is going thru the birting pains of the information age, and hopefully that will give the masses options to trade and protect their wealth when the whole thing blows up and goes to hell.
Published: July 1, 2006 10:53 AM
M E Hoffer
1743
Published: July 1, 2006 11:53 AM
M E Hoffer
sorry, above was test post.
Schiff is a good example of why an LvMI "Mutual Fund", based on Austrian insight, would be a good idea.
Published: July 1, 2006 11:57 AM
Robert Blumen
There are some Austrian fund managers out there. I'm not sure that any of them are running open end mutual funds, though.
The Austrian concepts help you as an investor under some circumstances, but alone they are not enough. In a post-bubble environment where monetary macro considerations pre-dominate, the concepts are helpful.
Published: July 1, 2006 12:36 PM
Artisan
What would you say is the consequence of the differences between European kind (since 1994) and American central banking?
I’m speaking about loans given to the government, which are not to be directly conceded by the European Central Bank whereas they directly make 98% of the fed budget. And the fact that FRB in Europe seems to be 2% against 10% in the US.
Shouldn't it mean that banks are much more profitable in Europe... but I doubt it to be true.
Published: July 5, 2006 5:24 AM