Petey Schiff Stumped When Challenged On His Hyperinflation Call

[Soul Crusher]

We are not increasing goods and services chief.

i dont see how what you said in anyway contradicts the notion that increasing the supply of goods and services can balance out an increase in the money suppply to avoid inflation.

value of money is dependant on the ratio of money supply to supply of goods and services.

you have 1 dollar and 1 apple.  dollar=apple.
you have 1 dollar and 2 apples. 1/2dollar=apple.
you have 2 dollars and 1 apple. dollar=1/2apple.


see?

[tbombz]

We are not increasing goods and services chief.

GDP is increasing at a rate of about 2.5% at the moment. that amounts to an increase in the supply of goods and services to a tune of almost 400billion dollars worth every year.

[tbombz]

stats for 2012


Gross domestic purchases

   Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 2.4 percent in the third quarter, compared with an increase of 1.0 percent in the
second.


Gross national product

   Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 2.7 percent in the third quarter, compared with an increase of 2.1
percent in the second.   GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which increased $1.3 billion in the third quarter after increasing $27.4 billion in the second; in the
third quarter, receipts decreased $1.6 billion, and payments decreased $2.8 billion.


Current-dollar GDP

   Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
5.5 percent, or $211.8 billion, in the third quarter to a level of $15,797.4 billion.  In the second quarter,
current-dollar GDP increased 2.8 percent, or $107.3 billion.


http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

[Soul Crusher]

GDP is increasing at a rate of about 2.5% at the moment. that amounts to an increase in the supply of goods and services to a tune of almost 400billion dollars worth every year.

Lol!!!   How much was govt spending last quarter?  

[tonymctones]

i dont see how what you said in anyway contradicts the notion that increasing the supply of goods and services can balance out an increase in the money suppply to avoid inflation.

value of money is dependant on the ratio of money supply to supply of goods and services.

you have 1 dollar and 1 apple.  dollar=apple.
you have 1 dollar and 2 apples. 1/2dollar=apple.
you have 2 dollars and 1 apple. dollar=1/2apple.


see?

bc the money supply will increase at a greater pace.

Your theory suggest that you can increase the amount of goods/services produced without incurring any cost which wont happen. That extra costs comes in the terms of wages to the employees which will result in more money into the economy.

As a result you will have the original inflow of money into the economy which will result in more spending, which will inturn result in more production, which will require more employees, who will be paid money, which will be spent on more goods/services.

That is one of the reasons we have inflation....

You cant up the production of goods/services without incurring extra costs especially with the lean businesses we have now.

The original inflow results in more workers which result in more money in the economy which results in inflation.

[tbombz]

Lol!!!   How much was govt spending last quarter?  

well government jobs are decreasing every month, and private sector jobs are increasing by more than double the rate at which government jobs are decreasing... soo....  

[tbombz]

bc the money supply will increase at a greater pace.

Your theory suggest that you can increase the amount of goods/services produced without incurring any cost which wont happen. That extra costs comes in the terms of wages to the employees which will result in more money into the economy.

As a result you will have the original inflow of money into the economy which will result in more spending, which will inturn result in more production, which will require more employees, who will be paid money, which will be spent on more goods/services.

That is one of the reasons we have inflation....

You cant up the production of goods/services without incurring extra costs especially with the lean businesses we have now.

The original inflow results in more workers which result in more money in the economy which results in inflation.

dude if you honestly have something to teach me your going to have to break it down way farther than that because at the moment i am completely clueless as to how what you said could possible prove anything in regards to anything contradictory to what ive been personally saying.. lmao

basically, what im saying is that =   i read your post and it doesnt make any since t me whatsoever.  you are saying that an increase in employees and an increase in the production of goods and services is going to CAUSE inflation?   

[tonymctones]

dude if you honestly have something to teach me your going to have to break it down way farther than that because at the moment i am completely clueless as to how what you said could possible prove anything in regards to anything contradictory to what ive been personally saying.. lmao

basically, what im saying is that =   i read your post and it doesnt make any since t me whatsoever.  you are saying that an increase in employees and an increase in the production of goods and services is going to CAUSE inflation?   

hahah yes it will,

What do you need to increase production of goods/services dizzle?

[tbombz]

goods - manufacturing equipment and/or employees, energy to power the process, natural resources to craft the goods (rubber, plastic, metal, etc)

services - employees mainly, some technology maybe

[tonymctones]

goods - manufacturing equipment and/or employees, energy to power the process, natural resources to craft the goods (rubber, plastic, metal, etc)

services - employees mainly, some technology maybe

And that Labor/Material/Overhead will require money, companies will not increase production for no reason.

So you have the initial inflow of money to cause the increase in production
Then the increase in goods/services
Which requires more money to flow into the economy

In other words you have an:

Increase in money into the economy to cause the increase in production
Increase in goods/services which results in more money to spend
Increase in money into the economy

Inflation can be looked at as too much money chasing too few products.

An increase in production will eventually lead to inflation the majority of the time because that money that is gained from the increase through wages to the new employees, profit from the ppl who sold the material etc...will generally eventually find its way back into the economy.

[tbombz]

i am sorry but i have to point out a major flaw i see in your reasoning

increasing production does not increase the supply of money.

the only thing that can increase the supply of money is "printing" more money.

in fact if you increase production without printing new money, your going to cause deflation.

[tonymctones]

1. Increase in money into the economy to cause the increase in production
2. Increase in goods/services which results in more money to spend
3. Increase in money into the economy from wages gained/profit made

Think about it like this dizzle: In the business process you will either stop at 1 or 3. The process will generally never stop at 2 because even if it does and the ppl who earn more money dont go spend it. That money will go to a bank which will loan it out and that money will find its way back into the economy that way.

So if you stop on either step 1 or step 3 you end up with more money in the economy. If you increase the money supply you will have inflation.

This is why the FED has to monitor the inflation and adjust their Fed Window rate accordingly to allow for a small amount of inflation.

[tbombz]

more money in the economy can only happen by "printing" new money.   


..unless you think money held in savings accounts doesnt count as "money in the economy" ?   

[tonymctones]

i am sorry but i have to point out a major flaw i see in your reasoning

increasing production does not increase the supply of money.

the only thing that can increase the supply of money is "printing" more money.

in fact if you increase production without printing new money, your going to cause deflation.

Not true my friend an increase in lending will effectively result in an increase in money supply. An increase in spending effectively results in an increase in money supply. You see what I mean by those concepts are taught in a bubble?

Inflation is too much money chasing too few products. So in increase in money circulation is going to do what?

[tonymctones]

more money in the economy can only happen by "printing" new money.   


..unless you think money held in savings accounts doesnt count as "money in the economy" ?   

I think you are hung up with the idea that the only way to have inflation is to increase the overall money supply. The reality is that you just have to increase the amount of available money supply.

[tbombz]

ah, I see what your saying I think.


Still,  take a look at the rate of growth in the economy. take a look at the inflation rate. it seems to me that all these rounds of quantitative easing have not had any negative effects, only positive benefits. albeit very small benefits.

[tonymctones]

ah, I see what your saying I think.


Still,  take a look at the rate of growth in the economy. take a look at the inflation rate. it seems to me that all these rounds of quantitative easing have not had any negative effects, only positive benefits. albeit very small benefits.

Indeed you are correct sir although I dont know what benefits youre speaking of although Im sure there have been some small ones.

So a few reasons for the lack of inflation would be:

1. a lot less ppl working now b/c businesses cut the fat from their ranks to become more efficient(this is why they will have to higher new employees when they begin producing more)
2. Dodd Frank and the latest Basal agreement have upped the banks capital reserve requirements meaning they have effectively less money to lend out per dollar they receive in deposits
3. Banks are alot more risk adverse now so alot of the projects they may have gave money to previously they arent now so there is less money in the market.
4. Business are more risk adverse now so alot of projects they would have taken on or asked for loans for they are not persuing now.

Im sure there are tons more but those are the ones I can think of off the top of my head.

This is why ppl pay attention to the FED meetings that I believe are hold quarterly to see if they will raise the interest rate at the FED window. The fact that the didnt choose to raise it from basically zero which is where it is now at their last meeting shows that they dont believe the economy is getting better or going to get any better anytime soon.

If they think the economy is getting better or is going to get better they will raise the interest rate so ppl will by bonds which will take money out of the market and help control inflation. At least thats their hope there are so many factors its ridiculous.

[whork]

Thanks to Tbombz and Tony.

We can all learn from the info in this thread.

[GigantorX]

Indeed you are correct sir although I dont know what benefits youre speaking of although Im sure there have been some small ones.

So a few reasons for the lack of inflation would be:

1. a lot less ppl working now b/c businesses cut the fat from their ranks to become more efficient(this is why they will have to higher new employees when they begin producing more)
2. Dodd Frank and the latest Basal agreement have upped the banks capital reserve requirements meaning they have effectively less money to lend out per dollar they receive in deposits
3. Banks are alot more risk adverse now so alot of the projects they may have gave money to previously they arent now so there is less money in the market.
4. Business are more risk adverse now so alot of projects they would have taken on or asked for loans for they are not persuing now.

Im sure there are tons more but those are the ones I can think of off the top of my head.

This is why ppl pay attention to the FED meetings that I believe are hold quarterly to see if they will raise the interest rate at the FED window. The fact that the didnt choose to raise it from basically zero which is where it is now at their last meeting shows that they dont believe the economy is getting better or going to get any better anytime soon.

If they think the economy is getting better or is going to get better they will raise the interest rate so ppl will by bonds which will take money out of the market and help control inflation. At least thats their hope there are so many factors its ridiculous.

To add to #2; because of economy wide low interest rates (artificially low) banks get less return on deposits as well. They also get little return on ,credit cards, mortgages and every other type of loan out there. It ties in with #3, why take the risk for little to no return? They won't and don't so they take the free money from the Fed and plow it into a massive stock bubble.

Anyways, just one mans opinion. It truly is amazing how much the Fed and our Federal Govt. has erased any semblance of a functioning market...and it isn't even like the prior system was a glistening monument or anything.

[tbombz]

Indeed you are correct sir although I dont know what benefits youre speaking of although Im sure there have been some small ones.

So a few reasons for the lack of inflation would be:

1. a lot less ppl working now b/c businesses cut the fat from their ranks to become more efficient(this is why they will have to higher new employees when they begin producing more)
2. Dodd Frank and the latest Basal agreement have upped the banks capital reserve requirements meaning they have effectively less money to lend out per dollar they receive in deposits
3. Banks are alot more risk adverse now so alot of the projects they may have gave money to previously they arent now so there is less money in the market.
4. Business are more risk adverse now so alot of projects they would have taken on or asked for loans for they are not persuing now.

Im sure there are tons more but those are the ones I can think of off the top of my head.

This is why ppl pay attention to the FED meetings that I believe are hold quarterly to see if they will raise the interest rate at the FED window. The fact that the didnt choose to raise it from basically zero which is where it is now at their last meeting shows that they dont believe the economy is getting better or going to get any better anytime soon.

If they think the economy is getting better or is going to get better they will raise the interest rate so ppl will by bonds which will take money out of the market and help control inflation. At least thats their hope there are so many factors its ridiculous.

so all the new cash is just building up the coffers of the banks basically?

makes perfect sense.

although it has been widely reported that the cash injections have helped the situation at least to a minor degree.

and while i do see your point clearly about how inflation can happen in other ways that printing money, i stll think that the growth in total economic output in terms of goods and services (because it is growing= quantitatively, not qualitatively= due to increasing population and stable production-per-capita) is helping to offset inflation as well.



now, all that being said. how to fix the situation of excess cash in the market once the economy picks up?   how about suctioning it out from the top? take the inflationary reserves away from the banks before they can expell the cash into the market?

[tbombz]

Thanks to Tbombz and Tony.

We can all learn from the info in this thread.

 

[Emmortal]

GDP is increasing at a rate of about 2.5% at the moment. that amounts to an increase in the supply of goods and services to a tune of almost 400billion dollars worth every year.

You can't use a data point without looking at what it breaks down into.

Personal consumption collapsing to 1.4% Q/Q, on hopes of a 1.9% rise, and down from 2.0%. In fact, at 0.99% personal consumption expenditures - the core driver of 70% of the US economy - were a tiny 36% of the headline number. Ironically today's second GDP revision was far worse when analyzed at the component level, than the first Q3 estimate, which while lower overall at 2.0%, at least had personal consumption nearly 50% higher at 1.42%, or well over half of the total contribution. So what drove "growth" in Q3? Nothing short of the most hollow and worst components of GDP: Government Spending, which soared to 0.67% of the annualized number, the first positive print in years, and of course, Inventories, which were responsible for 30% of the headline number.

So the two main drivers of the higher GDP print are Increased Inventories and Government Spending, the two WORST indicators of actual growth.

[magikusar]

gas 300% up
housing prices up 300% now not corecting
food up 200%

yep thats called hyperinflation

wait until jan when obama tax hikes hit

and then double up with obama care

WOOO WEEE!!!

guna see some screaming

[whork]

gas 300% up
housing prices up 300% now not corecting
food up 200%

yep thats called hyperinflation

wait until jan when obama tax hikes hit

and then double up with obama care

WOOO WEEE!!!

guna see some screaming

If only Romney had won