patrick.net

dunnross,

I can't figure you out. One one hand, you seem to be worried about inflation, and so you're long on gold. On the other hand, you're worried about deflation.

Which are we going to have? Inflation or deflation? How do you have inflation and deflation at the same time? Sure, some stuff might go up in value, and other stuff might go down. But usually when people talk about "inflation" and "deflation" they mean OVERALL, not particular goods.

bgamall4 says

We have some of both.

At the same time? That's ridiculous.

robertoaribas says

inflation and deflation are MONETARY conditions, they have nothing to do with specific asset prices, so stating that they both can occur at the same time demonstrates a spectacular lack of knowledge about economics...

Yeah that's what I was thinking. How can you have inflation or deflation at the same time (if you're talking about "overall" inflation or deflation)?

bgamall4 says

Speculation in futures is buying up contracts and making them scarce.

Scarcity in paper contracts doesn't hurt anyone. Scarcity in actual oil, coal, corn, soybeans, wheat, FCOJ, etc is what hurts people.

I admit, I don't really understand how the futures market works. I know it has something to with getting "firm" prices for things months (or even years) in advance of physical delivery.

I don't dispute that gold can keep rising. This will be the reaction if Bernake and the Europeans keep fooling around.
I only don't bother with it myself because I like stocks more. They may not have beaten gold in the last decade but I'm looking forward.
Also, I always remember my little old lady neighbor who is richer than god. She got that way with stocks but she's had them for over 60 years.
By definition, an asset with no intrinsic way to earn a profit or pay a dividend is more of a speculative investment than a stock.
Stocks we can judge based on direct information about how much profit it had, and of course guess what the future will be to arrive at a price of the stock. When it doesn't meet the consensus, it will fall. Over long time periods, those huge growing companies that pay dividends are just capturing their profits along with the general 4-5% worldwide average growth of GDP.
When I am rich, I will get some Swiss Francs.

robertoaribas says

inflation and deflation are MONETARY conditions, they have nothing to do with specific asset prices, so stating that they both can occur at the same time demonstrates a spectacular lack of knowledge about economics...

The most commonly accepted definition of inflation is simply--rising prices.

That's why the government uses the famous "basket of goods" to measure it.

Inflation can certainly be caused by monetary conditions, but it is NOT the (only or even most common) defintion.

Maybe dial back the insults a bit Roberto...

tatupu70 says

The most commonly accepted definition of inflation is simply--rising prices.

So that means when we finally run out of fossil energy to power our machines, we will have "massive inflation." Even if it's really just a reflection of the fact that we won't be able to produce 1% of what we did before.

wthrfrk80 says

tatupu70 says

The most commonly accepted definition of inflation is simply--rising prices.

So that means when we finally run out of fossil energy to power our machines, we will have "massive inflation." Even if it's really just a reflection of the fact that we won't be able to produce 1% of what we did before.

Yep. If you look back at the stagflation in the late 70s--much of it was attributable to oil prices...

robertoaribas says

We have seen computers and many other items get much cheaper due to technological innovation, but that has nothing to do with deflation...

Agree.

But some commodities, like energy, are so critical that any shortages can have a "ripple effect" throughout the whole economy. Which sector of our economy doesn't require energy to run?

When we start running out of fossil fuels, we are completely f*cked. We won't even care about Global Warming at that point.

robertoaribas says

TRUE inflation, when there is more money supply then there should be, goes on and on. Prices rise, salaries rise, prices rise more, and on and on.

I guess it does depend on the exact definition of "inflation."

Yes, an increase in the money supply causes a rise in prices. So does a decrease in crucial energy supplies.

Is the former the "true" definition of inflation? I'm not an economist, so who am I to say one way or the other?

robertoaribas says

Inflation or deflation are changes in the amount of MONEY chasing all commodities and assets...

I KNOW what inflation is--you THINK you know...

In truth, like I said, there is no true cut and dry defintion of inflation

Here are a couple:

http://www.investorwords.com/2452/inflation.html

http://www.businessdictionary.com/definition/inflation.html

Again--best to make sure you know what you're talking about before you start flinging insults.

I just did. They don't agree with you.

See my post above.

robertoaribas says

actually they do agree with me...
they both mentioned SUSTAINED increases in prices, which your oil example is not, and both mention the money supply...
it's okay tapatootie, you've been here for years, I'm used to this from you...

Roberto, Roberto, Roberto... I've come to expect this from you as well.

So, you claim that this agrees with you? Really?

"A sustained, rapid increase in prices, as measured by some broad index (such as Consumer Price Index) over months or years, and mirrored in the correspondingly decreasing purchasing power of the currency. It has its worst effect on the fixed-wage earners, and is a disincentive to save.

There is no one single, universally accepted cause of inflation, and the modern economic theory describes three types of inflation: (1) Cost-push inflation is due to wage increases that cause businesses to raise prices to cover higher labor costs, which leads to demand for still higher wages (the wage-price spiral), (2) Demand-pull inflation results from increasing consumer demand financed by easier availability of credit; (3) Monetary inflation caused by the expansion in money supply (due to printing of more money by a government to cover its deficits). See also deflation and hyperinflation."

Read more: http://www.businessdictionary.com/definition/inflation.html#ixzz208vB1034

zesta says

When you watch his videos and read his quotes, what year do you think he was predicting that housing would crash?

That's the problem with your viewpoint, you think Schiff is treating the economy like a bookie, when he's treating it like an analyst.

Analyst aren't fortune tellers. We are supposed to comment on future trends based on current economic fundamentals. If the average american would have listened to Schiff in 2002, maybe $14 Trillion Dollars in U.S wealth might not have been "created" then subsequently wiped out, to the misery of millions of people, and to the detriment of the entire U.S economy.

If you want to know when the world is going to end, visit a Madam Fortune Teller. If you want to know what makes sense in the current economy based on fundamental economic indicators, talk to an analyst.

I hope this information helps you form more informed opinions in the future.

robertoaribas says

they both mentioned SUSTAINED increases in prices, which your oil example is not

Are you suggesting that oil, natgas, and coal prices cannot continue to increase as they become scarcer?

robertoaribas says

When half the cacao freezes, chocolate gets more expensive for a while, if there is a bumper crop, it gets cheaper... That is neither inflation or deflation... that is a single commodity price change.

True. But wouldn't continuously-rising energy prices cause inflation? I'm not saying I know where energy prices will go in the short term. But fossil fuels (especially oil) are being depleted.

robertoaribas says

You cannot have inflation and deflation at the same time, as they are the opposite of each other; everything together can't be both getting more expensive, and cheaper...

True.

bgamall4 says

With housing in a deep freeze, you could have a growth in the money supply and slow turnover of the money. So you could have inflation in commodities, as the elite have more of the money for speculation, and deflation in housing at the same time.

But, like Roberto has pointed out, you can't have true inflation and deflation at the same time. Inflation and deflation traditionally refer to prices OVERALL.

bgamall4 says

No, you can have inflation in commodities, as all the money congregates at the top of the food chain, for speculative futures buying, while you have a deflation in the real society with no velocity of money in housing.
You can have both and we have had both. At the same time too.

Sure, you can have rising prices in commodities. But that's not the same as an OVERALL rise in prices. You have to look at a "basket of goods." If housing prcies are going down that will tend to offset the rising costs of commodities, for example.

Goran_K says

That's the problem with your viewpoint, you think Schiff is treating the economy like a bookie, when he's treating it like an analyst.

Analyst aren't fortune tellers. We are supposed to comment on future trends based on current economic fundamentals. If the average american would have listened to Schiff in 2002, maybe $14 Trillion Dollars in U.S wealth might not have been "created" then subsequently wiped out, to the misery of millions of people, and to the detriment of the entire U.S economy.

If you want to know when the world is going to end, visit a Madam Fortune Teller. If you want to know what makes sense in the current economy based on fundamental economic indicators, talk to an analyst.

I hope this information helps you form more informed opinions in the future.

Oh, I'm sorry, I thought we were talking about the Peter Schiff that is an investment broker.

This is why Peter Schiff can get away with getting so many things wrong. He can call that the Dow will go down to 2k and him and his apologists will say he was early in his predictions or that he meant the DOW when indexed to gold.

Can you really look at his track record and say that he's on target more than half the time? I get it, you agree with his view of what economic fundamentals SHOULD be. But are you really so blind you can't say that he's been wrong (a lot)

Read this:
http://money.usnews.com/money/personal-finance/articles/2008/05/30/permabear-peter-schiffs-worst-case-scenario?page=2

How many of his predictions came any where close to being accurate? When he finally did get a timetable for his predictions (does that make him a bookie?) he was wrong.

Peter Schiff on May 30th 2008:
• I think the stock market is headed lower. Gold is going to be $1,200 to $1,500 by the end of the year. That puts the Dow at a less-than-10-to-1 price ratio to gold. Right now, it's about 13 to 1. That's another 30 percent drop in the real value of stocks by the end of the year if you price them in gold. The Dow was worth 43 ounces of gold in 2000. It'll get to 10 by the end of the year and continue to fall from there.

• Oil prices had a pretty big run and might not make more headway by the end of the year. But we could see $150 to $200 next year. I don't think oil will hit $250 because there will be enough destruction of demand in the United States to keep it from doubling. The big problem for us is if the Chinese substantially allow their currency to rise. It could increase at least fivefold against the dollar over the span of a year or two. That reduces the price of oil by 80 percent for 1.3 billion Chinese. Consumption would go through the roof, and that will drive prices through the roof for us.

• At a minimum, the dollar will lose another 40 to 50 percent of its value. I'm confident that by next year we'll see more aggressive movements to abandon the dollar by the [Persian] Gulf region and by the Asian bloc. That's where the stuff really hits the fan."

Like any Guru, Peter Schiff was right once and so he (and his followers) think he will be right in the future.

"Past performance is no indication of future results." Or at least that's the disclaimer used in most investment commercials I hear.

Savings rate is going higher. Tax is going higher. Debt payments are all time high. There won't be much disposable income left to spend. Borrowing is down. Credit is deflating. Deflationary crash is coming. Japan had it for 20 years. Do not think we are immune!

http://www.kondratieffwavecycle.com/economy/deflationary-crash/

Schiff has been wrong more often than right. Late 07 he was decrying the looming crash of the dollar, urging people to buy EUR, and caterwauling about hyperinflation and bread lines. I remember seeing him on CNBC together with Roubini and even Roubini was disgusted by Schiff.

zesta says

How many of his predictions came any where close to being accurate? When he finally did get a timetable for his predictions (does that make him a bookie?) he was wrong.

Some of those predictions you posted as wrong are only half wrong, for instance the value of the dollar (there was a significant drop in value, but not 40%), also the price of Gold was right at the $1,100 mark in 2009, so he was off by slightly on the timing.

I've also never claimed he was never wrong, I even stated he's been wrong a lot (dollar valuation, hyper inflation in U.S, etc), so don't be dishonest and claim that I've ever said that.

So yes, he's not going to pinpoint exactly where prices will be to the day to day, but his predictions for a lot of things have been very accurate.

Here's a short list I can ring up off the top of my head:

- US economy is not strong and housing market will crash and we will have high unemployment (2002-2006)

- US Equity Markets Will Crash (2006)

- Buy commodities (2004)

- Buy Gold (2002)

- Foreign stock, gold and commodities to outperform US stocks (2010)

But people here are trying to discredit him on the one thing he has always gotten right, which is housing/stocks/equity markets/commodities. The funny thing is, Roubini has been saying the same things recently: http://www.bloomberg.com/video/roubini-says-2013-storm-may-surpass-2008-crisis-HCAjTp9VTD~gm6Ux8jnQvQ.html?source=Patrick.net

It's funny because the prediction that Schiff is making in the article is a common one being predicted by many economist about another crash coming.

With the amount of privately held debt in the country still extremely high, job growth stagnant, and wages stagnant, a lot of the weakness that brought on the crash still exist in the economy today.

robertoaribas says

As tapapatootie keeps confusing himself, it is the general change that is referred to as inflation, in all the definitions he cites, but he doesn't seem to quite grasp that fact.

When you resort to name calling, I'm pretty sure you've given up. You really don't understand the concept at all.

Do you realize that the generally accepted definition is rising prices at least?

Ok, so what is the true inflation rate right now, smart people? Can I use the CPI or is that part of a gummint conspiracy? Just like 911?

Goran_K says

Some of those predictions you posted as wrong are only half wrong, for instance the value of the dollar (there was a significant drop in value, but not 40%), also the price of Gold was right at the $1,100 mark in 2009, so he was off by slightly on the timing.

I've also never claimed he was never wrong, I even stated he's been wrong a lot (dollar valuation, hyper inflation in U.S, etc), so don't be dishonest and claim that I've ever said that.

So yes, he's not going to pinpoint exactly where prices will be to the day to day, but his predictions for a lot of things have been very accurate.

Half-wrong, timing wrong, nobody could have predicted ZIRP. etc.. I'd say he's wrong more often than he's right. For what it's worth, I don't remember you ever stating "he's been wrong a lot" The one thing you admitted him being wrong about in this thread was interest rates and even then you made excuses for him.

My point is, he's far from an oracle and claims he's right even when it's plainly obvious he's wrong. He's turned a open-ended prediction into a youtube investment broker. The fact that he can turn even a former GS employees into believers despite his horrendous track record is probably his best talent.

If you're going to call anybody an "oracle" maybe take a look at Med Jones.. THAT guy has a better track record than Roubini or Schiff

zesta says

For what it's worth, I don't remember

Then don't assume.
zesta says

He's turned a open-ended prediction into a youtube investment broker.

That's simply unfair, and not giving him credit. Peter Schiff is far more than some "youtube" investment broker. You actually rob your own argument of credibility with comments like this.

Med Jones is a smart guy, but it's hard to take anyone seriously who thinks they can present a valid metric for "happiness".

zesta says

For what it's worth, I don't remember you ever stating "he's been wrong a lot"

Unless Goran_K went back and edited one of his earlier posts, he's not lying this time. He did say Schiff was wrong a lot.

bgamall4 says

dunnross says

No I am not. Oil was $145 back in 2006. It's only $84, today.

But gas at the pump has not decreased by the same amount.

Gary Anderson strategicdefaultbooks.com

+1 Nailed it

Bill Gross predicted ZIRP, as did at least 3 of the Patrick.net regular authors at the time ~2008.

Randy H says

Bill Gross predicted ZIRP, as did at least 3 of the Patrick.net regular authors at the time ~2008.

Gotta make the Big Bankz happy. They're the ones with the power.

tatupu70 says

robertoaribas says

As tapapatootie keeps confusing himself, it is the general change that is referred to as inflation, in all the definitions he cites, but he doesn't seem to quite grasp that fact.

When you resort to name calling, I'm pretty sure you've given up. You really don't understand the concept at all.

Do you realize that the generally accepted definition is rising prices at least?

Tatupu:

You use the same, reliable methodical approaches specifically designed to effectively silence the other individual -- without having any real discussion in the process. This is success, for you. You may be paid for it, and you are good at it.

For anyone wanting to know how blogs may be used to covertly distribute disinformation and alter your political beliefs, research the Tavistock Institute, Saul Alinsky's "Rules for Radicals," and the concept of "sock puppets" as used by the US military.

Most people already know manipulation is going on in the media. Most have no clue how deep the manipulation goes. It's often being used by "people" on this blog. I have been watching this blog for years and find this situation fascinating.

Everyone Else:

That being said, the US dollar is available for infinite printing and dilution by central banks because OPEC requires that all crude oil be purchased with US dollars. Therefore, all central banks (one private bank in every country) hold an average of 60% of total reserves in US dollars. This means the US dollar may be diluted into oblivion and the excess used by central bankers to purchase media, politicians, commodities, real estate, utilities, governments, sock puppets, blogs, disinformation provocateurs, etc., for forever. The US dollar will remain fairly stable, no matter what.

There will be no transition from US dollar to another reserve currency because the current situation is already perfect for the central bankers. They will instead move beyond owning nearly all infrastructure purchased with diluted US dollars, and kill the US dollar (and most of your wealth), and then invoke a carbon emissions-based currency that will help usher in the political agenda they seek, which is regional and world Communitarian government.

This is the plan. This is not some sort of opinion or theory, though the sock puppets here will now scramble for damage control. Let's see how they do.

Wow and I thought MY tin foil hat was on too tight.

robertoaribas says

tatupu70 says

wthrfrk80 says

tatupu70 says

The most commonly accepted definition of inflation is simply--rising prices.

So that means when we finally run out of fossil energy to power our machines, we will have "massive inflation." Even if it's really just a reflection of the fact that we won't be able to produce 1% of what we did before.

Yep. If you look back at the stagflation in the late 70s--much of it was attributable to oil prices...

both of you have no idea what inflation is... the change in price of any one commodity or asset class is NOT inflation or deflation. Inflation or deflation are changes in the amount of MONEY chasing all commodities and assets...

We have seen computers and many other items get much cheaper due to technological innovation, but that has nothing to do with deflation...

I respectfully disagree with Robert and I concur with tatupu70. While the correct definition of inflation is an expansion in the money supply, most people including top investors such as Marc Faber tend to describe it as rising prices. I myself don't care how much money is in circulation, and whether it is expanding or contracting is immaterial. What matters is the cost of living, which is usually rising. For the monetary purists vs. lay folks: inflation = price inflation. No need to argue over it.

Now as to why prices tend to go up, especially in the USA, for the most part, it's due to price manipulation, not supply and demand, at least, not in the long term. That is, supply chains are often disrupted temporarily to get prices to go up. But the supply usually recovers. The objective is to make prices "stick" at higher price levels.

Examples:

1. Water quotas in California that create artificial shortages so agriculture prices are driven up. Once everyone has accepted the higher prices, quotas are lifted. If prices go down, quotas are reinstated.

2. Agriculture 2: bacteria scares are often used as an excuse to force farmers to dump millions of pounds of perfectly good fruits and vegetables: lettuce, tomatoes, peppers, etc. Because of the (temporary) shortage, prices go up. After a few months, people will accept the higher prices and production will return. Don't forget this makes land prices go up too. So, if you (as a farmer) were planning on lowering prices after full production, your lease might now be higher.

3. Agriculture 3: "bad weather" is often used to temporarily limit the supply. And we know that governments and corporations are now actively modifying the weather.

4. Government sponsored "kill" programs for local cattle farmers to reduce the supply of beef, milk, etc. As local farmers are eliminated, shortages are created, prices go up, then corporate farms take over and eventually increase the supply. But at higher price levels, of course.

5. Over-hyped natural disasters (and manufactured disasters) such as the Indonesian hard drive shortage that was supposedly due to excessive flooding.

6. More on electronics: in 2006, all electronics mfgs were required to be RoHS compliant in the name of public safety. In actuality, RoHS compliance was/and still is about consumer electronic price-inflation. It has been estimated that electronics went up 10% on average.

7. Oil prices are driven up in different ways: middle eastern instability, environmentalists/regulators responding to phony disasters such as the gulf platform explosion, etc. In the case of oil spills, the people will demand: "something must be done!" Then politicians are used to demonize the oil industry. The solution: shut down the refineries. In other words, shut down production so prices can go up.

8. Energy: phony disasters such as the Fukushima nuclear plant flooding. The intention was to shutdown the Fukushima plant and many others in Japan and around the world. Grand purpose? Make energy prices up.

I can go on and on. The point is, price-inflation is usually the result of price-fixing, not supply and demand. This is how governments devalue their currency.

housingcasino4865 says

And we know that governments and corporations are now actively modifying the weather.

You're kidding right? With what? A giant "laser" up on the moon?

housingcasino4865 says

8. Energy: phony disasters such as the Fukushima nuclear plant flooding. The intention was to shutdown the Fukushima plant and many others in Japan and around the world. Grand purpose? Make energy prices up.

Come, Mr. Bigglesworth!!

wthrfrk80 says

housingcasino4865 says

And we know that governments and corporations are now actively modifying the weather.

You're kidding right? With what? A giant "laser" up on the moon?

I meant to say, actively and *openly* modifying the weather. If you haven't found that out yet, try removing the rock that's above your head.

Sock Puppet Smasher says

Tatupu:

You use the same, reliable methodical approaches specifically designed to effectively silence the other individual -- without having any real discussion in the process. This is success, for you. You may be paid for it, and you are good at it.

I've had tatupu70 on ignore for a few months now, but that's probably the most concise rational for why I ignored him in the first place. He wasn't overtly rude, or offensive, but simply presented a "negative force" in every conversation in every thread, on every petty detail conceivable.

I call it trolling, but your definition was far more precise.

housingcasino4865 says

I meant to say, actively and *openly* modifying the weather. If you haven't found that out yet, try removing the rock that's above your head.

rotfl! Are you nuts or just trolling?

wthrfrk80 says

housingcasino4865 says

I meant to say, actively and *openly* modifying the weather. If you haven't found that out yet, try removing the rock that's above your head.

rotfl! Are you nuts or just trolling?

Boy, you are a d***ass. Just one example:

http://cwcb.state.co.us/water-management/water-projects-programs/Pages/%C2%ADWeatherModificationProgram.aspx

"Weather Modification Program New Draft Rules and Rulemaking Hearing The CWCB has drafted updated Colorado Weather Modification Rules and Regulations for the Department of Natural Resources. These rules are specific to the permitting of ongoing commercial weather modification operations in Colorado. "