Mike Shedlock Vs. Peter Schiff Vs. Robert Precher; Deflation vs inflation

[DSGE]

...consistent with what I said...

lol --I know! I was trying to give you credit for refuting Kevin's post. As in "trying" ≠ "succeeding".

Ah. My mistake.

 

[Toro]

Bet on the guys with the printing presses.

Exactly. They've come out and said they're targeting 2% PCE inflation. So what do I expect over the next few years? 2% PCE inflation.

And $3000 gold.

 

[Zander]

I expect $1,000 gold before $3,000 gold....of course I could be wrong.

 

[Middleoftheroad]

I expect $1,000 gold before $3,000 gold....of course I could be wrong.

Well I have doubts we will ever see $1000 gold again, although I think $3000 gold is pretty far off, so I do get your point.
Unless you are referring to inflation adjusted figures, in which point $1000 gold should be possible in the future and $3000 highly unlikely.

 

[Toro]

- I have no idea if gold is going to $3000. I was being illustrative.

- Gold will one day fall below $1000. Maybe it will go to $500.

- The deflationary forces in America are passing unless the government dramatically slashes spending over the next few years.

- The probability of a currency crisis is at the highest as it has been in my lifetime.

 

[Paulie]

Well since inflation is defined as the increase in the supply of money, and deflation the decrease in the supply of money...

They're not the definitions of inflation/deflation anybody outside the Austrian school bubble uses...

Here's what most people mean when they say "inflaton" (from financial definition of Inflation (economics). Inflation (economics) finance term by the Free Online Dictionary.)--

Inflation
The rate at which the general level of prices for goods and services is rising.​

--and that means inflation has nothing to do with the money supply.

"NOTHING"?

Isn't that a bit disingenuous?

 

[itfitzme]

It's not hard to predict the past. By September 2010, we already experienced the price deflation and credit had already contracted. Both had begun to fall on August of 2008. The CPI, the measure of inflation, had returned to it's upward trend by Dec 2008, before this "prediction" and consumer credit returned to it's upward trend in September of 2010.

The graph below shows total consumer credit and the CPI.

That Mitt Romney or Ron Paul have decided that they want to change the meaning, doesn't change the meaning. It means they are being intentionally misleading in order to get votes or they are just stupid. Why would you vote for someone that intentionally lies or is stupid?

As a side note, inflation has referred to price inflation, as measured by the PCE or CPI, for over a hundred years. It does not mean monetary inflation or an increase in the money supply.

I was reading the the BEA site and find, "...the CPI are based primarily on household surveys, while the ... PCE price index are based primarily on business surveys..."

Why would we want to use an index based on business surveys over households?

 

[Norman]

That Mitt Romney or Ron Paul have decided that they want to change the meaning, doesn't change the meaning. It means they are being intentionally misleading in order to get votes or they are just stupid. Why would you vote for someone that intentionally lies or is stupid?

Uhm. Its not lying if they clearly state that they mean increasing money supply by it. And I think they actually mean only the monetary base by that.

According to austrian school inflation is defined like that. Actually the definition makes much more sense as you can't inflate prices. Prices increase and money supply inflates. So if you want to be all anal about definition that definition makes verbally much more sense.

Anyway by inflation in this thread I mean raising prices. As long as we are talking about the same thing it doesn't matter

 

[Paulie]

As a side note, inflation has referred to price inflation, as measured by the PCE or CPI, for over a hundred years. It does not mean monetary inflation or an increase in the money supply.

Money supply and prices correlate with each other. More money chasing a steady amount of goods leads to price inflation. The Federal Reserve combats price increases and decreases via its open market operations, whereby it either increases or decreases the amount of money in bank reserves. Its entire operation is based upon attempting to change the amount of money chasing goods and services.

 

[william the wie]

The inflation vs. deflation debate revolves around high tech. High tech is deflationary old tech is inflationary due to discovery of economies. The battle to maintain real incomes in the face of increasing discoveries of economies was lost in the 70s. Scale and scope economies do not have a neat, nice formula but network economies do N/2 (N-1)= potential links with N being the number of users. As Toro likes to put it the internet is the biggest engine of deflation and the triangle set formula is why.

Missed you guys been busy researching for "What Wrong With Economic Policy" then broke a tooth and had a screwed up wire transfer in the same week. The combination gave me a huge case of writer's block so I am taking some time off to recoup.