Thursday, August 20, 2009

Schiff on Buffett, Health Care Costs, and the China Fund

4 comments:

Christopher said...

It's only going to be a wreck if a) workers are not working in the US and b) the printing of money is taken beyond a rational extreme. The problem here is that Schiff the Bonehead is implicitly comparing the inflation of the United States to Weimar Germany. They are not the same. The Germans printed MANY MANY MORE TIMES THE TOTAL VALUE OF THE GERMAN ECONOMY AT THE TIME. This lead to hyperinflation. The Americans have only printing a small percentage of the total economy, sooooo

Josh said...

"workers are not working in the US"

1 of 5 are not.

"the printing of money is taken beyond a rational extreme"

It has been for the past 30 years. Schiff doesn't directly compare what is happening in the US to Weimar, but he feels the results of what the US is doing will be similar to Weimar, Argentina, and Zimbabwe, even though they all got there in different ways.

"The Germans printed MANY MANY MORE TIMES THE TOTAL VALUE OF THE GERMAN ECONOMY AT THE TIME."

After the inflation had already taken off. Just like Zimbabwe.

"The Americans have only printing a small percentage of the total economy, sooooo"

Soooo its a completely different situation. Germany wasn't able to print the quantity of paper the US has for the past 40 years. They weren't able to export it over seas as if it was gold. Their economy wasn't 70% consumption which was all paid for with debt.

Christopher said...

"1 of 5 are not."

That means 4 are not spending. Why is that, Josh? Why are the other first-world economies coming out of recession, but the US not? Is it because the US is too scared to? Is "THE GOVERNMENT" crew scaring people so much that they have stopped spending to save for armageddon?

"It has been for the past 30 years. Schiff doesn't directly compare what is happening in the US to Weimar, but he feels the results of what the US is doing will be similar to Weimar, Argentina, and Zimbabwe, even though they all got there in different ways."

Well that is really retarded, because Weimar and Zimbabwe printed massive amounts of cash in a short period of time. That's what leads to hyperinflation. A period when the influx of new money or wages increases out paces the time needed to stabilize prices in relation to inflation. For example, here in South Korea the paper currency is very stable. Why? Because there is a low inflation rate. But when President Park was a president and before they were printing money like crazy. The current one dollar equivalent here thus has "1000 won" printed on it, even though it functions like a dollar in Canada. Over the last 10 years, the Won has had lots of time to stabilize, which means there is no "30 year bubble". The United States is the same. Yes, there has been inflation, but there has also been ample time for prices to catch up. It is only when the printing of money is dramatically greater than the economy's entire monetary value that hyperinflation occurs.

Are they really teaching you economics at your school, or are they teaching you THE GOVERNMENTNOMICS.

"It has been for the past 30 years. Schiff doesn't directly compare what is happening in the US to Weimar, but he feels the results of what the US is doing will be similar to Weimar, Argentina, and Zimbabwe, even though they all got there in different ways."

It is cause-and-effect, Josh. If he can't show how hyperinflation would occur, then he can't say that it might occur.

"After the inflation had already taken off. Just like Zimbabwe."

Because?

"Soooo its a completely different situation."

Yes, that's right.

"Germany wasn't able to print the quantity of paper the US has for the past 40 years."

What does that have to do with anything?

"They weren't able to export it over seas as if it was gold."

The Americans didn't export their inflation. People and governments invested in the dollar.

"Their economy wasn't 70% consumption which was all paid for with debt."

Do you have official stats to back that up? I have a hard time believing that 70% of the economy is credit-based, non-essential spending. For example, when a couple takes out a mortgage for a new house based on their incomes there is nothing wrong with that.

There is no such thing as a non-consumptive economy. Investors invest their capital with the expressed intent of creating a product or service for consumption. Those who argue otherwise do not understand economics.

Josh said...

"That means 4 are not spending. Why is that, Josh? Why are the other first-world economies coming out of recession, but the US not? Is it because the US is too scared to? Is "THE GOVERNMENT" crew scaring people so much that they have stopped spending to save for armageddon?"

Lol, you're blaming libertarians for the recession in the US? You realize the Chinese save 20 - 40% of their income and their economy is still growing right? That more cars were sold in China last year than in the US..right? That the US savings rate is still only around 5%...right? Are you retarded? People aren't spending because THEY'RE UNEMPLOYED. 1 in 5 people are NOT SPENDING BECAUSE THEY HAVE NO MONEY. THATS A 20% OF THEIR CONSUMERS ARE OUT OF JOBS. And the rest of the population are being oppressed into paying for huge government programs, bailouts, and wars and none of them provide ANY real economic growth.

"It is only when the printing of money is dramatically greater than the economy's entire monetary value that hyperinflation occurs."

And it has been for the past 40 years. I'm not an expert on the Korean economy, but Koreans have a much higher savings rate than Americans which means they have more backing to their currency. They also haven't had the luxury of being able to export paper for real goods for 40 years. Like most countries, they've probably had their government has probably had to be more conservative in its spending than the US.

"It is cause-and-effect, Josh. If he can't show how hyperinflation would occur, then he can't say that it might occur."

He can show how it would occur, and the US is printing cash at the same levels Weimar did pre-hyperinflation.

"What does that have to do with anything?"

The US has built a much larger bubble over a much longer period of time and the pain is going to be that much worse.

"I have a hard time believing that 70% of the economy is credit-based, non-essential spending."

I didn't say that. I said their economy is 70% consumption, not 70% credit-based, non-essential spending. What I meant was that 70% of the US GDP is basing on consuming, its too much, it more than any other country in a world, and it is setting itself up for disaster because it carries a massive trade deficit with the rest of the world, specifically China. Which makes complete sense if you think about: the massive trade deficit to China is an exportation of wealth, which is spent to consume, used with borrowed dollars from China, is this a sustainable cycle or will the US eventually run out of money? If the US was producing enough to make up for its consumption, the trade deficit wouldn't exist, so don't tell me they are.

"Investors invest their capital with the expressed intent of creating a product or service for consumption."

Indeed. So major portions of the economy are 1. saving capital 2. investing capital 3. producing and then 4. consuming. SO when 70% of the economy is based only on consuming and not saving capital, a large imbalance occurs.