8/27 vblog: 2nd Qtr. GDP, Bernanke, economists, gold stocks, my crib

[muzzled dogg]

YouTube - 2nd Qtr. GDP, Bernanke, economists, gold stocks, my crib

[Specter]

HAHA! Peter always makes me laugh!

He is not a robot, of course he is going to buy things he enjoys that are NOT an investment. Funny to hear him talking about his crib so candidly.

That piece by the WSJ was pure trash. I used to think that financial news sources would have higher credibility then regular media. I figured that people used them for financial guidance and would be less tollerant of bias. That article on peter completely blew my theory away. No more WSJ for me. They actually said that he was noted for predicting the housing crisis because of a youtube video. What about the book? What about the speeches he gave around the country? What about the mortgage bankers speech? wow, that article was trash.

[brandon]

His rant on deflation is pretty incoherent. Sometimes I really question his macroeconomic prowess.


He begins by implying deflation is the Austrian concept of a decrease in the money supply. "They say, well if there's deflation, no one will buy anything, because thew will wait for lower prices"

Then he goes on to imply that the decrease in price of electronics is due to deflation (improved efficiency in a market sector resulting in lower prices has nothing to do with in/deflation). And then he changes his definition of inflation to a general decrease in price. Basically I couldn't make any sense at all of his rant.

[Specter]

I think his point is that lowering prices does not mean people won't buy. He uses electronics as an example of products that have prices that are in "deflation" and that area of the market is thriving. It shows that when price goes down, people don't just sit on the side line and wait for even lower prices. Usually what happens is that prices going down causes more people to buy. If HD TVs were still $10,000 each, very few people would have bought them. The main argument against deflation is that people will stop buying and it will cause an economic collapse. The electronics market place disproves this theory.

[muzzled dogg]

Lol yeah I have oil paintings I'm 47 years old what do u think I have posters on my wall

[MozoVote]

Funny to see Schiff freely admit that a boat is a bad investment, and that he's had little time to use his - just like most new boat owners discover.

As for deflattion. Keynesians like to argue that "mild inflation" is stimulative and beneficial. Why can't mild deflation be viewed as beneficial? It introduces some rationality to pricing. If you know a purchase will decline in value, then you are naturally indiced to shop carefully and make a wise expenditure.

Deflation may introduce some delays in purchases. But again, that simply enforces accurate pricing of things and purchases at sensible times.

For example, I had LASIK surgery in 1999 when it cost about $4000. I had been waiting for the price to fall to a reasonable range... it used to be something like $15000 when it was first offered. Initially, few clinics had the laser equipment and few surgeons were trained.

Nowadays it's what... $1000 or so? I know in 1999 that the price would probably continue falling. But I decided $4000 was fair enough, and I did not want to wait forever.

[psi2941]

Lol yeah I have oil paintings I'm 47 years old what do u think I have posters on my wall

No we expect this type of stuff on his wall

[Disconsolate]

His rant on deflation is pretty incoherent. Sometimes I really question his macroeconomic prowess.


He begins by implying deflation is the Austrian concept of a decrease in the money supply. "They say, well if there's deflation, no one will buy anything, because thew will wait for lower prices"

Then he goes on to imply that the decrease in price of electronics is due to deflation (improved efficiency in a market sector resulting in lower prices has nothing to do with in/deflation). And then he changes his definition of inflation to a general decrease in price. Basically I couldn't make any sense at all of his rant.

It seemed pretty coherent to me.

I didn't notice the last part you mentioned, but I did notice him talking about falling prices.

I believe you're right that Austrians would define deflation as a decrease in the money supply. It's important to remember that it won't always lead to changes in prices.

If velocity stays constant, while a 5% decrease in the money supply is matched with a 5% decrease in goods/services you'd assume prices to not rise at all. If the money supply shrinks less than goods and services, assuming again constant velocity, you'd expect rising prices.

However, mainstream economists just refer to changes in price indexes. The deflation they talk about would be falling prices and Peter just asks, so what? The sector of electronics has sees constant productivity and economies of scale gains so their prices fall. This doesn't prevent people from buying the newest iPOD5000 or HDTV^2.