Lauren Lyster Teaches Economic Illiterate Peter Schiff Word Of The Day – ‘Deflation’

False.   Lauren Lyster reads some words on a screen, doesn’t give a reference, and calls it a definition.

Deflationite, you don’t know what you’re talking about.  As usual, Peter Schiff is right.  Lauren is also wrong.  Deflation is a good thing if you have a gold back currency and aren’t leveraged to the moon with a fractional reserve banking system.  If you’re using sound money and the money supply stays the same or even shrinks a little as the population grows, prices will fall, which is the normal workings of a sound economy.  Deflation might be a problem in a fractional reserve banking system leveraged with fiat currency, but if you actually let it occur instead of fighting it by printing and printing into hyperinflation, then the system will go into depression in order to rebalance itself.  

Peter Schiff knows what deflation is and how it affects the economy.  Lyster doesn’t educate him on anything.  Besides, almost no one learns this in grade school, let alone college.  Common sense is being destroyed through education in this country.  If you diminish the ability of people to think through and then act constructively to solve problems, then you do a good job of creating incompetent slaves.

This definition is incorrect. Deflation is NOT falling prices; it is a reduction in the quantity of money and/or volume of spending – more precisely, it is characterized by the disappearance of fiduciary media following a period of credit expansion. Fiduciary Media Defined: “Transferable claims to standard money, payable on demand by the issuer and accepted in commerce as the equivalent of standard money, but for which NO STANDARD MONEY ACTUALLY EXISTS.” – Ludwig von Mises, 1912. Fiduciary media today consists mainly of electronic deposit claims and securities denominated in such claims. The failure of a large debtor can wipe out a bank, making the demand deposits of that bank’s customers disappear, in turn making it impossible for those businesses to pay their debts and operating expenses, which then takes down other banks, and so it goes. This was the story of 1929-1933. Falling prices are merely one prominent symptom of deflation. To call falling prices “deflation” is to confuse one symptom with the totality of the problem. During most of the 19th Century, commodity prices fell across the board, but it didn’t in any way impair profitability or the ability of businesses to service their debt; this process neither caused nor was caused by a reduction in the quantity of money. The costs of doing business were correspondingly being reduced as part of the same process – a greater volume of output was created and sold, balanced expansion of our productive base proceeded, the affordability of commodities to the mass of consumers greatly increased (raising living standards) – all as a byproduct of increasing productivity and output. There is no social or economic benefit to an increase in the quantity of money; any amount of a commodity money (once it has been chosen as the most suitable commodity to serve as the store of value and unit of account by a critical mass of people) is the “right” amount. No increase whatever is needed. The process of expansion through the issuance of fiduciary media (including unbacked bank notes) constitutes a fraud on bailment (i.e., the creation of more claims to money than can be honoured by the issuing bank.) It benefits those who are first to spend the new claims, because they can bid away real wealth from producers in exchange for the counterfeit claims. 

No time or space here to explain the Austrian Theory of the Business Cycle, but a return to an honest, commodity money (i.e., a gold coin standard, with silver circulating as a parallel currency) with a 100% reserve requirement for all demand deposits would make the economic system immune to both inflation and deflation, as these are by definition created only by a departure from the 100% reserve requirement. Such a system would also, necessarily, involve a much more restricted use of borrowing and lending – rarely, if ever, for the purpose of consumption, and in business enterprises, only for capital investment of HIGHLY profitable ventures that proved their viability on a more limited scale using 100% equity financing. Risk tolerance would be much, much lower. Interest rates would accurately reflect the aggregate time preference of the general population (i.e., their preference for current consumption vs saving for the future). These are the features of a progressing economic system. 

Our current system has been very badly damaged over the past decades, destroying the ability to earn interest on savings and juicing consumption at the expense of maintaining and growing our ability to produce. Combined with the increasingly hostile business environment, regulations and taxation – it is no wonder our manufacturing base has moved overseas. Credit expansion erodes the productive base like a swarm of termites, hollowing it out until finally, it collapses. We are rapidly approaching the end-stages of this cruel experiment – as the banks have been on life support, artificially propped up since 2008, and the currency supported now only by the fact that petroleum is still traded in USD. Once that prop is removed, people holding dollars will be wiped out.

Schiff is correct, but that intro clip does not include a full exposition on the subject (which he and many others have provided elsewhere). The format of short interviews doesn’t allow time for full, supporting arguments.

Wow, she’s a dingbat isn’t she? Deflation is of course a monetary phenomena. Once you get that, you realize that prices going up and down in a free market is never problematic. The economy is a group of self-organizing agents who will respond given prices, profit and property. Of course, deflation now in certain asset classes could cause a string of defaults if too much leverage is present on these assets. But that doesn’t argue against deflation, it argues against excessive debt. Falling prices are a good thing for wealth creation but suck for debt junkies. You are stupid Lauren, mouthing the words that describe ideas you don’t even understand. She really should just drop the pretense and admit she’s an actress and not a journalist or even an economically literate person. 

great information. thanks for sharing.

Monetary deflation can cause price deflation.   Not always, but it can.  Schiff knows this and has talked of it many times.  And the definition that Lauren used?  Where did that come from?  The electronics industry has been solid for decades even as price deflation has been the norm.  Yes some factories have closed, but others have opened.   This is more about efficient business models.   Survival of the fittest as it were, which is standard and normal in a capitalist economy.   Unfortunately ours is a politically driven capitalist economy, where we have to bail out and live with the likes of BOA, AIG, CITI, Merrill Lynch, Goldman Sachs, and GM, instead of relegating them to the history books and getting on with more efficient models.

What feminist idiot posted this link and title??? Geez…I’m dumber for having come to watch this.

Debt deflation s catastrophic. real debt burdens increase and trigger waves of defaults.

Peter Schiff is a moron.

Dude, as others have astutely posited, you are the moron (probably schooled vs. educated), and do not know WTF you are talking about. I don’t agree with Schiff on everything, but he is correct here. What is needed, are defaults and big ones, including those big banks and some big corporations. In fact, the entire USG needs to default. It is in bankruptcy. Don’t believe me, ask Jim Rogers and Marc Faber. You have billions to bet against their billions? Go right ahead genius. What do we do post bankruptcy and default? Well, there is a cure for that, that was probably thought of before your were born. I will elaborate later.

I like Lyster. Her heart seems in the right place. This is evident via her other interviews with the likes of Lew Rockwell et al. She is a good communicator and entertainer. Good communication comes these days via good entertainment.

What Lyster needs here is a good mentor. She is young and I still believe quite impressionable with the right teacher. Lyster has a background in finance. She needs a real tutor in banking and finance. A true seasoned veteran in the business.

May I suggest, what Forbes Magazine calls “The Dean of Private Banking.” Mrs. Marilyn Macgruder Barnewall. Barnewall is not keen on central banking. However, Paul Volcker has consulted with Barnewall, and has recommended her talents to the private banking world. (You can look that up yourself)

http://theglobalnewsandviews.com/comments-for-marilyn/

Truly a courageous lady, if one begins to comprehend what she is endeavoring to do at this very nanosecond. To what I stated earlier to others here, she will lay out what the solution is to this nation’s present state of bankruptcy and impending default. Which both Schiff and Ron Paul are both correct in communicating to the general public. In fact, Barnewall has had private consultations with Dr. Ron Paul.

Also look up Mrs. Barnewall via:

http://newswithviews.com
http://wnd.com

Interviews via:

http://www.thedailybell.com