Schiff was right, they going for price controls!

[sn1p3r]

Re: Schiff was right, they going for price controls!

so the obvious hedge here is not JUST gold but long term storable food and a garden including the skills to grow your food. but then you will need a way to conceal or defend it from thieves.....ahhhh back to the old survivalist thread format.

nevermind.

[LargoWinch]

Re: Schiff was right, they going for price controls!

Blaze, I know we had this discussion many times and I do not therefore think I can convince you (yet :p), but regarding:

Lower prices = deflation = bad.

Lower prices do not equal deflation.

Lower prices are good as it increases the standard of living.

People are forced to put their money at risk (ie, invest) in order to beat inflation. Taking risk is important to feed innovation.

Money should be a store of value. The inflation tax does not encourage people to invest, but to speculate (ex: A $200K house in 2000 provides the same benefit to society than the same house worth $1MM in 2007).

Also, inflation creates several distortions within the economy, one of which is increased uncertainty, which leads to lower productive investment.

[WildspitzE]

Re: Schiff was right, they going for price controls!

good catch, mega! gold just went from an asset to hedge inflation risk to protection from starvation risk. :mad:

Remember, keep some of those coins divisible, 1/10, 1/4 oz.

[blazespinnaker]

Re: Schiff was right, they going for price controls!

Blaze, I know we had this discussion many times and I do not therefore think I can convince you (yet :p), but regarding:

Oh, I am easily convinced. It's why I post and read here. I'm looking for someone to convince me I'm wrong. I have zero interest in reading things from people who are trying to convince me I'm right.

Lower prices do not equal deflation.

Deflation, as far as I know, is a general drop in price levels.

Lower prices are good as it increases the standard of living.

I prefer higher wages and stable prices.

Money should be a store of value. The inflation tax does not encourage people to invest, but to speculate (ex: A $200K house in 2000 provides the same benefit to society than the same house worth $1MM in 2007).

I disagree ... money I think is unimportant. Money does not feed people. Farms, companies .. they feed people. They have real value. Gold, for example, does not have value. Gold will not cook for you, you can not eat it, it will not heal you. Or teach you. People do.

Also, inflation creates several distortions within the economy, one of which is increased uncertainty, which leads to lower productive investment.

Life is uncertain. The value of things will always be uncertain. Even if we had 100% price stability (an impossibility, due to the changing velocity of credit), the certainty of prices would never be there. The changing tastes, supply, demand .. they would all be impacting prices as well.

The problem with inflation is that it's constantly threatening to slide into hyperinflation. It's like a plane, if you tilt it too far down it goes into a nosedive and you really have to apply some nasty, dangerous force in order to get it stable again. But if you decline gently you get a great glide path for your landing.

[jtabeb]

Re: Schiff was right, they going for price controls!

[quote=blazespinnaker;93214]


I disagree ... money I think is unimportant. Money does not feed people. Farms, companies .. they feed people. They have real value. Gold, for example, does not have value. Gold will not cook for you, you can not eat it, it will not heal you. Or teach you. People do.

quote]

Says it all ( I would not call that a world view, I would call the above "Mental Illness")


Money is the bedrock of a society (as the stock of capital or means of procuring capital).

You destroy money you destroy capital formation SO you have no food, no factories, and no goods, no doctors and no teachers.

[hayekvindicated]

Re: Schiff was right, they going for price controls!

This article again shows that you cannot make money out of ags by buying ETFs. Price controls will ruin ETF investors.

The best way to play agriculture is to do it the way Rogers is doing it = you buy farmland in Canada and Brazil, and get into a partnership with local farmers who will use the land productively and get a percentage of the profits. Also, it is much less likely that Canada or Brazil would slap price controls on food the way silly Europeans or Americans would.

[WildspitzE]

Re: Schiff was right, they going for price controls!

This article again shows that you cannot make money out of ags by buying ETFs. Price controls will ruin ETF investors.

The best way to play agriculture is to do it the way Rogers is doing it = you buy farmland in Canada and Brazil, and get into a partnership with local farmers who will use the land productively and get a percentage of the profits.

Absolutely.

Also, it is much less likely that Canada or Brazil would slap price controls on food the way silly Europeans or Americans would.

What makes you say this?

[hayekvindicated]

Re: Schiff was right, they going for price controls!

Absolutely.



What makes you say this?

Because they are net exporters and the economies are very commodity based (much more so than the US or Western Europe). Also, they will be able to sell their produce to countries that pay in hard currency. By that time, the US and Britain almost certainly will NOT have a hard currency and will impose price controls and exchange controls for precisely that reason.

[WildspitzE]

Re: Schiff was right, they going for price controls!

Because they are net exporters and the economies are very commodity based (much more so than the US or Western Europe). Also, they will be able to sell their produce to countries that pay in hard currency. By that time, the US and Britain almost certainly will NOT have a hard currency and will impose price controls and exchange controls for precisely that reason.

Point well taken re: Net exporters (alingment of interest argument).

That said, never underestimate precedent coupled with culture. Brazil's history is littered with price and exchange controls (not to mention any and all kinds of [trade] taxes, especially for foreign entities).

Whether it is done to force a hand, or because someone is forcing theirs (e.g. their dependence on fertilizers, etc.) you may see them easily revert to custom.

Canada, I don't know well enough to comment.

[gwynedd1]

Re: Schiff was right, they going for price controls!

[quote=LargoWinch;93204]Blaze, I know we had this discussion many times and I do not therefore think I can convince you (yet :p), but regarding:

Lower prices do not equal deflation.

Lower prices are good as it increases the standard of living.

Hi LargoWinch,

You are looking at the buyer side of the equation and not in context. If you are selling widget-x and you have a 100,000 square feet of widget-x is a drop in price good? No, the drop in price may simply be a drop in value. If fewer people want it, it has less value. Sour milk will also drop in price.
A drop in price may correlate with a drop in the cost of production where competition forces out excess profits for the benefit of the consumer and yes, that is good.
Another case is across the board deflation where real debts increase and wealth shifts to the creditor from debtors. Some debtors are taking on risk for that capital that might reduce production costs.
Context is everything.

Money should be a store of value. The inflation tax does not encourage people to invest, but to speculate (ex: A $200K house in 2000 provides the same benefit to society than the same house worth $1MM in 2007).

Why should money be a store in value? What is it storing? Again it depends on context. If labor and capital are available and I save money what am I saving? If there is an apple tree and there are 100 apples and everyone will only eat 75 what is saved if everyone eats 50? When the context is someone running a buggy business feeds apples to their horses and together everyone would eat 110 apples then not eating 10 apples represented by not spending money is saving. However the money only communicates capital allocation.

Also, inflation creates several distortions within the economy, one of which is increased uncertainty, which leads to lower productive investment.

Inflation or deflation distorts the market. Deflation tends to be far worse than moderate inflation

[gwynedd1]

Re: Schiff was right, they going for price controls!

Dude, where did you get your economics degree and which central bank did you work for. You are SO OUT OF TOUCH with reality that I have to assume that you are a Chicago grad (or London) and that you worked for a regional Fed bank.

Hi jtabeb,

That actually would be the classical economists including Adam Smith who spend a good deal of time proving food price controls, and export controls contributed to food shortages. Its certainly not Chicago school.

-Wealth of Nations

In years of scarcity the inferior ranks of people impute their distress to the avarice of the corn merchant, who becomes the object of their hatred and indignation. Instead of making profit upon such occasions, therefore, he is often in danger of being utterly ruined, and of having his magazines plundered and destroyed by their violence. It is in years of scarcity, however, when prices are high, that the corn merchant expects to make his principal profit. He is generally in contract with some farmers to furnish him for a certain number of years with a certain quantity of corn at a certain price. This contract price is settled according to what is supposed to be the moderate and reasonable, that is, the ordinary or average price, which before the late years of scarcity was commonly about eight-and-twenty shillings for the quarter of wheat, and for that of other grain in proportion. In years of scarcity, therefore, the corn merchant buys a great part of his corn for the ordinary price, and sells it for a much higher. That this extraordinary profit, however, is no more than sufficient to put his trade upon a fair level with other trades, and to compensate the many losses which he sustains upon other occasions, both from the perishable nature of the commodity itself, and from the frequent and unforeseen fluctuations of its price, seems evident enough, from this single circumstance, that great fortunes are as seldom made in this as in any other trade. The popular odium, however, which attends it in years of scarcity, the only years in which it can be very profitable, renders people of character and fortune averse to enter into it. It is abandoned to an inferior set of dealers; and millers, bakers, mealmen, and meal factors, together with a number of wretched hucksters, are almost the only middle people that, in the home market, come between the grower and the consumer.

[gwynedd1]

Re: Schiff was right, they going for price controls!

Because they are net exporters and the economies are very commodity based (much more so than the US or Western Europe). Also, they will be able to sell their produce to countries that pay in hard currency. By that time, the US and Britain almost certainly will NOT have a hard currency and will impose price controls and exchange controls for precisely that reason.

Hi hayekvindicated,

Good points. Indeed the exporting country sets the price. Food tends to be consumed up to the consumable limit unlike most other goods. The demand pressure may cause local price controls but in sparsely populated countries with strong agriculture it would only be a small cut.

[jtabeb]

Re: Schiff was right, they going for price controls!

Hi jtabeb,

That actually would be the classical economists including Adam Smith who spend a good deal of time proving food price controls, and export controls contributed to food shortages. Its certainly not Chicago school.

-Wealth of Nations

In years of scarcity the inferior ranks of people impute their distress to the avarice of the corn merchant, who becomes the object of their hatred and indignation. Instead of making profit upon such occasions, therefore, he is often in danger of being utterly ruined, and of having his magazines plundered and destroyed by their violence. It is in years of scarcity, however, when prices are high, that the corn merchant expects to make his principal profit. He is generally in contract with some farmers to furnish him for a certain number of years with a certain quantity of corn at a certain price. This contract price is settled according to what is supposed to be the moderate and reasonable, that is, the ordinary or average price, which before the late years of scarcity was commonly about eight-and-twenty shillings for the quarter of wheat, and for that of other grain in proportion. In years of scarcity, therefore, the corn merchant buys a great part of his corn for the ordinary price, and sells it for a much higher. That this extraordinary profit, however, is no more than sufficient to put his trade upon a fair level with other trades, and to compensate the many losses which he sustains upon other occasions, both from the perishable nature of the commodity itself, and from the frequent and unforeseen fluctuations of its price, seems evident enough, from this single circumstance, that great fortunes are as seldom made in this as in any other trade. The popular odium, however, which attends it in years of scarcity, the only years in which it can be very profitable, renders people of character and fortune averse to enter into it. It is abandoned to an inferior set of dealers; and millers, bakers, mealmen, and meal factors, together with a number of wretched hucksters, are almost the only middle people that, in the home market, come between the grower and the consumer.

Hudson's take on Chicago and BS comments seem a match made in heaven. Classical Ecoonomics is NOT a subject taught a Chicago (according to my Investment Banker friend who went there). Don't confuse Neo-Fudalism, sorry I meant Neo-Liberalism for Free Markets, not the same.

Chicago airn't free market (e.g. classical economics in the vein of Adam Smith). Chicago IS Neo-Liberalism at its' finest according to BS (or worst, according to Hudson).

IMHO, the best Classical Economics school in the US is UKC Mo, Both Black and Hudson were faculty or associate faculty. The real Free-market minds and the best progressive ideas in the US come from there. NOT Harvard, MIT or Chicago.

[Jay]

Re: Schiff was right, they going for price controls!

Remember, keep some of those coins divisible, 1/10, 1/4 oz.

Silver suits this need well also.

[jtabeb]

Re: Schiff was right, they going for price controls!

Silver suits this need well also.

Yeah but silver is harder to cut up than gold is. Still a razor blade might come in handy at the supermarket. You know, to shave off a few flakes to pay for groceries.