Jim Rickards and Peter Schiff debate deflation vs inflation
Quantitative easing by the Federal Reserve has undoubtedly expanded the Fed balance sheet to record levels, but the outcome on consumer and asset prices is yet to be seen.
Jim Rickards, best-selling author, said that the Fed has failed to deliver inflation in the past when there was monetary stimulus, while Peter Schiff, CEO of Euro Pacific Capital, argued that inflation of asset prices is the likely outcome.
“I encourage everyone to stop using the word ‘monetary stimulus’. There is no monetary stimulus. There is money printing, yes there is money printing and debt monetization but it has no stimulative effect. You don’t get inflation from printing money, you get it from velocity, which is psychological, which the Fed doesn’t understand. But the biggest threat is deflation,” Rickards said.
Schiff said that by definition, the Fed has already caused inflation through the expansion of the money supply.“The only thing you’re going to see deflation measure in is gold, but in terms of fiat currency, prices are going to go up dramatically because they will continue to print the dollar until it no longer has value. That’s the only thing that’s going to stop it,” Schiff said.
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