video: Peter Schiff vs Gary Schilling

[ERICOPOLY]

Gary Schilling argues that the increase in the Fed reserves did not create money and that he is still positioning for deflation.  Holds Treasuries expecting yields to go much lower.  He says that net delevering has occured -- the private sector debt reduction as percentage of GDP has more than offset the increase in the government debt.  So he argues we're closer to being deleveraged than before... even taking government debt into account.

 

http://finance.yahoo.com/tech-ticker/inflation-vs.-deflation-peter-schiff-and-gary-shilling-discuss-debate-and-argue-535689.html

 

[Myth465]

Thanks for the link.

 

I generally like Schilling and after listening to Peter Schiff for 6 months, I generally regard him as an idiot. I now think he got one call right and will ride that waive for a while. For one who bitches about American intervention in markets and capitalism its very interesting that he has been pounding the sand for China for the last few years. A Libertarian loving China is quite ironic.

 

I dont think delevering is done. I think its shifted around. Moved from Corporate to Government. Consumer debt probably has dropped but inmo the mindset is the same. People are worried about layoffs and wont spend money until things stabilize. I guess they will spend but not like its 2005 or 1999.

[oec2000]

Gary Schilling argues that the increase in the Fed reserves did not create money and that he is still positioning for deflation.  Holds Treasuries expecting yields to go much lower.  He says that net delevering has occured -- the private sector debt reduction as percentage of GDP has more than offset the increase in the government debt.  So he argues we're closer to being deleveraged than before... even taking government debt into account.

 

http://finance.yahoo.com/tech-ticker/inflation-vs.-deflation-peter-schiff-and-gary-shilling-discuss-debate-and-argue-535689.html

 

The delevering is happening at a very slow rate relative to the overall level of debt. Don't have time to look it up but it was either a FFH or Hoisington presentation that showed the total debt/GDP ratio was around 380% which is the highest since WW2 I believe. Delevering is happening at the rate of less than 10% of GDP per year. It will take a long time at this rate to get back to normal.

 

I think FFH and Hoisington are both saying that it is this excessive debt that will provide the deflationary impetus to the economy. Is Shilling is arguing for a similar result but giving the opposite reason?

 

What's interesting is that Buffett disagrees with both Shilling (bonds) and gold (Schiff). I am curious to know what the investing track record of the two asses, sorry I meant S's, are. ;D

 

That's why FFH's deflation bet is so brilliant because the downside is limited if they are wrong. The traditional way of betting on deflation by buying long treasuries runs the risk of being painfully and spectacularly wrong.

[ERICOPOLY]

The traditional way of betting on deflation by buying long treasuries runs the risk of being painfully and spectacularly wrong.

 

My definition of a speculative investment is one that you make where you only generate satisfying gains if you include price swings in your favor... AKA "The Greater Fool" method of investing.  In a different video, Schilling argued that he'd make 40% from zero coupons even though the imputed yield is pathetic -- he justified this by saying "people don't buy the S&P500 for the yield".  So in other words I'd call him a speculator -- he only generates a satisfying return based on The Greater Fool... and admits the return he gets otherwise is unsatisfactory.