Schiff Interviewed on FSN

In a previous post, I discussed a debate between Peter Schiff and Diane Swonk, in which Schiff expressed a suspiciously Austrian-sounding view on the issues. Jim Puplava interviews Schiff on Financial Sense News Hour (June 24 hour 3, at about 30:28 into the show.) It turns out that he has read the Austrians, and calls Rothbard and Mises "basic economics", which he contrastst to monetarism and Keynesianism, which he calls "fairy-tale economics".

In this interview, he goes into more depth about why falling prices are a good thing. That natural tendency of prices in a market, Schiff says, is to fall. When prices fall, most people have more purchasing power, and therefore a higher standard of living. The expansion of money and credit, he goes on to say, prevents prices from falling and denies consumers the benefit of a rising real income. He rebuts the view that falling prices are dangerous, and that the central bank must ensure continued inflation. Instead, inflation is a "tax" that the government uses to redistribute purchasing power from the public to itself so it can "spend it on vote-getting schemes". Schiff also gives a thumbnail of how inflation disrupts economic calculation which creates malinvestments, driving boom-and-bust cycles.

The interview is worth listening to in its entirety.

Robert Blumen

Robert Blumen is an independent software developer based in San Francisco, California