Nouriel Roubini, co-founder and chairman of Roubini Global Economics, foresees an economic recovery, low inflation and a stronger dollar ahead. Peter Schiff, Euro Pacific Capital CEO and chief global strategist, disagrees and says we need more production and falling prices to help the economy.
Roubini And Schiff Mano-a-Mano
it’s really like the battle of the bears. who is doomier than the next one? you’re actually pretty moderate when it comes to the u.s. economy. i thought i was dr. doom until i met peter and compared to him i am dr. boom. he has been predicting the collapse of the dollar and inflation rising sharply. i see the opposite. inspite of q1, q2, q3 there’s not going to be much inflation because there’s slack in the liberal market and commodities. and credit growth, most of the excess money is going to the bank. we’re printing a lot of money but not creating credit and inflation. so inflation is going to stay low. gold price are going to fall. i believe the dollar is going to be stronger in the next few years. what are your views? i disagree whe said. he believes the economies need a certain amount of inflation to grow and consumers are better off if the prices of things they need and want go up every year. it’s my opinion economies are served by falling prices, by increased production, increased efficiencies that lower consumer prices, that’s what makes people better off. i think the idea central banks need to deliberately create inflation is wrong. it’s worsening the problems in the economy. i’m in favor of low inflation. of 2%. you were arguing deflation was good. or the stagnation of japan in the last 20 years or what’s happening right now, recession. deflation is a lack of aggregate demand. why do you think deflation is good? that’s none sense. why is 2% inflation better than 1% inflation? you said if consumers think prices will go down, they won’t shop. give me the example of one product that you wanted, that you needed that you would defer buying for a year because if you thought you deferred for a year it would be 1% cheaper. that’s a phenomenal — you’re talking — secondly if you expect the prices are going to be lower in the future, you can postpone consumption. people don’t do that. we’re seeing — you’re talking about theory. no. i’m talking about fact. deflation and you have recession and depression. here are the facts. americans use credit cards. they buy things and pay 18% interest. why don’t they wait a year and save the money and 18%. because they want it now. there is no period in history where consumers have not bought things because they thought the price is going to be cheaper. we know if we wait a while we can get the phone cheaper. but we don’t wait because we want it now. the central banks are creating this propaganda because they want inflation because they want to wipe out debt. inflation is good fbtors. you have all the indebted governments. they need inflation. the consumer doesn’t need inflation. what we need is more production and falling prices because that’s what grows in economy. that’s what leads to higher living standards. when workers can buy more with the money they earn. he just called your argument nonsense. he has been saying we have high inflation and gold prices are going to go through the roof. i’m making the arguments because we have debts and because of the factors, we’re still having economic growth and low inflation rather than high and the gold prices with falling and inflation is lack of aggregate demand. recession and is not depression. those are the facts. our viewers will be familiar with you. you have always said gold prices are going to go higher. well, they have been higher. i can give you six reasons why they’re going to go lower. you were saying gold prices were going to go down the whole time from 500 to 1,900. go to 5,000. it will go there. you have to wait more time. okay. gold has been going up for 13 years. it had one decline year and now everybody wants to say well you see the price of gold is going down. it went down one year but in the last 14 years it’s done very well. how long was i warning about the housing bubble and the financial crisis before it happened? it was years. it takes a while for the problems to surface. we do have an inflation problem and a bubble. and commodity prices are rising. maybe you haven’t noticed but gold is $1,300. like two crazy uncles out of the attic. the viewers got a taste of what happened here at salt. front row seat. the commodity he’s not going to buy because he’s going to wait for 1% — deflation — with that, we have got to leave it there. thank you so much.