Eric Janszen on Hyperinflation vs. High Inflation

[globaleconomicollaps]

I hate to steal your thunder, but several time these have either been posted late or been lost in the noise.


Eric Janszen on Hyperinflation vs. High Inflation
The Next Level with Erik Townsend

Erik Townsend with Eric Janszen
Sponsored by: PFS Group

The Next Level is a new weekly program hosted by Erik Townsend each Monday on Financial Sense aimed at investment professionals and more advanced private investors to discuss hotly debated topics in the financial community. In this first of many, Erik interviews Eric Janszen of iTulip.com on the subject of hyperinflation vs. high sustained inflation.

http://www.financialsense.com/node/8504

http://www.financialsensenewshour.co...012-0611-1.mp3

[xPat]

Re: Eric Janszen on Hyperinflation vs. High Inflation

I was going to post this link myself, but GEC beat me to it!

I would also appreciate suggestions from iTulipers for other guests and topics for this new show.

The idea is to give listeners something they can't get from the other online podcasts. Because there is so much interest in the PM space, I'm doing a two-part series on mechanics of precious metals markets starting next week with Bron Suchecki from Perth Mint on Mechanisms and Effects of Arbitrage in Precious Metals Markets, to be followed up two weeks later with a show about COMEX vs. LBMA, details of how futures markets really work, including settlement for cash or physical, gold carry trade, and a few other topics most of the gold commentaries don't touch upon. The goal is not to create a PM-centric program, which is why we led with a macro guest (EJ). Bron next week, then another macro guest, then another metals guest. I'm working on Nanex Research to do a piece on the details of how HFT algos really work, market microstructure, flash crash post-mortem, etc. Ideas for more topics and guests along these lines most welcome.

Thanks,

Erik Townsend a/k/a xPat

[globaleconomicollaps]

Re: Eric Janszen on Hyperinflation vs. High Inflation

I would love to hear an interview with FOFOA. If she can be convinced to give one. Her last several posts have directly addressed EJ and hyperinflation vs. high inflation. Possibly a debate format with EJ.

How about Stoneleigh from automatic earth? She likes to talk and might be willing to do a debate. yeah! Something where each side get to see the questions in advance and has some pdfs to put up or something like that.

-G

[Mega]

Re: Eric Janszen on Hyperinflation vs. High Inflation

Hi Gang
I see GLD showing a Gold bar that was NOT part of GLD........tells you all you need to know.

Mike

[thriftyandboringinohio]

Re: Eric Janszen on Hyperinflation vs. High Inflation

Thanks, xPat ( seems odd to use your real name).
It's great to see EJ get a long interview where he can avoid the sound-bite disease that afflicts most TV and radio, and speak at greater length.

[DRumsfeld2000]

Re: Eric Janszen on Hyperinflation vs. High Inflation

Thank you for posting this interesting interview. If you see any more or similar items please post those as well.

[NCR85]

Re: Eric Janszen on Hyperinflation vs. High Inflation

There's a lot that I don't immediately understand about EJ's claim that inflation will be brought about by government borrowing as a means of stepping in for private sector money creation. How this does work exactly? Can a government inflate away it's debts BY borrowing? At first glance this doesn't make much sense.

On another front I don't find it very believable. There is already an enormous amount of controversy over the government borrowing that is going on right now, even when in the aggregate (i.e. including state and local expenses), government borrowing is on the tepid side. Are we to believe that despite the backlash, government borrowing will take off to the extent of not just closing the output gap but producing enough of an output surplus to have inflation wipe away existing debts in real terms?

I guess I should conclude from this that some form of massive public works program such as a war is integral to EJ's inflationist views?

[Chris]

Re: Eric Janszen on Hyperinflation vs. High Inflation

There's a lot that I don't immediately understand about EJ's claim that inflation will be brought about by government borrowing as a means of stepping in for private sector money creation. How this does work exactly? Can a government inflate away it's debts BY borrowing? At first glance this doesn't make much sense.

The fed prints money to buy goverment paper then the goverment "spend" the money. This doesn't reduce the debt when you think of it in nominal terms but in real terms the debt is worth less due to the devaluation of the currency. That's how I understand it, at least.

[globaleconomicollaps]

Re: Eric Janszen on Hyperinflation vs. High Inflation

I was going to post this link myself, but GEC beat me to it!

Ideas for more topics and guests along these lines most welcome.

Thanks,

Erik Townsend a/k/a xPat

not exactly an idea for a show, but it is the FS news HOUR. Make it a full hour of interviews and comments. If you don't have a full hour of interviews, pad it out with more info about your peak oil thoughts. You must have several hours of lecture material on that by now.

I just noticed that FinancialSense is becoming a pay site. Will these interviews go behind a pay wall at some point? As a precaution you might put them on your own site.
-G

[astonas]

Re: Eric Janszen on Hyperinflation vs. High Inflation

Great show! Thanks for linking to it here!

[EJ]

Re: Eric Janszen on Hyperinflation vs. High Inflation

There's a lot that I don't immediately understand about EJ's claim that inflation will be brought about by government borrowing as a means of stepping in for private sector money creation. How this does work exactly? Can a government inflate away it's debts BY borrowing? At first glance this doesn't make much sense.

On another front I don't find it very believable. There is already an enormous amount of controversy over the government borrowing that is going on right now, even when in the aggregate (i.e. including state and local expenses), government borrowing is on the tepid side. Are we to believe that despite the backlash, government borrowing will take off to the extent of not just closing the output gap but producing enough of an output surplus to have inflation wipe away existing debts in real terms?

I guess I should conclude from this that some form of massive public works program such as a war is integral to EJ's inflationist views?

Think of public debt as the reciprocal of private debt. If the private sector isn't lending money into existence the government can and will.

I asked Janet Yellen last week whether the continuous decline in consumer credit outstanding and the countervailing force of increased federal government credit might hit a threshold.

She became defensive and explained to the group and the press that everyone is piling into Treasury bonds and isn't that a worry because they might get hurt when rates rise as they did in the early 1990s.

She's quite effective at redirecting a question.

There is now an enormous literature on inflating away government debt, such as this one picked at random.

The fact that such serious treatments exist today at all is important. The idea was unthinkable recently. But it is exactly what the US did after WWII.

[NCR85]

Re: Eric Janszen on Hyperinflation vs. High Inflation

Think of public debt as the reciprocal of private debt. If the private sector isn't lending money into existence the government can and will.

But this requires that the government subscribes to Keynesian economic theory, which half of the US' congress currently does not, right? Do you expect a sea change to occur in this regard? Does the conservatives' attitude towards deficit reduction amount to economic suicide in your views, given how it halts the expansion of the monetary supply that is needed to keep output high? Do I estimate correctly that it would take either another major output gap widening "Ka" event, or the emergence of a major military threat for them to make an about face on this front?

I asked Janet Yellen last week whether the continuous decline in consumer credit outstanding and the countervailing force of increased federal government credit might hit a threshold.

I get the impression Yellen implies that yields would begin to rise only after the output gap is to a large extent closed, whereas your question was about whether it could happen while the output gap still lies wide open. Could a reconciliation of the two positions be that hysteresis (i.e. unemployed workers losing their skills over time) causes the potential output of the economy to fall over time such that the output gap gets closed at a depressed level of economic output? Is this what you're getting at?

[Chris Coles]

Re: Eric Janszen on Hyperinflation vs. High Inflation

It is not also possible to look at reducing asset value, against which the borrowing is set, rather than simply continue to create new money against existing asset value by trying to keep the original value in place?

This surely takes the debate back to where EJ had argued it was better to write off asset value; rather than try and maintain it?

[xPat]

Re: Eric Janszen on Hyperinflation vs. High Inflation

not exactly an idea for a show, but it is the FS news HOUR. Make it a full hour of interviews and comments. If you don't have a full hour of interviews, pad it out with more info about your peak oil thoughts. You must have several hours of lecture material on that by now.

GEC, your feedback is much appreciated, but in this case I think you're in the minority. My first (pilot) attempt at this was a full-hour interview (with one person), and the feedback I got from Jim was that it needs to be closer to 30 or people will get bored. It's not a firm rule, and EJ went longer, but my general strategy is to do a 30-40 minute interview each week.

The FSN hour refers to the whole program Jim puts together, which is obviously now considerably more than an hour.

I just noticed that FinancialSense is becoming a pay site. Will these interviews go behind a pay wall at some point? As a precaution you might put them on your own site.

My series will stay free. Jim is working to monetize the premium content because his audience has grown global, and he wants to continue to grow FSN to service the whole audience. At this point, my goal is to see how much interest there is in content that intentionally targets "professionals and very advanced retails". If it's a big hit, I'll consider adding MORE content behind the paywall if Jim says he wants it. For now, the plan is just to see how the new segment is received.

xPat

[akt]

Re: Eric Janszen on Hyperinflation vs. High Inflation

GEC, your feedback is much appreciated, but in this case I think you're in the minority. My first (pilot) attempt at this was a full-hour interview (with one person), and the feedback I got from Jim was that it needs to be closer to 30 or people will get bored. It's not a firm rule, and EJ went longer, but my general strategy is to do a 30-40 minute interview each week.

The FSN hour refers to the whole program Jim puts together, which is obviously now considerably more than an hour.



My series will stay free. Jim is working to monetize the premium content because his audience has grown global, and he wants to continue to grow FSN to service the whole audience. At this point, my goal is to see how much interest there is in content that intentionally targets "professionals and very advanced retails". If it's a big hit, I'll consider adding MORE content behind the paywall if Jim says he wants it. For now, the plan is just to see how the new segment is received.

xPat

Thank you xpat for the insightful questions. Thank you EJ for the brilliant answers. The interview covers a lot of ground in a short time .......seems like you hit the highlights of EJ's work. And EJ shows a clarity of thought head and shoulders above others.