Harry Dent Fights Peter Schiff, Debate Summary.
https://www.youtube.com/watch?v=TIw-rO2ooIQ
Dent’s points are signified by ‘D’, whereas Shiff’s by ‘S’. The ‘1s’ are introductory statements, whereas ‘2s’ include both counterarguments, as well as responses to questions given by the presenter. This summary has been made so that the questions are omitted.
Note that I have mentioned only what I thought essential.
S1. Change from gold-standard to USD standard (which itself is backed by gold and redeemable on demand in gold), due to the possibility of acquiring interest from loaning Fed’s notes to the U.S. treasury. The U.S.A. abuses this power by buying votes using liabilities that eventually surpass the gold reserves (permanent deficits without the need for increasing taxes). This reaches its natural conclusion when eventually governments began to redeem the IOUs for gold, causing the U.S.A. to default (USD loses in value, causing an increase in consumer prices, e.g. from 360yen to 150, in the 1970s $30/o.z. gold to $800). After the stifling of this, the USD standard still occurs even though it isn’t backed by anything — causing bubbles (still allowing the U.S.A. to run deficits — owing more money than all other debtor nations combined). Eventually, QEs occur, once people realize there’s no end to it, the bubble will deflate — leading to the ultimate collapse of the USD, prompting the rise in gold because it’s ‘real money’ (comeback to the gold standard, and the U.S.A. loses on it the most). Since you can’t pay your debt and defaulting on it isn’t politically viable, you are going to inflate it away.
D1 As the money borrowed from other countries is malinvested, the inflationary collapse happens since the debts still must be made good. If a sharp decrease in prices happens, it may cause the money to go out of the system (for example by defaults, which in turn causes deflation).
He then argues using numerous charts that we are in a deflationary season, and with each year we are getting further into it. Because of this, more QE is required to achieve the same effects, and there’s not much correlation between it and inflation. The current constant increase in debt and financial assets is unsustainable, and deflation is needed to return them to a normal level. Due to the sheer size of this, this will be the greatest crash in history. According to a 2006–2020 greatest downside chart, gold isn’t the solution as it only essentially holds its value as everything goes down. T bonds are argued to be the best. Gold only tends to go up during the early stages of a crisis.
S2 The dollar’s value is subjective (it just relatively lost less value). The reason why we haven’t seen inflation is because the numbers have been deliberately designed to understate inflation, moreover, the USD has at the beginning of the COVID crisis gained value. The decrease in the stock market is meaningless because of it being eradicated through money printing. The cycles also mean nothing because in the past we had sound money, and what’s happening right now has no precedent — money is going to be printed until it’s worthless. Besides, you should position yourself for the end game, because otherwise if you are wrong then you get wiped out. The epicentre of the coming collapse will be the USD, and the only way to restore the confidence in currencies will be the reestablishing of the link to gold. Governments are currently selling snake oil to delay the collapse, but it will eventually stop working. The current problems (which cause the rise in socialism) are because of governments and central banking (not capitalism itself). As such, since the currencies’ intrinsic value is nought, they might as well go there. Stocks are at ATH, so a real long-term boom isn’t possible from now. Deflation won’t happen since governments only care about the next elections, and so it will be forever postponed, leading to hyperinflation as the amount of debt in the U.S. would necessitate far more drastic measures, as compared to those in the 1970s, to prevent it, which simply aren’t possible.
D2 The currencies aren’t going to go to nothing, as it isn’t Weimar Germany or else. Despite printing massive amounts of money we have no inflation (though understated, the direction is still correct). Hyperinflation only happens from the state of already high inflation, and since we don’t even see that, it is impossible. USD isn’t going to be a reserve currency in the future, but for now, it’s the best currency (his bet with T bills is only short-term). Pricing anything in gold doesn’t make sense since it’s highly volatile so the USD is currently better. A long-term boom isn’t possible. Governments cannot stop deflation, because they don’t control the ‘monster’ they’ve created. The only way to go out of this scenario is deflation or an inflationary spiral (of which signs aren’t currently seen).
