Both. What he means in the first place is, yes, there should be no interference in the market…even (or, especially, depending on how you look at it) in the price of money. It is disruptive, distortionary, and ultimately destructive.
However, at the same time, the market always wins out. Meaning, not even the Fed is more powerful than the market itself. Inflationary printing of money can only fool the market for so long. Of course, eventually the printing slows (or rates are raised by the Fed in one way or another), and the malinvestments that took place during the artificial boom are exposed (which is what we just had happen). But if printing continues indefinitely, it’s not as if interest rates will stay at zero forever, and the economy will be on a constant upclimb. Eventually the market will lose confidence in the dollar, and interest rates will rise (that is, people will demand a higher return because they see the value of the dollar declining).
This is what Peter Schiff is talking about all the time…eventually interest rates will rise. Either the Fed will raise them intentionally (theoretically to stave off hyperinflation), or the market will raise them on its own because of lost confidence in the tender.
Well, to answer that you want to have a clear understanding/definition of deflation.
See here.
(particularly Salerno’s papers)
No they were actually quite good. Keep it up.