This afternoon, CNBC Europe asked Peter Schiff about the effects of low oil prices on the European economy. Peter used the opportunity to explain why the governments of Europe, the United States, and Japan are all playing the same game: claiming inflation is good for the economy, when in fact it just allows politicians to escape the responsibility of giant national debts. The truth is that higher inflation equates to a lower standard of living.

Follow along with this transcript of Peter’s answers:

“First of all, falling oil prices are a good thing. They’re good for the European economy. The only problem is, the low prices aren’t going to last. I think it’s temporary. The idea that Europe needs inflation is complete, utter nonsense. Economies benefit from falling prices. Imagine if oil were free. What if Europeans could have all the oil they wanted and it didn’t cost anything? Wouldn’t that be fantastic?

“I think the drop is temporary, because people are still factoring in a stronger US dollar. Because they think the Fed is out of the QE business, and they think the Fed is going to be raising rates in 2015. I think the Fed is going to be launching a much bigger quantitative easing program than Europe and Japan combined. I think that when all the money printing returns in the United States, you’re going to see a big increase in oil prices for everybody.

“The idea that deflation, or low inflation, is a problem – again – is wrong. If the cost of food is down, that’s a good thing. If the cost of healthcare goes down, that’s a good thing. As the cost of living goes down, the people benefit. It’s just government that wants inflation, because politicians don’t want to cut government spending. They don’t want to deal with all the deficits they ran up to buy votes. So they want to bail themselves out by creating inflation. But the people will suffer from the inflation the central banks are creating.

“Prices are rising now in Japan at the fastest rate in years, and the economy is back in recession. You can’t make a false logical conclusion. You can’t say, ‘Because they haven’t had any inflation in Japan, and they also haven’t had economic growth, that it’s the lack of inflation that is causing the lack of growth.’ Whatever problems Japan has, they would be worse if they had inflation on top of economic stagnation. The fact that prices haven’t been rising, that’s been a silver lining in the Japanese cloud.

“If politicians think that they can improve a weak economy by increasing inflation, all that will do is weaken an economy further. The problems with Japan are structural, and they result in bad monetary policy. It’s interest rates being too low, and it’s the government interfering with the free market, trying to correct the imbalances the bad monetary policy has created. That’s the same problem that they have in Europe. That’s the same problem that we have in the United States. But instead of acknowledging the true problem and the source, all we’re doing is making it worse by printing even more money and keeping interest rates even lower.

“The debt is the problem. Now there are people who think that the way to solve the debt problem is to create inflation. I would rather see the debt restructured. I would rather see defaults than inflation. Because inflation is going to do much more damage to the economy than restructuring or defaulting on debt. But it’s the debt that’s the problem. If you want to make the argument that inflation relieves debtors, I understand that. But you can’t try to argue that it benefits the consumer, that it benefits the economy. Because it doesn’t. It interferes with economic growth, it impoverishes people. When the cost of living is going up, people are getting poorer.

“Even you believe it’s only 2 percent, prices are going up 2 percent a year. I mean, wouldn’t it be better if they didn’t go up at all? Or what if prices went down by 2 percent a year? That would mean things would get cheaper every year and so people would have a higher standard of living… And of course, it compounds: You raise prices 2 percent a year every single year, it really adds up over time.

“Of course, I don’t even believe a lot of these government measures. I think inflation is much more pernicious than 2 percent. You also have to look at the fact that if it wasn’t for the government creating all this inflation, prices would be going down. That is the natural benefit of a market economy. You increase your efficiencies. You become a better producer. You can produce more stuff for less money, and the customer, the consumer benefits from that reduction in prices. But governments are stealing that benefit away by creating inflation.”