Credit deflation and the reflation cycle to come (part 2)

[Harley]

22 hours ago, MrXxxx said:

Macrovoices podcast on Oil, its future and energy as a whole [https://www.macrovoices.com/983-macrovoices-276-philip-verleger-energy-economics-and-inflation]

may be interesting for some?....especially a point made about current N American/European producers and their future given the whole WOKE situation.

I listened but was working st the time.  On gold, seemed a little concerned but never mentioned the Basel stuff?  Odd?

[DurhamBorn]

7 hours ago, Mapper said:

This theme of the rich taking assets private and leaving the rest of us with fewer ways to build wealth is infuriating. Without the option of buying stocks, it's what? Back to taking a massive leveraged bet on the housing market as the only way for the plebs to get ahead.

The trend is a consequence of central bank intervention, right? So much cheap money sloshing around. Do you think it will continue when interest rates start to rise? 

Yes its down to endless liquidity.The Fed has printed so much US assets cant produce an income so entities are taking that liquidity now and buying up whatever they can elsewhere.Most countries have blocks,but the UK will flog off everything.Interest rate increases will change everything,but the question is how much damage is done before that happens.

Iv noticed since i was 21 and investing hard how much the UK has moved away from equity investing to houses.Lots of that is due to the cycle,dis-inflation etc,and houses couldnt of had a better macro backdrop.

I expect they would need to pay £2.60 minimum ,and could be a counter bid.I guess il just buy some more TEF Germany with the money.

[DurhamBorn]

50 minutes ago, Harley said:

But they don't unless they own more than one.  It's a distraction scam while the real assets are taken.  It's also probably a trap.  Like an ambush, funnel everyone there then bang bang.

Incredible scam isnt it,what use is one expensive house when you have 3 kids etc.Real producing assets being took.What will be left green bonds and levelling up?.

 

 

[BurntBread]

OK, we're all conspiracy theorists here, so I won't be too embarrassed about mentioning this.

Reading one of the other threads, there was a reference on another site to a chap talking about the climate change agenda (which we know on here has been partly responsible for bargain-basement O&G stocks), and the present COVID nonsense, which seems to have a hefty admixture of corruption (and therefore could perhaps have been investable if you'd been in on the conspiracy). So, at least a couple of examples of real things being blown out of all proportion by a political agenda, and driving market distortion. I think we (by which I mean DB, and I think before him, SP) were also quick to realise that agriculture (and specifically NPK) would be a weak link in the world economy. Being early to that realisation has been been good for many people here (so far).

The reason I mention it, is that the commenter then said "mark my words: the next thing we will be told to be convinced of, is water shortages". 

[Hancock]

1 hour ago, DurhamBorn said:

Incredible scam isnt it,what use is one expensive house when you have 3 kids etc.Real producing assets being took.What will be left green bonds and levelling up?.

Scam?? Its pretty much the entire reason the western economy has imploded ... that and sending manufacturing base to Asia.

Almighty fuck up and national suicide is a better term! (its not that good a term) 

[Heart's Ease]

47 minutes ago, BurntBread said:

OK, we're all conspiracy theorists here, so I won't be too embarrassed about mentioning this.

Reading one of the other threads, there was a reference on another site to a chap talking about the climate change agenda (which we know on here has been partly responsible for bargain-basement O&G stocks), and the present COVID nonsense, which seems to have a hefty admixture of corruption (and therefore could perhaps have been investable if you'd been in on the conspiracy). So, at least a couple of examples of real things being blown out of all proportion by a political agenda, and driving market distortion. I think we (by which I mean DB, and I think before him, SP) were also quick to realise that agriculture (and specifically NPK) would be a weak link in the world economy. Being early to that realisation has been been good for many people here (so far).

The reason I mention it, is that the commenter then said "mark my words: the next thing we will be told to be convinced of, is water shortages". 

A good friend and her partner were well into peak oil/peak water in late 2000's (and I have much to thank them for for putting me on a different thought track).

They were looking to move to Asturias to secure their water supply as it's so wet there. The fact they lived about ten miles away from Lake Vyrnwy always made me smile.

[Errol]

Money supply US:

 

[Lightscribe]

https://www.find-tender.service.gov.uk/Notice/013120-2021?origin=SearchResults&p=1
 

Looks like they are preparing for the 3rd wave lasting a bit longer than anticipated or something else.

[reformed nice guy]

12 hours ago, JMD said:

Perhaps we are going a little off thread. But as I don't invest in China I thought I might elaborate a little more to explain why I don't do so.                                                                                                                                                                  Until a few years ago I thought many of the same things you say above about China. I even thought China and the EU would drift ever closer together, politically and economically, they seemed a tragically close match, until that is, around the time of the 2008 global crash. Even after then the MSM kept plugging on about China 'doing capitalism better than the West'! There were even stories of how retired judges, etc from the West were living and advising the Chinese authorities on how they might reform their legal system. These things increasingly didn't ring true to me. But the global crash, along with increasing internal divisions within China's borders crystallized things. These things panicked China and it set about rapidly turning itself into a security state.                                                                                                                                                        So I disagree that China's progress over the last 40 years has been 'mind boggling'. After all it has been accomplished with great help from the West. And moreover didn't the USSR transform itself over a similar period, without any such cooperation from other nations? In fact by the 60's there was full on East West cold war. All command economies tend to make fast progress but it's usually a mirage, rather like a political Ponzi scheme. I dislike all command economies btw, including the corporatist one we in the West appear to be embarking on.

I see where you are coming from but I disagree with the trend. The way I see it is that the Chinese people will still do well despite the shitty authoritarianism that they are subject to, similar to the Russians. Most of the Russians knew it was all a load of bollocks but a tiny clique of hardline believers enforced it (sound earily familiar to present times?) but despite that they launched satelites, made fancy missles etc. I have to point out that the Russians were not that isolated - they built pipelines during the cold war that went all the way to Germany and Italy for both gas and crude.

As a random example, here is a Chink student that made a self driving bike that self stabilises, collision avoidance and such. Similar to the Tesla car autopilot yet he made it entirely himself (OK, he got a friend to help weld when 3d printing wasnt working):

https://www.bilibili.com/video/BV1fV411x72a

Skip to about 8:30 to get to the interesting bit.

I am not saying that he is the best student in the whole world but that is usually the type of thing we see from MIT or other prestigious Western universities. The Chinese uni he is at was probably a rice plantation 20 years ago.

The Chongs are focussing on stability, education and growing wealth. The West is focussed on skin colour, genitals and where you want to stick your cock.

[reformed nice guy]

2 hours ago, Errol said:

Money supply US:

 

The crypto global market cap is about $1.5 trillion. Imagine how much higher house + share prices would be if some of that new printy printy money hadnt went into crypto!

[DurhamBorn]

31 minutes ago, reformed nice guy said:

The crypto global market cap is about $1.5 trillion. Imagine how much higher house + share prices would be if some of that new printy printy money hadnt went into crypto!

Imagine how high reflation stocks will go once a few % comes out of bonds.Of course,thats exactly what the CBs want to happen and policy is aimed at.

[XswampyX]

43 minutes ago, reformed nice guy said:

The crypto global market cap is about $1.5 trillion. Imagine how much higher house + share prices would be if some of that new printy printy money hadnt went into crypto!

It hasn't gone into "crypto!". Yeah it might be worth about $1.5 trillion but if there was only 1 coin and I bought it for $1 then I obviously took $1 out of the bank and gave that $1 to somebody, who put it back in the bank, it's now worth $1.5 trillion and I sell it. So somebody takes out $1.5 trillion and gives me the $1.5 trillion and I put it in the bank.

The money never left the bank and it certainly didn't end up in crypto.

What do you think I did with my $1.5 trillion crypto investment? I bought a house, some cars a nice holiday...

Edit :- Trillions not billions. Numbers eh?

[XswampyX]

You could have a bitcoin that was mined by burning money. I have a bitcoin worth $1 and you want some of the action. You send me $1... I burn it, live on Youtube and that makes my coin now worth $2. I then send you 1/2 of a coin worth $1.

That would fuck the banks in the ass.

 

[MrXxxx]

1 hour ago, reformed nice guy said:

The Chongs are focussing on stability, education and growing wealth. The West is focussed on skin colour, genitals and where you want to stick your cock

100%!

[spygirl]

2 hours ago, reformed nice guy said:

I see where you are coming from but I disagree with the trend. The way I see it is that the Chinese people will still do well despite the shitty authoritarianism that they are subject to, similar to the Russians. Most of the Russians knew it was all a load of bollocks but a tiny clique of hardline believers enforced it (sound earily familiar to present times?) but despite that they launched satelites, made fancy missles etc. I have to point out that the Russians were not that isolated - they built pipelines during the cold war that went all the way to Germany and Italy for both gas and crude.

As a random example, here is a Chink student that made a self driving bike that self stabilises, collision avoidance and such. Similar to the Tesla car autopilot yet he made it entirely himself (OK, he got a friend to help weld when 3d printing wasnt working):

https://www.bilibili.com/video/BV1fV411x72a

Skip to about 8:30 to get to the interesting bit.

I am not saying that he is the best student in the whole world but that is usually the type of thing we see from MIT or other prestigious Western universities. The Chinese uni he is at was probably a rice plantation 20 years ago.

The Chongs are focussing on stability, education and growing wealth. The West is focussed on skin colour, genitals and where you want to stick your cock.

They work, they get the money they earn.

UK was like that till the 60s.

US prob til the 90s.

Pols then give more n more away to dossers.

Chinas doing the same, giving money to favoured people.

The people who work then start kicking back.

[Talking Monkey]

6 hours ago, Harley said:

But they don't unless they own more than one.  It's a distraction scam while the real assets are taken.  It's also probably a trap.  Like an ambush, funnel everyone there then bang bang.

I reckon that's a real possibility Harley that BTL gets targeted by the government for revenue raising, it just seems the easiest of options. 

[Clueless Imbecile]

Thanks to all who replied to my huge dilemma / 3 problems post a few weeks back....

Castlevania
Bobthebuilder
CVG
MrXxxx
DurhamBorn
Fully Detached
UnconventionalWisdom
sleepwello'nights

 

Sorry if I've missed anyone off the above list, and sorry I've taken so long to reply.

Buying a cheap house in the north east sounds tempting. The problem is, I would feel bad about leaving my parents, especially since they are at the age where they are more likely to need me. By coincidence, my mum recently had a medical problem over a weekend. My dad was out, and I ended up calling the NHS helpline, arranging a same day appointment for her (God bless the NHS for that!) and driving my mum to hospital. Luckily it turned out not to be serious, but it did make me think "What if I was living 100 miles north when that happend?". I could buy a house up there and rent it out, but I'm not really brave enough to buy a house that is more than, say, 20 minutes drive away from where I live. It would be a ball ache to go there to check on anything.

I'm wary of stating too much detail on here about my life because I value anonymity. I think there is a fair chance that I will inherit enough to buy an entry-level house in an ok area. However, I've always tried not to count on inheritance because there are so many things that could get in the way of it (e.g. if parents were to sell up and then spend the proceeds on living in a care home).

It sounds like the benefits option is ruled out for me since I don't have any kids. Looks like my options are:

1) Keep working and keep my ISA stockmarket investment & savings. (Default option / path of least resistance).
2) Keep working and buy a modest house. Would then have possibility of taking a lodger or renting it out while I live at parents house.
3) Stop working and live off savings until they run out (years away but probably before I reach retirement age), and then what?

If I buy a house it would be more likely to be within 10 miles of where I live. Luckily/unuckily I grew up in a fairly nice part of Cheshire, but it is poor value for money when it comes to housing. I could probably manage to buy an entry level home in the area, or I could look a few miles away where there is better value for money. If I was going to live there (potentially part of the week and spend the rest of the week at my parents house) then it would make sense to buy a place that is within walking distance of my parents house. If I could get by without owning a car, I reckon that would save me approximately 2 grand per year in insurance, road tax, MOT, maintenance and depreciation.

It's a difficult decision to buy a house when I'm quite comfortable & happy living at my parents house. The main worry I have is that my pension and the rest of my wealth is mostly in the stock market, whilst I don't own a home. Seems like too many eggs in one basket, particularly with all the talk of once in a lifetime market crash, decades to recover, etc.

It would be cool to meet DurhamBorn and you guys for a beer or two. Does anyone know any good (cheap!) hotels or B&Bs up there?

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

[spygirl]

https://www.bbc.co.uk/news/business-57531716

We're trying to do the best we can, but this is crippling us," says Scott Humphreys. "Before the pandemic we were paying $2,500 to $2,800 (£1,800-£2,000) to bring a 40-foot container from China. Now we're paying $16,000 - if we can get a booking."

Mr Humphreys is managing director of Peppermill Interiors, which supplies furniture for homes as well as to the bar and restaurant trade.

Like many importers, Peppermill is feeling the effects of serious bottlenecks in the global container shipping industry, which have led to delays and pushed up prices.

The company, based near Cannock, in Staffordshire, has been operating for 25 years, and currently employs 40 people.

Although it does use suppliers in the UK, roughly half of its stock is imported from East Asia, mainly from China. It will typically bring in between 200 and 250 containers each year.

Now, Mr Humphreys says, the rise in shipping costs is taking a heavy toll on his business. "We physically can't absorb the extra costs. We have to pass them on," he explains.

"A single armchair used to cost us £12 to bring in from China. It now costs us £100. So the price we sell the chair for has gone up by 25% - but that isn't extra profit for us.

"Some of the cheaper items, they've doubled in price. There's no point bringing them in anymore," he said.

He makes it clear who he blames. "It's all going to the shipping lines. They're working together. It's like a cartel out there."

 

Course they are...

Get your stuff sourced closer to where you sell it.

China isn't going to be cheap anymore.

 

 

[JMD]

3 hours ago, reformed nice guy said:

I see where you are coming from but I disagree with the trend. The way I see it is that the Chinese people will still do well despite the shitty authoritarianism that they are subject to, similar to the Russians. Most of the Russians knew it was all a load of bollocks but a tiny clique of hardline believers enforced it (sound earily familiar to present times?) but despite that they launched satelites, made fancy missles etc. I have to point out that the Russians were not that isolated - they built pipelines during the cold war that went all the way to Germany and Italy for both gas and crude.

As a random example, here is a Chink student that made a self driving bike that self stabilises, collision avoidance and such. Similar to the Tesla car autopilot yet he made it entirely himself (OK, he got a friend to help weld when 3d printing wasnt working):

https://www.bilibili.com/video/BV1fV411x72a

Skip to about 8:30 to get to the interesting bit.

I am not saying that he is the best student in the whole world but that is usually the type of thing we see from MIT or other prestigious Western universities. The Chinese uni he is at was probably a rice plantation 20 years ago.

The Chongs are focussing on stability, education and growing wealth. The West is focussed on skin colour, genitals and where you want to stick your cock.

That's fine that you and I disagree. In fact i think it is interesting we may hold diametric views about China, perhaps a bit like those two camps, one pro crypto, the other anti?                                                                                                                   Bringing the topic back on thread - you mention the Chinese 'investment trend', by which I assume you mean that you are a serious investor in Chinese companies? If so I don't deny that there is money and returns to be made and good luck to you(I mean that). However I am buying for the long term and really only want to own companies in sectors for a 10-20 year investment time horizon. So  beyond short term trading, I personally don't see a case for having investments in China in say 10 years time. I could be wrong, but it's a big part of my macro thinking. For example what is the 'investment upside' for us in the West if China comes out on top during/after the predicted east-west Cold War 11?... That outcome would seem a massive lose-lose proposition to me.                                                                                                                                                        Yes I was aware of that Russian oil pipeline, it earned Russia some valuable scraps of hard foreign currency during the cold war But that was really part of my point, the USSR was mostly starved of foreign capitol and of western IP. China however, has been gorging itself on all those types of goodies, plus indulging itself rather schizophrenically imo, by ramping up the worst excesses of both communism and capitalism. The Chinese CCP think they have a date with destiny, just like so many regimes before them, so perhaps things will be different this time?... however i think it's just political hubris, and merely another house of sand.

[DurhamBorn]

36 minutes ago, spygirl said:

https://www.bbc.co.uk/news/business-57531716

We're trying to do the best we can, but this is crippling us," says Scott Humphreys. "Before the pandemic we were paying $2,500 to $2,800 (£1,800-£2,000) to bring a 40-foot container from China. Now we're paying $16,000 - if we can get a booking."

Mr Humphreys is managing director of Peppermill Interiors, which supplies furniture for homes as well as to the bar and restaurant trade.

Like many importers, Peppermill is feeling the effects of serious bottlenecks in the global container shipping industry, which have led to delays and pushed up prices.

The company, based near Cannock, in Staffordshire, has been operating for 25 years, and currently employs 40 people.

Although it does use suppliers in the UK, roughly half of its stock is imported from East Asia, mainly from China. It will typically bring in between 200 and 250 containers each year.

Now, Mr Humphreys says, the rise in shipping costs is taking a heavy toll on his business. "We physically can't absorb the extra costs. We have to pass them on," he explains.

"A single armchair used to cost us £12 to bring in from China. It now costs us £100. So the price we sell the chair for has gone up by 25% - but that isn't extra profit for us.

"Some of the cheaper items, they've doubled in price. There's no point bringing them in anymore," he said.

He makes it clear who he blames. "It's all going to the shipping lines. They're working together. It's like a cartel out there."

 

Course they are...

Get your stuff sourced closer to where you sell it.

China isn't going to be cheap anymore.

 

 

I closed my import business doing exactly what they are a few years ago and got out all my capital that went mostly into gold and silver miners and then into everything else when it crashed.I saw exactly what was coming of course because its what i do.I didnt know exactly where the cost increases would go,i expected some shipping,but more factory inflation and a falling sterling,but its  classic example of the end of a long dis-inflation.They make TVs now where i live,and they make washing machines 3 miles away again.Anything bulky is a no no now from China.There are lots of products we could actually make here with a small unit,big dog cages for one,but i cant be arsed with all the red tape of going Ltd etc.

[JMD]

7 hours ago, DurhamBorn said:

Yes its down to endless liquidity.The Fed has printed so much US assets cant produce an income so entities are taking that liquidity now and buying up whatever they can elsewhere.Most countries have blocks,but the UK will flog off everything.Interest rate increases will change everything,but the question is how much damage is done before that happens.

Iv noticed since i was 21 and investing hard how much the UK has moved away from equity investing to houses.Lots of that is due to the cycle,dis-inflation etc,and houses couldnt of had a better macro backdrop.

I expect they would need to pay £2.60 minimum ,and could be a counter bid.I guess il just buy some more TEF Germany with the money.

Cheap leverage, or for some 'free money' even, is another driver...             I have only listened to half of this podcast, so don't know if they arrive at any useful (for us) information/conclusions... 

                   

                         

 

[Hancock]

1 hour ago, JMD said:

 The Chinese CCP think they have a date with destiny, just like so many regimes before them

About 6 years ago, I was speaking to a Chinese man who was lecturing at at Oxford university ... he was amazed upon arriving in England when he realised the EU is very similar to the Chinese system, where those who make the laws are appointed as opposed to being elected.

He was a staunch Brexiteer!

 

[goldbug9999]

6 hours ago, XswampyX said:

You could have a bitcoin that was mined by burning money. I have a bitcoin worth $1 and you want some of the action. You send me $1... I burn it, live on Youtube and that makes my coin now worth $2. I then send you 1/2 of a coin worth $1.

That would fuck the banks in the ass.

No it wouldn't because burning bank notes makes all the existing units worth more so banks would be delighted if people started burning bank notes as its one less IOU they have to honour.

When people talk about money "moving into crypto" what they really mean is that some part of the global call on wealth, the "buying power" moved.

Lets say I have a £, I buy a bitcoin off someone for a £ whose just mined it, we've now set a market price for the bitcoin of a £ so end up with two things with a value of "one £" where before we only had one - the pound itself and the bitcoin. Given that the totality of currency is a call on the totality of actual wealth (give or take), by creating a new currency unit (the bitcoin) and establishing its relative value to existing currency through market price discovery, I have moved some tiny share of the call on the worlds wealth to the bitcoin. In doing so the currency used to trade for the bitcoin becomes worth a tiny bit less.

So counter intuitively the fact that fiat currency used to buy bitcoin is not destroyed actually makes each unit of it (the fiat) ultimately worth less than if it was destroyed because its very existence keeps the fiat diluted.  

Hence the $1.5tn "value" of crypto represents buying power that has moved from fait to crypto - all the worlds non-crypto money (e.g. fiat + PMs) is worth the equivalent of $1.5tn less than it would be if crypto did not exist.

[goldbug9999]

6 minutes ago, PrincessDrac said:

So in essence are you saying the market cap of BTC has drained FIAT to the same extent?

All that new money has gone into creating a new currency with a huge MKT Cp.

Well not ALL the new money sadly  but ... yes thats in principle whats happening, all fiat and PM holders are kindly donating some of their spending power to bitcoin - well cheers lads 

[Bilbo]

12 minutes ago, goldbug9999 said:

Well not ALL the new money sadly  but ... yes thats in principle whats happening, all fiat and PM holders are kindly donating some of their spending power to bitcoin - well cheers lads 

Which has the value of a Dutch tulip bulb