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

[Loki]

7 minutes ago, DurhamBorn said:

Yep,no conspiracy at all,thats not how CBs work.People mistake their job and aims.Their main job is to try to ensure our way of life continues and that our economies can grow over time with a slowly increasing liquidity.Goverments are elected to choose to guide where.Where macro comes in is understanding the leads and lags.We arent better than them,its just we hopefully see what they have to react to.The reflation part comes from the political cycleas much as the macro.Both collide once or twice a lifetime.

I'm not looking for conspiracies I'm looking for confirmation of the reflation...hence the $1.6t followed by seeing Trump's twitterstorm jumped out at me.  My understanding is that the final can kick isn't a given, just that if it isn't, we will go Mad Max now rather than in 2030.

[JMD]

21 hours ago, TheCountOfNowhere said:

Hey JMD, what bit makes no sense ?

I'm not saying Im right, I'm saying i'm worried and I have no real idea what to do for the best.  It makes no sense to go all in into any market ever.  property is tangible and servers a purpose, we'd still have enough from the other (hopefully) less vulnerable investments to see us ok for many a year.  

I'd buy more shares now but I do think we are going to see a big US collapse at some point this year.  

My SIPP provider says they wont accept an in-specie shares transfer so I have to sell up to move in.  When I sell up I am not buying back any time before Jan, but I will buy back.

We love Greece but it's less stable and from what I read a lot of angry people there.  I'll pass on that one.

Count, hmm?? I said it made sense. I didn't say 'no' sense. 

[JMD]

21 hours ago, sancho panza said:

You've got to wonder who's putting money in there?

SP, re your question about the new Hertz investors, that's a great question. If we only knew the answer we could all adjust our investing strategies and become next cycle millionairs, hell probably billionairs! Seriously though, is there a way of discovering it (like who is buying/selling shares) or is it all a 'closed-book'?   

[Dogtania]

Just signed up to Coinfloor, I know there was some discussion on bitcoin in the last few days and where to purchase.  I have no experience with Coinfloor or tbh crypto but know that Coinbase who I have used previously really rip you one with their fees.  Still need to get verification etc completed but I believe they also offer some kind of monthly auto buy feature, I guess idea being to dollar average etc.

[TheCountOfNowhere]

32 minutes ago, JMD said:

Count, hmm?? I said it made sense. I didn't say 'no' sense. 

Musta mis read it.

[JMD]

2 hours ago, Heart's Ease said:

Lol I started to write something in my previous post along the lines of - ten years on it would surprise me even more if the thing that was going to save the world was the first line of the European accounting system marking Gold to Market (didn't FOFOA say $55,000 an ounce would absorb all debt as it stood ten years ago?). And then I thought - I really need to refresh my memory on this!

At the time I thought it made sense. It was as convincing an explanation for the shift away from the US$ as reserve currency as I had seen - we know the dollar will die as all reserve currencies will... The Euro balance sheet trick gives an opportunity for reset and then the genius of floating gold (that's the bit I really need to read back on).

Was it Another or FOA who said that Gold was the only thing that all that debt could be absorbed in? 

Does MMT get a run first?

I don't subscribe to the speakeasy so have no idea where the FOFOA gang is up to on this, apart from his anniversary and NY excerpts he makes available.

Apols if this is going off track of the thread but it has been an interesting niche for nearly 25 years and as Loki says, the link to the Euro was something I found mindboggling.

Edited to add: Loki - what are your thoughts?!

I don't think mentioning 'Another/FOA/FOFOA...' is going off-track. Thanks to Loki's original post, even i did further reading on those guys (and i admit to being pretty ignorant about these concepts).

However their Euro hypothesis did make me laugh - but then if they/he were writing today (are they/he still around?) i expect they would be embracing crypto as the new currency; and that they were vindicated about defining gold/'Freegold' as being the 'store of wealth', and not part of the new money/currency system.

btw, correct me if i am wrong on any of this, as i say i'm no expert, and tbh their posts were so voluminous/generic i sort of lost track now and again. 

[leonardratso]

53 minutes ago, Dogtania said:

Just signed up to Coinfloor, I know there was some discussion on bitcoin in the last few days and where to purchase.  I have no experience with Coinfloor or tbh crypto but know that Coinbase who I have used previously really rip you one with their fees.  Still need to get verification etc completed but I believe they also offer some kind of monthly auto buy feature, I guess idea being to dollar average etc.

hehe, i found the exact opposite, i had a coinfloor account but closed it because i found them a rip off, and their trading screen was abysmal.

i agree coinbase is a rip off as well, but when you open a coinbase account, you automatically get a coinbase pro or was old gdax account and you can vastly reduce fees there by using limit orders, i dont think ive ever been charged more than a couple of quid in fees for sometimes quite large amounts in the past, but you have to use the pro version and you have to setup the limit orders, dont buy at market price, slightly below or slightly above on your limit order. of course below you might miss it as it takes off, but it will be back, and its why i can rinse and repeat so much, a lot of it seems to happen overnight when a ramp/dump is going on in another timezone, but ive yet to have a limit order buy or sell fail and thats been over at least a 3 year period.

Ah, just checked my notes from last year, the main reason i dumped coinfloor was because they introduced minimums for buying and transferring out, also im alluding to some kind of fee and slow transfer times from/to my bank account - i think - old notes they may have backtracked on some of them in the bear market it had become by then, i do like coinbases in/out transfers though, zero fees and FPA- they say 3 working days on their website, but ive found it to be 15 mins to 2 hours in practise, both in and out, i can literally catch a bull run withoput having any cash there at all by transferring it in quickly and buying.

 

[Craig]

36 minutes ago, leonardratso said:

hehe, i found the exact opposite, i had a coinfloor account but closed it because i found them a rip off, and their trading screen was abysmal.

i agree coinbase is a rip off as well, but when you open a coinbase account, you automatically get a coinbase pro or was old gdax account and you can vastly reduce fees there by using limit orders, i dont think ive ever been charged more than a couple of quid in fees for sometimes quite large amounts in the past, but you have to use the pro version and you have to setup the limit orders, dont buy at market price, slightly below or slightly above on your limit order. of course below you might miss it as it takes off, but it will be back, and its why i can rinse and repeat so much, a lot of it seems to happen overnight when a ramp/dump is going on in another timezone, but ive yet to have a limit order buy or sell fail and thats been over at least a 3 year period.

Ah, just checked my notes from last year, the main reason i dumped coinfloor was because they introduced minimums for buying and transferring out, also im alluding to some kind of fee and slow transfer times from/to my bank account - i think - old notes they may have backtracked on some of them in the bear market it had become by then, i do like coinbases in/out transfers though, zero fees and FPA- they say 3 working days on their website, but ive found it to be 15 mins to 2 hours in practise, both in and out, i can literally catch a bull run withoput having any cash there at all by transferring it in quickly and buying.

 

If you're looking for something quick and straightforward without a full trading interface, then you could do a lot worse than Uphold or Revolut. Rates can be a bit steep, though certainly no worse than Coinbase's. 

[jamtomorrow]

3 minutes ago, Craig said:

If you're looking for something quick and straightforward without a full trading interface, then you could do a lot worse than Uphold or Revolut. Rates can be a bit steep, though certainly no worse than Coinbase's. 

Also, if *trading* is important to you, it's worth doing more extensive research - Coinbase retail can become hard/impossible to access during periods of market frenzy/irrationality. Which has never bothered me, because I don't trade. But if I did, it would *really* grind my gears.

@leonardratso have you found GDAX / CBPro any better in that respect?

[Dogtania]

Thanks for the info.  @leonardratso I've only ever bought small amounts a few times in coinbase and iirc the fees always seemed quite large but I guess that's the same everywhere.  Even though buying foreign currency I would expect a fee for some reason still hurt buying a couple hundred of BTC and losing a few pounds off the bat.

Regarding revoult @Craigit is not somewhere you own the coins so not great IMO.  I do have a cold storage wallet thing think it's trezor.  Main reason I initially got was for transferring the maidsafe tokens as all the exchanges they were listed on kept delisting.. And honestly I shouldn't really be keeping on an exchange anyway as I'm not trading.

Saw revoult had gold offered recently which was interesting, wonder if they will subsequently offer silver.  All the same I would argue a lot safer going for something like bullionvault.

[leonardratso]

9 minutes ago, jamtomorrow said:

Also, if *trading* is important to you, it's worth doing more extensive research - Coinbase retail can become hard/impossible to access during periods of market frenzy/irrationality. Which has never bothered me, because I don't trade. But if I did, it would *really* grind my gears.

@leonardratso have you found GDAX / CBPro any better in that respect?

ive never had any trouble to be honest, but then again like DB i take the emotion out of it by setting up sell points and buy points well in advance and then i ignore it whatever happens, if the prices go to the next level before a longish plateau then i might adjust the levels, ive never had a hit limit order fail though, even when the markets been very high volume.

Depends what you call a high fee though i reckon, looks like my limits vary between coins on fees, BTC looks probably the worst ant maybe 0.5%, but considering i only deal small its nothing to be honest; heres last few trades, some went underwater like OMG but i dont care, im not playing with QE amounts here;

 

note the times, these are all limit orders, im not signed on when they hit.

[Heart's Ease]

49 minutes ago, JMD said:

I don't think mentioning 'Another/FOA/FOFOA...' is going off-track. Thanks to Loki's original post, even i did further reading on those guys (and i admit to being pretty ignorant about these concepts).

However their Euro hypothesis did make me laugh - but then if they/he were writing today (are they/he still around?) i expect they would be embracing crypto as the new currency; and that they were vindicated about defining gold/'Freegold' as being the 'store of wealth', and not part of the new money/currency system.

btw, correct me if i am wrong on any of this, as i say i'm no expert, and tbh their posts were so voluminous/generic i sort of lost track now and again. 

https://fofoa.blogspot.com/2019/05/?m=1

In the link above is a few pages of the interview FOFOA did which was included in the "In Gold We Trust 2019" report.  Still holds to $55,000 valuation, still believes Euro will be the bridge. 

(Looks like I'm now back on the A/FOA/FOFOA trail. Now with added Q!).

The reason I have positive things to say about the euro is because, no matter how it’s being used today, it was conceived and constructed to bridge the end of the dollar reserve system to the next one. Its design, its architecture, will not only allow it to survive the transition, but also to flourish within the next system.

In his famous acceptance speech for the International Charlemagne Prize of Aachen for the euro in 2002, Wim Duisenberg said, “It is the first currency that has not only severed its link to gold, but also its link to the nation-state.” You see, the euro solved two problems. 1. It severed its link to the wealth reserve function of money. And 2. it severed its link to the Triffin Paradox of an international currency being managed by a single nation. These are the dollar’s two greatest problems, and the design of the euro resolved them.

Is it susceptible to politics and political influence? Of course it is. But it’s the currency of many very different countries, and that’s why its susceptibility to political influence is actually a strength, not a weakness. FOA wrote:

 

“The dollar is ruled by one country and one country only. This implies that only one Economy is taken into consideration when policy is discussed, the USA. The management of interest rates, inflation, dollar value and crisis intervention, are therefore politically motivated to benefit one world group, again, Americans. We have seen the news events of how this tramples upon the needs of other geopolitical groups (countries).

On the other hand, the Euro will utilize a totally different structure of consensus management. It will be governed by many nations of obvious conflicting needs. This very weakness, that is so well documented by analysts, is the “major” strength that will contribute to the popularity of the Euro. In time, it will be governed by many cultures, including an “open market” valuation of gold.”

 

[Craig]

10 minutes ago, Dogtania said:

Thanks for the info.  @leonardratso I've only ever bought small amounts a few times in coinbase and iirc the fees always seemed quite large but I guess that's the same everywhere.  Even though buying foreign currency I would expect a fee for some reason still hurt buying a couple hundred of BTC and losing a few pounds off the bat.

Regarding revoult @Craigit is not somewhere you own the coins so not great IMO.  I do have a cold storage wallet thing think it's trezor.  Main reason I initially got was for transferring the maidsafe tokens as all the exchanges they were listed on kept delisting.. And honestly I shouldn't really be keeping on an exchange anyway as I'm not trading.

Saw revoult had gold offered recently which was interesting, wonder if they will subsequently offer silver.  All the same I would argue a lot safer going for something like bullionvault.

I wouldn't have recommended Revolut until a couple of days ago, but just got an email saying you are now the owner of the coins, so presumably they'll be making them tradeable fairly soon.

[leonardratso]

aha;

Current Maker Fee0.50%

Current Taker Fee0.50%

[leonardratso]

BP's divi just landed in my account.

8.3p /share. this cut.

[sancho panza]

5 hours ago, Cattle Prod said:

Has something changed at the Fed? Is this behind the strength we are seeing in the dollar, as in liquidity being reduced? If so it feels a little like them giving themselves an excuse for the next significant injection. 

From Wolf Street:

 

Thanks for posting CP.Something's afoot.Whether they're jsut taking a foot of f the pedal while they can??

I think their aim is something akin to a flat S&P come November and their job is done.Printing now is needless and carries no net benefit if S&P is sub 2500 come Novemeber.

Fed always tries to be politcally neutral.With everything going on,they have to be careful.

 

5 hours ago, Bricks & Mortar said:

Having a hard time with the 'conspiracy' angle.
First day of the thread, DB told us it would go down like this.  It's the same in every developed economy.  The timing comes from the economic collapse caused by 'Cervesa Sickness'.   It's just Trump's luck if it coincides with an election in his country.  (if, indeed he does manage to spend the money in such a way as to juice the economy all the way up to the election, and as long as our tinfoil hat isn't so big we think Trump released the virus to cause the collapse to make the Fed print so they'd get the warchest.)

I do agree the game for Trump is to use the warchest to get to the election with the S&P as high as possible, but think thats in synch with the desired V-shape recovery.   Can he get the $ flowing fast enough?  Will Congress agree to everything?  Will the second crash come if there's a delay with either of these?

AS I said above,he'll be happy with neutral by Nov.Or even slightly down.So that jsut him vs Joe rather him vs Joe+ a tanking economy.

Decl:I am a bit of a political gambler 

[feed]

The $600/week unemployment benefit (from Cares Act) expires end of July.  Somewhere between 40% to 60% of unemployed collecting benefits are making more than if they were working.  The headlines are coming that will show what most employers are experiencing...can't compete w/ free cash and "safety of staying home"... 

Election is in 137 days.  Bets on cares act getting extended. 

[sancho panza]

3 hours ago, Loki said:

I'm not looking for conspiracies I'm looking for confirmation of the reflation...hence the $1.6t followed by seeing Trump's twitterstorm jumped out at me.  My understanding is that the final can kick isn't a given, just that if it isn't, we will go Mad Max now rather than in 2030.

Also ECB pumping like mad.....E1.6tn lent out at neg rates.accroding to holger

2 hours ago, JMD said:

SP, re your question about the new Hertz investors, that's a great question. If we only knew the answer we could all adjust our investing strategies and become next cycle millionairs, hell probably billionairs! Seriously though, is there a way of discovering it (like who is buying/selling shares) or is it all a 'closed-book'?   

The ones worht knowing about may well be using the 3rd party subsids.Share registers aren't open as far as I know.

3 hours ago, DurhamBorn said:

Yep,no conspiracy at all,thats not how CBs work.People mistake their job and aims.Their main job is to try to ensure our way of life continues and that our economies can grow over time with a slowly increasing liquidity.Goverments are elected to choose to guide where.Where macro comes in is understanding the leads and lags.We arent better than them,its just we hopefully see what they have to react to.The reflation part comes from the political cycleas much as the macro.Both collide once or twice a lifetime.

ANd when they collide it gets really interesting.

 

Have you seen WTI at $40 today,yellow stuff $1745.....thesis holding nicewly.

@Cattle Prod any  claer idea yet how much shale production got shut down for good in the end?

 

[The Idiocrat]

I’m putting this here just to show the madness that is still going on in the credit/debt industry. I’m watching the football on a dodgy internet connection on NBC Sports in the States, and this ad is being run every commercial break. Quite extraordinary IMO:

 

[Option5]

4 minutes ago, The Idiocrat said:

I’m putting this here just to show the madness that is still going on in the credit/debt industry. I’m watching the football on a dodgy internet connection on CNBC in the States, and this ad is being run every commercial break. Quite extraordinary IMO:

 

Has to be a spoof, please say it is......

[The Idiocrat]

13 minutes ago, Option5 said:

Has to be a spoof, please say it is......

Yanks don’t do irony so it’s real I’m afraid. I did think it was a pisstake when I first saw it, but it’s come on several times during the coverage. I suppose it’s targeting dim/naive/greedy/desperate people and so is pitched accordingly.

[King Penda]

1 hour ago, The Idiocrat said:

I’m putting this here just to show the madness that is still going on in the credit/debt industry. I’m watching the football on a dodgy internet connection on NBC Sports in the States, and this ad is being run every commercial break. Quite extraordinary IMO:

 

They can’t help me get my pension early I’ve just rang them fucking cunts

[JMD]

11 hours ago, Heart's Ease said:

https://fofoa.blogspot.com/2019/05/?m=1

In the link above is a few pages of the interview FOFOA did which was included in the "In Gold We Trust 2019" report.  Still holds to $55,000 valuation, still believes Euro will be the bridge. 

(Looks like I'm now back on the A/FOA/FOFOA trail. Now with added Q!).

The reason I have positive things to say about the euro is because, no matter how it’s being used today, it was conceived and constructed to bridge the end of the dollar reserve system to the next one. Its design, its architecture, will not only allow it to survive the transition, but also to flourish within the next system.

In his famous acceptance speech for the International Charlemagne Prize of Aachen for the euro in 2002, Wim Duisenberg said, “It is the first currency that has not only severed its link to gold, but also its link to the nation-state.” You see, the euro solved two problems. 1. It severed its link to the wealth reserve function of money. And 2. it severed its link to the Triffin Paradox of an international currency being managed by a single nation. These are the dollar’s two greatest problems, and the design of the euro resolved them.

Is it susceptible to politics and political influence? Of course it is. But it’s the currency of many very different countries, and that’s why its susceptibility to political influence is actually a strength, not a weakness. FOA wrote:

 

“The dollar is ruled by one country and one country only. This implies that only one Economy is taken into consideration when policy is discussed, the USA. The management of interest rates, inflation, dollar value and crisis intervention, are therefore politically motivated to benefit one world group, again, Americans. We have seen the news events of how this tramples upon the needs of other geopolitical groups (countries).

On the other hand, the Euro will utilize a totally different structure of consensus management. It will be governed by many nations of obvious conflicting needs. This very weakness, that is so well documented by analysts, is the “major” strength that will contribute to the popularity of the Euro. In time, it will be governed by many cultures, including an “open market” valuation of gold.”

 

Thanks HeartsEase, It is curious that the blog author still clings to the Euro being a 'bridge to a world currency'. I think the article reads a bit cultish (like much of the original blog postings tbh; would you agree/disagree?), and perhaps written by someone (author is anonymous I think) unaware that the Euro's future role (if it does survive) is to lock european nations into a super-state, with common tax and spend policies for starters. For example, the 'susceptibility to political influence is a strengh' line sounds weak/disingenuous to me - surely it is obvious that the Euro experiment has shown that a world currency cannot be introduced regionally, particularly if one country such as Germany in the case of the Euro, is allowed to dominate a currency's function, eg exchange rate, and to the detriment of the other member countries.                                                                                                                                                                                   But perhaps the whole idea of having a world currency without a central authority to run it is a chimera. Surely Bitcoin has been shown to be to volatile to work as a currency? Perhaps a compromise is needed where maybe each country has its own crypto, with the underlying block-chain (very disruptive/exciting technology) defining the limit of government and also the responsibilities of its citizens. Actualy I think these types of ideas/technologies become even more important to implement as future governments will probably come to own larger and larger slices of the economy. For example the 'block-chain contract' could hopefully then allow a more libertarian/free society to emerge in future years, say sometime after the predicted monetary collapse - but the main point being that there be no need for nasty violent revolutionary resets to happen. Wishful thinking? - Maybe, but an important discussion I think, however it is noticeably absent from all political party agendas, media discussions, etc. 

[MrXxxx]

Financial/economics newbie like me?...feel like DB el al appear to be speaking a different language?...take a look at this, one of the best articles I have read in a long time; she has a great way of explaining the complicated basics

https://www.lynalden.com/quantitative-easing-mmt-inflation/

I now understand what you guys are talking about....and it has also made me realize that QE is stealing from those who have been financially responsible to those (both companies and plebs) that haven't...

...oh, and how truly worthless FIAT is about to become!...a real `light bulb` moment.

[sancho panza]

17 hours ago, Cattle Prod said:

Yep, oil prices are surprising all and sundry, except us. Brent curve has just moved into backwardation, Trafigura and Vitol have just started talking their (long) book, and Total has just bought up most of the floating caroges in the North Sea. All points to physical tightness. At the bottom, with single digit oil, all the meadia scraming about tank tops and overflowing oil, I said this was likely to happen. People must have thought I was nuts, but here we are. The industry responded and supply is way down, probably below demand. Lovely to see a market work like it should.

Production in the US went to about 9.5, from about 13.5. I thought it might lose 4.5mbpd, I'd say it got to 4. About 2 million was from shale wells shutting in. Some of those are coming back on now, and that's fine. (I don;t know how many will stay off, to answer your question). But I'm ok with that,  I want them producing and depleting at these prices, with no new drilling coming in behind them. So US production is rising modestly, and probably will for a few months yet. The real fun will start toward the end of the year, when production declines really kick in with no new wells to offset. I was concerned that we needed a few months more of low prices to ensure shale stays quiet, but Art Berman is persuading me that it's baked in already. He knows a lot more than me about land rig contracting, drilling and completing, and reckons a long term decline is now unavoidable due to the lead time needed to get the rig fleet up and running again. It's all about natural decline of shale oil. Please note that the 27% Permian decline he cites is for the basin, not new wells. New wells are much higher, probably 70%+ in the Permian. You can see that in the steepness of the blue segment on the graph, he doesn't make this clear. The 27% is an average of these new wells, and the tens of thousands of old wells plugging on at 10-50 bbl a day. It is an incredibly high decline number for a basin, and is useful to indicate how many rigs you need drilling to offset that number (500-600 rigs for all shale plays, currently 165).

He reckons the US will decline to 8m bbl/d by mid 2021. That's (a non shut in or easily replaceable) loss of 4-5mbpd. That's half a Saudi Arabia. That will be the largest and fastest natural loss of production in the history of the oil industry, by far. As he points out, that may be appropriate to a new demand level, but if demand catches back up...yikes.

He has a new piece out yesterday, funnily enough, and is on macrovoices about this yesterday, which I haven't heard yet:

https://www.artberman.com/2020/06/18/u-s-energy-dominance-is-over/

This could have been written by @DurhamBorn himself:

He also notes what I had been saying before Covid 19 on here, it was happening anyway, and the virus has massively accelerated it;

Full text:

 

Thanks for posting and doing the highlights.You're insights always pick up the subtle nuances that the layman reader like myself wouldn't get,some of which can play a crucial role in the leads and lags.

I presume Backwardation is unusual with non perishable commodities?Does a move into bacwardation mean that the market expects a hgiher oil price in the future or is it more a factor of supply/demand.How unusual is it?

Also,presuming that these rigs are constantly being sighted in new places means a relatively transient workforce that can be hard to reassemble once they've all headed home.?same with the drilling kit?I presume once they;ve stopped drilling,the kit heads back to the owner and they store it.How logn would it take to get back to 500 rigs logistically once you're down at 165? Difficult question I realsie you may not know the answer to it.

One interesting fact I learned off a friend who drives for the CO op is that engines,once theyve been stood,have all sorts of problems when they start being used again with bits breaking and faults galoe.Is that the same with drilling rigs? ie if one has been stood around for a year,then it's going to take time and maintenance to get it running regularly.

Given we're down from 100mn bpd in 2019,EIA is projecting 97mn for 2021......That probably doesn't include the loss of shale.

Reason I say this is that I've read that a 5% drop in supply can lead to a 20% rise in price if demand is constant.How accurate do you think that ratio is?

https://www.eia.gov/outlooks/steo/report/global_oil.php

 

also worth ntoing when you see the OPEC proportion of world  production,you realise that in poker terms theyre trying to bluff the big stack