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

[TMM]

30 minutes ago, JMD said:

Precisely. And you (apologies if it wasn't you DB) opened a discussion recently about borrowing say 100k against your house and investing it in divi stocks to cover your house expenses, not to mention inflation inflating away much of your debt take-on. ...Though employing a strategy like this sounds a bit too much like becoming a 'mini hedge-fund'!!! ...Ultimately it comes down to personal risk/reward. But I think it is an interesting discussion.

I must have missed this. Please could someone link to it, thanks.

[TMM]

On 20/01/2021 at 05:55, DurhamBorn said:

Im on about the divi ,£30k of shares pays the interest on a £100k 2.7% mortgage.I dont think the shares will do a lot in capital terms,maybe 50% over the cycle with 8% a year divis.

Found it!

[Barnsey]

 

[Barnsey]

Anyone bothered reading Kelton's Deficit Myth? I had written it off but now I think I might have to take a gander given where the US is clearly trying to head.

https://blogs.lse.ac.uk/lsereviewofbooks/2020/06/22/book-review-the-deficit-myth-modern-monetary-theory-and-the-birth-of-the-peoples-economy-by-stephanie-kelton/

Government debt does matter, but we need to shift our understanding. Government debt is nothing like personal debt, because the federal government can issue more money. Nonetheless, it is not the imbalance between taxes collected and federal monies spent that matters. Rather what matters is the balance of real resources (257 – 260), to avoid generating bottlenecks, and the threat of inflation (44-47).

In the present moment, inflation is no threat whatsoever. The severe lack of consumption demand from households and investment demand from businesses makes deflation a greater worry than inflation. Once the economy begins to recover, policymakers will have to keep their eye on inflation. Nonetheless, for nearly 40 years, inflation has been well controlled. Partially this is due to international supply-chain competition and the business models of big corporations (Amazon, Wal-Mart, etc) that are built on low prices. There are several forces that will keep low inflation intact.

With no inflation and no bottlenecks, the government can address the true deficits (Chapter Seven), such as the good jobs deficit, the healthcare deficit, the education deficit, the infrastructure deficit, the green climate deficit and the democracy deficit, with no fiscal constraint. As such, Kelton contends the normative side of MMT should support building an economy that is geared toward people over profits and people over balanced budgets (Chapter Eight).

[geordie_lurch]

Inflation is already here according to Wolf and as several of us have been talking about recently even just via the new lockdown & shipping issues from China

Inflation Is Spreading Broadly into the Economy. Amid Surging Costs, Companies Raise Prices, and Customers Pay them, Despite Weak Economy, 10 Million Missing Jobs

https://wolfstreet.com/2021/01/22/inflation-is-spreading-broadly-into-the-economy-amid-surging-costs-companies-raise-prices-and-customers-pay-them-despite-weak-economy-10-million-missing-jobs-weirdest-economy-ever/

[Harley]

4 hours ago, MrXxxx said:

Q's for discussion:

1. Should you home be included when calculating your portfolio?

2. Depending on 1. what % would be maximally prudent?

IMO absolutely not, else next we'll be putting sofas and other chattels in there too!  A second home (as an investment) OK but not PPRs to live in.

[Chewing Grass]

1 hour ago, Barnsey said:

Nonetheless, for nearly 40 years, inflation has been well controlled. Partially this is due to international supply-chain competition and the business models of big corporations (Amazon, Wal-Mart, etc) that are built on low prices.

 

1 hour ago, Barnsey said:

With no inflation and no bottlenecks, the government can address the true deficits (Chapter Seven), such as the good jobs deficit, the healthcare deficit, the education deficit, the infrastructure deficit, the green climate deficit and the democracy deficit, with no fiscal constraint. As such, Kelton contends the normative side of MMT should support building an economy that is geared toward people over profits and people over balanced budgets (Chapter Eight).

All that is great if other countries will let you (the USA/UK etc) live the life of Riley at their workers expense.

I do believe basing your future on what has happened over the previous 40 years is as great a folly as getting a ruler and extending a line on a graph and saying this is what will happen.

[Heart's Ease]

33 minutes ago, Barnsey said:

 

 

This Twitter account came across my feed today - thought I'd post it here in case anyone found useful.

[arrow]

Sorry, had to post bits of this. This is the problem with economists and the financial press. Instead of warning people about the bind that politicians and central banks are in, future inflation and advising of asset allocations, they print this.

 

"Undercover economist Tim Harford: ‘I pulled all my money from the stock market’

Economist Tim Harford tells how he adapted after the pandemic hit his finances and why we focus on the wrong risk

Tim Harford OBE is an economist, broadcaster and columnist who has written nine books including The Undercover Economist."

 

So he has an OBE and media job. He lives a hard life.

 

"My father used to build computer systems for banks and my mother used to teach until she had children. We moved around quite a lot and then settled in Aylesbury in Buckinghamshire.

My parents were careful with money without being absurdly frugal. We would go on holiday once a year. There was a certain amount of privilege but not a lot."

 

No, not a lot of privelege. Aylesbury and holidays are associated with grinding poverty. 

 

"What was your first job?

I had a paper round as a child but my first grown-up job was when I was a student at Oxford University.

I used to go back one evening a week to Aylesbury and teach a two-hour evening class in communication skills.

I had pitched the idea to Bucks Local Education Authority, and I think I was paid £14 per hour which I thought was rather good. The going rate for working in a shop was about £3. But the classes involved quite a lot of preparation and so I was probably not as overpaid as I thought."

 

So, he's worked very hard at, erm..No, you were not overpaid. Certainly not. Communication skills courses have always been an essential part of any curriculum. Not as some might say, tedious, empty, pointless wank.

 

"How did you become an economist?
By chance. I applied to do PPE (Philosophy Politics and Economics); it’s a course which is quite famous for people who don’t know what they want to do.

I always assumed I would drop economics. But my tutor, the late Professor Peter Sinclair, wrote to me at the end of the summer break really encouraging me not to give it up. And I thought, well he’s probably right. So I stuck with economics."

 

He's always been a driven individual, fascinated by economics. How lucky we are to be blessed with the sage of Oxford.

 

"What was your big break?

The publication of The Undercover Economist in 2005.

It really took off. It was just after the best-seller Freakonomics (although my own book had been written back in 2002 and had languished for years without a publisher), and before the 2008 financial crisis. After the book came out, my idea for a newspaper column was taken up and I started presenting for the BBC."

Media job and writing books about how "strategies that would improve the environment, the economy, even our own health"

"Are you interested in money?

I am not super interested in money, but I am reasonably engaged in my own finances and investments.

But economics is not really about money; it’s about the decisions people make, history and power structures. In fact, economists are often criticised for not thinking enough about money."

Well it's great that a published BBC economist is not much interested in money. Why would he be? Oh that's right, with connections and a public sector job, why would he need to be concerned. History, power structures, environment, Greta. That's what economics is about

"Have you ever worried about paying the bills?

No, I don’t think so. I have been very lucky. The only time I have received a bill I could not pay was when I had just started my first postgraduate job as a management consultant. I only lasted a few months in that job, but that’s another story.

I got a tax bill for £3,000 with two weeks to pay. I had the money all locked up in a savings account but couldn’t access it for 90 days. I phoned my Dad, he lent me the money and as soon as I could, I paid him back.

More recently, when the pandemic started, it was a huge shock to our finances, as it was for a lot of people. I had work as a speaker about economics, which can be quite well paid, and it all disappeared. It was a worry but not a great problem because I had the savings to cover it."

 

Of course you've never been worried about money. It's perfectly understandable that you "forgot" about your tax bill. After all, economics isn't about money is it. What's that? Oh yes, you were going to talk about the coming economic troubles, investing in inflation assets and macro trends, but you got distracted when thinking of the "house that my wife designed with the help of an amazing architect".

 

https://www.telegraph.co.uk/money/fame-fortune/undercover-economist-tim-harford-pulled-money-stock-market/

 

[arrow]

Greta is angry, Boris's climate Tsar is furious and the civil servants are apoplectic while also feeling "fucked". Some good news then. The tilt from consumer to industrial continues.

"Boris Johnson’s climate change tsar is “apopletic” with a cabinet minister for approving Britain’s first new deep coalmine in decades.

Alok Sharma, who quit as business secretary this month to devote himself full-time to the presidency of the COP26 summit, is said to be furious with Robert Jenrick, the communities secretary, for not stopping the mine in Cumbria.

On January 6, Jenrick formally refused to intervene in the £165m Whitehaven project to remove coking coal from beneath the Irish Sea for steel-making. Jenrick, 39, decided not to use his powers to call in the scheme, which would have given him the right to block it, instead telling councillors he was “content” for the decision to be made locally. A government source said Jenrick did not consult Sharma or other ministers on the plan, in line with planning guidance

Work is likely to begin on the first deep coalmine for 30 years as the government tells other nations to slash carbon emissions. The Swedish climate activist Greta Thunberg, 18, said the approval of the mine showed that Britain’s commitment to go carbon neutral by 2050 “basically means nothing”.

The decision could complicate efforts to forge an alliance with Joe Biden’s White House, which has described international action on climate change as a key foreign policy goal.

Sharma, 53, who was appointed to the COP26 role two days after Jenrick’s decision, was, according to two sources, upset about not being consulted and with the verdict itself.

The Department of Business, Energy and Industrial Strategy is the parent body of the Coal Authority and has ultimate responsibility for the sector.

A civil servant said: “Alok was apoplectic. So were civil servants. There was just disbelief that a decision like this could have been made.”

One Whitehall source said: “It f***s us at the very moment the world is watching us and expecting us to step up on the issue.”

On January 11, less than a week after the decision, Sharma made one of his first speeches in his new role, and spoke of “accelerating the move from coal to clean power”. He praised countries for “phasing out coal”.

The rescheduled COP26 summit takes place in Glasgow in November.

Last week Sharma offered a glimpse of his anger at a business select committee. Asked whether it was an “embarrassment” for Britain, he said: “I completely understand the point you are making.”

Steve Reed, the shadow communities secretary, said the decision was “another staggering example of Robert Jenrick’s complete lack of judgment”.

West Cumbria Mining majority-owned by an Australian private equity fund, has said Whitehaven will create 500 jobs.

A government source rejected claims that Sharma was angry at Jenrick, saying they did not recognise the description."

https://www.thetimes.co.uk/article/climate-change-tsar-alok-sharma-seethes-at-robert-jenrick-over-cumbria-coalmine-cqkzvt25b
 

[Noallegiance]

8 minutes ago, arrow said:

Greta is angry, Boris's climate Tsar is furious and the civil servants are apoplectic while also feeling "fucked". Some good news then. The tilt from consumer to industrial continues.

"Boris Johnson’s climate change tsar is “apopletic” with a cabinet minister for approving Britain’s first new deep coalmine in decades.

Alok Sharma, who quit as business secretary this month to devote himself full-time to the presidency of the COP26 summit, is said to be furious with Robert Jenrick, the communities secretary, for not stopping the mine in Cumbria.

On January 6, Jenrick formally refused to intervene in the £165m Whitehaven project to remove coking coal from beneath the Irish Sea for steel-making. Jenrick, 39, decided not to use his powers to call in the scheme, which would have given him the right to block it, instead telling councillors he was “content” for the decision to be made locally. A government source said Jenrick did not consult Sharma or other ministers on the plan, in line with planning guidance

Work is likely to begin on the first deep coalmine for 30 years as the government tells other nations to slash carbon emissions. The Swedish climate activist Greta Thunberg, 18, said the approval of the mine showed that Britain’s commitment to go carbon neutral by 2050 “basically means nothing”.

The decision could complicate efforts to forge an alliance with Joe Biden’s White House, which has described international action on climate change as a key foreign policy goal.

Sharma, 53, who was appointed to the COP26 role two days after Jenrick’s decision, was, according to two sources, upset about not being consulted and with the verdict itself.

The Department of Business, Energy and Industrial Strategy is the parent body of the Coal Authority and has ultimate responsibility for the sector.

A civil servant said: “Alok was apoplectic. So were civil servants. There was just disbelief that a decision like this could have been made.”

One Whitehall source said: “It f***s us at the very moment the world is watching us and expecting us to step up on the issue.”

On January 11, less than a week after the decision, Sharma made one of his first speeches in his new role, and spoke of “accelerating the move from coal to clean power”. He praised countries for “phasing out coal”.

The rescheduled COP26 summit takes place in Glasgow in November.

Last week Sharma offered a glimpse of his anger at a business select committee. Asked whether it was an “embarrassment” for Britain, he said: “I completely understand the point you are making.”

Steve Reed, the shadow communities secretary, said the decision was “another staggering example of Robert Jenrick’s complete lack of judgment”.

West Cumbria Mining majority-owned by an Australian private equity fund, has said Whitehaven will create 500 jobs.

A government source rejected claims that Sharma was angry at Jenrick, saying they did not recognise the description."

https://www.thetimes.co.uk/article/climate-change-tsar-alok-sharma-seethes-at-robert-jenrick-over-cumbria-coalmine-cqkzvt25b
 

About fucking time we looked after ourselves.

Someone should get on the BBC and run a model (we know they live models) of what will happen tonight if we stop burning coal.

Chilly out is it?

[Loki]

6 minutes ago, Noallegiance said:

Chilly out is it?

And dark. And still.

[dnb24]

Might help with direction of travel Over next 5-10 years, CANZUK looks pretty much nailed on - Gregory Copley on this-

https://audioboom.com/posts/7777025-if-biden-abandons-the-uk-its-only-choice-will-be-canzuk-gregory-r-copley-defense-and-foreign?playlist_direction=forward

The political fallout alluded to between UK and USA in the Copley piece is interesting and Douglas Murray also weighs in on this with this piece-

https://www.dailymail.co.uk/debate/article-9179953/DOUGLAS-MURRAY-Left-stop-fawning-Joe-Biden-fear-wont-end-well.html

 

[Barnsey]

1 hour ago, Chewing Grass said:

 

All that is great if other countries will let you (the USA/UK etc) live the life of Riley at their workers expense.

I do believe basing your future on what has happened over the previous 40 years is as great a folly as getting a rler and extending a line on a graph and saying this is what will happen.

Exactly why I thought I'd post that snippet from the review. Huge complacency about low risk of inflation.

[Democorruptcy]

59 minutes ago, arrow said:

Greta is angry, Boris's climate Tsar is furious and the civil servants are apoplectic while also feeling "fucked". Some good news then. The tilt from consumer to industrial continues.

"Boris Johnson’s climate change tsar is “apopletic” with a cabinet minister for approving Britain’s first new deep coalmine in decades.

Alok Sharma, who quit as business secretary this month to devote himself full-time to the presidency of the COP26 summit, is said to be furious with Robert Jenrick, the communities secretary, for not stopping the mine in Cumbria.

On January 6, Jenrick formally refused to intervene in the £165m Whitehaven project to remove coking coal from beneath the Irish Sea for steel-making. Jenrick, 39, decided not to use his powers to call in the scheme, which would have given him the right to block it, instead telling councillors he was “content” for the decision to be made locally. A government source said Jenrick did not consult Sharma or other ministers on the plan, in line with planning guidance

Work is likely to begin on the first deep coalmine for 30 years as the government tells other nations to slash carbon emissions. The Swedish climate activist Greta Thunberg, 18, said the approval of the mine showed that Britain’s commitment to go carbon neutral by 2050 “basically means nothing”.

The decision could complicate efforts to forge an alliance with Joe Biden’s White House, which has described international action on climate change as a key foreign policy goal.

Sharma, 53, who was appointed to the COP26 role two days after Jenrick’s decision, was, according to two sources, upset about not being consulted and with the verdict itself.

The Department of Business, Energy and Industrial Strategy is the parent body of the Coal Authority and has ultimate responsibility for the sector.

A civil servant said: “Alok was apoplectic. So were civil servants. There was just disbelief that a decision like this could have been made.”

One Whitehall source said: “It f***s us at the very moment the world is watching us and expecting us to step up on the issue.”

On January 11, less than a week after the decision, Sharma made one of his first speeches in his new role, and spoke of “accelerating the move from coal to clean power”. He praised countries for “phasing out coal”.

The rescheduled COP26 summit takes place in Glasgow in November.

Last week Sharma offered a glimpse of his anger at a business select committee. Asked whether it was an “embarrassment” for Britain, he said: “I completely understand the point you are making.”

Steve Reed, the shadow communities secretary, said the decision was “another staggering example of Robert Jenrick’s complete lack of judgment”.

West Cumbria Mining majority-owned by an Australian private equity fund, has said Whitehaven will create 500 jobs.

A government source rejected claims that Sharma was angry at Jenrick, saying they did not recognise the description."

https://www.thetimes.co.uk/article/climate-change-tsar-alok-sharma-seethes-at-robert-jenrick-over-cumbria-coalmine-cqkzvt25b
 

Jenrick has unexpectedly let something through - again!

Quote

 

The housing minister has insisted ‘all the rules were followed’ when he approved a major property scheme involving a Tory party donor. Robert Jenrick is accused of a ‘cash for favours’ deal after he went against recommendations of the local council and a planning inspector to approve the Westferry Printworks redevelopment in east London, said to be worth £1 billion. The 1,500-home development, proposed by former newspaper tycoon Richard Desmond, was approved the day before the introduction of new infrastructure charges – which would have cost the billionaire between £30 million and £50 million.

Just two weeks later Mr Desmond donated £12,000 to the Conservative Party, Electoral Commission records show. But Mr Jenrick told MPs yesterday he took a the decision in ‘good faith with an open mind’, amid Labour warnings he was embroiled in a row ‘that now reaches inside Number 10 Downing Street’. Mr Jenrick also said Ministry of Housing, Communities and Local Government officials knew he was attending a Conservative Party fundraising dinner, that he had ‘inadvertently’ sat next to Mr Desmond, and that the project was raised with him at the event. He added he told the former Daily Express owner he could not discuss the matter. But Mr Jenrick told MPs the Metropolitan Police said officers will not be investigating allegations connected to the development.

Read more: https://metro.co.uk/2020/06/16/robert-jenrick-says-acted-good-faith-1000000000-property-row-12857867/?ito=cbshare

 

 

[Chewing Grass]

Thought all that was really funny as how do these looney lefties and environmentalists think steel is made for all their wonderful eco-projects.

FFS coking coal is very special stuff and is not burned in power stations it is used to make high quality steel.

A lot of people in politics and media need to be taken out back and shot for being complete morons.

[Loki]

 

[Harley]

I voted today and stuck it to the man.  Bought my first crypto today!  Only 300% later than planned!   A hell of a lot of zeroes, unfortunately to the wrong side of the decimal point!   I'm a tech-head but that was somewhat painful, to do it right!   God help Mr & Mrs Average.  A very surreal experience for a hard assets person who also understands IT and it's foibles!  I'm going to ladder in, buying each time TPTB do another annoying/scummy thing!

PS: Is there some sort of secret handshake?

[Tingles]

5 minutes ago, Harley said:

I voted today and stuck it to the man.  Bought my first crypto today!  A hell of a lot of zeroes, unfortunately to the wrong side of the decimal point!   I'm a tech-head but that was somewhat painful, to do it right!   God help Mr & Mrs Average.  A very surreal experience for a hard assets person who also understands IT and it's foibles!  I'm going to ladder in, buying each time TPTB do another annoying/scummy thing!

Great to hear this, I believe crypto is essential to a diversified portfolio.

Loving how a 'moment' last week has been channeled into progressing into crypto.  Respect.

[leonardratso]

18 minutes ago, Harley said:

I voted today and stuck it to the man.  Bought my first crypto today!  Only 300% later than planned!   A hell of a lot of zeroes, unfortunately to the wrong side of the decimal point!   I'm a tech-head but that was somewhat painful, to do it right!   God help Mr & Mrs Average.  A very surreal experience for a hard assets person who also understands IT and it's foibles!  I'm going to ladder in, buying each time TPTB do another annoying/scummy thing!

PS: Is there some sort of secret handshake?

really? i find it very easy, its also very easy to piss away 1000's, and make it of course.

What exchange are you using and how hard is it, i always found bitfinex hard to use but only to loan out the crypto for shorters or margin, but i stopped using them a few years back cos their screens reminded me of 80's stockbrokers with 50 crts banked in front of them.

Its just a BTFD thing, unless of course the dip is never ending to zero, which if you watch it, can happen over the course of 10's of minutes or even just minutes.

[leonardratso]

here you go, its happening right now;

[leonardratso]

how about some weekly action, some rollercoaster rides, it actually seems to have lost a lot of volatility lately, might be consolidating, waiting for those $1600 cheques to arrive.

[Popuplights]

20 minutes ago, leonardratso said:

here you go, its happening right now;

Zoom out mate, zoom out.

[DurhamBorn]

Just been updating my oil and gas roadmap,and i think the parabolic rise will be brought forward to maybe 2025 from 2028 looking at lots of cross market work.We should start big structural under supply late this year or midway 2022.

LNG looks likely to make the biggest percentage gains,probably 300% to 500%,but oil wont be far behind.

I think lots of where we are going will mean there is no way we are getting 100% electric cars by 2030,not a chance.Instead i think we might see things like blue and bio methanol come to the fore.

 

[DurhamBorn]

3 hours ago, Heart's Ease said:

 

This Twitter account came across my feed today - thought I'd post it here in case anyone found useful.

Drax has trebled nearly for us,we really dont mind if we get a bit more