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

[MrXxxx]

7 hours ago, Yadda yadda yadda said:

Brazil is great. A wonderful place. If you're rich.

If you're poor? I glimpsed poverty that was truly dangerous. People living in shacks on the banks of obviously polluted rivers.

America could easily go that way. We're not so far behind. Thing is being rich in America has just about all the good parts of being rich in Brazil and is overall better.

You want to see an example of a `North-South divide` forget the UK, go to Brazil.

[MrXxxx]

7 hours ago, Yadda yadda yadda said:

 

 

[MrXxxx]

6 hours ago, Lightscribe said:

And still the FT and the MSM business news fail to understand why BTC has exploded like it has.

FT article comments today hashing out the same old 2010 fud. Used for drugs/criminality/dark web/electric mining cost/useless with no electricity /not an asset/investment/ponzi/ millennials -gen-z will lose everything etc.

They don’t care and that’s what the MSM doesn’t get just like with GME. They view it as it may be 1 and 0’s but so is digitally created QE money which is devaluing to nothingness. At least you can’t make more BTC.

The younger generation know the game is rigged. They don’t want to work until death funding pensions in traditional financial models for the rest of their lives, knowing they’ll never see it themselves.

They see crypto and defi as they’re only hope of turning the system. Everyone knows that it could/will be regulated to death, but the genie is out the bottle. Governments go digital, use their own crypto and ban BTC now (with the big institutions moving into it) then they show their true colours of fearing it and they’ll be an uprising on their hands.

There are only two things that matter, hard assets and theft...think your hard assets are safe and the government will create a law to steal them, they have to be `hidden from the thief` hence anything that has a legal tie i.e property can be exploited.

[Chewing Grass]

8 hours ago, Yadda yadda yadda said:

Brazil is great. A wonderful place. If you're rich.

If you're poor? I glimpsed poverty that was truly dangerous. People living in shacks on the banks of obviously polluted rivers.

 

40 minutes ago, MrXxxx said:

You want to see an example of a `North-South divide` forget the UK, go to Brazil.

The big advantage of places like Brazil if you are poor is you can live in a shack without a heating bill.

In the UK/USA you would be permanently hypothermic for nearly 6 months of the year.

[Talking Monkey]

1 hour ago, DurhamBorn said:

Its exactly this.I think a few are starting to come around to it,but people dont understand the huge differences going on.Labour is going to get more of the pie for starters,at least nominal.Higher pay or higher corporate taxes.Onshoring is real and in progress.Its almost certain to reward the de-comlex areas who can leverage the inflation,or at least match it.Of course one last big deflation event could hit to make sure few gain from the cycle,or maybe the increases in inflationary areas are more subtle and so people take profits.

DB when you say labor is going to get more of the pie is that from a UK or global perspective. With the headwind of tech and automation I do wonder is that a sustained increase or just a blip over the next say 3 to 5 years then the downward pressure is exerted as automation gathers pace.

[ThoughtCriminal]

I don't think we've ever had the debt levels, the derivatives, the can kicking that's meant the 2008 correction STILL hasn't happened, the money printing. 

 

There are many key variables that are unprecedented. 

[Lightscribe]

33 minutes ago, Cattle Prod said:

People tend to view the world through their own experience. People who are younger than 65 have not experienced a 40 year cycle. Think of this, from Ray Dalio (you can download stuff of his for free):

X axis is 80 to 100 years. Small business cycles within longer wavelength inflation/disinflation, or debt cycles. Debt increases with disinflation, decreases with inflation. Arrow is probably pointing at the GFC. We're going through the big inflection point now. Debt is still increasing, though growth is slowing, hence a BK still possible. Can get inflation with no growth too though to wipe out debt (governments are trying for this) This whole thread is about preparing and being positioned fir this transition. The vast majority of people aren't.

I do think everybody on this board gets this and have agreed with the thesis from the start back when this thread was created in the HPC days.

Yes we’ve been in a disinflation since 1980 for 40 years but I think the actual economic devastation is more akin the Great Depression, so potentially a 100 year cycle.

Im sure back then having come from the First World War, spanish flu, moving away from gold/silver standard (in our currency) they thought too how could the economy survive?

But it is difficult to totally discount that the global economic system is so intertwined in modern day society, global economic impact so big, many countries printing to infinity that there is no way out other than a financial reset. So indeed it may not be a 40 or 100 year cycle, but a much longer cycle transition from the end of an Anglo world power to a a global one.

 

[Chewing Grass]

I think I have experienced a 40 year cycle, I was 14 in 1979/80 and used to venture on dilapidated trains into Liverpool once a month by myself to trawl around the record shops of that once great musical city. The whole place was rapidly turning into a seedy shit tip of decayed buildings and shops the pinnacle of which was probe records.

Then it was regenerated following 'the garden festival' on the back of easy credit and falling interest rates while all around the outskirts large manufacturing businesses continued to close.

I suspect 40 years later we are on the cusp of dilapidation and dereliction again at 0% with nowhere to go and little domestic manufacturing.

A service economy with no real money to service it.

Edit: Never noticed but it said 'Enterprise House' on the step in paint

http://news.bbc.co.uk/local/liverpool/hi/people_and_places/newsid_8917000/8917746.stm

[Lightscribe]

1 minute ago, Chewing Grass said:

I think I have experienced a 40 year cycle, I was 14 in 1979/80 and used to venture on dilapidated trains into Liverpool once a month by myself to trawl around the record shops of that once great musical city. The whole place was rapidly turning into a seedy shit tip of decayed buildings and shops the pinnacle of which was probe records.

Then it was regenerated following 'the garden festival' on the back of easy credit and falling interest rates while all around the outskirts large manufacturing businesses continued to close.

I suspect 40 years later we are on the cusp of dilapidation and dereliction again at 0% with nowhere to go and little domestic manufacturing.

A service economy with no real money to service it.

Exactly, an inflection point, every card played, family silver sold off, no tricks left in the hat, no room for manoeuvre. BoE considering negative rates in the face of bubbling inflation flashes red warning signs.

The younger ones I work with, trade on Robin Hood and crypto, with the aim of ‘making it’ getting past a million. I simply say, we’ll all ‘make it’ one day but the real question is what will £1m actually buy?

[Noallegiance]

9 hours ago, Lightscribe said:

And still the FT and the MSM business news fail to understand why BTC has exploded like it has.

........and they’ll be an uprising on their hands.

This isn't meant as a slap-down, but to me this is beyond naive.

If those in control feared BTC it would be nailed down already. What they keep in the shadows by not talking about it is gold because that's the only true stake in the heart of the financial system. BTC is setting itself up for collosal failure the higher it goes. And it's confused. It was supposed to be a currency but it's too volatile. It was supposed to be a store of value but is too volatile. I would guess that most people who are on it's coat-tails are clueless about it and have bought it simply because it's going up in undeniably ridiculous and unsustainable increments.

The media are giving BTC the standard treatment of marginalising it whilst at the same time encouraging it to get millions in on it before the clamp-down. Either way it's getting huge exposure that it wouldn't get if it was going to be an actual problem. The MSM know exactly what they're doing. IMO $millions will be lost and never recover, even when it's still only a marginal thing. 

There will be no uprising. The western population is no Myanmar. We've got no collective real-world balls and the skill with which we are manipulated into action or inaction is unmatched. There will not be enough of the population to effect a public coup.

But I wish you genuine good luck in getting out with more fiat that you started with.

[planit]

Remember 40 years moving in one direction is one leg of an 80 year cycle, the comments above seem to be missing that.

FT has this today and is is one of the straightest trends I have seen, 50 years long!

 

 

It is part of an article saying the forward looking PE ratio of the FTSE100 is lower than the US500 (15-25 roughly) 

 

Here are the sectors broken down which was another graph I liked, shows the US oil and gas is more expensive than UK.

 

 

Edited for clarity

[Sugarlips]

21 minutes ago, Lightscribe said:

 the real question is what will £1m actually buy?

Have these kids been able to buy a home? I think that @DurhamBorn has the right idea with his son buying a house with a cheap fixed mortgage now in the hope that the debt is wiped with a combination of inflation, great reset and the profits from taking a chance on precious metals or crypto in the medium term. All they have to do is hold down a job in the interim, which in itself no mean feat in the current situation of course..

[planit]

Regarding Bitcoin

I listened to a podcast today which talked about digital currencies being competition to Bitcoin. This is obviously a stupid comparison as a digital currency for a country is the same as a normal currency in behaviour - the government have control over how many in circulation and it's exchange rate. In fact the main difference I can see is the accountability and tracking which is obviously why China is so interested.

 

The big point here is you need to turn this inside out - Bitcoin is just another currency outside the control of central banks, like a gold backed currency invented by industrial oligarchs. I can't believe this has never been tried before, and if it was then the governments would just shut it down (please would one of the geniuses on here point me towards some kind of Rothchild/East India currency).

Governments NEED control of their currency (they wouldn't if they had been more responsible but we are way past that) and they will not put up with a new global currency outside their control with no inflation problems. The only reason Bitcoin has been allowed up to now is because it is not a big enough threat. But once corporations start using it as a store of value because governments are printing too much money (like Tesla) it becomes a big threat to their own currencies.

Even with current levels of printing everyone would be stupid not to dump their own money to transfer into Bitcoin (if everyone was given the choice worldwide on the same day). Every currency around the world would become worthless overnight. As we all know with fiat currencies, they all rely on trust of their intrinsic value.

 

I sold a couple of ETH the other day that I had held since 2017, I am not completely against crypto but the ironic thing about it is it's downfall would be guaranteed by it's success. Central banks can't afford a 'fair' currency outside their control, especially at the moment.

 

I did think this was a way off but Tesla buying bought forward the risk considerably.

 

[Lightscribe]

30 minutes ago, Noallegiance said:

This isn't meant as a slap-down, but to me this is beyond naive.

If those in control feared BTC it would be nailed down already. What they keep in the shadows by not talking about it is gold because that's the only true stake in the heart of the financial system. BTC is setting itself up for collosal failure the higher it goes. And it's confused. It was supposed to be a currency but it's too volatile. It was supposed to be a store of value but is too volatile. I would guess that most people who are on it's coat-tails are clueless about it and have bought it simply because it's going up in undeniably ridiculous and unsustainable increments.

The media are giving BTC the standard treatment of marginalising it whilst at the same time encouraging it to get millions in on it before the clamp-down. Either way it's getting huge exposure that it wouldn't get if it was going to be an actual problem. The MSM know exactly what they're doing. IMO $millions will be lost and never recover, even when it's still only a marginal thing. 

There will be no uprising. The western population is no Myanmar. We've got no collective real-world balls and the skill with which we are manipulated into action or inaction is unmatched. There will not be enough of the population to effect a public coup.

But I wish you genuine good luck in getting out with more fiat that you started with.

I’m up regardless (original investment withdrawn) so it means no odds to me. If BTC hits a 100k then great, I’ll buy a house outright with no mortgage. If it gets to a million then I buy a house, another for my daughter and retire early. 

It’s just one asset class of many that I’m hedging against inflation with - so I have to win one way or the other right? 

But all that aside, when you do have the likes of PayPal, Tesla (yes Elon co-started PayPal) and hedge funds like Greyscale with some serious money behind them, dismissing it all may be unwise. Remember there are some big tax gains that the governments will be happy to take from.

One thing for certain is that digital currency is the future, and blockchain involvement, smart contracts and AI goes hand in hand with that. With the implementation of ISO 2022 the whole SWIFT payment system will be changing. Crypto technology will be part of that.

https://www.swift.com/standards/iso-20022

 

https://cib.db.com/docs_new/UltimateGuide-EN-Bottom.pdf

[Mapper]

10 minutes ago, planit said:

Central banks can't afford a 'fair' currency outside their control, especially at the moment

Russell Napier said something that interested me about governments and money.

Paraphrasing, but he said democracies don't like hard money. Hard money means they cannot push currency to groups in need as and when they want to.

No more populism in a hard money system.

[geordie_lurch]

29 minutes ago, planit said:

Regarding Bitcoin

I listened to a podcast today which talked about digital currencies being competition to Bitcoin. This is obviously a stupid comparison as a digital currency for a country is the same as a normal currency in behaviour - the government have control over how many in circulation and it's exchange rate. In fact the main difference I can see is the accountability and tracking which is obviously why China is so interested.

The big point here is you need to turn this inside out - Bitcoin is just another currency outside the control of central banks, like a gold backed currency invented by industrial oligarchs. I can't believe this has never been tried before, and if it was then the governments would just shut it down (please would one of the geniuses on here point me towards some kind of Rothchild/East India currency).

Governments NEED control of their currency (they wouldn't if they had been more responsible but we are way past that) and they will not put up with a new global currency outside their control with no inflation problems. The only reason Bitcoin has been allowed up to now is because it is not a big enough threat. But once corporations start using it as a store of value because governments are printing too much money (like Tesla) it becomes a big threat to their own currencies.

Even with current levels of printing everyone would be stupid not to dump their own money to transfer into Bitcoin (if everyone was given the choice worldwide on the same day). Every currency around the world would become worthless overnight. As we all know with fiat currencies, they all rely on trust of their intrinsic value.

Yep great post with several critical points in it that people need to understand and I have highlighted 

Expanding on it a little further, I think there are several reasons why Bitcoin and other crypto currencies have been 'allowed' to continue but the main ones for me are:

• They can't stop it at all points no matter how hard they make it for fiat to be used to buy it or profits to be converted into fiat esp given that a lot of the enthusiasts who got on board with it all are the same people that look after the infrastructure for the internet. The crypto enthusiasts are also a lot of the tech people are the largest companies in the world etc.

 

• If they can't stop it then they might as well tax it via CGT etc to generate new revenues which is already a thing around the world e.g. HMRC https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals

 

• Bitcoin's adoption and publicity etc legitimises their own Central Bank Digital Currency plans somewhat as long as the majority of people don't and won't realise that in reality they are nothing like each other as per your post above.

 

• The main point most people miss with Bitcoin is the supply of Bitcoin is limited to 21 million and that's it! There are already only 2,375,094 BTC left to be mined and 1,700,000 BTC are classed as zombie Coins i.e. haven't moved since 2010. Go look at https://www.blockchaincenter.net/bitcoin-supply/ to see how rare it really is.

I really think everyone on this macro thread should stick a few % of their wealth into Bitcoin and look at it as insurance for the end of the fiat money system but each to their own obvs.

The last link I will leave is the Bitcoin "Rainbow" Price Chart here which is a log scale of prices in USD against time to get an idea of where things are probably heading with this screen shot of a few years out

[Noallegiance]

6 minutes ago, geordie_lurch said:

Yep great post with several critical points in it that people need to understand and I have highlighted 

Expanding on it a little further, I think there are several reasons why Bitcoin and other crypto currencies have been 'allowed' to continue but the main ones for me are:

• They can't stop it at all points no matter how hard they make it for fiat to be used to buy it or profits to be converted into fiat esp given that a lot of the enthusiasts who got on board with it all are the same people that look after the infrastructure for the internet. The crypto enthusiasts are also a lot of the tech people are the largest companies in the world etc.

 

• If they can't stop it then they might as well tax it via CGT etc to generate new revenues which is already a thing around the world e.g. HMRC https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals

 

• Bitcoin's adoption and publicity etc legitimises their own Central Bank Digital Currency plans somewhat as long as the majority of people don't and won't realise that in reality they are nothing like each other as per your post above.

 

• The main point most people miss with Bitcoin is the supply of Bitcoin is limited to 21 million and that's it! There are already only 2,375,094 BTC left to be mined and 1,700,000 BTC are classed as zombie Coins i.e. haven't moved since 2010. Go look at https://www.blockchaincenter.net/bitcoin-supply/ to see how rare it really is.

 

 

Why is BTC better than the other 8000+ coins?

Genuine question. I don't know.

[geordie_lurch]

4 minutes ago, Noallegiance said:

Why is BTC better than the other 8000+ coins?

Genuine question. I don't know.

I think the easiest answer is that it was the first and then that it has the most developers, support and money around it. I think another way of looking at it is thinking of it as the Amazon or maybe the Google of the digital currencies - yes there are others but they are all fighting over the scraps of money looking to exit fiat or being parked as insurance in case fiat money fails.

I don't want to derail this thread more but posted how to invest in it in one of the existing Crypto threads here if anyone is interested.

[Sugarlips]

I heard there are around 7500 different alt coins presently so BTC is 1 story  but a lot of ‘the kids’ are more interested in what the other crypto’s are upto.

Often the next big thing (currently Cardano, Polkadot, Theta etc) are backed by big players.

Putting small punts on some of the smaller cap coins can be fruitless or 100 baggers not dissimilar to buying penny stocks plus sorting the wheat from the chaff is a lot easier via YT research etc than it was when I first lost my shirt years ago on a scamcoin.

Worth gambling 0.5% of your net worth in to ensure you don’t miss out if you have time to do the research but you do need an easy come, easy go outlook.

[Sugarlips]

On a related note, scam or legit? 

https://elonmusk2021.news

edit to add defo a scam so don’t act on this one!

..but it does reaffirm that you have to tread really carefully in this space..even the legit coins are often pumped by those with alt motives..

https://decrypt.co/54271/elon-musk-twitter-scams-rake-in-580000-of-bitcoin

[AWW]

7 hours ago, wherebee said:

And the narrative about nasty bitcoin will ring hollow with the young, I think, when they see their parents Apple and Tesla shares go down by 80%.

I'm struggling to see why Apple are always lumped in with the likes of Facebook and Tesla. People usually buy an Apple phone as part of a mobile phone contract, some of the easiest credit to access. With laptops, Apple are taking control of more if the supply chain by making their own CPUs. iCloud means the products are sticky - it's a PITA to move off it once you're in. iCloud itself comes with some juicy recurring fees, which could easily be raised to match inflation, oh and it's getting cheaper to buy and run the gear that hosts it. I think it's a good long term buy and something like long AAPL/NFLX, short FB/TSLA is a reasonable way to play any forthcoming NASDAQ falls (DYOR)

[AWW]

11 minutes ago, Noallegiance said:

Why is BTC better than the other 8000+ coins?

Genuine question. I don't know.

I have the same problem with it, but my question is "Why is digital gold better than real gold?"

It's the line that's always trotted out when anyone points out that BTC can't scale into a "real" currency. "It's digital gold!" Fine. Explain to me why I would want my gold to be digital.

[Noallegiance]

2 minutes ago, Sugarlips said:

On a related note, scam or legit? 

https://elonmusk2021.news

Or a legit scam?!

Bloke's clearly clever but dodgy as fuck and brilliantly taking advantage of free money. The majority of his company value is based on pie-in-the-sky pricing. He's in trouble if he has to make sustainable profit, bit right now the idea of a company having to make enough money to carry itself is (laughably) old-school.

Will he tell everyone when he's going to sell his BTC?

For me, he's the ultimate player and salesman suited to the time in which he was born.

[DoINeedOne]

11 minutes ago, Sugarlips said:

On a related note, scam or legit? 

https://elonmusk2021.news

Scam

Youtube as well as twitter has a big problem with these videos and also im getting alot ads on YouTube which are similar 

[geordie_lurch]

37 minutes ago, AWW said:

I have the same problem with it, but my question is "Why is digital gold better than real gold?"

It's the line that's always trotted out when anyone points out that BTC can't scale into a "real" currency. "It's digital gold!" Fine. Explain to me why I would want my gold to be digital.

Because in a SHTF scenario you can get on a plane or whatever and have ALL your BTC with you in a small file on your laptop, phone or even just several keywords saved in a large document (or your brain!) and then convert this to local fiat or pay for stuff in micro BTC the other end (probably single satoshis).

Also your total amount of BTC could be the equivalent of £100,000s or $1,000,000 etc and is ONLY available to YOU with the correct wallet or password so is very hard to confiscate if you know what you are doing unlike physical metals. BTC is also much more easily divisible than gold... for example a satoshi is currently the smallest unit of the bitcoin currency recorded on the block chain and is a one hundred millionth of a single bitcoin (0.00000001 BTC). If there's a run to Gold then silver will also rise and even 1oz of silver might be $200 or more which will make it hard to pay for smaller things.

At the end of the day I think everyone should have a broad mix of all these things which is why I'm on this thread - it doesn't have to be either or