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

[dnb24]

47 minutes ago, JMD said:

Yes that's interesting. Not being sarcastic, but I honestly didn't think that level of forward planning existed. But if decisions such as that are being, it makes me think a 'sea change' in thinking is occuring behind the scenes.                                                                                                                                                                                I do also have a tangential question. But I heard this week that recent analysis of the civic stats has shown that cv19 infection rates and disease effects were far lower amongst the UK Chinese community population. If that's true, that's got to be a very significant 'fact', and might explain a lot, re. the Asian pandemic control success story?

I’ll be honest- it surprised me too! 

[JMD]

1 hour ago, DurhamBorn said:

I think your right Harley that we are not putting much of use on the thread at the minute.Im actually struggling myself to do much work,and everywhere i look seems to be sending signals we are in a holding pattern.Lots of people have come to the thread late as well when we have been positioning a long time.Bitcoin of course sends a macro message.Its that people are losing faith in Fiat.Life itself is a road map and you could argue is what the macro plays off.

If we take a 21 year old.If they earn £12 an hour,and houses are £80k and interest rates 5% then they see a roadmap to owning a house.They see their savings increase with the interest,they see the deposit build,they dont rush or gamble because the goal is always in reach.Its doable without consuming your life.

When a house is £200k and the jobs are temporary and savings get no interest the goal seems ever out of reach,not doable.

So the likes of Bitcoin have two drivers.First CBs are losing (and so Fiat) the trust of the people,and 2nd people are gambling to try to make enough to do what should be normal things.

So for me Bitcoin is another signal that printing is so high inflation must arrive,and that real assets are going to be coming into their own.

DB, your example of the typical BTC retail investor is indeed a despatate and scary one. I realise you use it to highlight your macro point, and so I agree. Your other pont you make concerning people recently joining the thread and so maybe not having yet had the opportunity - until we get a BK hopefully - of positioning their portfolios is a very important message to make. Not sure what the solution to that is, as unfortunately there is no scope here for a home page intro. to let people know in summary form what the thread is all about.                                      Personally, i would like to add that my own (and I venture to say a significant number of the other holders of BTC here, though stand to be corrected if I'm wrong) do not see BTC as being primarily an 'investment' - it is more a highly speculative play/insurance hedge. For example, I took the opportunity to put more into BTC than I was happy to hold for the long term (still a risk, but calculated as such). I have already (though not entirely) withdrawn part of my original capital, and intend to remove the rest soon, leaving the rest in as a 'free ride' bet. Yes a gamble, but I do like the idea of having (a small part of my portfolio) as taking a real stake in what I believe will become a massive part of the coming monetary shakeup/shakdown.                             Others may disagree, thats fine. But I would say that the ethos of this thread - as you regularly remind the thread DB - is not to analyse the moral behaviour of the markets, or even that of government. It is rather to understand the main economic drivers and then attempt to capture a small slice of that macro action for the long term wealth and health of our portfolios. 

[Harley]

2 hours ago, DurhamBorn said:

So the likes of Bitcoin have two drivers

There is another related driver probably implicit in what you said.  "Fact" is, if it were not BTC it would be something else.  This is characteristic end of cycle stuff.  Actually, more correctly, end of system stuff, in systems dynamics terms.  Something I've studied but will not bore.  "Related" given it's interdependence with the two you mention but also due to many other mainly behavioural drivers, including as a release mechanism.  Understand these subtle drivers for BTC and we may begin to better understand its course.  We seem to be on an age old trajectory, just with different names but with the same requisite passage of time to forget.

[DurhamBorn]

8 minutes ago, Harley said:

There is another related driver probably implicit in what you said.  "Fact" is, if it were not BTC it would be something else.  This is characteristic end of cycle stuff.  Actually, more correctly, end of system stuff, in system dynamics terms.  Something I've studied but will not bore.  "Related" given it's interdependence with the two you mention but also due to many other mainly behavioural drivers, including a release mechanism.  Understand these subtle drivers for BTC and we may begin to better understand its course.  We seem to be on an age old trajectory, just with different names but with the same requisite passage of time to forget.

Agreed,and thats the interesting thing like you say,the signals it is giving.Inflection in economic,social and political cycles.

[Harley]

1 hour ago, Bricks & Mortar said:

Macro attempt.

All around I see madness.  The soaring 'coins',  the gamestops, wallstreetbets, the housing market, the various commodities, Tesla, Apple, Amazon, etc. etc.  I think we NEED a BK event in our near future. 
I mean, what if this nonsense continues?  It'll just suck more and more into speculation.  I'm thinking the two choices are BK event, or accelerate to hyperinflation in short order.  In Weimar Germany, it wasn't very far from here, to wheelbarrows of cash for a loaf.

The end game of hyperinflation will be a new, sounder currency.  We can see our central banks are preparing for this, with many papers and even experiments in digital currency turning up around the world.

I think a good % of the investing public is seeing the inflation possibilities, seeing how it ends in hyperinflation, and seeing the digital currency plan.  As DB put it, losing 'confidence in fiat'.  They've filled in the blanks and are looking to dump fiat for whatever they can get.  There's a general expectation that everything is going 'to da moon'.

What's missing, is the stated intentions of governments, central banks, and the global overlords at the WEF, IMF, BIS et al.  They want a huge round of printy-printy spanning many years, in which they'll re-order the economy to make it how they want it.
I don't think they have enough time, if we go straight to hyper-inflation from here.
They're gonna HAVE TO put the brakes on.  HAVE TO cause a BK event.  Because there can't be more printy-printy after we move to a sound currency.

Bang on.  Just read this after my last post so very much on the same theme.  One contextual thing I forgot to say was historically we would have had a war by now, that historically being the most common reset (aka "clearing") mechanism.  Is what is labelled Covid, but which is (now?) something more broader than that, an attempt (by design or as much by nature) to replicate that?  No, I don't mean nature in the medical sense, but in the systems dynamic sense, where such things coalesce around it.  Like the start of the Big Bang in astro terms.  So should we therefore start viewing the emerging social and macro more from a war footing (command economy and all that) perspective?  So, for example, Green Energy and the like make the same "irrational" sense as making bullets do?  That is, the yardstick changes and the sooner we "get it' the better because getting under the covers of that would be far better than looking at any chart!

[Harley]

2 hours ago, DoINeedOne said:

RUSSELL NAPIER: GROWING WEALTH IN AN INFLATION AVALANCHE

Took this from the comments on RealVision its a good interview to which i want to listen to it again

This was an amazing interview, definitely worth a second watch. Just some random points:

Russell Napier introduces an important real world concept that Nassim Taleb has also talked about...cause and effect.

Do unions cause wage inflation or does inflation create a union movement which causes wages to rise?

Russell Napier sees a 3 pronged investment boom in the years ahead.

1)Green/ESG revolution

2)Buying stuff not made in China

3)Shorter distribution chains The ESG movement is bullish for above ground gold because more gold will stay in the ground.

 

The history of inflation is a history of commodity inflation. When the public realizes their savings are better off in consumables that is a major turning point, especially for food inflation.

Weimar Republic...farmers were the big winners because their debts were paid off by inflation and they could sell their produce at inflation adjusted prices. (I am sure all on here realize how many wealthy people are buying agricultural land) Also, look at the interview Max Wiethe did with Shawn Hackett last fall to see how weather could be nitroglycerine for food prices in the years ahead.

Politicians make the same mistake over and over but give it a different name. That communist Richard Nixon (sarcasm) instituted wage and price controls, and in Canada, Fidel Castro lover Pierre Trudeau did the same thing....message here, political ideologies do not matter, politicians will do what they have to do whether left or right of the spectrum. In the last few minutes Russell Napier explains how the yield cap will be implemented and it may not be pretty for stocks.

Also Russell Napier recommended a novel for the literary out there by Graeme Greene ...'Travels With My Aunt'. Finally, google a 1970s article by Warren Buffett 'How Inflation Swindles the Equity Investor'

Uploaded the downloaded audio here enjoy

https://www.dropbox.com/s/c1ie7lic79rqcrc/russellnapiergrowingwealthinan.mp3?dl=0

At the risk of posting too much so soon after promising not too, may I just say how appreciative I am when people not only post such great links but also invest their time to write such clear backgound narratives.

This really is the time for the Napiers of the world.  Maybe why he's getting the air time from the better sources.  He's also starting a service for retail customers, having previously apparently been restricted to professional investors.

Related, shame Grant Williams has now gone subscription with only snippets now free to air.

[DurhamBorn]

@Harley i think its more hybrid than command economy,though similar.I think the word as in the inflation we will see is PUSH economy.State actors will push policy in a direction and the CBs will provide the liquidity.

This of course means some areas will be starved,and others will be crowded out.Its the main reason from an investment side i want de-comlex assets because they gain from the policies,and also will prosper even if they arent the chosen areas by government.

Classic contrarian stuff.How can oil and gas gain from a green push?,easily ,because the chosen push uses more energy.My home town saw the worlds first steam powered train take passengers.It was delivered though by horses.

"Three horse-drawn wagons took the Loco and Tender by road to Aycliffe Road (Heighington Station) on Friday 9th September and it was set on the railway there on Saturday 10th September 1825."

[JMD]

2 hours ago, AWW said:

I have two friends working in vaccine research - one at GSK, another in a startup whose name escapes me. They and their teams are utterly convinced that Covid 19 was created in a lab. If it were created for nefarious purposes (I'll leave aside whether its release was deliberate or not), it would make sense for it to be designed to be more lethal to your typical westerner than someone with Chinese genes.

I realise it sounds like a conspiracy theory, but I'm no conspiracy nut.

Did they say why they thought cv19 had been manufactured? I heard the item about the low incidence of virus impact among the UK Chinese on the BBC news bullitin, but they didn't elaborate. I think if true it is dynamite. I note the story was released after the WHO had given China a free pass on any wrong-doings, team was there only 3 weeks and they were restricted in their efforts. Contrast that with the Iraq weapon inspectors where every complaint they raised was reported in the media. Something smells fishy.                                                                                                                                                                                                Yes, I still listen to that dreadful BBC rag, but roll on the new news/documentary channel starting next month on Freeview - GB News. Apparently it will be a right of centre slant to the news and fronted by Andrew Neil who has left the BBC. I wonder how they will cover the pandemic. Watch the sparks fly!!!

[Harley]

2 hours ago, Bricks & Mortar said:

.....Because there can't be more printy-printy after we move to a sound currency.

You've simply got to ask why our government (and others) is so willing to spend such historically high amounts under the narrative of covid and beyond (cladding?).  No realistic amount of taxation, or anything else, can right that.  Yes, they surely have an end game.  And sooner than later.  Maybe too soon for next month's Budget but that should be read carefully as it will be a key waymarker.  Just to emphasise, the most important thing about the Budget, maybe moreso now than ever, is not the theatrics but what's written in the detailed papers and what comes out over the following days.  Or maybe the Budget will be the "shock and awe" given they cancelled the Autumn Spending Review, or whatever its technically called.

[DurhamBorn]

The boss of L'Oreal, the world's biggest cosmetics group, has forecast a 1920s-style beauty boom when people will be allowed to go out and socialise again.

Chief executive Jean-Paul Agon said:

People will be happy to go out again, to socialise.

This will be like the Roaring 20s, there will be a fiesta in makeup and in fragrances.

Putting on lipstick again will be a symbol of returning to life.

 

 

[Erewhon888]

53 minutes ago, Harley said:

shame Grant Williams has now gone subscription with only snippets now free to air.

When I noticed the monthly cost was less than my usual coffee and a piece of cake (7 pounds), it was easy to sign up after having had free access for a long time.

[Harley]

9 minutes ago, DurhamBorn said:

The boss of L'Oreal, the world's biggest cosmetics group, has forecast a 1920s-style beauty boom when people will be allowed to go out and socialise again.

Chief executive Jean-Paul Agon said:

People will be happy to go out again, to socialise.

This will be like the Roaring 20s, there will be a fiesta in makeup and in fragrances.

Putting on lipstick again will be a symbol of returning to life.

 

 

A lot of voices in podcast land have been saying this.  MacroVoices was the latest.  A crack up boom before the slump, like last time!!!!!  I certainly buy it, but will only trade it.

Excellent macro review here:

https://macrovoices.podbean.com/e/macrovoices-258-julian-brigden-as-good-as-it-gets/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MacroVoices+(Macro+Voices)

Or here:

https://bit.ly/3rHZfgk

 

[Harley]

4 minutes ago, Erewhon888 said:

When I noticed the monthly cost was less than my usual coffee and a piece of cake (7 pounds), it was easy to sign up after having had free access for a long time.

Cheers Grant!

[Noallegiance]

11 minutes ago, DurhamBorn said:

The boss of L'Oreal, the world's biggest cosmetics group, has forecast a 1920s-style beauty boom when people will be allowed to go out and socialise again.

Chief executive Jean-Paul Agon said:

People will be happy to go out again, to socialise.

This will be like the Roaring 20s, there will be a fiesta in makeup and in fragrances.

Putting on lipstick again will be a symbol of returning to life.

 

 

And this time it won't just be those scientifically identified as 'ladies'!

[JMD]

1 hour ago, Harley said:

Bang on.  Just read this after my last post so very much on the same theme.  One contextual thing I forgot to say was historically we would have had a war by now, that historically being the most common reset (aka "clearing") mechanism.  Is what is labelled Covid, but which is (now?) something more broader than that, an attempt (by design or as much by nature) to replicate that?  No, I don't mean nature in the medical sense, but in the systems dynamic sense, where such things coalesce around it.  Like the start of the Big Bang in astro terms.  So should we therefore start viewing the emerging social and macro more from a war footing (command economy and all that) perspective?  So, for example, Green Energy and the like make the same "irrational" sense as making bullets do?  That is, the yardstick changes and the sooner we "get it' the better because getting under the covers of that would be far better than looking at any chart!

Yes Harley, presicely - but tragically - all that. The covid 'war', the increased tensions with China. These proxy 'war time footings' are being ramped in order to facilitate more control, economically and socially. All the institutions appear to be on board so what's to stop it happening? But thankfully I think there will be no 'hot war'. I think understanding these macro themes is important in order to help second guess where we might be at, in say 5 years time, and to invest accordingly. For example people on here talk about the looming threat of central bank cryptos - but such things for me are already part of my base case. Of course with the type of controls we might see inflicted, there is an argument that there is little point in trying to participate, investment wise, in such a future false market, then again I suppose what Hobson's choices do we have? ...in the meantime I shall continue visiting this brilliant macro thread for its inspiration and ideas.

[Yadda yadda yadda]

23 minutes ago, DurhamBorn said:

The boss of L'Oreal, the world's biggest cosmetics group, has forecast a 1920s-style beauty boom when people will be allowed to go out and socialise again.

Chief executive Jean-Paul Agon said:

People will be happy to go out again, to socialise.

This will be like the Roaring 20s, there will be a fiesta in makeup and in fragrances.

Putting on lipstick again will be a symbol of returning to life.

 

 

There is loads of money saved up waiting to be spent. All the cash usually spent on holidays, pubs, restaurants and (amongst office workers) on commuting, work clothes, lunch, etc. Some was spent on DIY and debt repayment. It will be a lumpy distribution with disproportionately more saved higher up the income curve. These 'excess savings' have surely contributed to asset bubbles. Especially in the USA where a lot of 'stimmy checks' have gone into shares and crypto.

Much of this money will be spent on luxuries. Some people have funny ideas of what luxuries are. L'Oréal will count for some. I've seen some of these companies described as Becky stocks. Businesses that aspirational women want to buy things from.

I haven't enough money to buy too many different shares so I'll stick to oil and mining and dirty stuff like that.

Edit to add that some have lost out through being unable to work. On average there is a lot of money about though.

[Bobthebuilder]

4 minutes ago, Yadda yadda yadda said:

There is loads of money saved up waiting to be spent. All the cash usually spent on holidays, pubs, restaurants and (amongst office workers) on commuting, work clothes, lunch, etc. Some was spent on DIY and debt repayment. It will be a lumpy distribution with disproportionately more saved higher up the income curve. These 'excess savings' have surely contributed to asset bubbles. Especially in the USA where a lot of 'stimmy checks' have gone into shares and crypto.

Much of this money will be spent on luxuries. Some people have funny ideas of what luxuries are. L'Oréal will count for some. I've seen some of these companies described as Becky stocks. Businesses that aspirational women want to buy things from.

I haven't enough money to buy too many different shares so I'll stick to oil and mining and dirty stuff like that.

Edit to add that some have lost out through being unable to work. On average there is a lot of money about though.

As Durham Born has said maybe "roaring twenties".

When this lockdown eventually ends I think the young are going to go mental. Great bands, concerts, stage n screen, maybe the return of raves. Young people having fun luxuries as you say. Maybe they will stop looking at gender issues on their phones and have a bit of a laugh. Fill the car up with petrol and head off to the party.

[Yadda yadda yadda]

6 minutes ago, Bobthebuilder said:

As Durham Born has said maybe "roaring twenties".

When this lockdown eventually ends I think the young are going to go mental. Great bands, concerts, stage n screen, maybe the return of raves. Young people having fun luxuries as you say. Maybe they will stop looking at gender issues on their phones and have a bit of a laugh. Fill the car up with petrol and head off to the party.

I hope they do.  Plenty of the not so young will go for it too - for a while at least.  I'll be amongst them just not til six in the morning...

[Errol]

 

[C-gull]

On 11/02/2021 at 15:09, JMD said:

That's Interesting when you mention about the Lego sets and watches you collect. Is it vintage watches you buy? I keep looking for an (inspired?) collectable/'future cherished item of value', that I could maybe store for potential future return, but as yet have not come up with anything concrete idea wise. 

I think a certain set of Swiss gentlemen could help you there, see below.

In all seriousness, there has been some serious serious money made by people collecting all sorts of vintage watches over the past decade (sometimes attributed to the same asset inflation effects that are discussed here), and they are as likely as any other asset to either lose you money or be cash cows. Add in the potential for fakery too and things can be dicey. An example; old watches used radium paint for the glow in the dark capability, so a vintage Rolex should set off a geiger counter as the radium is still going to be measurabley radioactive. Which, apparently, some fakers have cottoned on to and they are now including radioactive material in fakes to help them pass. No word on how much radioactive material mind, which could be concerning if you like to keep your hands in your pockets.

I think it's a not too dissimilar to art collecting and such like; money to be made but it can be hard for all sorts of unique reasons

[Heart's Ease]

29 minutes ago, Yadda yadda yadda said:

Much of this money will be spent on luxuries. Some people have funny ideas of what luxuries are. L'Oréal will count for some. I've seen some of these companies described as Becky stocks. Businesses that aspirational women want to buy things from.

 

Yup. Close family has done twenty odd years in various management levels of 'fragrance'. It's a sticky one. Most of trade done in the few weeks running up to, but not immediately before Xmas. Sticky because - even if there's little money around, it's an affordable treat, or affirmation, or aspiration. All marketing, of course. But when times are grim, it's still something people spend on - even though to me(!) it's the least rational thing ever!

I must look up the economist's term for it (to my shame my only degree is in economics and I can't remember owt).

[reformed nice guy]

9 minutes ago, Heart's Ease said:

Yup. Close family has done twenty odd years in various management levels of 'fragrance'. It's a sticky one. Most of trade done in the few weeks running up to, but not immediately before Xmas. Sticky because - even if there's little money around, it's an affordable treat, or affirmation, or aspiration. All marketing, of course. But when times are grim, it's still something people spend on - even though to me(!) it's the least rational thing ever!

I must look up the economist's term for it (to my shame my only degree is in economics and I can't remember owt).

A veblan object

[Don Coglione]

51 minutes ago, Yadda yadda yadda said:

I hope they do.  Plenty of the not so young will go for it too - for a while at least.  I'll be amongst them just not til six in the morning...

I hope they do too - most of my mates' kids are as boring as fuck.

[Don Coglione]

38 minutes ago, C-gull said:

 

Is there a more pretentious brand in existence?

Cunts.

[Harley]

1 hour ago, JMD said:

Yes Harley, presicely - but tragically - all that. The covid 'war', the increased tensions with China. These proxy 'war time footings' are being ramped in order to facilitate more control, economically and socially. All the institutions appear to be on board so what's to stop it happening? But thankfully I think there will be no 'hot war'. I think understanding these macro themes is important in order to help second guess where we might be at, in say 5 years time, and to invest accordingly. For example people on here talk about the looming threat of central bank cryptos - but such things for me are already part of my base case. Of course with the type of controls we might see inflicted, there is an argument that there is little point in trying to participate, investment wise, in such a future false market, then again I suppose what Hobson's choices do we have? ...in the meantime I shall continue visiting this brilliant macro thread for its inspiration and ideas.

We could run quite far with this narrative.  For example, war bonds anyone?  Er, actually no choice, there's a war on dontyaknow!  The more I think about it, this may be the best narrative for me to navigate by for the foreseeable future.