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

[Harley]

3 hours ago, jamtomorrow said:

It's almost behavioural-science-interesting how economists want to "play" consumer/wage inflation into the game.

Consumer looks perma-screwed to me - when/if b2b velocity takes off, wages are going to be left standing on the tarmac wondering what just happened.

Currencies and commodities.  The rest will be noise!

[Chewing Grass]

3 minutes ago, Castlevania said:

You’d think an Argentine would be aware of the risks of inflation

I love reading up on people and where they come from and their academic past.

Strange you mentioned Argentina (did you know).

To these people its just a job, they have no interest in anything other than themselves.

https://en.wikipedia.org/wiki/Silvana_Tenreyro

[Harley]

1 hour ago, Castlevania said:

It’s a mess. I spent a large chunk of yesterday afternoon trying to interpret the rules and calculate how much CGT I’d owe if I return to the U.K.

I went to an accountant just prior to my return.  Well worth it!  More than just CGT!

[Harley]

18 minutes ago, DurhamBorn said:

Incredible really.So she is saying mid case we have done enough and the economy recovers just fine.She is wrong,they will be printing £700billion all in,maybe more before this is over.She thinks they just need to stave off deflation,as most CBs do right now,they dont know governments have other ideas.This is a new cycle Silvana and you have no control over the US long bond,prepare to spend the next bit of your career chasing inflation,trying to slow it down.

Currencies and commodities.  The rest will be noise!!

[DurhamBorn]

7 minutes ago, Harley said:

I'm not sure I quite see it that way but am being challenged!  Money supply, liquidity, and velocity are each towers in their own right but your comment has stimulated my thinking.  For example, we are now operating and extremes away from normal so the classic economic constructs and relationships are being stressed into a possible "unnatural" world.  That is, systems behaving differently at the extremes.  Without going into the details (I just wrote a massive piece but sat on it!) your comment has generated many other such fertile (and more concrete) thoughts which I think are incisive in the way I will act going forward.  Funny, it's usually these little "innocent" asides that are the most important!

dams never burst when they are empty,look forward to your thoughts as always Harley.

[nirvana]

6 minutes ago, Harley said:

velocity

agree, I think this is important and it's still bunged up with shite 

Interesting that DavidH commented on twitter earlier that we shouldn't be criticizing the FED cos it's 'Economics 101' - I disgaree with this premise, the economists have completely lost the plot imo

Someone replied to him with this quote

"Today's paper money system is perhaps the greatest methodological crime in history. Central banks are an invention of the planned economy and incompatible with a free market."

- James E. Ewert & Ferdinand Lips

 

I'll have to ponder that one for a while 

[DurhamBorn]

1 minute ago, Harley said:

Currencies and commodities.  The rest will be noise!

Agreed,and  communications."Stuff" that already exists.35 years of letting everyone consume,with a smaller base producing is about to hit them hard.Try starting a car with crap jumps leads,this one needs heavy duty liquidity.

[DurhamBorn]

4 minutes ago, 5min OCD speculator said:

agree, I think this is important and it's still bunged up with shite 

Interesting that DavidH commented on twitter earlier that we shouldn't be criticizing the FED cos it's 'Economics 101' - I disgaree with this premise, the economists have completely lost the plot imo

Someone replied to him with this quote

"Today's paper money system is perhaps the greatest methodological crime in history. Central banks are an invention of the planned economy and incompatible with a free market."

- James E. Ewert & Ferdinand Lips

 

I'll have to ponder that one for a while 

Remember though David is one of the best macro strategists on the planet,he works with the system we have,not what we should have.Those question though will be part of the cycle for sure,especially once inflation starts to run.I cant wait to see them squirm  on rates as it ticks higher and higher.

[nirvana]

2 minutes ago, DurhamBorn said:

,he works with the system we have,not what we should have

Sure, very valid point that we should all keep reminding ourselves....

I wish I could be so sure that rates WILL go up in the future......they can't can they!? All the countries are bankrupt! (mathematically and morally )

if rates tick up how will everyone pay their debts??? 

[Loki]

5 minutes ago, DurhamBorn said:

Remember though David is one of the best macro strategists on the planet

It pains me to see some of the fuckwits he has commenting on his Twitter feed.

[nirvana]

1 minute ago, Loki said:

It pains me to see some of the fuckwits he has commenting on his Twitter feed.

I quite like this one 

Yes we do. The purchasing power of a dollar was close to 100% prior to 1913. Today it's around 2%. The FED is a private bank that enriches the 1% at the expense of the 99%. It is the greatest wealth transfer machine ever created. It is an abomination and needs to go.

[Loki]

5 minutes ago, 5min OCD speculator said:

I quite like this one 

Yes we do. The purchasing power of a dollar was close to 100% prior to 1913. Today it's around 2%. The FED is a private bank that enriches the 1% at the expense of the 99%. It is the greatest wealth transfer machine ever created. It is an abomination and needs to go.

I mean the sort of idiots that just spout braindead replies like "YOUR WRONG ITS GONNA CRASH"

[nirvana]

this is a valid one too - if Jamie Dimon wasn't picking up $30million + per year, there would be more money for true entrepreuneurs rather than this 'cronyism' and 'too big to fail' that is stifling a free market and innovation...

David we criticize relentlessly because a smaller entrepreneur with 80%+ operating margins (me) gets put out of business because unlimited capital that I can’t access is given to zombie companies & not to small companies w vision who could become the next s&p company. THATS WHY.

[nirvana]

@Loki Sorry I've become part of the 'end the fed' massive! This pic is interesting....right I'll be off to to ride a bike and listen to some music and leave you in peace 

 

[Wheeler]

38 minutes ago, Castlevania said:

You’d think an Argentine would be aware of the risks of inflation

That's probably why they brought her in, because of her experience of hyperinflation. I mean they appointed Carney for his experience in blowing housing bubbles after all.

 

[reformed nice guy]

45 minutes ago, 5min OCD speculator said:

Sure, very valid point that we should all keep reminding ourselves....

I wish I could be so sure that rates WILL go up in the future......they can't can they!? All the countries are bankrupt! (mathematically and morally )

if rates tick up how will everyone pay their debts??? 

That is probably the big kahuna. When a significant bond coupon is not repaid

[Loki]

50 minutes ago, 5min OCD speculator said:

Sorry I've become part of the 'end the fed' massive!

Even DH isn't a swooning Fed fanboy - he doesn't think they are blameless.

Quote

Oh it won't end well. My forecast calls for a global deflationary bust in the next year & a depression within the next decade. But there are bigger culprits out there. Others created the problem while the Fed & other CBs help facilitate it.

 

[Castlevania]

2 hours ago, Harley said:

I went to an accountant just prior to my return.  Well worth it!  More than just CGT!

I am an accountant

Unfortunately I don’t work in personal tax and they’ve changed the rules quite significantly since I studied...

[Harley]

8 hours ago, DoINeedOne said:

@Harley I think i posted it before but the interview with Grant Williams and Anthony Deden was one i ended up saving a interesting guy not all doom and gloom either

I clearly should have paid more attention!  Was that the RealVision one or late?  Any others?!

PS: Just finished "the End Game" episode 3 with Mike Green.  Wow! A kindred spirit, although of a far higher order!

[sancho panza]

14 hours ago, DurhamBorn said:

https://www.dailymail.co.uk/money/markets/article-8523327/Budget-defecit-400bn-year-cost-pandemic-spirals.html

I think it might of been at the start of this thread or just after i said i expected £700 billion+ from the BOE to be printed to make up for the dis-inflation since 1982.

Roll to today and now the OBR is saying it might be a deficit of £660 billion.

So its looking like my macro numbers on this before any of this happened were bang on the money for the scale.

It should be noted that £700 billion is the dis-inflation printed back,thats the tipping point for a reflation to really go full on.

Government is in a huge hole.They have taxed the decent to death and allowed a massive client state to develop that now can not be paid for.Not even close.The structural deficit is probably £160 billion and growing.

I must say,for someone with no financial background whatsoever,some ot the calls you've made have been incredibly good...................and free..It puts some of the city salaries in perspective.

And some of them were from way out.Mrs P checked her ISAat HSBC the other day and was stunend how well it had done over three years(PM's).Whilst I didn't predict covid,we were positioned for a deleveraging query cause thanks in many respects to this disucssion.

I always steer clear of making timing/pricing calls because it's so very difficult.It jsut gives me aan appreciation for those that do.

12 hours ago, Harley said:

That leaves, apart from the printing, pensions, negative rates and other financial repression, wealth (ISAs, second homes, etc), and bust ups with the public sector and client state.  Maybe even a tax on world income regardless of residency like for the Americans.  Not a nice place to be living in terms of service delivery, standards of living, security, and manipulated social and intergenerational strife.  Hopefully the music will be good though like last time, indeed better as this will be worse.

It really does beg the question doesn't it? How are they going to fill the gaps? Taxes on the ' haves' are certain given the mobility of big capital on the one hand and the gaping mouths in the nest on the other.

7 hours ago, MrXxxx said:

Can someone explain this tax implication...is it that you get taxed regardless of where you are domiciled, and so based on your citizenship?....if so, any other nations have  this policy?

South Africa have started doing this.Mrs P is on a warning that she may have to ditch citizenship(I can't see many advantages to an SA passport)

[Loki]

I always meant to ask @DurhamBorn - did you ever see your threads turning into the massive success they are? When you first posted it, was it work you already had in your head or did you formulate it especially?

[Harley]

8 hours ago, MrXxxx said:

Yes, my `ears pricked` last night when I heard mention of CGT being a target...makes S&S ISAs even more valuable, until they stop them.

Where did you hear that?

[Harley]

2 hours ago, DurhamBorn said:

dams never burst when they are empty,look forward to your thoughts as always Harley.

I took the "agree" reps to my post as agree that I should not post, or would that have been a "cheers"?!

PS:  Just a break.  Loving doing this outdoor physical work while listening to these podcasts.  I get better quality thinking done than in front of a screen!

[Castlevania]

3 minutes ago, Harley said:

Where did you hear that?

https://citywire.co.uk/wealth-manager/news/sunak-calls-for-independent-cgt-review/a1380355

[AQUAMAN]

so is the dollar still at risk of catastrophically mooning or what?

seems like nothing happened other than 1 week of panic in march