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

[Talking Monkey]

22 minutes ago, feed said:

While it may be a race to the bottom.  There are 1.4Billion Chinese and 1.4Billion Indians at that bottom and there is nothing that says the 70M in this country have any right not to be along side them.  

Creating an environment for success isn't something they have all that much influence over. Cost/wage arbitrage exists and technological advancement has been deflationary.  At best they react and they react slowly.  

  

The advantages of the West are being eroded, very likely we'll be joining the Indians and Chinese at the bottom in a couple of decades, they'll get a little richer we will get a lot poorer.

[CVG]

2 hours ago, No One said:

If they are so skint why don't they cut the triple lock bonkers scheme?

My Tax allowance as well as every other workers has been capped for 5 years so why not do the same for the pensioners, whatever happed to 2"we are all in this together" from Cameron's day?

Whilst they are at it, cut the foreign aid budget and save 1% of GDP, and cut military costs, because who is going to attack a nuclear armed nation?

Also, council pensions could do with a hair cut.

 

 

 

I don't agree with the triple lock but you're comparing apples and oranges.

The tax allowance is capped for pensioners too, so any increases we get above the allowance are fully taxable just like 'the workers'.

The real benefit for a worker over a pensioner is that they can, by various means, achieve a higher annual increase than a pensioner - especially when inflation kicks off over 5%.

[Calcutta]

1 hour ago, Talking Monkey said:

The advantages of the West are being eroded, very likely we'll be joining the Indians and Chinese at the bottom in a couple of decades, they'll get a little richer we will get a lot poorer.

Spent some time living in a slum, the differences between here and there are vast, but eroding. 

The real indicator I'm looking for is when it becomes standard for people to burn our rubbish rather than leave it for the council to pick up. 

 

[Harley]

1 hour ago, Talking Monkey said:

The advantages of the West are being eroded, very likely we'll be joining the Indians and Chinese at the bottom in a couple of decades, they'll get a little richer we will get a lot poorer.

I've mentioned before, one of the seismic macro themes (like demographics) is the re-balancing between East and West to something more very long term historically normal.  Interesting this re-balancing is in part exactly due to the West doing what the East did to lose out last time round!  The "framework" is one which enables true capitalism to flourish in a morally controlled way.  Not easy by any means but something our financially interventionist administration has never tried to follow.  They are corrupt and our corruption is being exploited by others.  Look at the latest defence review where they say China is our biggest threat at the same time as saying we should do business with them.  A lot of senior ex polos and so on seem to have taken their shilling to arrive at such a dichotomy.  Like any company, cost reduction only gets you so far for so long.  You need to look to the future to survive, to re-invent, to progress.  And yes, that's for all, not just the few, not here nor globally.

[Harley]

2 hours ago, feed said:

...

  

I contend the reduction in money velocity is due in part to the increasingly unequal distribution of income and (less so) wealth.  Money is frozen in the assets of the super wealthy (the "well off boomers" is a distraction, a firebreak).  "Trickle down" and the "wealth affect" were self serving bullocks, a way to grab more of the pie that had stopped growing (in real terms).  Putting money in relatively poor peoples' hands, if that really happens and is not front run by the same old, is a game changer.  They have their ill gotten assets stuffed away elsewhere and have pulled the drawbridge up (and now not just financially either), so now it's OK to try something different given the cupboard has been stripped bare.  End game on.  

[feed]

1 hour ago, Harley said:

I contend the reduction in money velocity is due in part to the increasingly unequal distribution of income and (less so) wealth.  Money is frozen in the assets of the super wealthy (the "well off boomers" is a distraction, a firebreak).  "Trickle down" and the "wealth affect" were self serving bullocks, a way to grab more of the pie that had stopped growing (in real terms).  Putting money in relatively poor peoples' hands, if that really happens and is not front run by the same old, is a game changer.  They have their ill gotten assets stuffed away elsewhere and have pulled the drawbridge up (and now not just financially either), so now it's OK to try something different given the cupboard has been stripped bare.  End game on.  

The wealthy extracting wealth isn't all that new.  We've an aristocratic class and system of government that has been doing that for generations and our brief flirtation with post war liberal democratic societies is likely over.  

But.  My entire career, the last 25 years, every job i have ever done, i have been displaced out of and they've gone to India. If you're central bank.

How do you cope with a private sector, where middle income jobs and associated productivity and wealth are leaving the country.  Lower level clerical jobs are being automated out of existence, and the only way that a host of lower level manual jobs aren't automated is the massive importation of economic migrants

at the same time as this.

Point is i don't think our government or central bank has all that many options.   QE into the disinflation, whomever benefited and in whatever form, was inevitable.  As is the inflation we'll see running up, again whomever benefits and in whatever form. 

 

[DurhamBorn]

30 minutes ago, feed said:

The wealthy extracting wealth isn't all that new.  We've an aristocratic class and system of government that has been doing that for generations and our brief flirtation with post war liberal democratic societies is likely over.  

But.  My entire career, the last 25 years, every job i have ever done, i have been displaced out of and they've gone to India. If you're central bank.

How do you cope with a private sector, where middle income jobs and associated productivity and wealth are leaving the country.  Lower level clerical jobs are being automated out of existence, and the only way that a host of lower level manual jobs aren't automated is the massive importation of economic migrants

at the same time as this.

Point is i don't think our government or central bank has all that many options.   QE into the disinflation, whomever benefited and in whatever form, was inevitable.  As is the inflation we'll see running up, again whomever benefits and in whatever form. 

 

Exactly,it was inevitable,and always has been so.Iv just been in B+Q.Iv stripped back my kitchen and needed some special paint.Its actually fantastic stuff iv used before,pricey but cheaper than new kitchens .Anyway,i noticed the massive jump up in prices.Things that were £5 now £5.90,£20,now £24 etc etc.Big inflation already.Its actually booted my arse to get any jobs done in the house i need to etc.

Obvious that more and more jobs will be coming back to the country because importing big items is going to be expensive.

As you say we pre-empted the move and our assets have out performed this inflation so far,most people havent.

[ThoughtCriminal]

The only thing this ends in is violent revolution. 

[Harley]

1 hour ago, feed said:

The wealthy extracting wealth isn't all that new.  We've an aristocratic class and system of government that has been doing that for generations and our brief flirtation with post war liberal democratic societies is likely over.  

But.  My entire career, the last 25 years, every job i have ever done, i have been displaced out of and they've gone to India. If you're central bank.

How do you cope with a private sector, where middle income jobs and associated productivity and wealth are leaving the country.  Lower level clerical jobs are being automated out of existence, and the only way that a host of lower level manual jobs aren't automated is the massive importation of economic migrants

at the same time as this.

Point is i don't think our government or central bank has all that many options.   QE into the disinflation, whomever benefited and in whatever form, was inevitable.  As is the inflation we'll see running up, again whomever benefits and in whatever form. 

 

Yes, very much so, and I do wonder if we are going around in ever decreasing circles.  That the current road is narrowing/running out and a regime change, a, well......great reset.....is required/coming!  But how much of that was precipitated/accelerated by the poor actions of the past?  I guess I'm not letting them off so easily.  But then not so easy without a siesmic clearing event like the wars of the past.  Whatever, defo some form of turning.

[Harley]

23 minutes ago, ThoughtCriminal said:

.......

The only thing this ends in is violent revolution. 

And someone (I have a few candidates!) to say "let them eat cake", the more modern saying more likely to be something along the lines of "let them ride bicycles" or "let them wear jumpers"!  Plenty of other candidates. 

[Optimistic]

I am in my first year of buying shares, due to a small windfall, but am up 35pc so far. I finally took the plunge after reading this thread for a year or so! So thanks guys. I am now reading your pension chatter and haven't a clue what's what! I am a couple of years away from retiring and have an embarrassing pot of 13k. I don't understand SIPPS, or even if I could do one now! Just got my head around shares! Any ideas would be welcome please! Ex hubby took his pension so had to start my own!  It may be just enough to shop for the yellow reduced stickers! Thanks 😊

[Harley]

20 minutes ago, Optimistic said:

I am in my first year of buying shares, due to a small windfall, but am up 35pc so far. I finally took the plunge after reading this thread for a year or so! So thanks guys. I am now reading your pension chatter and haven't a clue what's what! I am a couple of years away from retiring and have an embarrassing pot of 13k. I don't understand SIPPS, or even if I could do one now! Just got my head around shares! Any ideas would be welcome please! Ex hubby took his pension so had to start my own!  It may be just enough to shop for the yellow reduced stickers! Thanks 😊

Try a free Pension Wise consultation with a registered financial planner for an MOT style review?  

[Optimistic]

Thanks Harley, just looked! Free phone number and 45 to 60 minutes consultation. I'll start there. Probably take them all of 5 minutes for that amount!  Been ignoring it as it's so small!

[invalid]

Did someone say inflation inbound? Message from a Chinese supplier today, interesting that expectation on oil price gets a mention:

 

I received again another email direct from the owner of -------. There will be another round of price increase on March 25,2021 because of increasing prices of electronics parts to about 20%. I normally have stock good for 2 months so most likely price increase will be effected on May 2021. Price increase will be from 10-15%. Other than that, oil price are expected to increase bec of increasing market demand affecting the product shipping cost. If you are interested in -------, buy before May 2021 to still avail of present pricing. Btw price increase in ----- model still stands on April 1,2021.

 

 

[AlfredTheLittle]

I understand why we will see huge inflation soon through onshoring, or our currency debasing because of all the printing and terrible management of our economy.

What I don't understand is why the cost of buying things from China has gone up so much already? Our currency hasn't fallen relative to theirs so their costs must have increased - is it just increased competition for commodities? Or is it shipping costs as all the ships were being used to store oil bought cheap last year?

The Great rebuild hasn't really started yet, so you wouldn't expect to already be seeing huge price increases

[DurhamBorn]

1 hour ago, AlfredTheLittle said:

I understand why we will see huge inflation soon through onshoring, or our currency debasing because of all the printing and terrible management of our economy.

What I don't understand is why the cost of buying things from China has gone up so much already? Our currency hasn't fallen relative to theirs so their costs must have increased - is it just increased competition for commodities? Or is it shipping costs as all the ships were being used to store oil bought cheap last year?

The Great rebuild hasn't really started yet, so you wouldn't expect to already be seeing huge price increases

China used the crisis to invest hugely in its power network forcing up the price of copper etc.

Shipping lines couldnt make money for a long time so didnt invest in their fleets.Supply chains breaking down means some ships sale half empty so are pulled etc.

[Harley]

4 hours ago, Optimistic said:

Thanks Harley, just looked! Free phone number and 45 to 60 minutes consultation. I'll start there. Probably take them all of 5 minutes for that amount!  Been ignoring it as it's so small!

I would seek to explore all the financial aspects of retirement.  Unknown unknowns and all that.  Mine was good at getting a handle on the big picture and then deep diving where necessary.  Let them lead you and have your questions written down so you can ensure they are all covered by the end of the session.  I did mine as someone who thought I was knowledgeable and yet still picked up quite a lot of good advice (e.g. the impact of various options on benefits).

[dnb24]

Black swan event for Europe? Close of play Friday it all went tits up for Turkey who managed to exceed the Feds decade long inflation aim (in a weekend). Who will be on the hook? Europe’s finest banking establishments. 

[DurhamBorn]

2 hours ago, dnb24 said:

Black swan event for Europe? Close of play Friday it all went tits up for Turkey who managed to exceed the Feds decade long inflation aim (in a weekend). Who will be on the hook? Europe’s finest banking establishments. 

Their government has spent all the dollars in their private banking system as well.No dollars,no loans repaid.They might invade the rest of Cyprus to take the peoples minds off things.

[MrXxxx]

9 hours ago, Harley said:

I would seek to explore all the financial aspects of retirement.  Unknown unknowns and all that.  Mine was good at getting a handle on the big picture and then deep diving where necessary.  Let them lead you and have your questions written down so you can ensure they are all covered by the end of the session.  I did mine as someone who thought I was knowledgeable and yet still picked up quite a lot of good advice (e.g. the impact of various options on benefits).

Hi Harley, how much detail do you need to have/give them I.e specific details or just a general overview?...and is it f2f or over , Skype?

[MrXxxx]

6 hours ago, DurhamBorn said:

Their government has spent all the dollars in their private banking system as well.No dollars,no loans repaid.They might invade the rest of Cyprus to take the peoples minds off things.

Well the Argentines did it...I understand that Boris was thinking of doing exactly the same thing again until someone pointed out that we actually `own` The Falklands!

[Harley]

53 minutes ago, MrXxxx said:

Hi Harley, how much detail do you need to have/give them I.e specific details or just a general overview?...and is it f2f or over , Skype?

I can't remember all the details but do remember being concerned.  I went for it in the end and didn't get asked for any dangerous specifics.  I was ready to decline any question but never needed to.  I was asked my net worth, how it was comprised, what kind of pensions I had and their amount, my employment status, my plans, etc.  Good to have your list of assets and liabilities and (ideally) state pension forecast ready, although the guy seemed surprised I had prepared so well and that really helped make the session a success.  Their security process was good.  It was a phone call.  They call you at a pre-arranged time with some security credentials.  They email you a report later.  I was well impressed.  The government actually doing something right (provide information) and well.  Maybe depends on who you get but my guy was impressive (presumably an independent financial advisor on contract).

[Optimistic]

29 minutes ago, Harley said:

I can't remember all the details but do remember being concerned.  I went for it in the end and didn't get asked for any dangerous specifics.  I was ready to decline any question but never needed to.  I was asked my net worth, how it was comprised, what kind of pensions I had and their amount, my employment status, my plans, etc.  Good to have your list of assets and liabilities and (ideally) state pension forecast ready, although the guy seemed surprised I had prepared so well and that really helped make the session a success.  Their security process was good.  It was a phone call.  They call you at a pre-arranged time with some security credentials.  They email you a report later.  I was well impressed.  The government actually doing something right (provide information) and well.  Maybe depends on who you get but my guy was impressive (presumably an independent financial advisor on contract).

Just made my appointment for this week, thanks again 😃

[Barnsey]

11 hours ago, dnb24 said:

Black swan event for Europe? Close of play Friday it all went tits up for Turkey who managed to exceed the Feds decade long inflation aim (in a weekend). Who will be on the hook? Europe’s finest banking establishments. 

Last time I checked, BBVA/BNP Paribas/Unicredit/HSBC?

[DurhamBorn]

19 minutes ago, Barnsey said:

Last time I checked, BBVA/BNP Paribas/Unicredit/HSBC?

I take it they are dollar loans Barnsey?.Looks like the government has been using the dollars in the private banks to prop up the currency.Nice fat dose of inflation heading their way now.