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

[leonardratso]

only if you let it.

Keepit short and sweet and it shouldnt impact too much.

[harp]

6 hours ago, Bricormortis said:

Thanks for the info, maybe better on the crypto thread though.

In your opinion obviously! 

 

Ignore rigormortis  lightscribe. It’s all relevant. 

[JMD]

3 hours ago, Lightscribe said:

Ok noted, no more crypto discussion on this thread. My own opinion is that it is all an important part of the roadmap with the introduction of government crypto and blockchain (which is currently happening as we speak) and is very relevant to the roadmap for some on here that like to keep up to date. 

Theres far more to it than a tulip pyramid rug pull scheme and the media fanfare of energy use. The technology will change the world akin to like the internet did, and it will go through the evolutions as that did also. Then again I had these same discussions back then.

I agree Lightscribe. After all this is a macro thread, so i think it's vital to understand the main emerging  moving parts of the crypto universe and therefore also to appreciate the money flowing into this new asset class (fintech?/commodity?). Ok if btc eventually goes to zero then there really was no point in learning/discussing, however my own view is that my gold and silver investments will do less well over the cycle because of crypto competition (that's why I put a small % into btc as a hedge; needn't be much as it has been termed by some as being the most asymmetric trade). Anyway as I say, I believe crypto to be an essential part of the macro (economic and political) landscape, and so ignoring is as deficient as not  engaging in pm/oil discussions on this thread. 

[JMD]

2 hours ago, Loki said:

FWIW I would read but not contribute to a 'macro-crypto' thread...I like the way this thread goes on the odd tangent but crypto is so huge it could take it over for pages

I find I can't really contribute to @cattleprod expert oil analysis posts, but I do find them crucial in my overall macro understanding. If crypto is an emerging technology and/or control mechanism then surely the more we know of it the better?

[jamtomorrow]

With apologies if this is old hat, but I just "discovered" the Lawrence Livermore energy/commodity flowcharts for the first time: https://flowcharts.llnl.gov/

These are *definitely* the infographics I've been looking for!! I could only find the chart for US energy on the site (presumably you have to cough up for the others?), but that one is fascinating enough:

Would love to see same for ROW, especially India and China.

Particularly interesting to compare overall thermal efficiency of transportation vs electricity generation (I make it 21% vs 35%), and to consider how energy markets might restructure with increasing EV adoption.

Like: if my barrel of diesel is potentially "worth" 50% more if I generate electricity from it and sell the leccy to an EV user (because fixed power plants can achieve much better thermal efficiencies than ICEs - 30% or more would be realistic for a big diesel genny), why won't the market find a way to exploit that?

[Lightscribe]

9 hours ago, Majorpain said:

https://www.kitco.com/news/2021-05-13/U-K-Royal-Mint-sees-540-increase-in-silver-bar-demand.html

Interesting info, although its not completely useful as we don't know how much silver the Royal mint got through in the first place.  The new Britannia is also quite stunning so I'm not surprised its selling well.

The Royal Mint said that this has rapid growth in the precious metals market over recent years. It is now the primary producer of bullion coins in the U.K.

The Royal Mint also said that it offers a range of digital investment platforms which enable investors to buy and sell fractional gold, silver and platinum without taking custody of the metal. All digital holdings are backed by physical bullion bars, which are stored in The Royal Mint's vault, it said.“

They made sure to get that in at the end there... 

[wherebee]

12 minutes ago, Lightscribe said:

The Royal Mint said that this has rapid growth in the precious metals market over recent years. It is now the primary producer of bullion coins in the U.K.

The Royal Mint also said that it offers a range of digital investment platforms which enable investors to buy and sell fractional gold, silver and platinum without taking custody of the metal. All digital holdings are backed by physical bullion bars, which are stored in The Royal Mint's vault, it said.“

They made sure to get that in at the end there... 

that sentence is what I call a classic 'yes minister' wording.

It could be backed at a ratio of 1-100 and still be accurate.

[Barnsey]

So the obvious conclusion is perhaps that we're reaching a peak in inflation fears, however we haven't really been here since the 1940s, and true inflation is driven by exactly these fears if prolonged.

[King Penda]

14 hours ago, DurhamBorn said:

Its  hugely difficult area to work out what they will do.I suspect the answer is to allow big insurance companies to build lots of blocks similar to student style places and government will rent them all direct.BTL will be destroyed i think,the leveraged that is.Of course,the other option is that rents collapse.Rents through BTL,but also Housing associations and ALMOs etc is out of control.

Welfare was a fantastic idea until they started adding on extra for more children,made up illness and rent.Working all week in a shit hole warehouse or factory with wanker bosses etc now pays less than not working with a kid.

My mate gets £2200 a month in welfare,mainly as his wife got their middle child down as ADHD and she also gets carers on top of all the tax credits and DLA/PIP.However hes 49,shes 40.With pension credit rules changed now at 67 all they will get is Universal Credit for a couple,not Pension credit,as its based on the youngest person now.They will drop to £700 a month,and from him being 57 they will lose all the child stuff.

In simple terms the government has given the person i sat next to at school £350k for free,for no reason than he cant be arsed.

Yep I know I goad a few for a laugh on here but I’m fully aware that I’ve got to look at contigancy plans.people get slated for going into btl has an example.pensions are low hanging fruit and I’m fully expecting that within 15 years that people will be forced to tap into them has the government will class them has an asset say if you loose your job this will then be expanded.

[Harley]

48 minutes ago, Barnsey said:

So the obvious conclusion is perhaps that we're reaching a peak in inflation fears, however we haven't really been here since the 1940s, and true inflation is driven by exactly these fears if prolonged.

Will this inflation surge be temporary, like lockdowns?

[Harley]

Has anyone with unfilled ladders sold put options rather than just place limit orders?

[M S E Refugee]

 

[planit]

6 hours ago, jamtomorrow said:

Like: if my barrel of diesel is potentially "worth" 50% more if I generate electricity from it and sell the leccy to an EV user (because fixed power plants can achieve much better thermal efficiencies than ICEs - 30% or more would be realistic for a big diesel genny), why won't the market find a way to exploit that?

You have just demonstrated why the transition can't work with low oil prices. The cost of energy is higher with all the alternatives so they (market forces or regulation) will make oil cost enough to make the transition happen.

 

As briefly mentioned elsewhere, the politicians and enviro movement are playing with fire because the population of the world will starve without energy. The current world population (and growth) is supported with energy costing what it has over the last 20 years. If energy cost twice as much it will upset this balance the the results could be disastrous. 

 

I know most sensible people would choose to save people rather than choose CO2 emissions behind which the science is not conclusive but there is a delay in the system, by the time people realise they have messed up it will take 2-7 years to fix it. You can't build a nuclear plant in 12 months etc.

 

I hope it won't come to any of this but when you have a situation where energy projects are not carried out because banks are under pressure not to lend it is incredibly dangerous.

[Chewing Grass]

28 minutes ago, M S E Refugee said:

 

'To convert 33% of global vehicles to BEV would require 20 Million Tonnes of Copper (evil laugh) that figure is roughly equivalent to the whole worlds annual Copper demand, never mind all the plumbing, wiring, electrical machinery, electronics applications that require copper'.

'It requires a huge amount of fossil fuels to get this metal out of the ground for the green energy revolution to happen.'

Copper Bullion it is.

https://www.ebay.co.uk/sch/i.html?_from=R40&_trksid=p2322090.m570.l1313&_nkw=copper+bullion&_sacat=0

£35/kg with free delivery, looks quit shiny as well with pikey ingots being half price.

 

 

[M S E Refugee]

1 minute ago, Chewing Grass said:

'To convert 33% of global vehicles to BEV would require 20 Million Tonnes of Copper (evil laugh) that figure is roughly equivalent to the whole worlds annual Copper demand, never mind all the plumbing, wiring, electrical machinery, electronics applications that require copper'.

'It requires a huge amount of fossil fuels to get this metal out of the ground for the green energy revolution to happen.'

Copper Bullion it is.

https://www.ebay.co.uk/sch/i.html?_from=R40&_trksid=p2322090.m570.l1313&_nkw=copper+bullion&_sacat=0

£35/kg with free delivery, looks quit shiny as well with pikey ingots being half price.

 

 

Pre 1992 Copper coins would be cheaper.

[nirvana]

2 hours ago, Harley said:

Has anyone with unfilled ladders sold put options rather than just place limit orders?

nope, were you looking at setting up an account with tastyworks?

how about @Castlevania or anyone else?

[nirvana]

49 minutes ago, planit said:

you have a situation where energy projects are not carried out because banks are under pressure not to lend it is incredibly dangerous

as in it might actually force technology to drive better solutions, like running a fridge or a TV from a solar panel? or god forbid an ebike so you can get fit as well 

edit: apologies, as per usual I'm think on a micro level rather than a cunty banker n govment one 

[DurhamBorn]

15 hours ago, Hancock said:

If i got £120 for me and the little one that would cover food, water and fuel.

There would be no need to work, and i'm sure many would be the same ... so then not enough would be working to pay the £120.

Over 50% of the population already have no incentive to work.In my home town 83% of income comes from benefits and state and council wages and pensions.

People would work,it just means working would actually deliver increased living standards.Right now it doesnt.

[planit]

48 minutes ago, nirvana said:

as in it might actually force technology to drive better solutions, like running a fridge or a TV from a solar panel? or god forbid an ebike so you can get fit as well 

edit: apologies, as per usual I'm think on a micro level rather than a cunty banker n govment one 

It's a fair point but and worth working it through.

Part of the problem is that Solar and wind have up-front energy costs. So to get the solar panel to power the fridge you need energy.

So does the farmer use the energy to plough his field or does he put the energy into the solar panel as he can have a 'free' powered fridge in 2 years time.

 

So the answer is that if the problem doesn't get too bad too quickly (the gradient of the change matters hugely here), then the higher energy prices will make solar a good economic choice.

But if the energy squeeze is worse then energy prices will be so high that the farmer can't afford to plough his field and also can't afford the cost of the solar panel.

Then in this scenario the energy holders (people already with solar panels or wind farms) have all the power. 

 

There would need to be some kind of donation or control of energy prices and use so poor countries don't starve. Remember that if our economy tanks because of sky high energy prices, the poor countries get hit twice. 

Once by us not buying their goods and services and secondly because the energy cost is a higher percentage of their income so they can't afford it. 

 

 

[DurhamBorn]

1 hour ago, planit said:

You have just demonstrated why the transition can't work with low oil prices. The cost of energy is higher with all the alternatives so they (market forces or regulation) will make oil cost enough to make the transition happen.

 

As briefly mentioned elsewhere, the politicians and enviro movement are playing with fire because the population of the world will starve without energy. The current world population (and growth) is supported with energy costing what it has over the last 20 years. If energy cost twice as much it will upset this balance the the results could be disastrous. 

 

I know most sensible people would choose to save people rather than choose CO2 emissions behind which the science is not conclusive but there is a delay in the system, by the time people realise they have messed up it will take 2-7 years to fix it. You can't build a nuclear plant in 12 months etc.

 

I hope it won't come to any of this but when you have a situation where energy projects are not carried out because banks are under pressure not to lend it is incredibly dangerous.

It is,and thats why nature based solutions will be the winners in the end.The climate has always gone cold,then warm and always will,mostly the sun.We will probably get to net zero,actually,we will in time,but a great deal of that will be putting carbon back in the ground and trees etc.

The lack of investment will mean huge price spikes later in the cycle.The only question then is if to sell some,all etc or if the companies use the capital to own everything that comes after in the energy space.Nuclear is the real threat to gas etc and the oilies have done an amazing job of helping keep the worlds eyes on wind etc instead.Wind is producing 7% of UK electric today,1.5% yesterday,gas 50%,though to be fair solar is making 11% during the day.

[JMD]

19 hours ago, DurhamBorn said:

Its  hugely difficult area to work out what they will do.I suspect the answer is to allow big insurance companies to build lots of blocks similar to student style places and government will rent them all direct.BTL will be destroyed i think,the leveraged that is.Of course,the other option is that rents collapse.Rents through BTL,but also Housing associations and ALMOs etc is out of control.

Welfare was a fantastic idea until they started adding on extra for more children,made up illness and rent.Working all week in a shit hole warehouse or factory with wanker bosses etc now pays less than not working with a kid.

My mate gets £2200 a month in welfare,mainly as his wife got their middle child down as ADHD and she also gets carers on top of all the tax credits and DLA/PIP.However hes 49,shes 40.With pension credit rules changed now at 67 all they will get is Universal Credit for a couple,not Pension credit,as its based on the youngest person now.They will drop to £700 a month,and from him being 57 they will lose all the child stuff.

In simple terms the government has given the person i sat next to at school £350k for free,for no reason than he cant be arsed.

DB, I agree that shared living/micro apartments will become more prevalent to house people who need long term accomodation. But do new buildings actually need to be built, instead how about converting the 'spare' ex retail and ex office commercial buildings in our town and city high-streets? And why would this be done by the insurance companies? Are they the biggest CRE owners?                                                                                            So might this become a thing? I wonder what form it would ultimately take. After all since the planning code relaxations happened few years ago, many large redundant offices on commercial estates have been converted to flats. Ok most of those look horrible, but my point is if that can be done to pre-fab steel constructions, then I don't see why higher quality building cannot be transformed into residential. Plus faster turnaround and also creates jobs instantly, what's not to like? I guess that lobbying from current landlords will ensure this happens. Pity there is no easy type way for us to pick up some of the 'investment crumbs' from the big boys table?

[MrXxxx]

OK so this weeks Macrovoices podcast [https://www.macrovoices.com/podcasts-collection/macrovoices-podcasts] were discussing a new interest rate hedging approach [Simplify Interest Rate Hedge ETF | Simplify] that may be viewed as an alternative strategy to the PM silver approach discussed on here in the last year or so. So here are my thoughts on this ETF/interview, please feel free to critique.

The ETF could be used in three ways:

1. as a mid-term ETF trading oppportunity that would focus on the potential for rapid interest rate rises in the next 2-4 years, by buying now and trading out on a high rather than holding for the long-term.

2. as an insurance policy hedge for those

a) with high wealth in a variety of assets, especially those that are illiquid and susceptible to increased interest rates i.e. those with property (especially mortgaged) and/or

b) with a company pension scheme with limited options i.e. having a 60/40 provision and unable to transfer out of easily.

Thoughts?

 

[JMD]

9 hours ago, jamtomorrow said:

With apologies if this is old hat, but I just "discovered" the Lawrence Livermore energy/commodity flowcharts for the first time: https://flowcharts.llnl.gov/

These are *definitely* the infographics I've been looking for!! I could only find the chart for US energy on the site (presumably you have to cough up for the others?), but that one is fascinating enough:

Would love to see same for ROW, especially India and China.

Particularly interesting to compare overall thermal efficiency of transportation vs electricity generation (I make it 21% vs 35%), and to consider how energy markets might restructure with increasing EV adoption.

Like: if my barrel of diesel is potentially "worth" 50% more if I generate electricity from it and sell the leccy to an EV user (because fixed power plants can achieve much better thermal efficiencies than ICEs - 30% or more would be realistic for a big diesel genny), why won't the market find a way to exploit that?

Very interesting the question you pose regarding extracting more value from a barrel of oil. Is this I wonder what @DurhamBornhas previously suggested regarding the oil companies potentially buying up the energy producers? Or am I oversimplifying what your saying? ...makes me wonder what fantastic future cash machines the oilies might become, maybe I should buy some more!!!

[Harley]

2 hours ago, nirvana said:

nope, were you looking at setting up an account with tastyworks?

how about @Castlevania or anyone else?

Done!

[JMD]

6 hours ago, wherebee said:

that sentence is what I call a classic 'yes minister' wording.

It could be backed at a ratio of 1-100 and still be accurate.

...that's just pure cynicism, I'll have you know that Royal Mail is a very respectable outfit, and nothing like it's Post Office/'project Horizon fiasco' half-cousin shysters, plus I've heard (not really!) that they have lined up Gordon Brown as executive chairman, gold division (part-time, via zoom).