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

[DurhamBorn]

3 hours ago, Yadda yadda yadda said:

If the price of a pint stays where it is people will stay drinking at home.

Did council managers ever do any work or did they just have unproductive meetings?

£2.15 a pint around here even the expensive places are £2.80.Incredible now how much council managers are getting away with it like crazy now the waste is incredible.I should apply for some job at the council and see how long i can get away with doing nothing at all.

[jamtomorrow]

2 hours ago, Mapper said:

Anyone ever listened to this guy? Alasdair Macleod of GoldMoney.

Covers a lot of interesting stuff in this video.

First half is about the gold bullion market.

From 33:42 it is about Russia, China and currency collapse.

Here is the YT chapter list:

00:00 Introduction
00:59 The Basel / NSFR proposals, and LBMA gold trading
04:34 LBMA circles the wagons, as bullion banks must comply
07:00 Impact of the Basel changes on unallocated gold
09:57 Gold Derivatives - The Basel Committee’s motives
14:40 Suppression of gold and expansion of paper and leasing
16:56 Lent bullion, COMEX shorts, and unallocated holders
22:09 The tiny "free float" of physical gold in London
24:19 Confidence in LBMA data and the lack of transparency
28:59 COMEX activity data useful, but overshadowed by London
33:42 The geopolitics of Russia’s gold accumulation strategy
39:11 China’s gold accumulation and financial war with the US
45:34 The coming fiat collapse and mobilization of gold reserves
50:32 The trigger for the currency collapse - Rising bond yields
52:43 Wrap-up

He reckons China comes out of the collapse stronger than anyone else. Due to more fiscal discipline and having more gold.

He's been shouting about the sky falling in couple of years now. Dollar system was supposed to collapse last year (he was very specific about that timing).

Some of what he writes is genuinely insightful and rings true. But he could do with dropping the sensational stuff (or as DB sometimes says of DH, the "playing to the gallery")

[Loki]

23 hours ago, DurhamBorn said:

Potash were nother great sector for the above,but iv sold most now with massive profits,but hold Nutrien still.

Is that you done with potash for the cycle, or are you waiting for another pullback?

[Harley]

16 hours ago, Cattle Prod said:

It's not liveabord size, yet.

Intrigued.  Not like a house where you can add an extension.  Or does the wife get the dingy?

[BurntBread]

45 minutes ago, jamtomorrow said:

He's been shouting about the sky falling in couple of years now. Dollar system was supposed to collapse last year (he was very specific about that timing).

Some of what he writes is genuinely insightful and rings true. But he could do with dropping the sensational stuff (or as DB sometimes says of DH, the "playing to the gallery")

He wasn't specific on timings, but did give a sense that the collapse of fiat (together with government spending having to be drastically reduced) was coming pretty imminently. David Hunter though is also predicting something similar, but at the end of the decade (and with a separate BK event to clear things out next year).

This chap is another commentator who believes in a strong China, as they have accumulated 20 000 tonnes of gold, undeclared, and could therefore back their currency in the fiat collapse (and so would automatically emerge as the strongest state).

So, we have had a range of views about the timing of the big collapse ("BC"): imminently (here), 2024 (a commentator a few pages back who also thinks China is planning for this time-frame), and DH going for the end of the decade. I think the DH scenario is most optimistic, because it allows more time for governments to inflate away some of their debts/obligations ... although they might use that freedom to spend on infrastructure ... but then at least we would have the infrastructure to show for it. In any case, my sense from these people is that the earlier the BC is, the worse the experience will be for us plebs. @DurhamBorn, am I just making this nonsense up?

The other question I had about the Basel reforms of the gold market, was whether, although they are being put in place to reduce the chance of contagion between banks, they might eventually have the effect of increasing the amount of physical gold being stored in western countries; and that this could also help us to get through the fiat collapse?

[Mapper]

51 minutes ago, jamtomorrow said:

He's been shouting about the sky falling in couple of years now. Dollar system was supposed to collapse last year (he was very specific about that timing).

Some of what he writes is genuinely insightful and rings true. But he could do with dropping the sensational stuff (or as DB sometimes says of DH, the "playing to the gallery")

Agree about this in general.

It seems to go with the territory though, all of these macro guys have their particular things that they bang on about constantly.

For example, I have watched nearly all the DH videos posted here and they are all basically the same. I wonder if he hasn't got a prerecorded video that he sends out and the interviewer just edits in their questions!

What else can he say, though? The talking heads of the macro space probably shouldn't make such specific forecasts. The timescales are so long they are almost incomprehensible in terms of our quotidian lives. But the audience want excitement.

This has made me think more about timing events.

When did this thread start? 2017? What if COVID hadn't happened? Would be still be waiting for something to start the BK? And many of us still think that we haven't had the BK yet, that is still to come.

A main part of the thesis of this thread is a big infrastructure build out leading up to 2030, but as recently mentioned on here, anyone else feeling that that might be slower to happen?

[Hancock]

53 minutes ago, Mapper said:

A main part of the thesis of this thread is a big infrastructure build out leading up to 2030, but as recently mentioned on here, anyone else feeling that that might be slower to happen?

As someone who owns share in INFA and Babcocks, contracts being awarded has been far slower than i expected or it should have been.

Maybe one reason is down to public sector workers being sat at home doing sweet FA for 16 months.

[Mapper]

17 minutes ago, Hancock said:

Maybe one reason is down to public sector workers being sat at home doing sweet FA for 16 months.

100%

The UK economy has so many people with their hands out, how long is it going to take to cleanse the sytem before any meaningful economic activity can take place?

There will be SO many people resisting even the tiniest hint of reform every single step of the way.

[Mapper]

4 hours ago, MrXxxx said:

Macrovoices podcast on Oil, its future and energy as a whole [https://www.macrovoices.com/983-macrovoices-276-philip-verleger-energy-economics-and-inflation]

may be interesting for some?....especially a point made about current N American/European producers and their future given the whole WOKE situation.

Such great stuff comes out of this thread.

I am all for a good quote. This guy on the danger of the USA (the west) losing to China in the future procurement of energy:

"We diverted all our [general engineering] talent to financial engineering, and we're going to pay for it."

[DurhamBorn]

2 hours ago, Loki said:

Is that you done with potash for the cycle, or are you waiting for another pullback?

Id buy Mosaic etc if they pulled back a lot,but i got 200% out of them on a really big holding and a lot of other areas i wanted hadnt moved much,so rolled it into them.

[JMD]

5 hours ago, MrXxxx said:

Macrovoices podcast on Oil, its future and energy as a whole [https://www.macrovoices.com/983-macrovoices-276-philip-verleger-energy-economics-and-inflation]

may be interesting for some?....especially a point made about current N American/European producers and their future given the whole WOKE situation.

Yes, the guy seems to know his stuff. He definitely sees through all this woke esg crap, commenting that net-zero is impossible until perhaps 2100 (apparently that's a 'hidden second target' contained in same climate energy report). I agree his comments make me want to buy more Russian oil/gas.                                                                        Although if I understand him correctly, he does think total global oil demand has hit its peak and will now begin to fall. Hope others on here will listen and comment as energy sector is crucial to this thread I think.                                                                                                                                                                             Its also interesting that he too is talking about carbon credits becoming an ever more important market within the energy sector - eg like in the Marin Katusa podcast I posted recently. I'm really glad that @DurhamBornhas commented he doesn't think these new green/carbon bond instruments will seriously affect our oilies in the medium term, which is great to hear. However, I think as we approach say 2028+ all bets will be off, even for our lovely reflation stocks... Really hope this thread is still going for guidance and inspiration!!

[DurhamBorn]

2 hours ago, BurntBread said:

He wasn't specific on timings, but did give a sense that the collapse of fiat (together with government spending having to be drastically reduced) was coming pretty imminently. David Hunter though is also predicting something similar, but at the end of the decade (and with a separate BK event to clear things out next year).

This chap is another commentator who believes in a strong China, as they have accumulated 20 000 tonnes of gold, undeclared, and could therefore back their currency in the fiat collapse (and so would automatically emerge as the strongest state).

So, we have had a range of views about the timing of the big collapse ("BC"): imminently (here), 2024 (a commentator a few pages back who also thinks China is planning for this time-frame), and DH going for the end of the decade. I think the DH scenario is most optimistic, because it allows more time for governments to inflate away some of their debts/obligations ... although they might use that freedom to spend on infrastructure ... but then at least we would have the infrastructure to show for it. In any case, my sense from these people is that the earlier the BC is, the worse the experience will be for us plebs. @DurhamBorn, am I just making this nonsense up?

The other question I had about the Basel reforms of the gold market, was whether, although they are being put in place to reduce the chance of contagion between banks, they might eventually have the effect of increasing the amount of physical gold being stored in western countries; and that this could also help us to get through the fiat collapse?

Currency always goes down 99.999999% in the end.Usually the elite manage to de-value it over around 100 years as that is just long enough that most people alive dont notice it enough.Currency is really de-valued to keep people working and poor.In the west capitalism helped ordinary people gain the same advantages almost as the elites for a brief time,but it seems that window is again now closing.

There is too much chatter out there etc about gold and silver being the only protection against expanding currency bases.Real assets that people cant live without count as well.I actually think telcos are better inflation hedges than gold now because they can actually leverage the inflation by quite a bit,though of course they have some risk of failure,and regulation and tax risk.That is actually the biggest risk in an inflation cycle to people on the right side of the trade.Government hitting hard the few areas making big profits.Oil companies are an example where governments might steal most of our profits.

Our system is designed to take money from the middle,to give to the scroungers at the bottom so the rich dont have to and the liquidity from middle and bottom,actual all middle and what was stolen and given to the bottom ends up with the top as they own the assets.Its as simple as that.

Here in the UK the huge worry is that as what sterling can buy on a collective basis falls,the state and its workers and claimants decide they want to still keep what they already have,and that means all private assets go to zero in the end.

A prime example are councils where council tax goes up 2x to 3x the rate of private sector wages each year.The math is simple,in the end council tax will take all earnings unless there is change.

[BurntBread]

3 minutes ago, DurhamBorn said:

Currency always goes down 99.999999% in the end. Usually the elite manage to de-value it over around 100 years as that is just long enough that most people alive don't notice it enough. Currency is really de-valued to keep people working and poor. In the west capitalism helped ordinary people gain the same advantages almost as the elites for a brief time, but it seems that window is again now closing.

My feeling is that there is a tendency always for wealth to be concentrated in fewer and fewer hands, and I have only thought of three ways that can play out: The productive people are reduced to the point where they almost cannot survive, so there will be violent revolution if the exploitation is pushed any further, and this provides a cliff-edge the exploiters try to avoid. Alternatively, the people might have sufficient power (firearms, communication, or organisation coming from religion) that they can hold back the exploitation a comfortable distance from the edge of starvation. Lastly, technological progress might keep productivity increasing, which continuously raises the living standards of everyone and, like the red queen, we run as fast as we can and at least stay in the same place.

My guess is that it is the last of these that have kept us free in the 20th century, and that has mostly been technology built on top of cheap oil. Hitherto, we have still needed labour, but the oil and associated technologies have made us all more productive, and there have been markets for the goods. The latest round of information technology advances have increased productivity in middle-class jobs to the point where most clerical jobs are no longer needed, so we have a glut of unused labour, and not much they (perhaps I should say "we", since I came within a hair's breadth of losing my job this year) can usefully do. UBI may be the inevitable outcome, but I'm worried that we have now got ourselves into the kind of social trap that the poor east Asian countries (or Russia) were in the early 20th century, and that the trajectory is towards subsistence living at the brink of starvation, and all productivity beyond that gets funnelled away. The mechanism would be getting excess labour to compete for the remaining useful jobs. That night need a tweak to the education system to make sure it produces more STEM graduates, but that becomes easier as more and more roles become deskilled through automation.

Sorry: not in an optimistic mood today!

 

[Bobthebuilder]

21 minutes ago, DurhamBorn said:

That is actually the biggest risk in an inflation cycle to people on the right side of the trade.Government hitting hard the few areas making big profits.Oil companies are an example where governments might steal most of our profits.

Was just saying this to my wife today.

I have friends who have been sat at home on furlough and self-employed grants for the last 15 months or so while also getting bounce back loans and claiming benefits. Now I have done my 2020/2021 tax return, and it asks how much you got and how much you got that you were not entitled to. They now announce that furlough, SEISC payments etc will not be taken into consideration for mortgages etc. Great for them to tell us that now, if they had said that from the word go, no one would have stopped working.

When this covid shit is over, they are going to start to claw everything back. Tax bills, repossessions, evictions, etc.

I fully expect assets such as shares will be in the firing line.

All smoke and mirrors, corrupt and incompetent in equal measure.

[JMD]

5 hours ago, reformed nice guy said:

Good video. Thanks for sharing.

I know a lot of people dont rate the Chinks but I think that they are not incompetent. They were starving and couldnt make a decent amount of usable steel in the 60s and now they are throwing folk into their space station.

For the CCP to retain power they need to show progress and they have hundreds of millions of people that they can offer simple upgrades. For example, their first household fridge, their first household car etc

If they can continue to build up their internal market then that alone is 1.5 billion people

Hmm, depends how you measure 'incompetence'. After all many other Asian Tigers had a similar starting point but they have produced far better societies. And that Chinese famine was at least in part, some say mostly, due to useless/incompetent highly centralissed control agri reforms. And have they learnt nothing since? ie Their system is so unstable Xi Jumping has made himself dictator for life, so what happens after he dies? Imho it's not a country, more an empire and ready for breakup.                                                                                                         As for 'throwing folk into space stations'... Sorry, but that don't impress me much. I pay far more attention to where the CCCP are throwing their dissidents. I detest the Chinese/CCP model, let's face it it's medieval with tech characteristics, what else could really be said about it.                                                                                   Apologies if this comes across as a rant (at you reformed nice guy) but casual affectations toward China 'trigger' me! After all we shouldn't want our feckless politicians becoming jealous and casually importing crazy Chinese copycat policies, etc... arriving here to infect us all... after all, once started, it would be rather like an unstoppable virus?!?

[Loki]

 

[DurhamBorn]

24 minutes ago, Bobthebuilder said:

Was just saying this to my wife today.

I have friends who have been sat at home on furlough and self-employed grants for the last 15 months or so while also getting bounce back loans and claiming benefits. Now I have done my 2020/2021 tax return, and it asks how much you got and how much you got that you were not entitled to. They now announce that furlough, SEISC payments etc will not be taken into consideration for mortgages etc. Great for them to tell us that now, if they had said that from the word go, no one would have stopped working.

When this covid shit is over, they are going to start to claw everything back. Tax bills, repossessions, evictions, etc.

I fully expect assets such as shares will be in the firing line.

All smoke and mirrors, corrupt and incompetent in equal measure.

Im getting my none means tested JSA now for 6 months.Then il claim my 1 years none means tested ESA.Il tell the quack over the phone iv got mega anxiety etc and want to kill myself ,sick note or as they are called fit note il get the ESA until they manage to arrange a meeting where il score zero points and they will stop it saying nothing wrong with me,but at the moment those arent happening.I might do the odd 3 or 4 months a year down the line,but i might not.

[Hancock]

35 minutes ago, Bobthebuilder said:

When this covid shit is over, they are going to start to claw everything back. Tax bills, repossessions, evictions, etc.

 

If you've a Limited Company, once its closed down there is nothing to chase.

[Bobthebuilder]

5 minutes ago, DurhamBorn said:

Im getting my none means tested JSA now for 6 months.

Is that the new style JSA? Might do that myself, self-employment income has crashed for me since April for whatever reason.

NI contribution paid as well I see.

[Bobthebuilder]

1 minute ago, Hancock said:

If you've a Limited Company, once its closed down there is nothing to chase.

All the ones I know are sole traders. No LTD got SEISS grants. But fair point.

[reformed nice guy]

4 minutes ago, Hancock said:

If you've a Limited Company, once its closed down there is nothing to chase.

Depends how you get the money out the account. If you buy stuff then thats fine, but if you draw it as a salary you will need to pay income tax but walk away with ~60%. If you draw it as dividends you will need to show a profit. If you took it as a directors loan they will take it back from you.

 

[Hancock]

1 minute ago, reformed nice guy said:

Depends how you get the money out the account. If you buy stuff then thats fine, but if you draw it as a salary you will need to pay income tax but walk away with ~60%. If you draw it as dividends you will need to show a profit. If you took it as a directors loan they will take it back from you.

 

I didnt get the £50k BBL, in hindsight it was a stupid mistake. It was the once in a lifetime lottery win for many.

[reformed nice guy]

40 minutes ago, JMD said:

Hmm, depends how you measure 'incompetence'. After all many other Asian Tigers had a similar starting point but they have produced far better societies. And that Chinese famine was at least in part, some say mostly, due to useless/incompetent highly centralissed control agri reforms. And have they learnt nothing since? ie Their system is so unstable Xi Jumping has made himself dictator for life, so what happens after he dies? Imho it's not a country, more an empire and ready for breakup.                                                                                                         As for 'throwing folk into space stations'... Sorry, but that don't impress me much. I pay far more attention to where the CCCP are throwing their dissidents. I detest the Chinese/CCP model, let's face it it's medieval with tech characteristics, what else could really be said about it.                                                                                   Apologies if this comes across as a rant (at you reformed nice guy) but casual affectations toward China 'trigger' me! After all we shouldn't want our feckless politicians becoming jealous and casually importing crazy Chinese copycat policies, etc... arriving here to infect us all... after all, once started, it would be rather like an unstoppable virus?!?

I agree that Singapore, Taiwan etc are MUCH better societies. I hate communism, especially Leninism, but they have made great leaps (pardon the pun)

Even back in the 1985, farming was 35% of Chinas economy and mostly for the internal market. Now its about 10% and a massive exporter.

There are people working in cutting edge AI or robotics in China just now whos parents were eating tree bark to survive. That is mind boggling progress.

[Yadda yadda yadda]

5 hours ago, DurhamBorn said:

£2.15 a pint around here even the expensive places are £2.80.Incredible now how much council managers are getting away with it like crazy now the waste is incredible.I should apply for some job at the council and see how long i can get away with doing nothing at all.

Durham looking ever more attractive. Even a Sammy Smiths pub wants twice that down here.

[Loki]

https://www.reuters.com/business/exclusive-feds-kashkari-opposed-rate-hikes-least-through-2023-2021-06-18/