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

[DurhamBorn]

18 minutes ago, Harley said:

I've decided we've had a coup by the technocracy.  They were triggered (loss if control) by the growth of popularism and the Brexit vote here in the UK.  They've also run out of road in that they've fecked up over the most recent decades, it's all coming home to roost, and they have nowhere left to hide.  They've cashed in and taken the silver shilling ("regulatory capture", etc).  The technocracy covers it all, central banks, politicians, medics, media, etc.

How do you see it playing out?,i agree with you,iv just never taken a deep dive into it before.

[Barnsey]

Anecdote but it's worthy of our attention...

 

[Harley]

39 minutes ago, DurhamBorn said:

How do you see it playing out?,i agree with you,iv just never taken a deep dive into it before.

Stagflation and a regime similar to the old Soviets with all the corruption, propaganda, and abject economic failure that marked that period.  An out of touch elitist class with privileges like the old French court ("let them eat bread").  East German levels of control and surveillance by your neighbours, phone, etc.  That is, an extension of what we already have.  It will only end when there is nothing left.  There will be a few places to hide if quick enough but who knows where atm.  The other way to cope is to read up on Václav Havel and co.  Also how some of the Latin Americans have survived.  Timings?  Look how far we have come in the last 19 months (overt, longer covert) and it's happening at an increasing rate.  People have no idea how thin the thread their current world hangs by.

Or were you just asking for the most appropriate asset allocation?  

 

[DurhamBorn]

11 minutes ago, Harley said:

Stagflation and a regime similar to the old Soviets with all the corruption, propaganda, and abject economic failure that marked that period.  An out of touch elitist class with privileges like the old French court ("let them eat bread").  East German levels of control and surveillance by your neighbours, phone, etc.  That is, an extension of what we already have.  It will only end when there is nothing left.  There will be a few places to hide if quick enough but who knows where atm.  The other way to cope is to read up on Václav Havel and co.  Also how some of the Latin Americans have survived.  Timings?  Look how far we have come in the last 19 months (overt, longer covert) and it's happening at an increasing rate.  People have no idea how thin the thread their current world hangs by.

Or were you just asking for the most appropriate asset allocation?  

 

In fine on asset allocation,i think we should capture the inflation and leverage it at first,most wont.However i think its highly likely that at some point along my roadmap what you say will happen.The question is when do we remove the capital from where it is,and where do we put it?.The basics of what to do are easy.Buy everything you can,learn to fix things yourself,learn to cook healthy meals etc.My macro roadmap is proving remarkable so far and they are stealing wealth now through inflation,but the tax increases are now starting as well.I had hoped the state wouldnt of got as big as it has to the point where it refuses to be cut back and simply consumes everything.

Its incredible to think Boris thinks its a good idea to put up NI when it is the worst tax for hurting the poor who actually work to hand to an NHS wasting billions on Diversity Officers etc.

[MrXxxx]

On 03/09/2021 at 11:39, DurhamBorn said:

My daughter got a £3k  Diesel Pug 207 five years ago and still has it.Iv kept it on the road for £560 in that five years,mainly repairs around springs etc where she whacks curbs ,one of the best cars ever made for me for none motorway driving

Sounds as though she needs something a bit more substantial...I understand someone on Facebook who goes by the name of `Taliban` has a vehicle she may be interested in, low mileage, one previous owner, but no log book/owners manual....oh, and does about 10 gallons to the mile! :-)

[nirvana]

41 minutes ago, Harley said:

"let them eat bread"

it was 'let them eat brioche!' not even cake! the poor fukkers couldn't even afford the bread, never mind the bloody brioches or the cakes.....so the rich didn't see it coming.....

dunno how they'll resolve things now, the yoof are a bit confused too, give em the x-ray goggles to see into the matrix lol

 

[Harley]

57 minutes ago, DurhamBorn said:

The question is when do we remove the capital from where it is,and where do we put it?.The basics of what to do are easy.Buy everything you can,learn to fix things yourself,learn to cook healthy meals etc.

100%.  One game I play is action-reaction.  Put the price up, I do it myself, go without, reframe, etc.  That way I feel in control the best I can.  That's important for my mental health.  Loads of lateral thinking and research.  An effort of course.  I've been at it for a while now.  Decomplex is one of the best ideas from this thread.  Build resiliance.  Less is more.  You can mentally step away from the matrix even if you need to physically exist in it most of the time.  I'm a lot happier for it. 

I bought a new mitre saw and spent yesterday stripping down the old one to keep as parts for repurposing.  Bolts, microswitches, the works.  A lot gets repurposed!  Little left for the dump!  I bought that saw many years ago and can't see how they could have sold it so cheapily.  It was like an archaeological dig into the disinflationary past!  "Transitionary" my proverbial!

As to where to put the capital, I mentioned wrestling with the concept of value a long time ago.  That's the first thing to suss out IMO.  Convert some of it ahead of time in a spectrum of things  Wierd, you could have bought a van a few months ago and probably sell it for more now!  They may come for your ISA or pension but they're no expert in tractors, etc.  Everything I buy has a purpose.

Just had a curry night.  All made from scratch.  Not just better than a take away but enjoyably different and healthy.  Just bought my first brewing kit and built a bottle rack out of repurposed scraps so soon I'll even have my own beer to go with it!

I've lived many different lives.  Nothing is written!

[Hancock]

3 hours ago, Harley said:

Don't they need them for the jabbing and truck driving?

Never underestimate the multi-tasking abilities of the Great British librarian.

[Hancock]

2 hours ago, DurhamBorn said:

Its incredible to think Boris thinks its a good idea to put up NI when it is the worst tax for hurting the poor who actually work to hand to an NHS wasting billions on Diversity Officers etc.

NI is a hidden tax, most workers don't realise employee NI exists at circa 10% of workers wages.

Tories will do anything to avoid going after unearned wealth.

[Hancock]

Above should have been employer NI at 13.8%

[JMD]

3 hours ago, Harley said:

I've decided we've had a coup by the technocracy.  They were triggered (loss of control) by the growth of popularism and the Brexit vote here in the UK.  They've also run out of road in that they've fecked up over the most recent decades, it's all coming home to roost, and they have nowhere left to hide.  They've cashed in and taken the silver shilling ("regulatory capture", etc).  The technocracy covers it all, central banks, politicians, medics, media, etc.

I broadly agree Harley, but my take for what it's worth is that yes the ruling classes were indeed triggered by the populism shakeups. But since then not so much a technocratic coup, rather I think it's just been more a panicked lobbying effort by the middle classes/professions because they sence what's coming. This imo is why for example the media profesion were so utterly complicit in the plan-dem(on)ic(!) 'narrative'... ie it was time for 'all hands to the wheel'.                                                                                                  But the reason why I don't think we have had a covert coup (not yet anyway!) is because we still have some senior voices expressing controversial opinions. Victor Schvets for one - as I've written before he is a curious character and let's just say 'I don't fully understand his motivations' for speaking out, but when a private banker says he wouldn't own bank shares, and that 'private capital will never again walk alone', we should I think seriously heed his thesis of increasing corporatism. Corporatism is what I think we'll get, close to textbook socialism but not quite/and in practice maybe terrifyingly similar to the Chinese model. Plus corporatism allows the powerful and rich to maintain their wealth and position.                                                                                                                                                                   As for timing when to withdraw capitol (though into what?!), I've heard several commentators, including 'our own' Dave Hunter speak about 2026+ being an uncertain period, after which he would look to begin selling out of equities... I was hoping we had until end of decade at least before having to think about such things, but I guess Covid has sped things along, politically, socially, economically. And today the paucity of decision making (not to mention levels of insanity!) across all our institutions, and in particular the weariness/dreariness in manner and tone from our politicians, does make me think we have already begun the count down!!

[Talking Monkey]

4 hours ago, DurhamBorn said:

In fine on asset allocation,i think we should capture the inflation and leverage it at first,most wont.However i think its highly likely that at some point along my roadmap what you say will happen.The question is when do we remove the capital from where it is,and where do we put it?.The basics of what to do are easy.Buy everything you can,learn to fix things yourself,learn to cook healthy meals etc.My macro roadmap is proving remarkable so far and they are stealing wealth now through inflation,but the tax increases are now starting as well.I had hoped the state wouldnt of got as big as it has to the point where it refuses to be cut back and simply consumes everything.

Its incredible to think Boris thinks its a good idea to put up NI when it is the worst tax for hurting the poor who actually work to hand to an NHS wasting billions on Diversity Officers etc.

That's an important question on when do we remove the capital from where it is and where do we put it. For me the first part doesn't seem too difficult in that intuitively I would think there would be a reasonable window where we see things getting markedly worse with each of us start opining that collapse is a year out or 6 months out etc. 

The really really hard part is where do we put it once we've removed it so that it is in a form that we can ideally both grow and consume through time. I've no idea as it will either be vulnerable to theft by government or theft by being actually robbed. 

[wherebee]

11 hours ago, Cattle Prod said:

And as @DurhamBornhas been reporting from the Northern front;

Another media lie.  How many are leaving for an extra 50p and hour as against those leaving rather than take a vaccine still in trial stage.

[Harley]

4 hours ago, JMD said:

I broadly agree Harley, but my take for what it's worth is that yes the ruling classes were indeed triggered by the populism shakeups. But since then not so much a technocratic coup, rather I think it's just been more a panicked lobbying effort by the middle classes/professions because they sence what's coming. This imo is why for example the media profesion were so utterly complicit in the plan-dem(on)ic(!) 'narrative'... ie it was time for 'all hands to the wheel'.                                                                                                  But the reason why I don't think we have had a covert coup (not yet anyway!) is because we still have some senior voices expressing controversial opinions. Victor Schvets for one - as I've written before he is a curious character and let's just say 'I don't fully understand his motivations' for speaking out, but when a private banker says he wouldn't own bank shares, and that 'private capital will never again walk alone', we should I think seriously heed his thesis of increasing corporatism. Corporatism is what I think we'll get, close to textbook socialism but not quite/and in practice maybe terrifyingly similar to the Chinese model. Plus corporatism allows the powerful and rich to maintain their wealth and position.                                                                                                                                                                   As for timing when to withdraw capitol (though into what?!), I've heard several commentators, including 'our own' Dave Hunter speak about 2026+ being an uncertain period, after which he would look to begin selling out of equities... I was hoping we had until end of decade at least before having to think about such things, but I guess Covid has sped things along, politically, socially, economically. And today the paucity of decision making (not to mention levels of insanity!) across all our institutions, and in particular the weariness/dreariness in manner and tone from our politicians, does make me think we have already begun the count down!!

I agree on corporatism.  It will be like the old soviets in terms of dour style.  All "isms" are essentially the same in that respect.

I failed to mention the Trusted News Initiative as an example of how groups can become internationally co-ordinated.

https://www.bbc.co.uk/mediacentre/latestnews/2020/trusted-news-initiative

But I understand it has since moved on to tackle covid "disinformation".  I can't see this going away.  Just one example?  No, we have SAGE, but also the "Independent" SAGE.  Surely more to come in the finance area, with the usual vested front running graft behind it.

I'm not naive to imagine a film type conspiracy, although that is a possibility.  More like key players drinking the same cool aid and opportunism, followed by fear of loss.  Our country's power base is a collection of vested interests, in a pluralistic fashion.  Are they linking up in a 1930s German way?

All just one hypothesis so I treat it all as such.  But I just crack on at the local level where things can look very different.  Live in the grey.  "Interpret" things as appropriate.  I like a bit of big picture context but too much is toxic.

Life always go on.  No harm in making your bit (and mind) as flexible as possible.  Drill down on the key word "resilience".  It's always amazing and delightful who turns out the best at that.  Not the Rambos, that's for sure.

I continue to invest, etc as we do but just spend time prepping the best I can as well.  And prepping can be quite enjoyable.  I've learned loads and have a sense of achievement.  But also detachment in case it goes "pop".

What I really want now is a van and several small woods.  A good bug out for defcon 2.  The number of visiting "converted" vans around here is off the scale.  Most are low key but with tell tale signs.  Oh, and solar with a store.

Correction, I meant JCVI not MHRA.  Blah, details!

The key dynamic to appreciate here is the size of the pie has been shrinking for a while now and various groups are trying to maintain their absolute lot (including the historic growth rate) at the increasing expense of others.  A "war" has historically been the clearing mechanism in this perpetual ebb and flow.

 

[nirvana]

8 hours ago, Harley said:

Nothing is written!

except for your 'seed phrase' 

methinks you now need to be your own bank too and tell the manipulative fukkers to go roger themselves at the local Freemason's reacharound 

the world has come a long way since we all thought bank managers were 'fine upstanding members of the community' eh?

[Harley]

4 minutes ago, nirvana said:

except for your 'seed phrase'

On tablets of metal!

[nirvana]

5 hours ago, JMD said:

Corporatism is what I think we'll get,

we've had that since Reagan and Thatcher! That's what fukked everything up! Why are the transport links in UK so shite? Cos of BIG OIL trashing the rail networks through an incompetent government...so enjoy your oil divvies but realise what a shithole the cunts created 

[nirvana]

4 minutes ago, Harley said:

On tablets of metal!

yeah I was looking at them yesterday lol.....think I'll stick with the 'black dobber' 

 

[Harley]

8 minutes ago, nirvana said:

we've had that since Reagan and Thatcher! That's what fukked everything up! Why are the transport links in UK so shite? Cos of BIG OIL trashing the rail networks through an incompetent government...so enjoy your oil divvies but realise what a shithole the cunts created 

It's been a process, like watching a child grow up.....to become an axe murderer?!

[Harley]

3 minutes ago, nirvana said:

yeah I was looking at them yesterday.....think I'll stick with the 'black dobber' 

 

Available at Toolstation for collection!

[nirvana]

11 minutes ago, Harley said:

Available at Toolstation for collection!

well I need to be able to read a QR code with my new DIY banking tool...

as long as I remember to clean the stove flue this year I doubt very much the house is gonna burn down and if a burglar appears I doubt he'll get a hard on if he finds a QR code hidden in 'blanked out for security purposes' 

I refuse to be controlled, long live the resistance!

 

[MrXxxx]

Following on from a point that @DurhamBornhas made in the last three months regarding investment drawdown rates/equity-bond ratios, I thought others may find this of interest [I have also place it in 'The Library' thread for easy finding at a later date]:

https://insight.lcp.uk.com/acton/attachment/20628/f-2758550c-163d-4b08-8c17-63e0b7106f08/1/-/-/-/-/When QE broke the 4% rule .pdf

Basically it makes the following points:

1. At a 0.4% TER a 4% drawdown is not longer sustainable with the traditional 55/45 [or lower] stocks/bond retirement portfolio, only becomes realistic at 75/25 or above where the failure rate of running out of funds is 12-13%. At a 2% TER managed portfolio failure rates are doubled i.e. 21-24%

2. Due to lower returns/interest rates what was traditionally the SAFEMAX 4% drawdown rate is now 3%.

3. A 4% drawdown rate can be sustainable by reducing the TER to 0.4% and having a75/25 or above stocks/bonds portfolio [~12-13% failure] OR at a TER of 2% by not increasing drawdown by inflation every year with a 55/45 or above stocks/bonds portfolio [~9-11.5%].

There are also some other interesting models based on variation in partial retirement and/or U shaped spending pattern in retirement. In a nutshell 1. Reduce TER costs, and/or 2. Reduce bond allocation, and/or 3. Reduce drawdown%.

[Harley]

Not for ones who are offended but I do enjoy these podcast.  Other similar ones too.  It seems podcasts are the new place to go for the former freedoms.

https://markethuddle.com/podcast/retail-and-proud-guest-michigandolf-aka-horselover-fat/

Patrick Ceresna is on Macrovoices and runs Big Picture Trading.  A long history of options trading.  A shout out for Kevin too.  All nicely Canadian too!

There are some serious points amongst the offence!  I was keen to get back into options.  Maybe not!  Also liked the comment about moving into index trackers during volatility as a derisking strategy.  Reduce company risk and only one (few) panic button(s) to press.  One to think about.

PS:  I'll have a beer in hand too next time but I was using the wood chipper last time and fingers and eyes are good!

Enjoy?!

PPS:  HorseLoverFat looks fun:

[Animal Spirits]

3 hours ago, MrXxxx said:

Following on from a point that @DurhamBornhas made in the last three months regarding investment drawdown rates/equity-bond ratios, I thought others may find this of interest [I have also place it in 'The Library' thread for easy finding at a later date]:

https://insight.lcp.uk.com/acton/attachment/20628/f-2758550c-163d-4b08-8c17-63e0b7106f08/1/-/-/-/-/When QE broke the 4% rule .pdf

Basically it makes the following points:

1. At a 0.4% TER a 4% drawdown is not longer sustainable with the traditional 55/45 [or lower] stocks/bond retirement portfolio, only becomes realistic at 75/25 or above where the failure rate of running out of funds is 12-13%. At a 2% TER managed portfolio failure rates are doubled i.e. 21-24%

2. Due to lower returns/interest rates what was traditionally the SAFEMAX 4% drawdown rate is now 3%.

3. A 4% drawdown rate can be sustainable by reducing the TER to 0.4% and having a75/25 or above stocks/bonds portfolio [~12-13% failure] OR at a TER of 2% by not increasing drawdown by inflation every year with a 55/45 or above stocks/bonds portfolio [~9-11.5%].

There are also some other interesting models based on variation in partial retirement and/or U shaped spending pattern in retirement. In a nutshell 1. Reduce TER costs, and/or 2. Reduce bond allocation, and/or 3. Reduce drawdown%.

Interesting find @MrXxxx. DB has mentioned similar to the analysis but on a shorter timescale, page 2:

The best example of this is gilts, once a staple of retirement portfolios. Current gilts have a real yield (relative to inflation) of -2% p.a. Add to this typical private wealth / IFA fees of c2% this creates an annual 4% loss relative to inflation. This means that over a typical 23-year retirement an investment in gilts would be expected to lose 60% of its real value after inflation and fees.

The report assumes retirement at age 65 with an average life expectancy of 21 years.

Page 17:

Page 19:

In the example below, of a £1m starting pension pot, on average £416k is taken by the individual and over £304k goes in expenses, the balance being an inheritance. Those expenses really add up...

• The title of the analysis is debateable given the long term trend in bond yields before any QE.
• The report only briefly mentioned increased volatility seeking greater returns will involve, something that someone in drawdown may not recover from.

[Harley]

.