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

[Barnsey]

Insightful (if not particularly exciting) interview with the legendary Lacy Hunt

Watched this late last night at work, but from what I can remember, he’s forecasting a VERY long spell of disinflation and even -2% deflation (including FALLING wages). He does make a point of saying very desperate MMT could muddy this prediction somewhat but seems convinced (and you shouldn’t dismiss his intelligence lightly) that demographics and huge COVID debt overhang will suppress growth just as it has in the past decade.

I understand it goes against our expectations of inflation to come back rather sooner than 6-9 years from now, we’re possibly going to end up somewhere in between? Therefore keeping your reflation expectations a little more reserved in the near to medium term? To be fair to @DurhamBorn it’s towards the end of this decade where inflation is really expected to accelerate.

[Bricks & Mortar]

13 hours ago, Loki said:

Just reading some of that Raoul's latest tweets and I am struggling to understand this one

 

https://twitter.com/RaoulGMI/status/1254111689374666754

 

In the preceding tweets he seems to spell out why a strong dollar is a problem, then seems to imply a weaker dollar/lower DXY is bad.

 

I cannot understand this in the context of this thread - what am I missing? (Keep it civil yeah?) 

 

Edit: Has he just missed the 'government infrastructure spending' possiblility?
 

https://twitter.com/RaoulGMI/status/1254112583260528644/photo/1

Well worth reading this set of tweets.   It seems to be a slightly different view of debt deflation, and the cause/mechanism.

The one I homed in on, was near the end

Raoul seems to be expecting negative interest rates, (or at least, the bond market to expect NIR), in the near future.  It seems he can't imagine the scale of money-printing needed to lower the dollar.
Thanks to DB, for letting us know the number is indeed, almost unimaginably high, (all the disinflation since 1981).
For myself, I have difficulty imagining negative interest rates in the reserve currency.  But I don't count.
What matters is whether the Fed can imagine that level of printing, OR negative interest rates.

[Bricormortis]

 

Interview 46 minutes long... courtesy of Bloomberg. 

Touches on various topics without over committing himself, mentions  some inflation in assets and stocks followed by monetary inflation... what counts is the value of money going forward.... very specific things will benefit... a change in the world order...self sufficiency being more valued.

[DurhamBorn]

100% agree with Ray on self sufficiency.It will be a big driver of the cycle.UK has the chance to be one of the best performing economies.If we can scale up hydrogen from all the wasted wind energy even better.Im expecting that to be one of the main things in the UK.Factories are coming back,thats certain.Its already happening.Im really hoping they announce a new Arc steel works on Teesside.That will show the cycle for what it is going to be.Imagine large scale underground mining with Anglo American and a new steel works.You only have to re-introduce ship building and new energy plants and its 1850 again.

[M S E Refugee]

Is worth investing in the large household goods companies such as CL, RB.L, ULVR.L, PG, and SCA B.

I know they are safe but boring, expensive and pay low dividends or are other sectors such as Tobacco,Oil,Telecoms,Miners and Utility Stocks better value at this time.

[Fully Detached]

Quick thanks to whoever posted the Michael Moore movie and also the Raoul Pal newsletter, both a few pages back - I've done both of those today and they were both bloody brilliant. Together with @DurhamBorn's responses to @BurntBread's questions this has made today an epic time to enter this thread and start following it with a better idea of what the hell you're all talking about.

[Castlevania]

With regards to Raoul Pal, he runs a financial channel called Real Vision (the “Netflix of finance”). It’s really good but expensive. The basic package costs $239 for a year’s subscription.

However putting my @Yellow_Reduced_Sticker hat on, if you have an account with IG index then you seemingly get access to Real Vision for free. You have to fund your account with I think £500 and they charge you an inactivity admin fee if you don’t trade for two years and it’s not quite as convenient as having direct access, but all the same a fair saving.

[MrXxxx]

A couple of PM related questions:

1. Do people still think we are going to have a temporary drop in the gold price as the debt deflation `bites` and people have to `sell off the silver`?

2.  Don't have a base to hold solid, so what's the best alternative I.e. part bar investment vs etf/etc?

3. In 2. above would you vault in several locations I.e Zurich, New York, UK?

4. In 2. above any preferred options I.e Bullion vault, Royal Mint signature etc

5. Not sure if I read this on Dosbods or elsewhere, but what's the best ratio for holding pm`s I.e two thirds of allotted funds in silver, one third in gold AND/OR would you use a % for a pm miner ETF?

Note, I appreciate any replies are opinions, not financial advice/DYOR ETC.

[CVG]

12 minutes ago, MrXxxx said:

A couple of PM related questions:

1. Do people still think we are going to have a temporary drop in the gold price as the debt deflation `bites` and people have to `sell off the silver`?

2.  Don't have a base to hold solid, so what's the best alternative I.e. part bar investment vs etf/etc?

3. In 2. above would you vault in several locations I.e Zurich, New York, UK?

4. In 2. above any preferred options I.e Bullion vault, Royal Mint signature etc

5. Not sure if I read this on Dosbods or elsewhere, but what's the best ratio for holding pm`s I.e two thirds of allotted funds in silver, one third in gold AND/OR would you use a % for a pm miner ETF?

Note, I appreciate any replies are opinions, not financial advice/DYOR ETC.

1. Don't know. I just keep a given % of my overall portfolio in PM related assets.

2. Vault. I only use/trust ETF's for easy balancing.

3. Switzerland. I can get there!

4. Bullionvault.

5. Primarily Gold (as it is for insurance/stability purposes) - say 75%/25%. But spread across physical, vault, miners, ETF's.

[CVG]

23 minutes ago, MrXxxx said:

Don't have a base to hold solid

Just a thought. If you have a neck, wrist or ankle then perhaps you have more of one than you think.

[Sasquatch]

3 hours ago, MrXxxx said:

A couple of PM related questions:

1. Do people still think we are going to have a temporary drop in the gold price as the debt deflation `bites` and people have to `sell off the silver`?

2.  Don't have a base to hold solid, so what's the best alternative I.e. part bar investment vs etf/etc?

3. In 2. above would you vault in several locations I.e Zurich, New York, UK?

4. In 2. above any preferred options I.e Bullion vault, Royal Mint signature etc

5. Not sure if I read this on Dosbods or elsewhere, but what's the best ratio for holding pm`s I.e two thirds of allotted funds in silver, one third in gold AND/OR would you use a % for a pm miner ETF?

Note, I appreciate any replies are opinions, not financial advice/DYOR ETC.

1. No idea! I'm holding for the next 5 to 8 years and will sell when I can't hold my nerve any longer

2. Mainly vaulted, some PM's elsewhere in a safe place

3. London - I can get there! (I know Switzerland is held to be the safest place in the world but I am not Swiss. I have to have faith that the UK government won't go down the confiscation route)

4. Bullionvault (through business and through my SIPP)

5. 80% Gold, 17% Silver, 3% Platinum* (keep a close eye on this and would sell on and transfer to gold if I make a decent profit). Also some PM stocks (mix of large and very small)

[kibuc]

Silvercorp just bought Guyana Goldfields at 50% premium. Another one that got away. 

[janch]

On 26/04/2020 at 11:38, Bricks & Mortar said:

Raoul seems to be expecting negative interest rates, (or at least, the bond market to expect NIR), in the near future.  It seems he can't imagine the scale of money-printing needed to lower the dollar.
Thanks to DB, for letting us know the number is indeed, almost unimaginably high, (all the disinflation since 1981).
For myself, I have difficulty imagining negative interest rates in the reserve currency.  But I don't count.
What matters is whether the Fed can imagine that level of printing, OR negative interest rates.

Thanks for that as it explains the difference in Raoul Pal's thinking in that he thinks the dollar will go high.  As you say he probably can't imagine printing enough to lower the dollar which is what I was confused about in my previous post a few pages back.

Let's hope the FED don't lose their nerve.

 

[DoINeedOne]

5 hours ago, MrXxxx said:

A couple of PM related questions:

1. Do people still think we are going to have a temporary drop in the gold price as the debt deflation `bites` and people have to `sell off the silver`?

2.  Don't have a base to hold solid, so what's the best alternative I.e. part bar investment vs etf/etc?

3. In 2. above would you vault in several locations I.e Zurich, New York, UK?

4. In 2. above any preferred options I.e Bullion vault, Royal Mint signature etc

5. Not sure if I read this on Dosbods or elsewhere, but what's the best ratio for holding pm`s I.e two thirds of allotted funds in silver, one third in gold AND/OR would you use a % for a pm miner ETF?

Note, I appreciate any replies are opinions, not financial advice/DYOR ETC.

1. not sure to be honest but i will be buying more if we do

2. Small physical away in a different location, but mostly bar investment.

3. Toronto, Zurich and London

4. Bullion Vault

5. Physical, Miners & bullion vault are roughly 50/50 gold silver but broken down over total amount invested it works out as below

[Loki]

5 hours ago, CVG said:

Just a thought. If you have a neck, wrist or ankle then perhaps you have more of one than you think.

Or the 'prison wallet'

[janch]

 

Gold price adjusted for inflation since the 70s.

 

 

The largest and longest cup & handle I have ever seen.

 

 

The recent rally in precious metals is only the beginning.

 

[Loki]

1 hour ago, janch said:

Let's hope the FED don't lose their nerve

I summed up my portfolio to a friend as "IF they get the economy going again this is where the money will go. If my portfolio doesn't ultimately go up it's irrelevant as the economy will have collapsed"

[Gin]

6 hours ago, CVG said:

Just a thought. If you have a neck, wrist or ankle then perhaps you have more of one than you think.

Ten krugs round your wrist is a bit of a risk though.

[Cosmic]

On 15/04/2020 at 23:43, Bobthebuilder said:

Dont waste your money,buy a Festool TS55 rail saw, way better and has much more uses than a table type. Trust me, you will never look back. Got the t shirt and all that.

Looking at this and it turns out I can buy rails for my evolution circular saw. If I put a better blade (the Evo stuff comes with multi material blades - fine for studding out or garden fences but quite a rough finish), would I be far off the Festool for occasional use? 

[Loki]

My silver to go order has been despatched and the interest rate on my savings account has been reduced again

[Bobthebuilder]

1 hour ago, Cosmic Apple said:

Looking at this and it turns out I can buy rails for my evolution circular saw. If I put a better blade (the Evo stuff comes with multi material blades - fine for studding out or garden fences but quite a rough finish), would I be far off the Festool for occasional use? 

Dont know the Evolution product, but if the rails are made for your saw model and fits in the rail slides,i guess it would work much the same.

[MrXxxx]

3 hours ago, Gin said:

Ten krugs round your wrist is a bit of a risk though.

I was thinking more a solid $ symbol around my neck a la Ali G or Mr T (remember him?) "What choo looking at Carney!" :-)

[MrXxxx]

2 hours ago, Loki said:

My silver to go order has been despatched and the interest rate on my savings account has been reduced again

Always makes me laugh (well it doesn't, it actually pis@es me off) when they blame the BoE as a justification, but forget to lower their mortgage rates by an equivalent %!

[nirvana]

5 hours ago, janch said:

Let's hope the FED don't lose their nerve.

I'll play devil's advocate, I think what they're doing is immoral! They just repeatedly bail their mates out.....

On the subject of our 'pal' Raoul Pal I came across this at the weekend https://threadreaderapp.com/thread/1254110879479746562.html

quotes  'There are simply not enough dollars available in the world to service all the debts and thus a debt deflation remains the BIG RISK.'

'The global system is just not set up to deal with this. It is an UGLY situation with almost zero options without a change in the entire system. No printing of money will solve this. It is structural'

I've read this second point mentioned other places as well, bottom line, the FED can't bail the whole world out!!

[nirvana]

Some recent graphs some might find interesting...