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

[Bobthebuilder]

31 minutes ago, wherebee said:

The beast that shall not be named lost my pension data.  I wouldn't trust them with a dead cat.

I say this very quietly but Vod are a shit company to be a customer of, maybe it's me, but I am shocked how bad they are at customer service.

[ThoughtCriminal]

https://twitter.com/MacleodFinance/status/1339692783876120582?s=19

 

Excellent article that covers much of the topics discussed on here. 

 

He maps out the path to the BK.

Doesn't make for pretty reading. 

[Noallegiance]

17 minutes ago, ThoughtCriminal said:

https://twitter.com/MacleodFinance/status/1339692783876120582?s=19

 

Excellent article that covers much of the topics discussed on here. 

 

He maps out the path to the BK.

Doesn't make for pretty reading. 

I literally just finished reading this:

https://www.goldmoney.com/research/goldmoney-insights/the-next-dollar-problem-has-just-arrived

 

[Inigo]

I pay for a listing on a business website and each year have a brief chat with the guy that runs it before renewing.  We talked about how business has been going, which for us has been quite a good year.  He said he was also having a very good year (as a result of most people having to move at least an element of their business online) and his customers were split between 30% very good year, 30% OK year and 40% shit year.  We talked about how we see the future and he volunteered the phrase "roaring twenties" for how he sees business from 2022 onwards.

Thought it interesting that  @DurhamBorn's phrase is spreading.

[ThoughtCriminal]

29 minutes ago, Noallegiance said:

I literally just finished reading this:

https://www.goldmoney.com/research/goldmoney-insights/the-next-dollar-problem-has-just-arrived

 

Snap. 

 

What did you think? 

 

I found it be very plausible and chimes with much of the consensus on here. 

[Metalheadz]

Adriatic Metals is probably a safe (if a bit boring) bet if you believe $35 silver is on it's way. Buttload of silver that will actually get mined in the not too distant future. Not likely to shoot to the moon but would expect it to clear the summer high. LSE listing but fairly illiquid.

I'm having a punt with some smaller Canadian silver juniors. I made a spreadsheet showing the performance over the Summer run and found companies with a market cap around $50m were the most torquey (+200% ish to peak). I'm a bit sceptical that companies now around $150m MC will double/triple again but I guess everything is possible.

On the charts I'm following a lot of silver juniors are breaking out or itching to. Not sure I'm a believer yet but interested to see how it plays out.

[The Grey Man]

There is a head wind of free cash to keep the system going. The western system.  Hence the view of inflation ahead and this is a magnitude greater than a decade ago.

How far and how quick the supply lines decouple will add a massive factor. COVID has always been a war. Its also known as China. Destruction of industry and rebuild. This time we dont get to rebuild the enemy. Only ourselves or our sides.

I think the incoming US government might be more diplomatic than Trump. Thats all. To praise Obama? Yep I will. He spent close to a month during the Malaysian Airlines crash in the Ukraine, out East, attemptimg to sure up SE Asian sea allies. Did not wholly work. Trump carried on.

The relevance for me poking my beak in here is do not underestimate the decouple. If total and no major military issues we see a formally divided world but with a lot of cash to remake it.

Compare post banks issue. We saw a hell of a lot more of that money head out east.

I dont see Biden will break from this.

The dollar collapse, for me, is the race to build these two new worlds before those on the other side deceide to dump the dollar. It will be timing that point. During that period it is very clear alternatives will be attractive such as bitcoin.

The other side might win. 

 

[DurhamBorn]

9 hours ago, Loki said:

Dave H now agrees with Durham B

 

David uses a lot of the same tools i use,he worked for Fidelity as a junior equities guy on the team i got a lot of my work from.He tends to add much more contrarian thoughts into the numbers though.Easily one of the best still actually doing real macro work.Most are just economists now,macro tourists as my friend calls them,

[DurhamBorn]

9 hours ago, Barnsey said:

Last paragraph of the article:

"Once the great melt is underway, the public will insist that policymakers continue MMT and similar monetization policies. Historically, when money supply growth outpaces economic growth, inflation happens. Inflation could happen next year, according to Edwards. He agrees with descriptive aspects of MMT but fears the political forces that will force it to continue indefinitely."

I think we will start to see it in the numbers mid summer and be visible be the autumn Barnsey.The Euro zone is still deflationary at the moment,but that will change into next year i think.M1/2 crossing GDP as you say is one of the key numbers that starts to move the dial on velocity.

[Sugarlips]

So with DXY sub 90 another of DB’s long held predictions is coming to pass, congratulations.

Aside from the previously agreed long term positions in bullion and energy etc, how will you be playing this, will it kiss 88 then rocket higher? Are you ready to buy USD when it hits?

[jamtomorrow]

7 hours ago, ThoughtCriminal said:

https://twitter.com/MacleodFinance/status/1339692783876120582?s=19

 

Excellent article that covers much of the topics discussed on here. 

 

He maps out the path to the BK.

Doesn't make for pretty reading. 

Good to see alternative hypotheses being advanced for the recent spike in M1:

"It is driven by factors on both sides of bank balance sheets, with evidence that large depositors are reducing their term deposits and increasing their instant access checking accounts. This appears to be behind the increase in M1 money supply fuelled out of a shift from the M2 statistic, which includes savings deposits.

It amounts to a hidden run against bank balance sheets."

That said, Macleod has been roaming the streets ringing his clanging chimes of doom for some time now. A few months back, he predicted the fiat system would collapse before YE. He'll be right eventually I expect.

[wherebee]

2 minutes ago, jamtomorrow said:

That said, Macleod has been roaming the streets ringing his clanging chimes of doom for some time now. A few months back, he predicted the fiat system would collapse before YE. He'll be right eventually I expect.

This is the problem.  It's like all those predicting the collapse of the stock market in 1921.  They were right, but 8 years too early, and they missed out on every penny in the meantime.

 

[jamtomorrow]

1 hour ago, DurhamBorn said:

I think we will start to see it in the numbers mid summer and be visible be the autumn Barnsey.The Euro zone is still deflationary at the moment,but that will change into next year i think.M1/2 crossing GDP as you say is one of the key numbers that starts to move the dial on velocity.

Another crossover of interest ... (don't want to come over all Macleod, but it does seem like a very big deal for a supposedly global reserve currency). It's already being called "The Dolphin":

 

[ThoughtCriminal]

1 hour ago, jamtomorrow said:

Good to see alternative hypotheses being advanced for the recent spike in M1:

"It is driven by factors on both sides of bank balance sheets, with evidence that large depositors are reducing their term deposits and increasing their instant access checking accounts. This appears to be behind the increase in M1 money supply fuelled out of a shift from the M2 statistic, which includes savings deposits.

It amounts to a hidden run against bank balance sheets."

That said, Macleod has been roaming the streets ringing his clanging chimes of doom for some time now. A few months back, he predicted the fiat system would collapse before YE. He'll be right eventually I expect.

Interesting. 

 

I think it serves us well to look at the work of others who also see where this is leading but perhaps see a different outcome. 

 

Think DB sees the dollar recover whereas Macleod doesn't. 

[Loki]

21 minutes ago, ThoughtCriminal said:

Think DB sees the dollar recover whereas Macleod doesn't. 

“The reports of the dollar's death are greatly exaggerated.” 

Easy way to get eyeballs.

[Heart's Ease]

2 hours ago, jamtomorrow said:

That said, Macleod has been roaming the streets ringing his clanging chimes of doom for some time now. 

Can't let that go past without giving it a seasonal nod.  🔔🔔

[Barnsey]

6 hours ago, DurhamBorn said:

I think we will start to see it in the numbers mid summer and be visible be the autumn Barnsey.The Euro zone is still deflationary at the moment,but that will change into next year i think.M1/2 crossing GDP as you say is one of the key numbers that starts to move the dial on velocity.

Current status:

[nirvana]

Oil 49 

 

[sancho panza]

As ever hattip to @Democorruptcy for bringing Dr Tim to the thread.I've reprinted in full for those who want the nuance but you can read the bits in bold for a speed read.

Where we are,where we're going.Posing the question of how far service orientated economies have to fall..........???Also posing the question of what happens when the demand for credit starts dropping?

decomplexification,loss of critical mass,falling utilization  rates etc etc

https://surplusenergyeconomics.wordpress.com/2020/12/08/186-the-objective-economy-part-three/

#186. The objective economy, part three

Posted on December 8, 2020

CRAFTING THE FUTURE

Behind most complex issues lies a stark simplicity which, once grasped, imposes logic on seemingly-baffling situations. That’s certainly true of our economic and broader predicament.

Ultimately, the economy is an energy system, and energy, though abundant, cannot be ‘had for free’. Whenever energy is accessed, some of that energy is always consumed in the access process. This input-output equation – known here as the Energy Cost of Energy (ECoE) – has now turned against us, undermining the dynamic which has driven economic growth ever since the late 1700s, when the invention of the efficient heat-engine first enabled us to harness the power of fossil fuels.

The fossil fuel dynamic worked in our favour for far longer than it takes to become complacent, and to assume – on the basis, not of analysis, but simply of past experience and extrapolation – that economic growth must continue in perpetuity. 

A second stark simplicity is that we cannot ‘fix’ an energy problem with monetary tools, any more than one could ‘fix’ an ailing house-plant with a spanner. If we switch our metaphors and picture rising ECoEs (and dwindling surplus energy) as an oncoming truck, our responses over the past quarter-century have amounted to throwing the financial system under the wheels.

Since the economy is a product of the energy dynamic, changes in that dynamic affect not just the size of the economy, but its shape and character as well. Having spent more than two centuries building an energy-profligate dissipative-landfill system, we now face reversion to a more energy-frugal economy in which the relationship between (a) exogenous energy inputs, and (b) the human component tilts back towards the latter. A useful shorthand term for this human component is ‘craft’, a word which captures skills as much as, or more than, it references physical labour.

This tilt in the equation does not portend a return to some romantically-imagined past, and neither does it imply that we can make ‘by hand’ products supplied today by energy-intensive mass production.

Rather, it means that the production and purchasing of these products will dwindle, a process which is already under way. As we’ve seen, demand for discretionary (non-essential) goods and services has already become dependent on a necessarily finite process of credit expansion.

Changes in consumer purchasing will be accompanied by changes of supply processes. These changes – which will include de-layering and simplification, and will be spurred by falling utilization rates and progressive losses of critical mass – can be summarised as “de-complexification”, which involves the reversal of the economic and broader complexity that has been created by abundant, ECoE-cheap energy.                  

Introduction

At the very start of his 1929 novel The Good Companions, J.B. Priestly puts the reader high above the Pennine hills in the northern English county of Yorkshire. From there, we descend gradually, concentrating first on a town, then on a street, then on a sea of cloth-capped men walking home from a football match, and finally on a single man, Jess Oakroyd, one of the central characters in the narrative.

Looking down from a similarly elevated position, the World economy has become a dissipative-landfill system, using energy-profligate processes to transform raw materials into products which, for the most part, are rapidly abandoned to landfill or other methods of disposal. This is in stark contrast to the craft model which prevailed before the Industrial Age, when the balance between energy-derived inputs and human skills was very different, and in which the quality of goods, and certainly their durability, was rated a lot more highly than it is today.

Three hundred years ago, people were far likelier to maintain, repair and reuse artefacts than they are now. These are skills that we’re going to need to re-learn.

Properly understood as an energy system, the economy has reached the end-point of a phase in which material prosperity has expanded massively because of the abundant availability of cheap energy from oil, gas and coal.

One of the factors which is bringing this long chapter to an end is the dawning recognition that the environment can no longer tolerate the further expansion, or even the continuity, of a system based on the profligate use of fossil fuels.

The other factor, as yet largely unrecognized, is that oil, gas and coal have ceased to be ‘cheap’ in the only meaningful sense, which is the Energy Cost of Energy (ECoE). After all, abundance of energy supply would be completely meaningless if we were ever to find ourselves using 101 units of energy to access 100 units.  

Where supply systems are concerned, the fundamental issue at stake is the changing relationship between exogenous energy inputs and the human contribution.

This human contribution has always had two components. In past times, human physical labour, sustained by farming and augmented by the use of wind, water and animals, supplied the bulk of the energy used by the economy.

But the second (and arguably the more important) human function has always been the direction and application of energy, however that energy is sourced. In pre-industrial times, skills known as crafts played a very important role in a context of resource and energy scarcity.

As the balance tilts away from energy profligacy, we should anticipate a greater reliance, not just on human labour itself, but even more on the application of craft, a term which needs to be understood as a combination of design and skill.

The importance of ‘craft’ is simply stated. Starting with the same materials, and expending the same amount of labour, one person might produce an artefact of quality and durability, whilst the efforts of another might result in failure. The difference between the two is the meaning of ‘craft’ as the word is used here.  

This tilting balance does not imply a return to some halcyon rustic age of craftsmanship, let alone to a bucolic existence which looks far better to nostalgic hindsight than ever it felt to the vast majority at the time. Rather, it suggests profound changes along lines which this article aims to explore.

Properly understood, we can anticipate some, at least, of the economic processes involved, and this should give us a reasonable level of visibility on what the post-dissipative economy is going to look like.               

Context – the end of energy profligacy

The necessary parameters here – which are familiar to regular visitors to this site, and can be stated briefly – start with recognition that the economy is an energy system, and not the financial one as which it is so often misrepresented.

All goods and services which have any economic utility at all are products of the use of energy. Properly understood, and although it is used for many other purposes, money operates primarily as a medium of exchange. This means that money has no intrinsic worth, and commands value only as a ‘claim’ on the goods and services produced by the energy economy. This interpretation was set out in more detail in part one of this series.

The critical factor in the energy economy is the observation that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This component is known here as the Energy Cost of Energy (ECoE), and the level of ECoE determines how much remaining (surplus) energy is available for all economic purposes other than the supply of energy itself.

Analysis undertaken using the SEEDS model indicates that sensitivities to ECoE are inverse functions of complexity. In the highly-complex Western advanced economies, prosperity per capita turns downwards at ECoEs of between 3.5% and 5.0%, thresholds which were passed between 1997 and 2005. Since then, the average person in these economies has been getting poorer, a trend which no amount of financial gimmickry can reverse.

The equivalent threshold for less complex emerging market (EM) economies lies at ECoEs between 8% and 10%, a band which the World entered in 2017. Accordingly, global prosperity per person has now turned down from a long plateau, and our efforts to use credit and monetary adventurism to disguise and deny (since we cannot change) this trajectory explain the increasingly surreal character of the global financial system.

Critically, and as we discussed in part two, the process of deteriorating prosperity takes place through a hierarchy of calls on incomes. First calls are made by taxation, and by the cost of household essentials. These prior calls leverage the way in which a deterioration in prosperity reduces the residual capability to make discretionary (non-essential) purchases. SEEDS analysis indicates that, in a growing number of countries, discretionary prosperity has already been squeezed almost out of existence within recent years.

Of course, this doesn’t mean that no discretionary purchases are made by the average person. But it does mean that such purchases are now, for the most part, financed using credit. Moreover, and reflecting deviations in income around the average, some households can still make discretionary purchases without resorting to debt, whereas others are already using credit to fund part of the cost of essentials. This is a variance which points strongly towards growing popular demands for redistribution.

Since debt is ‘a claim on future money’, whilst money is ‘a claim on energy’, debt can be defined as ‘a claim on future energy’. If, when credit falls due for payment, the presupposed level of applicable surplus (ex-ECoE) energy is found not to exist, neither conventional debt or other financial promises (such as pensions) can be met. At this point, the only choice which remains is between ‘hard’ default (where we renege on commitments) or ‘soft’ default (where commitments are met, but in money devalued by inflation). Historically, the preference has tended to be for the latter.

A further complicating factor is that the financial and corporate sectors have created liens on income which are the household counterparts of the streams of income on which so many business models now depend. Once confined largely to rent and mortgage payments, these liens have since extended into a gamut of payment streams which include credit, staged purchases and subscriptions. Additionally, many of these streams of income have been capitalized into traded assets, originally exemplified by the mortgage backed securities (MBSs) which became so prominent during the 2008-09 global financial crisis (GFC).

How it happens

These considerations form the essential context for how the transition from the dissipative-landfill model to a more craft-based economy can be expected to take place.

It is, of course, extremely implausible that we will start selling hand-assembled cars, and even less likely that we’ll switch over to man-made gadgetry, or craft-produced computers. But this isn’t the way that change is going to happen.

Rather, we will simply make and buy less of these energy-dissipative products over time. Since we know that the scope for discretionary consumption is subject to a relentless squeeze – a trend that currently is being staved off by credit expansion alone – we can further infer that transition will involve falling sales of consumer products manufactured along energy-intensive, dissipative-landfill lines. This can be expected to begin in discretionary product classes.

There are already several pointers towards such trends. First, hindsight seems likely to confirm that sales volumes in a string of product areas – including cars, smartphones, computer chips and electronic components – peaked during 2017-18.

Second, plans to replace internal combustion engine (ICE)-powered cars and lorries with electric vehicles (EVs) are likely to happen on a less than one-for-one basis, resulting in decreasing fleet sizes, with ICE vehicles disappearing more rapidly than EVs arrive to replace them.  

Third, various ideas are being canvassed that would see people renting items which, hitherto, they would have owned. These ideas raise important issues about ownership, about the distribution of income and wealth, and about income streams, but they do point towards reduced ownership, implying smaller quantities and falling sales in a gamut of product categories.

Because the economy is characterized by complex inter-connectedness, it’s not too difficult to describe how these processes will unfold. These have been discussed here before as part of the “taxonomy of de-growth”.

First, we should anticipate a reversal of the process by which, as the real economy of prosperity grew larger, it also became progressively more complex. Even an industry as seemingly basic as the supply of food has expanded from a relatively limited number of trades into a host of specializations, whilst whole sectors of the economy exist as service adjuncts of others.

As this process goes into reverse, we will witness both simplification and de-layering. Whilst the latter term is self-explanatory, describing the shrinkage and elimination of whole tiers of activity, ‘simplification’ refers both to products (with customer choice reducing towards more basic ranges) and to processes, where methods of production will become less complex, whilst supply chains are shortened.

Meanwhile, we should anticipate the compounding effects of two further processes. One of these is falling utilization rates. This can be considered using the example of a bridge, whose economic viability relies on spreading the fixed costs of operations over a large number of users. As user numbers decrease, the share of fixed costs needing to be allocated to each user increases, pushing prices upwards, and accelerating the rate at which user numbers fall. This effect applies to any activity whose viability relies on economies of scale, which means that exposure to this downwards pressure is going to be virtually ubiquitous across the economy.               

A second and related process is the loss of critical mass. This occurs where some of the many components or other inputs required by a production process cease to be available. Some such gaps can be worked around, and will indeed form part of the simplification process. But others either cannot be surmounted cost-effectively, or cannot be overcome at all. Accordingly, products cease to be made because some necessary inputs can no longer be sourced.

Importantly, loss of critical mass and falling utilization rates can be expected to interact in a compounding process (for which provision is now made in the SEEDS economic model). We can, for instance, picture a manufacturer ceasing to make a product because critical inputs cannot be obtained. This reduces the purchasing of other components, whose supply then ceases because suppliers’ own utilization rates have fallen below the threshold of viability.

Services – rapid shrinkage

It makes sense to pause here and recap what we’ve observed so far. Energy-based analysis indicates that, because of deterioration in the energy dynamic, past growth in prosperity has gone into reverse, which makes the average person poorer over time. We also know that, because of the hierarchy of calls on incomes, we’re witnessing a leveraged squeeze on the scope for discretionary purchasing, to the point where much, perhaps most, of the ‘discretionary economy’ has become hostage to the ultimately-finite process of credit expansion.

We can further note that, as consumer discretionary purchases contract, we will witness de-layering, product and process simplification, and the compounding effects of falling utilization rates and losses of critical mass. Together, these processes point towards a shift away from energy-profligate, dissipative-landfill production methods towards smaller, more local and more ‘crafted’ supply processes which rely less on exogenous energy inputs and more upon human skills.

Thus far, we’ve concentrated primarily upon physical goods, though it must be emphasized that the whole “de-complexification” process will affect services at least as much as (and probably more than) it affects the supply of goods. Service sectors are prime candidates for de-layering, are likely to be amongst the first casualties of simplification, and are particularly exposed to the adverse effects of falling utilization rates.

There is, though, an additional, quite fundamental point to be noted about the diminishing role of services in an economy transitioning away from the dissipative-landfill model to which we have long become accustomed.

Ultimately, service industries are adjuncts of the supply of goods, and are a product of the complexity and the efficiencies created by the energy-profligate system.

This is not a conclusion that a perusal of conventional economic data would reveal. Official statistics indicate that services account for 63% of World economic activity (as of 2017), and that the proportions are even higher in the United States (80%), Britain (79%), the European Union and Australia (both 71%).

Since ‘industry’ (of all kinds) accounts for 30% of World GDP, and for lower proportions still in the advanced economies, one could easily conclude that services are ‘at least twice as important’ to the economy as manufacturing, and all other production activities, put together.

This is a wholly misleading interpretation, in much the same way as similar statistics could be used to ‘prove’ that, since agriculture is ‘only’ 6% of World economic output, 94% of the economy could continue unscathed even in a situation in which the production of food had become impossible.

The reality is that, in the pre-industrial economy, services were few in number, and rudimentary in character, and a retreat from an energy-profligate system can be expected to drive their role back towards that situation. Historically, the availability of low-cost fossil fuel energy starkly and relentlessly reduced the numbers of people required for the supply both of food and of physical goods, which meant that the numbers no longer required for these activities soared. This was the dynamic which drove the expansion and proliferation of service activities, and the consequent reallocation of financial activity is reflected in statistics which seem to show that services are now ‘more important’ than production.

The obvious corollary is that service activities will shrink more rapidly than the supply of goods as the economy moves away from the dissipative-landfill model.

A final conclusion – for now – is that many of the giants of the commercial and financial landscape will fade from prominence as the economy rebalances away from the dissipative-landfill system.

This, at least, should not cause undue surprise to anyone who has a knowledge of commercial history – after all, global trade is no longer dominated by businesses like the Honourable East India Company and the Hudson’s Bay Company, any more than the Dow Jones Industrial Average is populated by former stalwarts such as the Distilling & Cattle Feeding Co., the United States Leather Co., the Remington Typewriter Co., or the Victor Talking Machine Co..  

[sancho panza]

41 minutes ago, Cattle Prod said:

Great podcast on https://www.macrovoices.com/ this week. Got Kyle Bass on who I always listen to, getting some big hitters on now. 

Erik is completely wrong about the coronavirus as usual (no excess deaths since May, mate), but that apart, top notch interviewing and insight as usual.

Points of interest for me:

- Erik's come off his idea of the recent rallies being vaccine driven, posits that current rallies are only the beginning of the reaction to the covid thing being over. i.e. a melt up ahead. Questions Berman's US production target of 5.5m bbl as I did a few months back, says he'll get him back on, should be interesting. Going to get Luke Gromen back too to talk about the dollar. Points out that if the Democrats take the Senate in the Georgia runoff, fiscal stimulus will be much higher, and bullish for PMs. He interviewed the head of GS commodities who see a secular commodity bull starting, sees a big run up in oil etc. Must check it out.

- Kyle...well let's just say he's all aboard the DOSBODS train! Sees an oil price squeeze next year and sees natural gas as perhaps THE play on the 2020s commodity boom. Interestingly, he prefers owning the commodity rather than the company, not sure how he deals with decay. Interesting thoughts on Bitcoin too.

He's a pretty original thinker, but it's like he was skimming this thread. Good to have a guy who made a billion dollars betting Greece would default when no one else believed it could happen on board with us. Welcome, Kyle 

I like Kyle bass too but he has been wrong about the collapse of japan for a long time......being right early is the same as being worng and I say that from bitter expereince.But he has made some amazing calls.I remember him buying ncikels and dimes from banks in bulkas they were worth more melted down....

Look forward to having the time to enjoy that podcast

On the matter of excess deaths.Year end approaches and the truth will hit home.From Dr Clare Craig (fellow fo the royal College of Pathologists no less)

 

[sancho panza]

2 hours ago, Barnsey said:

Current status:

 

[sancho panza]

6 hours ago, ThoughtCriminal said:

Interesting. 

 

I think it serves us well to look at the work of others who also see where this is leading but perhaps see a different outcome. 

 

Think DB sees the dollar recover whereas Macleod doesn't. 

He's making a few dangerous(to your wallet anyway) assumptions regading the ratio of M2/M1.He's mainly citing companies moving out of time accounts as them getting ready to spend.It could also be that in times of uncertainty they've weighed up the opportunity cost of having cash at hand versus benefit of getting their proportionate share of 0.25% APR and decided they'd rather have cash at hand given the unpredicability of the crisis we're in.Anyone involved in commerical real estate would be a case in point.

 

'The hyperinflationary trend of US M1 money supply is clear. '

Like msot hyperinflationists he bases his analysis on supply of money when as @Barnsey  and @DurhamBornare  alluding it's the velocity that predominantly matters.Supply rising into slumping velocity is not hyperinfaltionary.

 

He makes some good points on credit deflation and also makes the pertinent point that a lot of investors are cashing in profits but converting straight to anotehr asset class eg crypto.

I think the dollar has one more cycle in it. and we're a long way from hyperinflation at the moment.

 

[Yellow_Reduced_Sticker]

On 17/12/2020 at 08:46, 5min OCD speculator said:

maybe but UK is a complete shitehole and  the infrastructure sucks arseholes....like the planners......and unlike France which is paradise in comparison.....enjoy your Brexit 

 

Ah HELLO me 'ol COKCA SHERBET Mucker loving ya post pics AND thanks for selling me all ya RMG at bottom prices ...ya in frogLand, emm ... SO how come your neighbour @TheCountOfNowhere is wanting to buy a house back in the UK now OR has he done it already? don't know as he/she hasn't posted here in a long time...

 

BTW, CRAZY times with house prices here in the Cotswolds, around the corner from me a bungalow went up for sale last Thursday SOLD next frigging day!

[nirvana]

19 minutes ago, Yellow_Reduced_Sticker said:

SO how come your neighbour @TheCountOfNowhere is wanting to buy a house back in the UK now

search me, he probably had family.....tough gig if your wife is a bitch 

good out in the country thanks; I go for my daily baguette  Glad you got the RM, I got plenty of oilies instead  

Have fun!

 

[jamtomorrow]

40 minutes ago, sancho panza said:

I think the dollar has one more cycle in it. and we're a long way from hyperinflation at the moment.

This is where I wonder about the word "cycle" - the *petrodollar* as we know it has had just the one full "cycle" within the meaning of this our blessed thread, 1970s to present. Give me two of those, and then maybe I'll concede it's worthy of the word "cycle".

But I don't see the dollar lasting another 50 years. It's a mental stretch to imagine the fiat system and monetary communism (aka: central banking) lasting another decade.

Or is the thinking that the emerging monetary cycle will play out much *much* quicker?