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

[sancho panza]

15 hours ago, Democorruptcy said:

I expected gold to do a lot better this year before the 10 Yr turned but it's done little more than the 2011 peak. In proportion to the drop in the 10 yr for the GFC, it's not gone up enough. Maybe Bitcoin has taken some of the juice?

I definitely think you're right there.Time will tell whether Bitcoin has legs.I think some sort of crypto is inevitable and when you see the likes of Raoul Pal pushing it,you know the insto's won't be far behind.

I left gold off the chart because I think DXY and UST's are showing some correlation currently.It has disappointed this year,especially when you consider how much the PM miners have underpeformed,which reinforces your Bitcoin tkaing the juice thesis.

8 hours ago, DurhamBorn said:

Exactly as we exected.Governments are monetizing back the disinflation to get it out of the economy and into the BOE cupboard marked do not open 0.5% coupon.

Quite.I've psoted a fair bit in the past about Fisher's paradox before ie that the more people pay down debt the more they'll be unable to pay it down,and what we're seeing here and what we saw in MArch/April with huge chunks of credit card debt paid off is one of the first major red warning flags of the BK imho.For decades,even in crisis people have used revolving credit when things have got tough.All of a sudden they're not.

What's happened-the man on the street knows somethings up.I was down at Leicester Market this morning taking 2 year old Panza on her weekly soft commodities lesson and the place was dead.In the military it gets called 'combat indicators',you know where people sense that something's wrong but can't quite put their finger on what it is.I'm seeing that in increasing numbers of people both socially and at work.They know somethings up because what they're seeing isn't matching what they're being told.

The first seeds of the debt deflation are the changes to spend spend spend psychology.

 

https://en.wikipedia.org/wiki/Irving_Fisher

Crucially, as debtors try to liquidate or pay off their nominal debt, the fall of prices caused by this defeats the very attempt to reduce the real burden of debt. Thus, while repayment reduces the amount of money owed, this does not happen fast enough since the real value of the dollar now rises

[sancho panza]

4 hours ago, dnb24 said:

Clinically I think there are a number of things at play for the differences in Asian numbers and Western numbers-

1. Primarily the dry tinder from UK 2019.

2. Lack of care- there have been more private home deaths this year than ever recorded- nhs shut down=death. 

2. I think BAME- lack of vit D- has a role due to increase in cardiac issues/diabetes etc make them low hanging fruit. Asian countries are more homogenous and therefore essentially adapted for their climate.

2. Obesity as per SP states (links in with vit D also).

However, i believe if we were not at a cross roads for western state finances, and therefore politics, then the media wouldn’t have spun this as they have. Excess deaths and NHS load was equal to or worse in 1999/2000, 2007/2008, winter 2018/18 yet no one remembers them. 
Which brings me to my fourth point- Japan is in a very different place to the West in terms of state financial and fiscal policies- it is arguably not necessary for Japan to shut down its economy to turn things towards an industrial cycle they are already there and have a population who are already insular in most aspects of life. Why I say this is because we can see direct Western government influence on media/PCR testing/testing availability/shutting the NHS down through staff shortages when it suits them. To turn a ship like the western economy and To change government policy you need to ensure the plebs are looking the wrong way for a fair amount of time. 
Barnsley mentions above thread that the BOE and FED have prepared for the BK, and I believe that, they’ve used covid to preload the coffers ready to take up the slack when the BK comes. The stats have allowed them to do this- fear has enabled them. 
Still it could be worse- they could have sent all men under 40s into a 2-3 year war!! 
 

Great psot there Dnb.Aside from your points on covid,I think it's an interesting line of thought there on Japan and also on keeping the plebs like us looking the worng way while the trap is getting set.WOrking people who don't get exposure to the inflation areas are going to see huge chunks of their wealth evaporate.

And you're right the govt have shut down the NHS at will at times.Incredible to see especially given the public were out there clapping for it at the same time as oldies were being sent back to care homes with/without covid where the staff jsut weren;t eqipped or trained to look after them.

5 hours ago, 5min OCD speculator said:

that's not really true is it? It's a function of the printing press.....if USD was so much in demand why has Euro rocketed in value? ie DXY dumped it's arse

Wolf is tlaking about cash USD not USD more generally.The peritnant point to me is that people are hoarding cash.I'm not disputing DXY has dropped.

another red flag on the road to a significant deflationary event.

[Errol]

[Errol]

Commodities breaking out of a massive decade-long wedge:

 

[sancho panza]

2 hours ago, Talking Monkey said:

Considering the number of deaths are no more than a bad flu season it does hint at another agenda. Therefore to me it seems a BK is almost being engineered to then justify the truly massive printing that is to be done. The amount of time and effort the US took to get the second stimulus done leads me to believe any very significant further expansion of the Fed balance sheet would need a huge event.

Linking into both the globalist agenda to decimate the middle classes along with the maxim the market hurts the most people, then a BK almost seems an inevitability.

A BK was/is ienvitable.And has been since the CB's failed so misearably to sort out the problems that caused 2008.The simplest solutiion to the huge Western debt problems is monetary inflation running alongside declining real wages.So that makes that otucome a certainty in my eyes.

We've seen the 08-20 playbook and they haven't changed much in it depsite it not working so well.

The banking system is utterly broken as often discussed on here which makes the routing of stimulus via other channels a certainty as @DurhamBorn has long said.

I think your point on middle class people getting burned is bang on but I don't think it was intended,it's going to be an unfortunate side effect.The reality is that the mechainsm for maintaining their main source of wealth-hosuing-is unrepairable and the mechaism for stimulating the economy-industrial spending-will bypass it.

3 hours ago, JMD said:

Thanks SP, i thought as much. The differences in country death rates are mostly related to obesity/diet/co-morbitities. Something we knew/deeply suspected last February if i'm not wrong? 

But this is never discussed as being the most important factor in shielding the vulnerable. Instead we are all triggered into being 'all in it together' - or as i prefer to say: a community based 'joint enterprise killing of the economy'!

Me and @dnb24 were having covnersations in Mar/April confirming what we seeing in our respective regions hospitals and what we were seeing/hearing clinically.

People like John Lee,John Ioaniddis,Sunetra Gupta,Clare Craig,John Nicholls etc etc have been calling this from the start.Ioaniddis even wrote an article in March 20 predicting that the disaster was in the data they were using given the lack of deaths on the Diamond Princess cruise ship and he's been proven absolutely right.

My cynicism was firmly based on the fact that empty hospitals are a bad thing and that's what I saw in March.However you dress it up with fancy words,empty hospitals mean more misery not less.

[sancho panza]

1 hour ago, Chewing Grass said:

Pouring money into a deflationary depression, its what the textbooks say would have been the answer to the Great Depression, perhaps they are wrong.

to paraphrase Steve keen:'the answer to the Great Depression was World War Two'

[JMD]

1 hour ago, Loki said:

History is written by the winners

Hey ho.

Loki, I know what you mean and where your coming from with that statement. But there are many levels of knowledge and of 'history' - nothing is expunged entirely or for all time.

 

Please excuse the following boring detour/thread derailment(?) into the topic of history, but i think it illustrates my point... For example, immediately following WW11, with all the death and destruction suffered, could we have had the discussion below? Today however, this history/knowledge is openly available for all to debate. 

So for example, who/what was mainly responsible for WW11? Was it Hitler, or was it rather the case that Hitler's greatest influence was in fact more to do with actually losing the war for Germany? I think the later. Hitler came along at the right time, but if he hadn't, someone else would have arrived to fill his leather boots, not to mention help fulfil 'German destiny' (see Mitteleuropa, the 19th century German expansionist policy that was always going to end badly). However, Hitler's personal anti-semitism lost Germany many hundreds of Jewish nuclear/chemical scientists/missile engineers, who fled from Germany, but if they had remained they would have developed weapons which may/probably have won the war for Germany.

...Thought experiment: If Germany had won its European war, what would Europe look like today? In light of even the mighty USSR unexpectedly folding after only 70 years, and with slight adjustment for time frames, i think Europe would look similar to our modern EU. Difference is we would never have joined of course, and Russia and its empire would be members (Lenin would not have been 'sent in' (by Germany no less, you couldn't make it up!) to start 'his' Russian revolution; but that's another story/history. 

To be clear, I'm not attempting to take a cynical line. I like history and I have come to understand that 'history' is hardly ever really just a academic interpretation of past events, it is rather a set of stories that we tell ourselves in order that we can better understand both ourselves and times we are living through (sounds a bit esoteric, but Yuval Harari's book Sapiens is good on the broad subject of anthropology/history/myths, i found it helped crystalize many of these ideas for me).  

[sancho panza]

2 hours ago, dnb24 said:

From medical aspect with intro of Lateral flow tests/vaccine/change in PCR cycles over the next 3-6 months i my hope is increased as it gives the west a get out of jail card as these should show direction of change- ie magically sars coV-2 disappears and Healthcare goes back to normal staffing, less covid, more pneumonia, less need to have separate wards etc. Media lose interest, odd story here and there- and if we get a big economic downturn- the public/media will probably have got over covid and be more worried about putting food on the table.

I’m not sure a BK is being engineered as such, my interpretation is that they (just as DB/David Hunter)  predicted & know the fractious state the west is in- and a cycle change was required-I think they’ve taken advantage of something to do this. But like Harley I struggle working out whether it’s  the head or tail!?!

the reality is that they could finish this pandemic by limitng PCR cycles to 15.Like you say,it's the obvious get out of jail card and then we go back to people dying of flu/pneumonia.

I don't think our political class are bright enough to pre empt this and are far more likely to be reacting and choosing the easiest option out of whatever mess they've got themselves into.The western debt situation is the stuff of utter stupidity and short sightedness.There's no way even people as stupid and irresponsible as our political class would have gone down that road if they'd understood the consequences.

David Hunter's rather dark warning about what comes after he's dead has stayed with me ever since I first heard him utter it.I do think think we're lumbering into a crisis that will threaten modern society as we know it.

[geordie_lurch]

Just wanted to give an honest report back in case it helps others...  my top slicing of around 40% of my modest holding in K & S AG a few weeks ago at around 28% profit seems to have been somewhat premature as what I kept (which I bought at the same price) are now up 38%

On the plus side the cash I freed up went into Merian Gold and Silver on HL and that's doing well enough but just not that well overall...yet! I still think I will get a chance to buy more of both cheaper when the BK hits but maybe we will miraculously miss the BK due to all the Government stimulus?

5 minutes ago, sancho panza said:

David Hunter's rather dark warning about what comes after he's dead has stayed with me ever since I first heard him utter it.I do think think we're lumbering into a crisis that will threaten modern society as we know it.

What was that roughly?

[JMD]

4 minutes ago, sancho panza said:

to paraphrase Steve keen:'the answer to the Great Depression was World War Two'

I've just posted something (long and convoluted?!) about WW11 above. I don't know the context of your Steve Keen comment SP, but i shall now read back on the thread to find out... in the mean time i'll put it down to synchronicity!!

[Loki]

19 minutes ago, geordie_lurch said:

What was that roughly?

I think the general jist was he doesn't know exactly (no one does) but it will be like nothing in living history

[Boon]

If you do believe in a BK, are your cash/gold holdings not very high?

Or do you believe that reflation stocks will not be hurt badly?
Personally I don't see the falls Hunter is talking about, I do think the excess liquidity will have to be deployed sooner as people will start to crap their pants too soon. For instance if we approached 5000 on the FTSE again people would be yelling to do something.

[Democorruptcy]

39 minutes ago, Cattle Prod said:

I was thinking about that, but BTC is still only around 6% the market cap of gold. So a little juice, but not much. Gold went up over 2% yesterday, or a third of BTCs market cap. I think gold has just been in a consolidation for the last 5 months as many have pointed out, and BTC has just filled the speculative vaccum during that time, garnered the headlines, the FOMO and the stim checks. As you say, the next few months will be telling. I think both will go up.

That said, comparing golds market cap to BTC glosses over the differences between the physical and paper gold markets.

Is gold market cap above ground ounces x price?

[Alifelessbinary]

11 hours ago, Harley said:

How you doing that if I may ask?  Through commodity equities?

PS:  Agree with the time aspect - need to find a pace/approach consistent with your life - why I don't trade atm.

Yes mainly through a mixture of commodity equities, ITs and ETFs. Across all sectors commodities are trading at huge lows and for my portfolio they represent a great buy and hold strategy, which I can then assess yearly. Im under 40 so I have a fairly long timeframe to play with.

while I love the game of investing I just don’t have the time to crunch the numbers or adequately review markets. I have also proved to myself over the last few years I don’t have the  personally to make time based decisions.

70% of my portfolio is now purely passive. The other 30% of my portfolio  is active to a point.
 

One area I differ from most people on this thread is that I’m long tech, which has provided an incredible return over the last 5 years. I have taken some profits, however Covid showed how resilient some of the main players are. I fully agree that valuations are now bonkers, but I’m happy to stay in for the long haul.
 

 

[nirvana]

52 minutes ago, geordie_lurch said:

What was that roughly?

boston dynamics will have created herds of zombie whores with pointy tits who offer you a bj for a millionth of a bitcoin
meanwhile some fat bloke appears from around the corner with an axe or a chainsaw and tries to nick all your chickens.....and 'yer stuff' and your keys 
bit like this

 

[nirvana]

ps US OIL has broken out....50s.....

I'm beginning to think the markets are gonna go bonkers before BK just fecking buy any old shite.......that's what excess money printing does to the druggies  

[A tremendous # on the lung]

1 hour ago, Errol said:

Commodities breaking out of a massive decade-long wedge:

 

Bit like my boxer shorts

[Majorpain]

57 minutes ago, sancho panza said:

the reality is that they could finish this pandemic by limitng PCR cycles to 15.Like you say,it's the obvious get out of jail card and then we go back to people dying of flu/pneumonia.

Just out of interest do you know what the current NHS PCR cycle # is?  I had a look on the PHE website, but whilst it provided a lot of interesting stuff the actual numbers were a little thin on the ground.  I haven't seen anything to stop them doing "dial a pandemic" by ramping the cycles.

The Pfizer second dose had a notable kick to it for even the young, the timing of dropping to only one dose a few weeks after the first "vulnerable" people got it was mighty suspicious.  I just hope there are not metaphorical or literal bodies being buried there.

[Noallegiance]

I the spirit of the current convo from Mr Hunter:

"...I am calling for an inflation scare in the early months of this year led by commodities. This will trigger a Fed tightening response that will help trigger the deflationary bust I have been forecasting..."

[DurhamBorn]

8 hours ago, Barnsey said:

Looks like we're getting much more £££ from Sunak as soon as today, I realise much of it is just sustaining things for business but my goodness, money supply soaring, suppliers of services and goods decreasing, the reasonably well off continuing to build up their wealth given restrictions, the path is becoming ever clearer. If and when the BK arrives, the guns are already loaded and ready, opportunists will be fast to act.

We're already in the hole, and due to unique nature of this crisis the wealthy are doing ok. I don't want to sound defeatist but with money this cheap it does indeed look like a distribution cycle to sort things out. It is what it is I suppose.

It will be a distribution cycle Barnsey,but nothing to fear for anyone on here our assets will be leveraged by inflation.

[DurhamBorn]

8 hours ago, Democorruptcy said:

This iShares Global Timber & Forestry ETF was very volatile in recent years. They aren't making any more land! 

Its a really good idea that.A simple investment that nobody spots.Im convinced nature based carbon offsets will be huge winners once people realise a lot of green investment is a bubble that wont achieve very much.

[DurhamBorn]

Just now, Cattle Prod said:

Weyerhauser for equity ownership and divis. They own many, many trees. Not sure how the balance sheet is mind you.

Yeah i think they are a great investment.Iv been looking to see if there are any ways i can really leverage it,but i might have to accept playing it with the big boys.Offsetting is going to be the main winner from climate change ,that and gas 

[DurhamBorn]

7 hours ago, 5min OCD speculator said:

that's not really true is it? It's a function of the printing press.....if USD was so much in demand why has Euro rocketed in value? ie DXY dumped it's arse

Euro hasnt gone up,the dollar has fallen.You know this.Reason is the EBU are way behind the Fed,dollar will turn back up between 85 and 88 im looking at.Commod currencies the places to be in a year or so,CAD and Aussie

[DurhamBorn]

5 hours ago, dnb24 said:

Dosbods fund???

Joking apart it has crossed my mind for us to set up a Ltd company,buy some shit land and plant a load of trees.

[Loki]

2 minutes ago, DurhamBorn said:

Joking apart it has crossed my mind for us to set up a Ltd company,buy some shit land and plant a load of trees.

I want to buy a field in the bust, just because i think it would be cool to own land. There's a possible extra reason to justify it