Credit deflation and the reflation cycle to come (part 3)

[belfastchild]

51 minutes ago, MrXxxx said:

...and I am sure it will all be somebody else fault, and they will be asking for the tax payer to bail them out/subsidize them!

Happening from tomorrow here in NI. Applications open for 2m pot of 'govt' money for 20k households to apply for (only if you are on benefits).

[CannonFodder]

2 minutes ago, belfastchild said:

Happening from tomorrow here in NI. Applications open for 2m pot of 'govt' money for 20k households to apply for (only if you are on benefits).

That sounds a lot of money till its not. 2m split 20k ways is £100. 20k households seem low too for amount of people at risk of impact.

If bills are going up 600 to 1000 quid, it doesnt remove the pressure.

Plus the cost of admin for 20k applications and running the scheme. Especially if that comes out of the 2m first before the split.

I DON.T know anything about this but on face value it seems a massive waste of resources for very little impact. MORE of a political headline grabber as everyone thinks the 2m will pay their bills than anything else.

[belfastchild]

19 minutes ago, CannonFodder said:

That sounds a lot of money till its not. 2m split 20k ways is £100. 20k households seem low too for amount of people at risk of impact.

If bills are going up 600 to 1000 quid, it doesnt remove the pressure.

Plus the cost of admin for 20k applications and running the scheme. Especially if that comes out of the 2m first before the split.

I DON.T know anything about this but on face value it seems a massive waste of resources for very little impact. MORE of a political headline grabber as everyone thinks the 2m will pay their bills than anything else.

Exactly. Its being administered by a Charity so probably less than 100 quid each and there will probably be a lot that goes unclaimed and it has a weird closing date of the end of March!
Of course they did ask for 50 odd million IIRC but that hasnt been approved yet.
 

[kibuc]

12 hours ago, M S E Refugee said:

My Wife and I have been looking at property over there, houses don't appear to selling very quickly.

Hopefully a few more rate rises will yield some bargains.

Are you planning to move or buying as an investment? Whereabout, if I may ask?

 

Ukrainians are still pouring in and Belarusians are starting to join them which should help keep upwards pressure on the market. As far as mortgage costs are concerned, a significant portion of them (20% at the moment, used to be more than 1/3rd a couple years ago) is denominated in CHF so they are not affected directly by this raise, and there's a lot of 5-year fixes as well. They might be for a rude awakening in a few short years but not just yet.

[DurhamBorn]

10 hours ago, WICAO said:

We also run only 1 car and keep accurate spend records including realistic depreciation.  Last year we spent £3,640 ($6,801) so your about £4,000 sounds right on the money for a non-flashy car.

Is that including fuel,tax and insurance?.Over the last 20 years iv averaged £16 a week for a car,buying to value at sale (£250 scrap usually) and all repairs.£800 a year.Insurance average £180 a year,tax £130,fuel roughly £900.£2k a year all in.

That will be much much harder going forward though as the big repairs you need to do on older cars,clutch changes etc are getting very expensive.When my PUG dies im going to get a 3 seater van.Much easier to work on and fix yourself and much less to go wrong on them.

[M S E Refugee]

13 minutes ago, kibuc said:

Are you planning to move or buying as an investment? Whereabout, if I may ask?

 

Ukrainians are still pouring in and Belarusians are starting to join them which should help keep upwards pressure on the market. As far as mortgage costs are concerned, a significant portion of them (20% at the moment, used to be more than 1/3rd a couple years ago) is denominated in CHF so they are not affected directly by this raise, and there's a lot of 5-year fixes as well. They might be for a rude awakening in a few short years but not just yet.

We are looking around Wejherowo and Kartuzy areas.

We have both had enough of the UK and plan to move there permanently,I'm currently waiting for my Polish Citizenship to come through. 

[Yadda yadda yadda]

9 minutes ago, Cattle Prod said:

You're on your own, as first predicted by @sancho panza. Are you happy to pay higher taxes for this?

Obviously vaccine mandates and worsening ts and C's and working conditions are responsible for this as Sancho says, but I see a big negative feedback loop here. People quitting after the pandemic is clearly a thing. For me, a lack of service provision is another nail in the coffin, really. So you have people who can afford to retire bringing it forward. People who can downshift, doing that. People like me who are accelerating retirement plans asap, and young people not entering professions such as the above.

So who is actually going to do the work? Who is the government going to rinse for tax?! Obviously this pullback in work will have to be paid for with something, that's @DurhamBorndistribution cycle I suppose, people selling assets to fund the gap in work. Like your dumb ass btl guy upthread is going to have to soon do.

Macro wise, this is all highly inflationary, wages will have to go up. But I really don't see where the govt is going to get tax from if people in the middle who fund the whole bloody country are quitting jobs and selling assets. I can see the parasite killing the host pretty soon, then what? 

The "unprecedented" but unquantified surge in demand is the more worrying part of that tweet.

We don't need inflationary pressures in the health service that exceed the rest of the economy.

[kibuc]

7 minutes ago, M S E Refugee said:

We are looking around Wejherowo and Kartuzy areas.

Kartuzy and the entire Kashubia region is absolutely lovely, very rural, it's just lakes and nature parks all the way to the horizon as you move South-West. If you go North towards Wejherowo you're getting dangerously close to Tricity and the coast, where it gets more urban and you get a much more plasticy-touristy kind of vibe that's very characteristic of Polish seaside.

[CannonFodder]

41 minutes ago, Cattle Prod said:

 

So who is actually going to do the work? Who is the government going to rinse for tax?! Obviously this pullback in work will have to be paid for with something, that's @DurhamBorndistribution 

Macro wise, this is all highly inflationary, wages will have to go up. But I really don't see where the govt is going to get tax from if people in the middle who fund the whole bloody country are quitting jobs and selling assets. I can see the parasite killing the host pretty soon, then what? 

I agree with your entire post in case this reply comes across as not.

perhaps my view is darker.

The paradigm will change, money will be found in new ways. 

Say road charging?. How about 10p a mile or 20p on motorway. Yummy! It can replace fuel duty as that being dented by EVs

All those people working at home; not paying for a commute, hardy fair on low waged retail workers, perhaps this wfh should become a benefit in kind. Taxy taxy or back to the office plebs, fill that hole in rail budgets.

High Inflation and capital gains tax working together works wonders. 18 percent or 28 percent of all asset inflation including blt housing will be confiscated either on sale or on death through iht rather than cgt. 

So if a btl house doubles nominally through inflation, not a real gain. 9 or 14 percent (half value) of housing equity is removed from citizens ownership when they sell. A different amount if they die first. Iht thresholds kept low, the trap is set. Most people.s worth in housing.

Tough times ahead comrade, should primary residence be cgt exempt, especially mansions. On with a threshold of first 600k and let inflation do its work. Its to save the nhs innit.

Essentially they will squeeze harder. People will need the overtime to live so work longer hours and pass their assets to government through inflqtion being taxed and iht.

A desparate government still has an imagination.

[Lightscribe]

52 minutes ago, Cattle Prod said:

You're on your own, as first predicted by @sancho panza. Are you happy to pay higher taxes for this?

Obviously vaccine mandates and worsening ts and C's and working conditions are responsible for this as Sancho says, but I see a big negative feedback loop here. People quitting after the pandemic is clearly a thing. For me, a lack of service provision is another nail in the coffin, really. So you have people who can afford to retire bringing it forward. People who can downshift, doing that. People like me who are accelerating retirement plans asap, and young people not entering professions such as the above.

So who is actually going to do the work? Who is the government going to rinse for tax?! Obviously this pullback in work will have to be paid for with something, that's @DurhamBorndistribution cycle I suppose, people selling assets to fund the gap in work. Like your dumb ass btl guy upthread is going to have to soon do.

Macro wise, this is all highly inflationary, wages will have to go up. But I really don't see where the govt is going to get tax from if people in the middle who fund the whole bloody country are quitting jobs and selling assets. I can see the parasite killing the host pretty soon, then what? 

Exactly that. Mounted pressure by service/staff reduction at both the top and bottom, combined with stagflation will be systematic collapse (not helped by in health sector by vaccination mandates)

As I’ve said before, at the bottom it’s no longer cost effective to work in a full time minimum paid job (now rent paying families have been forced on tax credits these last two years anyway and realised their better off).

Then at the top, stock market highs/bumper pension pots retiring professionals early at the top. We also haven’t got the skills/experience in the younger generation to replace the amount as the same rate, due to education dilution in nonsense subjects, student debt costs and the sheer ‘will’ to commit to that long term of experience.

The younger generation hasn’t got a family/house goal to work towards anymore due to both economically impossible without inheritance or going the benefit route.

[CannonFodder]

I think benefits will be eroded by inflation to an extent or at least become very uncomfortable going forwards.

There will be chaos however, there was a survey a while back that average highway maintenance worker was late fifties, this the people doing the work not in offices. Crazy. Jumping down from those rigs not good for the knees.

Services will be hollowed out, continuity destroyed, then rebuilt which will add to inefficiency as things bed in. Inefficiency leads to cost.

 

[VeryMeanReversion]

3 hours ago, MrXxxx said:

And that my friends is a fine example of hedging! :-)

And there was me thinking hedging was like dogging but less comfortable.

[Noallegiance]

1 hour ago, Cattle Prod said:

You're on your own, as first predicted by @sancho panza. Are you happy to pay higher taxes for this?

Obviously vaccine mandates and worsening ts and C's and working conditions are responsible for this as Sancho says, but I see a big negative feedback loop here. People quitting after the pandemic is clearly a thing. For me, a lack of service provision is another nail in the coffin, really. So you have people who can afford to retire bringing it forward. People who can downshift, doing that. People like me who are accelerating retirement plans asap, and young people not entering professions such as the above.

So who is actually going to do the work? Who is the government going to rinse for tax?! Obviously this pullback in work will have to be paid for with something, that's @DurhamBorndistribution cycle I suppose, people selling assets to fund the gap in work. Like your dumb ass btl guy upthread is going to have to soon do.

Macro wise, this is all highly inflationary, wages will have to go up. But I really don't see where the govt is going to get tax from if people in the middle who fund the whole bloody country are quitting jobs and selling assets. I can see the parasite killing the host pretty soon, then what? 

Bloke I've known for 20 years had a heart attack 6 weeks ago. He had one about 15 years ago but has lived squeaky clean since then.

Wife was told it was a 3 hour wait.

She bundled him in the car and then had to wait hours in A&E.

[DurhamBorn]

The macro is that the economy cant produce enough for the demands on it.That was mentioned on my fist post in the thread i think as where we were going,well we have now arrived.Too much is being consumed by scroungers,both working and not,mainly the state.They are now at the first stage of what happens when the inflection point is reached.They try to tax more,hand out more where the media squeal etc.That then makes the problem worse and inflation keeps going higher.

What will happen is people will live different lives and structural changes will happen.More people per house for starters,more things shared.The more you do for yourself (of for each other unwaged) the less links in a chain to tax or pay tax.

Money should spend the cycle coming out of growth assets,bonds and houses and going to the de-complex areas.

[Lightscribe]

11 minutes ago, Cattle Prod said:

I in turn agree with what you say, CF. But it kind of supposes the majority of working people remaining ignorant, thick, telly addicted consuming automatons. One possible silver lining of the governments handling of the pandemic is that a lot of people woke up, will never trust the govt again, went out and did things, stopped spending. And a lot of them have quit their jobs it seems, in the US anyway, do we have 'quits' data for the UK? The anarchist in me loves it tbh, and yet I'm still grinding in corporate world, handing over a large amount of income tax. Sacking it all off is coming ever closer, and I'm sure it's the same for millions of people. If people ever realise they don't need much to live on an have a quality life, it's all over for this parasitic system.

And as you say plenty in the same boat will be thinking the same.

Making the western world’s professional working tax payers work from home for two years was one of the biggest psychological experiments in history.

As I’ve said before, I used to be a frequent flyer and heavily involved with point collecting, upgrades, hotel status etc (my ex was high up in BA). Business travel pays for the flights. That’s now gone, perhaps forever.

People have had a long time to reflect and change life choices and priorities. That cannot be reversed now the genies out the bottle, especially with decreasing overheads and gains like no commuting costs working from home.

[WICAO]

3 hours ago, MrXxxx said:

..and although some would be scathing/jealous of you, you actually did it 'on your own back' rather than that of others directly or via government 'support'/initiatives [read 'giveaways']....respect!

Absolutely and at times it can be a lonely journey when you're running against the herd for years on end.  From a psychological perspective there are a few important points that worked for me:

• Start.  Most don't even make it this far.  At this point it's about just setting the goal which should then drive a whole pile of actions and then the momentum begins.  When I look back at my efforts and assumptions they were laughably wrong but if I didn't start I wouldn't be where I am today.
• Determination.  As mentioned above FIRE is a marathon and not a sprint.  A bit of stoicism doesn't go astray either.
• Never become a victim.  The papers and forums are full of them.  As soon as others are being blamed the goal is lost.
• Don't be afraid to make mistakes.  I tried trading, was terrible at it and pivoted to what I do now which works for me.  I'm still holding early investments that I wish I didn't have.  Etc etc.
• And.  This lark is not about doing one thing really well.  It's about doing many things in parallel that work for you which all add up to something significant. 
• Track progress.  What doesn't get measured doesn't get done.  Religiously I've tracked my progress against 'the plan' weekly since 2007.  It also helps with the determination bit as well because by tracking you see progress.

[WICAO]

3 hours ago, MrXxxx said:

Its interesting I have been of the same mindset [almost religiously], and was all for taking this approach at all costs with pension planning. Recently though I reevaluated my situation [via some Excel spreadsheets], and found that the 'giving the government as little tax as possible' was not the optimal solution, and in I could end up with a higher monthly sum post-tax by actually paying some tax; this 'hurts' as I despise the government and their wastage but it seems silly to 'cut my nose off to spite my face'.

That's an interesting observation and not something I came across.  I personally found that every £ saved in tax ended up in my pocket to be invested.

Just to be clear though the aim for me was to always maximise the money in my pocket after all expenses and not to just minimise taxes at the expense of everything else.  For example, I always took the higher paying job even though it meant more taxes, sometimes cruelly so, but then I put as much as I could into pensions and ISA's every year to minimise the damage of that. 

But I don't think that's what you're talking about.  Can you maybe give an example?

[MrXxxx]

1 hour ago, CannonFodder said:

I agree with your entire post in case this reply comes across as not.

perhaps my view is darker.

The paradigm will change, money will be found in new ways. 

Say road charging?. How about 10p a mile or 20p on motorway. Yummy! It can replace fuel duty as that being dented by EVs

All those people working at home; not paying for a commute, hardy fair on low waged retail workers, perhaps this wfh should become a benefit in kind. Taxy taxy or back to the office plebs, fill that hole in rail budgets.

High Inflation and capital gains tax working together works wonders. 18 percent or 28 percent of all asset inflation including blt housing will be confiscated either on sale or on death through iht rather than cgt. 

So if a btl house doubles nominally through inflation, not a real gain. 9 or 14 percent (half value) of housing equity is removed from citizens ownership when they sell. A different amount if they die first. Iht thresholds kept low, the trap is set. Most people.s worth in housing.

Tough times ahead comrade, should primary residence be cgt exempt, especially mansions. On with a threshold of first 600k and let inflation do its work. Its to save the nhs innit.

Essentially they will squeeze harder. People will need the overtime to live so work longer hours and pass their assets to government through inflqtion being taxed and iht.

A desparate government still has an imagination.

And this is why I feel its important not to make yourself a 'sitting duck' for their easy taxation games i.e.

1. Buy [or rent] the property size that you need and not what you can afford to ensure lower Council Tax

2. Buy property where it is cheaper but still pleasant to a) avoid property tax they may have in mind based on value, and b) an area that isn't subject to high levels of social welfare/demand on resources.

3. Buy secondhand/refurbished where either a) the purchase is free of VAT and/or b) the asset depreciation has been 'taken' by the initial purchaser.

4. Eat well/healthily by a) growing your own, b) avoiding processed, and c) reducing calorific intake...also do the YRS and preserve/freeze.

5. Make the most of tax allowances but don't allow all your financial assets to be restricted/narrow i.e ISA's vs SIPP's. Growth vs Income stocks etc

 

[belfastchild]

17 minutes ago, Cattle Prod said:

I'll be looking at tax receipts very carefully, as once Rishi realises people are opting out, I think that'll be the trigger and they'll make their moves.

I normally pay my tax bill sometime around early Nov to early Dec as thats when I have the most receipts in and usually have feck all income in late December/Jan/Feb.
Sitting with the money for the end of the month tax bill still in my account. I will pay it but I will leave it to the last minute this time. Wonder how many cant actually pay it.
Considering winding up the business properly in April (probably wont as money will trickle in for one part of it for years) and then telling them to go sing for the rest of the covid loan.
Couldnt book an appointment for the dump yesterday, booked one for this morning, sat in the car for 10 mins whilst they cleared the snow, looks like it was closed yesterday then. Rates bill will be interesting this year (said that last year and ended up paying it as well).

15 minutes ago, Cattle Prod said:

I'm on my last 100,000 miles, one more long haul holiday for three, and I'm done. And good riddance, what a load of crap business travel was. I made sure I was rolled off the plane roaring drunk every time mind you, the food and drink cost my company thousands after all, it'd be rude not to.

Spent the last of my miles last month on a bottle of brandy. Was supposed to be off to the Canaries next month but unvaxxed so unlikely. More money to put in the sipp in that case! Its all getting very interesting...

[MrXxxx]

40 minutes ago, DurhamBorn said:

The more you do for yourself (of for each other unwaged) the less links in a chain to tax or pay tax.

This...and I wonder if people will 'pay' either in kind [barter] or with Bitcoin type 'currency', thus avoiding the taxation and being untraceable.....I hope so, this I believe is what has to be done now the system [and its operators] have failed.

[WICAO]

2 hours ago, DurhamBorn said:

Is that including fuel,tax and insurance?.Over the last 20 years iv averaged £16 a week for a car,buying to value at sale (£250 scrap usually) and all repairs.£800 a year.Insurance average £180 a year,tax £130,fuel roughly £900.£2k a year all in.

That will be much much harder going forward though as the big repairs you need to do on older cars,clutch changes etc are getting very expensive.When my PUG dies im going to get a 3 seater van.Much easier to work on and fix yourself and much less to go wrong on them.

Yes, it's everything to do with running a car.  Fuel, oil, servicing, insurance, tax, new tyres this year, a windscreen repair and importantly depreciation.  I choose to run a comfortable 4 year old when purchased car because I want trouble free motoring - when I sit in it I want it to start every time and I also don't want to ever repair it.  Once that starts it's time to get another 4 year old car.  I have better things to do with my time and I'm prepared to pay to get that.

[AWW]

39 minutes ago, Lightscribe said:

Business travel pays for the flights. That’s now gone, perhaps forever.

People have had a long time to reflect and change life choices and priorities. That cannot be reversed now the genies out the bottle, especially with decreasing overheads and gains like no commuting costs working from home.

Exactly this. I've always enjoyed travelling, and have had several long breaks from work to spend time abroad. Due to Covid, our holidays for the last two years have consisted of camping in the UK. And do you know what, I would be perfectly happy if that's all we did for the next ten years, especially now that we've got all the proper gear. Chucking the kids in the car and hitching up a trailer is much, much less hassle than sticking to a baggage allowance, enduring an airport, a flight, a transfer, then getting to the hotel to find that the rooms are furnished with a coffee table with sharp corners, a balcony with railings that a baby could crawl through etc. Much cheaper too.

From a work point of view, I've been staggered by how many people love working remotely. I absolutely hate spending my life on video calls; it's not for me. I went back into my office yesterday and I was the only person there, out of thirty. The City of London was deserted and most shops were closed. Granted, my commute is a reasonably enjoyable ten mile bike ride, rather than 90 minutes on a commuter train, but still, how on earth people can handle sitting in a bedroom on their own for 8 hours a day, speaking into a laptop, is beyond me.

[Juniper]

47 minutes ago, Lightscribe said:

Making the western world’s professional working tax payers work from home for two years was one of the biggest psychological experiments in history.

Absolutely. This must have been such an eye opener for so many. Hours in Heathrow or on an uncomfortable plane vs hours with your children…there is no contest. There must be a huge number of people looking to work less, consume less and therefore pay less tax, even if that isn’t their primary goal.

[MrXxxx]

30 minutes ago, Cattle Prod said:

So they need to run inflation hot, whilst keeping the bond markets quiet, which means the BOE funding the govt in an inflation!

I think this is what they are going to rely on, and will try to add additional complexity. Peoples understanding of basic finances i.e. pension even well educated people is pitiful; I previously include myself in this as I have only really started to understand this in the last 3-4 years, and so they will be taxed [robbed?] by stealth.

 

33 minutes ago, Cattle Prod said:

So I'm getting concerned that systemic problems have been brought forward, and we are in for serious repression, financial and otherwise, in this cycle rather than post 2027/2028. Have your excape route ready, because if you can't silently withdraw from the system, you're either a dependent or slave to the state.

And this is where a site/thread such as this is so useful, the mind hive works as a 'team' with others 'seeing' traps ahead that may not have considered.

[MrXxxx]

28 minutes ago, WICAO said:

But I don't think that's what you're talking about.  Can you maybe give an example?

The situation was looking at early drawdown from pensions [using tax free allowance] before official state pension kicked in, and tax paid once in full retirement....but I think you example of higher paying job is similar i.e. you could have taken a lower salary and so lower tax pre-gross pay, or a higher salary with higher tax payments, but higher pay net after taxes.