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

[Chewing Grass]

38 minutes ago, belfastchild said:

Reading the 'when money dies' was a wakeup call for me in this department. People swapping grand pianos for bags of spuds.
Middle classes getting hit first and not being able to recover (private doctors, dentists, accountants etc, nobody needs them)
People holding shares, companies still contain that 'value' but after hyperinflation no use. Set your dividend and by the end of the week its not worth collecting.

Ordering a coffee at one price, paying for it at a higher price.

Foreigners coming in and taking _all_ your assets and then you go out and spend the money as quickly as possible.

Guy going into a shop and buying all the baby clothes as they were the only thing left and he had to spend his pay that day or it would be worthless the next, whereas the baby clothes wouldnt be.

Certainly a lot of it is beginning to rhyme...

That book was a good investment, just looked on ebay and the cheapest one (new or used) is £9.

[sancho panza]

On 03/06/2022 at 22:58, Viceroy said:

I rate these journos and their independent/unbiased coverage of Ukraine and the wider conspiracies.

@EvaKBartlett

@GonzaloLira1968 + @realGonzaloLira pre Apr '22 (a Chilean living in Ukraine)

latest from him: 

 

@JamesGRickards

@RealGeorgeWebb1

 

Latest from Armstrong re war 'Our sources have been warning that the US is prodding Israel and Saudi Arabia to attack Iran. Israeli has been now staging exercises on taking out Iran's nuclear facilities. Our sources have relayed that the Israeli Air Force fighter jets have been conducting air maneuvers over the Mediterranean Sea which began last night. They are "simulating" striking Iranian nuclear facilities. I have warned that it appears that the American Neocons are trying to start a war in the Middle East to further drain the Russian capability. The US is only using Proxy Wars so as not to actually engage directly to keep the US forces in reserve.When we look at the Timing Array on Israel, it clearly appears that the trend is setting up and the Directional Change we have next year in 2023 coincides with our Timing Array on Global International War.  The volatility will rise but the next important turning point will be 2025.  It certainly appears that the period post-2024 is where this is likely to spread globally'

 

Thanks for that Viceroy.Very interesting watch.Whilst he may or may not be proved right(I think he's likely to be proved right),the fact that you don't even hear a discussion like this in much of the Western MSM shows how they're really not fit for claimed purpose any more.

It appears the Ukrianian military are struggling much more than the West is letting on.

[marceau]

1 hour ago, Axeman123 said:

Exile doesn't sound too bad when you look at those alternatives!

Weimar screws different groups of people at different times.

Labourers are relatively well off throughout, they end up getting paid new rates every day! Then they get fucked by the subsequent deflation and unemployment after things stabilise.

Many get caught out by lack of liquidity after it's over, massive bankruptcies of those inflation-exploiting vertically-integrated firms, corruption trials, suicides, assasinations. Obviously the guys in brown shirts take 'justice' to an extreme over the following decades. Fleeing is great if you go west, fatal if you go east.

A real crap shoot.

[DurhamBorn]

1 hour ago, janch said:

The financial press over the weekend (OK Mail on Sunday) but other things I've read elsewhere too are all about losing money in the favourite funds etc eg Fundsmith and Scottish Mortgage etc and other funds/ITs not being worth the fees for fund managers ie tales of woe and also the number of investors in HL and other platforms going down but to hang on for markets to recover.  (But my  thought is they probably won't as they have a lot of Amazon/FB etc)

Meanwhile my reflation shares are doing quite nicely and although haven't done anything spectacular recently I certainly haven't lost and they're up overall.  So a massive thanks to @DurhamBorn for pointing me in the right direction.  Every so often I take out some profit and mostly buy a new share or sometimes add to something which looks to be taking off.  Of course I also have some duffers eg a few PM miners.  Will they ever do anything? (Sigh)

I'm wondering about India now as I read somewhere its economy is growing fast and of course its now able to buy cheap Russian oil.  Does anyone have any thoughts on JPMorgan Indian Investment Trust (JII) or Templeton Emerging Markets Inv Trust (TEM)?

Iv bought a few of these to play India,i didnt put them on the thread because they are a fully renewable company and might blow up,they have some big backers on the shareholder list though.Not advice etc.

[DurhamBorn]

48 minutes ago, sancho panza said:

Thanks for that Viceroy.Very interesting watch.Whilst he may or may not be proved right(I think he's likely to be proved right),the fact that you don't even hear a discussion like this in much of the Western MSM shows how they're really not fit for claimed purpose any more.

It appears the Ukrianian military are struggling much more than the West is letting on.

If the west falls id blame the media more than anyone.They never look at the issues from an open mind.Take these 10% increases in bennies.I have no problem with them showing fat Sharon who doesnt work moaning shes skint.However they should then go something like this,

"Sharon worked for 4 months after leaving school,but then had her child to a man she isnt with now and hasnt worked since.Including Housing Benefit and free school meals she gets xxx amount without having to work.She claims she doesnt have childcare yet her mother lives over the road and doesnt work herself claiming for some disability,though she looks in decent health for her age.

The other side of this is Paul here.Paul works in the local warehouse.He too is struggling,even though hes is working 48 hours a week.His rent is very high due to people like Sharon who gets theirs paid forcing up rents,ironic as its out of his tax.If Sharon is to get more for doing nothing,Paul must lose more by paying more tax.In affect Sharon is consuming Pauls work.

Then there is Sue.Sue worked for 40 years in the local factory.She saved for her retirement.She is struggling.The inflation partly caused by Sharon consuming,but never producing means her lifetimes savings are being inflated away.

The cry is for more free money for Sharon,but its not free.To give Sharon more Paul and Sue need to lose more than they already do.For all three to improve their incomes the best solution would be for Sharon to get into a job and off benefits,lifting her up,and then stopping Paul and Sue working harder or becoming poorer because their hard work is being split with those who cant,or simply wont work.Government seems all about  Sharon,but perhaps the real victims are the ones you never hear about paying for it."

This is Durhamborn reporting for the BBC

[sancho panza]

Some Paul Hodges out takes all on a theme

https://www.icis.com/chemicals-and-the-economy/2022/05/us-stocks-set-for-long-term-decline-as-fed-pivots-to-focus-on-putinflation/

The good news is that central banks have pivoted to focus on inflation. As US Federal Reserve chair Jay Powell and Bundesbank President Joachim Nagel made clear this month, they are now set to “normalise” monetary policy:

• Some analysts want to refer to this as tightening, but this simply isn’t true
• As the chart shows, US inflation was last at today’s level of 8.3% in 1982
• At that time, 10-year interest rates were 14.6%  – but today they are just 2.8%

Anyone who remembers the 1970s would know that the risk of a stock market downturn is now very high. But younger people only know the world of Alan Greenspan and Ben Bernanke, who believed that:

“What is good for financial markets, is good for the wider economy”.

 

 

 

 

[sancho panza]

https://www.icis.com/chemicals-and-the-economy/2022/05/us-housing-bubble-starts-to-deflate-as-prices-peak-and-mortgage-rates-rise/

 

 

The chart highlights the result, based on median new US home prices and household incomes:

• Home prices in 1967 were less than 1x incomes before the Boomers began their buying spree
• By the time they had finished in 2000, the ratio had more than doubled to 2.5x

• Then Alan Greenspan and Ben Bernanke began their subprime and stimulus bubbles
• By the time they had finished, the ratio had more than doubled again to reach 5.8x today

As the Financial Times notes, the issue is affordability:

“Suppose back in December you were going to buy a house for $425,000 with 20 per cent down. But you didn’t get a deal done for whatever reason. The change in rates means that the monthly mortgage payment on your dream home has now gone up about 30 per cent, from $1,442 to $1,877. That’s $5,220 in additional payments a year.

“More to the point, if your mortgage budget was fixed at about $1,442, you are now shopping for a $325,000 house. That is a really different house. And so, unsurprisingly, many buyers are saying the hell with it. Applications for purchase mortgages (that is, not refinancings) are down by a third from their coronavirus pandemic peak.”

But those, like us, who remember the pre-Greenspan era know that prices can – and do – go down. And as Redfin reported last week:

“Housing Market Update: Nearly 1 in 5 Sellers are Dropping Their Price”

Most homeowners suffer from loss-aversion. They see that prices are falling, but they refuse to follow the market lower. Instead, the selling is led by people who have to sell due to the “3 Ds”  – Debt, Divorce and Death.

[Red Debt Redemption]

7 hours ago, Mapper said:

Re entropy, I watched a low budget doc on YT titled something like, "What if all the people suddenly disappeared?"

I can't vouch for its accuracy, but something that struck me was a claim that after a relatively short time (a few thousand years I think), nothing would be left to show humans had ever existed. Even concrete would degrade back into nature.

Actually, there would be one place with evidence of humans...

Don't know if my spoiler text will work, so I pushed the answer below the fold (I hope).

 

 

  Hide contents

the Moon

 

Nope, the Borg destroy it in season 27.

[Axeman123]

47 minutes ago, Cattle Prod said:

I still think we get two more 50bps hike and a pause, fwiw.

I am with you on that. I think this narrative of Powell as a madman inflation-fighter is a set-up for the pivot, akin to "only Richard Nixon could have gone to China".

[Lightscribe]

17 minutes ago, sancho panza said:

Some Paul Hodges out takes all on a theme

https://www.icis.com/chemicals-and-the-economy/2022/05/us-stocks-set-for-long-term-decline-as-fed-pivots-to-focus-on-putinflation/

The good news is that central banks have pivoted to focus on inflation. As US Federal Reserve chair Jay Powell and Bundesbank President Joachim Nagel made clear this month, they are now set to “normalise” monetary policy:

• Some analysts want to refer to this as tightening, but this simply isn’t true
• As the chart shows, US inflation was last at today’s level of 8.3% in 1982
• At that time, 10-year interest rates were 14.6%  – but today they are just 2.8%

Anyone who remembers the 1970s would know that the risk of a stock market downturn is now very high. But younger people only know the world of Alan Greenspan and Ben Bernanke, who believed that:

“What is good for financial markets, is good for the wider economy”.

 

 

 

 

Paul Hodges is obviously not watching and learning.

[Lightscribe]

1 hour ago, DurhamBorn said:

If the west falls id blame the media more than anyone.They never look at the issues from an open mind.Take these 10% increases in bennies.I have no problem with them showing fat Sharon who doesnt work moaning shes skint.However they should then go something like this,

"Sharon worked for 4 months after leaving school,but then had her child to a man she isnt with now and hasnt worked since.Including Housing Benefit and free school meals she gets xxx amount without having to work.She claims she doesnt have childcare yet her mother lives over the road and doesnt work herself claiming for some disability,though she looks in decent health for her age.

The other side of this is Paul here.Paul works in the local warehouse.He too is struggling,even though hes is working 48 hours a week.His rent is very high due to people like Sharon who gets theirs paid forcing up rents,ironic as its out of his tax.If Sharon is to get more for doing nothing,Paul must lose more by paying more tax.In affect Sharon is consuming Pauls work.

Then there is Sue.Sue worked for 40 years in the local factory.She saved for her retirement.She is struggling.The inflation partly caused by Sharon consuming,but never producing means her lifetimes savings are being inflated away.

The cry is for more free money for Sharon,but its not free.To give Sharon more Paul and Sue need to lose more than they already do.For all three to improve their incomes the best solution would be for Sharon to get into a job and off benefits,lifting her up,and then stopping Paul and Sue working harder or becoming poorer because their hard work is being split with those who cant,or simply wont work.Government seems all about  Sharon,but perhaps the real victims are the ones you never hear about paying for it."

This is Durhamborn reporting for the BBC

I remember in the 80’s, the words ‘on the  dole’ was mentioned by newspapers in articles describing people as much as the Daily Mail mentions how much their house price was worth.

It had a negative connotation. ‘Scroungers’, ‘YTS’, ‘council’ like words gave a ‘looked down’ upon meaning that no one wanted to be associated with.

Most media outlets now are all of the same ‘Associated Press’, ‘Rockefeller Foundation’ etc. The narrative wouldn’t dare to go down the same route with such terms nowadays.

Its no longer frowned upon as the majority of the country get benefits. You go on to mumsnet and they constantly incorrectly assume that the whole country is on tax credits in some form or another. You can’t blame them as it is indeed the case in some areas.

Theres no way out of the hole that’s been dug. They will see the last tax payer go bust before benefits are ever reformed.

[Plan-b]

2 hours ago, Cattle Prod said:

That grasping hag Pelosi, in the last few weeks, spent over a million dollars on Apple and Microsoft calls expiring March-June to next year.

Make of that what you will, but I read that as the Democrats have either worked out how to get a stimulus through before the mid term elections, or that they've agreed a pause with Powell (they met a few weeks ago). I still think we get two more 50bps hike and a pause, fwiw.

If it plays out this way then rather than direct action against inflation using interest rates the Fed decides to temper inflation through demand destruction. But they'd still have interest rate rises later on if it doesn't work out.

 

[HousePriceMania]

2 hours ago, Cattle Prod said:

That grasping hag Pelosi, in the last few weeks, spent over a million dollars on Apple and Microsoft calls expiring March-June to next year.

Make of that what you will, but I read that as the Democrats have either worked out how to get a stimulus through before the mid term elections, or that they've agreed a pause with Powell (they met a few weeks ago). I still think we get two more 50bps hike and a pause, fwiw.

I'll close my short.

Just now, Plan-b said:

If it plays out this way then rather than direct action against inflation using interest rates the Fed decides to temper inflation through demand destruction. But they'd still have interest rate rises later on if it doesn't work out.

 

That's exactly what the tories are up to IMHO

[Starsend]

10 hours ago, Juniper said:

I read this piece on hyperinflation at the weekend 

https://rudy.substack.com/p/a-very-ordinary-life?s=r&utm_campaign=post&utm_medium=web&utm_source=direct

It’s not inconceivable that the Davos crowd aspire to this:

“Finally, there was a revaluation and each person could turn in so much of the previous money, if they hadn’t spent it for nothing already, and get a small amount of new currency. It was very little, 200 marks or so. And the rest was all lost. I’m not sure how they did manage to stabilize the currency, but once the government decided to take action they did it.

Of course all the little people who had small savings were wiped out. But the big factories and banking houses and multi-millionaires didn’t seem to be affected at all. They went right on piling up their millions. Those big holdings were protected somehow from loss. But the mass of the people were completely broke.”

I still think and hope we’re not headed for hyperinflation but each time we do payouts, such as the current bungs for the ‘cost of living crisis’, the more I fear we won’t be far off. 

No great mystery as to why the big boys didn't get wiped out; they owned real stuff, factories, farms, real estate, gold... and probably had lots of debt to buy that stuff that got wiped out.

[marceau]

12 minutes ago, Starsend said:

No great mystery as to why the big boys didn't get wiped out; they owned real stuff, factories, farms, real estate, gold... and probably had lots of debt to buy that stuff that got wiped out.

Old money did well, but the speculators who configured for inflation all got wiped out by the deflation that followed the rentenmark. No liquidity and crippling interest rates made vertical integration a huge liability.

Real estate performed terribly & landlords were obliterated because rents were capped right at the start.

[Plan-b]

19 minutes ago, Starsend said:

No great mystery as to why the big boys didn't get wiped out; they owned real stuff, factories, farms, real estate, gold... and probably had lots of debt to buy that stuff that got wiped out.

The house always wins, I'm hoping for a few scraps off their table

[M S E Refugee]

Biden declares US energy emergency https://www.rt.com/news/556722-biden-declares-energy-emergency/

[DurhamBorn]

38 minutes ago, M S E Refugee said:

Biden declares US energy emergency https://www.rt.com/news/556722-biden-declares-energy-emergency/

“Multiple factors are threatening the ability of the United States to provide sufficient electricity generation to serve expected customer demand,” Biden said in his emergency declaration. “These factors include disruptions of energy markets caused by Russia’s invasion of Ukraine and extreme weather events exacerbated by climate change.”

[Pip321]

3 hours ago, DurhamBorn said:

If the west falls id blame the media more than anyone.They never look at the issues from an open mind.Take these 10% increases in bennies.I have no problem with them showing fat Sharon who doesnt work moaning shes skint.However they should then go something like this,

"Sharon worked for 4 months after leaving school,but then had her child to a man she isnt with now and hasnt worked since.Including Housing Benefit and free school meals she gets xxx amount without having to work.She claims she doesnt have childcare yet her mother lives over the road and doesnt work herself claiming for some disability,though she looks in decent health for her age.

The other side of this is Paul here.Paul works in the local warehouse.He too is struggling,even though hes is working 48 hours a week.His rent is very high due to people like Sharon who gets theirs paid forcing up rents,ironic as its out of his tax.If Sharon is to get more for doing nothing,Paul must lose more by paying more tax.In affect Sharon is consuming Pauls work.

Then there is Sue.Sue worked for 40 years in the local factory.She saved for her retirement.She is struggling.The inflation partly caused by Sharon consuming,but never producing means her lifetimes savings are being inflated away.

The cry is for more free money for Sharon,but its not free.To give Sharon more Paul and Sue need to lose more than they already do.For all three to improve their incomes the best solution would be for Sharon to get into a job and off benefits,lifting her up,and then stopping Paul and Sue working harder or becoming poorer because their hard work is being split with those who cant,or simply wont work.Government seems all about  Sharon,but perhaps the real victims are the ones you never hear about paying for it."

This is Durhamborn reporting for the BBC

Sorry DB you couldn't pass for any western journalist.

No mention of body positivity, cancel culture, gender binary issues, internalised misogyny, toxic masculinity , environmental issues nor the fact its all Putin's fault.  .

Also too much actual detail....headline only in western media followed by repeating the surface level headline again and again eg old couple lose home to horrible equity release firm (but omit to mention the couple have spent the last 15 years on a yacht drinking champagne etc) 

[Nomad]

3 hours ago, DurhamBorn said:

If the west falls id blame the media more than anyone.They never look at the issues from an open mind.Take these 10% increases in bennies.I have no problem with them showing fat Sharon who doesnt work moaning shes skint.However they should then go something like this,

"Sharon worked for 4 months after leaving school,but then had her child to a man she isnt with now and hasnt worked since.Including Housing Benefit and free school meals she gets xxx amount without having to work.She claims she doesnt have childcare yet her mother lives over the road and doesnt work herself claiming for some disability,though she looks in decent health for her age.

The other side of this is Paul here.Paul works in the local warehouse.He too is struggling,even though hes is working 48 hours a week.His rent is very high due to people like Sharon who gets theirs paid forcing up rents,ironic as its out of his tax.If Sharon is to get more for doing nothing,Paul must lose more by paying more tax.In affect Sharon is consuming Pauls work.

Then there is Sue.Sue worked for 40 years in the local factory.She saved for her retirement.She is struggling.The inflation partly caused by Sharon consuming,but never producing means her lifetimes savings are being inflated away.

The cry is for more free money for Sharon,but its not free.To give Sharon more Paul and Sue need to lose more than they already do.For all three to improve their incomes the best solution would be for Sharon to get into a job and off benefits,lifting her up,and then stopping Paul and Sue working harder or becoming poorer because their hard work is being split with those who cant,or simply wont work.Government seems all about  Sharon,but perhaps the real victims are the ones you never hear about paying for it."

This is Durhamborn reporting for the BBC

Great post, I think some of the problems with msm is they don't understand basic economics, if that is the case they would be ignorant of the real issue and what is causing this inflation, politicians appear to suffer from the same problem.

[BadAlchemy]

20 minutes ago, DurhamBorn said:

“Multiple factors are threatening the ability of the United States to provide sufficient electricity generation to serve expected customer demand,” Biden said in his emergency declaration. “These factors include disruptions of energy markets caused by Russia’s invasion of Ukraine and extreme weather events exacerbated by climate change.”

Have you printed too much fiat currency?

Did you outsource all your industrial base to China?

Is your dollar hegemony losing its shine?

Out of your depth? Fucked up geopolitically? Getting your arse handed to you on a plate?

No worries. All new, extra strength 'Russia Did It' spray is here. Feckless western leaders have trusted it for generations. And now you can rely on our best formula yet.

Remember...

Our household name.... Clears your name... Every game!

[nirvana]

21 hours ago, leonardratso said:

@nirvana

 

[Plan-b]

7 minutes ago, BadAlchemy said:

Have you printed too much fiat currency?

Did you outsource all your industrial base to China?

Is your dollar hegemony losing its shine?

Out of your depth? Fucked up geopolitically? Getting your arse handed to you on a plate?

No worries. All new, extra strength 'Russia Did It' spray is here. Feckless western leaders have trusted it for generations. And now you can rely on our best formula yet.

Remember...

Our household name.... Clears your name... Every game!

Lets not forget the Biden administration cancelled the Keystone Pipeline and the Alaska Oil and Gas leases 

[Joncrete Cungle]

14 minutes ago, Plan-b said:

Lets not forget the Biden administration cancelled the Keystone Pipeline and the Alaska Oil and Gas leases 

Our own morons initially rejected the Shell Jackdaw gas field development only last year. It has been given the green light today, wasting 6 months....

https://www.offshore-mag.com/regional-reports/north-sea-europe/article/14277701/north-sea-jackdaw-project-goes-ahead-following-shell-revisions

[Plan-b]

Just now, Joncrete Cungle said:

Our own morons initially rejected the Shell Jackdaw gas field development only last year. It has been given the green light today, wasting 6 months....

Plenty of Morons to go around! I like the "Green" light reference , Very good