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

[Funn3r]

7 minutes ago, Lightscribe said:

The problem is that physical has left paper prices. I was getting old pre-1920 silver coins up until a year or so back for around the price of spot.

The attraction is that when our currency goes down the toilet (and others too) is that small little coins have predefined verification and weight.

If gold starts running to anywhere near the price it should be, then silver will too. Having the ability to exchange small transactions for physical silver could be more advantageous than cutting/clipping etc.

Fair enough if you can shave a little off the price by buying old 50% silver. It's going to make a difference if you're buying a literal shed-full, which I am not as I have no space.

Does not address what I said though; why not just buy modern ones as the price difference is not huge. I mean when there's no internet and you're trying to buy half a turnip by candle-light then surely trying to convince the turnip baron to accept this shitty old florin "it's 50% silver honest trust me" will be a harder sell than a shiny one in a box with "Royal Mint".

[ThoughtCriminal]

You know the drill by now.

 

Germany is fucked.

[baffledbyzirp]

1 hour ago, sancho panza said:

Have you got a view MS on the possiblity of a sterling crisis before end 2023(sterling crisis defined as cable<1).

Also have you got a take on where UK IR's will need to go to get infaltion under control and whtehr they will be succesful.No pressure jsut interested in yor take.

This mess is unfolding quicker than I expected UK wise and I'm pretty releived we've alreayd moved our allotments into USD/PM exposure/Oilies before now.I'd hate to be selling cable at $1.18 but it might be better than parity in 6 months

also @baffledbyzirp

SP, I agree with MS that those who claim to know, generally know nothing, and those of us who are honest, are simply reading the tea leaves.

What is certain is that the UK and £GBP face headwinds. There are an awful lot of moving parts and most of them are aligned negatively;

1. We are entering recession

2. Inflation looks set to be circa 10% into next year

3. Consumer confidence has been devastated, which will reduce discretionary spending possibly leading to a liquidity trap

4. Strategic blackouts and electricity rationing are likely during the coming winter depending on the severity of the weather

5. GBP is historically low against a basket of currencies, especially the USD

6. Our Balance of Trade and Public Sector Borrowing Requirement are enormous and can't be easily reversed

7. The onshoring of manufacturing, which DB predicts, is occurring at a glacial pace, in the meantime imports are crucial

8. North Sea oil acted as a bulwark against currency devaluation and propped up our exports in the 70s but is not available to the same extent today

9. Autumn is typically the season when disaster strikes

10. There is universal worker dissatisfaction regarding wages unless you are a FTSE 100 boss according to this morning's Guardian

11. Net migration at 1,000,000+ p.a. 2020-2023

12. A bloated public sector approaching 50% of the workforce if you include indirect employment

13. A benefits bill that is plainly unpayable

14. War in Europe and potential conflict in Iran or Taiwan

Given the adverse factors listed above I suspect that the economy is going to take a pasting over the next six months. I believe that input costs, especially fuel, are reducing globally, so inflation may reduce without CB meddling, which is too-little-too-late as ever. In order to curb inflation you need to be in front and above the curve as per the Taylor Rule. Our panjandrums are trying to steer a tiger by grabbing its tail. Once the public stop spending inflation will self-correct, but not without enormous suffering for the leisure and retail sectors, adversely impacting the tax take. Printing-Spending-Inflation-Cost of living crisis-Consumer confidence impairment-Reduced spending-Deflation.

Is Sterling in peril? Yes. Is the Euro equally feeble? Yes. What are the alternatives? PMs, dollar denominated investments, EMs, land as opposed to property, real assets, Swiss Franc, index linked products. 

The Euro will fail ultimately because of design flaws as per Wynne Godley's analysis. GBP has the ability to survive but we must acknowledge our limitations as a country and forsake our seat at the top table, concentrating instead on domestic rather than international matters. Which currency will be the first to default and set the whole edifice at risk of collapse? Take your pick. There may be trouble ahead. The mighty dollar reigns supreme by virtue of its reserve currency status. The tide has changed, the BRICS no longer to be vassal states who can have their accounts frozen, assets seized and their access to international financial plumbing denied at Uncle Sam's whim. The dollar will be the last to go despite inherent flaws and deficits that are unpayable.

 

[Bus Stop Boxer]

3 minutes ago, Funn3r said:

Fair enough if you can shave a little off the price by buying old 50% silver. It's going to make a difference if you're buying a literal shed-full, which I am not as I have no space.

Does not address what I said though; why not just buy modern ones as the price difference is not huge. I mean when there's no internet and you're trying to buy half a turnip by candle-light then surely trying to convince the turnip baron to accept this shitty old florin "it's 50% silver honest trust me" will be a harder sell than a shiny one in a box with "Royal Mint".

Theres so much BS on YT re physical silver shortages.

When these vids crop up on my feed,  I just check in at Bairds, and every time there is no supply issue for bullion Sovs or silver Brits. There has only been one time in a decade where there was a wait for Sovs or Brits.

Even then Baird were still selling their bullion silver rounds Rabbits Monarchs Eagles etc...

Main reason to buy old silver coins on ebay is to avoid VAT. My mate has been doing this for over a decade.

Hes now in to full on fine pieces mind.

That is a different ball game all together. Very very bouyant i'm told.

[M S E Refugee]

8 minutes ago, Funn3r said:

Fair enough if you can shave a little off the price by buying old 50% silver. It's going to make a difference if you're buying a literal shed-full, which I am not as I have no space.

Does not address what I said though; why not just buy modern ones as the price difference is not huge. I mean when there's no internet and you're trying to buy half a turnip by candle-light then surely trying to convince the turnip baron to accept this shitty old florin "it's 50% silver honest trust me" will be a harder sell than a shiny one in a box with "Royal Mint".

There's a 40% difference in price between the pre 1947 Silver compared to the new 1oz Britannia's for a comparative amount of Silver.

[Funn3r]

3 minutes ago, M S E Refugee said:

There's a 40% difference in price between the pre 1947 Silver compared to the new 1oz Britannia's for a comparative amount of Silver.

I must have got my maths wrong then as it seemed only slightly cheaper to me. I am not a maths person trust me. Maybe I was wrong in believing that value of 11.3g for florin weight. Or maybe as you said I should be focusing on the 50% silver ones rather than 100%

[nirvana]

54 minutes ago, Errol said:

Gold in GBP isn't

GBP=monopoly money bro, DXY 109 incoming? is uncle dave on holiday at the moment? 

[marceau]

5 minutes ago, baffledbyzirp said:

Once the public stop spending inflation will self-correct, but not without enormous suffering for the leisure and retail sectors, adversely impacting the tax take. 

 

 

Agree with everything apart from this bit. Demand destruction will NOT change the inflation trend. It does nothing to change the relationship between productivity and promises. If the tax take drops it sends inflation HIGHER, as that gap widens.

Decreases in the inflation print from reduced activity are therefore temporary, leading to the whipsaw effects seen in every prolonged inflationary period. See 1970s UK chart for examples of how big these swings can be even in relatively benign conditions, see emerging market inflations for more extreme versions.

[nirvana]

1 hour ago, Plan-b said:

It's the pound that's fuct not gold 

sure, but what that's really telling you is that for the last 10 years you shoulda been in USD and BTC not feckin shitty pounds  AKA Gold has gone nowhere against the 'mighty dollar' 

 

[M S E Refugee]

17 minutes ago, Funn3r said:

I must have got my maths wrong then as it seemed only slightly cheaper to me. I am not a maths person trust me. Maybe I was wrong in believing that value of 11.3g for florin weight. Or maybe as you said I should be focusing on the 50% silver ones rather than 100%

Here's a useful calculator for you.

https://www.gerrardsbullion.com/sell/sell-silver-online/silver-coins-prices/

[Harley]

48 minutes ago, baffledbyzirp said:

SP, I agree with MS that those who claim to know, generally know nothing, and those of us who are honest, are simply reading the tea leaves.

What is certain is that the UK and £GBP face headwinds. There are an awful lot of moving parts and most of them are aligned negatively;

1. We are entering recession

2. Inflation looks set to be circa 10% into next year

3. Consumer confidence has been devastated, which will reduce discretionary spending possibly leading to a liquidity trap

4. Strategic blackouts and electricity rationing are likely during the coming winter depending on the severity of the weather

5. GBP is historically low against a basket of currencies, especially the USD

6. Our Balance of Trade and Public Sector Borrowing Requirement are enormous and can't be easily reversed

7. The onshoring of manufacturing, which DB predicts, is occurring at a glacial pace, in the meantime imports are crucial

8. North Sea oil acted as a bulwark against currency devaluation and propped up our exports in the 70s but is not available to the same extent today

9. Autumn is typically the season when disaster strikes

10. There is universal worker dissatisfaction regarding wages unless you are a FTSE 100 boss according to this morning's Guardian

11. Net migration at 1,000,000+ p.a. 2020-2023

12. A bloated public sector approaching 50% of the workforce if you include indirect employment

13. A benefits bill that is plainly unpayable

14. War in Europe and potential conflict in Iran or Taiwan

Given the adverse factors listed above I suspect that the economy is going to take a pasting over the next six months. I believe that input costs, especially fuel, are reducing globally, so inflation may reduce without CB meddling, which is too-little-too-late as ever. In order to curb inflation you need to be in front and above the curve as per the Taylor Rule. Our panjandrums are trying to steer a tiger by grabbing its tail. Once the public stop spending inflation will self-correct, but not without enormous suffering for the leisure and retail sectors, adversely impacting the tax take. Printing-Spending-Inflation-Cost of living crisis-Consumer confidence impairment-Reduced spending-Deflation.

Is Sterling in peril? Yes. Is the Euro equally feeble? Yes. What are the alternatives? PMs, dollar denominated investments, EMs, land as opposed to property, real assets, Swiss Franc, index linked products. 

The Euro will fail ultimately because of design flaws as per Wynne Godley's analysis. GBP has the ability to survive but we must acknowledge our limitations as a country and forsake our seat at the top table, concentrating instead on domestic rather than international matters. Which currency will be the first to default and set the whole edifice at risk of collapse? Take your pick. There may be trouble ahead. The mighty dollar reigns supreme by virtue of its reserve currency status. The tide has changed, the BRICS no longer to be vassal states who can have their accounts frozen, assets seized and their access to international financial plumbing denied at Uncle Sam's whim. The dollar will be the last to go despite inherent flaws and deficits that are unpayable.

 

Nice.  I would add on the horizon the possibility of a move to a bipolar world requiring us to pay (higher) tribute to the US.  That'll apply to all those in it's orbit.  The US with it's energy reserves, etc may have played a blinder.  A bit out there and more structural and longer term but they have shown just what they can do.

[Harley]

37 minutes ago, marceau said:

Agree with everything apart from this bit. Demand destruction will NOT change the inflation trend. It does nothing to change the relationship between productivity and promises. If the tax take drops it sends inflation HIGHER, as that gap widens.

Decreases in the inflation print from reduced activity are therefore temporary, leading to the whipsaw effects seen in every prolonged inflationary period. See 1970s UK chart for examples of how big these swings can be even in relatively benign conditions, see emerging market inflations for more extreme versions.

True in that the picture is quite complex.  But then IMO eventually sentiment leads in the end regardless so it becomes less relevant.  I was thinking about this while listening to a critique of Biden's zero percent claim.  That's, at best, just a net figure and depends on weighting, etc.  People live in the real world where they face a particular and personal slice of those numbers and not everything is discretionary.  To me, as typical, the numbers become less significant, just as we have witnessed the fall of the technocrats while adhering to their version of their numerical truth.  I just don't see how expectations can be controlled given the emerging vice grips facing us.  Maybe therefore a move from subtlety controlling expectations to overtly controlling behaviour.  Or it rips where the crowd lets it rip.

[marceau]

Just now, Harley said:

 Maybe therefore a move from subtlety controlling expectations to overtly controlling behaviour.

It is the only way out imo. At the moment muddled authority and responsibility is allowing money to call the shots. You need the man the media was claiming Trump to be. Someone who stands up on TV with a group of hard-looking Generals behind him and says 'it's mine now'. 'Mine' meaning both spoils AND responsibility.

Of course, Trump wasn't that guy. But if we don't get him, this situation just gets worse and worse as the vested interests, cartels and ideologues rip the place apart.

[Plan-b]

38 minutes ago, nirvana said:

you shoulda been in USD and BTC not feckin shitty pounds 

How do you know I wasn't? 

[Funn3r]

44 minutes ago, M S E Refugee said:

Here's a useful calculator for you.

https://www.gerrardsbullion.com/sell/sell-silver-online/silver-coins-prices/

That sounds more like it. Thanks for clearing up.

I think here's where I went wrong

[nirvana]

apparently the Turks have doubled their Russian oil imports and with the week lira it means petrol is about a quid a litre....

Turkey for winter anyone? maybe should be posting this in the 'get the fuk out of the UK' thread? 

[Jay]

3 hours ago, moneyscam said:

Whilst my stocks are taking a bath at least my hedge is the gift that keeps giving.

Well played sir..thanks for the post..at least I know who has been taking my money..didn’t think the Swiss would let it run..

[belfastchild]

Heres one for @DurhamBorn

Was out today and went looking for a new bed. Been thinking about bullwhip effect and all that and figured I at least needed a new mattress and also my bed is about 15 years old. Probably the best time about now to get one.
Fancied a proper heavy wooden bed with tailboard etc, not cheap shite. Had a look online from a local small retailer and an irish made mattress and irish made bed were the guts of 1500 quid. Figured that wouldnt be too bad in the scheme of things (bed cost 400 quid 15 years ago).
Went down to have a look and they didnt have the wooden one in, nobody else in the shop so got chatting to the guy. Wooden beds were the rage about 3 years ago then they got hit with a 1000% increase in shipping costs. That irish made oak bed actually came from China and just warehoused here. The box volume is quite high and they are quite heavy so were getting crucified on the shipping costs so no longer imported (although he managed to source me one). Said the push is for older style divan beds easier to make here.
Settled on the mattress, delivery etc and it was about 1500 quid roughly. He gets the calculator out and gives me 25% off. Said they had to reduce their prices recently and I was the first person through the door at around lunchtime!
A few other people came in whilst I was there so I didnt get the chance to ask more about trends and footfall etc.
I bought my first bed from the same shop when I just bought this house and its a poor end of town so the stuff I bought today was the most expensive they had. Interestingly the cheapest stuff was about the same price now as I paid about 6 years ago for a mattress but the cheap stuff now looks like cardboard in comparison.

[Funn3r]

8 minutes ago, nirvana said:

apparently the Turks have doubled their Russian oil imports and with the week lira it means petrol is about a quid a litre....

Turkey for winter anyone? maybe should be posting this in the 'get the fuk out of the UK' thread? 

When I was in Turkey in late May we drove past filling stations and we worked out it was £1.20 per litre

So if you're Turkish it's actually come down.

Have to believe it's not as simple as that though and there's a subsidy in it somewhere.

Whatever, have feeling they are not going to freeze like we are.

[Errol]

1 hour ago, nirvana said:

GBP=monopoly money bro

Precisely my point.

[Axeman123]

32 minutes ago, Funn3r said:

Whatever, have feeling they are not going to freeze like we are.

Geography certainly supports that.

[Starsend]

2 hours ago, BWW said:

and will stay at 15+ for ....

and svr or 2-5 year fixed rates for mortgages will hit ....

??

At what point are they absolutely forced to deal with this? When it breaches 20% ? 25% ? There must be a point where they have to act robustly.

This is getting quite alarming for me now. My retirement plans going up in smoke fast. Almost tempted to dump everything into gold as I have some faith that will always retain some value.

[Don Coglione]

1 hour ago, marceau said:

It is the only way out imo. At the moment muddled authority and responsibility is allowing money to call the shots. You need the man the media was claiming Trump to be. Someone who stands up on TV with a group of hard-looking Generals behind him and says 'it's mine now'. 'Mine' meaning both spoils AND responsibility.

Of course, Trump wasn't that guy. But if we don't get him, this situation just gets worse and worse as the vested interests, cartels and ideologues rip the place apart.

Vlad?

[Don Coglione]

3 minutes ago, Axeman123 said:

Geography certainly supports that.

Central Turkey can get fucking cold.

[Axeman123]

4 minutes ago, Starsend said:

At what point are they absolutely forced to deal with this? When it breaches 20% ? 25% ? There must be a point where they have to act robustly.

This kind of thing (from Friday) is what will scare them into action IMO

https://uk.news.yahoo.com/inflation-fuels-jump-government-debt-064741248.html

Headline: Inflation fuels jump in Government debt costs as borrowing hits £4.9bn

"It came as debt interest payments climbed to £5.8 billion in July, lifting from £3.5 billion in the same month last year due to increases in Retail Price Index (RPI) inflation."

4 minutes ago, Don Coglione said:

Central Turkey can get fucking cold.

Fair point, I was just being facetious.