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

[DurhamBorn]

55 minutes ago, Lightscribe said:

The multi year reversion to that line was too much to resist and I needed to free some capital, it was a sexy chart. 

 

 

 

[JimmyTheBruce]

Bloody Hummingbird ruined my scorecard....

 

[Harley]

41 minutes ago, Bobthebuilder said:

Sorry chaps, just thinking out loud, bear with me.

A few weeks ago, Durham Born posted something along the lines of, "the CBs have printed about 30% of the disinflation, should be enough for now". Then our deflation stocks start to move. Then today the government announce an end to all mask mandates and no vax pass for any large live events, from next Thursday.

I am starting to smell a rat.

Me no understand!

[CannonFodder]

11 minutes ago, DurhamBorn said:

 

Tory HQ preparing for BJ.s future?

[Lightscribe]

10 minutes ago, JimmyTheBruce said:

Bloody Hummingbird ruined my scorecard....

 

You’re up on a certain shimmering feline? Obviously a man of distinction. You shall be rewarded handsomely for your faith and devotion.

[Bobthebuilder]

4 minutes ago, Harley said:

Me no understand!

I remember pre covid chats about printing the disinflation back into the system "the plumbing", infrastructure, roads, railways was the obvious answer at the time.

I don't understand either, just a hunch.

[Loki]

1 minute ago, Bobthebuilder said:

I remember pre covid chats about printing the disinflation back into the system "the plumbing", infrastructure, roads, railways was the obvious answer at the time.

I don't understand either, just a hunch.

According to David Hunter there will be trillions 'printed' when the bust hits, I don't know if it's just The Fed or if bank of England etc will be forced to as well

 

[Bobthebuilder]

2 minutes ago, Loki said:

According to David Hunter there will be trillions 'printed' when the bust hits, I don't know if it's just The Fed or if bank of England etc will be forced to as well

 

I presume that will be the other 70% of printing the disinflation, then.

[JimmyTheBruce]

9 minutes ago, Lightscribe said:

You’re up on a certain shimmering feline? Obviously a man of distinction. You shall be rewarded handsomely for your faith and devotion.

Am I fuck.  Down over 50% on that.  Those are daily change numbers.

[Hardhat]

3 minutes ago, JimmyTheBruce said:

Am I fuck.  Down over 50% on that.  Those are daily change numbers.

I feel you, I went big on Yamana at exactly the wrong time.

Making ground now though...

[Lightscribe]

5 minutes ago, JimmyTheBruce said:

Am I fuck.  Down over 50% on that.  Those are daily change numbers.

Didn’t see the top bit my eyes only naturally stopped there 

[Lightscribe]

15 minutes ago, Bobthebuilder said:

I remember pre covid chats about printing the disinflation back into the system "the plumbing", infrastructure, roads, railways was the obvious answer at the time.

I don't understand either, just a hunch.

Like this what we discussed here back then and posted on certain forums in 2019?

[Hancock]

47 minutes ago, Loki said:

According to David Hunter there will be trillions 'printed' when the bust hits, I don't know if it's just The Fed or if bank of England etc will be forced to as well

 

He seems to totally ignore the trillions already printed.

[Froggy2000]

Hi DurhamBorn.  Quick question if I may. Would you describe your modelling, and that of the Fidelity Team, David Hunter etc. as being based on the Austrian school of economics?

I'm struggling with exactly why certain things get cheaper during falling interest rates/credit expansion and then why that reverses later.  E.g in your example, why the farmer gets cheaper employees.  My guess is the tractor is cheaper because the factory that builds them is cheaper to finance, but why does the price of say labor or food prices change when the supply of agricultural land vs consumers / or supply of labor stays fixed regardless of where we are in the credit cycle?

I'm trying to learn as much of this myself, and the closest concept I have found to your decomplex one is the difference between High order and Low order capital goods in the Austrian theory,so I'll explore these in more detail if you think its a good starting place.

Thanks for all the knowledge!!

[DurhamBorn]

25 minutes ago, Froggy2000 said:

Hi DurhamBorn.  Quick question if I may. Would you describe your modelling, and that of the Fidelity Team, David Hunter etc. as being based on the Austrian school of economics?

I'm struggling with exactly why certain things get cheaper during falling interest rates/credit expansion and then why that reverses later.  E.g in your example, why the farmer gets cheaper employees.  My guess is the tractor is cheaper because the factory that builds them is cheaper to finance, but why does the price of say labor or food prices change when the supply of agricultural land vs consumers / or supply of labor stays fixed regardless of where we are in the credit cycle?

I'm trying to learn as much of this myself, and the closest concept I have found to your decomplex one is the difference between High order and Low order capital goods in the Austrian theory,so I'll explore these in more detail if you think its a good starting place.

Thanks for all the knowledge!!

The falling cost of money mostly.Investment is cheaper than the productivity gains from investing it so you get a lovely cycle for consumption.Once that stops though governments and CBs dont understand why and keep pushing more and more.Our inflation now isnt just about too much printed money,its about the fact half the population now chooses to do nothing or little for the free money.Austrian theory or Keynesian doesnt really matter.The simple way to see it is that the economy cant now produce the demands on it at these prices.Its trying to heal by forcing prices and wages up higher than welfare but our idiot polo keep pushing up welfare.

Its a very complex area hence there being very very few people good at it anymore.

[Froggy2000]

Thanks DurhamBorn,

4 minutes ago, DurhamBorn said:

.Investment is cheaper than the productivity gains from investing

This phrase reminds me of another concept I read from an economics professor named Antal Fekete.  He called it the marginal productivity of debt.  As debt expands the increase in productivity/GDP associated with it falls until it turns negative.  At that point we are basically consuming capital / eating the seed corn in order to pretend that nothing is wrong.  Sounds like a good description of where we are today!

If I find anything useful I'll be sure to post it!

[BadAlchemy]

1 hour ago, Bobthebuilder said:

I remember pre covid chats about printing the disinflation back into the system "the plumbing", infrastructure, roads, railways was the obvious answer at the time.

I don't understand either, just a hunch.

As a world leader, if you launched a massive, inflationary infrastructure programme just out of the blue when there is already way too much debt, you would be toast. If you launched that infrastructure programme in response to the economy collapsing under the weight of that debt, you would be toast and quite likely dangling from a lamp post too. I will say no more! 

[JREWING]

8 hours ago, WICAO said:

I have no trouble accessing my UK SIPP online portals from Australia.  I've also had no trouble reinvesting dividends.

Interesting. I'm guessing while living overseas and NOT a UK resident in essence legally you should not trade on any UK exchanges. I was guessing that having a Australian IP address then the HL portal would be view only. I'm guessing @wherebee buy's the BP ADR on the US exchange whereas you have the ability to buy BP on the FTSE.

Thanks for the reply, I hope Oz treats you well. Parts of Australian culture I like, and some I detest.  Good luck.

[JREWING]

13 hours ago, Harley said:

Wow, no wonder my investing journey is so boring! 

Probably more reckless on my part Harley. BP could have revisited 250p and all previous profit gone. I don't think you can go wrong with BP at 320p or below. At current levels I would need to have far deeper pockets in order to average down should she fall. The yield at current SP levels would be my concern with RPI almost double what BP currently returns annually. It's what I feel will hold back the push over the 420p line. But what do I know, thought she might struggle past 370p and here she is.

[DurhamBorn]

1 hour ago, Froggy2000 said:

Thanks DurhamBorn,

This phrase reminds me of another concept I read from an economics professor named Antal Fekete.  He called it the marginal productivity of debt.  As debt expands the increase in productivity/GDP associated with it falls until it turns negative.  At that point we are basically consuming capital / eating the seed corn in order to pretend that nothing is wrong.  Sounds like a good description of where we are today!

If I find anything useful I'll be sure to post it!

Yes,we call it a distribution cycle,where past saved labour and capital is consumed because the costs of capital isnt worth investing.Its critical,but few understand it,they feel it etc "cost of living crisis",but dont understand it.For instance every extra bennie now makes it much worse for those just above bennies.Every dingy that lands in Dover is more consuming others savings etc.

[Yellow_Reduced_Sticker]

12 hours ago, CannonFodder said:

Am sure the bbc are more than happy to freeze their license fee to help Ms Criddle

OR even have it abolished altogether

 

 

NO need to pay!

 

I abolished the license 23 years ago, I refuse to pay BBC/othershitChannels for their propaganda

 

The BBC should be on "RIP OFF Britain" along with the rip off council tax!

 

Anyways...here's How-to legally avoid paying the license fee:

 

 

[HousePriceMania]

4 hours ago, JimmyTheBruce said:

Bloody Hummingbird ruined my scorecard....

 

What just happened ?

Look at this fat parasitic shit saying inflation is still temporay and energy prices at the problem.  What a c***

 

https://www.investmentweek.co.uk/news/4043555/energy-prices-labour-supply-threaten-financial-stability-bank-england-governor

Inflation in the UK remains a temporary phenomenon, according to Governor of the Bank of England, Andrew Bailey, although the ongoing energy bills crisis poses a genuine concern to consumers.

[WICAO]

55 minutes ago, JREWING said:

Interesting. I'm guessing while living overseas and NOT a UK resident in essence legally you should not trade on any UK exchanges. I was guessing that having a Australian IP address then the HL portal would be view only. I'm guessing @wherebee buy's the BP ADR on the US exchange whereas you have the ability to buy BP on the FTSE.

Thanks for the reply, I hope Oz treats you well. Parts of Australian culture I like, and some I detest.  Good luck.

I bought BP. and RDSB while a UK resident.

We're at this point planning on Australia being a long term home so I'm actually planning on putting my UK SIPP into drawdown as an Australian resident.  So far its been really easy.  My SIPP providers had zero problems with switching me to Aus resident and my accounts just behave like they always have.  Also I've taken tax advice and so I understand the lay of the land there with some pro's and con's when factoring Aus Superannuation in to the mix as well.

The only nuances going into drawdown that I can see:

- There is a HMRC form to fill in to make sure I'm taxed in the right place.  I'll confirm that closer to the time as the rules could change between then and now.

- Getting the money to Australia as from what I can see the SIPP providers will only pay into a UK bank account.  Again haven't dug to deep here yet as again the rules can change.  But that seems to be nothing more than a minor inconvenience as currency transfers can be done quite cost effectively these days if one stays away from the mainstream banks.

I spent some time reading the T&C's of my SIPP's and paid for some advice before getting on the plane given what's at stake.  Time and money well spent as I feel very good about the whole SIPP situation now.  I'll recheck that tax advice closer to drawdown age.

Thanks for the wishes.  As I like to say the grass is not greener on the other side it's just a different shade of green and right now we like the different shade.  Sure there are some real negatives here but the outdoor lifestyle to name one works very well for us.

[moneyscam]

1 hour ago, JREWING said:

Interesting. I'm guessing while living overseas and NOT a UK resident in essence legally you should not trade on any UK exchanges. I was guessing that having a Australian IP address then the HL portal would be view only. I'm guessing @wherebee buy's the BP ADR on the US exchange whereas you have the ability to buy BP on the FTSE.

Thanks for the reply, I hope Oz treats you well. Parts of Australian culture I like, and some I detest.  Good luck.

Why not? You can perfectly legally whether an individual or corporate buy UK listed stocks wherever you live unless the country you live in has a specific prohibition (very rare). When I lived in Switzerland I bought and sold UK stocks and they were held in my custody account over there.

Think about it, no major exchange would be attractive or useful to international investors if only domestic investors could purchase them. Think about all the major mutual funds or investment trusts in US / UK that offer say Asian equity exposure, they couldn't do this without being allowed to purchase / sell on Asian exchanges.

How you deal with the tax on dividends and capital gains is a separate issue. I simply declared my dividend, interest and capital gain income to Swiss taxman when I was over there.

[WICAO]

11 minutes ago, moneyscam said:

Why not? You can perfectly legally whether an individual or corporate buy UK listed stocks wherever you live unless the country you live in has a specific prohibition (very rare). When I lived in Switzerland I bought and sold UK stocks and they were held in my custody account over there.

Think about it, no major exchange would be attractive or useful to international investors if only domestic investors could purchase them. Think about all the major mutual funds or investment trusts in US / UK that offer say Asian equity exposure, they couldn't do this without being allowed to purchase / sell on Asian exchanges.

How you deal with the tax on dividends and capital gains is a separate issue. I simply declared my dividend, interest and capital gain income to Swiss taxman when I was over there.

I think there may be some nuances around what the wrapper providers allow as opposed to the actual buying of the UK listed stocks.  I seem to recall with one of my GIA's I was allowed to buy and sell freely within the wrapper but what I wasn't allowed to do was add new money to the account for investment but it was country of residence dependent.  DYOR of course.