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

[Barnsey]

2 hours ago, Errol said:

This really isn't true - or at least, it's only true if you buy rubbish equipment.

A top, very top of the line custom built gaming PC was about £2500 10 years ago. Now if you go to buy a similar top of the line custom built machine it is £3500. Gaming monitors are the same - what cost £300 ten years ago might cost £500-600 now.

I'm sure there are other examples - like televisions. The absolute top of the line TV from 10 years ago has an equivalent that often costs more today.

The deflation only applies to tat and cheap nonsense.

From a magazine in my possession from 1984 called "company car magazine", I make that about £6500 for the cheaper in-car motorola, and almost £10000 for the portable one in today's money?

[Barnsey]

1 hour ago, Boon said:

Same in mobile phones, although you could argue for consistency sake the very best Apple phone on the market has gone up in price, maybe by double. But maybe that is good marketing, they have enough suckers so that they know even if they increase the price it'll still sell.

True, although essentially eliminating any need for a PC and fancy camera, the quality is just superb (don't own but impressed).

[Harley]

6 hours ago, BurntBread said:

My guess is that the transition (still to come) is from "not thinking about the future" to "having to think about the future".

During a disinflation, people have (borrowed) money in their pockets; they look at "stuff", and they buy it because it's affordable. As the disinflation continues (and as technology improves so there is real deflation in electronic goods), those things get more and more true, but still nobody is thinking about the future, just what they can buy now, and the fact it looks really cheap.

When the trend reverses, and inflation starts to pick up, people still have the "live for today" mentality, but find they can no longer afford things so easily. If there is any planning, it's along the lines of "things will get back to normal soon, so we'll hold off for a while on the big purchases."

The real change of sentiment is when people figure out it's not going back to normal, and they start to think about what they will be able to afford in a year's time, and compare it to what they can (just about) afford now. When they realise the cash in their pockets is on fire, that's when the purchases get brought forward.

I suppose a "leads and lags" thing, as DB keeps telling us.

A good post.  It's good to game the psychology.  Even applies to us re. my planning posts!  George Gammon talked about it this week too and made good points against the economists' assumption that people delay or bring forward purchases.  Maybe for some items but he listed many items people would get now regardless of future price expectations.  But all this, as you point out, probably should be seen in the light of a series of ratchet type moves more common when dealing with expectations.  These things aren't linear.  Consensus amongst the crowd has to build, pennies need to drop, and lightening rods need to be struck....and then we have a ratchet, pause, and repeat.

[Sugarlips]

Just got sent this, I’m not familiar with the writers/site but they claim the Evergrande payment wasn’t actually paid and that Hsbc are in deep in the fallout, thoughts?

https://www.encouragingangels.org/new-blog/2021/10/29/92630gvbl4885eok9t9j3091yl731d

[Loki]

5 minutes ago, Sugarlips said:

Just got sent this, I’m not familiar with the writers/site but they claim the Evergrande payment wasn’t actually paid and that Hsbc are in deep in the fallout, thoughts?

https://www.encouragingangels.org/new-blog/2021/10/29/92630gvbl4885eok9t9j3091yl731d

Time for a new variant and lockdown 3.0!

[Errol]

2 hours ago, Hancock said:

In 1983ish i remember my dad buying a flat screen TV which were all the rage at the time for £500, this must have been close to a months take home pay.

Almost 40 years later I can go out and buy a SMART TV for £500, that does pretty much everything the top of the range ones do, and is most certainly not "rubbish equipment or tat and cheap nonsense".

Last TV I purchased £1100, I think. It had arguably the best picture quality and composition of its time. To get a similar 'best picture quality' TV now you are looking at either £1000 or more. Probably more.

[Sugarlips]

1 minute ago, Errol said:

Last TV I purchased £1100, I think. It had arguably the best picture quality and composition of its time. To get a similar 'best picture quality' TV now you are looking at either £1000 or more. Probably more.

I use the same approach with TVs as used cars, find a mate who is offloading a perfectly good one cheap because they can’t resist the latest model. Done this twice, currently have I decent Panasonic cost me £200 6/7 years ago still going strong.

[Errol]

Totally insane (and nonsense):

- Global auto sales are 60mm units pa. Tesla is selling 1.2 mm units pa.

 

[Noallegiance]

2 hours ago, Axeman123 said:

I'd assumed pretty much every comodity had already run, except PMs. I expected gold to be the last to go, and figured we were due for launch. What are you hoping will run first?

Next for me wants to be Shiba Inu so I can pay for winter!

[Errol]

[stoobs]

1 hour ago, Cattle Prod said:

We were discussing a while back how the state would get its paws on our capital. We looked at pensions, property, how much they could steal, and how they'll do it. Well here is a sneakier route: inheritance tax. I put a graph on it up last week, showing how many more are going to be pulled into the net. In simple terms, if your pot is currently at the IHT threshold, and manages to keep pace with say an average inflation rate of 6% over the next 8 years, your pot becomes 518k, and the govt, by freezing the bands, gets 77k of your hard earned. For doing absolutely nothing. 

https://www.telegraph.co.uk/business/2021/10/30/soaring-inheritance-tax-scandal-must-fixed/

He misses the point that this is deliberate, and won't be fixed.

In theory, 100% IHT over a certain threshold would be the ultimate fix for our broken system. Make as much money as you want during your life but you can’t take it with you and you can’t pass it down indefinitely to future generations. It would wipe out thousand year old distortions in a generation, and prevent the offspring of the current lucky winners from dominating the next thousand years. The poorest children would be several hundred thousand pounds behind the richest, rather than several billion. That kind of a gap can be overcome during a lifetime using wit and graft. Everyone has a fighting chance.

In reality, it would never be allowed to happen, globally, all at the same time. The rules would be applied, equally and fairly to all those below the 0.1% ensuring those multi-century empires continued and no upstarts could ever make up the ground to join them.

[Axeman123]

14 minutes ago, Noallegiance said:

Next for me wants to be Shiba Inu so I can pay for winter!

I thought Shiba had already gone parabolic!

[Noallegiance]

2 minutes ago, Axeman123 said:

I thought Shiba had already gone parabolic!

It's had two jumps in a month but it's consolidating potentially for another one.

[DurhamBorn]

3 hours ago, Cattle Prod said:

We were discussing a while back how the state would get its paws on our capital. We looked at pensions, property, how much they could steal, and how they'll do it. Well here is a sneakier route: inheritance tax. I put a graph on it up last week, showing how many more are going to be pulled into the net. In simple terms, if your pot is currently at the IHT threshold, and manages to keep pace with say an average inflation rate of 6% over the next 8 years, your pot becomes 518k, and the govt, by freezing the bands, gets 77k of your hard earned. For doing absolutely nothing. 

https://www.telegraph.co.uk/business/2021/10/30/soaring-inheritance-tax-scandal-must-fixed/

He misses the point that this is deliberate, and won't be fixed.

As we have talked about this and the fact pensions are outside of IHT but now have the lifetime allowance frozen and could have the IHT relief removed at any time seems like a pincer movement.

It obvious from the budget they intend to take everything from the working middle to give to bennies and state workers.Obvious removing cash is the third plank.

Lots of ways to use up money is going to be needed.

It worse as well when you have elderly relatives who bury their heads in the sand.My dad for instance wont talk about death or anything connected because it upsets him even thinking of it,but he is skirting IHT.I try to get him to give more to the kids now etc and he does,paying when they take him out for the day.I approach it from the care angle,because his biggest fear is going in a home.

They froze the allowance because all the money printing and inflation ends up in assets and its a way to stop the people side stepping the theft.

[JMD]

4 hours ago, Barnsey said:

From a magazine in my possession from 1984 called "company car magazine", I make that about £6500 for the cheaper in-car motorola, and almost £10000 for the portable one in today's money?

Wow - 'A fully portable telephone and can be carried in a briefcase, car or whatever'!!!    ...1984 certainly was a different time... I mean what exactly was a 'briefcase'?                                                                                                         Also i note that you could lease that £3000 'tele'(?)phone for £70/month, so maybe the thread discussion being currently had, about top end products having set price points is kinda true. 

[Hancock]

47 minutes ago, JMD said:

Wow - 'A fully portable telephone and can be carried in a briefcase, car or whatever'!!!    ...1984 certainly was a different time... I mean what exactly was a 'briefcase'?                                                                                                         Also i note that you could lease that £3000 'tele'(?)phone for £70/month, so maybe the thread discussion being currently had, about top end products having set price points is kinda true. 

Thing with that phone is not only was it the top end product, it was also the bottom end product.

 

[Hancock]

54 minutes ago, Cattle Prod said:

That's a "swinging from lampposts" chart if ever I saw one.

I love the narrative in the DT/MSM at present, that you can't tax the rich to prosperity.

When the real story is that for 4 decades they've been taxing the working man, to hand it to the rich in varying ways ... then borrowing/printing money to give a few crumbs to the working man so he can make ends meet ..... and then claiming this is growth or prosperity.

I would love to see several upper echelon MP's and bankers hanging from lampposts, the fact the BoE has a known corrupt Governor sums up the state of affairs.

 

[Hancock]

40 minutes ago, Cattle Prod said:

The problem there is that quite often the people that have to pay IHT, and will increasingly, are those who put in a lifetime of hard graft, and luck had nothing to do with it. The very rich don't pay IHT anyway.

Why would I bother studying harder in school, working through uni, taking investment risks to grow my capital etc etc if I was to hand it over to the govt for redistribution, rather than give it to my son? I work hard to give my son an advantage over his peers, it's just evolution. If I knew my lifetimes earnings were going to be blown on the likes of track and trace instead, I wouldn't bother. I'd just join the bennies and take it easy.

It depends on the threshold I suppose, but it'd need to be significantly higher than several hundred thousand pounds to keep the incentive. 

When you say spent on track and trace, what you really mean is having some of your money put in the pot of £40bln, that was then shared between sponsors and friends of Tory MP's.

 

[stoobs]

As I said my suggestion was workable in theory only.

Ultimately, those with real wealth and power either committed theft of some form on a massive scale, or their ancestors did. Our current system selects the most devious back-stabbing criminals amongst us, then puts them in charge of how wealth is distributed. Unsurprisingly that doesn’t result in any recognisable level of fairness.

[Hancock]

2 hours ago, Cattle Prod said:

That's a "swinging from lampposts" chart if ever I saw one.

Its as if after losing so much after the dotcom bust, they decided to have another crack at taking it all from the early 00s .... and then when that went wrong in 2008, they come up with ZIRP, QE and every other scam around the globe to make sure they'd never lose again.

Then come 2020 when things were fucking up for them behind the scenes (due to QE/ZIRP + property rigging scams), they had to come up with Covid to keep their ill gotten gains and take what was left.

Have to say im with Biden on his tax the super rich into oblivion, its not as if anyone can claim i'd be railing against capitalism, freedom or democracy for making such a suggestion, as the veil claiming that we had those is long gone.

Its just blatant crony capitalism, and bribing politicians to get to such a point.

[Erewhon888]

5 hours ago, Sugarlips said:

I use the same approach with TVs as used cars, find a mate who is offloading a perfectly good one cheap because they can’t resist the latest model. Done this twice, currently have I decent Panasonic cost me £200 6/7 years ago still going strong.

I'm somewhat surprised that Dosbodders tolerate a government propaganda and disinformation receiving device in their domestic environment. I find that a regularly monitored set of podcasts and channels brought to a computer monitor already provides more reliable information than I can keep up with. Perhaps a poll on this would be illuminating?

[Chewing Grass]

1 minute ago, Erewhon888 said:

I'm somewhat surprised that Dosbodders tolerate a government propaganda and disinformation receiving device in their domestic environment.

You have to keep your eye on the enemy all the time, I believe it is called 'intelligence'.

[MrXxxx]

https://www.msn.com/en-gb/money/other/homeowners-urged-to-check-their-mortgage-terms-to-avoid-potentially-devastating-worst-case-interest-rate-rise-of-35percent-in-2023/ar-AAQ7pBB?li=BBoPWjQ

OK, although the 'Daily Mail' article is slightly alarmist, the writing is now 'on the wall' for all to see, and any overextended 'home owner' that fails to address the issue now has nobody to blame but themselves, as the government will not [hopefully!] be bailing them out this time with some ridiculous scheme.

[M S E Refugee]

15 minutes ago, MrXxxx said:

https://www.msn.com/en-gb/money/other/homeowners-urged-to-check-their-mortgage-terms-to-avoid-potentially-devastating-worst-case-interest-rate-rise-of-35percent-in-2023/ar-AAQ7pBB?li=BBoPWjQ

OK, although the 'Daily Mail' article is slightly alarmist, the writing is now 'on the wall' for all to see, and any overextended 'home owner' that fails to address the issue now has nobody to blame but themselves, as the government will not [hopefully!] be bailing them out this time with some ridiculous scheme.

Some of the Elite can put up the newly evicted, Buck House has plenty of rooms.

[AWW]

4 hours ago, DurhamBorn said:

It worse as well when you have elderly relatives who bury their heads in the sand.My dad for instance wont talk about death or anything connected because it upsets him even thinking of it,but he is skirting IHT.I try to get him to give more to the kids now etc and he does,paying when they take him out for the day.I approach it from the care angle,because his biggest fear is going in a home.

My Mrs has the same problem with her parents.  They're sitting in a £1.5m house and have inherited two other houses that they seemingly can't be bothered to sell, both of which are slowly being reclaimed by nature (it's the neighbours I feel sorry for).  Probably getting on for £2.5m in property wealth.  They can't really get around their home; it's completely unsuitable for old folk to live in, having effectively 8 storeys (4 in each half, with stairs between).  If I were in their position, I would be cashing in my chips, moving into a house I can still get around, and working out how to keep the taxman at bay when I die.  Put the grandkids through private school, gift deposits to my kids etc. They don't seem to give it a second thought.

I think it's a generational thing. Because they were dirt poor earlier in life, they still fear that they will end up being poor again at some point in their lives, so they can't give anything away. They're like squirrels with nuts.