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

[Pip321]

16 minutes ago, DurhamBorn said:

The Paras should earn what they do,but 3 bed semis with gardens should be £90k,an immigrant should get zero access to bennies or services for 10 years of NI payments and the bennie cap should be £10k.The minimum wage of a single person working 37+ hours should be double the what the maximum bennies are however many kids.Family formation then happens as all working men become an asset to family income.

Agree, you have changed the salary scale of other others to fit😉

I still suggest we overvalue pen pushers, accountants and civil servant types (many of which aren’t superstars) over those who do spectacular jobs.

I guess it’s all about supply and demand….except it’s heavily manipulated. Why anyone is a paramedic on £25k when they could get a basic head office role at a bank and work 4 days a week flexi, discounted canteen etc and earn £35/40k is beyond me.

[ThoughtCriminal]

Big thanks to whoever it was posted that Stanley Druckenmiller video.

 

I've been a big fan of his for years but first time I've ever seen a long-form interview.

 

It really brought home how he emphasises how vital lags and leads are, that's his basis for almost every investment decision.

 

He also pointed out how it's almost a lost art to look at certain sectors as canaries in the coalmine for booms or busts. 

 

He concludes that we've never seen economic circumstances like this before so its almost impossible to predict how this ends. All he can say with certainty is that the answer is almost certainly "very badly". 

[ThoughtCriminal]

Speaking of a Canary in the coalmine.........

[Axeman123]

2 hours ago, Lightscribe said:

Tax advantages and living costs across states will dictate all.

That is very true, however that migration can ruin good states. Nevada was very red, low tax etc. These things plus proximity attracted Californians, who then seem intent on voting for the same failed policies that destroyed California. For context Ronald Reagan was state Govenor there before he became President, which would be inconcievable today.

The USA was originally intended to be a diverse collection of states, with an active marketplace of ideas leading to labour and capital going where it was treated best. This would always favour laissez faire economic models. Instead we have seen a century and more of creeping federalism, hopefully that can be rolled back.

[Long-game]

10 hours ago, DurhamBorn said:

I still think its in play but its looking more likely the above happens and they simply inflate private wealth away until the state has it all.Its incredible how the state is trying to protect itself and its workers and bennies at the expense of everyone else.Very dangerous times.

In such circumstances having gold, silver etc and other 'essentials' will be even more important. 

[feed]

Bezos called Biden a fool or a liar yesterday.  

Bezos is wealthy, he wants to stay wealthy and knows how energy costs and associate inflation will destroy him.  

[Chewing Grass]

1 hour ago, HousePriceMania said:

I said last week, it's time to get everything into assets...I stand by that, Boris and his 50 year mortgages says the game is up.

50 year mortgages equals pay more for the same and kiss goodbye to retirement.

Would you take 10 year finance out on a car?

[Majorpain]

14 minutes ago, ThoughtCriminal said:

Speaking of a Canary in the coalmine.........

Elephant in the room being that if German trade deficit is going negative, then rest of Europe is properly screwed.

[Castlevania]

10 hours ago, DurhamBorn said:

On occasion through email and Facebook messaging.He doesnt do much work now,but he manages some trust funds for a few charities for free,quite big portfolios.He wishes he was 30 again though because he thinks macro strategists will be like gold dust.My inflation work has proved much closer to the results than his own.He thinks there is a good chance we are at the end of an epoch defining cycle.The models go off the page down the line ie they go parabolic.Its mainly due to deficit spending.He thinks we must lose democracy or collapse,with very little in between.Interesting i mentioned several years ago i thought our roadmap was showing the economy couldnt produce enough for the demands on it and that would drive the cycle.He said my work on that was some of the best reading of the macro he had ever seen.Its not the disaster he is so worried about,its the massive violence that will go with it.There is hope,but western leadership and "elites" couldnt be worse.He doesnt think its all planned,he just thinks they dont understand macro and history.

Intriguingly Tony Blair wrote an article in the Times the other week and he mentioned that the economy couldn’t support the demands on it.

I think that’s the first time I’ve seen a politician or ex-politician admit that.

[Axeman123]

7 minutes ago, Majorpain said:

Elephant in the room being that if German trade deficit is going negative, then rest of Europe is properly screwed.

At some point the EU will have to make peace with Russia and initiate NS2, and the weird thing is that Biden etc seem to be rooting for it by stopping LNG exports to lessen their own inflation.

[CannonFodder]

17 minutes ago, feed said:

Bezos called Biden a fool or a liar yesterday.  

Bezos is wealthy, he wants to stay wealthy and knows how energy costs and associate inflation will destroy him.  

 

 

[Chewing Grass]

Spotted this on somebodies twitter thing, might put dates to the points on the curve, I think we are at 14.5.

[RJT1979]

54 minutes ago, ThoughtCriminal said:

Speaking of a Canary in the coalmine.........

Don't tell milk hunter 

[Errol]

40 minutes ago, Axeman123 said:

At some point the EU will have to make peace with Russia and initiate NS2, and the weird thing is that Biden etc seem to be rooting for it by stopping LNG exports to lessen their own inflation.

Russia still won't sell them anything unless they pay in Rubles, gold etc 

[CannonFodder]

Its all about the Beta (market movement)

 

 

[ThoughtCriminal]

4 minutes ago, CannonFodder said:

Its all about the Beta (market movement)

 

 

He's what Druckenmiller calls a bull market genius 

[CannonFodder]

3 minutes ago, ThoughtCriminal said:

He's what Druckenmiller calls a bull market genius 

If only god would send us a sign of whats coming

 

[Errol]

5 minutes ago, Cattle Prod said:

Indeed. Sakhalin Island used to be Japanese in the first place, and the Russians took it at the end of world war 2! 

Which was absolutely fair and correct after what the Japanese had done.

[Castlevania]

12 minutes ago, Cattle Prod said:

Indeed. Sakhalin Island used to be Japanese in the first place, and the Russians took it at the end of world war 2! The gas was discovered later, that must have really stung Japan, who have zero energy resources. So they bit the bullet and bought into the project. And now...

Are Japan actually boycotting Russia? Apparently of the Japanese companies operating in Russia 3% have withdrawn since the Ukraine invasion.

[Starsend]

2 hours ago, HousePriceMania said:

The is the sort of crazy bastard talk I've been saying for years now ?

I am not mental ?

What do people think this "economic collapse" would look like and time scales for this ?

Surely if MSM is touting this its:

a) Much further along than people think

b) They need to do something quickly to avoid it, i.e. higher IRs than anyone expects 

I said last week, it's time to get everything into assets...I stand by that, Boris and his 50 year mortgages says the game is up.

This is the big question, what the fuck does it actually look like because without knowing that you can't know how to protect yourself. Perhaps Argentina can offer some hints - they simply stole people's money, USD accounts were seized and converted to bongo bongo currency overnight. Could the UK government do this? Could they seize gold? People think they wouldn't because we haven't seen that kind of theft in our lifetimes but we haven't seen collapse either.

I wonder how safe SIPPS / ISAs are in the event of collapse. This is the big question. Be useful to find out what happened to Argentinians who held shares in say Newmont, were they confiscated or just taxed to shit. Fairly certain the UK thieves will go for 'wealth' taxes.

There's still hope that they change course but they seem remarkably stupid and things are fairly well advanced now. In some ways, collapse is the best option anyway as we can then rebuild from the rubble (assuming we get rid of the cretins that caused this mess).

In practical terms what can you do:

1. Hold some physical gold / silver. Try to buy under the £5k limit in any one transaction so you don't have to prove who you are.

2. Consider limiting how much you put into your SIPP and favour your ISA instead. This is a difficult one as I wouldn't bother working if I had to pay full tax on what I earn. Having too much in a SIPP makes me nervous though as its a sitting duck for the Government when / if they get desperate.

3. Open an account somewhere sane, Singapore springs to mind here. Safe and a strong currency. If anybody has any info knowledge in this area then it would be very useful to share.

4. If things look to be getting really bad then have a plan on how to transfer the contents of your ISA / deposit accounts / premium bonds etc to your Singapore account.

5. Consider holding allocated gold / silver in overseas locations. The location you choose is critical as many countries could go the same way as the UK.

6. If you have the room fill your house up with non perishables. This is a good inflation hedge anyway and the Government aren't going to be interested in nicking your fifty boxes of washing powder.

7. Antiques / art / collectibles. Problem is many of these are inflated already.

Would welcome any other suggestions without going full on prepper.

Only so much you can do really, personally I think the key one is an account abroad where you can get your money out of the UK fast. Fortunately, with the knowledge / people we have on this thread I think we'll see it coming in plenty of time and be able to take action as long as you've set up your escape routes beforehand.

 

 

[Noallegiance]

It looks like my little office could be a useful anecdotal micro petri dish.

Not only have the foaming crypto 'experts' gone quiet (especially when compared to 8 months ago when passionate conversations tipped into Bahamas holidays and retirement before the age of 40), but for one fellow a failure to successfully re-mortgage due to a product being pulled from offer with dubious reasoning from the bank has meant a £350p/m uplift in mortgage cost (fixed for 5 years at 3.3% up from circa 1.3%). To add salt to it, he forgot to re-mortgage within the 10 day offer window and had to eat another £100p/m increase from when the offer was made less than 2 weeks ago.

Discussions now for this person are about down-scaling the gas-guzzler, selling it to pay off the loan used to buy it (less than 2 years ago) and using the difference for a less high-end motor.

This is in an environment where earning money is not difficult. There's nobody in our office who should be anywhere near a breadline other than when they drive past one.

 

[DurhamBorn]

1 hour ago, Castlevania said:

Intriguingly Tony Blair wrote an article in the Times the other week and he mentioned that the economy couldn’t support the demands on it.

I think that’s the first time I’ve seen a politician or ex-politician admit that.

Incredible isnt it.Good to see though how far ahead we are,onwards and upwards.Sometimes mapping these things gives you an answer that comes from huge numbers of inputs and cross market affects,yet the answer seems so simple.When you consider all that work, the answer was obvious all along.

[ThoughtCriminal]

The more you look at Germany the worse it gets.

[ThoughtCriminal]

Down we go......

[CannonFodder]

40 minutes ago, Starsend said:

 

Only so much you can do really, personally I think the key one is an account abroad where you can get your money out of the UK fast. Fortunately, with the knowledge / people we have on this thread I think we'll see it coming in plenty of time and be able to take action as long as you've set up your escape routes beforehand.

 

 

If it yields a return abroad then needs to be on your tax return in most cases.

Dont declare it and these countries share tax info.

Could be the first thing seized by UK with a request to a friendly country to sieze suspiciously accounts of the little people - big people ok.

Ask a canadian trucker.

Electorate be happy with this seizure, people richer than them with overseas account.

Gov needs money, gov asks friends for lists of people with accounts in their countries, gov crosschecks against tax returns, gov seizes through friends and up to you to get back, gov releases stories to press it is tough on overseas tax evasion.

Big people own a company that owns another company that has assets abroad. The company donates all its profits to a charity that upkeeps the castle and estate where the big people reside.