Credit deflation and the reflation cycle to come (part 7)

[DurhamBorn]

The end of the dollar will mean huge inflation in asset prices,almost all the value of the treasury market will transfer to real assets.Its why the Saudis have bought 10% of TEF and are sniffing around BT.They know coming off the dollar over time means a re-value on lots of assets.

[ThoughtCriminal]

I'm going to issue Luke Gromen with a cease and desist order if he doesn't stop using @Cattle Prod patented "man hours in a barrel of oil" analogy. 😂

 

 

[Loki]

12 minutes ago, ThoughtCriminal said:

I'm going to issue Luke Gromen with a cease and desist order if he doesn't stop using @Cattle Prod patented "man hours in a barrel of oil" analogy. 😂

 

 

 

All those quadrillions of added value or whatever and they still had to outsource the plastic dog turd factories to China 

[Axeman123]

32 minutes ago, DurhamBorn said:

almost all the value of the treasury market will transfer to real assets.

I suppose that might be one way for enough nuclear power plants to get built accross the west. Not exactly portable though, so "rule of law" is going to weigh heavily on decision makers wanting to build them overseas as part of sovereign wealth fund.

[Long time lurking]

Every time ,,,TAX 

 

[Loki]

1 minute ago, Axeman123 said:

Not exactly portable though, so "rule of law" is going to weigh heavily on decision makers

Recent events suggest...!

 

 

[Axeman123]

7 minutes ago, Loki said:

Recent events

Indeed. It would have to be friendly countries all holding assets in each other, with some kind of overarching rulemaker to sanction the holdings of any member that tried to windfall tax or nationalise anothers. You would then have courts and so on, another globalist structure.

In theory though, it is interesting. If nations were just to build and own stuff internally you would have the obligatory warped incentives to build the wrong things and massively overpay for them, whereas putting them overseas should make the incentives favour efficiency and absolute returns. The problem would be that the international co-operation needed to have enough trust would open the door to reciprocal back-scratching; eg "invest your nations reserves in building the thing my biggest donor does so they will win the tender, and put it in my constituency...and I will do the same for you".

[Loki]

2 minutes ago, Axeman123 said:

Indeed. It would have to be friendly countries all holding assets in each other, with some kind of overarching rulemaker to sanction the holdings of any member that tried to windfall tax or nationalise anothers. You would then have courts and so on, another globalist structure.

In theory though, it is interesting. If nations were just to build and own stuff internally you would have the obligatory warped incentives to build the wrong things and massively overpay for them, whereas putting them overseas should make the incentives favour efficiency and absolute returns. The problem would be that the international co-operation needed to have enough trust would open the door to reciprocal back-scratching; eg "invest your nations reserves in building the thing my biggest donor does so they will win the tender, and put it in my constituency...and I will do the same for you".

I don't think any financial structure can emulate morality...full reserve backed capitalism probably gets closest

 

[Long time lurking]

 

[Long time lurking]

6 hours ago, One percent said:

A question please. Why can’t the BOE just start printing again?   

That game has come to an end ,regarding  the consequences of doing so (weaken our currency),it`s becoming clearer by the month the below hypothesis is looking to be correct,basically the can is getting very close to the wall at the end of the road,IMO there will have to be another world wide "emergency" before they can even think about printing in any meaningful way that would delay the inevitable from happening 

 

[JMD]

7 hours ago, Boon said:

One head-scratching thing is why isn't the government forcing firms to create or tailor roles for the disabled? With the carrot to start, then the stick.

It would reduce pressure on the public purse and maybe increase productivity as well as the optics looking good.

Of course there are gonna be some (many?) lifestyle scroungers in those figures, but I would guess a lot of people on bennies would like to work, but could not in some roles, and then once you get past a certain age then it becomes impossible to get any job bar a minimum wage one (which tend to be the least flexible in terms of work and employer attitude)

In this day and age with all the cloud and communication systems we have there doesn't seem to be any excuse why some jobs have to be done by 1 person on a 40-hour week basis.

Much like building more houses I suspect simple self-interest is at the heart of it. 

Yes. I've posted periodically on here that a 3-day week - with jobs shared out, and btw with the 'cost to the country' of such a plan being neutral - would have radical social/economic benefits. I shan't restate those benefits again.

But would only add that the reason why the polos really fear the whole idea is because more free time for this country's atomised individuals would probably create great scope for regular people (ie not the 'captured' union or activist types) to attend/participate in social/educational/political group discussions, and rapidly encourage such groups to agitate for real change...  Is this how effective revolutions happen - by simply giving 'thinking time' to 'average joe' working people?

[Harley]

I could have set up a conservative(*) four ETF Permanent Portfolio this time last year, done nothing, and now have an 8.63% total return at a very acceptable level of risk for no work.

Would have been a very acceptable floor fund to meet needs (versus upside wants) in retirement.

Somewhat less annualised over three and five years but still good enough.

Our current core portfolios contain a more granular collection of ETFs which don't seem to add much, if anything, to the risk:reward.

KISS!

* = the risk parity folk would beg to differ!

Edited December 29, 2023 by Harley

[JMD]

8 hours ago, DurhamBorn said:

I have the numbers from my roadmap,if inflation linking bennies and public sector pensions is not broken then the productive will lose between 47% and 58% of their real terms spending power.Think about that.BUT we are down around 21% now and past the point where more and more jump on bennies they are so generous.So those numbers are growing,not falling.At 50% loss of spending power almost 3/4s of the population will be better off not working.Remember as well we are importing millions more scroungers.The multipliers i use are all now vertical.I expect we will see tax cuts in the budget and an early election.BOE cannot QE,so government will see gilt auction failures unless they tax savings hard.

Of course thats why the likes of Ashmore and SEDY have been going up and up lately.The MSM etc will wake up in a couple of years when we have all the loot.

 

Thanks for that DB, looks like your thrifty lifestyle (excluding the massage trips of course!) will become the norm?

I wonder if we rapidly 'go the way' of Argentina and (based on a recent article i read about Argentina's economy; and relating it to our own country's population size/workforce size) end up with just 10 million privately employed workers and 5 million public employees? Although of course a lot of unofficial/untaxed work would still be done in addition to those officially employed numbers.

(But 'curriously' i bet the polos (for the reasons I stated above) still wouldn't implement a 3-day week!)

Edited December 29, 2023 by JMD

[JMD]

1 hour ago, Harley said:

I could have set up a conservative(*) four ETF Permanent Portfolio this time last year, done nothing, and now have an 8.63% total return at a very acceptable level of risk for no work.

Would have been a very acceptable floor fund to meet needs (versus upside wants) in retirement.

Somewhat less annualised over three and five years but still good enough.

Our current core portfolios contain a more granular collection of ETFs which don't seem to add much, if anything, to the risk:reward.

KISS!

* = the risk parity folk would beg to differ!

I'm confused.

Aren't the risk parity folk are the same set of people as the managed futures/trend investing/return stacking folk? And didn't you write a positive post recently including mentioning Resolve asset managers who provide etf's for US investors?

I ask because I read up on the links you included in your post and tbh It looked interesting to me. But have you now changed you mind about Resolve and their strategies?

Edited December 29, 2023 by JMD

[Bien Pensant]

11 hours ago, Boon said:

One head-scratching thing is why isn't the government forcing firms to create or tailor roles for the disabled?

Isn't that the gist of the Equality Act 2010:

Where someone meets the definition of a disabled person in the Equality Act 2010 (the Act) employers are required to make reasonable adjustments to any elements of the job which place a disabled person at a substantial disadvantage compared to non-disabled people.

...

Does the reasonable adjustment duty apply to my recruitment practices as well as to the arrangements for my existing staff?

Yes.

Equality Act 2010: Duty on employers to make reasonable adjustments for their staff - Government Equalities Office

Edited December 29, 2023 by Bien Pensant

[Bien Pensant]

7 hours ago, Loki said:

If Dave Hunter is right about the safety trade back into the DXY and bonds then I am apprehensive about what the fuck sort of event would be needed to trigger that (As it is a complete reversal of the process currently happening)

WW3, which is certainly on the cards, and a victory for Our Democracy and The International Community™, which seems less likely.

[Harley]

5 hours ago, JMD said:

I'm confused.

Aren't the risk parity folk are the same set of people as the managed futures/trend investing/return stacking folk? And didn't you write a positive post recently including mentioning Resolve asset managers who provide etf's for US investors?

I ask because I read up on the links you included in your post and tbh It looked interesting to me. But have you now changed you mind about Resolve and their strategies?

I've done quite a bit of work, too much to cover it all here but the key bits...

As I understand it risk parity (RP) is about having an allocation (in this case across classes) giving the same risk in each class.  They would no doubt consider that a "conservative" allocation.  And the numbers point to something very different from the 25% per class of a Permanent Portfolio (PP).

Very hard to implement RP in the UK for retail (especially tax wrapped) as it needs levered bonds.  And although the concept makes sense to me, I'm not there yet.  I can like something conceptually, even leverage the ideas, without doing it!

My approach may not fit anyway: a low risk:return PP based portfolio for essential floor needs and higher risk:return trend based portfolio for upside wants as I can live without one but not the other.

I've been reviewing the above approach to ensure it is optimised.  We had been holding more granular holdings in each class (e.g. regional ETFs) and varying the holdings based on techs (a form of trend following).

Two key findings for me: keep PP and trend following separate (different portfolios, etc) and there seems to be little better/worse results being more granular in the PP (although I ought to try some alt ETFs).

It'll be a long write why the above seems to be the case.  Also to cover some other findings.  A valuable exercise giving me more confidence on what we need (or not!) to do given our circumstances.

Edited December 29, 2023 by Harley

[Harley]

An interesting podcast by Parallel Mike with a bit towards the end for the silly conspiracy theorists!

https://parallelmikepodcast.podbean.com/e/40-bread-circuses-with-jonny-hodl/

[jamtomorrow]

17 hours ago, Harley said:

OK, presumably not the Luke Groman's of the Twittersphere, the more populist (aggregator type) sites, although I'm seeing a (shocking) spread up the chain.  Yes, a sentiment indicator.  No need to check for me though.  More concerned where it's going.  Will it burn itself out as in a move from denial to acceptance, or will it morph into something nasty?   The sites I'm observing were always ahead of the narrative (i.e. focussed on the meta data), with just a few emotive posts to support things, but now seem more stuck on the wallowing doom loop where you just can't post enough of the same thing.  Just more of the same.  Immigration, cost of living crisis, etc.  Yes we know.  The videos of people being beaten up, of church crosses being torn down, of distraught people with grocery bills and/or shopping trolleys, etc.  Yes, we've seen.  They've all be done, and done, and done....  No value (toxic) in engaging but yes, a big take away.

Harley is there any chance you're simply "seeing" the algos here? Because you have to go out of your way to avoid them on social media.

Youtube is almost impossible to use without being algo'd (on mobile devices at any rate).

Facebook, Insta and Tiktok are absolute cesspools - there's literally no way to see a clean feed without algo effects. If you're consuming anything from these sources, you're already lost.

Twitter can ostensibly be used sans-algo but it will try its hardest to sneakily shift you back onto "for you" (which is definitely unashamedly algorithmic). But I have my suspicions about the "following" timeline.

One of the things I like a lot about this forum is how it has largely been beyond the reach of heavy algos - we just see the posts in the order they occur, give or take.

But quite a few on here are starting to show signs of being rewired by the algos, which has me wondering if that's what you're seeing more generally?

Algos are the ultra-processing of the information sphere - everyone knows you shouldn't eat ultra-processed shite, but not everyone realises you need to keep it away from your mind too - including posters on here, and macro pundits more generally.

[Pip321]

8 hours ago, Long time lurking said:

That game has come to an end ,regarding  the consequences of doing so (weaken our currency),it`s becoming clearer by the month the below hypothesis is looking to be correct,basically the can is getting very close to the wall at the end of the road,IMO there will have to be another world wide "emergency" before they can even think about printing in any meaningful way that would delay the inevitable from happening 

 

I posted about public sector pensions now larger the national economy and you about daisy chains…….i think it would be really revealing to see on one piece of paper what is really going on with world finance, national debt etc but in its simplest language 

For example a Daisy Chain theory shouldn’t be a Hypothesis….someone with time should follow the money and see who exactly owes what and to whom.

Feels to me that we (even leftie* me) moan about immigration, economic outlook, general crap Uk, EU stuff when it’s now becoming really clear.

We (not us obviously I mean the royal we…ie them😉) need immigration…..it drives GDP on paper (not productively, positively or in a real sense) which lets the government keep borrowing so they can keep paying public sector shite, pensions, £100 bn roads, £40bn masks etc and they are taking a little for themselves. Even if ‘taking’ is a PM who does 60 days and gets a life pension, or EU MPs working 3 days and drawing huge salaries/pensions for life etc.

Its like an tech bubble scam…start company, borrow big, draw big salary (big enough to live in for rest of life), go bankrupt and fuck off before the suckers know what’s happened. Only now the polos are doing it…..and the public are watching them whilst being locked down, paying tax, getting jabbed and spending 90% of their time being distracted by made up woke and gender issues. 
 

*my leftie rant, the workers should get a decent and fair share of the profits they generate for a business….not just bank staff but including profitable factory working. FULL STOP….

Woke, carbon emissions, tax, transgender men in wigs, tummy tucks on the NHS, immigration…..not my left. Made up shit by both sides (left and right) to confuse the masses and stop them asking where all the money is really going. Old working class left…..if you decide to not work when you can, you and your family die hungry.😉 

 

Edited December 29, 2023 by Pip321

[Heart's Ease]

55 minutes ago, Pip321 said:

I posted about public sector pensions now larger the national economy and you about daisy chains…….i think it would be really revealing to see on one piece of paper what is really going on with world finance, national debt etc but in its simplest language 

For example a Daisy Chain theory shouldn’t be a Hypothesis….someone with time should follow the money and see who exactly owes what and to whom.

Feels to me that we (even leftie* me) moan about immigration, economic outlook, general crap Uk, EU stuff when it’s now becoming really clear.

We (not us obviously I mean the royal we…ie them😉) need immigration…..it drives GDP on paper (not productively, positively or in a real sense) which lets the government keep borrowing so they can keep paying public sector shite, pensions, £100 bn roads, £40bn masks etc and they are taking a little for themselves. Even if ‘taking’ is a PM who does 60 days and gets a life pension, or EU MPs working 3 days and drawing huge salaries/pensions for life etc.

Its like an tech bubble scam…start company, borrow big, draw big salary (big enough to live in for rest of life), go bankrupt and fuck off before the suckers know what’s happened. Only now the polos are doing it…..and the public are watching them whilst being locked down, paying tax, getting jabbed and spending 90% of their time being distracted by made up woke and gender issues. 
 

*my leftie rant, the workers should get a decent and fair share of the profits they generate for a business….not just bank staff but including profitable factory working. FULL STOP….

Woke, carbon emissions, tax, transgender men in wigs, tummy tucks on the NHS, immigration…..not my left. Made up shit by both sides (left and right) to confuse the masses and stop them asking where all the money is really going. Old working class left…..if you decide to not work when you can, you and your family die hungry.😉 

 

 

@Pip321 just for you. 

[MrXxxx]

Is the extra cost of spreading your investments across several brokers [and thus keeping below the £85k FSCS limit] good 'insurance'?...

https://www.msn.com/en-gb/money/other/i-can-t-touch-my-300-000-after-my-broker-shut-down/ar-AA1mbz0Z

...for the extra small % cost this article would suggest so.

[Pip321]

13 minutes ago, Heart's Ease said:

 

@Pip321 just for you. 

Yep, absolutely fair play.

You are a leftie Pip, so you vote Labour? No….even the Tories are too left nowadays.

Hmmm, Okay, a I am a capitalist leftie…

Maybe just a capitalist who thinks work (even by lowly workers) should be rewarded fairly.

Fuck…how am I meant to sleep tonight? 😆😆

Cheers, nice video.😉👍🏻

[M S E Refugee]

4 minutes ago, Pip321 said:

Yep, absolutely fair play.

You are a leftie Pip, so you vote Labour? No….even the Tories are too left nowadays.

Hmmm, Okay, a I am a capitalist leftie…

Maybe just a capitalist who thinks work (even by lowly workers) should be rewarded fairly.

Fuck…how am I meant to sleep tonight? 😆😆

Cheers, nice video.😉👍🏻

I would imagine you are more of a Libertarian than a left winger.

[WICAO]

16 minutes ago, MrXxxx said:

Is the extra cost of spreading your investments across several brokers [and thus keeping below the £85k FSCS limit] good 'insurance'?...

https://www.msn.com/en-gb/money/other/i-can-t-touch-my-300-000-after-my-broker-shut-down/ar-AA1mbz0Z

...for the extra small % cost this article would suggest so.

I'm all about minimising investment expenses but even with that as a pillar I've spread my wealth across multiple brokers and multiple wrapper providers and just pay the extra expenses.  Still very exposed but it might help a little.