Credit deflation and the reflation cycle to come.

[sancho panza]

13 hours ago, eek said:

Inflation adjusted its even clearer

Year	CPI (for parity)	M1 (inflation adjusted)	M2 (inflation adjusted)	M2/M1 ratio
1980	77.80	492.29	2137.53	4.34
1990	127.40	622.92	2521.98	4.05
2000	168.80	671.39	2760.07	4.11
2008	211.10	660.35	3641.40	5.51
2018	247.87	1469.74	5647.38	3.84

M1 remains remarkable consist between 1980 and 2008 while M2 increased significantly between 2000 and 2008. since then the M2/M1 ratio has returned to below its typical average while M1 has skyrocketed.

So the really interesting question is not so much why M2 failed to lift off but why was M2 so high in 2008.

Thought provoking question.Your table is a super find,.Can you link to the source?

Possible theories/random thoughts

1) Money tipped out of broader measures and was concentrated in M2 as it was possibly moved onto shorter term deposits as people traded their funds or spent them more actively.

2) On second thoughts,it might be right to consider the two questions separately.The failure of M2 to lift off meaningfully would have reinforced the Fed;s hand to print more given their playbook was to print to get consumers spending.That certainly fits with the evidence.

3)Velocity data would give us an added insight,given that M1/2/3 velocity might be different and give us a reason why they were driving one or the other-apologies I can't load the live St Louis Fed charts

Have you any thoughts eek?

 

Let's look at what's in M1/M2

What is 'M1'

M1 is the money supply that includes physical currency and coin, demand deposits, travelers checks, other checkable deposits and negotiable order of withdrawal (NOW) accounts. The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be quickly converted to cash. "Near money" and "near, near money," which fall under M2 and M3, cannot be converted to currency as quickly.

What is 'M2'

M2 is a calculation of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits.

What is 'M3'

M3 is a measure of the money supply that includes M2 as well as large time deposits, institutional money market funds, short-term repurchase agreements and larger liquid assets. The M3 measurement includes assets that are less liquid than other components of the money supply and are referred to as "near, near money," which are more closely related to the finances of larger financial institutions and corporations than to those of small businesses and individuals.

 

[eek]

7 minutes ago, sancho panza said:

Thought provoking question.Your table is a super find,.Can you link to the source?

 

It's mine. A combination of the M1 and M2 data from your link  alongside the US consumer price index which I'll need to check the source of as its was on my desktop rather than this laptop... The M1 / M2 ratio is literally just that I took the M2 figure and divided it by M1...

I'll actually need to have a proper look before commenting on M3 - my initial thought is that M3 was killed for a reason but I can't remember why as its 25 years since my economics degree... (Yep from  https://en.wikipedia.org/wiki/Money_supply  since 2006 it's not been published by the US government although its still estimated by private firms....)

I'll have a think about the rest and get back to you...

 

[sancho panza]

 

9 hours ago, Admiral Pepe said:

FYI GDX can be bought on the LSE in GBP via LSE:GDGB

@sancho panza Which broker do you use for your miner shares? With the FX exchange these trade costs would soon mount up. I would have thought internative investor would allow me to deposit USD (which I hold already elsewhere) but it appears not. 1.5% plus the share dealing cost seems steep.

re broker.....I politely decline to answer as I don't want to lie,but we have accounts at some of the big boys just to spread risk and a smallish one

When I buy a foreign,we plan to hold for a decade,so FX costs are a minor consideration.With where I think Sterling is going medium term,even less so.Our last few trades were close enought to the spot that I was more than happy.

Uk stocks I'll trade more actively,possibly with options.But generally we have a trading pot and a long term pot.

12 hours ago, ThoughtCriminal said:

Question for DB and SP:

H

ave either of you looked at Russian stocks?

 

Lots of miners, telecoms and power producers there and the average yield is 6%

 

Any thoughts?

Yes,some great potential but if you think South African stocks are risky-which is where my risk profile turns a shade of green-then Russia is another greater wall of worry.

Have you any names for the above?

[sancho panza]

10 hours ago, DurhamBorn said:

Yep,removing more liquidity.No increase in rates for a year though so they say.Interesting to see how the southern countries get debt away now.Corportate debt will prove harder to sell.The Fed has forced the ECBs hand here.Price and risk discovery will start to creep in to European asset markets.

We are halfway to what we expected now.First liquidity is tightened (no QE,or start of QT) and/or interest rate increases (Fed) push up the cost of debt until we enter recession.We then see  a massive debt deflation and they re-start QE pouring money into an already inflation primed economy.

 

It's gonna be rough sailing by mid 2019 I suspect.

[sancho panza]

27 minutes ago, eek said:

It's mine. A combination of the M1 and M2 data from your link  alongside the US consumer price index which I'll need to check the source of as its was on my desktop rather than this laptop... The M1 / M2 ratio is literally just that I took the M2 figure and divided it by M1...

I'll actually need to have a proper look before commenting on M3 - my initial thought is that M3 was killed for a reason but I can't remember why as its 25 years since my economics degree... (Yep from  https://en.wikipedia.org/wiki/Money_supply  since 2006 it's not been published by the US government although its still estimated by private firms....)

I'll have a think about the rest and get back to you...

 

Cheers.I'm jsut trying to develop my understanding of things and this is an interesing topic to me.

1 hour ago, Alifelessbinary said:

I just thought I’d add some information about the Berkeley Group and specifically shorting them. It worth noting that this is just based on market experience and I haven’t looked at their accounts.

While they have been the main perpetrator selling luxury £1000+ sq ft flats off plan during the last boom, over the last few years they have been diversify away from this market. They are now heavily active in zones 2-6 and are focusing on areas where sold prices range between £400-£800 sq ft, which the banks deem ‘domestic’, where as £1000+ is ‘exotic’.

I’m not a huge fan of their product, but Tony Pidgley is a legend of the industry and has perfectly called two crashes previously. He has setup the various internal divisions so that they directly compete with each other and drive results. All bids are cross reference centrally though, as embarrassingly a few years ago they were found to be bidding against each other!

 They are phenomenal lobbiests and are connected at the highest levels. While they are susceptible to a property crash like all of the house builders, I would say there are better targets that are run by muppets. I hate to say but Berkley are impressive operators (machiavellian) in pursuit of returns and are a handful to manage. I wouldn’t be surprised if they had a contingency plan to deliver government targets as a method to fight and survive another day if/when the crash appears.  DYOR as they still might go through the floor but check their development pipeline first as I’m not sure they are as heavily exposed to prime central as they once were.

I managed to make some nice returns after brexit on both Barratt and Perssimon shares the later becoming a bagger in just under 12 months. I’ve since sold them as working in the game and owning a place in London my exposure is already breaking all my diversification rules. I’ve gone pretty bearish on property over the last few months, but the last 10 years have proven time and time again that ‘the markets can stay irrational for a lot longer than you can stay solvent’.

 

 

I think we were politely asked to leave shorting discussions off this thread.

Set up a separate thread and we can parlez there.

[Inoperational Bumblebee]

22 minutes ago, sancho panza said:

 

re broker.....I politely decline to answer as I don't want to lie,but we have accounts at some of the big boys just to spread risk and a smallish one

When I buy a foreign,we plan to hold for a decade,so FX costs are a minor consideration.With where I think Sterling is going medium term,even less so.Our last few trades were close enought to the spot that I was more than happy.

Uk stocks I'll trade more actively,possibly with options.But generally we have a trading pot and a long term pot.

Yes,some great potential but if you think South African stocks are risky-which is where my risk profile turns a shade of green-then Russia is another greater wall of worry.

Have you any names for the above?

Assuming you meant Russian miners/telcos/energy, Will! on ToS mentioned LSE:POLY, which I've just taken a small bite of.

[macca]

[Band]

2 hours ago, macca said:

It is Mayfair

[eek]

4 hours ago, Banned by HPC said:

It is Mayfair

Yep and I think those rates weren't much different back in 2000. Then it was £8 an hour 

[Castlevania]

7 hours ago, Inoperational Bumblebee said:

Assuming you meant Russian miners/telcos/energy, Will! on ToS mentioned LSE:POLY, which I've just taken a small bite of.

Polyus is the big one. They look fairly cheap, but not sure I can stomach the political risk.

[Gordie Lastchance]

10 hours ago, The Second Mouse said:

TRIG sounds interesting, the thing I can't quite work out is whether the dividend that lands in the bank is 5.78%, or 

5.78%- Annual management charge (1%) - ongoing charge (0.08%)..so 4.7% ?

I just don't know. I'm still learning - hence the bruises on my head from the number of blackboard dusters being thrown at me by teacher! Admittedly, they're less painful than having a Dacia Duster thrown at my bonce!!! My new friends on here have been very patient and helpful, so I'll put out a wee plea: does anyone know the answer? And is TRIG something any of you would be happy to buy and hold?

[eek]

8 hours ago, eek said:

It's mine. A combination of the M1 and M2 data from your link  alongside the US consumer price index which I'll need to check the source of as its was on my desktop rather than this laptop... The M1 / M2 ratio is literally just that I took the M2 figure and divided it by M1...

I'll actually need to have a proper look before commenting on M3 - my initial thought is that M3 was killed for a reason but I can't remember why as its 25 years since my economics degree... (Yep from  https://en.wikipedia.org/wiki/Money_supply  since 2006 it's not been published by the US government although its still estimated by private firms....)

I'll have a think about the rest and get back to you...

 

To add the CPI data comes from http://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/

[Gordie Lastchance]

18 hours ago, Gordie Lastchance said:

I take it you aren't looking at me for advice!!!! Hee hee.

However, poking about on the internets following up suggestions made by other contributors, I remembered The Renewable Infrastructure Group (TRIG) having been mentioned as part of discussions on ToS. It's described as a closed ended investment company, based in Guernsey. What I've found is it has an annual management charge of 1%, an ongoing charge of 0.08% and a dividend yield of 5.78% (but it says under dividend frequency: none. Eh?). Its market capitalisation is £1.1billion. Its spiel says it has a portfolio of 58 investment projects in wind, solar PV and battery storage in the UK, Ireland and France. I'm not a greenie, but I do care about choking the atmosphere with toxic things. To thread contributors: Is this worth a closer look???

For info, this is what The Second Mouse was responding to.

[A_P]

9 hours ago, sancho panza said:

 

re broker.....I politely decline to answer as I don't want to lie,but we have accounts at some of the big boys just to spread risk and a smallish one

When I buy a foreign,we plan to hold for a decade,so FX costs are a minor consideration.With where I think Sterling is going medium term,even less so.Our last few trades were close enought to the spot that I was more than happy.

Uk stocks I'll trade more actively,possibly with options.But generally we have a trading pot and a long term pot.

Thanks for answering. Certainly didn't want to come across as prying, just reasonable new to this learning as much as I can.

[DurhamBorn]

10 hours ago, eek said:

It's mine. A combination of the M1 and M2 data from your link  alongside the US consumer price index which I'll need to check the source of as its was on my desktop rather than this laptop... The M1 / M2 ratio is literally just that I took the M2 figure and divided it by M1...

I'll actually need to have a proper look before commenting on M3 - my initial thought is that M3 was killed for a reason but I can't remember why as its 25 years since my economics degree... (Yep from  https://en.wikipedia.org/wiki/Money_supply  since 2006 it's not been published by the US government although its still estimated by private firms....)

I'll have a think about the rest and get back to you...

 

They killed M3 because it was the most broad and tended to work towards "money" as a store of value rather than a medium of exchange.They didnt want to track it as a store of value,they only wanted to track it as a medium of exchange because they dont use store of value for money in their models.That tells you what you need to know about what CBs see their currency as.They base no weight to it being a store of value,only as a medium of exchange.M2 provides everything M3 does without worrying about a workers wages being a store of value.

I think they ditched it in the mid 2000s,but they didnt take much notice of it before that.

[Inoperational Bumblebee]

2 hours ago, Castlevania said:

Polyus is the big one. They look fairly cheap, but not sure I can stomach the political risk.

Hence I only bought a few hundred quid's worth. No great loss if it all gets messy, but if it goes 10+ or more multiple then it'll still be a tidy sum. I'm years off retiring so happy to take on some high risk.

[Castlevania]

58 minutes ago, Inoperational Bumblebee said:

Hence I only bought a few hundred quid's worth. No great loss if it all gets messy, but if it goes 10+ or more multiple then it'll still be a tidy sum. I'm years off retiring so happy to take on some high risk.

To avoid confusion. I meant Polyus as opposed to Polymetal International which is what you bought.

http://www.polyus.com/en/investors/factsheet/

68 million oz of gold reserves

[Inoperational Bumblebee]

Just now, Castlevania said:

To avoid confusion. I meant Polyus as opposed to Polymetal International which is what you bought.

http://www.polyus.com/en/investors/factsheet/

68 million oz of gold reserves

My mistake. I'd not heard of them so assumed a typo. Apologies!

[ThoughtCriminal]

12 hours ago, sancho panza said:

 

re broker.....I politely decline to answer as I don't want to lie,but we have accounts at some of the big boys just to spread risk and a smallish one

When I buy a foreign,we plan to hold for a decade,so FX costs are a minor consideration.With where I think Sterling is going medium term,even less so.Our last few trades were close enought to the spot that I was more than happy.

Uk stocks I'll trade more actively,possibly with options.But generally we have a trading pot and a long term pot.

Yes,some great potential but if you think South African stocks are risky-which is where my risk profile turns a shade of green-then Russia is another greater wall of worry.

Have you any names for the above?

I'm primarily thinking of

 

Gazprom

Lukoil

Novatek

Rosneft

Norilsk Nickel

Rostelecom

Rushydro

 

I think the perception of Russia as high risk is primarily due to the media noise. The economic fundamentals of their economy are superb, especially compared to western basket cases.

 

 

 

[Gordie Lastchance]

Ee  bah gum, t'markets are having a bit of a wobbly today. I wondered how things would be, bearing in mind some of the posts on here over the past while. 

[leonardratso]

43 minutes ago, Gordie Lastchance said:

Ee  bah gum, t'markets are having a bit of a wobbly today. I wondered how things would be, bearing in mind some of the posts on here over the past while. 

nothing goes to heck in a straight line, got to expect the ups and downs, everythings sinusodial in nature, has to be for feedback to work properly.

[Clueless Imbecile]

This afternoon I came very close to buying some shares in a gold mining company that is listed on the NYSE. However, before I could actually click the button to buy, the website told me that I would need to complete form W-8BEN (apparently a US government form relating to overseas investors who invest in US companies). I wasn't expecting that, and so I chose not to proceed with the purchase of the shares. I thought I'd better do some research into W-8BEN first.

Does anyone know that the implications of completing form W-8BEN are (particularly any downsides)? I doubt it would cause me any problems but am just a little anxious about the prospect of having to potentially deal with the US authorities (IRS?) in addition to HMRC. One government tax authority is enough!

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

[Funn3r]

1 minute ago, Clueless Imbecile said:

This afternoon I came very close to buying some shares in a gold mining company that is listed on the NYSE. However, before I could actually click the button to buy, the website told me that I would need to complete form W-8BEN

After I opened an account with Harvard Lansdown the very next thing I did was fill in the W8BEN. This was on the advice of people on here and was but the work of a moment. The whole point was to buy into the TLT fund however which you now can't do. Don't think you re opening yourself up to any problems just by filling it in though/

[Castlevania]

It’s just some extra admin.

[Cosmic]

4 minutes ago, Clueless Imbecile said:

This afternoon I came very close to buying some shares in a gold mining company that is listed on the NYSE. However, before I could actually click the button to buy, the website told me that I would need to complete form W-8BEN (apparently a US government form relating to overseas investors who invest in US companies). I wasn't expecting that, and so I chose not to proceed with the purchase of the shares. I thought I'd better do some research into W-8BEN first.

Does anyone know that the implications of completing form W-8BEN are (particularly any downsides)? I doubt it would cause me any problems but am just a little anxious about the prospect of having to potentially deal with the US authorities (IRS?) in addition to HMRC. One government tax authority is enough!

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

https://www.investopedia.com/terms/w/w8form.asp

No down sides in filling one in, it simply exempts you from some tax US residents may be subject too.

I would suggest you look at GDX rather than a single miner though if you're looking for some exposure as part of a smaller portfolio, which the above question would suggest you may be...

Not advice DYOR etc