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Credit deflation and the reflation cycle to come.


DurhamBorn

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Is the feeling that this is well under way now? I've seen MSM articles about an economic slowdown in 2019, including on the So-Called BBC website. Would anyone care to guess a timescale?

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15 minutes ago, Durabo said:

Is the feeling that this is well under way now? I've seen MSM articles about an economic slowdown in 2019, including on the So-Called BBC website. Would anyone care to guess a timescale?

Im sticking my neck out.

The slowdown caused by the more debt riddled orgs and assets falling down as IR are raised will be more than cancelled out from the increased demand from the West running away from China.

 

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UnconventionalWisdom
10 hours ago, DurhamBorn said:

Not yet.The Fed will tighten until a debt deflation hits and then their policy u turn will be too slow to stop whats upon us.

Powell has been keen to stress that he will support main street at the expense of wall street. Supports your theory. 

https://www.forbes.com/sites/johnmauldin/2019/01/02/powell-may-mark-the-beginning-of-an-independent-fed/#15fdf8d16779

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Yellow_Reduced_Sticker
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.My friend keeps telling me we will consider it once we get into the reflation cycle,but i keep telling him you might be dead by then (hes nearly 80) id like a loose roadmap now :ph34r:

 
@DurhamBorn, why don't ya send your friend over the book i shared by Raymond Francis ...
 
"Never Be Sick Again - Health Is a Choice Learn How to Choose It"
 
Get it here:
 
image.png.1e49bf2e0b46607999499efe15dd626e.png
 
Raymond Francis, covers how you can live to 145 years old!
 
More PROOF:
After all we don't want to lose our... INSIDE MAN :Jumping:

 

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52 minutes ago, MrXxx said:

Gold will turn first,my road map is up to $1500 down to $700 (or even $500 for a very small window) then up to $10,000,silver up to $22/23 down to $8 (maybe even $5) then up to $250,maybe $300.

DB I've seen you quote these estimates a few times, my question is, as part of a reflation environment, wouldn't $10k gold / $250 silver be less of a gain due to currency inflation?

I.e. are your estimates in real terms or not taking inflation into in account?

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8 hours ago, DurhamBorn said:

There will be a window.Gold will turn first,my road map is up to $1500 down to $700 (or even $500 for a very small window) then up to $10,000,silver up to $22/23 down to $8 (maybe even $5) then up to $250,maybe $300.Highly indebted companies with strong cash flow will have around 6 years to eat into those debts before rates go over 10%.Companies who have borrowed and can increase prices with inflation with debts locked at low rates will do well (their bond holders creamed).You dont want to be re-financing billions in 2025 though.

Thats the good part,after that cycle we will get a global depression on a scale never before seen.We could be at $400 trillion debt and $2 quadrillion derivatives and the full unwind of that will probably cause world war,collapse of western society etc,or at the least all western social systems,pensions,currency and access to capital markets.Pretty much all wealth will be destroyed.

I really enjoy reading your posts DB, but this post is scary..I dont class you as a tin foil hatter & so I tend to take note.

Before the lights go out I am going to try and sell my sovs at that first $1500 high in Gold, assuming it stays on track, then buy in when I think it is at the lowest point. I haven`t got your patience to keep them till the final leg up to all time highs.

I`m 64 anyway & might lose my marbles by then.O.o

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UnconventionalWisdom
9 hours ago, DurhamBorn said:

Thats the good part,after that cycle we will get a global depression on a scale never before seen.We could be at $400 trillion debt and $2 quadrillion derivatives and the full unwind of that will probably cause world war,collapse of western society etc,or at the least all western social systems,pensions,currency and access to capital markets.Pretty much all wealth will be destroyed.My friend keeps telling me we will consider it once we get into the reflation cycle,but i keep telling him you might be dead by then (hes nearly 80) id like a loose roadmap now :ph34r:

This article speaks of a similar future 

http://charleshughsmith.blogspot.com/2019/01/the-crisis-of-2025.html?m=1

 

I am guessing the political movement demanding QE for the People will come to power by 2021. The money creation will begin in earnest and a few years later, inflation will start rising, much to the surprise of proponents of QE for the People.
At that point the proponents and the ruling elites will be trapped: they won't be able to withdraw all the benefits ("free money") of QE for the People, nor can they reverse runaway inflation without drastically reducing the creation of currency.
Various politically expedient policies will be tried--wealth taxes, the issuance of a new currency, perhaps even a state cryptocurrency--but none of these can reverse the underlying dynamic.
The currency devalues and then collapses, along with the "wealth" that it represented.
This is the predictable path because it's the only one that's politically expedient and doesn't cause much financial pain until it's too late to stave off collapse.
Scurve2-17.png
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Economy's stalling out. Brexit, yadda yadda.

https://uk.reuters.com/article/uk-britain-economy-pmi/brexit-worries-slow-uk-economy-to-near-standstill-pmi-idUKKCN1OY0QN

Quote

Growth in Britain's economy slowed to a crawl at the end of 2018, according to a survey that, three months before Brexit, showed optimism among services companies have sunk to levels typical of the global financial crisis.

Friday's IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI) rose slightly more than forecast by economists polled by Reuters, to 51.2 in December from 50.4 in November.

But the increase was one of the slowest since the Brexit referendum in 2016 and firms were increasingly anxious about the year ahead.

Britain's economy looks on track for quarterly growth of around 0.1 percent during the fourth quarter, data company IHS Markit said, a far cry from the post-financial crisis average of 0.5 percent.

November and December marked the weakest two months for morale among services firms since March 2009, around the low point of Britain's last recession, the PMI showed.

Brexit uncertainty was by far the most widely cited factor by companies for the decline in expectations, which dipped to 60.2 from 60.6 in November, IHS Markit said.

 

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Consumer credit annual growth eased to 7.1 percent in November from 7.4 percent in October, the slowest increase since March 2015 amid heightened Brexit uncertainty.

Credit card lending went up 7.9 percent (vs 8.3 percent in October) and other loans and advances increased 6.6 percent (vs 6.9 percent in October).

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3 hours ago, Solzhenitsyn said:

Here’s a tip. Sell your BTL property.

It's paid off for pennies. Plus it's my father's now and will be for my son in the future. So it's not a btl. If I was down south I wouldn't have bought it an definitely would be selling it now 😁

 

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3 hours ago, Talking Monkey said:

DB if western society collapses what happens to China, India and other EMs, would they get just as battered

What would be interesting is how to protect wealth/income, I guess a portfolio of high dividend shares wouldn't be it if everything collapses

When i say collapse,i mean the financial system as we know it,and our social systems.Welfare,pensions etc.It will be very very painful.Id expect the east to suffer the same fate,it will be worldwide.Of course we are so far away from it at the moment a lot can change.Its a road map based on where we are now,likely CB action to a likely debt deflation,and then the likely macro path due to that action.A lot can change in that time.What is pretty certain is the direction these things will take,its just the scale we cant be sure of,a road map is just that,we use liquidity models and cross market work and add on leads and lags.Gold is a very good example.Our road map says it is going to $1500.It is already up $100.Even if it turns down now (it might but we still expect $1500) our road map was correct.They arent trading calls they are macro calls.

Consider a hungry person heading out of his house.We know where the eating places are in his town.The last one is 10km away.After that the next town is 30km away so unlikely he goes there.Our roadmap would consider how long he has gone without food,how much fuel in the tank,how much liquidity in his pocket,where he usually goes etc.The road map is his house to the final place 10km away.The cross market work is the variables that might change where he stops to eat.Road maps can fail.His car might not start,but once he is away,we know then the cross market things come into play and that decides most of how for along the road he goes.If he only has $4 and the place 10km away does all you can eat for $3.80,his tank if full of fuel,its mid afternoon and hel get there just as the best food comes out etc we know thats the likely end of the road map.However if his bet he has running comes up as he is driving he might pull into his favourite place at 5km where its more expensive.Liquidity has changed his mind and direction.It didnt change the fact he was hungry,just where he ate and how far he went.However while the horse race was running he was still heading out towards the cheap place,there is a lead and a lag before his liquidity increased and he changed his route.

Its sounds simple,but that is very much how liquidity is the backbone of choices in the economy.The Fed started to tighten 2 years ago.That was the point the road map fell into place.

 

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Noallegiance
37 minutes ago, DurhamBorn said:

When i say collapse,i mean the financial system as we know it,and our social systems.Welfare,pensions etc.It will be very very painful.Id expect the east to suffer the same fate,it will be worldwide.Of course we are so far away from it at the moment a lot can change.Its a road map based on where we are now,likely CB action to a likely debt deflation,and then the likely macro path due to that action.A lot can change in that time.What is pretty certain is the direction these things will take,its just the scale we cant be sure of,a road map is just that,we use liquidity models and cross market work and add on leads and lags.Gold is a very good example.Our road map says it is going to $1500.It is already up $100.Even if it turns down now (it might but we still expect $1500) our road map was correct.They arent trading calls they are macro calls.

Consider a hungry person heading out of his house.We know where the eating places are in his town.The last one is 10km away.After that the next town is 30km away so unlikely he goes there.Our roadmap would consider how long he has gone without food,how much fuel in the tank,how much liquidity in his pocket,where he usually goes etc.The road map is his house to the final place 10km away.The cross market work is the variables that might change where he stops to eat.Road maps can fail.His car might not start,but once he is away,we know then the cross market things come into play and that decides most of how for along the road he goes.If he only has $4 and the place 10km away does all you can eat for $3.80,his tank if full of fuel,its mid afternoon and hel get there just as the best food comes out etc we know thats the likely end of the road map.However if his bet he has running comes up as he is driving he might pull into his favourite place at 5km where its more expensive.Liquidity has changed his mind and direction.It didnt change the fact he was hungry,just where he ate and how far he went.However while the horse race was running he was still heading out towards the cheap place,there is a lead and a lag before his liquidity increased and he changed his route.

Its sounds simple,but that is very much how liquidity is the backbone of choices in the economy.The Fed started to tighten 2 years ago.That was the point the road map fell into place.

 

What a great post. On so many levels.

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DB - Before the end game scenario economically, (in which I am totally on the same page as you) what’s the reckoning politically shorter term? Corbyn next in - although I think Javid is being lined up (hence the heavy media coverage taking a ‘hard line’ on the migrate boats to appeal to the conservative voters) but if Corbyn was voted in then re-nationalism of infrastructure in the inflation period should send energy/transport stocks flying (as we have been investing in here).

I also think once property folds and the likes of HTB collapses spectacularly, debt forgiveness will be on the cards. Certainly so on the government loan side anyway. If the HTB homes in my area wasn’t already ridiculously overpriced already (600k+) for a 3-4bed house and with ridiculous service charges I may of even considered one once they take a massive hit.

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reformed nice guy
1 hour ago, DurhamBorn said:

When i say collapse,i mean the financial system as we know it,and our social systems.Welfare,pensions etc.It will be very very painful.Id expect the east to suffer the same fate,it will be worldwide.Of course we are so far away from it at the moment a lot can change.Its a road map based on where we are now,likely CB action to a likely debt deflation,and then the likely macro path due to that action.A lot can change in that time.What is pretty certain is the direction these things will take,its just the scale we cant be sure of,a road map is just that,we use liquidity models and cross market work and add on leads and lags.Gold is a very good example.Our road map says it is going to $1500.It is already up $100.Even if it turns down now (it might but we still expect $1500) our road map was correct.They arent trading calls they are macro calls.

 Consider a hungry person heading out of his house.We know where the eating places are in his town.The last one is 10km away.After that the next town is 30km away so unlikely he goes there.Our roadmap would consider how long he has gone without food,how much fuel in the tank,how much liquidity in his pocket,where he usually goes etc.The road map is his house to the final place 10km away.The cross market work is the variables that might change where he stops to eat.Road maps can fail.His car might not start,but once he is away,we know then the cross market things come into play and that decides most of how for along the road he goes.If he only has $4 and the place 10km away does all you can eat for $3.80,his tank if full of fuel,its mid afternoon and hel get there just as the best food comes out etc we know thats the likely end of the road map.However if his bet he has running comes up as he is driving he might pull into his favourite place at 5km where its more expensive.Liquidity has changed his mind and direction.It didnt change the fact he was hungry,just where he ate and how far he went.However while the horse race was running he was still heading out towards the cheap place,there is a lead and a lag before his liquidity increased and he changed his route.

 Its sounds simple,but that is very much how liquidity is the backbone of choices in the economy.The Fed started to tighten 2 years ago.That was the point the road map fell into place.

 

Your last few posts have been very interesting DB.

Do you have any thoughts about the likelihood of wealth confiscations? Like the American gold one at the start of the 20th century. Would it be prudent to hold some physical gold in case they confiscate swap your gold for fiat currency?

Another question if you dont mind - if wealth (broadly defined) is eroded and middle class pensions are ruined, then what would these people do for income? My guy tells me that families will have to look after them and charity for those without.

It reminds me of Pikettys book "Capital in the 21st century" when fortunes were destroyed by WW1, although that was mostly confided to the 'nobles'. 

If central banks fail and people lose confidence in them, do you think we could return to a stage in the distant future where inflation is closer to zero?

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2 hours ago, Sideysid said:

DB - Before the end game scenario economically, (in which I am totally on the same page as you) what’s the reckoning politically shorter term? Corbyn next in - although I think Javid is being lined up (hence the heavy media coverage taking a ‘hard line’ on the migrate boats to appeal to the conservative voters) but if Corbyn was voted in then re-nationalism of infrastructure in the inflation period should send energy/transport stocks flying (as we have been investing in here).

I also think once property folds and the likes of HTB collapses spectacularly, debt forgiveness will be on the cards. Certainly so on the government loan side anyway. If the HTB homes in my area wasn’t already ridiculously overpriced already (600k+) for a 3-4bed house and with ridiculous service charges I may of even considered one once they take a massive hit.

Tough call because we always ignore politics as it doesnt have much affect on things medium term.People think it does,but it doesnt.Corbyn and his front bench wouldnt last long in government.The markets would shut them out,just when they need access.I see little chance of debt forgiveness because we already have that in the system.You go bankrupt.The HTB homes in my area are now about £120k for 3 beds but they are well down already on sale prices.One estate being built already has lots for sale.The ones with photos of baby wallpaper on an empty house tell a story.

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1 hour ago, reformed nice guy said:

Your last few posts have been very interesting DB.

Do you have any thoughts about the likelihood of wealth confiscations? Like the American gold one at the start of the 20th century. Would it be prudent to hold some physical gold in case they confiscate swap your gold for fiat currency?

Another question if you dont mind - if wealth (broadly defined) is eroded and middle class pensions are ruined, then what would these people do for income? My guy tells me that families will have to look after them and charity for those without.

It reminds me of Pikettys book "Capital in the 21st century" when fortunes were destroyed by WW1, although that was mostly confided to the 'nobles'. 

If central banks fail and people lose confidence in them, do you think we could return to a stage in the distant future where inflation is closer to zero?

Most peoples wealth will be "stolen",its just first it will be through a debt deflation and the financial dislocation,then high inflation will do the rest and get into places like pensions etc.They wont need to come along and take it the old way.

I fully agree the middle class are in for a hell of a shock.Like you say family will look after them.Why do you think i ditched some gorgeous lasses along the way but my partner i settle down with is a nurse ;),,The pensions might still be paid,but if they are locked at max +5% and inflation runs a cycle at 5% to 20% then its bye bye buying power.

I think its very likely after this thing blows apart at the end of the next cycle (2025?) then like you say a long period of flat prices might be upon us,but what buying power will be at that stage isnt known.

As always its what you pay for something and if you have floating leverage on it that counts.

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3 hours ago, DurhamBorn said:

When i say collapse,i mean the financial system as we know it,and our social systems.Welfare,pensions etc.It will be very very painful.Id expect the east to suffer the same fate,it will be worldwide.Of course we are so far away from it at the moment a lot can change.Its a road map based on where we are now,likely CB action to a likely debt deflation,and then the likely macro path due to that action.A lot can change in that time.What is pretty certain is the direction these things will take,its just the scale we cant be sure of,a road map is just that,we use liquidity models and cross market work and add on leads and lags.Gold is a very good example.Our road map says it is going to $1500.It is already up $100.Even if it turns down now (it might but we still expect $1500) our road map was correct.They arent trading calls they are macro calls.

Consider a hungry person heading out of his house.We know where the eating places are in his town.The last one is 10km away.After that the next town is 30km away so unlikely he goes there.Our roadmap would consider how long he has gone without food,how much fuel in the tank,how much liquidity in his pocket,where he usually goes etc.The road map is his house to the final place 10km away.The cross market work is the variables that might change where he stops to eat.Road maps can fail.His car might not start,but once he is away,we know then the cross market things come into play and that decides most of how for along the road he goes.If he only has $4 and the place 10km away does all you can eat for $3.80,his tank if full of fuel,its mid afternoon and hel get there just as the best food comes out etc we know thats the likely end of the road map.However if his bet he has running comes up as he is driving he might pull into his favourite place at 5km where its more expensive.Liquidity has changed his mind and direction.It didnt change the fact he was hungry,just where he ate and how far he went.However while the horse race was running he was still heading out towards the cheap place,there is a lead and a lag before his liquidity increased and he changed his route.

Its sounds simple,but that is very much how liquidity is the backbone of choices in the economy.The Fed started to tighten 2 years ago.That was the point the road map fell into place.

 

Great post.

 

I  really, really expect - and will be VERY surprised - if before I die (20-40 years) there is not a massive collapse of the welfare systems in almost all European countries.  The twin asteroid hits of mass unemployment through automation, the end play out of the fiat/credit bubble, and the massive burden from low-IQ, low work ethic immigration from Africa and the MIddle East will kill any hope for the social model that was brought into place post war.

Australia and New Zealand may still be OK.  The USA may still be OK.  Canada may be OK, but at the rate they are importing breeders, probably not.

All quite depressing really.

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Democorruptcy

Uh-oh... doubts about pension freedom

Quote

 

We are disappointed to have found that less than 50 per cent of the advice we reviewed was suitable,” the FCA said in its December update

FT

 

 

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I'll start off by saying that I sold off 2/3 off my portfolio today (which was up 6%). Had a bit of a realisation today that I need to preserve capital rather than speculate, especially given the lack of a permanent roof over my head. Seeing so many things roll over it's about time I rediscovered my respect for money and the hard work it takes to obtain.

On Brexit, did you see the poll put today? 57% of Conservatives favour no deal over current deal. Don't think there's going to be any resolution soon unless Germany force EU to make concessions as their recession confirmed in 6 weeks (possibly). 12 month extension likely if EU agree.

On pensions, see Denmark, have 98% now in defined contribution schemes, I think UK and most others will be forced in this direction sadly, inflation will hopefully do the rest. The scale of this crisis cannot be understated if inflation stays low in coming 5-10 years.

As for automation, population decline will offset this, particularly in Germany. Numbers in U.S., UK and France look ok.

 

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40 minutes ago, Barnsey said:

I'll start off by saying that I sold off 2/3 off my portfolio today (which was up 6%). Had a bit of a realisation today that I need to preserve capital rather than speculate, especially given the lack of a permanent roof over my head. Seeing so many things roll over it's about time I rediscovered my respect for money and the hard work it takes to obtain.

On Brexit, did you see the poll put today? 57% of Conservatives favour no deal over current deal. Don't think there's going to be any resolution soon unless Germany force EU to make concessions as their recession confirmed in 6 weeks (possibly). 12 month extension likely if EU agree.

On pensions, see Denmark, have 98% now in defined contribution schemes, I think UK and most others will be forced in this direction sadly, inflation will hopefully do the rest. The scale of this crisis cannot be understated if inflation stays low in coming 5-10 years.

As for automation, population decline will offset this, particularly in Germany. Numbers in U.S., UK and France look ok.

 

Really?  Importing millions of africans and middle easterners into europe each year does not seem to be leading to population decline to me....

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7 minutes ago, wherebee said:

Really?  Importing millions of africans and middle easterners into europe each year does not seem to be leading to population decline to me....

Germany actually needs another 9 million. Politically they can no longer do this so automation investment will be huge.

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7 minutes ago, wherebee said:

Really?  Importing millions of africans and middle easterners into europe each year does not seem to be leading to population decline to me....

and wages would go up in countrys effected by population decline,thus makeing them more attractive.

5 minutes ago, Barnsey said:

Germany actually needs another 9 million. Politically they can no longer do this so automation investment will be huge.

germanys fucked it just doesnt know it yet,its on the hook for the eecs debt.

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43 minutes ago, Barnsey said:

12 month extension likely if EU agree.

That would force UK to hold elections to the European Parliament in May, as every member is obligated to hold these and be represented in the EP. Not only would that be a political own goal of massive proportions, it would also create legal issues, as the Parliament has passed a resolution to shrink itself in the upcoming elections to accommodate for brexit.

It is true for any extension beyond the 1st of July.

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4 minutes ago, kibuc said:

That would force UK to hold elections to the European Parliament in May, as every member is obligated to hold these and be represented in the EP. Not only would that be a political own goal of massive proportions, it would also create legal issues, as the Parliament has passed a resolution to shrink itself in the upcoming elections to accommodate for brexit.

It is true for any extension beyond the 1st of July.

do you think we will be allowed to leave ?

its corrupt it will break its own rules at a whim to get what it wants.

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