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50sQuiff

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About 50sQuiff

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  1. I have a boggo family SUV nowadays so not one to talk, but I can see the rationale. If you're priced out of housing and enjoy your motoring, why not? There's a lot of enjoyment to be had there.
  2. The inability of Remainers to move on from Brexit, even in the face of this pandemic, has been something to behold. The bile, the resentment, the hand-wringing continues. It's all so limp-of-wrist. After 5 years, with the right therapist and the right attitude, you may - one day - finally let your referendum defeat go. A grown man leapt into the gutter in fear as I ran past him yesterday evening - on the opposite side of the pavement, but a mere 1.5 metres away, unavoidably encroaching into his Matt Hancock-prescribed arbitrary safe zone. This pandemic seems to be eroding the little remaining confidence of an already broken and emasculated Remain cohort.
  3. Well, you got that right at least. You mentioned unemployment and the output gap as preventing inflation. There are many historical examples that contradict this. The 1970s stagflation that was considered "impossible" under the Keynesian framework being the most obvious example. 10 years ago, a provocative thread about Britain being a potential candidate for hyperinflation would've received hundreds of replies. Deposit and STR funds were held in yen, francs and gold. This was very right for a time (2008-11), but was ultimately proved wrong. Now, the forum, by and large is committed to deposit funds in sterling and buying the dip (20% and 2 months from the highest valuations in human history) in index trackers. It's also remarkably bullish on housing. When it's not discussing the quality of Waitrose bread (Sainsbury's Taste the Difference thick-sliced is the best wholemeal on the high street in my view), HPCers seem to be fighting the last war. After BusinessWeek's "The Death of Inflation" front cover last year, the prevailing sentiment on this forum should give contrarians pause. https://www.ft.com/content/664c575b-0f54-44e5-ab78-2fd30ef213cb
  4. War reparations were a factor in loss of international market confidence, but it wasn't a cause of the hyperinflation per se. See this thread for the three causal factors: US unemployment was double the "natural rate" in the 1970s, and the economy ran well below capacity during multiple recessions, yet the global reserve currency very nearly went hyper. The Phillips curve is bunk. There is no relationship there. This characterised the last cycle, or rather, the expansionary phase of the current cycle. The new phase that began in late 2019 may produce very different outcomes.
  5. Count me among that number. Just back from walking my dog in the neighbourhood park, where police in a liveried Volvo estate aggressively swerved around the grass. They pulled up to people sat on the ground or benches - in appropriate groupings and keeping appropriate distances - and got out of their car, with that shrugging-open arms gesture that's becoming familiar from news reports of similar instances. They proceeded to lurch around the park for a further 10 minutes, beeping at anyone who didn't quickly move from their path. Once they left, everyone went back to doing exactly what they were doing before. This area - like most of London - is essentially otherwise unpoliced. None of this was necessary. None of it even relates to the law. It's the braying and bullying of a bankrupt political establishment who are frit. 🤣
  6. +1 This political class, and its simpering middle class constituents, deserve all the riots they're going to get, if they escalate this further.
  7. +1 Shame on anyone cheer-leading ever more draconian measures and the nasty, bullying tone from Hancock et al. People sunbathing, or walking their dog - a safe distance from anyone else - are not going to kill your granny or harm the Envy of the World™ (that's permanently in a state of crisis).
  8. This is what bear markets do. The time to panic was at the beginning of March. Now bulls (and passive investors and their brokers) are in no-man's land. Historical precedent is a good place to start, so I don't think it's fair to no-one has a clue. All bear markets are different of course, but valuations do tend to mean revert (and overshoot in similar ways). Yes, but perhaps more importantly, we will be in a buyback-free environment for a long time - perhaps an entire generation. Corporations have been the only net buyer of equities for the duration of this bull market. Then we have the net divestment of boomers really just kicking in. Secular headwinds for equities are now formidable, far beyond cyclical factors.
  9. Secular bear markets typically end with severe undervaluation, say circa 7x trailing 12 month earnings. S&P at 1000 is about the right ballpark. So, just in case you're nervy about your index positions here, and are looking for reassurance, I would say Hovel is being rather optimistic 🙂
  10. The government can do anything it wants with rates. Yields have been capped before and they will be again. The currency, however...
  11. On another thread, a veteran poster suggests that in the event of high unemployment, wage destruction and a velocity shock, higher inflation is not possible, or at least unlikely. The poster also suggests that the public will choose to hoard any helicopter money distributed to them. I agree, this is a possible outcome, and it clearly uses post-1989 Japan as a model. However, we are not Japan. If this conclusion was valid in all circumstances, the Weimar Republic should still be in the grip of a secular stagnation. Argentinians should be struggling under the weight (debt carrying costs) of a currency that grows ever stronger in real terms. On the contrary, Britain seems set for higher inflation in future, and indeed may be uniquely placed among the OECD countries as a candidate for hyperinflation. Hyperinflation is usually associated with certain preconditions and a vicious feedback loop characterised - paradoxically - by a shortage of money. This is because once the reflexive loop takes hold, each subsequent round of monetary ease (printing), results in less aggregate purchasing power. One of the preconditions is usually when a high debt, twin-deficit (Government and Current Account) nation loses the confidence of international creditors. Sterilisation of net currency outflows of the debtor nation cease (bond purchases, domestic asset purchases, FDI). The value of the currency falls precipitously, and capital flight takes hold. At the same time, an economic shock has usually caused domestic credit creation to collapse (institutional and individual creditworthiness is decimated), and asset prices to fall. Tax revenues plummet, corporate profits fall, financial market liquidity falls and consumer confidence collapses. At the same time, an insatiable government must defend its own purchasing power (and that of its supplicants) by direct creation of base money, bypassing the system of private sector credit creation. At this point, import costs rise and domestic private sector productivity and confidence falls. The new base money is spent directly on a dwindling supply of consumer goods, first by public sector employees, subsidised corporations/institutions and welfare recipients. As the money circulates, private citizens begin to notice the erosion of their purchasing power, and move to exchange currency for consumer goods at a faster rate. This creates an aggregate decline in the purchasing power of the currency. In response, to maintain its own purchasing power (in the case of a government that is unwilling or unable to contract its spending in real terms, it must continue to outbid the private sector for goods and labour), the government must print more money, and the doom loop continues. This isn't a prediction of hyperinflation in Britain. My base case is higher inflation driven by financial repression through yield-curve management and long bond rate caps. However, to borrow a phrase from Ben Bernanke, I think it's a mistake to assume that "it" can't happen here.
  12. On that basis, the Weimar Republic should still be in the grip of a Japanese-style secular stagnation. Argentinians should be struggling under the weight of a currency that grows ever stronger in real terms. Hyperinflation is usually associated with certain preconditions and a vicious feedback loop characterised - paradoxically - by a shortage of money. This is because once the reflexive loop takes hold, each subsequent round of monetary ease (printing), results in less aggregate purchasing power. One of the preconditions is usually when a twin-deficit (Government and Current Account) nation loses the confidence of international creditors. Sterilisation of net currency outflows of the debtor nation cease (bond purchases, domestic asset purchases, FDI). The value of the currency falls precipitously, and capital flight takes hold. At the same time, an economic shock has usually caused domestic credit creation to collapse (institutional and individual creditworthiness is decimated), and asset prices to fall. Tax revenues plummet, corporate profits fall, financial market liquidity falls and consumer confidence collapses. At the same time, an insatiable government must defend its own purchasing power (and that of its supplicants) by direct creation of base money, bypassing the system of private sector credit creation. At this point, import costs rise and domestic private sector productivity and confidence falls. The new base money is spent directly on a dwindling supply of consumer goods, first by public sector employees, subsidised corporations/institutions and welfare recipients. As the money circulates, private citizens begin to notice the erosion of their purchasing power, and move to exchange currency for consumer goods at a faster rate. This creates an aggregate decline in the purchasing power of the currency. In response, to maintain its own purchasing power (in the case of a government that is unwilling or unable to contract its spending in real terms, it must continue to outbid the private sector for goods and labour), the government must print more money, and the doom loop continues. I could write this up in a new thread with better explanations and more depth, but it's been a tiring day and this is the best I can do right now. But suffice it to say, that Britain is alarmingly placed to begin circling this hyperinflationary vortex.
  13. Quite. I think Max Keiser describes it best: a neo-feudal casino gulag.
  14. There's little doubt now, based on various noises from the Fed over the last 6 months, that long term rates will be capped. Thus bond holders will be squeezed for years to come, as their rate of return falls - and stays - below inflation, until excessive debt has been expunged, once way or another.
  15. Or buy something that will appreciate in real terms in this environment. Housing will perform poorly, even with high inflation.
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