Jump to content
House Price Crash Forum

Recommended Posts

Some examples please, successful modern economies without central banks.

the US 1836-1913

Historically, prior to central banks, financial crises happened much more regularly, along with recurrent recessions, multiple bank failures and huge losses of savings.

well that quite obviously BS, given that US has had its worst two financial crises (the great depression and now) while it has had a central bank (the Fed was chartered in 1913).

IIRC, Hayek won the Nobel Prize in Economics for proving that central banking causes the boom and bust cyles.

we would be much better off without central banking. every financial crises has been caused by state intervention (or natural disater). money is best left to the free markets.

edit: wouldn't all fit in one post.

Edited by InternationalRockSuperstar
Link to post
Share on other sites
  • Replies 2.7k
  • Created
  • Last Reply

Top Posters In This Topic

OK, inflation peaked at 26.9% in 1975. It was above 20% for 13 months in '75/'76 and a further 3 months in 1980.

26.9% is high inflation, severe inflation, bad inflation - and most definitely a bad thing.

26.9% inflation is not hyperinflation.

The International Accounting Standards Board defines hyperinflation in IAS 29 as:"the cumulative inflation rate over three years is approaching, or exceeds, 100%."

No we won't. £100 says that we won't have inflation above 20% by Dec 2009, Grumpy Old Man can hold our money if that's ok with you and him.

before end of 2012 and if i lose i give you £100 - if you lose you give me 12 ounces of silver

Bankruptcy of governments that print their own money is a near meaningless concept. The English haven't defaulted formally on debt since the middle ages, our external debts are balanced by similar credits, and we have an economy that can support increased taxation to finance government debts. Given the history of the seventies, default by inflation is not going to happen.

been defaulting by stealth since 1971 also went of gold standard for WW1 another default and again went off the gold standard before WW2 - went off gold standard a number of times re wars since middle ages

Rioting? State failure? This is the UK we are talking about? The last time we had real state failure was 1066. You could count the civil war I suppose, but that was rather a case of two competing succesful states in the same body politic. People know why we are in a mess, and taxes are going to go up, that's why the right wing scored near to 60% in the Euro elections (Conservative + UKIP + BNP) and the 'progressives' tanked (Lab/LDem/Green). The people who are going to pay the taxes don't do rioting, they do voting.

dont ever think it cant happen here

Some examples please, successful modern economies without central banks.

some examples of successful economies without boom bust cycles with central banks

Historically, prior to central banks, financial crises happened much more regularly, along with recurrent recessions, multiple bank failures and huge losses of savings.

show me

and central banks causing huge losses of savings

or if we are being honest - theft of savings

British_Pound.jpg

FRN.jpg

US_Dollar.jpg

post-2696-1244916179_thumb.jpg

post-2696-1244918396_thumb.jpg

post-2696-1244918513_thumb.jpg

Edited by lowrentyieldmakessense(honest!)
Link to post
Share on other sites

UK and US government bond prices are up across the board today (yields are down) as the rally from the end of last week continues. 10-yr yields in both countries broke through the headline 4% level last week, and this appears to have brought in buyers who believe the market has been getting ahead of itself. A more sober look at global trade data suggests that there's a great deal of wishful thinking in the green shoots story. As a consequence the dollar is currently up today and oil, gold and equities are down.

The UK 10-yr gilt yield is currently 3.90%, the US 10-yr note 3.74%.

On the more technical front, the BoE will be buying £3.5bn of gilts in a reverse auction today under its QE programme, and a further £3.0bn on Wednesday. Once these purchases are complete the BoE will have used approximately £93bn of its proposed £125bn QE allocation, giving us a further 5 weeks of QE to go at the present rate of spend.

On the issuance front, the DMO isn't holding any gilt auctions this week, and nor is the US Treasury (apart for some short-term bills).

Couple of things to watch out for this week in relation to the gilts market are the CPI/RPI numbers (released tomorrow) and the minutes of the last MPC meeting (Wednesday). In the latter case the market will be looking for some clues as to the MPC's thinking re any extension to the QE programme.

Link to post
Share on other sites
UK and US government bond prices are up across the board today (yields are down) as the rally from the end of last week continues. 10-yr yields in both countries broke through the headline 4% level last week, and this appears to have brought in buyers who believe the market has been getting ahead of itself. A more sober look at global trade data suggests that there's a great deal of wishful thinking in the green shoots story. As a consequence the dollar is currently up today and oil, gold and equities are down.

The UK 10-yr gilt yield is currently 3.90%, the US 10-yr note 3.74%.

On the more technical front, the BoE will be buying £3.5bn of gilts in a reverse auction today under its QE programme, and a further £3.0bn on Wednesday. Once these purchases are complete the BoE will have used approximately £93bn of its proposed £125bn QE allocation, giving us a further 5 weeks of QE to go at the present rate of spend.

On the issuance front, the DMO isn't holding any gilt auctions this week, and nor is the US Treasury (apart for some short-term bills).

Couple of things to watch out for this week in relation to the gilts market are the CPI/RPI numbers (released tomorrow) and the minutes of the last MPC meeting (Wednesday). In the latter case the market will be looking for some clues as to the MPC's thinking re any extension to the QE programme.

so, as ever, irrational exuberance wins the day.

FreeTrader,

can I ask you a question.

Has your opinion changed (or is it changing) as to path of the ol 'flation debate ?

I appreciate that you have been calling the big problems since 2007 btw. I noticed someone questioned your stance a few weeks ago..... ;)

Link to post
Share on other sites
early morning bump. :)

Which comes first ?

The early morning grump or the early morning bump ?

(I take it the early morning dump is well out of the way.)

Link to post
Share on other sites
On the more technical front, the BoE will be buying £3.5bn of gilts in a reverse auction today under its QE programme, and a further £3.0bn on Wednesday. Once these purchases are complete the BoE will have used approximately £93bn of its proposed £125bn QE allocation, giving us a further 5 weeks of QE to go at the present rate of spend.

About a billion a day of QE!? This obviously can't go on/ this obviously can't stop.

Keep it coming FreeTrader....

Link to post
Share on other sites
FreeTrader,

can I ask you a question.

Has your opinion changed (or is it changing) as to path of the ol 'flation debate ?

I appreciate that you have been calling the big problems since 2007 btw. I noticed someone questioned your stance a few weeks ago..... ;)

I'd say on balance I've shifted a little more to the inflation side (although to be clear, I still believe that a deflationary environment is the most probable outcome - low CPI and falling asset prices).

As far as the central banks are concerned, they're running up against the problem of unrestrained public spending – embedded structural deficits that go beyond Keynesian stimulus spending in recession. Both Mervyn King and Ben Bernanke have intimated recently that budget deficits need to be brought under control because they can see that interest rates are going to be driven higher unless the bond markets can be persuaded that the dire state of Western public finances will be meaningfully addressed.

It's the lack of political will and obfuscation by politicians that is leading me to become more pessimistic about inflation. All they seem to be able to do is promise that they'll stop spending some time in the future, but not right now. California is becoming a poster child for what the US economy could be facing within a decade, and you can bet that if CA could print its own currency it would be doing so right now. So I think pressure will be brought to bear on the Fed to take the easy way out and print. What stands in their way is market resistance – possible flight from both US Treasuries and the dollar.

I'm a little more optimistic about the UK getting to grips with the public finances, providing Gordon Brown isn't PM. I don't think any new government will find it easy to cut public debt and face down the public sector unions on pensions etc., but I see more pragmatism and underlying willingness to do so than in the US.

It's very bleak at present in my view. We have no real leaders - men and women with a deep conviction that the system is corrupt and needs rebuilding, people with the integrity and stature to convey to the population that to enact meaningful change we need to reinstate the concept of personal responsibility and also go through a period of considerable societal and economic pain. That pain is coming anyway, and the public would take the hardship better if they were convinced that there would be a full and open investigation of the fraud and abuses of the past decade, including fines, imprisonment and sequestration of assets where appropriate. That's the easiest way to fix the cancer at the top of our society – demonstrate to the general population that no-one is above the law and those who are entrusted with the governance of our nation (both politically and financially) should be be held to the highest of standards.

Chances of it happening without a market-forced solution or civil unrest? Zero.

Link to post
Share on other sites
It's the lack of political will and obfuscation by politicians that is leading me to become more pessimistic about inflation. All they seem to be able to do is promise that they'll stop spending some time in the future, but not right now. California is becoming a poster child for what the US economy could be facing within a decade, and you can bet that if CA could print its own currency it would be doing so right now. So I think pressure will be brought to bear on the Fed to take the easy way out and print. What stands in their way is market resistance – possible flight from both US Treasuries and the dollar.

yep history points to printing money

It's very bleak at present in my view. We have no real leaders - men and women with a deep conviction that the system is corrupt and needs rebuilding, people with the integrity and stature to convey to the population that to enact meaningful change we need to reinstate the concept of personal responsibility and also go through a period of considerable societal and economic pain. That pain is coming anyway, and the public would take the hardship better if they were convinced that there would be a full and open investigation of the fraud and abuses of the past decade, including fines, imprisonment and sequestration of assets where appropriate. That's the easiest way to fix the cancer at the top of our society – demonstrate to the general population that no-one is above the law and those who are entrusted with the governance of our nation (both politically and financially) should be be held to the highest of standards.

+1

and this is the problem - there are one or two but not enough yet to make a difference - Frank Field comes to mind.

Chances of it happening without a market-forced solution or civil unrest? Zero.

yep

Link to post
Share on other sites
I'd say on balance I've shifted a little more to the inflation side (although to be clear, I still believe that a deflationary environment is the most probable outcome - low CPI and falling asset prices).

**deflationary snip ;) **

As far as the central banks are concerned, they're running up against the problem of unrestrained public spending – embedded structural deficits that go beyond Keynesian stimulus spending in recession. Both Mervyn King and Ben

Chances of it happening without a market-forced solution or civil unrest? Zero.

ok thanks for that. I wasn't going anywhere with it, just curious. :)

there's nothing worse than being in a financial position where overall medium/long term deflation would suit me better, but knowing (or thinking that I know) that overall medium/long term inflation is coming. :(

Edited by grumpy-old-man-returns
Link to post
Share on other sites
We have no real leaders - men and women with a deep conviction that the system is corrupt and needs rebuilding, people with the integrity and stature to convey to the population that to enact meaningful change we need to reinstate the concept of personal responsibility and also go through a period of considerable societal and economic pain.

What we're seeing I think, is peak corruption - a necessary and final eruption thereof before the healing process can truly start.

I'm reminded most of the final commodities blow-off in the summer of '07 - and as a result, more than a little sanguine (about the political outlook in this dimension).

My concern is more in terms of what the earnest young brigadiers who replace these lamentable (and if truth be told - near-pensionable) lackwits actually do; we've been here before - it's never been pleasant.

Edited by ParticleMan
Link to post
Share on other sites
What we're seeing I think, is peak corruption - a necessary and final eruption thereof before the healing process can truly start.

I'm reminded most of the final commodities blow-off in the summer of '07 - and as a result, more than a little sanguine (about the political outlook in this dimension).

My concern is more in terms of what the earnest young brigadiers who replace these lamentable (and if truth be told - near-pensionable) lackwits actually do; we've been here before - it's never been pleasant.

I like that term ParticleMan.

Link to post
Share on other sites

Warning: Poorly informed post follows.

I know received wisdom is that the QE money is being used to repair balance sheets / recycled into new gilts. But is there any possibility it is actually finding it's way elsewhere, say into equities? This would allow smaller entities and individuals to sell their equity holdings into strength and move into hard assets (say houses).

Or am I flailing in the dark?

Link to post
Share on other sites
I know received wisdom is that the QE money is being used to repair balance sheets / recycled into new gilts. But is there any possibility it is actually finding it's way elsewhere, say into equities? This would allow smaller entities and individuals to sell their equity holdings into strength and move into hard assets (say houses).

Or am I flailing in the dark?

Post #699

Link to post
Share on other sites

what an interesting day... the BRICs and their mates get together to discuss alternatives to the USD.... they declare shortly afterwards that there is no alternative, and that the dollar is still top dog

then dollar rallies, treasuries rally, money presumably arriving from equity sell off?

i'm beginning to think Zarathustra and Asimov over at TF have this nailed

Link to post
Share on other sites
what an interesting day... the BRICs and their mates get together to discuss alternatives to the USD.... they declare shortly afterwards that there is no alternative, and that the dollar is still top dog

Which means they have made alternative arrangements, or are working on it.

then dollar rallies, treasuries rally, money presumably arriving from equity sell off?

And the worlds producers of actual wealth sell their stuff at a new, higher price.

i'm beginning to think Zarathustra and Asimov over at TF have this nailed

If they said that the chindians/russians just started the worlds greatest pump and dump, then yes.

Link to post
Share on other sites
ok thanks for that. I wasn't going anywhere with it, just curious. :)

there's nothing worse than being in a financial position where overall medium/long term deflation would suit me better, but knowing (or thinking that I know) that overall medium/long term inflation is coming. :(

I thought that you were sat on lots of shiny metal ready for inflation, watching the spot reduce on a daily basis isn't much fun.

How could you be set up so that deflation suits other than being all cash?

Link to post
Share on other sites
Which means they have made alternative arrangements, or are working on it.

And the worlds producers of actual wealth sell their stuff at a new, higher price.

If they said that the chindians/russians just started the worlds greatest pump and dump, then yes.

Hadn't even thought that. Think you hit the nail again though.

Link to post
Share on other sites
  • Guest featured this topic

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.