Jump to content
House Price Crash Forum

We're Absolutely Doomed To Ruin


Recommended Posts

0
HOLA441
  • Replies 87
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

1
HOLA442
2
HOLA443
Is that why oil is $64 a barrel? ........up nearly 100% from its low.

I can't be arsed to argue.

You believe we will get hyperinflation, I believe we will get deflation.

You are wrong, I am right.

Link to comment
Share on other sites

3
HOLA444
Guest Daddy Bear

I have posted my views views backed up couintless times before.....

A summary for you.

I trust you will support your arguement with a piece of comparable intellect....

Where are we at the moment?

Those in the West (esp. US/UK) are in massive personal debt and massive government debt. Governmnet deficit spending is gigantic. Trillions and Trillions of £/$ - The greatest % of GDP ever. We have borrowed and are continuing borrowing money in the bond markets from international investors to pay for our government spending, consumer spending and also to pay the interest on the money we have borrowed.

What are we doing with this money?

Buying consumable crap and supporting the Public Sector & Social Security System.

This cannot continue. We need to pay our creditors back.

We can do this - but it will take time. How ?

Raise Taxes, reduce social security, cut government spending, reduce government departments and contract the public sector hugely. Allow inefficient businesses to go to the wall and defaults to occur. Raise Interest rates and allow unemployment to skyrocket. Invest in research and technology for manufacture of saleable products. Invest in infrastructure that provides yield. This will result in our economies becoming more lean and efficient, allowing us to pay back our creditors over the next 10 - 20 years or so, thereby working off the last 15 years of consumption.

Would 'the people' keep a government in power for long if they said this is what they are going to do? I don't think so - Would you?

There is another alternative

We could Default on our Debt

How could we do this?

1. Do not pay our creditors.

2. Print Money and pay our creditors using a currency which is worth alot less.

What option will they choose? Well I reckon option 2 is highly likely. If I can work this out then sooner or later the Chinese/Japanese (bond purchasers/foreign investors etc) will too. To be honest I think they have worked this out already and are pondering their next move. Eventually they will decide not to loan us the money (buy bonds) for us to purchase their consumable crap to keep their workers in jobs...but instead give their money directly to their own people instead to buy their own goods.

So in summary there will be vastly fewer buyers for US/UK government bonds. As I have forecast a long time ago the US/UK bond market will collapse.

What will our governments (Central Banks) do?

The Fed et al. will have to buy their own governments bonds. How will they do this? Answer "Print Money". THEY ARE DOING THIS NOW - it has only just begun. As a number of central bank leaders have said " we will do whatever it takes...." This will result in the collapse of the US Dollar and UK Pound. Welcome to a currency crisis that when it happens may deteriorate very quickly. As the dollar/pound collapse all imports will rocket in price, the outcome will be high consumer prices of all goods (imported and home produced), already we can see this occurring in food etc. Within a certain time period lag (6 - 18 months of a big consumer squeeze - happening now) wage inflation will become a necessity. A Wage Spiral will occur. Interest Rates will have to rise. The $ and £ will collapse further. More and more people will be out of work (receiving printed money social security), and interest rates will be steadily climbing.

Stage 2

Eventually there will be ZERO creditors who will lend the US/UK money - due to inflationary default - the Fed and BOE will have to print more and more money to buy their own government bonds to keep interest rates down, in order to finance government deficit spending to pay for the social security (to limit civil unrest) and the public sector (to keep people in 'jobs').

So where will this end?

I fear Hyperinflation will occur.

As I have said many times before a "TIPPING POINT" will arise. The population of these economies will not want to hold on to this "printed money". They will lose confidence in the currency they are paid in - dollar/sterling. For example a state employee e.g. a teacher will want to spend his £4,000 monthly wage salary very quickly - as they can see their monthly salary was £3,000 6 months before, £2000 6 months before that - but back then bread was only £2 a loaf...its now £8. VELOCITY of money will pick up exponentially. The huge quantities of money that have been printed over the previous year or so will now result in Hyperinflation.

What will the Governments do? What will our lives be like?

The specifics... who knows? No doubt they will introduce emergency laws, taxes on assets, rules on spending, rules on access to money in banks, price controls. They may make it illegal to hold other currencies, to buy, hold or transact in gold. There may be energy supply problems, 3 day working week...most certainly civil unrest and new state controls on demonstrations.... only time will tell.

How long have we got until the Bond Market Collapses?

It could be as early as April 2009 or it may take much longer. Early 2010..... I do not know. I think the probability that it will happen within a year or so as very high.

Remember nothing is 100% guaranteed.

POST 2

Since late 2007 money has been fleeing to the safety of US treasuries. A bubble has formed. It has been a flight to quality.

Originally it went into internet stocks, then housing, then commodities/stock market, then banks on deposit and now finally govt. bonds.

There is no way all these investors in US treasuries can be paid. However the capital value of the resale of the Treasury note has increased. Soon like the housing bubble there will be a dash for the exit. The government will have to raise IR's to prevent this.

Unless the government is engineering a collapse in the bond market?

Added to this that China, Japan, Saudi Arabia have their own collapsing economies to bail out - why would they continue to lend their cash to the US?

China et al. will put up with buying US treasuries for a while, but once they stop buying and start dumping them on the market the US dollar will collapse. This collapse will drive down the market to early 80's levels - and consequently IR's will go to where they were in the early 80's. Expect IR's in region of 15 - 20%.

Big problem is where will the cash go next? Only solution is to destroy the value of this cash. There is no safety - apart from assets or gold?

If the government is unable to sell bonds to finance govt. spending they will have to raise taxes, steal pension money, reduce state spending.... BUT WE KNOW THEY WILL NOT.

They will MONETIZE the debt. Printing is their only way out. They will print money and buy their own debt. The dollar will collapse.

It is not a question of "IF" but "WHEN?"

I suppose historically we are about in 1931. The difference is last time the money was used to prop up productive competitive infrastructure. This allowed the debt to be paid off over the next 20-30 years. This time the infrastructure is not competitve. We cannot produce our way out of it.

Finally what really worries me is that so far the US have pumped in about $9.7 trillion dollars into monetizing the debt. The outstanding value of US mortgages is about $10 trillion dollars. Surely the problem should be sorted by now?

Unless of course a percentage of the $100 trillion dollars of outstanding Derivatives could unwind due to defaulting of counter-parties ?

POST 3

More thoughts on why the bond market will collapse

All Bubbles Deflate - never slowly or orderly.

The US treasury Market is in a Bubble.

The longer the US treasury Market remains in a bubble the greater the pop.

The more debt the US issues to China...middle east...etc the tighter the available credit for other markets - e.g. emerging markets....Europe...E Europe...Russia....

For an investor to invest in these other riskier markets they will want higher and higher yields. They have been seeking 'perceived safety' in US treasuries. The high yields that have to be given by places like Hungary, Eastern Europe ...the UK !! will cripple the financial system of these countries. Basically what I am saying is the increasing US treasury bubble is strangling credit elsewhere.

Investors are in US treasuries for SAFETY......not yield or the normal economic fundamentals. FEAR is the major driver of this bubble. (not the usual GREED). Eventually a reassessment will HAVE to take place....because basically the US economic model is collapsing......a dawning of reality will take place. This is what I call my TIPPING POINT.

The rush to the exit will be towards Oil, Commodities...even housing.

This is because these assets have been repriced recently ...they look fair value, or at least give the potential for some yield.

If you do the research you can see that the rate of purchasing by China of US treauries has slowed since 2007- they have been buying assets instead. When this originally occurred the dollar weakened and oil went ballistic - from $50 to $150. Admittedly it then collapsed when the projected demand dropped off a cliff with the global slowdown.... recession.

Do the research and you will see that China has stated that Gold and other investments are preferable to the US DOLLAR $. China knows they face an inflationary default by the US. This Crisis has already cost the US $10 TRILLION DOLLARS. The dollar has been in decline for a long time - since the 1970's it has now shrunk to about 20% of its original purchasing power. The policies conducted by the US government - QE et al. - since the crisis began and even more so in the past few weeks...days are condemning the DOLLAR $ to a COLLAPSE.

A TIPPING POINT is fast approaching. The US people, the international community are losing trust in the US DOLLAR $ - you can see it on TV etc it is slowly entering the global psyche. The DOLLAR has no real backing - apart from this trust. Only CONFIDENCE.

Ask Yourself this?

If you held 70% of your wealth in Dollars now would you diversify your holdings a bit. Maybe reduce to 40% ?? Maybe go into Solid Assets or Gold? China Holds 70% of its wealth in DOLLAR DENOMINATED ASSETS.

The Value of Gold has been like a thermometer in the sick global economic illness that is engulfing the world. Gold has risen from 2001 - 2009 ; $200 - $1000

I am no Gold Bug and hold no Gold - but this does indicate a problem somewhere. As the US print and devalue their dollar the Chinese will have to make their play or be humiliated in front of the world.

China has been very vocal recently about the US devaluing the DOLLAR. I think some of you may be right in thinking the Chinese won't want to cause panic and exit the bond market rapidly causing a disorderly pop. But they MAY NOT HAVE A CHOICE.

As their economy contracts the amount of treasuries they are able to buy is shrinking all the time. They have to fund their own STIMULUS PACKAGE. They are already diverting funds into their own country and consequently have to buy much less treasuries. The research and data available shows china is trying for an orderly exit - they are buying short notes as opposed to the long term 30 year ones. China has about $2.5 TRILLION DOLLARS worth of US denominated asstes....Bonds...freddy and Fanny corporate bonds etc. They need to sell a large proportion of these holdings to Diversify their 'portfolio' and finance their own economy... the future does not look good.

So those were additional reasons why the bond market collapse will occur in the near future - resulting in a massive dollar devaluation...A flight into Hard Assets .......Increasing the velocity of all this printed money...and ergo HYPERINFLATION

Link to comment
Share on other sites

4
HOLA445
If we're going to have debt-deflation or hyperinflation, but retain some kind of social order, it's worth investing in gold.

If we're "doomed to ruin" then you need agricultural land, tools, and possibly firearms. Not gold.

And there's the rub - what's worth hoarding is dependent on how bad the crash will eventually be - WHICH WE DON'T KNOW.

But even if you know it's coming, you can still do totally the wrong thing.

...too true....make sure when you harvest the nuts from the trees this autumn you hide them in a place where the squirrels will not find them.... <_<

Link to comment
Share on other sites

5
HOLA446
6
HOLA447
I used to think posters on here were very intuitive and ahead of the curve.

Sadly most have become so focused on the HPC and picking up a "free house" that they have become blinkered to the actual outcome that now is certain to happen.

Its like watching a train heading for the buffers and seeing some of the passengers trying to get into first class as the seats become vacant....

Some good posters with a broader perspective have been chased away from hpc.co.uk.

I like your signature, by the way.

Link to comment
Share on other sites

7
HOLA448
8
HOLA449
Guest Daddy Bear
I can't be arsed to argue.

You believe we will get hyperinflation, I believe we will get deflation.

You are wrong, I am right.

:lol:

Link to comment
Share on other sites

9
HOLA4410
food and firearms?

much as I am a goldbug,it is worth bearing in mind that it is only a bit of metal.In much the same way as money is only a bit of paper with some ink with fancy patterns on.

comes pretty well down the list on maslowe's hierarchy of needs.

It is only pieces of metal, agreed. However, it is pieces of a metal that has more or less held its purchasing power for thousands of years. No currency has stood that test of time - not one. I hope that I might be able to exchange my metal for "real" things if and when the purchasing power of our current paper currencies diminish significantly. If this doesn't happen and my pieces of metal lose significant purchasing power, well that means I made a bad choice and I'll live with the consequences.

Most of the money used to buy it came from property appreciation so I'm fairly relaxed about the eventual purchasing power of the pieces of metal - easy come, easy go as they say. I have reasonable cash reserves in addition so hoping to cover all likely eventualities.

If we get into real TEOTWAWKI territory, I agree that my pieces of metal will have no direct practical value, but I may be able to either exchange them for more practical items, or use them to help me and my loved ones escape the country.

Link to comment
Share on other sites

10
HOLA4411
It is only pieces of metal, agreed. However, it is pieces of a metal that has more or less held its purchasing power for thousands of years. No currency has stood that test of time - not one. I hope that I might be able to exchange my metal for "real" things if and when the purchasing power of our current paper currencies diminish significantly. If this doesn't happen and my pieces of metal lose significant purchasing power, well that means I made a bad choice and I'll live with the consequences.

Most of the money used to buy it came from property appreciation so I'm fairly relaxed about the eventual purchasing power of the pieces of metal - easy come, easy go as they say. I have reasonable cash reserves in addition so hoping to cover all likely eventualities.

If we get into real TEOTWAWKI territory, I agree that my pieces of metal will have no direct practical value, but I may be able to either exchange them for more practical items, or use them to help me and my loved ones escape the country.

..stick to nuts...at least you can eat them...

Link to comment
Share on other sites

11
HOLA4412
12
HOLA4413
13
HOLA4414
China has been very vocal recently about the US devaluing the DOLLAR. I think some of you may be right in thinking the Chinese won't want to cause panic and exit the bond market rapidly causing a disorderly pop. But they MAY NOT HAVE A CHOICE.

As their economy contracts the amount of treasuries they are able to buy is shrinking all the time. They have to fund their own STIMULUS PACKAGE. They are already diverting funds into their own country and consequently have to buy much less treasuries. The research and data available shows china is trying for an orderly exit - they are buying short notes as opposed to the long term 30 year ones. China has about $2.5 TRILLION DOLLARS worth of US denominated asstes....Bonds...freddy and Fanny corporate bonds etc. They need to sell a large proportion of these holdings to Diversify their 'portfolio' and finance their own economy... the future does not look good.

So those were additional reasons why the bond market collapse will occur in the near future - resulting in a massive dollar devaluation...A flight into Hard Assets .......Increasing the velocity of all this printed money...and ergo HYPERINFLATION

That's a logical summary, but a bit mechanistic. For example what if the BRIC countries make some progress in replacing the $ with SDR's? They could convert part of their $ holdings into SDR's and back them with actual US assets - for example the US handing over the IP rights that the Chinese have already "stolen".

Not saying this will happen, but as all sides in the game want to keep it going, I can see lots of possibilities for this kind of creativity.

Link to comment
Share on other sites

14
HOLA4415
15
HOLA4416
:blink: what deflation?

CPI, RPI both here and in the US is falling and thats with the huge liquidity injections all the major banks are making. The Fed, BoE and ECB are all fighting a losing battle. We are in the early stages of a deflationary depression.

Link to comment
Share on other sites

16
HOLA4417
Guest Daddy Bear
That's a logical summary, but a bit mechanistic. For example what if the BRIC countries make some progress in replacing the $ with SDR's? They could convert part of their $ holdings into SDR's and back them with actual US assets - for example the US handing over the IP rights that the Chinese have already "stolen".

Not saying this will happen, but as all sides in the game want to keep it going, I can see lots of possibilities for this kind of creativity.

No new SDRs had been created between 1981 and the 2008 banking crisis.

Only 21.4 billion of them existed before April 1st 2009 (equal in value to $31.9 billion).

On 2 April 2009, the G-20 authorized the IMF to issue $250 billion in new SDRs to augment the foreign reserves of IMF members and quickly channel resources into emerging economies.

Increases in the reserves of some emerging economies will be substantial i.e. South Korea’s will grow by $3.4 billion, India’s by $4.8 billion, Brazil’s by $3.5 billion, Russia’s by $6.9 billion and China's by $7.3 billion

I'm sure it will all be fine then.... definitely not inflationary....... :lol:

Link to comment
Share on other sites

17
HOLA4418
Guest Daddy Bear
CPI, RPI both here and in the US is falling and thats with the huge liquidity injections all the major banks are making. The Fed, BoE and ECB are all fighting a losing battle. We are in the early stages of a deflationary depression.

Do you honestly think they will lose the battle and have a deflationary global depression?

Link to comment
Share on other sites

18
HOLA4419
19
HOLA4420
20
HOLA4421
21
HOLA4422
22
HOLA4423
Increases in the reserves of some emerging economies will be substantial i.e. South Korea’s will grow by $3.4 billion, India’s by $4.8 billion, Brazil’s by $3.5 billion, Russia’s by $6.9 billion and China's by $7.3 billion

I'm sure it will all be fine then.... definitely not inflationary....... :lol:

"Augmenting" China's reserves by $7.3bn is chicken feed. It only makes sense if they are there to diversify/stabilise - which I would guess would be at the expense of their dollar holdings.

Link to comment
Share on other sites

23
HOLA4424
Do you honestly think they will lose the battle and have a deflationary global depression?

They are losing the battle, they are failing to bring back inflation.

You cannot beat deflation in a credit based system.

Link to comment
Share on other sites

24
HOLA4425
Guest Daddy Bear
They are losing the battle, they are failing to bring back inflation.

You cannot beat deflation in a credit based system.

You can - you can print.

Link to comment
Share on other sites

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