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http://www.theaustralian.com.au/national-affairs/fears-14pc-wages-win-will-spread/story-fn59niix-1225960480931

Common FIAT Currency across the globe, eventually all countries will near ZERO base rates due to peak debt so peak servicing costs at nominal wages domestically. Due to an increase in debt levels CB's drop domestic base rates to accomodate peak debt levels due to stagnating wages in the domestic economy.

Hot money flows to the last remaining economies holding rates above the rest of the globe to chase yield. Eventually these economies exceed peak debt so exceed peak asset prices relative to the domestic local wage; we then have a global currency in differing nominations accomodating ZERO base rates domestically.

So peak debt, peak asset prices, peak wages relative to cost and debt domestically, Is Australia heading to a complete colapse, with wages spiralling, adding to a collapsing housing induced economy where wages in a small percentage of the domestic economy are outstripping the large percentage of the economy.............

Rising domestic interest rates, an overvalued currency due to hot money flowing from the west, i am just using Australia as an anecdote...............

Scepticus what are your thoughts......................

Edited by Panda

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Scepticus what are your thoughts......................

Haven't seen him for ages, heard he was feeling a bit peaky.

My guess is that the central banks will keep base rates low far beyond the point at which inflation takes off.

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I think Karl Marx stated that the capitalist system will collapse in on itself as capital becomes increasingly concentrated in fewer hands leaving the proletariat hungry and dissatisfied as increasingly they cannot afford the basic necessities of life and demand dries up in the economy..

nonsense, common knowledge says that the banks are here to protect and invest our savings for the peace of mind of the future.

ALL their advertising says so. surely the ASA would stop them advertising if this wasnt so.

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I think Karl Marx stated that the capitalist system will collapse in on itself as capital becomes increasingly concentrated in fewer hands leaving the proletariat hungry and dissatisfied as increasingly they cannot afford the basic necessities of life and demand dries up in the economy..

Without the state intervention, the wealth would have been redistributed. As we had state intervention, we better hope that they have the balls to redistribute it via taxes instead now. If not, the imbalance between the poor (indebted consumers) and the wealthy (the few with a surplus) will remain and the economy will continue to decline.

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http://www.theaustralian.com.au/national-affairs/fears-14pc-wages-win-will-spread/story-fn59niix-1225960480931

Common FIAT Currency across the globe, eventually all countries will near ZERO base rates due to peak debt so peak servicing costs at nominal wages domestically. Due to an increase in debt levels CB's drop domestic base rates to accomodate peak debt levels due to stagnating wages in the domestic economy.

Hot money flows to the last remaining economies holding rates above the rest of the globe to chase yield. Eventually these economies exceed peak debt so exceed peak asset prices relative to the domestic local wage; we then have a global currency in differing nominations accomodating ZERO base rates domestically.

So peak debt, peak asset prices, peak wages relative to cost and debt domestically, Is Australia heading to a complete colapse, with wages spiralling, adding to a collapsing housing induced economy where wages in a small percentage of the domestic economy are outstripping the large percentage of the economy.............

Rising domestic interest rates, an overvalued currency due to hot money flowing from the west, i am just using Australia as an anecdote...............

Scepticus what are your thoughts......................

I think scepticus lurks on his/her blog, which is full of mad theories about currencies and interest rates. Look at a recent post for a link.

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http://www.theaustralian.com.au/national-affairs/fears-14pc-wages-win-will-spread/story-fn59niix-1225960480931

Common FIAT Currency across the globe, eventually all countries will near ZERO base rates due to peak debt so peak servicing costs at nominal wages domestically. Due to an increase in debt levels CB's drop domestic base rates to accomodate peak debt levels due to stagnating wages in the domestic economy.

Hot money flows to the last remaining economies holding rates above the rest of the globe to chase yield. Eventually these economies exceed peak debt so exceed peak asset prices relative to the domestic local wage; we then have a global currency in differing nominations accomodating ZERO base rates domestically.

So peak debt, peak asset prices, peak wages relative to cost and debt domestically, Is Australia heading to a complete colapse, with wages spiralling, adding to a collapsing housing induced economy where wages in a small percentage of the domestic economy are outstripping the large percentage of the economy.............

Rising domestic interest rates, an overvalued currency due to hot money flowing from the west, i am just using Australia as an anecdote...............

Scepticus what are your thoughts......................

I think Scepticus could be right on the money with his thoughts about ZIRP and peak debt. From observations, it appears to be what the central banks are doing, even if perhaps not wittingly. Additionally, if it drives out yield from the rent seekers, it will actually benefit the majority of us.

IMO, if the above is true, concentrating on finding ways to rebalance the distribution of wealth will become paramount - you can't have an economy with all the wealth in the hands of a few, with the vast majority crippled with debt. If peak debt has arrived, then the burden of it needs to be spread proportionately.

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I think Scepticus could be right on the money with his thoughts about ZIRP and peak debt. From observations, it appears to be what the central banks are doing, even if perhaps not wittingly. Additionally, if it drives out yield from the rent seekers, it will actually benefit the majority of us.

IMO, if the above is true, concentrating on finding ways to rebalance the distribution of wealth will become paramount - you can't have an economy with all the wealth in the hands of a few, with the vast majority crippled with debt. If peak debt has arrived, then the burden of it needs to be spread proportionately.

Ironically, this was one of the advantages of credit.

From Lombard Street, published in 1873:

English trade is carried on upon borrowed capital to an extent of which few foreigners have an idea, and none of our ancestors could have conceived. In every district small traders have arisen, who 'discount their bills' largely, and with the capital so borrowed, harass and press upon, if they do not eradicate, the old capitalist. The new trader has obviously an immense advantage in the struggle of trade. If a merchant have 50,000 L. all his own, to gain 10 per cent on it he must make 5,000 L. a year, and must charge for his goods accordingly; but if another has only 10,000 L., and borrows 40,000 L. by discounts (no extreme instance in our modern trade), he has the same capital of 50,000 L. to use, and can sell much cheaper. If the rate at which he borrows be 5 per cent., he will have to pay 2,000 L. a year; and if, like the old trader, he make 5,000 L. a year, he will still, after paying his interest, obtain 3,000 L. a year, or 30 per cent, on his own 10,000 L. As most merchants are content with much less than 30 per cent, he will be able, if he wishes, to forego some of that profit, lower the price of the commodity, and drive the old-fashioned trader—the man who trades on his own capital—out of the market. In modern English business, owing to the certainty of obtaining loans on discount of bills or otherwise at a moderate rate of interest, there is a steady bounty on trading with borrowed capital, and a constant discouragement to confine yourself solely or mainly to your own capital.

This increasingly democratic structure of English commerce is very unpopular in many quarters, and its effects are no doubt exceedingly mixed. On the one hand, it prevents the long duration of great families of merchant princes, such as those of Venice and Genoa, who inherited nice cultivation as well as great wealth, and who, to some extent, combined the tastes of an aristocracy with the insight and verve of men of business. These are pushed out, so to say, by the dirty crowd of little men. After a generation or two they retire into idle luxury. Upon their immense capital they can only obtain low profits, and these they do not think enough to compensate them for the rough companions and rude manners they must meet in business. This constant levelling of our commercial houses is, too, unfavourable to commercial morality. Great firms, with a reputation which they have received from the past, and which they wish to transmit to the future, cannot be guilty of small frauds. They live by a continuity of trade, which detected fraud would spoil. When we scrutinise the reason of the impaired reputation of English goods, we find it is the fault of new men with little money of their own, created by bank 'discounts.' These men want business at once, and they produce an inferior article to get it. They rely on cheapness, and rely successfully.

But these defects and others in the democratic structure of commerce are compensated by one great excellence. No country of great hereditary trade, no European country at least, was ever so little 'sleepy,' to use the only fit word, as England; no other was ever so prompt at once to seize new advantages. A country dependent mainly on great 'merchant princes' will never be so prompt; their commerce perpetually slips more and more into a commerce of routine. A man of large wealth, however intelligent, always thinks, more or less 'I have a great income, and I want to keep it. If things go on as they are I shall certainly keep it; but if they change I may not keep it.' Consequently he considers every change of circumstance a 'bore,' and thinks of such changes as little as he can. But a new man, who has his way to make in the world, knows that such changes are his opportunities; he is always on the look-out for them, and always heeds them when he finds them. The rough and vulgar structure of English commerce is the secret of its life; for it contains 'the propensity to variation,' which, in the social as in the animal kingdom, is the principle of progress.

I'm not sure that applies any more though.

The merchant princes are leveraged to the eyballs, while the little man can't get credit.

.

Edited by Timm

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I think Scepticus could be right on the money with his thoughts about ZIRP and peak debt. From observations, it appears to be what the central banks are doing, even if perhaps not wittingly. Additionally, if it drives out yield from the rent seekers, it will actually benefit the majority of us.

IMO, if the above is true, concentrating on finding ways to rebalance the distribution of wealth will become paramount - you can't have an economy with all the wealth in the hands of a few, with the vast majority crippled with debt. If peak debt has arrived, then the burden of it needs to be spread proportionately.

well there is a cure, and its called default.

The shadow banking system is what blew this lot up...and its the shadow banking system thats sucking up all the QE.

ie, all this commodity inflation and nothing is changed.

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well there is a cure, and its called default.

The shadow banking system is what blew this lot up...and its the shadow banking system thats sucking up all the QE.

ie, all this commodity inflation and nothing is changed.

Yes, hard default is one way, but they seem to be trying to stage manage things to talk the market down from the roof, as it were. We seemed to cross over to beyond peak debt (which was unstable), with the CBs trying to guide us back down to it. As this is the case, we have to hope that policy to redistribute wealth is implemented effectively afterwards, using fiscal policy as the tool.

Additionally, as interest rates have been falling (ignoring noise) since the 80s, perhaps we're reaching the conclusion of this with ZIRP and peak debt? Even, if there were defaults, perhaps we will never see high rates again, as there just isn't the yield to chase (ie. who are savers going to lend to?).

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Ironically, this was one of the advantages of credit.

From Lombard Street, published in 1873:

I'm not sure that applies any more though.

The merchant princes are leveraged to the eyballs, while the little man can't get credit.

Interesting post.

I don't think there is anything wrong with credit. Whether some are in debt or some have a surplus isn't really the issue, IMO, it's the distribution of it. If the line between the indebted and the wealthy is drawn in the drawn at 80% (with the bottom 80% being net debtors), it is a very different scenario to it being drawn at 50%. In both situations, there are debtors and creditors, but in the latter, the average is to have no debt, nor surplus. Surely, this would be desirable?

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I think Karl Marx stated that the capitalist system will collapse in on itself as capital becomes increasingly concentrated in fewer hands leaving the proletariat hungry and dissatisfied as increasingly they cannot afford the basic necessities of life and demand dries up in the economy..

Sounds a bit like Communism to me as well. Human nature?

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I think scepticus lurks on his/her blog, which is full of mad theories about currencies and interest rates. Look at a recent post for a link.

FYI, I don't lurk, I prowl.

Any questions about the specific material posted on my blog, may be posted on my blog.

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I think Karl Marx stated that the capitalist system will collapse in on itself as capital becomes increasingly concentrated in fewer hands leaving the proletariat hungry and dissatisfied as increasingly they cannot afford the basic necessities of life and demand dries up in the economy..

Left to their own devices, I think markets have a good ability to strip the wealthy of good chunks of their wealth. When you have state intervention bailing out the wealthy, you have to rely on the government to redistribute this wealth though.

I've heard many people say that it's a constant battle to keep hold of their wealth, which seems exactly as it should be to me. Whether the state should be intervening seems to be a very active debate of recent times, though.

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I'm not sure that applies any more though.

The merchant princes are leveraged to the eyballs, while the little man can't get credit.

It's almost the opposite, in fact. The landlord who has no mortgage doesn't need as much rent to cover their costs as a btl'er who has all the same costs, PLUS the cost of having to service the mortgage.

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FYI, I don't lurk, I prowl.

Any questions about the specific material posted on my blog, may be posted on my blog.

Its not a question regarding you blog, its a question regarding you posts on here, am i on the nail with my initial post, or am i missing anything, because i am coming round to your way of thinking..............

You and Injin do make me think, so a positive thing thinking, something many do not ten to do............................

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Its not a question regarding you blog, its a question regarding you posts on here, am i on the nail with my initial post, or am i missing anything, because i am coming round to your way of thinking..............

you are correct.

The last of the ponzis will presumably get blown up to giddy heights before collapsing.

Next up - Brazil.

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you are correct.

The last of the ponzis will presumably get blown up to giddy heights before collapsing.

Next up - Brazil.

Brazil property market is going crazy, and the cost of living is rocketing(whatever the official figures are saying).

The banksters must be raking in trillions in the property bubble that's going on there. It will end very badly indeed IMO, there are plenty of people with guns.

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Brazil property market is going crazy, and the cost of living is rocketing(whatever the official figures are saying).

The banksters must be raking in trillions in the property bubble that's going on there. It will end very badly indeed IMO, there are plenty of people with guns.

have you got some links?

thanks.

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you are correct.

The last of the ponzis will presumably get blown up to giddy heights before collapsing.

Next up - Brazil.

I have read you blog three times, enlightening, educating, refreshing.........................................................

So Brazil next, when Australia, their asset boom is at tipping point, interest rates sky high relative to the US, UK, EU, hot money flooding into the OZ economy, this is propping up the domestic property bubble as external funding plays a massive part on domestic lending in Australia due to a severe shortage of domestic savings due to an ever widening gap in asset cost to nominal wage and an ever increasing cost of living due to a lack of competition through corporations taking the p!ss out of the domestic consumer. When Australia blows, it will blow like a horse have its kn@ckers tangled in barbed wire...............................

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I have read you blog three times, enlightening, educating, refreshing.........................................................

So Brazil next, when Australia, their asset boom is at tipping point, interest rates sky high relative to the US, UK, EU, hot money flooding into the OZ economy, this is propping up the domestic property bubble as external funding plays a massive part on domestic lending in Australia due to a severe shortage of domestic savings due to an ever widening gap in asset cost to nominal wage and an ever increasing cost of living due to a lack of competition through corporations taking the p!ss out of the domestic consumer. When Australia blows, it will blow like a horse have its kn@ckers tangled in barbed wire...............................

so presumably you have read and agree with my initial post here?

http://liminalhack.wordpress.com/2010/11/01/the-fiat-solution/

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so presumably you have read and agree with my initial post here?

http://liminalhack.wordpress.com/2010/11/01/the-fiat-solution/

Yes..

So with a scenario of a global ZERO policy interest rate, no hot money flowing into any domestic economy due to a common zero base rate global policy. Sloshing funds, cash has no where to go but to take risks in exotic casino type gambles globally which risk capital loss or to domestically lend to risk takers paying a wage locally which will eventually lead to domestic growth locally and provide domestic growth and prosperity relative to other global economies, which should lead to local domestic wage inflation?

Edited by Panda

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Yes..

So with a scenario of a global ZERO policy interest rate, no hot money flowing into any domestic economy due to a common zero base rate global policy. Sloshing funds, cash has no where to go but to take risks in exotic casino type gambles globally which risk capital loss or to domestically lend to risk takers paying a wage locally which will eventually lead to domestic growth locally and provide domestic growth and prosperity relative to other global economies, which should lead to local domestic wage inflation?

yes.

medium term, the increasing demograpic dependancy ratio also serves to push up the return to labour relative to return to capital - almost everywhere that matters in the world.

but lets be honest - the first beneficiariesof all this are developing and third world labourers.

it may take some while to feel the benefit personally but I would say that quite soon the inequality level in our own economies starts to come down even if we are all getting poorer at the same time.

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have you got some links?

thanks.

What sort of links do you want?

My evidence is anecdotal as I've visited several times in the last few years and monitor house prices in a few towns, plus speak to people to-ing and fro-ing between Geneva and Brazil most weeks.

In a dump of a town 5-6 hours from Sao Paolo, orange-growing country, houses are now priced similarly to the UK Midlands, minimum wage is <1000 reals a month and average is probably 1000-1500 reals a month. They're not used to available credit, the banks are ****-raping the people, getting them loaded up with debt as they've done everywhere, those with money and property are laughing.

Cost of living is higher than the UK if you compare like for like.

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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