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Killer Bunny

Niall Ferguson On... Everything

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Empires are complex systems that tend to fall, rather than decline.

US on course to suffer fiscal decay, much like previous empires. Spanish, Ottoman, UK after 1937, which had debt servicing payments sucking up 40%+ of tax revenue.

Obama should get Volcker to announce fiscal deficit eradication by 2020 + stop making speeches and put real foreign policy in place. US will cut back on the military rather than social security.

China has problems, but will continue to grow and rival the US in the Pacific.

Gold is going nowhere.

It's deflation the CBs have to fight. Inflation is very hard to induce.

Witty guy. He was introduced to debt by his ex-wives.

The link may be poor - you can get it at zerohedge.

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I'm having real trouble watching this -- too slow internet connection...

Anyone able to give a resume/summary?

It was from July 2010.

He thinks that the US is doomed unless it comes up with radical fiscal reforms to address the debt problem, and he says that the collapse of empires happens much quicker than most people imagine (and is linked to their debt levels as much as anything else).

He'd have 10% of his wealth in gold, but no more than that (he doesn't think it will rise too much further).

He reckons we should fear deflation more than inflation.

One questioner asked if he thinks that having children had taught him about debt - he said that ex-wives had taught him more! :lol:

Edit: a better summary from okaycuckoo above...

Edited by Constable

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Another long, dull intro IMPO.

Loves the sound of his own voice doesn't he, could have summed it up in 15 minutes max!

Main points:

1. All empires have been brought down by debt and the end is sudden, not a long drawn out process.

2. US withdrawal from its wars will signal the imminent end of US Empire, just as Russian withdrawal from Afghanistan signalled the collapse of the USSR.

3. Regardless of interest rate levels, you cannot carry on deficit spending at the current US levels without everything going t1ts up.

4. When the US goes t1ts and it's global military hegemony ends, you Ozzies better be sh1tting it, cos the Chinese are going to be your new masters.

5. Deflation is the enemy, you should be so lucky to get inflation. (Personally don't agree with this, if you've got a computer you can add as many zeroes as you want just like this: 00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000)

EDIT: Looks like I broke HPC with my zeroes (just like the G7 will break fiat currency with their printing presses!)

BTW, skipped some bits, so missed the gold bit. I disagree on that too, due to my point at 5 and also due to deflation causing a collapsing economy, which means a weak currency which means you're better off holding gold than the currency concerned (which is any fiat currency, if the world's reserve currency gets a kicking).

Edited by General Congreve

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(...)

5. Deflation is the enemy, you should be so lucky to get inflation. (Personally don't agree with this, if you've got a computer you can add as many zeroes as you want just like this: 00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000)

Fiat money is just a promIse to pay.

PrInting is a default, because you are servicing an iOU with a (devalued) iOU. If your creditor thinks you will continue to service (already) devalued iOUs with (potentially worthless) iOUs, they will stop taking iOUs in return for actual goods. This is the printy limit - print too much, and you can't buy stuff from abroad at any realistic price.

This is what I like to call the prInt horIzon.

In a closed economy this is not a big issue - you can suck the surplus promises out of the system through various rent proxies such as tax and govt debt (and rent!), thus preserving the value of your IOUs as a medium of exchange. In a more open system, where other means of exchange are available, you risk a poverty of exchange opportunities. Yes, you can soft default on existing debt by printing, but doing so means that you deny yourself access to further stuff at a fair price in iOUs.

That, my friend, is why adding zeros is a limited game.

EDIT: Looks like I broke HPC with my zeroes (just like the G7 will break fiat currency with their printing presses!)

Yup, though my guess is that two or three zeros would do the trick.

BTW, skipped some bits, so missed the gold bit. I disagree on that too, due to my point at 5 and also due to deflation causing a collapsing economy, which means a weak currency which means you're better off holding gold than the currencny concerned (which is any fiat currency, if the world's reserve currency gets a kicking).

Gold has been an excellent bet over the last decade or so. If the west continues to print, it will be a good bet in the future. But if you think this printing will continue for long, one would do much better with a productive asset. And we all know what the most productive assets are...

:ph34r:

.

Edited by Timm

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And we all know what the most productive assets are...

:ph34r:

.

Go on give us a clue:

Oil field / Gas field

Gold mine /Natural Resource mine

Farm Land

Factory

Offices

Rental property (least productive for the nation, but "productive

" for bankers and landlords).

Printing press

Quango Office!

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Fiat money is just a promIse to pay.

PrInting is a default, because you are servicing an iOU with a (devalued) iOU. If your creditor thinks you will continue to service (already) devalued iOUs with (potentially worthless) iOUs, they will stop taking iOUs in return for actual goods. This is the printy limit - print too much, and you can't buy stuff from abroad at any realistic price.

This is what I like to call the prInt horIzon.

In a closed economy this is not a big issue - you can suck the surplus promises out of the system through various rent proxies such as tax and govt debt (and rent!), thus preserving the value of your IOUs as a medium of exchange. In a more open system, where other means of exchange are available, you risk a poverty of exchange opportunities. Yes, you can soft default on existing debt by printing, but doing so means that you deny yourself access to further stuff at a fair price in iOUs.

That, my friend, is why adding zeros is a limited game.

A neat summation of why inflationary policies will inevitably fail and end in a currency crisis of one form or another,(either hard or soft). You will always get capital flight and subsequent capital controls as the State seeks to maintain the inflows of rent that sustain it. This leads to no new 'real' money wanting to enter a system that subsequently devalues it. The only way a failing State can delay the unavoidable bankruptcy is to print even more of the IOU's in an exponentially rising tide of watered down cash.

Edited by Jack's Creation

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Ferguson made that address on July 28, 2010. On that date spot gold closed at $1,165 an ounce. It finished the year on $1,421 an ounce. It will continue to go nowhere. :lol:

For the unaware, his name appearing here http://www.bilderbergmeetings.org/participants_2010.html might provide a clue for why he's pretending to be an X-Factor viewer.

An interesting list, this is the one I find most intriguing:-

GBR Williams, Shirley Member, House of Lords

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Ferguson made that address on July 28, 2010. On that date spot gold closed at $1,165 an ounce. It finished the year on $1,421 an ounce. It will continue to go nowhere. :lol:

For the unaware, his name appearing here http://www.bilderbergmeetings.org/participants_2010.html might provide a clue for why he's pretending to be an X-Factor viewer.

Good point, he's also a big friend of the Rothschilds who as you will know are long gold. Good work Niall!

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Fiat money is just a promIse to pay.

Gold has been an excellent bet over the last decade or so. If the west continues to print, it will be a good bet in the future. But if you think this printing will continue for long, one would do much better with a productive asset. And we all know what the most productive assets are...

:ph34r:

.

yes we do....... :)

Mining%20Pic.jpg

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Oh the oh so clever HPCers can only see gold rising ad infinitum. That wasa the sentiment of BTLers in the mid 2000s. NOTHING GOES IN A STRAIGHT LINE.

Anyway the intro is rubbish but the rest is brilliant. He has captured the main points that we need to know very well. US is in decline and China will have problems. Thus, do not expect rising and rising inflation from 2008. IN fact we are in broadly deflationary times -rising unemployment, falling HPs, falling public sector, falling asset prices (trend), falling bond yields (trend).

I disagree with those who say we are in inexorably rising inflation. That probably will come in a few yearas sbut not now. Prices in HPs and stocks and comms need to bottom first.

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Oh the oh so clever HPCers can only see gold rising ad infinitum. That wasa the sentiment of BTLers in the mid 2000s. NOTHING GOES IN A STRAIGHT LINE.

Anyway the intro is rubbish but the rest is brilliant. He has captured the main points that we need to know very well. US is in decline and China will have problems. Thus, do not expect rising and rising inflation from 2008. IN fact we are in broadly deflationary times -rising unemployment, falling HPs, falling public sector, falling asset prices (trend), falling bond yields (trend).

I disagree with those who say we are in inexorably rising inflation. That probably will come in a few years sbut not now. Prices in HPs and stocks and comms need to bottom first.

Saw a friend last night, he works for a leading outdoor clothing retailer. Due to rising wage demands in China and other factors, shirts that cost them £1.80 each to import in 2010, will be costing them £5 each by the end of 2011. Likewise, weather proof jackets that cost £100 in 2010, will be £180 by the end of 2011.

Thanks to poverty wages, China has been importing deflation for the last couple of decades, now they are importing inflation.

Oh yeah, have you bought any petrol/diesel recently? How's your gas bill? My provider nearly doubled it's rate on 1st December.

As for gold. Our faith is not blind, like that of the HPI crowd. We are long gold because of the economic conditions we now face and the disastrous policies of western governments in response to this crisis. You are talking to someone who called the top of the property market and sold his property in August 2007 for a handsome profit, before ploughing it into gold/silver for a very reasonable return so far. Meanwhile the remainder of my cash in my savings account has been losing me money.

Edited by General Congreve

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For the poor man:

Deflating real-money supply

Deflating credit supply

Increasing price for goods and services due to increased prodcution/distribution costs

The above is about the only thing that can be said with any certainty. In other words, the majority of us are going to get a lot poorer. Either a poverty of empty pockets or ones bulging with worthless fiat.

Either way, the poverty is the same.

Edited by tallguy

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For the poor man:

Deflating real-money supply

Deflating credit supply

Increasing price for goods and services due to increased prodcution/distribution costs

The above is about the only thing that can be said with any certainty. In other words, the majority of us are going to get a lot poorer. Either a poverty of empty pockets or ones bulging with worthless fiat.

Either way, the poverty is the same.

Spot on. This is all about the fact the west has been living beyond it's means coming to an end. Result, we'll be poorer, as a country anyway, personally I should be a quite a bit richer. :ph34r:

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...interesting re Obama ....NF thinks Obama should expand on his foreign visit speeches to Turkey, India etc which are restricted to telling everyone what a nice guy he is compared with 'the man before' ....and formulate and then talk about a US Foreign Policy strategy at such meetings.... :rolleyes:

PS...suggested his speeches were more like FACEBOOK entries .... :rolleyes:

Edited by South Lorne

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...interesting re Obama ....NF thinks Obama should expand on his foreign visit speeches to Turkey, India etc which are restricted to telling everyone what a nice guy he is compared with 'the man before' ....and formulate and then talk about a US Foreign Policy strategy at such meetings.... :rolleyes:

PS...suggested his speeches were more like FACEBOOK entries .... :rolleyes:

If Obama did expand his speeches to include Foreign Policy Strategy, he'd just be foaming at the mouth screaming, "ALL MUST BOW TO ISRAEL! DIE IRAN, DIE!!!!!!!!!!". Wouldn't do his good guy image much good, so I think Niall is wrong.

Edited by General Congreve

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If Obama did expand his speeches to include Foreign Policy Strategy, he'd just be foaming at the mouth screaming, "ALL MUST BOW TO ISRAEL! DIE IRAN, DIE!!!!!!!!!!". Wouldn't do his good guy image much good, so I think Niall is wrong.

...sure ...if Obama went to that extreme.... :rolleyes:

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...like the way NF pointed to small events which lead quickly ...sometimes instantaneously...to chaos , destruction and desolation in the collapse of an empire....and pointed to the withdrawal from theatres of war and major collapse...the Russian retreat from Afghanistanin '89 was followed by the collapse of the Berlin Wall in the same year accelerating the break up of the USSR..... :rolleyes:

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Hi KB,

I do like your media work, very much, and I can't remember disagreeing with your forecasts. So, don't get me wrong, I am a "fan", but if you are suggesting we watch a video 1hr 14min long perhaps you could at least give a little info about it? :)

I'm having real trouble watching this -- too slow internet connection...

Anyone able to give a resume/summary?

+ 1

Edited by Tired of Waiting

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Hi KB,

I do like your media work, very much, and I can't remember disagreeing with your forecasts. So, don't get me wrong, I am a "fan", but if you are suggesting we watch a video 1hr 14min long perhaps you could at least give a little info about it? :)

+ 1

It's from ABC in Oz, who have conveniently broken the vid into sections of a few minutes each with headlines - so clicking #11 gets you to his comments on gold.

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