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'Millions face hardship' as government support ends


Warlord
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The pound has already tanked, no? 

ISTM going to America when the exchange rate was 2.0+

I don't believe the pound will tank, not least because most other fiat currencies will be doing the same. Thus the net effect on exchange rates will be small.

Indeed. World stock and currency markets all work in syndicate. All related. Of course only Warlord could think that it would only be the GBP that would tank in the future. He fails to understand that money printing and low interest rates is universal the world over. He seems to think that out of all the countries in the world, it is only the UK that put these measures in place. He probably thinks that there are absolutely no problems in any other country and never will be. 

If the problems we face were all unique to the UK, Warlord would be right. The GBP would severely tank and interest rates would shoot right up. It's his inability to recognise what is happening in the interconnecting world that is his weak spot, leading to his flawed arguments. Of course I don't blame him. IIRC, he's the guy who has been taken in by Peter Schiff, and he needs the GBP to tank in order for him to justify his gold purchases. A vested interest if you like.

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Indeed. World stock and currency markets all work in syndicate. All related. Of course only Warlord could think that it would only be the GBP that would tank in the future. He fails to understand that money printing and low interest rates is universal the world over. He seems to think that out of all the countries in the world, it is only the UK that put these measures in place. He probably thinks that there are absolutely no problems in any other country and never will be. 

 

The Americans can get away with it for longer because they have the "reserve" currency of the world. We won't be so lucky. Just a matter of time that the chickens come home to roost and IR's will sky rocket .

 

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The Americans can get away with it for longer because they have the "reserve" currency of the world. We won't be so lucky. Just a matter of time that the chickens come home to roost and IR's will sky rocket .

 

You're wrong. All major world currencies are pegged these days. I think you spend too much time on zerohedge.

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The major central banks work in syndicate to keep major currencies aligned to their liking. A crash in one currency would cause a lack of confidence in the rest, which is exactly why there's such tight control of them.

They control savoury pastries?!?

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It depends if you think covid will hasten medium term deglobalisation or not

So that's why supermarket shelves are empty and people are bidding up the value of houses?

Err. They have measures for inflation. It impacts industry and stuff. Really.

So inflation is an issue now?

.

I wouldn't count on supermarkets shelves being empty as high demand, if you think  of all the businesses having to shut up shop and you will see their is a demand shock to the economy. The cinemas, pubs, restaurants and all events such as conferences, weddings etc the are postponed or cancelled. Albeit this is a forced demand shock, I wouldn't be surprised if there was some deflationary pressure on the economy coming soon.

In terms of inflation, I think its more of a red herring these days, for the last few years inflation will have probably been around d 6 or 7 % for young people (that's my estimate) but for baby boomers and the older generation it may only be 1%, if that. My point is that whilst inflation is commonly cited and used by businesses, its not a perfect metric. Official inflation figures will continue to be low.

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I wouldn't count on supermarkets shelves 

I didn't. You said we had low demand.

 

In terms of inflation, I think its more of a red herring these days, for the last few years inflation will have probably been around d 6 or 7 % for young people (that's my estimate) but for baby boomers and the older generation it may only be 1%, if that. My point is that whilst inflation is commonly cited and used by businesses, its not a perfect metric. Official inflation figures will continue to be low.

In the short to medium term, yes; longer than that and possible deglobalisation becomes an issue. But, in the short to medium term supply constraints could be a drag on the wider economy that zirp can't do anything about.

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I didn't. You said we had low demand.

In the short to medium term, yes; longer than that and possible deglobalisation becomes an issue. But, in the short to medium term supply constraints could be a drag on the wider economy that zirp can't do anything about.

We do have low demand albeit forced by lockdown and restrictions. Just to be clear even if we didn't have lockdowns and restrictions demand would still have been lower as people would've just become more scared to leave there home. 

In regards to your second point, possibly but it won't happen anytime soon. Supply chains in the far East are still intact. European countries and the US will have a tough time reversing globalisation as it will mean more expensive goods, if you even look at Trump and his trade wars, they haven't actually done a lot to reverse the trend of globalisation.

Automation and technological advancement may be the only way we can somewhat reverse globalisation but it'll be a long process.

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TBH there are always extremes.

Sure, someone who had stacks of money and didn't invest a cent into property 10 years ago would have missed out on quite a lot of gains.

But without knowing what else they had done with the cash it is impossible to say whether that was a bad decision or not. Renting wouldn't be bad if they were compounding their money in a business, for instance.

Similarly I know people who got on the property ladder in London in 2016 and over-leveraged using the props. Their deposit has pretty much been wiped out, it's just that they don't know it yet. I would feel far more sorry for them than someone who missed the equity gains - realistically the hit is double for them. The value of their property has gone down and could go down further, and on the other side of the coin they will be unable to take advantage should the market deliver a temporarily good opportunity.

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We do have low demand albeit forced by lockdown and restrictions. Just to be clear even if we didn't have lockdowns and restrictions demand would still have been lower as people would've just become more scared to leave there home. 

In regards to your second point, possibly but it won't happen anytime soon. Supply chains in the far East are still intact. European countries and the US will have a tough time reversing globalisation as it will mean more expensive goods, if you even look at Trump and his trade wars, they haven't actually done a lot to reverse the trend of globalisation.

Automation and technological advancement may be the only way we can somewhat reverse globalisation but it'll be a long process.

I'm not saying globalisation should be reversed but I think there is some  social and political pressure to do so. I suppose it may or may not happen. It's an interesting debate as to whether that will happen. Huawei for example.

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If the problems we face were all unique to the UK, Warlord would be right. The GBP would severely tank and interest rates would shoot right up. It's his inability to recognise what is happening in the interconnecting world that is his weak spot, leading to his flawed arguments. Of course I don't blame him. IIRC, he's the guy who has been taken in by Peter Schiff, and he needs the GBP to tank in order for him to justify his gold purchases. A vested interest if you like.

Gold near historic highs against the £ , it's a great hedge. You should definitely hold some yourself.

Schiff has not taken anyone in; it's just a philosophy and strategy.

 

 

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We will see rampant inflation and a financial crisis maybe not right now but at some point in the future.

Gov't can't just carry on borrowing beyond its means or printing money without consequence. Sooner or later the chickens will come home to roost and sadly the poorest or those families on marginal incomes will feel it the most through taxes and inflation.  This is in addition to the economic calamity of the lockdowns and the jobs and businesses lost. 

 

The so called ''poorest'' have just been given a nice little £1,000 covid bonus to the UC they receive (I'll be extremely surprised if it doesn't become permanent)... I'm not sure how covid has impacted on their ability to sit at home breeding.

As ever, the people who will be most effected by increased taxation will be the full time working, non-benefit claiming PAYE working/lower middle classes.

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We will see rampant inflation and a financial crisis maybe not right now but at some point in the future.

Gov't can't just carry on borrowing beyond its means or printing money without consequence. Sooner or later the chickens will come home to roost and sadly the poorest or those families on marginal incomes will feel it the most through taxes and inflation.  This is in addition to the economic calamity of the lockdowns and the jobs and businesses lost. 

 

Agreed. We will also see a major war, pandemic, nuclear accident, fusion power and the end of humanity at some point in the future.....

I guess you're saying the seeds for inflation and a financial crisis are being sewn now though?

I think we'll see some measure of austerity (proper austerity not that nonsense the left winged on about) and tax rises down the road. I'm seriously considering a pay increasing role change at work simply to pass the payrise into my pension since I think the £40k @ 40% relief will disappear.  

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Indeed certain industries do not have real supply constraints (software, media) since the marginal cost of production is nil.

Human time is the most expensive commodity.

Those industries also require creativity as an input. They have run out of that, hence why all mass media is total shite.

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You can huddle in the corner, starving and swaddled in tattered rags, with your stack of £20's muttering over and over "Cable still at 1.3. Cable still at 1.3"

How much was a cup of coffee in Weimar?

If the virus was contained to just a few countries, they were continually printing cash to cover their obligations, and citizens lost faith in governments, sure I could see a similar trajectory.

But it doesn't seem to be the case does it? Many countries are printing, it isn't just here and the US. Most governments will choose that way out as short-term the benefits are all there.

Exchange rates could go parabolic against countries that have managed better, or alternatively harder assets which have a modicum of liquidity. I feel the latter is more likely due to the inter-connected nature of economies today.

I do think we'll have a much weaker currency in future, but the effect will not be that perceptible to Joe Public. After all, if exchange rates in EUR/USD are similar or better allowing them to take holidays, and house prices are 2% higher than they are now in 5 years, all is sweet isn't it?

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