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Still looking through inflation


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3 minutes ago, msi said:

If inflation hits wages > raised IRs > we are f*****

If inflation is transitory > the raised prices now, drop later on > Deflation > we are f******

Prices that consumers pay are going to shoot up in about 6 weeks 

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1 hour ago, Patfig said:

Yay more house price rises

No, I do not think so as food fuel and consumer goods go up in price house prices will go down. Oh my god i am starting to agree with this forum, 

 

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My chip pan is on fire!!.....That's ok, a little fire is a good thing.

 

It's spread, the entire kitchen is aflame..........yes well, It's more fire than expected but it's probably transitory.

 

Christ my whole house has gone up in flames.......  Good point but I'm confident the fire's reched it's peak.

 

My house has burnt down.........see, the fire's gone, everything fine....Told you so.

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20 minutes ago, HomeAlone2 said:

My chip pan is on fire!!.....That's ok, a little fire is a good thing.

 

It's spread, the entire kitchen is aflame..........yes well, It's more fire than expected but it's probably transitory.

 

Christ my whole house has gone up in flames.......  Good point but I'm confident the fire's reched it's peak.

 

My house has burnt down.........see, the fire's gone, everything fine....Told you so.

Oh your house has burnt down?  Never mind, I've got a rental you can use....

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1 hour ago, shlomo said:

No, I do not think so as food fuel and consumer goods go up in price house prices will go down. Oh my god i am starting to agree with this forum, 

 

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You have lost the faith

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On 22/07/2021 at 12:58, TheCountOfNowhere said:

More crap from the ECB today about transitory inflation.

Meanwhile the price of shelter goes to the moon.

What can be done about these criminals ?

It's just more evidence that interest rates are going nowhere, whatever happens to inflation.

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1 hour ago, simon99 said:

It's just more evidence that interest rates are going nowhere, whatever happens to inflation.

Interesting thought experiment - how does the market respond if there is no pressure on IRs?

Borrowing becomes effectively risk free - Junk or AAA is all the same now.

Zombie companies become equivalent to well run companies - no incentive to improve.  Share price driven by leverage and buybacks.

The chase for any sort of yield leads to financialisation of everything (PCP cars, AirBnB, BTL..)

 

..any more?

 

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2 hours ago, msi said:

Interesting thought experiment - how does the market respond if there is no pressure on IRs?

Borrowing becomes effectively risk free - Junk or AAA is all the same now.

Zombie companies become equivalent to well run companies - no incentive to improve.  Share price driven by leverage and buybacks.

The chase for any sort of yield leads to financialisation of everything (PCP cars, AirBnB, BTL..)

 

..any more?

 

Government lends you everyone via QE with no underwriting or security what could possibly go wrong?

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31 minutes ago, coypondboy said:

Government lends you everyone via QE with no underwriting or security what could possibly go wrong?

I was thinking more along the lines of 'how does the market take advantage of a Government pushing permanently low IRs?'

 

IRs help reflect risk - so it destroys the risk premium and the reward for being financially prudent (hence Zombie companies being equivalent to well run companies).  Junk bonds still have notional value as they are swept up by QE; this means there is a sh*t load of toxic debt that looks good on bank's balance sheets - Banks are happy to take it as they know QE will absorb it.

 

What other market distortions appear, and how would the Elites take advantage of them? 

 

 

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6 hours ago, simon99 said:

The BoE have in the past signalled rates will need to rise, then done nothing. There's even less chance now given the debt racked up.

It is less a constraining factor in the UK/BoE tandem since the UK has been selling a significant amount of debt that is indexed by CPI. 

Unlike the USA/FED. 

Inflating away the debt is actually the best course of action for western governments, the issue will be the temporary pain bright with the change of paradigm 

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On 24/07/2021 at 22:41, Freki said:

It is less a constraining factor in the UK/BoE tandem since the UK has been selling a significant amount of debt that is indexed by CPI. 

Unlike the USA/FED. 

Inflating away the debt is actually the best course of action for western governments, the issue will be the temporary pain bright with the change of paradigm 

In the case of the UK and other spendthrift nations the spending deficit will rise by more than inflation, the national debt will grow at least or exceeding inflation, trying to inflate the "old legacy" debt away won't work as it will be added to by ever increasing new debts.

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More dithering from the Fed, no change on rates, no cuts to the massive QE programme, just noises about maybe one day having to maybe slow it a bit. More noises about inflation being temporary. No sign of rates rising any time soon as usual.

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