AuthorTopic: Hyperinflation or Deflation?  (Read 138940 times)

Offline moniker

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Re: Hyperinflation or Deflation?
« Reply #705 on: December 30, 2019, 04:58:04 PM »
If you want to work in the Trades, you need to do it on your own, on the sly, under the Radar and work for CASH.  If I was a healthy young man say in my 30s again, that is what I would be doing.  I am a fine Electrician and an OK Plumber and Carpenter.  Any typical problem I can fix (or could if my fucking right arm wasn't such a mess)

I also do good GHOSTBUSTING online in Cyber Space.  lol  For this, I don't need a good right arm, just a KNOWLEDGE of Gaming.  I would warrant I am the only Master class Chess Player in our Clan.  I can beat most anyone playing that game.  Not Kasparov though of course, or Big Blue, the IBM Supercomputer that went up against him.  Just ask Eddie.  He played against me.  Exactly once.  lol.  I think it took about 17 moves to crush him.  lol.

RE
I'll have to take a rain check on the chess game, I'm working at a frenetic pace all almost all the time now. Besides, I'm a sore looser.  :(

Offline Nearingsfault

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Re: Hyperinflation or Deflation?
« Reply #706 on: December 30, 2019, 06:25:54 PM »
Happy Holidays to all you doomers out there. I do not know or assume I can time the financial collapse of our intersecting bubbles but I've been following along this thread with great interest. Trades were mentioned though... Automation and industrial production is affecting trades a great deal. The robots and AI are in the factories making the components. Doors are all pre hung and with lots of tolerances for unskilled install. There are power lifts on every major site now for everything from shingles to drywall no more doing your time in trade grunting it. Factory framed buildings are being pre wired and pre plumbed by factory labour then checked over by a single licensed trades person. I visited a friend in one such place as the machine placed a 40 ft section of wall studs via pneumatic robotic arm and a pneumatic press held it all tight and square...  A brave new world.
I don't think Automation is coming for my skill sets any time soon. I do like a little diversity of skills.  For the cookie cutter new builds and trade specialists its anything goes.

Cheers...
If its important then try something, fail, disect, learn from it, try again, and again and again until it kills you or you succeed.

Offline John of Wallan

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Re: Hyperinflation or Deflation?
« Reply #707 on: December 30, 2019, 09:07:20 PM »
Happy Holidays to all you doomers out there. I do not know or assume I can time the financial collapse of our intersecting bubbles but I've been following along this thread with great interest. Trades were mentioned though... Automation and industrial production is affecting trades a great deal. The robots and AI are in the factories making the components. Doors are all pre hung and with lots of tolerances for unskilled install. There are power lifts on every major site now for everything from shingles to drywall no more doing your time in trade grunting it. Factory framed buildings are being pre wired and pre plumbed by factory labour then checked over by a single licensed trades person. I visited a friend in one such place as the machine placed a 40 ft section of wall studs via pneumatic robotic arm and a pneumatic press held it all tight and square...  A brave new world.
I don't think Automation is coming for my skill sets any time soon. I do like a little diversity of skills.  For the cookie cutter new builds and trade specialists its anything goes.

Cheers...

Automation is expensive to set up and only works with cheal abundant energy (Mainly oil).
Once we run out of cheap abundant energy we cant mass produce anything big centrally and cheaply distribute.
Everything has to be made or sourced local. (Including food, medical and dental, building materials etc.)
Local often means by hand. There will not be a robotic framer in every town making house frames, and you cant transport it around if you dont have trucks because you dont have oil, or because highways and bridges deteriorate, or because grid power is not reliably available, or because complex spare parts are not available as international shipping has become unreliable etc... Complexity= fragility..
Think back 150 years: Nails were shipped on horse back from a capitol intensive factory, but timber was usually sourced locally if possible for housing.

Everything was relatively expensive pre-industrial age, hence everyones standard of living was lower. Cheap energy and resulting cheap resouces led to deflation which made goods more affordable. Think model T ford. Every year of production for quite a few years the prices went down.

Ecconomic crash will eventually result in oil shortage when money losing frackers finally go broke. Initially it may result in cheap oil as demand crashes. (Deflationary)
Central banks will panic and print like there is no tomorrow. When demand eventually increases oil shortage will then cause an inflationary spike, and reduces production of goods. When more and more money starts chasing less and less goods we get hyper-inflation.

First Deflation then Inflation, then Hyper-inflation..
5 to 10 years max.

JOW

Offline AJ

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Re: Hyperinflation or Deflation?
« Reply #708 on: December 31, 2019, 03:14:24 AM »
c... Complexity= fragility..

Everything was relatively expensive pre-industrial age, hence everyones standard of living was lower.

JOW

I personally think that no one knows how fragile we are, ala Korowicz. We were almost there in 2008. As much as I despise Bernanke, Geithner, & Paulson, they saved the "system" for one more blow of the bubble. The whole charade was imploding in 2008 and they saved it. Sadly Obama didn't prosecute any of the guilty and hence we have Trump. Trump has only made the system more fragile. Once it breaks it will not reassemble except at a MUCH lower standard of living.
AJ
Nullis in Verba

Offline RE

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Re: Hyperinflation or Deflation?
« Reply #709 on: December 31, 2019, 03:16:55 AM »
First Deflation then Inflation, then Hyper-inflation..
5 to 10 years max.

JOW

That's a reasonable Nostradamus Prediction, but we all do have to live long enough to see if it plays out that way.  I do not rate my odds of living another decade too highly.

RE
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Offline Nearingsfault

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Re: Hyperinflation or Deflation?
« Reply #710 on: December 31, 2019, 04:44:57 AM »
Happy Holidays to all you doomers out there. I do not know or assume I can time the financial collapse of our intersecting bubbles but I've been following along this thread with great interest. Trades were mentioned though... Automation and industrial production is affecting trades a great deal. The robots and AI are in the factories making the components. Doors are all pre hung and with lots of tolerances for unskilled install. There are power lifts on every major site now for everything from shingles to drywall no more doing your time in trade grunting it. Factory framed buildings are being pre wired and pre plumbed by factory labour then checked over by a single licensed trades person. I visited a friend in one such place as the machine placed a 40 ft section of wall studs via pneumatic robotic arm and a pneumatic press held it all tight and square...  A brave new world.
I don't think Automation is coming for my skill sets any time soon. I do like a little diversity of skills.  For the cookie cutter new builds and trade specialists its anything goes.

Cheers...

Automation is expensive to set up and only works with cheal abundant energy (Mainly oil).
Once we run out of cheap abundant energy we cant mass produce anything big centrally and cheaply distribute.
Everything has to be made or sourced local. (Including food, medical and dental, building materials etc.)
Local often means by hand. There will not be a robotic framer in every town making house frames, and you cant transport it around if you dont have trucks because you dont have oil, or because highways and bridges deteriorate, or because grid power is not reliably available, or because complex spare parts are not available as international shipping has become unreliable etc... Complexity= fragility..
Think back 150 years: Nails were shipped on horse back from a capitol intensive factory, but timber was usually sourced locally if possible for housing.

Everything was relatively expensive pre-industrial age, hence everyones standard of living was lower. Cheap energy and resulting cheap resouces led to deflation which made goods more affordable. Think model T ford. Every year of production for quite a few years the prices went down.

Ecconomic crash will eventually result in oil shortage when money losing frackers finally go broke. Initially it may result in cheap oil as demand crashes. (Deflationary)
Central banks will panic and print like there is no tomorrow. When demand eventually increases oil shortage will then cause an inflationary spike, and reduces production of goods. When more and more money starts chasing less and less goods we get hyper-inflation.

First Deflation then Inflation, then Hyper-inflation..
5 to 10 years max.

JOW
I fully agree with all of that... at some point yet to be determined in the future. Meanwhile one must live in the world that is while preparing for the world that will be. One fault I have of the doomer world is it seems to trend older. Like many people doomers seem unable to imagine the status quo outliving them so of course everything is going to crash in their lifetime. I am 51 right now with young kids. At least 15-20 years of providing left in me. Yes it might end but meanwhile I must stay economically relevant.
If its important then try something, fail, disect, learn from it, try again, and again and again until it kills you or you succeed.

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Re: Hyperinflation or Deflation?
« Reply #711 on: December 31, 2019, 06:16:50 AM »
c... Complexity= fragility..

Everything was relatively expensive pre-industrial age, hence everyones standard of living was lower.

JOW

I personally think that no one knows how fragile we are, ala Korowicz. We were almost there in 2008. As much as I despise Bernanke, Geithner, & Paulson, they saved the "system" for one more blow of the bubble. The whole charade was imploding in 2008 and they saved it. Sadly Obama didn't prosecute any of the guilty and hence we have Trump. Trump has only made the system more fragile. Once it breaks it will not reassemble except at a MUCH lower standard of living.
AJ

Both points correct, in my view. At some point in the future, the average American standard of living will be that of the average Estonian. Think a 60 per cent reduction, by, as JOW suggests, everything becoming far more expensive.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

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Re: Hyperinflation or Deflation?
« Reply #712 on: December 31, 2019, 02:40:29 PM »
c... Complexity= fragility..

Everything was relatively expensive pre-industrial age, hence everyones standard of living was lower.

JOW

I personally think that no one knows how fragile we are, ala Korowicz. We were almost there in 2008. As much as I despise Bernanke, Geithner, & Paulson, they saved the "system" for one more blow of the bubble. The whole charade was imploding in 2008 and they saved it. Sadly Obama didn't prosecute any of the guilty and hence we have Trump. Trump has only made the system more fragile. Once it breaks it will not reassemble except at a MUCH lower standard of living.
AJ

Both points correct, in my view. At some point in the future, the average American standard of living will be that of the average Estonian. Think a 60 per cent reduction, by, as JOW suggests, everything becoming far more expensive.
I think it will be more at the level of the average ancient Etruscan (which is considerably lower than modern Estonians).
AJ
Nullis in Verba

Offline John of Wallan

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Re: Hyperinflation or Deflation?
« Reply #713 on: December 31, 2019, 06:01:46 PM »
Happy Holidays to all you doomers out there. I do not know or assume I can time the financial collapse of our intersecting bubbles but I've been following along this thread with great interest. Trades were mentioned though... Automation and industrial production is affecting trades a great deal. The robots and AI are in the factories making the components. Doors are all pre hung and with lots of tolerances for unskilled install. There are power lifts on every major site now for everything from shingles to drywall no more doing your time in trade grunting it. Factory framed buildings are being pre wired and pre plumbed by factory labour then checked over by a single licensed trades person. I visited a friend in one such place as the machine placed a 40 ft section of wall studs via pneumatic robotic arm and a pneumatic press held it all tight and square...  A brave new world.
I don't think Automation is coming for my skill sets any time soon. I do like a little diversity of skills.  For the cookie cutter new builds and trade specialists its anything goes.

Cheers...

Automation is expensive to set up and only works with cheal abundant energy (Mainly oil).
Once we run out of cheap abundant energy we cant mass produce anything big centrally and cheaply distribute.
Everything has to be made or sourced local. (Including food, medical and dental, building materials etc.)
Local often means by hand. There will not be a robotic framer in every town making house frames, and you cant transport it around if you dont have trucks because you dont have oil, or because highways and bridges deteriorate, or because grid power is not reliably available, or because complex spare parts are not available as international shipping has become unreliable etc... Complexity= fragility..
Think back 150 years: Nails were shipped on horse back from a capitol intensive factory, but timber was usually sourced locally if possible for housing.

Everything was relatively expensive pre-industrial age, hence everyones standard of living was lower. Cheap energy and resulting cheap resouces led to deflation which made goods more affordable. Think model T ford. Every year of production for quite a few years the prices went down.

Ecconomic crash will eventually result in oil shortage when money losing frackers finally go broke. Initially it may result in cheap oil as demand crashes. (Deflationary)
Central banks will panic and print like there is no tomorrow. When demand eventually increases oil shortage will then cause an inflationary spike, and reduces production of goods. When more and more money starts chasing less and less goods we get hyper-inflation.

First Deflation then Inflation, then Hyper-inflation..
5 to 10 years max.

JOW
I fully agree with all of that... at some point yet to be determined in the future. Meanwhile one must live in the world that is while preparing for the world that will be. One fault I have of the doomer world is it seems to trend older. Like many people doomers seem unable to imagine the status quo outliving them so of course everything is going to crash in their lifetime. I am 51 right now with young kids. At least 15-20 years of providing left in me. Yes it might end but meanwhile I must stay economically relevant.

AJ,
Keep an eye on the future, but dont expect it to be like the past. Just because I see trouble ahead does not mean I want to bring it on. I really do hope I am wrong. Hope for the best, but prepare for the worst.

Ecconomic collapse seems very close, let alone biosphere collapse some areas are already experiencing. (Check out the fires here in Oz). Economically relevant obviously means different things to different people. Irrational stock market euphoria, housing price bubbles, low interest rates and money printing all seem like short term issues to me. I suppose my lifetime is short term in the scheme of things.

If you think the status quo can go on for a while yet give me a timeframe, a destination and a pathway of how we get to the future utopia/ distopia. Star Trek or Mad Max.. I cant see how Governemnts can run deficits forever. Forever is a long time....

10 Years seems optomistic to me, but I am now erring on the long side, as most of my predictions seem to be 5 to 10 years too early, I I thought we would be much deeper in the shit by now.. (10 Years is nothing inthe scheme of things really) Having said that, the fact we are all communication on the web with computers already puts us in a pretty high ivory tower with silver spoons in our mouths to start with... Collapse has already started for the homeless, the displaced, the hungry, the people in fire zones and those in flood zones around the world.

I am turning 50 soon. Cant see this status quo lasting until I am in my 60's, let alone 70's or 80's.... If it does, excellent! Gives me more time to prepare a lifeboat for the next generation. Putting in trees, gardens, water tanks, accumulating tools and knowledge. If just one of my trees lives 100 years, I am sure it would have benefited many people and/or animals in that time, either for food, shelter or even just fire wood. I am thinking of the next generation, just not like you are perhaps.  :-*

JOW

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Re: Hyperinflation or Deflation?
« Reply #714 on: January 01, 2020, 05:13:48 AM »
At some point in the future, the average American standard of living will be that of the average Estonian. Think a 60 per cent reduction, by, as JOW suggests, everything becoming far more expensive.
I think it will be more at the level of the average ancient Etruscan (which is considerably lower than modern Estonians).
AJ

But with better pottery.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

Offline RE

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📉 Signs That A Recession Is Imminent
« Reply #715 on: January 06, 2020, 04:03:48 PM »
NEWZ FLASH!  It's already here!

RE

https://seekingalpha.com/article/4315242-signs-recession-is-imminent

Today's Market | Market Outlook
Signs That A Recession Is Imminent
Jan. 5, 2020 6:49 AM ET|


A corporate profit recession is imminent.

This has important implications for the U.S. economic and stock market outlook.

Key indicators suggest that profits will continue to move in the wrong direction.

This idea was discussed in more depth with members of my private investing community, Global Macro Research. Get started today

A recession is imminent. It has been more than a decade since the U.S. economy emerged from the Great Recession brought on by the Financial Crisis. And all signs suggest that the longest economic expansion in U.S. history is set to continue running at least for the time being. But the same cannot be said for corporate earnings, which is threatening to fall into recession in 2020 for the first time since late 2016. This has important fundamental implications for investors over the coming year.

So what if corporate earnings fall into recession? A decline in business profit growth typically bodes ill for the broader U.S. economy. While corporate earnings growth has receded in the past with the U.S. economy and its stock market continuing to rise - most recently in 2015-16 - frequently a decline in profit growth will lead the onset of an economic recession and bear market by as much as nine months to a year. And even if stocks can continue to rise, a decline in profit growth will make stocks that are already at post crisis high valuations even more expensive, thus increasing the potential for higher volatility and downside risk even further going forward. Put simply, it matters a lot.

Corporate earnings are still hanging in there. Corporate earnings growth remains positive, at least for the moment. Although quarterly earnings fell by nearly -4% on an operating basis and more than -6% on a GAAP basis, annualized corporate earnings still increased by nearly +2% on both measures in the most recently completed reporting season for 2019 Q3. And with forecasted quarterly earnings projected to resume their robust growth in 2019 Q4 and through 2020, annualized earnings growth is estimated to reaccelerate back to double-digit expansion by this time next year.

Not so fast. While the latest consensus analyst forecasts are encouraging, they are notoriously optimistic. And when considering the underlying data, recent trends have been driving hard in the wrong direction.

By some measures, corporate earnings are practically in recession already. While still positive on a reported basis, annualized corporate profits actually first turned negative by -2.9% on a tax return basis with inventory valuation (IVA) and capital consumption adjustments (CCAdj) according to the national income and product accounts (NIPA) all the way back in 2019 Q1. After flipping positive in Q2 at +1.3%, NIPA profits flipped back to the negative in Q3 at -0.3%.

Key economic indicators also suggest further deterioration, not a rebound.

Consider private nonresidential fixed investment, which has been highly correlated with corporate profits dating back to the end of World War II. This annualized growth in corporate expenditures on capital such as commercial real estate, tools, machinery, and factories has been trending definitively lower since peaking in mid-2018.

Consider industrial production, which is similarly correlated dating back to the early 1970s. This reading first turned negative back in July and continues to trend in the wrong direction.

Consider durable goods and capital goods orders, both of which have been moving in lockstep with corporate earnings since the early 1990s. Annual growth in these readings faded into negative territory as early as last spring.

These are a few of many readings heading south for corporate profits. Others include the US Leading Economic Indicators, manufacturing and trade revenues, global exports, and the Institute for Supply Management (ISM) indices just to name a few.

All of this poses a considerable risk for stocks in the year ahead. Perhaps corporate earnings will achieve the sudden reacceleration that is currently being forecasted. If so, it requires many of its highly correlated economic indicators to miraculously reverse course and do the same. This is a very tall order even if a trade agreement with China is reached in the near future. And the recent escalation in geopolitical risks further complicates this outcome.

Set up for disappointment. Overall, the outlook for corporate earnings is decidedly different than what the market is currently expecting, which may result in a variety of unpleasant downside jolts in selected stock names that disappoint as we enter into 2019 Q4 earnings season.

The bigger risk is economic. If the U.S. economy starts edging toward recession, stock buybacks will be at risk. And if stock buybacks start to decelerate, watch out below in the U.S. stock market.

Fed stimulus is still on the side of investors. The one source of comfort for investors is the knowledge that the Fed will come running with rate cuts and balance sheet expansion at the first sign of trouble. Count on it. But as we saw throughout the bursting of the tech bubble and the onset of the financial crisis, there is only so much the Fed can do if and when the snowball gets rolling downhill.

Watch key economic indicators and earnings in the weeks ahead. The U.S. economy and its stock bull market remain intact. But if key economic indicators continue to deteriorate and 2019 Q4 earnings season comes in less than expected, it may be time to start thinking about dialing back portfolio risk exposures to the stock market. Stay tuned.

Try Global Macro Research and join our discussion about contrarian value opportunities in today's capital markets.

Disclosure: I am/we are long USMV, PSLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long selected individual stocks as part of a broad asset allocation strategy.

Disclosure: This article is for information purposes only. There are risks involved with investing including loss of principal. Gerring Capital Partners and Global Macro Research makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Gerring Capital Partners and Global Macro Research will be met.

 

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Corporate earnings before tax actually peaked in 2014. EPS has grown only due to the deficit-expanding tax cut and often debt-financed stock buybacks. So naturally price/book, price/sales, EV/EBITDA, and others measures have soared through the roof. Right now the S&P 500 trades for over 24 times trailing GAAP earnings. If EPS falls, I expect it to trade well north of 30 as the Fed prints more trillions to prevent a single downtick in the S&P 500.

I must say I thoroughly enjoy speculators taunting people for telling it like it is. Many of these speculators probably think they're the Maverick/Top Gun of the markets, not realizing the Fed has totally underwritten their gains for the past decade. It is indeed an easy game when it's rigged in your favor. But you can't call it investing - it's more accurate to call it speculation on never-ending Fed rigging. Investors care about fundamentals - speculators do not.

People that were in the markets before asset prices were nationalized in 2009 are naturally more cautious due to alarmingly high and ever-growing valuations. Those starting in the markets since 2009 have no doubt developed a superiority complex and believe it's natural for stocks to go diagonal up in perpetuity.
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