Best investment while we travel

[redneckrob]

Originally Posted by a64pilot

The funny thing is I’ve pegged every “correction” we have had for the last 30 yrs or so, but every time I’ve been early with it, in the housing case eight years early. Things run for years longer than I expect.
The company I Retired from, I retired because I was certain that it was going to go under literally any day, but it somehow stayed afloat for two years and didn’t file for Chapter 11 until I believe last month.
Apparently it goes on the auction block in a week or so. I didn’t expect it to be auctioned either.

Anyway I don’t see any way out of our global economic issue except for a correction.
You drop interest rates to stimulate, but if your at zero or near it, how do you stimulate then? Negative interest I assume, and that’s completely nonsensical.
Being paid to owe money? How well is that going to work?

As Keynes said “Markets can stay irrational longer than you can stay solvent.” I too have predicted 5 of the last 3 recessions!

[daletournier]

Originally Posted by redneckrob

Was very specifically what I was referring to. And that's a nonsense statement, which presumably you now agree with given that you've disavowed typing it!

It is a bit of a bizarre argument to claim at the same time decry interest rates heading toward zero and "fiat" currencies as always heading toward zero value, since those are opposite sides of the coin. In a high inflation/high interest world a currency loses value more rapidly than in a low inflation/low interest world. If inflation was zero then interest rates would be near zero and "fiat" currencies would lose value more slowly. If you actually had deflation, which is universally accepted as disastrous to economies, then "fiat" currencies would increase in value. So I'm really unclear here, is it the devaluation of "fiat" currencies you're against or low interest rates you're against, because it makes no sense to rail against them both simultaneously from a basic macro econ perspective. I personally think decreasing interest rates are more of a danger than runaway inflation at this point in our history, but it's pretty important to grasp that that's the opposite of currency devaluation in order to intelligently discuss it.

By the way, every currency is a "fiat" currency since Bretton Woods ended. The term is certainly in wide use among the gold-bug type anti-central bank conspiracy theorists as a way to make currency somehow sound illegitimate. Since it's the only kind of currency in existence, unless you're writing a historical treatise on gold backed currency versus modern currency you'd generally only use the deragoty "fiat" if you were trying to make a point or simply like being redundant, like I said we simply call it "currency" because that's what it all is.

As I cant see what you wrote as I type (phone app) I'll do my best to answer.

Your right "your very unclear". I certainly didnt prove you right or contradict myself , you just chose to see it the way you wanted to.

Your definition of inflation and deflation are correct unfortunately I disagree with how inflation is measured, ask the average guy on the street if the world is getting cheaper! Asset inflation definitely exists. Our currencies are losing purchasing power while interest rates are going down, this may not be text book but it's real.

If asset prices were taken into the inflation formulas I think we would have a more realistic picture of what's happening. Go ask a millenial that wants to buy house if they've got cheaper, let's compare house prices to income now vs 30 years ago, let's look at electricity bill's back home in oz..etc etc.

I agree the world is trying to deflate, this is very normal after a credit fueled boom and your right, deflation is very much the enemy of a financial system based on fractional banking thus the massive stimulus which is keeping deflation at bay while driving up asset prices, and this is why I believe central banks are trapped. Theres desperation in trying to keep the wealth effect going.

Low interest rates are completely necessary in order to service a debt written society and to keep the credit taps open, if serviceability is lost deflation will take hold, unfortunately the cheap money keeps driving more indebtedness etc up, checkmate.

No argument regarding post Bretton woods.

Regarding gold bugs as you put it, I hold some , wish I had of bought more as it's up 35% in Aud over the last 12 mths, so maybe those Gold bugs arent so dumb after all.

Its an emotional subject because theres alot at stake, this is obvious when you use words like "nonsense "

[daletournier]

Also not against or fore the devaluation of currencies, never said that, I said that fiat currencies not being backed by anything other than faith are abused and do lose their value, history shows that ,although you disagree.

I dont ask you to believe this, that's your choice, I'm just repeating what I've read which includes a variety of sources over the years.

[daletournier]

Originally Posted by redneckrob

As Keynes said “Markets can stay irrational longer than you can stay solvent.” I too have predicted 5 of the last 3 recessions!

Hes definitely right, and there lies the problem with timing.

[daletournier]

Originally Posted by redneckrob

Companies are different than currency, that's not at all my point. My point was that the statement "history shows all X eventually return to their inherent value....zero" is logically flawed in that it's trying to claim that because some examples of X have failed in the past, then despite lots of examples of X that are still alive and doing well the entire concept of X is flawed. Obviously that's not the case because you can substitute lots of things in for X (companies, countries....) and see that the logic isn't sound. That's the entirely of my point. Either that or it's just a pointless statement, in which case I guess probably better left unsaid.

No, you introduced companies to the discussion and I agree they are completely different from currencies therefore it was illogical to compare them, even if you some how tried to make the connection by throwing in a X!

Explain to me why interest rates are so low and sinking around the world, why is this? Why are asset prices ,houses ,stocks bonds so high?

[redneckrob]

Originally Posted by daletournier

No, you introduced companies to the discussion and I agree they are completely different from currencies therefore it was illogical to compare them, even if you some how tried to make the connection by throwing in a X!

Explain to me why interest rates are so low and sinking around the world, why is this? Why are asset prices ,houses ,stocks bonds so high?

It won't be possible to continue this discussion about basic logic without being insulting, so let's just say that there's no more inevitability to all "fiat" currencies failing than all of anything else failing based on history alone and leave it at that.

Here in the U.S. we measure inflation via the consumer price index (CPI). The Bureau of Labor and Statistics has a whole army of folks who calculate this in excruciating detail via a methods compiled in a completely open published Handbook of Methods which you can read at https://www.bls.gov/opub/hom/pdf/cpihom.pdf CPI is showing very low inflation and has for quite some time. If there is a specific methodology in the Handbook that you disagree with, it would be appropriate to bring up that specific methodology. However if we're talking about comparing a person's gut feeling about inflation to a very methodical, detailed measure I'll go with the latter every time. I actually do some work with the Handbook, so seriously if there's a specific methodology you have questions about I'm happy to talk about them.
Unfortunately I'm not nearly as familiar with the Australian measure of CPI, so I'd have to defer to someone with more expertise in that, although it appears they have an equally detailed methodology along with a similar army of folks who spend all day every day doing nothing but measuring it https://www.abs.gov.au/ausstats/abs@.nsf/mf/6461.0

A final note; stocks prices aren't a measure of inflation in any version of macro economics, and it might be worth a refresher on how bond pricing works. Housing prices are part of CPI, start on page 16 of the U.S. Handbook to see if you see any holes in the methodology.

[daletournier]

No problem. I realise stock prices and bond prices have nothing to do with measuring inflation, without reading back through what I wrote I must not of worded it well or separated what I was trying to say well enough.

I thought house prices were left out of the inflation measurements?

I dont think they are taken into account in Australia.

https://mobile.abc.net.au/news/2017-...ousing/8457718

[pt49]

Australia has not had a recession for decades... due to us fueling Chinese growth with raw products, and building houses in Australia.

The 2 major industries in Oz are digging holes and building houses.

The former is entirely dependent on the growth of the middle class in China, and the latter is entirely dependent on continued immigration of foreigners into the Land of Oz.

On "FIAT" currencies, while there're hundreds in our world, they all live or die on what happens with the USD... so there's really only one real fiat currency that matters.

Can it be replaced? Absolutely it can.
Will it be replaced? Absolutely it will be.
... but when, and what with?

[daletournier]

At the risk of getting insulted I had a quick search regarding the measurement of inflation . I dont wish to argue, discuss or ignore the post is preferred.

There seems to be quite some controversy around how inflation is measured and how the way its measured has changed over the years, many times I should add. Theres quite a few economists (and non economists ) that question the current model.
Here is just just one article :

https://forbeswealthblog.ca/2018/06/...n-rates-a-lie/

theres many more if one wishes to look, apparently I'm not the only one that feels life is more expensive than we are led to believe.

An economist John William's from Shadow statistics argues that the cpi should be measured as it was in the 1980's as this would show that current inflation figures are very conservative.

http://www.shadowstats.com

Once again I'm not trying to argue, in fact the previous conversation has motivated me to look into these topics more, and that includes fiat currencies going to zero in history.

I dont work and dont intend to go back to work thus money interests me

[daletournier]

Originally Posted by pt49

Australia has not had a recession for decades... due to us fueling Chinese growth with raw products, and building houses in Australia.

The 2 major industries in Oz are digging holes and building houses.

The former is entirely dependent on the growth of the middle class in China, and the latter is entirely dependent on continued immigration of foreigners into the Land of Oz.

On "FIAT" currencies, while there're hundreds in our world, they all live or die on what happens with the USD... so there's really only one real fiat currency that matters.

Can it be replaced? Absolutely it can.
Will it be replaced? Absolutely it will be.
... but when, and what with?

Empires come and go and with it their currencies or status of the currency. I'm not suggesting that usd is on the verge of this..

[tsell]

Originally Posted by pickpaul

Ha! My bad. It does however raise the point that with bitcoin I could send 2/10ths of 1 US penny anywhere in the world instantly. It would still cost less than a penny with transaction fee included. Try that with paypal or western union :-)

Just to clarify: .02 is 2/100. .2 is 2/10.

cent =100.
2 cents ==2/100

Now back to our regularly scheduled program........

[a64pilot]

Originally Posted by pt49

On "FIAT" currencies, while there're hundreds in our world, they all live or die on what happens with the USD... so there's really only one real fiat currency that matters.

That is one prediction that I missed.
I really expected there to be a “Petro Dollar” that would become the Worlds basis for currencies that would have come into existence probably two decades ago.
Obviously that didn’t happen

[wolfgal]

am following with interest...

thank you, Dale, for the effort you are putting into this thread


wolfie

[daletournier]

Theres a guy called Jim Rickards that discusses the future of the usd as well as the world economy in general. He believes the Sdr ( IMF special drawing rights) could be the future reserve currency.

The guys no fool and always backs up what he says.

https://www.businessinsider.com/the-...urrency-2016-9

[a64pilot]

Bingo, I figure the day a barrel of oil is priced in something other than the US dollar, the US is in trouble.