maplevalue
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Posts posted by maplevalue
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Well said :-). Just look at what happened in 1970s despite the Fed obviously not desiring it. History repeats.
Nope - not the same at all. Why is gold falling if the currency is being debased?
wabuffo
I think when looking at a broader range of stores of value it is easier to see the currency debasement. Stocks/real estate being prime examples, trading cards (https://www.pwccmarketplace.com/market-indices) and fine wine (https://www.liv-ex.com/news-insights/indices/) being more esoteric examples.
On a much more speculative note I increasingly am of the mind that gold is becoming a relatively poor store of value. It is not too big of a stretch of the imagination to think asteroid mining, while somewhat fanciful at this very moment, has the potential to impact precious metals' values in a big way over the next 50 years.
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I worry we could experience a multi-year period of negative returns due to problems with inflation, rising rates and the money-out-flow negative feed-back loop that would probably be created.
What would be so bad about that? I rather Central Bank's focus on the real economy and less on boosting financial assets. If main street is doing well with higher wages, better quality of life, and less inequity while stock markets are going down, I'm perfectly okay with that. But we don't really see that anymore. We can't withstand prolonged pain in the financial markets anymore. After some signs of distress, CB's come in with their massive rate cuts and QE infinity.
I overall agree with you, one of the reasons the CBs/governments would not agree with you is because the 'common man'/'average voter' has become levered up ever since QE got going (see Canadian debt levels and real estate). Governments/central banks will do whatever it takes to try and keep these people out of a negative equity position, and will likely tolerate higher inflation.
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One of my worries is that few individual investors recognize how much stock market returns have been driven by low rates and QE. The sentiment is "investing is easy" without appreciating this HUGE tailwind. I worry we could experience a multi-year period of negative returns due to problems with inflation, rising rates and the money-out-flow negative feed-back loop that would probably be created.
This is the million dollar question for asset markets. Current prices for stocks/bonds/housing are all dramatically 'wrong' in a higher rate world, particularly one where higher rates are driven not by productive economic activity but by high government spending.
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This research paper claims in the Weimar Republic Hyperinflation started with a huge runup in stocks and increase in speculation.
Might I recommend more reading about the end of World War I....
This is a good read:
In my view, there are three reasons why hyperinflation might happen:
1) losing monetary sovereignty (ie, central govt must float debt in foreign currency that it cannot issue by fiat)
2) war - or - a government overthrow
3) the collapse of domestic industrial production.
After WWI, Weimar Germany suffered all three. Next - do the United States Federal government....
I don't know anything about Bitcoin, so I can't comment - though I fail to understand why a supposed monetary polaris would be so unstable in value.
wabuffo
I am currently reading the book Studies in Hyperinflation and Stabilization http://www.centerforfinancialstability.org/hyperinflation.php which is a collection of oldish papers examining different hyperinflations which have happened through time. The first lesson they state (page xxii) is that "We, like others, have identified the cause of hyperinflation as the substitution of [money creation] for the tax financing of government expenditures" (i.e. when instead of raising taxes to finance government spending the central bank just prints).
Now not wanting to dive into politics too much, but I think its safe to say in the US/Canada at this point there is very little appetite for the type of tax increases that would be necessary to fund the type of deficits of the past year, and are expected for the coming years. As well, the politically easy type of taxes that may be implemented (i.e. wealth taxes, tax on high income earners) will not end up generating that much revenue. With this in mind it is very easy to imagine a high inflation scenario (maybe not hyperinflation, but higher than most of us would have experienced in our lifetimes) over the next decade or so, the government keeps printing because it is the easy thing to do.
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It is mind blowing that the 10 yr T-Bill rates spiked again this morning, AFTER fed promised to keep rates low yesterday for a few more years. If fed can't stop it, then I wonder if the rates will spike really hard.
Worth remembering that the constraint on Fed's ability to control rates is inflation. All the jawboning in the world will not be able to prevent the market radically repricing the Fed's path if inflation starts showing up. M4 up ~30% YoY + economy is just about to open up + have some more stimulus coming down the pipe; a scenario that looks pretty inflationary to me.
Buckle up.
Source on M4: http://www.centerforfinancialstability.org/amfm_data.php
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This whole episode makes me thankful for the existence of a professionally managed CPP in Canada.
Sure, people may have their gripes about CPP (and them running ads), but at the end of the day having CPP as a backstop protects investors against themselves doing stupid stuff like investing in meme stocks.
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Agtech is mammoth alright but, the players in it are already well established and ingrained in it to allow newcomers any landscapeto compete it appears so, best to concede and just get to unicorn status fast and then taken out by BASF,Cargill's, Deere's, Microsofts or Nutrien's in this vast landspace at <=$1billion USD.
https://upstreamaginsights.substack.com/p/2021-digitized-acres-by-company
Agree with this. I am not an agricultural expert or anything but to me it makes sense that the equipment makers or the seed producers are probably best suited to deliver this type of technology given they have huge scale and established relationships and could runover a small Winnipeg based firm.
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New interview by Druck:
Thanks for sharing!
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300,000 dual citizens in Hong Kong must choose between Canada and China after policy change - https://nationalpost.com/news/300000-dual-citizens-in-hong-kong-must-choose-between-canada-and-china-after-policy-change
China doesn’t recognize dual nationals under its Nationality Law and Hong Kong residents of Chinese descent are regarded as Chinese citizens. The Hong Kong government has stated that residents, around 300,000 of whom hold Canadian passports, are not entitled to consular protection unless they make a declaration of change of nationality. If that process is successful, they are no longer regarded as Chinese citizens – but it may affect their right of abode in Hong Kong, which allows people to live and work in the territory without restrictions. Foreign nationals can only acquire right of abode after a seven years residency requirement, which gives them the right to vote but not hold a territorial passport or stand for office.Not an expert in this but certainly not a negative for CAD real estate.
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I heard yesterday was particularly bad with respect to outages, so your experience is unsurprising.
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FT - Moderna develops new vaccine to tackle mutant Covid strain: US drugmaker warns current jab is less effective against South African variant
Moderna is launching a trial of a new Covid-19 vaccine as the US biotech group warned that its current shot was less effective in tackling the strain that emerged in South Africa. Laboratory tests show Moderna’s Covid-19 jab still works against the variant named 501. V2, which emerged in South Africa, and B.1.1.7, which was first discovered in the UK, the company said. But it warned that the neutralising antibody response to 501. V2 was sixfold lower than to the original variant, raising concerns that immunity to it may wane significantly, particularly in older people. Stéphane Bancel, Moderna chief executive, said the company was preparing for a “worst-case scenario”, even though he had “zero concerns” about the vaccine’s efficacy in the coming months.
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On the topic of mutations/endemicness, it seems one rarely hears about mutations leading the virus to become more deadly (i.e. right now it seems like the UK variant is just more contagious). Is there a natural tendency, or a medical term for, these viruses to become more contagious/less deadly as time goes on (from an evolutionary perspective this would seem to make sense)?
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Any prefs out there that have caught your eye?
The number of very low priced prefs (i.e. has the most upside in a higher interest rates scenario) is not that big. TRP-H being one of them.
Fed can't keep the rates low
in General Discussion
Posted
Hence why I prefaced it by "on a much more speculative note" :D