Reply to: Is a an economic depression coming?

[ladymuck]

This is so important. It is not just individuals, airlines too... they'd usually price fix fuel purchases for the next 3-years going forward but even they are holding off during the current debacle.

If deflation really is coming in a big, spot Gold price is going to get rekt.

I think airlines are holding off because they're broke!

I see Lufthansa are after a bailout as they are now technically insolvent.

[scooterscot]

The magic money tree has been around for a long time, so while they may be busy planting new ones there will be a period of deflation where cash is king (why buy today if not urgently needed when it may be cheaper tomorrow), and only when the economy can support wage rises (i.e. not when there is the threat of mass unemployment) will inflation be used to try to tame the national debt, at which point assets rule over cash.

This could take years or longer to play out.

This is so important. It is not just individuals, airlines too... they'd usually price fix fuel purchases for the next 3-years going forward but even they are holding off during the current debacle.

If deflation really is coming in a big, spot Gold price is going to get rekt.

[Hobosapien]

spot on

there be many parallels to the late 1930's and the present day, in particular with debt. It should be clear to everyone the US Federal reserve has stated publicly there is no limit to how far they'll go - that should be a wake up call to anyone holding fiat.

Care to guess how much cash US banks are now required to keep on customer deposits? The truth might scare you.

The magic money tree has been around for a long time, so while they may be busy planting new ones there will be a period of deflation where cash is king (why buy today if not urgently needed when it may be cheaper tomorrow), and only when the economy can support wage rises (i.e. not when there is the threat of mass unemployment) will inflation be used to try to tame the national debt, at which point assets rule over cash.

This could take years or longer to play out.

[BR14]

i think basel brush is more this:




or is that dodgyRog?

[scooterscot]

My opinion is that there is nothing to indicate there will be a depression - though that doesn't rule it out.
Depressions like the one that occurred in the 1930's happened due to the collapse of the broad money supply (money/debt pairings created by banks as they offer depositors credit) after the economic over-confidence of the roaring 20's leading to the wall street crash of 1929. This caused a lot of poverty from reduced economic activity and deflation. However that was when the country (the US) was on the gold standard.
Nowadays the central banks can print narrow money (banknotes and primary bank's accounts with the Fed/Bank of England) allowing them to offset some of the deflation and generate short term boosts to the economy. However doing this won't prevent the loss of confidence leading to loss of desire to lend etc, so the recession/depression will be just as severe, only spread over a greater period of time.
Coronavirus is not an indication of a loss of confidence in the system, it's "just" a bad thing that happened. Investors are still as confident about the future relative to the current depressed market valuations as they were before the virus came along.

spot on

there be many parallels to the late 1930's and the present day, in particular with debt. It should be clear to everyone the US Federal reserve has stated publicly there is no limit to how far they'll go - that should be a wake up call to anyone holding fiat.

Care to guess how much cash US banks are now required to keep on customer deposits? The truth might scare you.

[vetran]

you mean it isn't?

Well this is the mental picture (top in posing pouch) I have of Assgoo standing next to NAT (as his eye recovers after a nasty Gimp suit accident) on the way to service the bank holiday trade for NLUK.

[vetran]

Sadly I have to agree with Assgoo a lot of people will suffer and many will feel the bite of unemployment.

I do not however take pleasure in this or get excited about abusing them so gladly I am nothing like him!

[BR14]

FTFY.

AssGoo & Old Smeg are near to claiming Blackadder was historically accurate.

you mean it isn't?

[vetran]

I bet they can hand you you ass on a plate though.

FTFY.

AssGoo & Old Smeg are near to claiming Blackadder was historically accurate.

[GJABS]

What?

[ladymuck]

I dunno about an economic depression but there's definitely the other type (not the weather one either) coming up if some things aren't relaxed

[DimPrawn]

My opinion is that there is nothing to indicate there will be a depression - though that doesn't rule it out.
Depressions like the one that occurred in the 1930's happened due to the collapse of the broad money supply (money/debt pairings created by banks as they offer depositors credit) after the economic over-confidence of the roaring 20's leading to the wall street crash of 1929. This caused a lot of poverty from reduced economic activity and deflation. However that was when the country (the US) was on the gold standard.
Nowadays the central banks can print narrow money (banknotes and primary bank's accounts with the Fed/Bank of England) allowing them to offset some of the deflation and generate short term boosts to the economy. However doing this won't prevent the loss of confidence leading to loss of desire to lend etc, so the recession/depression will be just as severe, only spread over a greater period of time.
Coronavirus is not an indication of a loss of confidence in the system, it's "just" a bad thing that happened. Investors are still as confident about the future relative to the current depressed market valuations as they were before the virus came along.

[GJABS]

My opinion is that there is nothing to indicate there will be a depression - though that doesn't rule it out.
Depressions like the one that occurred in the 1930's happened due to the collapse of the broad money supply (money/debt pairings created by banks as they offer depositors credit) after the economic over-confidence of the roaring 20's leading to the wall street crash of 1929. This caused a lot of poverty from reduced economic activity and deflation. However that was when the country (the US) was on the gold standard.
Nowadays the central banks can print narrow money (banknotes and primary bank's accounts with the Fed/Bank of England) allowing them to offset some of the deflation and generate short term boosts to the economy. However doing this won't prevent the loss of confidence leading to loss of desire to lend etc, so the recession/depression will be just as severe, only spread over a greater period of time.
Coronavirus is not an indication of a loss of confidence in the system, it's "just" a bad thing that happened. Investors are still as confident about the future relative to the current depressed market valuations as they were before the virus came along.

[BlasterBates]

This is a difficult market as staying in cash isn't necessarily going to work, with helicopter money being distributed in huge quantities with more of it to come, there could be a pick up in inflation.

You need to balance between equities cash and gold.

[Whorty]

Rambling of an unemployed lockdown alcoholic. Sad really when it happens....

You say sad, I say it's entertaining watching Sassy and his imbecilic drivel