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  1. #821
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    Quote Originally Posted by suntan View Post
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    Nah we receive money now so confederation is now the greatest thing ever.
    this doesn't fit my anrrative.
    Silly people focus on the math.

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    Quote Originally Posted by suntan View Post
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    Well kiddies bond yields are creeping up as debt loads skyrocket and lenders are starting to wonder if governments can pay back their obligations.

    Thing is they've only gone up a bit, problem being they went up a bit real fast and whole parts of economies are still shuttered. So next step is even higher bond yields. Stock market certainly thinks so.

    Bond prices are falling as a result. If you have cash hold onto it, let's see if you can start getting GICs that pay out at 7% again.

    It's been a while since M0 was expanded as much as it has been, so the real value of money has also tanked.

    Good jorb everybody!
    wil hyper inflation occur even with massive interest rate hikes?

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    Quote Originally Posted by revelations View Post
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    wil hyper inflation occur even with massive interest rate hikes?
    I think I told you this before, but you REALLY need to take a macro-econ course.

    I was going to write a helpful gigantic wall of text of what inflation is, but nah. Go take a course.

    But obviously, yes, hyperinflation in the prices of goods and services - which I assume is what you're referring to when you say "hyperinflation" - can occur with interest rate hikes. In fact, that's often what the end result of interest rate hikes is.

    Often it goes like this:

    - Idiot gov't decides it needs to print money.
    - Central bank prints money. This expands M0. LOOK UP WHAT M0 (M-ZERO, NOT M-THE LETTER O) IS.
    - Amount of money circulating no longer reflects the country's economy. This is called the REAL VALUE OF MONEY. LOOK THAT UP.
    - The currency's value starts dropping compared to other countries' currencies.
    - The central bank then raises the prime rate so that the currency doesn't tank so much. I hope you realize that there is a direct link between a country's prime rate and the relative value of its currency.
    - Since the real value of the currency is now lower, the prices of goods and services goes up. Way up.
    - Your savings are worthless.

    And no, switching to crypto-currency like you keep bleating about like a doofus doesn't do jack shit. The problem at hand is the GDP of the economy, not what "thing' - whether that's bills, gold or bitcoin - represents the worth of that economy.
    Last edited by suntan; 03-05-2021 at 11:05 AM.

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    Quote Originally Posted by suntan View Post
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    I think I told you this before, but you REALLY need to take a macro-econ course.

    I was going to write a helpful gigantic wall of text of what inflation is, but nah. Go take a course.

    But obviously, yes, hyperinflation in the prices of goods and services - which I assume is what you're referring to when you say "hyperinflation" - can occur with interest rate hikes. In fact, that's often what the end result of interest rate hikes is.

    Often it goes like this:

    - Idiot gov't decides it needs to print money.
    - Central bank prints money. This expands M0. LOOK UP WHAT M0 (M-ZERO, NOT M-THE LETTER O) IS.
    - Amount of money circulating no longer reflects the country's economy. This is called the REAL VALUE OF MONEY. LOOK THAT UP.
    - The currency's value starts dropping compared to other countries' currencies.
    - The central bank then raises the prime rate so that the currency doesn't tank so much. I hope you realize that there is a direct link between a country's prime rate and the relative value of its currency.
    - Since the real value of the currency is now lower, the prices of goods and services goes up. Way up.
    - Your savings are worthless.

    And no, switching to crypto-currency like you keep bleating about like a doofus doesn't do jack shit. The problem at hand is the GDP of the economy, not what "thing' - whether that's bills, gold or bitcoin - represents the worth of that economy.
    where are the elites piling their assets into, in order to offset the coming decline in CAD/USD/gold/crypto etc ?

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    Quote Originally Posted by revelations View Post
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    where are the elites piling their assets into, in order to offset the coming decline in CAD/USD/gold/crypto etc ?
    Assets, like land and businesses.

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    Quote Originally Posted by revelations View Post
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    where are the elites piling their assets into, in order to offset the coming decline in CAD/USD/gold/crypto etc ?
    Quote Originally Posted by Cagare View Post
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    Assets, like land and businesses.
    Assets like land, houses and businesses get pummelled when interest rates rise. Because if your business has a ton of debt, how much do you think it's worth now that the carrying cost of that loan has increased?

    What do the elites do? They hold cash and buy fixed-income assets like GICs that pay out at ludicrous rates.

    You're a youngin', you don't remember GICs @ 25%.

    I had most of my money in a real return bond fund in the 90s, that fucker made me 10% a year.

    You guys are probably so young you don't remember the RRSP foreign content restrictions.

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    Quote Originally Posted by suntan View Post
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    Assets like land, houses and businesses get pummelled when interest rates rise. Because if your business has a ton of debt, how much do you think it's worth now that the carrying cost of that loan has increased?

    What do the elites do? They hold cash and buy fixed-income assets like GICs that pay out at ludicrous rates.

    You're a youngin', you don't remember GICs @ 25%.

    I had most of my money in a real return bond fund in the 90s, that fucker made me 10% a year.

    You guys are probably so young you don't remember the RRSP foreign content restrictions.
    GICs have never been at 25% in your or my lifetime, if you mean the 80's when they were at 12-14% sure. In the 70's it was around 15%. If we want to talk history anyone under the age of 40 doesn't really remember what a true recession looks like, we haven't had anything serious since the 90's, and a countrywide one really hasn't happened since the 80's.

    When I say land, I mean farm land, or large tracts of useable land, not houses. If the value of currency decreases then the value of the land increases, but of course the ability to finance it becomes less and therefore less demand for the land. Not every business is in debt. Holding cash in a deflationary environment is not a good idea.

    What the predicted outcome in the future is that instead of raising interest rates to counter balance money printing they will just use taxation as a form of controlling inflation. At least that's the current government's theory they are willing to experiment with.

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    Quote Originally Posted by Cagare View Post
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    GICs have never been at 25% in your or my lifetime, if you mean the 80's when they were at 12-14% sure. In the 70's it was around 15%. If we want to talk history anyone under the age of 40 doesn't really remember what a true recession looks like, we haven't had anything serious since the 90's, and a countrywide one really hasn't happened since the 80's.

    When I say land, I mean farm land, or large tracts of useable land, not houses. If the value of currency decreases then the value of the land increases, but of course the ability to finance it becomes less and therefore less demand for the land. Not every business is in debt. Holding cash in a deflationary environment is not a good idea.

    What the predicted outcome in the future is that instead of raising interest rates to counter balance money printing they will just use taxation as a form of controlling inflation. At least that's the current government's theory they are willing to experiment with.
    now you sound like me.

    MMT is the devil's work.

    - - - Updated - - -

    Quote Originally Posted by suntan View Post
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    Assets like land, houses and businesses get pummelled when interest rates rise. Because if your business has a ton of debt, how much do you think it's worth now that the carrying cost of that loan has increased?

    What do the elites do? They hold cash and buy fixed-income assets like GICs that pay out at ludicrous rates.

    You're a youngin', you don't remember GICs @ 25%.

    I had most of my money in a real return bond fund in the 90s, that fucker made me 10% a year.

    You guys are probably so young you don't remember the RRSP foreign content restrictions.
    The assets you hold in an inflationary environment may not be the same assets you want to hold in an environment where policy is aggressively combatting inflation.

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    Quote Originally Posted by Cagare View Post
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    GICs have never been at 25% in your or my lifetime, if you mean the 80's when they were at 12-14% sure. In the 70's it was around 15%. If we want to talk history anyone under the age of 40 doesn't really remember what a true recession looks like, we haven't had anything serious since the 90's, and a countrywide one really hasn't happened since the 80's.

    When I say land, I mean farm land, or large tracts of useable land, not houses. If the value of currency decreases then the value of the land increases, but of course the ability to finance it becomes less and therefore less demand for the land. Not every business is in debt. Holding cash in a deflationary environment is not a good idea.

    What the predicted outcome in the future is that instead of raising interest rates to counter balance money printing they will just use taxation as a form of controlling inflation. At least that's the current government's theory they are willing to experiment with.
    A low priced mortgage was at 18%. Of course GICs were at 25%. Why makes you think they weren't? Trudeau Sr. did a LOT of damage.

    There is no connection between the value of currency and the value of land as you have specified.

    Higher taxation leads to inflation of goods and services.

    There is no deflationary pressure. That is a ludicrous assertion.

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    Quote Originally Posted by Buster View Post
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    The assets you hold in an inflationary environment may not be the same assets you want to hold in an environment where policy is aggressively combatting inflation.
    There is literally no way for the central banks of either the USA or Canada to combat inflation. They foolishly increased M0, we're fucked.

    You guys need to understand that bond yields are going up because lenders are questioning the ability of govts to pay back their debt, not because the economy is doing well.
    Last edited by suntan; 03-05-2021 at 12:15 PM.

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    The most amazing part of all of this.

    Still. No one cares.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    lol at anyone thinking the Fed or BoC or BoE or RBA being able to increase rates to fight inflation in any meaningful way.

    Businesses, households, and governments are struggling with debt loads with interest rates negative to <2% in real terms.

    An increase of rates in most countries of more than a couple percent will just lead to massive defaults and a great depression.

    Central Banks have put themselves in a corner. My guess is they just continue playing with how CPI is calculated, monetizing government debt, and treat us all like frogs in a pot slowly being brought to a boil hoping we don't notice (and even if we do, what can we do?)

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    Quote Originally Posted by davidI View Post
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    lol at anyone thinking the Fed or BoC or BoE or RBA being able to increase rates to fight inflation in any meaningful way.

    Businesses, households, and governments are struggling with debt loads with interest rates negative to <2% in real terms.

    An increase of rates in most countries of more than a couple percent will just lead to massive defaults and a great depression.

    Central Banks have put themselves in a corner. My guess is they just continue playing with how CPI is calculated, monetizing government debt, and treat us all like frogs in a pot slowly being brought to a boil hoping we don't notice (and even if we do, what can we do?)
    Dude, once again, inflation isn't coming from an overheated economy, it's because lenders are become more risk averse. If the central bank doesn't raise rates the CAD$ will tank like you've never seen it tank before.

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    OK, lets say GICs are the way to go - ie. interest is at 10-15% in say 5 years.

    However, the 50k you put in 5 years prior - that could previously buy you a car for eg. now only buys you a smart phone.

    What is the point of 15% interest in that case?

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    Quote Originally Posted by suntan View Post
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    A low priced mortgage was at 18%. Of course GICs were at 25%. Why makes you think they weren't? Trudeau Sr. did a LOT of damage.

    There is no connection between the value of currency and the value of land as you have specified.

    Higher taxation leads to inflation of goods and services.

    There is no deflationary pressure. That is a ludicrous assertion.

    - - - Updated - - -



    There is literally no way for the central banks of either the USA or Canada to combat inflation. They foolishly increased M0, we're fucked.

    You guys need to understand that bond yields are going up because lenders are questioning the ability of govts to pay back their debt, not because the economy is doing well.
    Bond yields go up because of a lack of demand for fixed income.

    Fewer people buying bonds, yields go up.

    There are a bunch of reasons why there might be less demand for fixed income.

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    Quote Originally Posted by Buster View Post
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    Bond yields go up because of a lack of demand for fixed income.

    Fewer people buying bonds, yields go up.

    There are a bunch of reasons why there might be less demand for fixed income.
    1) The lenders have run out of money to lend.
    2) The rates being offered don't reflect the level of risk that lenders perceive.

    Either scenario is ruh-uh. Just sayin'

    Keep in mind gov't debt is considered to be absolutely guaranteed. A gov't can tax their populace at 100%.

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    Quote Originally Posted by revelations View Post
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    OK, lets say GICs are the way to go - ie. interest is at 10-15% in say 5 years.

    However, the 50k you put in 5 years prior - that could previously buy you a car for eg. now only buys you a smart phone.

    What is the point of 15% interest in that case?
    It keeps you afloat. That's why inflation SUCKS.
    Last edited by suntan; 03-05-2021 at 01:12 PM.

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    Quote Originally Posted by suntan View Post
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    1) The lenders have run out of money to lend.
    2) The rates being offered don't reflect the level of risk that lenders perceive.
    so what is the proper yield and how is it determined?

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    Quote Originally Posted by revelations View Post
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    where are the elites piling their assets into, in order to offset the coming decline in CAD/USD/gold/crypto etc ?
    The elites own assets instead of debt. Those assets inflate. They don't need to "hedge". However, a lot of big money people are banking on BTC. I don't know suntans opinion on why he thinks BTC and gold won't be a good place to hide your money? But reality is that those assets will inflate in value and will essentially be a hedge against a devaluing dollar. The value of gold and BTC won't change as money devalues, so their price will jump in relation to how much the value of dollars goes down.

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    Quote Originally Posted by suntan View Post
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    Dude, once again, inflation isn't coming from an overheated economy, it's because lenders are become more risk averse. If the central bank doesn't raise rates the CAD$ will tank like you've never seen it tank before.
    We really need a way to identify two different types of inflation. I'm not sure a lot of people understand the difference between inflation due to an increase of created wealth circulating the market, and inflation due to government fiscal idiocy.

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    Quote Originally Posted by Misterman View Post
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    The elites own assets instead of debt. Those assets inflate. They don't need to "hedge". However, a lot of big money people are banking on BTC. I don't know suntans opinion on why he thinks BTC and gold won't be a good place to hide your money? But reality is that those assets will inflate in value and will essentially be a hedge against a devaluing dollar. The value of gold and BTC won't change as money devalues, so their price will jump in relation to how much the value of dollars goes down.
    As a lay person in the financial world, I dont understand exactly how gold and crypto et al are going to tank, along with many of the major FIAT currencies around the globe. Weve already seen the intial waves starting to roll on this.

    I mean we have the prices of things like trading cards now to insane levels as everyone who sees the writing on the wall, is moving their cash and traditional investments into unconventional investments.

    Its tulip mania, but on a macro scale. The ones left holding the bag will be anyone in FIAT, in any form. Black markets will form and dominate.

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    Quote Originally Posted by revelations View Post
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    As a lay person in the financial world, I dont understand exactly how gold and crypto et al are going to tank, along with many of the major FIAT currencies around the globe. Weve already seen the intial waves starting to roll on this.

    I mean we have the prices of things like trading cards now to insane levels as everyone who sees the writing on the wall, is moving their cash and traditional investments into unconventional investments.

    Its tulip mania, but on a macro scale. The ones left holding the bag will be anyone in FIAT, in any form. Black markets will form and dominate.
    You don't think hockey cards have become more popular because everyone has been partially locked inside their houses for the past 51 weeks??...
    Ok...

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