How many of you are ready for the coming depression?

Discussion in 'Political Opinions & Beliefs' started by jdog, Mar 28, 2020.

  1. jdog

    jdog Banned

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    How many of you saw the signs of economic crisis coming? How many of you are prepared for what is next? Do you really think this stimulus bill can stop whats happening? Do you think the Fed can?
    What is coming is going to be ugly, and something few people are prepared for. What is coming is deflation, and it is something no one alive today has ever experienced.
    We have had 50 years of inflation, and it is now no longer sustainable. As it begins to unwind, it will mean falling asset prices across the board, and a crash in the economy that will be worse than anything you have ever experienced.
     
  2. Surfer Joe

    Surfer Joe Well-Known Member Past Donor

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    I'm not an economist, but since the 90s, the inflation rate has been low and very sustainable.
    If the economy crashes, it will be as much due to poor leadership during a time of crisis as to external conditions.
     
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  3. Spim

    Spim Well-Known Member Past Donor

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    I dint think its coming, so I guess I'm not prepared :(
     
  4. jdog

    jdog Banned

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    The inflation rate is a lie. It is fabricated. Asset inflation has gotten out of control and it is unsustainable. The problem comes from the fact that we have a debt based economy, and inflation is built into every purchase. It is only kept going by the belief that, it will keep going. Have you ever heard of the Holland Tulip Crash? It serves as a perfect example of how this scheme works. How about the greater fool theory?
    I really do not care if you agree with me or not, as it will not effect me in the slightest, but if you ignore the reality it will effect you greatly. You see, reality does not care about anyone's opinions.
     
  5. VotreAltesse

    VotreAltesse Well-Known Member Past Donor

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    Well, I couldn't predict that it would have been a virus that would cause that, but simply the very high debt rate was a sign that the whole economic system to be in danger. I posted that in february : http://politicalforum.com/index.php...k-that-our-civilization-will-collapse.568144/

    Unfortunately, I'm not ready for that crisis, quite complicate considering the condition I have.

    I doubt the stimulus would stop the bleeding.

    If I could, I would have bought some field, being able to be self sufficient in food is a great way to get ready against a lot of economic troubles.
     
  6. jdog

    jdog Banned

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    The virus did not cause it, it simply triggered it. The signs of recession were already presenting themselves like the inverted yield curve. Of course the fact that it has effected unemployment the way it has, will make this thing move much faster than it would have otherwise. You are right about the stimulus not being able to stop it. It will help people temporarily, but the businesses will still go bankrupt, and the jobs they used to supply will disappear.
     
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  7. Pycckia

    Pycckia Well-Known Member

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    I don't know if prepared is the right word but I happen to be sitting on a pile of cash right now by happenstance. A bond I owned was called a few months ago and I didn't get nd to reinvesting the cash.

    Are you prepared?
     
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  8. fmw

    fmw Well-Known Member

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    Thanks for the cheerful comments. Better find a comfortable cave for yourself.
     
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  9. VotreAltesse

    VotreAltesse Well-Known Member Past Donor

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    You're right.

    Considering hyper inflation could happen, I think the best would be to have some place where you could make some potatoes grow. Your cash could loose almost all of its value.
     
  10. Pycckia

    Pycckia Well-Known Member

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    I have considered buying gold. Tenth ounce gold coins sell at about $185 apiece.

    But the other concern is deflation as threatened last financial crisis. If renters don't pay their rents, landlords don't pay their loans. Money disappears from the system and cash is king, so long as the money markets don't "break the dollar" as I heard was a concern in 2008. Actual currency would be the only safe haven as the price of gold would also deflate, maybe an account in Swiss franks?

    The stimulus money is there to repay defaulted loans. But when the economy recovers, if the stimulus was overdone, then inflation is a big concern.

    "You pays your money and you takes your chances," as the man says. I live in an exurban area where there is an abandoned farm at the end of my cul-de-sac. I suppose we could grow potatoes there.

    ------------------

    For non-native English speakers, here is a link explaining the bad grammar of my quote:

    https://www.englishforums.com/English/YouPaysMoneyChances/pwvlm/post.htm
     
    Last edited: Mar 29, 2020
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  11. Quantum Nerd

    Quantum Nerd Well-Known Member

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    We've been really fighting deflation since 2008, save for a brief inflationary period caused by Trump's tax cut. Now, we will be back in the same boat, but now interest rates already are at basically 0, thanks to Trump's pressure on the Fed. What are they gonna do? Negative interest rates? I think it is very possible. With each further recession, the system gets closer to the brink of unsustainability. That's why Trump's tax cuts in good times were so irresponsible. Truly a sugar high, for which we have to pay now, when the hypoglycemia is amplified by the virus crisis. People have said before this may happen. trump and fans just weren't listening.
     
  12. jay runner

    jay runner Banned

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    It's a terrible thing that during the last sixty years, relatively good times most of it, the USA has pissed out and given away money and gotten into huge overhanging, nearly strangulating debt.

    But given this very weak and debt ridden national condition, the Fed pumping liquidity into the economic system and the federal government giving away even more money is the only thing that can shore up and continue the existence of the United States.

    The choice is go for broke or automatically descend down into the abyss of nothingness.

    Inflation is better than no longer having a country to be a citizen of.

    And it's possible this Wuhan Wet Virus thing will be conquered sooner than generally thought, and a reprieve will be obtained -- at least until the next big ugly thing hits.

    Mama said if you can't get all you want and get it in perfect condition, you got to survive on what you can get.
     
    Last edited: Mar 29, 2020
  13. LowKey

    LowKey Well-Known Member

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    Prepared? lol.

    Brother I'm lower class. I work my ass off during the week just to keep the lights on around here. Fortunately I've started working as a plumber so my job is relatively recession proof, but in the event of major economic crisis my choices are welfare, charity, crime, or living in a tent, and my wife ain't having that so..
     
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  14. jay runner

    jay runner Banned

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    If you get some of these long-tails you've worked your way into very high middle class:

    https://www.duluthtrading.com/men/collections/longtail-t-shirts/

    No plumber's crack showing. Charge like hell, your knees and back won't last forever.
     
    Last edited: Mar 29, 2020
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  15. LowKey

    LowKey Well-Known Member

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  16. jdog

    jdog Banned

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    Clearly seeing reality is the best way to be prepared, being prepared is the best way to deal with adversity, they have a word for people who refuse to prepare, they are called victims....
     
  17. jdog

    jdog Banned

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    Hyperinflation is really not a risk, in fact just the opposite is the most likely scenario. Most people have a misunderstanding of how economics actually work.
     
  18. SkullKrusher

    SkullKrusher Banned

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    Let’s see

    1, camper van ... check
    2. Smart phone ... check
    3. Fishing gear... check
    4. Radio.. check
    5. Woods property filled with enough variety of junk to trade for the next decade... check
    6. Rifle and ammo... check
    7. Lake and swamp critters to eat... check
    8. Well water and filtration device... check
    9. Large oak trees with sniper nest... check
    10. 2 layers of wire perimeter fence and trench...check
    11. Flood lights to frighten and blind virus infected zombies... check
    12. 100 gallon heavy steal tank of gasoline... check
    13. Solar collector field for electricity..not yet.. will have to scavenge post apocalypse for that

    items still needed
    1. Army Surplus store filled with all the other stuff I forgot about
    2. A variety of farm animals and a barn
    3. About 10 acres of farmland and a couple of mules
    4. Alex Jones Survival seed mix
    5. 1 android robot
     
    Last edited: Mar 29, 2020
  19. VotreAltesse

    VotreAltesse Well-Known Member Past Donor

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    I can't say I'm very knowleadgable on finances, I'm more looking at the problem of ressources (oil, place) and social aspect, so I trust you on that.
     
  20. jdog

    jdog Banned

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    Apparently you prefer to believe government BS statistics rather than your own eyes. We have had inflation much higher than government statistics for 30 yrs. The government lies about the inflation rates and alters them using tricks like hedonics and substitution. Do you understand how inflation happens? What causes it? and why it ultimately always causes economic crashes and massive deflation?
     
  21. jdog

    jdog Banned

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    Sounds like you are a guy who knows how to survive. The kind of guy who fixes it yourself. That is exactly the kind of person who will be able to survive this thing without much sweat. If you are already used to living frugally, then you will not have to adjust to the new reality, it will just be something you have been doing all along.
    There is always going to be a need for people who know how to fix and build things, especially today when so few people actually know how to do anything practical.
    It is the upper class people used to high spending, lots of debt, and the luxuries who are in for a reality check. It is the people who are used to doing things themselves, living cheaply, and working hard who will survive the best, they have had a lifetime of training for what is coming....
     
  22. jdog

    jdog Banned

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    It works like this. Whenever someone buys something on credit it causes inflation. The reason it does is because you are paying more for the purchase than the original price. You are paying the price of the item plus interest on the balance. Because of our fiat money system, when a purchase is made on credit, that money is actually created right at the point of purchase simply by your commitment to pay it back. Only a tiny fraction of our money supply is actual cash, the vast majority is simply digital figures inside computers. So if you buy a $100 widget on credit, you create $120 in money if you pay 20% credit on that purchase. That is where inflation comes from, constant production of more money, and paying above the actual price.

    As inflation rises the price of all asset, which are financed require higher loan amounts to facilitate the purchase. Higher inflation equals higher debt.
    The problem occurs when inflation begins to outpace wages. Because inflation is difficult to understand for common working people, the wealthy class use inflation to gain a larger and larger share of the pie. They slow the increase in wages at a very slow pace so that people do not really notice that their wages are not increasing as fast as prices.

    The end result of this is that assets become inflated beyond their values in relation to what people earn. But, by going into debt an "average person" can purchase an asset with debt and share in this inflation scheme. This causes people to think inflation is actually good, at least for a while.

    Now anyone who can do the math realizes as this scheme progresses year after year, at some point the working people who's wages do not keep pace with inflation will not even be able to service the debts they must incur just to live. That is when the problem starts.

    At the point where people begin to become delinquent on their loans, and begin to default, it begins to bring into question the real value of the assets they purchased on debt to begin with. Is a house really worth half a lifetimes earnings? Is the stock of a company really worth 50 yrs of earnings?

    No none of these things are worth what their "perceived" value is. And the only thing that supports that value is the "belief" that there is a "greater fool" out there who is going to buy this asset from you at a profit from what you paid.

    At some point this "belief" is shattered by a triggering event. Sometimes it is a market crash, sometimes it is a war, this time it is a pandemic virus.
    Whatever the triggering event, it causes people to change their behavior. To stop spending recklessly, to cut business expenses, perhaps lay off employees who are not productive. This behavior change begins a chain reaction, less people spending, less people working, debt default, business bankruptcy. It begins a feedback loop. The business that closes, leaves and empty building the owner cannot rent, he will probably try to sell, and will have to reduce the price to do so.
    The business owner has assets and equipment from the business that must be sold to raise cash. The employees who were laid off, must consider selling their house or the car they are making payments on. This is the beginning of deflation assets must be lowered in price to sell, because the there are less buyers and more sellers.

    Suddenly the overpriced house that was purchased on the belief it would be sold at profit seem like a stupid investment. The belief in inflation has vanished. Suddenly the value of all assets becomes whatever someone is willing to pay, without the belief it will be worth more in the future, and very possibly that it will be worth less.

    It is a time to return to reality, and it is usually brutal and indifferent to suffering and need.
     
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  23. Pycckia

    Pycckia Well-Known Member

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    You may very well be right. I don't know how tax cuts figure into it, but there is a lot I don't know. I just acquired some street smarts with the aim of preserving my capital and having been somewhat successful I am willing to give a few opinions if I think they may be helpful.

    I first became interested in money during the Carter administration when the word "stagflation" was coined to describe the heretofore unknown phenomenon of simultaneous high inflation and stagnant economic growth. I did not succeed. I am impatient and non-systematic and was completely befuddled by what I read.

    During the dot com boom I was reaping a modest nest egg through stock options and it behooved me to understand money and, as I had skin in the game this time I was much more successful. I started with the basics: what is money? There are three definitions each of which capture one aspect of money but it is the third which is significant for our purposes. Money is: (1) a store of value; (2) a medium of exchange; and (3) a bankers obligation. People rail about the banks being bailed out during a financial crisis but, really, there is nothing else to bail out. If bankers go bust, default on their obligations, there is no money.

    I also studied the history of capitalism which helped me a whole lot more than trying to read theory. I like history and can sit and read it for a long time. The point here is that crises like 2008 are a permanent feature of capitalism. Marx thought that such crises would end capitalism. The nineteenth century had many periodic crises, such as the gold panics of 1893 and 1907 which were calmed single handedly by J.P. Morgan.*

    In my lifetime there have been many crises some of which never reached public consciousness like the Penn Square Bank fiasco in which criminally negligent loans made by a shopping mall bank in Texas threatened the US banking system and Long Term Capital management in which a hedge fund started by financial geniuses including a Noble Prize winner (I forget if it was Black or Scholes**) threatened the same.

    My mother passed away recently and she was worried by the presses bad mouthing of Trump's economics. I told her "you were born into a Great Depression and you might well die during the next." She laughed.

    Capitalism is a rickety old machine held together by chewing gum and bailing wire, but it has always been this way. Tough times may be ahead but they will get better. At least they always have. If capitalism finally, totally, collapses, it won't be Trump's fault. The grand and awful forces coursing through the global economy are indifferent to the puny efforts of a mere President of the United States.

    --------------------

    *When JP Morgan died flags where flown at half-staff on Wall Street, a custom usually reserved for Presidents. He was worth $68 million dollars or just over a billion in today's money. When his net worth was published, John D. Rockefeller is reputed to have said to John Jacob Astor, both centimillionaires several times over, "and to think he was not a wealthy man."

    **If you get some spare time, like if you lose your job during the next Great Depression, read Black and Scholes paper on option pricing, for which they won the Noble Prize. It comes up with a formula for how option prices change as the option nears its strike date. They called it a "stochastic differential equation" which I had never heard of. Anyway, after some hair raising calculations they say. "We recognize this [stochastic differential equation] as the heat transfer function of physics."

    Option prices change the same way a heated iron bar cools.
     
    Last edited: Mar 29, 2020
  24. One Mind

    One Mind Well-Known Member Past Donor

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    I call them service sector worjers ans we have a service sector economy thanks tito the globalism scheme.
     
  25. jdog

    jdog Banned

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    Capitalism is just fine, so long as people exist, capitalism will exist. The problem is what we practice in America today is not capitalism. It is a hybrid of socialism and capitalism in which socialism is used to restrict capitalism's benefits to the wealthy and the corporations.
    We live under illusion in America, the illusion of capitalism, the illusion of freedom, the illusion that government works in our best interests. Perhaps it takes crisis like this to wake people up and to see the emperor has no clothes... Perhaps they still will not see.
     

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