I'm not meaning to be rude, but it's not a good analysis. Firstly it relies on the assumption that the lockdowns were a premeditated policy decision designed to spur inflation and economic growth. Ignoring whether the whole pandemic was premeditated or not, that's not how modern wealthy economies operate. Growth relies upon credit-fuelled consumption ie creating demand for goods now and paying for it later with currency that is of less value, something we witnessed in the decades leading up to the GFC. During a balance sheet recession (as we are currently experiencing and which Japan has been in since the 1980's or so), credit-fuelled growth is absent as consumers and SMEs are either reluctant to take on more debt, or there is a paucity of credit-worthy individuals in the real economy to whom banks are willing to extend consumer or business loans. Consequently, businesses and individuals have a preference for paying down debt/accumulating savings as opposed to spending. Creating lockdowns therefore is the antithesis of how monetary and fiscal policy stimulates economic growth. Secondly, it assumes inflation will continue to rise and that it is in controlled territory. As I have posted elsewhere a short term view of inflation rate can be misleading and lead to erroneous assumptions. In January 2020 the inflation rate was 2.2%, then it plummeted to below 0%. In the previous years it was in the 1.3 - 1.8% range and it was "fairly" stable prior to the pandemic. Let's assume that if the rate remained consistent, inflation should have been 2.2% again in 2021, meaning, that prices should have been 4.4% higher in 2021 than in 2019. With the current inflation rate of 3% (remembering it was below zero in 2020), prices have barely caught up to the trajectory they were on since the beginning of 2020. Thirdly, the idea that it's time to "edit savings" is a new one on me and I would suggest fabricated. Fourthly, central banks have shown over the past 40 - 50 years a complete inability to control the inflation rate, popular mythology (ie Volcker) aside. New money is created by governments in order to pay for government services, maybe reverse repos also fall into this category though they are self-securitised so I'm yet to work out whether they are examples of money that has already been issued or whether they are examples of what could well be "double-dipping" ie access to reserves backed by newly created money, in effect creating a loan and then securitising that loan in a package which the central bank will "borrow". Old money does not need to be "wiped" in order to create new money. One point @Pirocco makes that I have no issue with is that currency is purposely devalued. This goes back to my original point that under our modern central bank/government fiat issued system, growth is driven by credit-fuelled spending and monetary inflation is used as a tool to drive spending. Even if it has been spectacularly unsuccessful over the past decade or so.
I think what Pirocco meant is to penalise savers, and people with wealth, stored not just in cash, but other forms such as gold, stocks and property.
Thanks. But rather than penalise, a more accurate description would be to discourage savings in bank accounts that come at the expense of current consumption. The chart below shows the effect of the Australia wide lockdown in 2020 ie consumption was driven down and savings forced up, note that again consumption is falling and savings are climbing as a result of the lockdowns in 2021: As far as the asset classes go, central banks are not interested if people choose to buy gold or shares because it makes a small part of your average person's portfolio (ignoring superannuation because for workers it can't be spent on consumption in the present) compared to RE. They are interested if people buy crypto because there are sectors in the finance industry and regulatory sphere that view it as a threat to the legacy banking industry (which is a reasonable assumption, it's not really a threat to fiat though) and there are some regulators that are obsessed with the idea that it is used to grease the wheels of illegal activity. When they are interested in property it is because property speculation takes funds away from current consumption or can impact upon an individual's or family's ability to meet repayment obligations which again impacts their capacity to consume in the present. Again, everything points to the need to drive consumption in the now rather than the future, something designed lockdowns do not achieve. On another note if our governments and CBs really wanted to create high inflation then what they could do is enter the market and buy real goods eg oil, coal, minerals etc, but I'm not sure how they'd go about doing that. However I've read that The Fed is not tasked by law to create inflation and to do so would require a change to its mandate, the RBA though is mandated to maintain inflation in the 2 - 3% range. Or they could hand out stimmies or implement a UBI. The reality of the situation is not as sinister as some would like to believe, it's floating on the surface in clear light ie incompetence, the desire to maintain office and misguided theory.
Judging from his disappearance in 2019, and reappearance 2020, when silver reached the recent ATH, Pirocco only appears when there's going to be a major market event so we should take note and reconsider our investment plans. I just sold another stock yesterday, only left with defensive.
Bonds? No, I had a bad experience with bonds. March 2020, I had 80% of my cash locked up in bonds that I couldn't cash out immediately so I missed the March 2020 lows.
FIRST Spur inflation, not economic growth. It doesn't matter whether the pandemic was premeditated or not. The difference is the one between planning, and grabbing an opportunity, to do the same - trigger value fluctuations. In order to edit value owned by bank depositors and all other speculators, central planning thieves need price fluctuations of speculative products AND an excuse for these. Just editing existing bank accounts, or mass selling in markets they frontrunned buying in, without any event explaining the big value drop, would raise eyebrows and confrontation with questions that couldn't be answered without making people angry. So, "big" events are needed, to serve as excuse. The sars-cov2 virus appearance (regardless appearence reason) was such an opportunity to explain a worldwide (=big event just like the deliberate oil production decreases of the seventies and many other such actions with big consequences) sabotage of production and trade, and thereby driving alot speculators into sell modus. The result was the 2020 flash crash. Speculators realized the consequences of the sabotage and the money markets interferences, expected price increases, to then help bring those, by become willing to pay more. SECOND My average basis is 2 decades inflation. The post Euro currency period, end nineties to present day. If you look at the monetary balances (not the temporary stories of created and again destroyed new money), you see a stable trend. Stable, because planned. The fluctuations you talk about are the temporary stories alike the QE scams, that suggested mass money creation AND spending, but were actually the precise opposite - after a decade strong house market price rises, central planners brought a decade stagnation, in order to first get rid of enough existing money, by luring speculators into buying high (me included) and selling low (me not included), for which price fluctuations are required. So yes, inflation has been in controlled territory. You are here since long time. Remember the hyperinflation stories of a decade ago? The very opposite occurred. A decade of stagnation. My bread and cheese and butter have been the same price during a decade, it's only since the corona sabotage of the central planning, that they finally increased. Next year / this year, the central planning announced increases of wages and the whole rimram typical for an inflation period. Those are setting a sentence period after a monetary cyclus period. They should be stopped doing that,/quote] and instead just let prices correct back down to where they were, and their will continu their corona sabotage until they're sure of that no-return. THIRD What is new about "editing savings"? It's what central planning does to control general price risings, especially housing - their biggest milk cow. Did you interprete "savings" as bank account only? That was not what I ment. I see savings as monetary storage of value. People store value in a variety of products, euro, dollar, crypto, stocks, bonds, gold, silver, anything that is usable for this. Central planners frontrun those markets, and manipulate value along forced rate differences (ex credit rate versus bank deposit rate, excess reserves rate versus libor, and so on). Also futures markets serve for this, even easier, because no trade of actual product needed. A price can be driven wherever wanted, but of course requires on the cash market counterparties willing to pay the bloated price. FOURTH Of course existing money has to be wiped. Governments became smarter than just producing money for themselves and ignore existing money. See, not only speculators became smarter than their predecessors in history, central planners also became. See, they don't want people to dump the currencies they made and control. They don't want to milk cows to death. Instead, they milk at a rate that allows cows to survive/and have *some* life. They throttle their money creation according to how better the cows become at producing milk. Not too much as to give these time to become better, and not too less as to give them not too much luxury. I'm not sure how to interprete. One point Pirocco makes that I have... ? Are you saying that you find central planned currency devaluation okay?
@Pirocco, your post is a little bit conspiratorial for my liking so I'll restrict my comments to the following: Deliberately create housing bubbles restricts consumption in the present. Central banks are about creating consumption therefore they have no interest in creating housing bubbles. If bubbles do form it is because there is a paucity of credit-worthy individuals and businesses banks are willing to lend money to ie there's too much risk in funding business expansion or entrepreneurial activity at present so banks have a preference for lending to the housing market. Central planners get no material advantage from creating housing bubbles, though they do keep their jobs by ensuring the bubbles don't pop. We've addressed futures markets dozens of times here, suffice to say, they give security to producers when planning future business decisions. I didn't interpret "savings" as bank accounts only. I had no idea what you meant by the term, I suggested "editing savings" was a fabricated concept. If you mean it to be the omnipresent effect of inflation then you and I would agree. Central banks frontrun the money market using the channel between the cash rate and the rate on reserves, this channel is what determines how commercial banks go about borrowing and lending money, I'm not sure from your post if that is what you meant. We can't dump government money. We all have tax liabilities, even the unemployed. Most of that probably makes as much sense to you as your response did to me. No.
Pirocco, what are your thoughts on the expected gold rally 2022? There's a lot of talk about that, but I'm not too convinced on the timeline, and if there will be another March 2020 like 10-15% dip before the rally to over $2k happens.
"conspiracy", implies secrets and insider information. What I stated, and where I based conclusions on, was based on data. Published by institutions alike central banks. I started collecting it around the time I became silver stacker. I'd better start collecting it before, but I was too ignorant and too stupid. I was able to avoid materialisation of the loss I was lured into, and stupidly enough allowed, in 2020, the opportunity to sell what I bought in 2011 near to break even, due to the sabotage and panic that the central planners inflicted, with as excuse the sars2 appearence. I didn't sell all, post 2011 I purchased more silver at lower prices, and I decided to hold it. Also specialties I kept. In 2020 I did the very opposite of what I did in 2011. Instead of being concerned and fearing the future, I saw an opportunity to correct the past. Doing the opposite of what most do, one of the rules I learnt. ... restriction based on your claim based on your liking. No, central banks are monetary "policy makers", privileged by governments. They force producing and trading people to do what fits their plans. The existence reason of a central bank, is to fight speculators. Speculators are people that try to avoid the inflation and interest rates based theft of the whole of governments, their institutions alike central banks, and the parasiting gangbang behind them. That's it and that's all. Yes, secure, against, speculators. If speculators, so as an attempt to preserve value, would stop buying and selling gold, the gold futures market would lose its existence reason. This is how gradually, over the decades, futures markets for certain products were created. They were, and are, created when speculators start to trade, or trade too much, on those products. "Savings" is stored value. Stored in chosen products, dollar being 1 example, a certain stock shares another. That's all. Why making it hard? No, central banks (and the whole of the gangbang) frontrun markets by spending other peoples saved money, and by creating and spending new money. When they pay other peoples money back, it has lost a planned part of its purchasing power, being the "devaluation". Done along rates manipulation. Rates A B C D, different, the difference the basis of the planned purchasing power loss. Of course we can. Using governments money to pay, is getting rid of it. Using it to pay anything else, is dumping it, and what is named "hyperinflation": people swap governments money for anything else, as fast as they can, because it loses its purchasing power so fast, for the same reason, aka, a self reinforcing spiral towards the end of governments money usage.
I have this viewpoint on gold: It's a market that is heavily controlled by central banks. Over the period late nineties to late 200x, gold price lagging alot on house prices, so low gold prices, central banks SOLD. Over the period late 200x to late 201x, gold price running ahead alot on house prices, so high gold prices, central banks BOUGHT. THAT is the opposite of what speculators do. Oddly (?) central banks hunt losses on their gold stocks. Well, if you think another time, not odd. Central banks exist to fight speculators. When speculators want to swap gold for fiat, central banks sell golds price down to less received fiat.. And vice versa, when speculators want to swap fiat for gold, central banks buy golds price up to more paid fiat. So using gold to store value, with the purpose to avoid central banks fiat devaluation, is swapping a loss for another loss. Of course, for those that trade it alot forth and back, in order to gain from short interim price fluctuations, it may be better. But that's work, not easy, and trading has a cost (expressed broadly, including the time you have to put in it) itself. There is a much simpler viewpoint though, already mentioned, if alot people talk about / expect something, expect the opposite to happen. Thievery is always value that goes from alot to a few, because the gain is proportional to the amount people. There is yet another viewpoint: look at the amount gold in the hands of speculators. The more tonnes, the bleaker golds price trend in the future. Central banks will double that down, just like they doubled it up the past decade.
You take the data and turn it into a conspiracy where none exists. I won't bother arguing with you, you really don't know what you're talking about.
For anyone else interested in how central banks actually implement monetary policy this is a simple explanation: https://www.rba.gov.au/education/resources/explainers/how-rba-implements-monetary-policy.html. It looks at how open market operations are carried out using 1. price ie the cash rate, 2. quantity ie amount of exchange settlement (ES) balances kept to settle inter-bank transfers, 3. the demand for ES, 4. the supply of ES, which is managed through bond sales/purchases, repos (the exchange of bonds or securities for ES balances and FX swaps and 5. the policy interest rate corridor mentioned previously. This article is slightly more in depth with greater attention given to repos and reverse-repos which is the most common tool the RBA uses to manage the supply of money in the market, in particular reverse-repos. https://www.rba.gov.au/education/re...the-rba-implements-monetary-policy/index.html
I've read about this previously. CB buy gold to take out liquidity. Buying gold is to short their own currency. Likewise, selling gold is to push up the currency.
Sounds absurd, but you are right, this is actually happening It is a bit like quantitative easing. But in reality it seems like quantitative easing is not so much used to pay off debt, but instead to keep the money velocity running. Because, that is what keeps the value up. If that goes down, we're doomed: VENEZUELA horror.
