Commodity Deflation

[errolanderson]

The 1980's were very inflationary. Remember Canada Savings Bonds yielded 18%.

My first Mac computer with the power of a toaster cost $7,500.

But global governments had very little debt. Reagan's debt was miniscule. As the U.S. headed into recession, U.S. air traffic controllers went on-strike. If my memory is right, he fired them all . . . .

In those days, a U.S. recession could be fought with government spending. But today (IMO) government debt is far too enormous for that plan to work, (as markets are now finding out).

Interesting times . . . .

[blackpowder]

And it's become more common place to reward a ceo whose department is guilty of fraud while they fire 5300 underlings.
While the man on the street aspires to be that ceo.
The welfare thinking created by First King Pierre breeds on its own. Gimme Gimme Gimme.

By the way, you're producing a raw commodity for the economic system in which you've resided all your life. Get over it.

[perfecho]

Errol, not a financial guy at all...only pondering..., however was it Reagonomics that lowered business tax substantially and started to put more on the working class? Seems since late 90's, many businesses have had major cash, and buying up other businesses became the name of the game. Have seen that locally within the Nisku oil sector....some actually started companies to bought. (Things have changed in the last year though)
Look at the latest Monsanto deal...wonder how the change in tax (and control) has had on current situation......????

[errolanderson]

perfecho . . . good question and just a personal opinion.

We will see massive changes (shake-ups) in both the financial and corporate world over the next five (5) years.

Many companies will not survive this downturn. Many business names will simply disappear via take-over or bankruptcy. This will stretch far outside our world of agriculture.

An unstoppable train right now . . . .

[foragefarmer]

Errol


"We will see massive changes (shake-ups) in both the financial and corporate world over the next five (5) years.

Many companies will not survive this downturn. Many business names will simply disappear via take-over or bankruptcy. This will stretch far outside our world of agriculture."


This has been going on in business long before you started to predict doom and gloom here on Agriville.

Have you been sitting on the sidelines since you began posting these economic forecasts?

[tweety]

Which brings up the most important question then. What does the typical farmer who owns land machinery grain etc do? What are some wise strategies?

[perfecho]

....The shakeups should have already happened....something out there is stopping it....
(this is where the eerie orchestra and ...dum....dum....dumm..of the drum comes in)

What does a farmer do...IMHO...keep on doing. Pay down debt, don't have high expectations, be happy where your at. The race to be biggest doesn't usually end in contentment, but knowing you can feed your family..(freewheat style), do things you enjoy other than taking out the other guy and make sure you volunteer in something that's worth while!
Now....back to the wine!

[perfecho]

Not saying this is "wise" Tweety...but gratifying....

[farmaholic]

So if a bunch of Companies are going to get amalgamated or "vaporize" what does this do to those pieces of shit called mutual funds. Good blue chip amalgamations wouldn't bother me....the value will get combined but high risk ventures is where "money and value(?)" will evaporate into thin air? We may be entering a time where greater value will be placed tangible everyday necessities. ....like cellphones...buy your Apple and Samsung stock, if it isn't already too late.

I never looked at it the way an Agriviller posted it recently. ....the saver isn't getting rewarded for saving and the borrower isn't getting penalized for borrowing(stealing from the saver and giving Iit to the borrower)...in their words, wealth transfer. Money is too cheap right now. But how can that be changed when a lot of people are leveraged to the max....

The solution is beyond my management skills....

[errolanderson]

Farmaholic . . . You've identified the beast.

Conventional economics no longer works or make sense. Central bank money money printing or QE stimulus has been a collective and colossal failure IMO.

Central banks now have no choice but to drop their rates into negative territory to feed their own addition . . . money printing. This includes the U.S. Federal Reserve. The U.S. Is in no position to hike rates as their economy is in the early stages of contraction. Even Ben Bernanke suggested this week that the Fed may have to join the negative rate club.

Governments can no longer even remotely service their debt. And the Fed Reserve is now caught in their own web.

Stock markets have acted as a parking lot for investors desperate for yield. This is not working capital in my view.

[Rareearth]

Tweety, investing it hard tangible assets such as land and machinery are never a bad thing. These investments are a investment in your business, bigger faster better and most importantly easier, and hopefully emotionally and financially.

Investing, trusting other to do what's good for you is bad, sad, etc. It's paper. Ponzi scheme material, the stock markets and mutual funds etc. They are for the most part intangible. A bank account is addicting the bigger it get the tighter and more is invested hoping and hoping it continues to grow. It's only tangible and worth something physically and emotionally once it's withdrawn, cashed in, liquidated, etc, invest in yourself.

[foragefarmer]

Rareearth

" Ponzi scheme material, the stock markets and mutual funds etc."

Take a look at the return of any good blue chip stock ( eg. Canadian banks and Railways) with a decent dividend payment from 2009-2016. If you weren't in, you've missed one of the best bull runs ever. Just look at any long term chart of any good blue chip. Will it continue who knows, but trying to time the market can be a disaster.

Those who have been sucked in by cheap money are the ones that should be worried. Being greedy, will take care of ones who don't know when to stop. Those who live within their means will do just fine. Paying off your debt is economics 101.

Errol, with all your predictions, what have you been doing these past years to protect yourself financially (buying gold, investing, expanding, holding cash etc etc).

[perfecho]

Forage....Does that still work if you were in 2007? I don't know...don't follow stocks since I totally got out in early 2000s. We were bought out by a public company and I worked with them for a while....when I saw how they managed...it was all out.

[cottonpicken]

Luckily the whole world decided to devalue at the same time.

Anyone here want to bet on a currency value when their government is monetizing the debt(qe) on a solo mission-its ****ed its toast,christ they are absorbing collateral losses on corporate now,pump and dump teams keeping stocks up,keeping commodities in check(150 dollar oil is not good for an economy),creating ever great distortions,which leads to roads to nowhere,overcapacity and dislocations in the free market capitalism concept.

The funny thing is everyone knows its ****ed now.

[foragefarmer]

Prefecho

Just using BMO as an example, in 2007 it was $70.00/share, it then fell to $30.00 in early 2009, it is now $85.00. The thing to remember is that it pays a good dividend throughout. The other thing good blue chip companies should be bought at all times, in other words someone might have bought some BMO at $70.00 in 2007, but also could have been bought at $30.00 in early 2009 and have done very well by cost averaging.


Like a said before, trying to time the market can be a disaster.