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Voss wrote:


We're not talking about the end of the world, we're talking about the economy tanking and going into a recession. Cheap goods and junk like 2 year cell phones is what the economy largely runs on. If that sort of things 'dries up,' we're absolutely in economic recession territory.

Of course! But your earlier assertion that the US would suffer more than China from a global recession is demonstrably false. The US has undergone multiple recessions in the past few decades and has weathered them all and recovered fairly quickly. China goes into a recession? Hoo boy.

Not Online!!! wrote:
If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.


Automatically Appended Next Post:
Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it

Go back and read what I've written very carefully.

From the get go I've highlighted that value is a construct, but it's irrelevant arguing otherwise as that's not reality, our economic system is based on ascribing value to commodities, so arguing that gold doesn't have an intrinsic value is futile because nothing has an intrinsic value and it contributes nothing to the discussion.

I think the only thing we've learned in the last 10 years of economic development is that no one really understands how it all works and that maybe the current scheme is the worst model for building sustainable societies.

About the only thing we do know is that the gold/silver standards were utter disasters for every economy that employed them in the last 200 years, and the idea that our problems will somehow magically not be there anymore if we go back to a currency model that boomed and busted every three years as opposed to one that does so every 10-15 is kind of silly.

 Azreal13 wrote:
So, like I said in the first bit of my post that you didn't quote then?

No, because "nothing has intrinsic value" is not true either. Gold has limited intrinsic value because its practical applications are fairly narrow and it's not all that rare. Rarer things would have more intrinsic value. For example, highly enriched uranium suitable for nuclear weapons production is extremely valuable simply because of its scarcity and manufacturing expense. The objection to the gold standard being anything other than fiat currency is not one about intrinsic value in general, it's about gold specifically being very low in value outside of its arbitrary selection as currency.

 Mad Doc Grotsnik wrote:
Well, avoiding Politics?

The U.K. is circling a recession. You can guess why.

And I genuinely fear this will hit far harder than 2007/2008.

Why?

The PPI ‘scandal’. Trust me when I say when it comes to PPI, I’ve (genuinely) forgotten than you’ll ever know about the ins and outs of that specific insurance product.

See, since it all kicked off around, ooooh, 2010? All forms of PPI were seen to be toxic. And many were pretty worthless. Either stupidly restrictive terms, or not worth the cost.

But Mortgage PPI (MPPI)? Why wouldn’t you want a policy to cover your mortgage payments for (in most cases) up to 12 months? Which would pay out alongside any other similar policies? And, given what you stood to gain, a pretty nominal cost?

You’re right, it does make sense. Because the only certain thing in life is that things are uncertain.

Yet, because PPI as an umbrella product group has a not undeserved bad reputation? There are tens of thousands of mortgage holders that cancelled their MPPI policies. And that means when redundancies start hitting? All of them are at heightened risk of repossession. And from there, negative equity.

So. Yeah. Regardless of the root cause of the next recession in the U.K.? It gonna be far, far worse.

Yeah, I think you're right there.

Cars, too. Virtually no-one buys a car outright any more, it's all done on finance. I think that's set to all come crashing down in a recession once people start losing their jobs, can't make their car payments or afford the settlement figure to end the agreement early.

Crispy78 wrote:

 Mad Doc Grotsnik wrote:
Well, avoiding Politics?

The U.K. is circling a recession. You can guess why.

And I genuinely fear this will hit far harder than 2007/2008.

Why?

The PPI ‘scandal’. Trust me when I say when it comes to PPI, I’ve (genuinely) forgotten than you’ll ever know about the ins and outs of that specific insurance product.

See, since it all kicked off around, ooooh, 2010? All forms of PPI were seen to be toxic. And many were pretty worthless. Either stupidly restrictive terms, or not worth the cost.

But Mortgage PPI (MPPI)? Why wouldn’t you want a policy to cover your mortgage payments for (in most cases) up to 12 months? Which would pay out alongside any other similar policies? And, given what you stood to gain, a pretty nominal cost?

You’re right, it does make sense. Because the only certain thing in life is that things are uncertain.

Yet, because PPI as an umbrella product group has a not undeserved bad reputation? There are tens of thousands of mortgage holders that cancelled their MPPI policies. And that means when redundancies start hitting? All of them are at heightened risk of repossession. And from there, negative equity.

So. Yeah. Regardless of the root cause of the next recession in the U.K.? It gonna be far, far worse.

Yeah, I think you're right there.

Cars, too. Virtually no-one buys a car outright any more, it's all done on finance. I think that's set to all come crashing down in a recession once people start losing their jobs, can't make their car payments or afford the settlement figure to end the agreement early.

Cars are worse.

Houses least unless trashed mantain the majority of there value. Not many lose majority of value without somthing big.

A new car loses x value just leaving the lot.

X amount after 3 years or so etc.

 Azreal13 wrote:

Not Online!!! wrote:
If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.


Automatically Appended Next Post:
Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it

Go back and read what I've written very carefully.

From the get go I've highlighted that value is a construct, but it's irrelevant arguing otherwise as that's not reality, our economic system is based on ascribing value to commodities, so arguing that gold doesn't have an intrinsic value is futile because nothing has an intrinsic value and it contributes nothing to the discussion.

No, you need to realise that you can't argue that if nothing has intrinsic value that you should just disregard that fact and implement a standart on a commoditiy currency Basis because we can't fathom a World were such commoditiy would turn worthless.

Take whale oil for exemple.
This is why i said Gold is intrinsically valueless, in order to point out the volatility to explain to you that your standart is virtually useless as a suggestion to base the currency value on.

Just because you don't like the argument doesn't make it wrong, that is not how an argument works.

 jhe90 wrote:


Yeah, I think you're right there.

Cars, too. Virtually no-one buys a car outright any more, it's all done on finance. I think that's set to all come crashing down in a recession once people start losing their jobs, can't make their car payments or afford the settlement figure to end the agreement early.

Cars are worse.

Houses least unless trashed mantain the majority of there value. Not many lose majority of value without somthing big.

A new car loses x value just leaving the lot.

X amount after 3 years or so etc.

I'm afraid I have to disagree.

I think your point is valid in the context of a decent housing market. But that's not what we've got. The marker is grossly over inflated in terms of price.

So, if I'm right, and the next recession sees a remarkable uptick in repossession? Yeah. That's banks losing out even more. And when banks lose out, they become Risk Adverse. That means fewer mortgages being granted. House prices will fall not only because nobody can afford to buy, but because the Banks cannot shift the repossessed properties to anyone except speculators. Who do what they do by paying as little as possible.

That can tank the entire market. That traps an awful lot of people, who bought their home in the past decade to 15 years trapped in negative equity.

That's not really a problem in Car Finance, because the second you roll off the forecourt, you're down 20% due to VAT alone. Car's are meant to depreciate in value. Housing isn't meant to.


Automatically Appended Next Post:
The PPI aspect also hits lending of any kind.

Credit Card? No PPI.

Loan? No PPI.

Car Finance of any stripe? No PPI.

Oh, it's still available. And a decent product overall. But nobody is buying it. So when things hit the skids, and money becomes tight? That's another noogie to the economy.

Heck, I've seen people so hellbent that any form of financial insurance is PPI, and therefore BAD actually cancel income protection policies, life policies, critical illness policies.

The PPI Scandal? All claims must be made on or before 29 August 2019. But that will not be an end to the financial repercussions. There are many, many more waiting in the wings to come and rough us up in a recession.

And once again, it's those in the lower income brackets that are most exposed. Even if they're lucky enough to see reduced hours, rather than outright redundancy? They're gonna be in shtook.

To give you an idea? Between April 2011 and November 2015, more than 12,000,000 successful PPI complaints were made. That's 12,000,000 policies rescinded (that will of course include policies on long since repaid debt) - and lord knows how many other policies cancelled on the off chance of a refund.

This is the dog's egg in the long grass - and the lawnmower is coming.

Not Online!!! wrote:

 Azreal13 wrote:

Not Online!!! wrote:
If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.


Automatically Appended Next Post:
Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it

Go back and read what I've written very carefully.

From the get go I've highlighted that value is a construct, but it's irrelevant arguing otherwise as that's not reality, our economic system is based on ascribing value to commodities, so arguing that gold doesn't have an intrinsic value is futile because nothing has an intrinsic value and it contributes nothing to the discussion.

No, you need to realise that you can't argue that if nothing has intrinsic value that you should just disregard that fact and implement a standart on a commoditiy currency Basis because we can't fathom a World were such commoditiy would turn worthless.

Take whale oil for exemple.
This is why i said Gold is intrinsically valueless, in order to point out the volatility to explain to you that your standart is virtually useless as a suggestion to base the currency value on.

Just because you don't like the argument doesn't make it wrong, that is not how an argument works.

My opinion on the argument isn't what makes it wrong. It is your futile assertion that's causing the issue.


Automatically Appended Next Post:

 Peregrine wrote:

 Azreal13 wrote:
So, like I said in the first bit of my post that you didn't quote then?

No, because "nothing has intrinsic value" is not true either. Gold has limited intrinsic value because its practical applications are fairly narrow and it's not all that rare. Rarer things would have more intrinsic value. For example, highly enriched uranium suitable for nuclear weapons production is extremely valuable simply because of its scarcity and manufacturing expense. The objection to the gold standard being anything other than fiat currency is not one about intrinsic value in general, it's about gold specifically being very low in value outside of its arbitrary selection as currency.

No, you're conflating "value" with "application."

Gold wasn't worth anything for millions of years. Then man found it and decided he liked it and/or needed it. People who liked/needed it but didn't have it offered people that had gold other things they did have in exchange. How much of those goods was needed to obtain that gold was an initially arbitrary decision based on nothing more scientific than whatever felt right to the trading parties.

And lo, commerce is born.

Nothing has an intrinsic value because "value" is a construct. However everything has a value because that's what we've collectively decided to do as a species, even if that value is basically nothing.

Which is why arguing "gold has no intrinsic value" is so futile, because for this discussion to work we need to agree that everything has a value or economics doesn't work.

Arguing "the gold standard didn't work because basing another thing's worth on something that fluctuates" is a fair argument. Arguing that it didn't work because gold has no intrinsic value is baseless because whatever thing or combination of things that you substitute for gold won't have any intrinsic value either, unless we have a consensus that it does.

No, you're conflating "value" with "application."

Gold wasn't worth anything for millions of years. Then man found it and decided he liked it and/or needed it. People who liked/needed it but didn't have it offered people that had gold other things they did have in exchange. How much of those goods was needed to obtain that gold was an initially arbitrary decision based on nothing more scientific than whatever felt right to the trading parties.

And lo, commerce is born.

Nothing has an intrinsic value because "value" is a construct. However everything has a value because that's what we've collectively decided to do as a species, even if that value is basically nothing.

Which is why arguing "gold has no intrinsic value" is so futile, because for this discussion to work we need to agree that everything has a value or economics doesn't work.

Arguing "the gold standard didn't work because basing another thing's worth on something that fluctuates" is a fair argument. Arguing that it didn't work because gold has no intrinsic value is baseless because whatever thing or combination of things that you substitute for gold won't have any intrinsic value either, unless we have a consensus that it does.

Why does the goldprice then fluctuate or any good?
BECAUSE THE VALUE IS DETERMINED BY THE MARKET.
Ergo the Value as you say is a construct, ergo as you say it is not intrinsical, ergo you are a moron if you state then that the reason that something has no intrinsic value is a baseless assumption because the MARKET mechanism literally gives every commodity a value at a given time, ergo i CAN STATE that Gold has no intrinsic value, BUT that gold has the value accomondated and appointed by the market.

This is literally the reason why the gold standart never worked, because the market decides what is the goods price, ergo the Market gives the good value else it would not have any value at all, which is incidentally the reason why the gold standart not worked.

IS this so difficult to understand?

And now for the reason why i recomended a mixture of goods. Because if i apply a mixture i get surprise surprise a mixture of goods which overall will be less affected by sudden price shifts. Ergo a more stable and flexible baseline valuebasis for the currency.

IS this so difficult to understand?

I didn't think so, but you're clearly struggling with it.

 Easy E wrote:

This is not a political thread, but an economics thread.

They're one and the same because, despite their protestations, economists are not scientists and economics is not a scientific discipline, it is mathematics enslaved by philosophy.

It doesn't matter how something obtained value, it matters how reliable that value is. When someone says "X has intrinsic value" what that means in a practical sense is "X is reliably valuable."

Gold - and to a lesser extent Silver - are valuable and have a practical use for a reason that I'm surprised has not been brought up yet considering it's the primary reason why Gold and Silver became so independently popular as coinage across the globe; they're ideal metals to make coins out of.

Gold - and to a lesser extent silver - is;
- Relatively rare. You can't just dig it up in your back yard.
- It's easily cast or stamped into the shape of a coin with an official seal on it.
- It's quite light, so you can carry a decent amount of it around in a purse all day without it weighing you down.
- It's not particularly reactive, at least not with air, so it's not self debasing.
- It provides an attractive, quality finish to items such as jewellery.

It's not an accident that these two metals have formed the basis of currency the world over for hundreds of years.

Back on the actual topic, while everyone seems to love a good cataclysmic prediction the recession might hurt but it's unlikely to be on the scale of the global financial crisis. Yes there's a lot of exposed firms (the exposure to credit for vehicle purchases has already been covered I think) and there's some financial book cooking going on in many countries to make banks and other financial institutions look more stress resistant than they actually are, but the underlying economics and structure of most advanced economies is actually pretty good. Employment in the UK for example is very high (please don't bother with the zero hours etc nonsense, the number of people minimally employed is quite low relatively) and it has room for slack. Our fiscal deficit is quite low so we have room for expansionary spending if needed in an emergency. No recession is good, but it's unlikely to be anywhere near as bad as the last one.

 NinthMusketeer wrote:
It doesn't matter how something obtained value, it matters how reliable that value is. When someone says "X has intrinsic value" what that means in a practical sense is "X is reliably valuable."

Is that logic? Yeah see we don't like your kind round here

Pretty sure this is a thread about impending recession, and not about an economic decision from several decades ago?

It's funny that you seem to think that decade long decisions not have consequences in regards of economy.

House ownership pushing lead to the 2008 crisis.
A story that started earlier.

I am pretty sure he meant "the gold and silver standard is a notable element in discussion of economy overall but is off-topic within the context of this thread unless linked to the specific event being discussed, that being the next recession."


Automatically Appended Next Post:

 LordofHats wrote:

 NinthMusketeer wrote:
It doesn't matter how something obtained value, it matters how reliable that value is. When someone says "X has intrinsic value" what that means in a practical sense is "X is reliably valuable."

Is that logic? Yeah see we don't like your kind round here

Sorry, what I meant was "we need to adopt the pony standard, whereby everyone's wealth is represented by a pony of varying weight; more wealthy people can feed their pony and it will get fatter."

I am disappointed, Ninth. You're on dakkadakka, debating what to base economics around-

And your straw man is not TEEF!

The conditions definitely seem right for a recession. We have trade wars galore, a major destabilization brewing in the Middle East which will undoubtedly have an impact on oil prices, and citizens that are unable to handle economic hardships because they have no savings or assets. The only real question is what the catalyst will finally be- war, a financial scandal, or automation eliminating a large sector of jobs.

Here's my take on it.
I am going out on a limb here and by no means claim to be right but this is just how I see it..

1. China doesn't really operate a free market. Here's why. As soon as the Chinese stock market entered free fall- July 3 - China Financial Futures Exchange (CFFEX) suspends 19 accounts from short-selling for one month. In laymen terms that prevented extraction of critical amount of resources from society. (Which is what a stock-market crash is rich entities getting richer by calling in debts... defaults are covered by bailouts etc.). This and other measure kept the insane growth rate. Is it sustainable indefinitely? No. Is it softening the fall and damage controlling the slow fall of fiat currency. Yes.

New York Stock exchange can/will enter a free fall because its a strict free market US capitalist establishment. Its a payday to the very rich when it happens.

2. Why are people talking about gold? The US dollar and de-facto economical benchmark is based on a resource already - Oil/Shale Gas. The petro-dollar is heading for a very big speed bump while it will need to adjust to a shared market for oil as other players profit of the turmoil and US's weakening political position while electric/alternative energy sources are slowly becoming a larger part of society. US is the only country that's stepped out of the Paris accords. Why? To try and delay the inevitable. That's why there is so much interference going on in the middle east & Venezuela trying to keep a hold on the market $$..

Everyone else is still on track because they can see it coming we are all heading for electrics. Global warming true or false is irrelevant to thios shift in energy because its still happening irrespective if climate change is or is not man made because that's what the market now wants. The developed nations will lead and the third world will follow 1.5 steps behind.

The next recession? Yes.Trump gets re-elected and when his term finishes there'd be a good time for a grand cashing in of the chips. The dominoes will get knocked again..
This will be exhabarated by higher unemployment due to accelerating automation rates and ageing population so it will be far worse than 2008.

Am I right? Hopefully not and things will just be on the up and up and I'm just completely bonkers.. Could I be right? Hopefully not and people will not need to suffer through hardships.

Hardships of our own making, at least.

Extra Credits did a good Extra History episode on the history of paper money which went into the Gold Standard and why it no longer worked and the currencies were floated.




Clearly we all need to go back to the Cowrie shell standard.

 A Town Called Malus wrote:
Extra Credits did a good Extra History episode on the history of paper money which went into the Gold Standard and why it no longer worked and the currencies were floated.




Clearly we all need to go back to the Cowrie shell standard.

Here's the issue, EC half the time is just plain wrong.

But in this case, of course, the majority of economists agree.

The gold standard was abandoned for real reasons.

In the UK, household borrowing on unsecured credit (so excluding mortgages etc, but including student debt) is also increasing - and currently stands as a higher average than before the last crash.

Seriously. Regardless of the root cause of the next one, it's gonna be proper, proper rough. Even if the UK ends up remaining in the EU, leaves with a deal or crashes out. This is gonna hurt.

Which is why I'll be taking advantage of having a flatmate, and that extra income (which offsets my rent) to settle all my existing debts. They ain't big by any means (far, far below the household average). But they have to go. When it hits, I don't want to be owing anyone anything.

If you're in a similar financial position, I can recommend doing the same. Even if it's just a programme to reduce your borrowing. Better to do it now, whilst you know you've got disposable income.

Thankfully we're in pretty good shape other than the mortgage, and have plenty of equity in the house. Good advice though.

Honestly matey, I wouldn't rely solely on the equity. What's there today, could be gone tomorrow. Especially if there's a very sudden collapse in house prices.

And as I'm sure you're aware being a mortgage holder, if you can afford to pay extra in a given month, it saves you quite a bit of money in the long run - as overpayments typically reduce the capital, rather than the interest. This is an especially potent tactic in the early years of a mortgage, which are generally spent paying off interest, rather than capital.

And a final nuggett? Overpaying Your Mortgage Does Not Build Up A Reserve For Tighter Times. At all. It's a fairly common misconception I see at work from time to time.

Example? Let's use a round number, realistic or not. Your mortgage payment is £500. You pay this without issue for 12 months. And you also make overpayments across the same period, totalling £1,000. That £1,000 overpayment does not mean you've got two contractual repayments 'in the bank'. Ever. It just means the capital owing is reduced.

Please note this information is correct for the UK. Other countries may have different rules and takes.

We're very lucky. We have a 200k mortgage on a roughly 700k house in a very desirable area. Obviously a major recession could wipe out a lot of that value but shouldn't be to the point where we need to worry about things like negative equity.

Sweet If you've spare rooms, consider a lodger. Every penny they pay can be used to overpay the mortgage (less tax, of course).

I think what's being overlooked is that growth rates have been slowing in many countries at a graceful rate and so it's likely that both governments and private institutions can see the writing on the wall and are prepared. The 2008 recession involved the sudden falling over of a number of dominos, especially concentrated in the financial sector, which came as a massive shock and caused real problems with the recovery. The next recession is more likely to be an extended and more manageable dip followed by a much faster climb out.