@ziadaboujamra asks if I would buy Turkish equities? And with the dastardly Turk authorities now seeking to terrorise fin tweets it's just too much not to comment. Equities are a v functional way of capturing the huge income transfer from WE the people to THEM the corporates.
But buy now? Be cognisant of the flight path. Buying German Weimar stocks was also a v effective profit centre in the early stages of the great inflation. Likewise Turk equitis have worked. But as I suggested in my paper "Dawn of. Chaos" Hyper Infl is a rare & devastating scourge
Turkey is susceptible to a more sustained inflation epidemic simply because its fin assets are such a small % of gdp. The fin system was already broken. Locals didn't trust the monetary power as witnessed by v small deposits/gdp and guvies/gdp. In lira, we the people trust not...
Easier to burn the house down when the fire-breaks are non-existant; when no one really cares. I argue that the US is less susceptible owing to its reserve / love status. We the people love holding dollars - well the mercantilist nations with their swollen CA surpluses at least
So, as I eat my protein pancakes for b/fast, if you want to play inflation in 2022, go searching in places where w bank deposit or gov bonds are tiny % of their GDP. No one's awake, no guard dogs of capitalism, plagued by indifference, smoke detectors going beep beep beep
So all roads lead to Turkey but equities only work so long as the refrain is "you're joking, right?" They rapidly lose their superpower when investors realise the joke's on them. But I hear that many locals approve so far of their Gov and so ETFs may have one last puff.
But I will say one thing in defence of the crazy big boss over there. Interest rates or rather their level are like hydrocloxorine, much misunderstood. I think what he was trying to channel was Friedman.
Let's deconstruct the "high rates fuel inflation" statement. Actually its more reminiscent of Trump's admission to drink bleach; he was almost right. I'm snorting tons of iodine solution daily up my nose in crazy old London Town for example. Maybe that's powering this thread?
But high interest rates, is it causality ?? maybe, But I think there's more to it.
High rates are the perfect indicator that the monetary system has been jacked on optimism opiates, that the risk guys have dropped their guard and hosed the economy with lots of freshly printed fractional reserves. It's also indicates that fin assets are a smaller slice of GDP
And so one could argue that high interest rates are inflationary. Certainly feels right today as we languish towards the end of the 13th year of our silent global depression with nominal rates tacked to zero.
And yet the reporters who swell the egos of our central bankers and scribe away. It seems that it's their daily duty to serve as audience for the gods of finance who quarterly make utterances about the monetary public good in phrases carefully chosen to convey no meaning,
You know what I mean ? I bet you don't...ask @ToStRo instead. Yeah, maybe more tomorrow...
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