Inflation

[Knobby22]

not if they have to pay out CDS swaps ( and other derivatives ) that might be incalculable

several pension funds have massive unfunded liabilities ( and that seems to be just the US )

but of course they could always print more US dollars

We have the ability to pay off our debt quickly however it would involve taxing the multinationals exporting our gas and minerals more effectively.

 

[Smurf1976]

Globally though Net debt is $0.

Doesn't our fiat monetary system create the principal but not the interest thus making debt in total unrepayable?

 

[over9k]

Doesn't our fiat monetary system create the principal but not the interest thus making debt in total unrepayable?

Debt in total or net debt?

Debt itself will never disappear unless you outlaw lending money. GL with that.

 

[mullokintyre]

meanwhile, in the world of what IS happening rather than what should/might/in theory happening, a plunge in container imports into the LA ports probably needs to be taken into account .
From FreightWaves

September is usually a strong month for West Coast imports as U.S. companies bring in their year-end holiday goods. Not so in 2022.

On Wednesday, the Port of Los Angeles reported its lowest import total for September since 2009, amid the Great Recession. The day before, the neighboring Port of Long Beach posted its weakest import total for September since 2016.

Imports to Southern California ports are falling fast because shippers have shifted volumes to East and Gulf coast ports, fearing disruptions from West Coast port labor negotiations. Simultaneously, volumes are now pulling back nationwide due to falling demand.
“In the month of September is where the real story lies,” explained Gene Seroka, executive director of the Port of Los Angeles, during a news conference on Wednesday.

Earlier this year, imports of durable goods bought heavily during the pandemic — furniture, appliances, etc. — began pulling back. In September, declines were heavily driven by reductions in holiday goods, as well.

“September is traditionally a high-volume month for end-of-year products,” said Seroka. “Think toys and games, clothing, footwear and other products. Those holiday gift items dropped precipitously compared to last September, mainly because they came in earlier. This year our peak season was in June and July, as savvy importers moved up the arrival of these goods to bring some certainty back to when they could get to market.”

It remains to be seen whether it is a timing issue of imports, or it is a sign of some big recessionary cutbacks to come.
The other big indicator, the BDI , has stabilised around the 1800 mark after crashing to 750 in September, but it is still down nearly 60% since the beginning of the year.
Mick

 

[over9k]

meanwhile, in the world of what IS happening rather than what should/might/in theory happening, a plunge in container imports into the LA ports probably needs to be taken into account .
From FreightWaves

It remains to be seen whether it is a timing issue of imports, or it is a sign of some big recessionary cutbacks to come.
The other big indicator, the BDI , has stabilised around the 1800 mark after crashing to 750 in September, but it is still down nearly 60% since the beginning of the year.
Mick

Yeah this was always going to happen. Look at peloton for the poster boy for this. Everyone bought everything in the pandemic and now they don't need another fridge/couch/exercise bike/laptop/whatever for years and years.

 

[qldfrog]

meanwhile, in the world of what IS happening rather than what should/might/in theory happening, a plunge in container imports into the LA ports probably needs to be taken into account .
From FreightWaves

It remains to be seen whether it is a timing issue of imports, or it is a sign of some big recessionary cutbacks to come.
The other big indicator, the BDI , has stabilised around the 1800 mark after crashing to 750 in September, but it is still down nearly 60% since the beginning of the year.
Mick

On a local related subject, i have been told on the grapevine that containers price in Australia are heading down steeply ahead , due to a flood of containers ..aka reduced commerce?
This could put an end to some supply issues based inflation .

 

[divs4ever]

We have the ability to pay off our debt quickly however it would involve taxing the multinationals exporting our gas and minerals more effectively.

but if you ' tax them effectively ' ( they are already paying royalties and other government costs ) , where is the incentive to spend five to ten years planning and building the mine ( and various other plant and infrastructure ) add in many Western Governments change every 3 or 4 years along with random policy changes , and commodity prices and currency fluctuations .

remember the average working mine evolved from at least a year of successful exploration ( not all exploration leads to a feasible project ) a prolonged wade through various approvals ( and sometimes concerned citizens protests , and you still haven't started prepared the ground for resource extraction . ... AND plant and equipment doesn't last forever it will need to be replaced/upgraded/repaired .

MAYBE more effective use of tax revenue ( as suggested by the late Kerry Packer ) would be better

tax the resources too much ( and commodity prices drop ) and you have a mothballed ( or abandoned ) mine ( ala the nickel mines of PAN and MCR a couple of years back ) and you get no tax incomes from that mine until a restart

 

[InsvestoBoy]

Doesn't our fiat monetary system create the principal but not the interest thus making debt in total unrepayable?

If the debt is productive and grows the economy, it can of course be repaid.

If the debt is unproductive or promotes malinvestment then it probably can't be repaid, in aggregate. Nothing stops individuals who take out loans to buy a jet-ski from repaying that loan if they wish to and are able do so.

Total debt is reasonably a mix of both, if you believe in capitalism then it's reasonable to believe more of it is productive (because why would the lender make unproductive loans that are less likely to be paid back in aggregate) than not.

The question however is premised entirely on whether the debt should ever be repaid in total and the answer is probably not.

This is a credit based (not fiat based) money system, aggregate debt repayment is aggregate monetary destruction and commensurate shrinking in economic size and activity.

 

[frugal.rock]

On a local related subject, i have been told on the grapevine that containers price in Australia are heading down steeply ahead , due to a flood of containers ..aka reduced commerce?
This could put an end to some supply issues based inflation .

I had heard there was a lot of empty containers sitting around at various port's.
There was talk of forcing the clearing of empties backlog as they were starting to impede movements.
Fines were imposed by some ports for containers sitting more than 14 days on wharf and even less days for train carried based containers.

 

[divs4ever]

On a local related subject, i have been told on the grapevine that containers price in Australia are heading down steeply ahead , due to a flood of containers ..aka reduced commerce?
This could put an end to some supply issues based inflation .

maybe , reduced demand ( as opposed to the delivery of delayed orders ) and now the customers ( and businesses ) are financially constrained .

If the debt is productive and grows the economy, it can of course be repaid.

yes , you are correct , sadly the other option is more popular in many places ( both at local and national level )

and equally sadly .. popularity wins elections ( so those fiscal tightwads normally go unelected , and unheeded when they are consultants )

 

[Value Collector]

Doesn't our fiat monetary system create the principal but not the interest thus making debt in total unrepayable?

Nope, thats a fallacy.

The fallacy suggests that if you loan $100 into existence and charge $5 interest, the total amount of $105 which is repayable is impossible to repay because only $100 exists, this ignores the fact that the debt and interest doesn't have to be paid all at once, and the interest charges can be spent back into the economy allowing debts much larger than the actual original principle amounts to be paid off.

This fallacy can easily be shown to be false with a simple example, Lets say we live on an Island just the two of us, and only one single $1 coin exists and I own it. Say you lose a $100 bet and now owe me $100, some people would say that debt could never be paid because only $1 exists. However those people are missing huge point, you could collect a coconut for me each day and I pay you $1 for the coconut and each day when I pay you that $1 you make a $1 payment of that $100 debt.

So even by only having $1 cycling through our island economy, you can repay $100 in principle just by the lender spending that money back into existence.

All the reserve banks "profits" get spent on their running costs or paid to the government, either way the interest is recycled back into the economy where it can be earned and used to clear debt again. It's production that creates the value to clear debt, not the actual amount of money that exists at any one time, because money can pass through many hands.

 

[divs4ever]

I had heard there was a lot of empty containers sitting around at various port's.
There was talk of forcing the clearing of empties backlog as they were starting to impede movements.
Fines were imposed by some ports for containers sitting more than 14 days on wharf and even less days for train carried based containers.

hadn't heard about the proposed fines , but did hear stories ( possibly untrue , since i don't have sources on the wharves now ) that some long-staying containers were still full ( consignments to failed businesses , or goods ordered in advance , or just deliveries stalled by logistics snarls

and yes there was plenty of news on empty containers that can't find a boat back home ( often to China ) let alone a load to fill it before leaving the wharf

 

[frugal.rock]

The fines thing was in the US, I think.
Not trying to be specific though, just generalisation without a quoted source.

Quick google

Ocean carriers will pass on fines to importers for lingering containers

The Los Angeles/Long Beach cargo community is confused about punitive fees on ocean carriers designed to expedite the clearance of containers from marine terminals.

www.freightwaves.com

 

[Value Collector]

If the debt is productive and grows the economy, it can of course be repaid.

If the debt is unproductive or promotes malinvestment then it probably can't be repaid,

I wouldn't even say that it has to grow the economy to be repaid, the economy can stay exactly the same size as debt does is transfer some of the purchasing power from the borrower to the lender.

For example, if Tom and Ben spend $100 a week each, we have a $200 economy. If Tom borrows $100 from Ben and spends $200 and Ben spends nothing that week will still have $200 spending/economy. Next week when the loan payments start Tom will only have $90 to spend because he has to pay Ben $10/week, but Ben has $110 to spend, the unproductive loan can still be paid off, even though the $200 economy has remained they same.

 

[Value Collector]

I had heard there was a lot of empty containers sitting around at various port's.
There was talk of forcing the clearing of empties backlog as they were starting to impede movements.
Fines were imposed by some ports for containers sitting more than 14 days on wharf and even less days for train carried based containers.

Its been expected that there would be a glut of containers eventually, due to the excessive amounts that were made in 2020/2021 due to the shipping crunch, they ports were so slammed that they weren't returning empty containers back to china so china was mass producing them just to keep up.

check out this video at the 4 min mark to see a brief explanation of what caused the over production of shipping containers.

 

[Knobby22]

but if you ' tax them effectively ' ( they are already paying royalties and other government costs ) , where is the incentive to spend five to ten years planning and building the mine ( and various other plant and infrastructure ) add in many Western Governments change every 3 or 4 years along with random policy changes , and commodity prices and currency fluctuations .

remember the average working mine evolved from at least a year of successful exploration ( not all exploration leads to a feasible project ) a prolonged wade through various approvals ( and sometimes concerned citizens protests , and you still haven't started prepared the ground for resource extraction . ... AND plant and equipment doesn't last forever it will need to be replaced/upgraded/repaired .

MAYBE more effective use of tax revenue ( as suggested by the late Kerry Packer ) would be better

tax the resources too much ( and commodity prices drop ) and you have a mothballed ( or abandoned ) mine ( ala the nickel mines of PAN and MCR a couple of years back ) and you get no tax incomes from that mine until a restart

Shell has acknowledged that it will never pay any petroleum resource tax over the life of the project.

Gas giants paying zero income tax on Australian operations, new data shows

As the gas and oil industry gathers in Brisbane for the annual APPEA summit, data shows some member companies paid no income tax for past seven years.

www.google.com.au

 

[divs4ever]

Nope, thats a fallacy.

The fallacy suggests that if you loan $100 into existence and charge $5 interest, the total amount of $105 which is repayable is impossible to repay because only $100 exists, this ignores the fact that the debt and interest doesn't have to be paid all at once, and the interest charges can be spent back into the economy allowing debts much large than the actual original principle amounts to be paid off.

This line of thinking can easily be shown to be false with a simple example, Lets say we live on an Island just the two of us, and only one single $1 coin exists and I own it. Say you lose a $100 bet and now owe me $100, some people would say that debt could never be paid because only $1 exists. However those people are missing huge point, you could collect a coconut for me each day and I pay you $1 for the coconut and each day when I pay you that $1 you make a $1 payment of that $100 debt.

So even by only having $1 cycling through our island economy, you can repay $100 in principle just by the lender spending that money back into existence.

All the reserve banks "profits" get spent on their running costs or paid to the government, either way the interest is recycled back into the economy where it can be earned and used to clear debt again. It's production that creates the value to clear debt, not the actual amount of money that exists at any one time, because money can pass through many hands.

OH NO ! now you are arguing currency is a token of work/productivity done ( or to be done in the future )

that is a crazy ( but correct ) concept that will topple governments ( those that embrace MMT , carelessly ) and ruin ( false ) economies

now currently that debt is often NOT being repaid , the debt ( interest ) is being serviced and the original capital is being refinanced ( more likely at a higher interest rate in the current trend )

now another problem of this cycle is the trend of the original $100 being loaned , was that the $100 had been pulled from FUTURE productivity ( which may or may not happen ) ( after all the original scenario contained a single $1 coin which doesn't seem to have changed hands , much like Central Bank gold reserves )

i love the example by the way , it explains more the deeper you analyze it

cheers

 

[divs4ever]

On a local related subject, i have been told on the grapevine that containers price in Australia are heading down steeply ahead , due to a flood of containers ..aka reduced commerce?
This could put an end to some supply issues based inflation .

maybe , reduced demand ( as opposed to the delivery of delayed orders ) and now the customers ( and businesses ) are financially constrained .

 

[JohnDe]

We have the ability to pay off our debt quickly however it would involve taxing the multinationals exporting our gas and minerals more effectively.

Pay particular attention from 1:25

 

[divs4ever]

Shell has acknowledged that it will never pay any petroleum resource tax over the life of the project.

Gas giants paying zero income tax on Australian operations, new data shows

As the gas and oil industry gathers in Brisbane for the annual APPEA summit, data shows some member companies paid no income tax for past seven years.

www.google.com.au

is that the company's fault , or the weakness of government negotiations

for example originally gas was considered and noncommercial ( waste ) by-product of oil production ( and flared )

would a government prefer that gas burnt at the extraction site ( at no profit to anybody ) , or MAYBE used in the power generating plants and elsewhere in the global economy ( it is still liable to be burnt somewhere, sometime while oil production proceeds )

i also note a tiny word 'INCOME ' most energy companies pay royalties ( to the states , and sometimes others ) they also pay taxes on various other parts of the production cycle ( maybe even carbon credit offsets to Europe ) there are also other costs and remediation costs involved INCLUDING upfront guarantees on remediation costs ( effectively lending the state government money , probably interest-free )

and in the case of some nations upfront bribes ( normally are undocumented ) are an unofficial tax as well

now i hold WDS ( Woodside ) and BPT which apparently were not invited to the meeting , but my hazy recollections of Santos makes me wonder how much TAXABLE profit did it make in those years ( income is NOT profit ) if STO fulfilled its tax obligations , the problem is elsewhere .

ANOTHER issue glossed over is the trend to adjust government policy after the horse has bolted , this will reduce future investor sentiment ( one reason i avoided investing into Africa until recently , but now global standards are slipping , why not Africa and PNG )

i would have told you about my loss of confidence in the government on this subject , but that confidence had completely vanished by February 2020 ( and i am NOT restricting that to politicians )