Inflation

[Arborbridge]

I think the point being made was that one cannot compare the Swiss and UK economies because they are totally different in size, in demographics, in geography and in their historical relationship with other countries. The Swiss have a position which is unique in the world and not one we could ever emulate. I'm sure you would suggest differently: but in my view the two cannot be compared because the situations are so different.

Actually the main difference (I read recently) is that the Swiss have a much better work ethic. They would not, as a people, tolerate the level of idleness we accept as normal.

That may be a major factor, but the people I know don't seem particularly hard working. They do live in a wealthy society which is the envy of many, so it all seems to come easily to them. I doubt the Swiss complain much about potholes: they just fix them (note to self - I must ask the question next time I'm there!). It's a very "closed" society, which enables them to reap the benefits of visiting employees but not commit to the long term responsibilities we take on. As an example of being "closed", I have a nephew who was born in Geneva to Anglo-French-Hungarian parentage but isn't entitled to claim Swiss nationality. I believe he is technically "English" but has lived all his life in France. I get a bit lost with the details of my family and their multi national existence! (They even change languages in mid sentence, depending which is most convenient)

By the way, my French friends say they couldn't abide living in Switzerland because they get fed up with petty-fobbing rules and regulations. It wears you down eventually because it's all rather pretty seeming.

Arb.

[Nimrod103]

By the way, my French friends say they couldn't abide living in Switzerland because they get fed up with petty-fobbing rules and regulations. It wears you down eventually because it's all rather pretty seeming.

Arb.

My Italian colleague said much the same thing a few years ago, but then don't we have an increasing level of rules and regulations? It is why HS2 is the most expensive railway line in the World.

[Urbandreamer]

It is why HS2 is the most expensive railway line in the World.

A lovely claim on a thread about inflation!

A couple of, I hope obvious reasons why you are wrong.

1) It isn't a railway, because it's been abandoned.
2) Just how difficult and expensive do you think that the trans-siberian railway was?

Re 2, of course the trans-siberian railway only cost 300 million roubles, but they were GOLD roubles. That's significantly more than the projected cost of HS2, had it been decided to finish the job. Inflation don't you know!

Let's stick to inflation, rather than sniping at government infrastructure decisions that we did or didn't like.

[Nimrod103]

It is why HS2 is the most expensive railway line in the World.

A lovely claim on a thread about inflation!

A couple of, I hope obvious reasons why you are wrong.

1) It isn't a railway, because it's been abandoned.
2) Just how difficult and expensive do you think that the trans-siberian railway was?

Re 2, of course the trans-siberian railway only cost 300 million roubles, but they were GOLD roubles. That's significantly more than the projected cost of HS2, had it been decided to finish the job. Inflation don't you know!

Let's stick to inflation, rather than sniping at government infrastructure decisions that we did or didn't like.

I wasn't making a point about whether I liked it or not. Just pointing out that compulsory purchase, planning, environmental and HSE restrictions make the costs of building stuff much higher. China, for instance, doesn't have such things, and so they build much more cheaply.

[1nvest]

I'm seriously considering changing the currency that I use. Now that we use contactless debit cards this is actually an option.

It's been a easy option for years, Pound credit card for daily spending, sell US$ (invested in stocks) or gold/whatever (T+2) days before the end of month/credit-card payment date to fully pay off that months credit card bill. Technology/electronic simplifies not having to carry around share certificates/gold/whatever in your wallet, having a e-wallet instead along with fractional shares/ounces, easier to break part of a £1700 single one ounce gold coin into £10/whatever notes (easier in some cases to that of trying to break a £50 note into £10's).

It's becoming easier to hold non-UK brokerage accounts where you can do direct transfers of shares between accounts, or transfers of (non Pound) currency between phones. The UK Parliament is seemingly intentionally killing the Pound, driving its acceptability/usage away. As-is it is intentionally driving the likes of rents higher. £350K flat, rent for £1750/month (£21K/year) that in part is including the decline of capital gains tax allowance (down to £6K) and the rise in taxation of nominal gains/increase. 5% property price increase, £17,500 value increase - that is taxed at 28% = £4900 added to the rent - so rent = £21K instead of £16K. Where those renting often wont have the income/wages to cover £21K in rent, so are supported by taxpayers (housing benefit).

In contrast others, such as the Swiss, strive to cap taxation with affordability in mind. For instance if the UK adopted similar, assumed one who might have spent their human capital - retired owning both their own £350K home alongside another that provided a £10.5K/year NET income (3% real yield to supplement their £9.5K/year state pension) from rent after £3.5K/year in expenses (uplift of otherwise 1% depreciation), £14K/year rental cost. Both the younger with high human capital/accumulating and retired parties content with the situation. Instead of a thick tax rule book and third parties both collecting/chasing taxation and others reviewing/allocating housing benefits (often in a discriminatory manner such as prioritising migrants).

[the0ni0nking]

One of the things the Swiss do have, is much weaker employee protections.

In my last job before the pandemic, I was based in Switzerland and tasked with integrating a business we had recently acquired - in other words, removing headcount in Switzerland partly because of wage arbitrage but also to align with our processes/procedures. We were able to get rid of certain people/roles at two weeks notice (and depending on length of service; no redundancy).

Conversely, they have some very restrictive rules around client identifying data which served to limit the extent/speed with which certain things could move to other jurisdictions. (Basically, individual client consent was needed).

One other interesting this to note was that because I remained a UK employee despite been based in Switzerland, the Swiss tax regime was such that they required tax to be paid as if I had been recruited locally and at a salary level they assessed. So my employer was forced to pay tax on an assumed salary even when I wasn't earning that. It's an interesting way of trying to encourage employers to hire locally rather than fly people in as they did in my case every week.

[Wuffle]

' Where those renting often wont have the income/wages to cover £21K in rent, so are supported by taxpayers (housing benefit).'

Who is being supported, is it the resident through who's hands the support passes to the owner or the outright owner?
Artificially high house prices are engineered to suit those higher up the food chain and exclude the poor.
Middle class British kids (anybody on here helping their kids on the ladder?) are the greater enemy of the poor and a relentless bid for house prices ensures that

W.

[the0ni0nking]

Middle class British kids (anybody on here helping their kids on the ladder?) are the greater enemy of the poor and a relentless bid for house prices ensures that

W.

My parents gave me £10k towards my first property purchase. I didn't expect it and didn't need it and it caused a right hassle as it prompted me to have to reduce the mortgage advance I required from the bank at a late stage in the process.

Granted, I could have simply pocketed the £10k and kept the mortgage the same but that isn't the way my mind works - I wanted as little debt as possible.

Maybe I should have refused and told them that they are the enemy of the poor?

[1nvest]

Where those renting often wont have the income/wages to cover £21K in rent, so are supported by taxpayers (housing benefit).

Who is being supported, is it the resident through who's hands the support passes to the owner or the outright owner?

Using the same £350K rented property value, that increases by 5% due to Pound debasement (inflation) where that nominal £17,500 'gain' is taxed at 28% (£4900) then clearly that 'benefit' should be paid direct to the owner. Who in turn should reduce the rent by that amount (rounded up to £5000 as they don't have to pay a accountant to do the paperwork).

[1nvest]

Middle class British kids (anybody on here helping their kids on the ladder?) are the greater enemy of the poor and a relentless bid for house prices ensures that

W.

My parents gave me £10k towards my first property purchase. I didn't expect it and didn't need it and it caused a right hassle as it prompted me to have to reduce the mortgage advance I required from the bank at a late stage in the process.

Granted, I could have simply pocketed the £10k and kept the mortgage the same but that isn't the way my mind works - I wanted as little debt as possible.

Maybe I should have refused and told them that they are the enemy of the poor?

The enemy of the poor are migrants, who may see a UK low wage as being a great-wage back-home, able to tolerate shorter term poor living conditions to return home relatively rich. Under-cut the UK's poor who are left idle/subsidised. Or having one migrant worker then bringing over 10 dependents who live off the state/others. Inflationary.

Easily resolved ... three years mandatory national service, where those raised domestically have that reduced to a year full time/residential two years non-residential accumulated during schooling years. Residential installs commonality, learning for instance not to stand on toilets and often miss, but sit instead; How to clean oneself/teeth etc. basics that may not be taught at home. Even if the service involves going around streets with a wheelbarrow and some tarmac to patch holes, or give a elderly persons home a lick of paint; Picking seasonal fruit/veg ... whatever, doesn't have to be pure military service, but that said everyone should learn how to hold/shoot a rifle as part of national defence.

[RockRabbit]

The enemy of the poor are migrants, who may see a UK low wage as being a great-wage back-home, able to tolerate shorter term poor living conditions to return home relatively rich. Under-cut the UK's poor who are left idle/subsidised. Or having one migrant worker then bringing over 10 dependents who live off the state/others. Inflationary.

Easily resolved ... three years mandatory national service, where those raised domestically have that reduced to a year full time/residential two years non-residential accumulated during schooling years. Residential installs commonality, learning for instance not to stand on toilets and often miss, but sit instead; How to clean oneself/teeth etc. basics that may not be taught at home. Even if the service involves going around streets with a wheelbarrow and some tarmac to patch holes, or give a elderly persons home a lick of paint; Picking seasonal fruit/veg ... whatever, doesn't have to be pure military service, but that said everyone should learn how to hold/shoot a rifle as part of national defence.

Ah, 'Enemy of the (fill in blank)'. Haven't I seen stuff like this before? Just change the word from 'migrants' to 'Jews' and we're back in the 1930s.

Simply hate filled racist ranting (with multiple recommendations!) Bravo LF.

[1nvest]

Why store/hold/invest in £50 and £20 notes when alternative "currencies" such as US stock share certificates and gold can also relatively quickly/easily be converted into £10/£5 notes for local 'bartering' purposes.

Ignoring the political point's about specific countries governments, that's a interesting chart.
As it happens the IC has a interesting article about the purchasing power of gold.
https://www.investorschronicle.co.uk/ne ... as-soared/

Personally I think that it says a lot more about the fiat currency system, than the economy. If it does say anything about the economy then what it says is either that gold is getting more scarce or that we are finding ways of reducing the marginal cost of production.

Ps, off topic for this board, but I'm seriously considering changing the currency that I use. Now that we use contactless debit cards this is actually an option.

(e)wallet 'currency' of US stock accumulation fund certificates and gold in equal value measure (yearly rebalanced), 1896 to recent log linear regression slope measures (general trend line) and that 'currency' saw other 'assets' historic price decline rates of ....

Consumer prices -4.8%
House Prices -2.7% annualised
Pound currency (hard cash) -9.1%
UK stock (price only) -4.2%
US stocks (price only) -2.6%
Cash deposit (T-Bills) -3.7%

Of course that 'currency' is 'foreign', you can't walk into a grocery store and pay in a US S&P500 stock index share, has to be converted to Pounds first, as with any other currency. Typically a T+2 days conversion notice/time. Alternatively pay by credit card, and do the conversion a few days prior to paying off that months credit card bill.

Alongside owning a UK home (GB£), that's additionally US$ fiat currency and non-fiat commodity currency (gold), asset diversity of land, stocks, commodity.

Commonly however and many prefer to measure relativity based to hard cash Pounds, which historically at least where the worst currency to keep in your wallet.

A note about rebalancing, that just reduces concentration risk, doesn't broadly add to rewards (introduces additional costs). If you don't rebalance for a decade then 50/50 will tend to end up with a high weighting in the more productive/rewarding asset(s), may end up at 80/20 ... such that you time-averaged 65/35 in the best/worst assets. Rebalancing is inclined to yield a comparable reward to that (on average, but different time periods may see that swing either way), but where you were less concentrated into a single asset, more consistently remained at around 50/50 exposure levels. Additions/withdrawals applied to a non-rebalanced portfolio can be directed in a manner where that is a form of partial rebalancing, add to the most-down, draw from the most-up. i.e. if your (e)wallet contents stock value is greater than the wallets gold contents value, then spend stock certificates (otherwise spend gold). Which simplifies things, such as for heirs. Load up 50/50 at retirement, spend down whichever is the higher value each month in order to pay off the credit card bill, beyond which there's no other management required (no yearly rebalance trades involved). A exception however is if the two values become considerably different, such as if the weightings had increased to/above 75/25 when the concentration risk might be considered a bit too high.

Working in your favour is that the UK will take steps to prop-up/maintain its housing market, as will the US take steps to prop-up/maintain its stock markets, so you're aligned with "don't fight the fed".

[Urbandreamer]

Of course that 'currency' is 'foreign', you can't walk into a grocery store and pay in a US S&P500 stock index share, has to be converted to Pounds first, as with any other currency. Typically a T+2 days conversion notice/time. Alternatively pay by credit card, and do the conversion a few days prior to paying off that months credit card bill.

As I said, off topic. But I intend using BTC, avoiding the T+2 and the T+5 delays. Not sure why it officially takes five days for funds to move from a broker account, but that is what's claimed.

With BTC, it can be assumed to change hands in an hour (6 confirmations of 10 minutes each) to fund the exchange/card. It doesn't have to be converted to pounds before you walk in the store. It's all handled by VISA and the exchange/card. I've had no problem paying for beer in a pub this way.

I understand that historically some American brokers issue a debit card linked to the account, which would make things a lot easier. I know of no UK broker who does the same.

[1nvest]

I intend using BTC, avoiding the T+2 and the T+5 delays. Not sure why it officially takes five days for funds to move from a broker account, but that is what's claimed.

With BTC, it can be assumed to change hands in an hour (6 confirmations of 10 minutes each) to fund the exchange/card. It doesn't have to be converted to pounds before you walk in the store. It's all handled by VISA and the exchange/card. I've had no problem paying for beer in a pub this way.

May I ask what card that is? And 6 confirmations is 10 minutes each - does that mean 6 separate times you've credited the card and that's how long each took for the actual transfer to have occurred? I know little to nowt about BTC, other than its value is very volatile.

As I see it the future is being directed to where transfer into/from Pound accounts will by popular vote be limited to just for paying tax/receiving benefits with high barriers to other forms of transfers in/out. Where the voting by feet will be inclined towards other forms of payments. Inflationary .... in terms of Pounds, perhaps even into hyper-inflation territory.

[Urbandreamer]

I intend using BTC, avoiding the T+2 and the T+5 delays. Not sure why it officially takes five days for funds to move from a broker account, but that is what's claimed.

With BTC, it can be assumed to change hands in an hour (6 confirmations of 10 minutes each) to fund the exchange/card. It doesn't have to be converted to pounds before you walk in the store. It's all handled by VISA and the exchange/card. I've had no problem paying for beer in a pub this way.

May I ask what card that is? And 6 confirmations is 10 minutes each - does that mean 6 separate times you've credited the card and that's how long each took for the actual transfer to have occurred? I know little to nowt about BTC, other than its value is very volatile.

As I see it the future is being directed to where transfer into/from Pound accounts will by popular vote be limited to just for paying tax/receiving benefits with high barriers to other forms of transfers in/out. Where the voting by feet will be inclined towards other forms of payments. Inflationary .... in terms of Pounds, perhaps even into hyper-inflation territory.

It's off topic, and technical.
But....
I have an account with CoinBase (crypto exchange) that includes a debit card. Any funds, in any crypto they deal with, can be used to fund spending upon the VISA card.

Bitcoin is statistical. You instigate a transfer, for example from your private vault (and we all advise limiting what you keep on an exchange like MtGox or FTX) and any transaction can be theoretically replaced. There is debate about how much history makes a difference, but the safe worst case is a history of 6 records (blocks). Hence if you fund your account before using the card, to be polite, you should wait 6 blocks. There is a new block every 10 minutes. Hence worst case of one hour. If you keep funds on the exchange you can ignore that delay.

My intention is to keep a few weeks worth of BTC on the exchange to fund buying food in the supermarket.

Re tax. CGT is payable if the pound depreciates against your shares/bitcoin unless in a tax shelter (which you can't do with bitcoin).

[Nimrod103]

https://www.telegraph.co.uk/business/20 ... -rate-cut/

The Bank of England could begin cutting interest rates before the US and the eurozone in a sharp reversal of previous expectations, according to traders. Money markets indicate that there is a 20pc chance that policymakers in Britain could announce a first interest rate cut since the pandemic in May. Meanwhile, the chances of such a move by the US Federal Reserve and the European Central Bank (ECB) are put at around 10pc.

[Mike4]

https://www.telegraph.co.uk/business/2024/03/26/ftse-100-markets-latest-news-bank-england-interest-rate-cut/

The Bank of England could begin cutting interest rates before the US and the eurozone in a sharp reversal of previous expectations, according to traders. [i]Money markets indicate that there is a 20pc chance that policymakers in Britain could announce a first interest rate cut since the pandemic in May. Meanwhile, the chances of such a move by the US Federal Reserve and the European Central Bank (ECB) are put at around 10pc.[/i]

Or put the other way, an 80% chance they won't?

[Arborbridge]

I wasn't making a point about whether I liked it or not. Just pointing out that compulsory purchase, planning, environmental and HSE restrictions make the costs of building stuff much higher. China, for instance, doesn't have such things, and so they build much more cheaply.

I'm sure you prefer to live in a society were fairness and the impact to the individual still has some consideration. Cheapness at further expense to your liberty is not a price you would want to pay, so you need to accept some of the downside of that.

Arb.

[Nimrod103]

I wasn't making a point about whether I liked it or not. Just pointing out that compulsory purchase, planning, environmental and HSE restrictions make the costs of building stuff much higher. China, for instance, doesn't have such things, and so they build much more cheaply.

I'm sure you prefer to live in a society were fairness and the impact to the individual still has some consideration. Cheapness at further expense to your liberty is not a price you would want to pay, so you need to accept some of the downside of that.

Arb.

I agree with you, but only up to a point. The way the British system seems to work is that if you are a land owner, eventually you get compulsorily purchased (eg for HS2) , but it takes 10 years and a vast amount of lawyers fees to do it, so the costs rise steeply.
Is there a difference to the Chinese way in the final result?
This will be happening soon again with freeholders being expropriated.

[Lootman]

The way the British system seems to work is that if you are a land owner, eventually you get compulsorily purchased (eg for HS2) , but it takes 10 years and a vast amount of lawyers fees to do it, so the costs rise steeply.

Is there a difference to the Chinese way in the final result?

This will be happening soon again with freeholders being expropriated.

After decades devoted to achieving financial security through property, I have more recently and sadly come to the conclusion that holding assets that cannot be moved is a risk, given the rising tide of envy-fuelled ideology in this country.

I may go into this next inevitable Labour government holding no property assets or housing units for the first time since 1977. As the old saying goes, quit while you are ahead.