Hi All,

I wanted to open up this discussion to hopefully get people's thoughts and learn more from those with more knowledge/expertise on the plumbing of the economic system. Please excuse the facetious title, but one can live in hope!

In particular, it would be great to get ideas on how people are managing their portfolios / personal finances.

To use a cliche, we appear to be living in strange times.

Deficits don't matter

One I struggle with most (consciously avoiding lockdown2.0 - took my views off twitter & to my MP) is the casual attitude of policy makers central banks and citizens to the huge increases in "debt & deficit". I am a fiscal conservative at the best of times, but this is getting seriously crazy no?

Maybe, the reason I find this so difficult is that I studied economics in 2001-2004, when I remember multiple times that one of the issues with interest rates is that they cannot go negative and made outrageous comments like deficits / public sector debt result in crowding out private investment.

The BoE is cancelling UK debt purchased as QE, but when Argentina & Zimbabwe do this, it doesn't end well. 

I don't want to be sensationalist and suggest that we are going down the route of hyperinflation (which I understand is a political phenomenon) as much as a monetary phenomenon. However, given the level of our imports & the deficit, do we not need other countries to trust our currency and fiscal management.

I guess the big worry is that the currency is relying on history & limited competition for reserve status. But eventually it will depreciate and we will not be able to fund services like the NHS that rely on machines from abroad. 

I hear stories of the difficulties during the 1970s & I expect that deficits & inflation were a large part of the issues that caused the societal & currency issues at the time.

What am I doing / have I done?

Not much to be honest - I am far too confused / uneducated / stupid / scared to call the end of the monetary system / falling empires (understand Ray Dalio is the go to source), but in terms of broad strokes as to how I approach asset allocation:

  • I always held gold, but I have increased it from 2% to 10%.
  • From asset allocation, I have reduced to less than 10% (from 25) any allocation to government…

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