Just a quick money thought for today...

Presented without comment.

Source = ZeroHedge

And an excellent video along the same lines that exlains what is truly happening in the financial world:

Punk Economics - Lesson 3

Inflation

I've chosen an image by Escher for today's post because I hope it will provide you with a different way of looking at something, namely inflation.

Inflation is most often defined as the rise in price of goods and services over time. However, its less often quoted meaning is the loss of value of the currency. It's this second meaning that is more representative of what inflation truly is. I strongly believe the first definition is misleading, perhaps deliberately so, as we shall see.

We have become so accustomed to living in a society that uses money that we often take its units of measurement, be they Pounds, Dollars or Euros, as fixed, much like distances like metres and weights like kilograms. In reality, they are units of exchange and are thus subject to the laws of supply and demand.

Think back to a time before money. Perhaps a wheat farmer wanted some meat for his meal. He might exchange a bushel of wheat in the local town for a pig. One year, pork is particularly popular (demand has increased) and the pig farmer can command a higher price - the wheat farmer will need to exchange two bushels of wheat. Another year, the wheat crop across the country is poor (supply has gone down) and so this time the wheat farmer has the upper hand - he only needs to give the pig farmer half a bushel.

Money simply makes exchange easier - if the pig farmer didn't want any wheat, the wheat farmer would have to find someone with whom to exchange his wheat for something the pig farmer did want.

You can quickly see that money itself has no value - it is simply a piece of paper or cheap metal and has very little practical use. Things like pigs, wheat, computers, cars and houses have practical use and inherent value. The "value" in money comes from the fact that everyone agrees to exchange it for goods and services - hence the term fiat, from the Latin for "it shall be".

Money is simply a common unit of exchange and is therefore subject to increases and decreases in value depending on its supply and its demand.

Two of the unfortunate side effects of inflation being thought of in terms of "prices going up" rather than "value of money going down" are:

Blame for the prices can be misplaced. People grumble about how suppliers or perhaps "speculators" are pushing prices up. In reality, the mismanagement of the supply of money, primarily by the government and banks, is responsible for pushing the value of money down. The following graph shows how the value of the pound has fallen:

Reported prices of some goods are distorted. Because prices are usually reported in "nominal" terms (i.e. without factoring in the falling value of the currency), it can appear that price changes are constantly rising. Compare the curves on the following graph:

If you were following the announcements in the press about house prices between 1990 and 1996, you might think the value of a home had only fallen by about £10,000. In reality, because the value of the currency had also been falling during that period, the home would really have lost £80,000. The same will happen over the coming years but people who think in terms of "prices go up" rather than "value of money goes down" won't see it.

Rising house prices are often portrayed as a good thing in the media. They make home-owners feel good - their wealth is increasing and so they feel confident about spending today, rather than saving for the future. People who don't own a home see the rising prices and want to join in to benefit. As prices go up, demand falls and so the inevitable boom-bust cycle is formed. This is somewhat hidden when looking back at nominal pricing.

Hopefully, you'll never see money the same way again...

Food choices when dieting

I've started the process of losing the fat I inevitably gained from eating a slight calorie surplus for the past 10 months during my muscle and strength-building phase. I now need to make sure that the food I'm choosing to eat is as satiating as possible. Losing fat depends on a number of factors, the most important I believe to be time, willpower and calorie intake. Unless you are very overweight, you don't want to lose weight too fast because you will also be losing the good things like muscle and potentially interfering with hormones, which lead to feeling like crap. In your head, you want to be lean now, but your body is going to fight that and if you go too quickly, you'll end up falling off the waggon too soon and never making much progress. Changing your body is about time and patience. It's a marathon, not a sprint.

I'm aiming for a loss of 1 lb per week and to do this, I'm going to taper my calories down each week to ensure that I maintain this rate of loss for as long as possible - until I reach a level of leanness that I'm happy with. I suspect it's going to get more difficult as I approach my goal, so I may need to take some breaks along the way.

It may sound obvious, but during a calorie deficit, I'm going to be hungry. If I get too hungry, I'm going to need more willpower to stop myself from reaching for the snacks (almost certainly resembling that guy in the image up there!).

The best food choices I can make are going to be foods that are filling, low in calories and high in protein. These foods will help prevent me from being hungry and, combined with resistance exercise, convince my body that it should be burning fat, not muscle (protein).
An excellent list of these types of food can be found over at ChickenTuna's website. Her motto of "eat boring food and have an exciting body" is pretty good, except that the food choices aren't quite as depressing as being boring! One of the best things I ever did to change my diet was to eliminate as much sugar as possible. Sugar creates a vicious cycle of highs and lows. By reducing your intake of sugar, you remove a lot of cravings and really start to enjoy the flavours and tastes of so-called "boring" foods like vegetables.

Because I love numbers, I created something I called a "Nutrient Quotient" (I'm sure this is not original and I bet there are loads of other similar things out there - I haven't looked for them though as this was purely for my benefit). I can input the foods I eat into a spreadsheet and by dividing the number of calories per 100g in that food by its total protein and fibre content, I get a number that reflects how useful it will be to eat during a calorie deficit - the lower the NQ, the better (it contains more fibre and protein for its calorie content). Let's take a look a few examples:

• Broccoli - this has become one of my favourite vegetables since taking more interest in my diet: 100g contains the following: 30 calories, 3.3g protein, 3.6g fibre, thus its NQ (nutrient quotient) is 30 / (3.3 + 3.6) = 4 (I'm rounding to the nearest whole number as the accuracy isn't that important).
• Pizza - along with sushi, pizza is one of my favourite foods. I'm using a typical margarita-style shop-bought frozen pizza for the following values: 780 calories (per-pizza), 36g protein, 11g fibre. Thus its NQ is 17.
• Coconut Milk - I don't mean the tins of coconut milk here, but a dairy-alternative available in the UK from a company called Kara. This is my favourite alternative to normal milk because it isn't sweet, like rice milk (although I do like rice milk!) but isn't chalky like some soya milk can be. Anyway, because this is a liquid, it contains very little fibre so comes out with a very high NQ of 90. This demonstrates the principle of chewing your calories, not drinking them.
• Egg whites - I've found buying liquid egg whites a great way of helping me get my protein intake without the hassle of cracking lots of eggs and throwing the yolks away, which also seems a shame. (Whole eggs are great and I eat lots of them when I want to gain weight). These come out with a NQ of 4.

Thus, using NQ, I can help make informed choices about which foods are going to help me maintain the good stuff (muscle) and get rid of the bad (fat), hopefully without getting too hungry in the process (by keeping fibre intake high).

The most important point to remember in all of this is that changing your body takes time and effort. Different methods work for different people, but they all have their foundation in controlling calorie intake. As a scientist, I like to take a measured, informed route. There is no magic secret or supplement until we can buy willpower in pill form.

I will continue to weigh myself weekly, changing my calorie intake to ensure I lose 1 lb per week and go to the gym twice per week to perform heavy, compound exercises like squats, benchpresses, weighted chinups and deadlifts.

UK House Prices Update

 

Since the mid 1990s, the UK has "enjoyed" substantial growth in the UK residential housing market. I say "enjoyed" because increasing house prices are a double-edged sword - they benefit those who are smart (lucky?) enough to get out at the top and hurt those who get locked in to a property worth less than the loan secured on it. I've written before on one of the factors affecting the market - the number of buyers, i.e. the demographics. Now I'm going to put my money where my mouth is and make a prediction for where prices are headed.

First, I need to point out the importance of real prices vs. nominal prices. Essentially, real prices are corrected for inflation and nominal prices are not. When discussing prices of anything over a reasonably long time period (5 years or more), it's important to use the real price because even a small amount of inflation can make large impacts to the value over time. This is due to the nature of exponential growth and I'll go into more depth on both this and inflation in a later post. 

Here is a graph of real UK house prices since 1983. I've used the average of both Nationwide's figures, which go back to 1975, and Halifax's, which only go back to 1983. The correction factor is taken from Nationwide's figures, which come from the ONS's numbers for the Retail Price Index, RPI.

There are a few important points to note:

• The grey vertical regions are recessions.
• The grey line is the section of the population I consider most likely to be active in the housing market. People younger than this may not be able to afford to buy, people older than this are likely to be downsizing or releasing equity. In fairness, I have cherry-picked the narrow portion of the demographics that most closely matches the change in house prices, but a broader section shows the same pattern.
• The blue line is the UK as a whole.
• The red line is just for Northern Ireland, which experienced a particularly explosive boom and hence now a bust.

I've added my prediction for UK house prices with a red arrow. This is based on the demographics and also the size and duration of previous peaks and corrections.

Perhaps the most important point is that I don't think many people will "see" the continued fall in the housing market. It will be hidden by inflation. For example, the average price of a house in the UK (at the end of December) is £163,000. I think it will stay at this price for many years (i.e. the price reported by the press and the mortgage lenders), gradually falling in value when corrected for inflation.


I'll begin to be interested in purchasing a house when I see house prices in real terms stop falling. I expect this to be around 2015. Having said that, anything could happen in the future and I think we are going to see some interesting things happen in the economy over the next few years. Never before has the world been in so much debt. That's another topic I'm sure I'll delve into another day...

Long time, no see!

I've been away (from this blog) for far too long. My health routine is largely unchanged but I've changed my attitudes towards finances to some extent. I'll go into details in future posts.

This post is just an update to my muscle-building / fat-burning progress:

• I'm no longer vegetarian (long story largely unrelated to nutrition).
• I'm heavier.
• I'm stronger.
• I'm older (now 31) :D
• I only work out twice per week now (it used to be three times, but I found no significant difference in progress by dropping to twice and possibly improved recovery of the big lifts - squat and deadlift).

Things that have not changed:

• I'm still an IFer (LeanGains style, although since the whole thing is about convenience, I eat between 5pm and 10pm i.e. when I'm home from work).
• I still get the vast majority of my calories and protein from food (i.e. I don't use shakes).
• I still only supplement with a little whey protein and creatine (along with the obligatory multivitamin).
• I still use a Starting Strength type approach - heavy, compound lifts.
• I still record each workout in a logbook so that I can increase the weight next time (assuming I've managed all reps with decent form).
• I still weigh myself once per week and adjust calories as needed to hit the rate of gain or loss I want.
• I'm still short at 5' 4" =)

This was me before any consistent training (weight probably around 9st):

This was after 7 months of building up my strength and cutting down lots of fat with a Starting Strength type routine (weight exactly 8st 1lb!):

This was after another 8 months of a bulk/cut cycle (weight exactly 8st 8lb):

I'll post a current pic when I've finished cutting - I'm too fat right now, but I'll show the change.

Things I've learned:

• I find it very hard to put on muscle, so I need to bulk slowly. (I'm both very short and small-framed - my wrists measure 6 inches at the widest point, my ankles 7.25 inches).
• At a steady gain of 1/2 per week, I get too fat after about 6 months.
• I would rather gain more slowly to minimise fat gain. My next bulk cycle, I will go even more slowly - aiming for 1/2b per fortnight.
• Patience and consistency is the name of the game!
• Steroid use is extremely common and very few people talk about it. I respect people who are honest, whether they take them or not. I've chosen not to, but for beginners it's very hard to get an idea of what is achieveable without them.

An example of someone whose achievement I respect:

Pham Woodbridge

Pham went from 110lb to 160lb in 9 years. This is an average rate of 5.5lb a year! As a small "hardgainer" I can relate to this as a realistic natural rate of growth (I'm assuming Pham is natural, but I'm never certain in this game).

UPDATE - I'm not convinced he's natural after further research. Most of the images on SimplyShredded are "enhanced"...

I also agree with his thoughts on aerobic exercise (i.e. unnecessary to get ripped) and main exercises (weighted chins, bench, squat). I don't think his "eating every 3 hours" is necessary and I found the whole thing a pain when I once tried to do it. Since doing LeanGains, I've found my life freed from the pain of preparing meals and worrying about "OMG my muscles are going to waste away if I don't eat in the next 18 mins". That being said, I'm hardly the next Arnie, so who knows, maybe if I ate every 2 hours, I'd be huge! ;)

Hope some of this is useful for a real-world example of a "hard-gainer". One thing that frustrated me when just starting was knowing how long it would take / how fast I could build muscle. I've tried to provide as many numbers in this post for that reason.

I'll post an update in a few months when I'm ripped again! (I'm much fatter than that last picture right now because I've been bulking for a long time through the dark winter).

Image from this post taken from here.