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Saturday, August 6, 2022

2022-08-06

*** denotes well-worth reading in full at source (even if excerpted extensively here)

Economic and Market Fare:


The Federal Reserve may have to go further than what the markets are factoring in to quell inflation in the current cycle.

Treasuries and stocks rallied after the Fed suggested last week that the monetary authority had reached the neutral rate, signaling that increases down the line may be more measured.

However, the Fed’s suggestion about the neutral rate -- when the policy benchmark is neither contractionary nor expansionary -- is likely flawed.

(says someone who knows even less about where the so-called neutral rate must be!!)


***** Persistent Inflation Scares The Fed

The markets are now betting that inflation will soon subside, allowing the Fed to pivot. But, if inflation proves persistent and not transitory, the Fed may have much more work to do, to the detriment of asset prices.

There are two schools of thought on the issue of transitory versus persistent inflation.

One school thinks high inflation will arrest the current inflation surge, thus proving inflation transitory this time.

On the other side of the argument, the BIS warns that inflation can remain persistent in high inflation regimes as they fear we are entering.

Both views may be correct. The current surge in inflation may be transitory, but we may be entering a long period where inflation remains moderately above that of the last 20 years.

This article compares the two viewpoints to help appreciate how inflation might behave in the coming months and years. Given the Fed’s enormous impact on markets and its extremely hawkish stance due to inflation, a well-reasoned inflation forecast is imperative for investors.

Transitory Inflation
Many economists believe higher prices result in demand destruction, which normalizes supply/demand price curves and arrests sharp increases in prices over the coming months.

Walmart and other retailers help support this idea. Per Walmart’s press release on 7/25/2022:

“The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars.“

The graph below shows that prior spikes of high inflation were transitory. In those instances, high inflation rates lasted for up to two and half years but fell just as quickly as they rose.


Persistent Inflation
The Bank for International Settlements (BIS) recently published Inflation: a look under the hood. In the article, they argue that high inflation regimes, as we may be entering, can be persistent, not transitory. It is worth distinguishing that in a high inflation regime, inflation can be volatile and not persistently very high. Essentially the average inflation rate over the regime is elevated from that of a low inflation regime.

If the BIS is correct, inflation may fall sharply in the next three to six months, but average inflation rates over the next decade or more may linger well above the Fed’s preferred 2% objective.

Today’s Bout of Inflation
Economist Milton Friedman once stated, “inflation is always and everywhere a monetary phenomenon.” Basically, the more money, the more inflation and vice versa.

While we largely subscribe to his theory, the current bout of inflation is due to monetary machinations, as he posits, but also the result of supply problems.

Understanding how money is created is vital to understanding inflation. Contrary to popular opinion, the Fed does not print money. All money is lent into existence. The Fed simply adds or subtracts reserves at banks. Excess reserves allow banks to lend money and thus print money. 

In 2020 and 2021, the Federal government borrowed over $6 trillion. By doing so, they significantly increased the money supply. However, new money is inflationary only if the money is spent. Printing a zillion dollars and burying it in a hole should not affect prices.

Unlike the traditional spending habits of the government, during the pandemic, they borrowed and wrote checks to individuals and companies. The economy was essentially mainlining money versus a slower drip that often accompanies government borrowing and spending.

... At the same time money was coursing through the economy, the supply of goods and services came to a halt. Global supply lines around the world were hampered. The basic laws of supply and demand took hold, and prices surged higher.

..........
Can We Compare The 70s to 2022?
While the BIS report provides food for thought, we must consider the only recent experience with persistent inflation (>5%) was over 40+ years ago.

At the time, there was little debt and much less economic reliance on debt and interest rates.

.....
Summary
Stay humble on your inflation stance. No one has a crystal ball on whether inflation will be transitory or persistent. While we think transitory, we understand there are many forces driving prices, and the relationship between many of them is not fully understood or appreciated. ...


........
Conclusion
Unlike the 1970s, where the focus became ‘excessive trade union power’ and was used as a justification for hammering unions through a variety of anti-union regulations and laws, the current episode is highlighting the destructive market power that corporations have and their profit greed at a time when workers are suffering real income losses and worsening standards of living.

The response of central banks to exacerbate that suffering is criminal in my view.

Unless society comes to terms with this and demands from our governments that they take action against corporations and restrict their market power the situation will continue.


reminder that U6 is B.S.; so claims that we can't be in recession b/c unemployment is so low and thus labor market is so strong, are also B.S.:

... The data also suggest the “true rate of unemployment” is much higher in many places than national or local figures show.

That’s based on a broader labor market metric developed by researchers at the institute. The TRU (for True Rate of Unemployment) measures workers they consider “functionally unemployed” — people who are looking for work but don’t have a full-time job, working part-time but want full-time work, or who earn below the poverty line. That accounted for 23.1 percent of the U.S. labor force in April.

In some metropolitan areas, such as El Paso, Texas, Augusta, Ga. and Las Vegas, that “true rate of unemployment” was above 30 percent in 2021.

“We think it misleads the American people to say, ‘Oh, we’ve got 3.6 percent of America that is unemployed, ergo, a huge percent of the population is employed,’ when in fact they can’t make above a poverty wage,” Ludwig said.


The economy added a much higher than expected 528,000. This follows a much higher than expected  372,000 jobs in June. But the discrepancy between jobs and employment is amazing.







Tweet Vid of the Week:



Other Quotes of the Week:

famous last words...
Daly: She also added that she is "optimistic to get inflation down without a deep recession," and that "we're not even at the neutral rate yet." All suggesting The Fed is far from the 'pivot' everyone has been hoping for over the last week as she concluded that The Fed "won't bring rates down in just a few months."


Williamson: US economic conditions worsened markedly in July, with business activity falling across both the manufacturing and service sectors. Excluding pandemic lockdown months, the overall fall in output was the largest recorded since the global financial crisis and signals a strong likelihood that the economy will contract for a third consecutive quarter.


Schiff: The mantra from the White House is that two consecutive quarters of negative GDP isn’t the “technical” definition of a recession and that the economy is just entering into “another phase of recovery.” Peter said, “I guess they believe if you repeat a lie often enough, people will believe it.”



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Charts: 
1:
11: unemployment rate is not only thing that is low:




(not just) for the ESG crowd:


.... Democrats and climate experts claim the package will cut carbon emissions by 40% by 2030 compared to 2005 levels. Overall, the proposed legislation will make it more affordable for people to access clean technology.

But the full picture isn’t quite so rosy, or, in this case green.

Unlike last year’s Build Back Better package, the IRA actually incentivizes fossil fuel production. The bill that Manchin killed had the clean electricity program, which would penalize utilities that didn’t transition to renewable energy. The IRA bill’s ‘all of the above’ energy strategy invests in developments that will mean further greenhouse gas emissions. New solar and wind projects are contingent on approval for oil and gas leases on millions of acres of public land and waters. And there is a provision that locks in new drilling in the Gulf of Mexico and off the coast of Alaska. (Many climate groups are now mobilizing against these elements.)

Schumer has also agreed to support legislation that will make it easier to approve green energy as well as fossil fuels projects, such as the Mountain Valley Pipeline that Manchin desperately wants.

It’s no surprise then that the package was reportedly pushed and subsequently lauded by a diverse coalition of capital that includes Bill Gates and Exxon Mobil executives.

So, the IRA is a very dirty and risky trade-off, but one that Democrats will probably take. ...



Other Fare:

Unprecedented live-fire drills encircling the island will block flights and shipping as analysts predict further punitive measures




Troubling new research shows warm waters rushing towards the world's biggest ice sheet in Antarctica


Too hot to trot.



In a decisively lopsided win for pro-abortion activists, Kansas voters on Tuesday rejected a proposed amendment to the state constitution that would have expanded the legislature's power to restrict abortions. With 98% of votes tallied, "no" votes were ahead 59% to 41%.  



Tweet Vids of the Week:



Contrarian Perspectives

Extra [i.e. Controversial] Fare:

*** denotes well-worth reading in full at source (even if excerpted extensively here)


Regular Fare:

And - when voters get what they ask for.

If we measure the success of a government by how it reflects the will of the people, then our democracy is a failure. This has always been one of the long-discussed dangers of democracy: that it may cease to be a government “by the people.”1 Let us admit that the danger of democracy has been realized.

The revolution you see today had to start at the top because the people – the voters – were unwilling to spark revolutionary change. Power then imposition, through the institutions and the bureaucracies onto the population. Enabled by the constraints on bureaucratic power being unenforced and the limitations on legislative authority being ignored. Elections thought to reflect the will of the people instead force on the people the will of the elected.


Why a proposed railroad merger could be bad news for local communities.

... First, let’s look at the national issues. Combining Canadian Pacific and Kansas City Southern would reduce the number of Class I railroads in the U.S. — which is the class composed of the largest railroads — from seven to six, down from 63 as recently as 1976. That consolidation, which was set off by the deregulatory zeal that gripped both Democrats and Republicans in the 1980s, has let to a wave of job losses, with more than half a million railroad jobs in 1980 becoming fewer than 150,000 today.

Rampant consolidation has also led to shoddier service, as railroads, much like retailers with their just-in-time inventorying, focused on squeezing every last cent they could out of the system, instead of building it to absorb some level of external shock. For railroads, this is called “precision scheduled railroading,” and led to fewer, heavier trains, and lagging investment in the rail system in favor of enriching stockholders through stock buybacks and dividend payouts. Between 2010 and 2021, railroad corporations spent $50 billion more on buybacks and dividends than they spent on rail infrastructure, according to the STB.



Markets are good for some activities, but for others they are actively harmful. There are a lot of jobs that people want to do, and all you have to do is give them a decent salary and whatever tools are necessary and they’ll work hard. A good example is curing cancer, or, indeed, most medical research. People love the idea of helping people and saving lives. As long as they know that if they do cure whatever it is they can move on to curing something else (ie. their economic welfare is not dependent on not solving the problem) they’ll bust their asses.

On the other hand, if the profit motive is involved, some problems don’t get solved. If you’re a pharmaceutical company, you don’t want to cure diseases: you want to sell a pill or shot or treatment that people have to take over and over again. You want to develop palliatives, not cures. Using for profit companies to try and cure something, including Covid, is deranged: it would cost them hundreds of billions of future profits if they actually cured the plague or cancer, or anything else.

This is also why, when they do come up with actual cures, they price them massively high. After all, you only get to sell a cure once to each patient. ...



Tweet Vids:

"once you see it, you can't unsee it"



Unsustainability / Climate Fare:

Menton: Miners Explore Amazon Basin To Support "Green" Energy; New York Times Horrified

The front page of today’s New York Times features a big article clearly intended to get the readers riled up about the latest environmental horror that must be stopped. The headline is “The Illegal Airstrips Bringing Toxic Mining to Brazil’s Indigenous Land.” Subheadline: “The Times identified hundreds of airstrips that bring criminal mining operations to the most remote corners of the Amazon.”

Wow, this is bad. The airstrips are “illegal.” The mining is “toxic,” and not only toxic but also “criminal.” And it’s all happening in the most pristine place left in the whole world, the “remote corners of the Amazon,” much of it inhabited by the most innocent of all innocent indigenous people, the Yanomami.

So what is driving this big rush of miners into these remote regions? Could so-called “green energy” — with its vast demands for raw materials like nickel, manganese, aluminum and iron — have anything to do with it? If so, you won’t learn anything about that from the Times. ...

... Hey, this is for EV batteries, transmission lines, wind turbine bases, and all other kinds of good things to make the world “green.” Of course all the big financial institutions are behind it. It’s ESG investing!




COVID Fare:

I've continued to come across too much excellent COVID-related content (with contrarian evidence-based points-of-view!!) to link to it all
Read everything by eugyppius; el gato malo; Mathew Crawford; Steve Kirsch; Jessica Rose!
Paul Alexander, Berenson, Chudov, Lyons-Weiler, Toby Rogers are also go-to mainstays; a list to which I have added Andreas Oehler, Joey Smalley (aka Metatron) and, Julius Ruechel; Denninger worth staying on top of too for his insights, and especially his colorful language; and Norman Fenton; Marc Girardot; plus Walter Chesnut (on twitter); new additions: Sheldon Yakiwchuk and Aaron Kheriarty; I will of course continue to post links to key Peter McCullough material, and Geert Vanden Bossche, and Robert Malone, and Martin Kulldorff, and Jay Bhattacharya, and Sucharit Bhakdi, and Pierre Kory, and Harvey Risch, and Michael Yeadon, and John Ioannidis, and Paul Marik, and Tess Lawrie, and Zelenko, and Dolores Cahill, and [local prof] Byram Bridle, and Ryan Cole, and…
but going forward, my linking to material by those mainstays mentioned above will be reduced to key excerpts and/or essential posts



.... Rather than just believing me, you can take a look at this post from Public Health Ontario, where they have also started saying the quiet part out loud: Our immune systems are being damaged: ... 

...................... It could take weeks, it could take months, I doubt it will take years, but it’s extremely naive to imagine that after orthopox viruses killed 300 million human beings in the 20th century that monkeypox will just turn into a gay nothingburger STD that hospitalizes a handful of sodomites before fading out into obscurity again. This thing is out there now and you’re not going to put the genie back into the bottle.


Mothers of stillbirth babies were all vaccinated.


Interview with Vinay Prasad, MD MPH
 


Tweets & Quotes of the Week:

Kunstler: Twice vaxxed, twice boosted, and twice recent Covid-19 patient Dr. Anthony Fauci warned this week that the unvaxxed would “get into trouble” as the seasons turn this year. The part he left out is: the unvaxxed will be in trouble trying to keep up with helping their sick and dying vaccinated relatives whose immune systems have been damaged by their multiple vaxxes. The boldness of Dr. Fauci’s lying is really something to behold. Who in the entire HHS-NIH-CDC bureaucracy has failed to notice that the mRNA “vaccines” have no efficacy whatever against Covid-19? The vaccinated are by far those still getting sick and increasingly disabled from the disease and even more from the vaxxes themselves. The emperor’s new clothes hang in shreds. Rumor is that many upper-level employees in these public health agencies are increasingly freaked out by their now-obvious complicity in a momentous crime. They know they will have to answer for allowing the mRNA fiasco to get this far, for going along to get along, and they’re preparing to mutiny to save their own asses. Wait for it.


PMJT: “Don’t think you can get on a plane or a train and put vaccinated people at risk”.




CO-VIDs of the Week:

The Trozzi Report Episode 1 Part 3 | All Cause Excess Mortality & VI AIDS
"Excess deaths are through the roof; and anyone who thinks it's not the 'vaccine' is a moron"



Anecdotal Fare:

In memory of those who "died suddenly" in Canada, Mexico, Trinidad and Tobago, Brazil, Paraguay, Chile and Argentina, July 26-August 1

.... A Winnipeg family says they've been told they may have to wait as long as a year to find out what caused their 14-year-old daughter's death. Talina Rampersad-Husack died suddenly on July 17 in the intensive care unit at the Children's Hospital, her obituary says.

Details about her illness are unclear, leaving her family to wonder what exactly led to her death. An autopsy was done, but Talina's family says they were told it could take up to a year to get the final results. "No parent should have to wait one year to find out how their healthy, vibrant 14-year-old daughter died," a family spokesperson said in a statement to CBC News.


Testimonies from COVID jab injured



Back to Non-Pandemic Fare:

GeoPolitical Fare:

Stoller: Nancy Pelosi, China and the Slow Decline of the U.S. Military
The defense base has shrunk in dangerous ways, mostly because defense contractors have consolidated power. A few members of Congress are trying to fix the problem.

...... To put the problem simply, we spend massively on weapons and get too little for it. Why? Just like health care or most other bloated sectors, it’s the prices, stupid. We consolidated economic power in the hands of a few dominant defense contractors and financiers, and they have become slothful and expensive. Fortunately, since it’s a problem caused by policy, it’s also a problem that can be solved by policy.



The People in Hiroshima Didn’t Expect it Either

... U.S. polling on people’s top concerns find 1% of people most concerned about the climate and 0% most concerned about nuclear war.

Yet, the U.S. just illegally put nukes into a 6th nation (and virtually nobody in the U.S. can name either it or the other five that the U.S. already illegally had nukes in), while Russia is talking about putting nukes into another nation too, and the two governments with most of the nukes increasingly talk — publicly and privately — about nuclear war. The scientists who keep the doomsday clock think the risk is greater than ever. There’s a general consensus that shipping weapons to Ukraine at the risk of nuclear war is worth it — whatever “it” may be. And, at least within the head of U.S. Speaker of the House Nancy Pelosi, voices are unanimous that a trip to Taiwan is worth it too.

... Meanwhile, exactly like the people of Hiroshima and Nagasaki, and the guinea-pigged human residents of the much larger Pacific island nuclear experiments, and the downwinders everywhere, nobody sees it coming. And, even more so, people have been trained to be absolutely convinced that there’s nothing they could possibly do to change things if they did become aware of any sort of problem.



Let me start with a simple analogy. You are tooling down the road on a BMW S1000RR “crotch rocket” at 100 miles per hour. You see Toyota sedan a couple of hundred yards (i.e., 183 meters) ahead with an elderly codger at the helm getting ready to pull out into traffic. Do you think it matters if he sees you? Damn right it does. If he pulls out in front of you a collision is inevitable unless you dump the bike, which means you will skip along the pavement like flat rock flung over a still body of water. Or, you’ll hit the car and be launched into low orbit and wind up as bloody pulp. Neither is pleasant to contemplate. It would be nice to know what he is thinking, right? So do you think it matters if the United States correctly understands what the leaders of Russia and China are thinking? And, conversely, does it matter if the leaders of Russia and China correctly discern the intentions of U.S. leaders? The answer–YES on both counts.

..... We face a comparable dilemma in the breakdown of communication between Washington and Beijing. False assumptions reinforced by wrong conclusions almost inevitably lead to a deadly miscalculation. Normally, the national intelligence agencies of a nation are supposed to provide a dose of truth and reality. That is the real danger facing America now. The CIA and the FBI are politically compromised and are institutionally averse to telling the President and his team they are wrong. While I no longer have access to current U.S. intelligence, I still hear things through the grapevine of former colleagues and the news is unsettling. There was a time when there were “Dutch Uncles” in the CIA. A “Dutch Uncle” is one who admonishes sternly and bluntly for the benefit of the recipient. Instead of a Dutch Uncle, the intelligence community is behaving more like Wormtongue, a rogue villain in Lord of the Rings. A dangerous situation when our leaders need to understand correctly what the other “guys” think.




Orwellian Fare:

'Did not misrepresent facts': German journalist detained for reporting 'Ukraine's war crimes' | Exclusive

German journalist Alina Lipp said she was facing three years in prison in her home country for her reporting on crimes committed by Ukrainian forces against civilians. 

... She also said that Germany would hold court hearings without her. They will not allow her to present her case as it would hamper the process.

She explained that she did not misrepresent facts. She just filmed what she saw and does not spread fake information. "Will file a counter case in German courts against action taken by the government," she noted.

She is accused by the German authorities of supporting the Russian invasion of Ukraine and faces three years in prison under article 140 of the constitution or a monetary fine.



CaitOz Fare:


Welcome to the inaugural issue of Treazine, the zine dedicated to treason. Treasonous speech, treasonous thoughts, treasonous information, the treasonous expansion of consciousness; if it wrongthinks, it Treazines. If you are reading this, it means you have full control of this body of work. You have full permission to print it out, distribute it, republish it online, translate it into other languages, make money off it, even claim authorship. Wherever you think this material belongs, you have unconditional permission to put it there. This is a collection of our favorite publications over the past month. If it’s relatively well-received there will be another one next month, if not then our inaugural issue will be our last. Either way, we hope you enjoy!



House Speaker Nancy Pelosi has left Taiwan after a brief but diplomatically corrosive visit, the aftereffects from which may be felt for years to come.

Toward the end of her speech alongside Taiwan’s President Tsai Ing-wen, Pelosi’s brain underwent one of its increasingly common software glitches, causing her to begin babbling inarticulately.

Here is a transcript of what Nancy Pelosi’s brain said:

“In our earliest days at our founding of our country, Benjamin Franklin, our presidency, said, freedom and democracy. Freedom and democracy, one thing, security here. If we don’t have- we can’t have either, if we don’t have both.” 

Of course Benjamin Franklin was neither a president of the United States nor a “presidency”, and the quote Nancy’s floundering brain was reaching for was “Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.” These are not difficult things to remember or articulate for someone with functioning gray matter.

This is right up there with other famous neural malfunctions by the speaker, like ...

None of which would be a problem, if we were talking about some little old lady whiling away her twilight years at a retirement home in Florida. But we are not; we are talking about one of the most powerful elected officials in the most powerful government on earth, third in the line of succession to the presidency after the vice president.

More importantly, we are talking about someone who just participated in an incendiary visit to Taiwan which has ensured the escalation of dangerous cold war tensions between major world powers, and could potentially have triggered a hot war with China.

US war machinery, including aircraft carriers and large planes, were mobilized to provide security for Pelosi’s visit ahead of her arrival. The United States military was literally just used to help a dementia patient try to start World War Three.



Pics of the Week:






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