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[Markets] The Woke Inquisitors Have Come For The Freethinking Heretics The Woke Inquisitors Have Come For The Freethinking Heretics

Authored by J.B.Shurk via The Gatestone Institute,

Attacks on free speech are on the rise.

A British college recently expelled a student for expressing support for the government's official policy of deporting illegal immigrants. A Wisconsin school district charged three middle-schoolers with sexual harassment last month for refusing to use the plural pronoun "they" when referring to a single classmate. US President Joe Biden's National Climate Advisor Gina McCarthy recently encouraged social media companies to censor from their online platforms any opinions that contradict Biden's climate change narrative.

In its continued commitment to preserve the government's monopoly over COVID-19 information, Twitter actually suspended a medical doctor for merely sharing a scientific study that suggests the Pfizer vaccine affects male fertility. And the NFL's Washington Commanders fined defensive coordinator Jack Del Rio $100,000 and forced him to apologize only weeks ago for having expressed his opinion that 2020's summer of riots across the United States after George Floyd's death was more destructive than the few hours of mayhem at the Capitol on January 6, 2021.

In contrast, it has become newsworthy that entertainment powerhouse Paramount has chosen not to censor old movies and television shows containing content that today's "woke" scolds might find "offensive." In a "cancel culture" world where censorship and trigger warnings have become the norm, preserving the artistic integrity of a film is now considered outright daring. In fact, even publishers of old literary classics have begun rewriting content to conform with "politically correct" sensibilities.

Examples such as these, where personal speech is either censored or punished, are becoming much more frequent, and anybody who minimizes the threat this increased intolerance for free expression poses to a democratic society is either gullibly or willfully blind. As any defender of liberty knows, nothing more quickly transforms a free society into a totalitarian prison than crackdowns on speech. Of all the tools of coercion available to a government, preventing individuals from freely expressing their thoughts is most dangerous. Denying citizens that most basic societal release valve for pent-up anger and disagreement only heightens the risk for outright violence down the line. Either silenced citizens become so enraged that conflict becomes inevitable, or the iron fist of government force descends on the public more broadly to preemptively curtail that possibility. Either way, the result is a disaster for any free society.

For Americans who cherish free speech, this undeniable war on language and expression is jolting but not shocking. Whenever censorship slithers back into polite society, it is always draped in the mantle of "good intentions."

Fifteenth-century Dominican friar Girolamo Savonarola's "bonfire of the vanities" destroyed anything that could be seen to invite or reflect sin.

The notorious 1933 Nazi book burning at the Bebelplatz in Berlin torched some 20,000 books deemed subversive or "un-German".

During Communist China's decade-long Cultural Revolution in the 1960s and '70s, the vast majority of China's traditional scrolls, literature and religious antiquities went up in smoke.

All three atrocities were celebrated as achievements for the "greater good" of society, and people inebriated with "good intentions" set their cultural achievements aflame with fervor and triumph. Much like today's new censors who claim to "fight hate" because "that's not who we are," the arsonists of the past saw themselves as moral paragons, too. They purged anything "obscene" or "traditional" or "old," so that theocracy, Nazism, or communism could take root and grow. And if Western institutions today are purging ideas once again, then it is past time for people to start asking just what those institutions plan to harvest next.

We in the West are running — not walking — toward another "bonfire of the vanities" in which normal people, egged on by their leaders, will eagerly destroy their own culture while claiming to save it. This time around the "vanities" will be condemned for their racist, sexist, transphobic, anti-science or climate-denying ways, but when they are thrown into the fire, it is dissent and free expression that will burn.

There will one day be much disagreement as to how the same Western Civilization that produced the Enlightenment and its hallowed regard for free expression could once again surrender itself to the petty tyranny of censorship.

Many will wonder how the West's much-vaunted "liberal" traditions could meekly fold to the specter of state-controlled speech.

The answer is that the West has fallen into the same trap that always catches unsuspecting citizens by surprise: the steady encroachment on free speech has been sold as a "virtue" that all good people should applaud.

First, certain thoughts became "aggravating factors" that turned traditional crimes into new "hate crimes" deserving of additional punishment.

Then the definition of what is "hateful" grew until politicians could comfortably decree anything at odds with their agendas to be examples of "hate."

Who would be for "hate," after all? Surely no-one of good sense or good manners.

Now "hate" has transformed into an elusive description for any speech that can be alleged to cause the slightest of harms.

From there, it was easy for the state to decree that "disinformation," or rather anything that can be seen to contradict the state's own official narratives, causes "harm," too.

Those who despise free speech told society, "If you do not punish hate, then you're a bigot." And today, if you oppose the government's COVID-19, climate change, immigration, or other contentious policies, your harmful "disinformation" must be punished, too.

It is a slippery slope, is it not? Once governments normalize censorship and the punishment of points of view, free expression is firmly stamped with an expiration date.

After the Nazis went down this poisonous path, repentant Germans built a public memorial to remember the book burning at the Bebelplatz and ensure its tragic lesson was never forgotten. On a plaque in the square is a commemorative engraving, paraphrasing the 19th century German writer Heinrich Heine:

"That was only a prelude; where they burn books, they will in the end also burn people."

That warning comes with no expiration date.

Tyler Durden Tue, 07/05/2022 - 02:00
Published:7/5/2022 1:08:44 AM
[Markets] 'Reset' This! 'Reset' This!

Authored by Michael Walsh via,

The following is an excerpt from Michael Walsh’s forthcoming book, Against the Great Reset: Eighteen Theses Contra the New World Order, which will be published by Bombardier Books and be available October 18, 2022. Walsh has gathered a series of essays from among eighteen of the most eminent thinkers, writers, and journalists—including the American Mind’s own James Poulos, as well as Claremont Senior Fellows Michael Anton and the late Angelo Codevilla—to provide the first major salvo in the intellectual resistance to the sweeping restructuring of the western world by globalist elites.”

Part I: The Problem

What is the Great Reset and why should we care? In the midst of a tumultuous medical-societal breakdown, likely engineered by the Chinese Communist Party and abetted by America’s National Institutes of Health “gain of function” financial assistance to the Wuhan Institute of Virology, why is the Swiss-based World Economic Forum (WEF) advocating a complete “re-imagining” of the Western world’s social, economic, and moral structures? And why now? What are its aspirations, prescriptions, and proscriptions, and how will it prospectively affect us? It’s a question that the men and women of the WEF are hoping you won’t ask.

This book seeks to supply the answers. It has ample historical precedents, from Demosthenes’s fulminations against Philip II of Macedon (Alexander’s father), Cicero’s Philippics denouncing Mark Antony, the heretic-hunting Tertullian’s Adversus Marcionem¸ and the philosopher Friedrich Nietzsche’s Nietzsche contra Wagner. Weighty historical issues are often best debated promptly, when something can yet be done about them; in the meantime, historians of the future can at least understand the issues as the participants themselves saw and experienced them. Whether the formerly free world of the Western democracies will succumb to the paternalistic totalitarianism of the oligarchical Resetters remains to be seen. But this is our attempt to stop it.

So great is mankind’s perpetual dissatisfaction with its present circumstances, whatever they may be, that the urge to make the world anew is as old as recorded history. Eve fell under the Serpent’s spell, and with the plucking of an apple, sought to improve her life in the Garden of Eden by becoming, in Milton’s words, “as Gods, Knowing both Good and Evil as they know.” The forbidden fruit was a gift she shared with Adam; how well that turned out has been the history of the human race ever since. High aspirations, disastrous results.

The expulsion from the Garden, however, has not discouraged others from trying. Indeed, the entire chronicle of Western civilization is best regarded as a never-ending and ineluctable struggle for cultural and political superiority, most often expressed militarily (since that is how humans generally decide matters) but extending to all things both spiritual and physical. Dissatisfaction with the status quo may not be universal—timeless and static Asian cultures, such as China’s, have had it imposed upon them by external Western forces, including the British and the Marxist-Leninists—but it has been a hallmark of the occident and its steady civilizational churn that dates back at least to Homer, Plato, Aeschylus, Herodotus, Pericles, and Alexander the Great, with whom Western history properly begins.

The philosopher Friedrich Nietzsche, assaying the inelegant Koine, or demotic, Greek of the New Testament in Beyond Good and Evil, observed: “Es ist eine Feinheit, daß Gott griechisch lernte, als er Schriftsteller werden wollte—und daß er es nicht besser lernte”: “It’s a particular refinement that God learned Greek when he wanted to become a writer—and that he didn’t learn it better.” Nietzsche, the preacher’s son who became through sheer willpower a dedicated atheist, was poking fun at the fundamentalist belief that the Christian scriptures were the literal words of God himself (Muslims, of course, believe the same thing about the Koran, except more so). If something as elemental, as essential to Western thought as the authenticity of the Bible, not to mention God’s linguistic ability, could be questioned and even mocked, then everything was on the table—including, in Nietzsche’s case, God Himself.

With the death of God—or of a god—Nietzsche sought liberation from the moral jiu-jitsu of Jesus: that weakness was strength; that victimhood was noble; that renunciation—of love, sex, power, ambition—was the highest form of attainment. That Nietzsche’s rejection of God was accompanied by his rejection of Richard Wagner, whose music dramas are based on the moral elevation of rejection, is not coincidental; the great figures of the nineteenth century, including Darwin and Marx, all born within a few years of each other, were not only revolutionaries, but embodied within themselves antithetical forces that somehow evolved into great Hegelian syntheses of human striving with which we still grapple today.

Wagner, the Schopenhauerian atheist who staggered back to Christianity and the anti-Semite who engaged the Jew Hermann Levi as the only man who could conduct his final ode to Christian transfiguration, Parsifal. Charles Darwin, ticketed for an Anglican parsonage but mutating into the author of On the Origin of Species, The Descent of Man, and all the way to The Formation of Vegetable Mould through the Action of Worms. Karl Marx, the scion of rabbis whose father converted to Lutheranism and, like Wagner for a time, a stateless rebel who preached that the withering away of the state itself was “inevitable”—and yet the state endures, however battered it may be at the moment.

It’s fitting that the “Great Reset of capitalism” is the brainchild of the WEF, which hosts an annual conference in the Alpine village of Davos—the site of the tuberculosis sanatorium to which the naïf Hans Castorp reports at the beginning of Thomas Mann’s masterpiece, The Magic Mountain. Planning to visit a sick cousin for three weeks, he ends up staying for seven years, “progressing” from healthy individual to patient himself as his perception of time slows and nearly stops. Castorp’s personal purgatory ends only when he rouses himself to leave—his Bildungsreise complete—upon the outbreak of World War I, in which we assume he will meet the death, random and senseless, that he has been so studiously avoiding yet simultaneously courting at the Berghof.

Central Europe, it seems, is where the internal contradictions of Western civilization are both born and, like Martin Luther at Eisleben, go home to die. And this is where the latest synthetic attempt to replace God with his conqueror, Man, has emerged: in the village of Davos, in the canton of Graubünden, Switzerland: the site of the annual meeting of the WEF led by the German-born engineer and economist Klaus Schwab, born in Ravensburg in 1938, the year before Hitler and Stalin began carving up Poland and the Baltics.

Once more into the breach, then: behold the present volume. In commissioning sixteen of the best, most persuasive, and most potent thinkers and writers from around the world to contribute to our joint venture, my principal concern has been to offer multiple analyses of the WEF’s nostrums and in so doing to go poet Wallace Stevens’s “Thirteen Ways of Looking at a Blackbird” a few better. Then again, given the surname of the WEF’s chief, perhaps a better, more potent literary citation might be Margret’s little ditty from the Büchner/Alban Berg expressionist opera, Wozzeck (1925): In’s Schwabenland, da mag ich nit—”I don’t want to go to Schwab-land.” Nor, as Hans Castorp’s journey illustrates, should anyone wish to visit Davos-land if he prizes his freedom, his possessions, and his sanity. To the Great Resetters, we are all ill, all future patients-in-waiting, all in dire need of a drastic corrective regimen to cure what ails us.

In these pages, we shall examine the Great Reset from the top down. The eminent American historian Victor Davis Hanson begins our survey with “The Great Regression,” locating Schwab’s vision within its proper historical context. He is followed by Canada’s Conrad Black and America’s Michael Anton and their views of capitalism and socialism, with not a few attacks on conventional, osmotic wisdom that will both surprise and enthrall. Britain’s Martin Hutchinson outlines the contours of the Reset’s “Anti-Industrial Revolution,” even as the American economist David Goldman confronts both Schwab’s notion of the “Fourth Industrial Revolution” and China’s immanentizing its eschaton in real time, along with the Red Dragon’s commitment to the upending of Western civilization and its own Sino-forming of a post-Western world.

American writer, editor, and publisher Roger Kimball tackles the implications of a neofascist Reset in his essay, “Sovereignty and the Nation-State,” both of which concepts are under attack in the name of “equality,” its totalitarian successor “equity,” and the political consequences of our re-embrace of Rousseauvian concepts as applied to governments. British historian Jeremy Black discusses the misuses toward which the study of history has been and will be put to by the Resetters. The late Angelo Codevilla contributes what alas became his final essay, “Resetting the Educational Reset,” to sound the tocsin about the dangerous left turn of the once-vaunted American educational system, now reduced to a shrill, sinistral shell of its former dispassionate glory.

From Down Under, the Philippines-born Richard Fernandez twins two eternally competing faiths, religion and science; the American-born, Australian-based political sociologist Salvatore Babones contributes a remarkably clear explication of the kinds of transportation feasible under the “green energy” regimen the Reset seeks to impose upon us, and its practical and social implications. Writing from Milan, Alberto Mingardi, the director-general of the Istituto Bruno Leoni, gets to the heart of the Great Reset’s deceptive economic program with an essay concerning faux-capitalist “stakeholder capitalism” and its surreptitious replacement of shareholder capitalism in the name of “social justice.”

The Great Reset, however, is not strictly limited to matters financial, pecuniary, or macroeconomic. Social and cultural spheres are of equal importance. James Poulos looks at the Reset’s unholy relationship with the predatory Big Tech companies that currently abrogate the First Amendment by acting as governmental censors without actually being commanded by an act of Congress or, increasingly, an arbitrary presidential mandate. From British Columbia, noted Canadian author and academic Janice Fiamengo weighs in on the destructive effects of feminism upon our shared Western culture while, on the lighter side, Harry Stein examines the history of American humor—which in effect means worldwide humor—and how the leftist takeover of our shared laugh tracks has resulted in a stern, Stalinist view of what is and what is not allowed to be funny.

The British writer Douglas Murray has a go at the permissible future of Realpolitik under the panopticonic supervision of the Reset, the Chinese Communist Party, and the Covid hysterics, while the American journalist John Tierney lays out the road to civilizational serfdom that the unwarranted panic over the Covid-19 “pandemic” has triggered during its media-fueled run between 2019 and 2022. My contribution, in addition to this Introduction, is an examination of the Reset’s—and, historically, elitist tyranny’s—deleterious effects on Western culture: the very thing that gave birth to our notions of morality and freedom.

At its heart, the Great Reset is a conceited and self-loathing central-European blitzkrieg against the cultural, intellectual, religious, artistic, physical, and, most of all, moral inheritance we have received from our Greco-Roman forebears. This has been latterly shorthanded, with the rise of “wokeness,” to “white” culture. Typically racialist, if not outright racist, the cultural Marxists behind wokeness insist on reducing humanity to its shades of skin color and then claiming that although all skin colors should achieve in exact same proportions to their share in a given population, some skin colors are better than others and any skin color is preferable to white. It’s a deeply repellent principle that masquerades as a perversion of Judeo-Christianity but is in fact a simultaneous attack on individuality and merit that seeks to roll back the scientific and cultural advances of the past two millennia, wielding both science and culture as weapons against our shared technological and moral heritage.

The goal, as always, is power—the eternal fixation of the socialist Left…

Tyler Durden Sun, 07/03/2022 - 23:45
Published:7/4/2022 2:00:37 AM
[2f1670b4-07e6-52da-b534-7fe92d64fa1d] Newsom July 4 ad targets DeSantis: 'Freedom is under attack' California Gov. Gavin Newsom says GOP governors such as Florida Gov. Ron DeSantis are putting freedom "under attack," citing a move to remove books from classrooms. Published:7/3/2022 2:12:36 PM
[Markets] The Great Reset In Action: Ending Freedom Of The Press, Speech, & Expression The Great Reset In Action: Ending Freedom Of The Press, Speech, & Expression

Authored by Birsen Filip via The Mises Institute,

Governments, corporations, and elites have always been fearful of the power of a free press, because it is capable of exposing their lies, destroying their carefully crafted images, and undermining their authority. In recent years, alternative journalism has been growing and more people are relying on social media platforms as sources of news and information. In response, the corporate state, digital conglomerates, and the mainstream media have been increasingly supportive of the silencing and censoring of alternative media outlets and voices that challenge the official narrative on most issues.

At the recent World Economic Forum meeting in Davos, Switzerland, "Australian eSafety commissioner" Julie Inman Grant stated that "freedom of speech is not the same thing as a free for all," and that "we are going to need a recalibration of a whole range of human rights that are playing out online—from freedom of speech … to be free from online violence." Meanwhile, the Canadian government is seeking to restrict independent media and the freedom of expression via the implementation of Bill C-11, which would allow it to regulate all online audiovisual platforms on the internet, including content on Spotify, Tik Tok, YouTube, and podcast clients.

Similarly, the UK is seeking to introduce an Online Safety Bill, the US "paused" the establishment of a Disinformation Governance Board following backlash, and the European Union approved its own Digital Services Act, all of which aim to limit the freedom of speech. Attempts by elites and politicians to silence dissenters and critical thinkers is not something new. In fact, history is full of examples of "the persecution of men of science, the burning of scientific books, and the systematic eradication of the intelligentsia of the subjected people."

However, these current efforts to curtail freedom of speech and press by supposedly liberal governments are still somewhat ironic, given that even "the most intolerant of churches, the Roman Catholic Church, even at the canonization of a saint, admits, and listens patiently to, a 'devil's advocate.' The holiest of men, it appears, cannot be admitted to posthumous honors, until all that the devil could say against him is known and weighed."

The corporate state, digital conglomerates, and the mainstream media want to ensure that they have the exclusive authority to dictate people's opinions, wants, and choices through their sophisticated propaganda techniques. To do so, they have even resorted to transforming falsehoods into truth. In fact, the word truth has already had its original meaning altered, as those who speak the truth on certain subjects are now regularly accused of spreading hate speech, misinformation, and disinformation.

Presently, truth is no "longer something to be found, with the individual conscience as the sole arbiter of whether in any particular instance the evidence (or the standing of those proclaiming it) warrants a belief; it becomes something to be laid down by authority, something which has to be believed in the interest of the unity of the organized effort, and which may have to be altered as the exigencies of this organised effort require it."

However, modifying the definition of truth comes with the potential for great peril, as truth-seeking often contributes to human progress in that it leads to discoveries that ultimately benefit society at large. It should be noted that truth is by no means the only word whose meaning has been changed recently in order for it to serve as an instrument of propaganda; others include freedomjusticelawrightequalitydiversitywomanpandemicvaccine, etc. This is highly concerning, because such attempts at the "perversion of language, the change of meaning of the words by which the ideals" of the ruling class are expressed is a consistent feature of totalitarian regimes.

As a number of liberal-democratic governments increasingly move toward totalitarianism, they want people to forget that there is "the greatest difference between presuming an opinion to be true, because, with every opportunity for contesting it, it has not been refuted, and assuming its truth for the purpose of not permitting its refutation." According to them, "public criticism or even expressions of doubt must be suppressed because they tend to weaken public support."

In fact, they believe that all views and opinions that might cast doubt or create hesitation need to be restricted in all disciplines and on all platforms. This is because "the disinterested search for truth cannot be allowed" when "the vindication of the official views becomes the sole object" of the ruling class. In other words, the control of information is practiced and the uniformity of views is enforced in all fields under totalitarian rule.

The suppression of freedom of the press, speech, expression, and thought means that current and future generations will be "deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error." They are also at risk of becoming ignorant of the fact that the only way in which a person can know "the whole of a subject" is by "hearing what can be said about it by persons of every variety of opinion, and studying all modes in which it can be looked at by every character of mind." That is to say, current and future generations will be unaware that "the steady habit of correcting and completing" one's own "opinion by collating it with those of others, so far from causing doubt and hesitation in carrying it into practice, is the only stable foundation for a just reliance on it."

At present, it is likely that the masses do not regard freedom of the press, speech, expression, and thought as being particularly important, because "the great majority are rarely capable of thinking independently, that on most questions they accept views which they find ready-made, and that they will be equally content if born or coaxed into one set of beliefs or another." Nevertheless, no one should have the power and authority to "select those to whom" freedom of thought, enlightenment and expression is to be "reserved."

In fact, John Stuart Mill went so far as to claim that "if all mankind minus one, were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind." He further added that silencing the expression of an opinion is essentially an act of "robbing the human race," which applies to both current and future generations. Even though the suppressors can deny the truth to people at a particular point in time, "history shows that every age having held many opinions which subsequent ages have deemed not only false but absurd; and it is as certain that many opinions, now general, will be rejected by future ages, as it is that many, once general, are rejected by the present."

If current efforts to suppress freedom of the press, speech, expression, and thought succeed, then the search for truth will eventually be abandoned and totalitarian authorities will decide what "doctrines ought to be taught and published." There will be no limits to who can be silenced, as the control of opinions will be extended to all people in all fields. Accordingly, contemporary authoritarian policy makers need to be reminded about the crucial importance of freedom of speech, expression, and thought, which the US Supreme Court recognized in the 1957 case Sweezy v. New Hampshire when it ruled that

to impose any strait jacket upon the intellectual leaders in our colleges and universities would imperil the future of our Nation. No field of education is so thoroughly comprehended by man that new discoveries cannot yet be made…. Teachers and students must always remain free to inquire, to study and to evaluate, to gain new maturity and understanding; otherwise, our civilization will stagnate and die…. Our form of government is built on the premise that every citizen shall have the right to engage in political expression and association. This right was enshrined in the First Amendment of the Bill of Rights. Exercise of these basic freedoms in America has traditionally been through the media of political associations…. History has amply proved the virtue of political activity by minority, dissident groups, who innumerable times have been in the vanguard of democratic thought and whose programs were ultimately accepted. Mere unorthodoxy or dissent from the prevailing mores is not to be condemned. The absence of such voices would be a symptom of grave illness in our society.

Tyler Durden Thu, 06/30/2022 - 23:50
Published:7/1/2022 12:24:57 AM
[Markets] Empire To Expand NATO In Response To War Caused By NATO Expansion Empire To Expand NATO In Response To War Caused By NATO Expansion

Authored by Caitlin Johnstone via,

Turkey’s President Erdogan has officially withdrawn Ankara’s objection to the addition of Finland and Sweden to NATO membership, with the three countries signing a trilateral memorandum at a NATO summit in Madrid.

The removal of Erdogan’s objection was reportedly obtained via significant natsec concessions from the other two nations largely geared toward facilitating Turkey’s ongoing conflict with regional Kurdish factions, and it removes the final obstacle to Finland and Sweden beginning the process of becoming NATO members. Finland’s addition will more than double the size of NATO’s direct border with Russia, a major national security concern for Moscow.

“Sweden and Finland moved rapidly to apply to NATO in the wake of Russia’s invasion of Ukraine, reversing decades of security policy and opening the door to the alliance’s ninth expansion since 1949,” Axios reports.

So the western empire will be expanding NATO again in response to a war that was predominantly caused by NATO expansion. Brilliant.

At the same NATO summit, President Biden announced plans to ramp up US military presence in Europe in response to the Ukraine war.

“Speaking with Spanish Prime Minister Pedro Sánchez, Biden said the US will increase the number of US Navy Destroyers stationed at a naval base in Rota, Spain, from four to six,” Antiwar’s Dave DeCamp reports.

“The president said that this was the first of multiple announcements the US and NATO will make at the summit on increasing their forces in Europe, steps being taken in response to Russia’s invasion of Ukraine.”

This news comes out as a new CNN report tells us that the Biden administration does not believe Ukraine has any chance of winning this war, yet still won’t encourage any kind of negotiated settlement to end the bloodshed.

From CNN:

White House officials are losing confidence that Ukraine will ever be able to take back all of the land it has lost to Russia over the past four months of war, US officials told CNN, even with the heavier and more sophisticated weaponry the US and its allies plan to send.

Advisers to President Joe Biden have begun debating internally how and whether Ukrainian President Volodymyr Zelensky should shift his definition of a Ukrainian “victory” — adjusting for the possibility that his country has shrunk irreversibly. US officials emphasized to CNN that this more pessimistic assessment does not mean the US plans to pressure Ukraine into making any formal territorial concessions to Russia in order to end the war.

This would confirm what I and many others have been saying since Russia invaded: that this proxy war is being waged not with the intention of saving Ukrainian lives by delivering a swift defeat to Moscow but with the intention of creating a costly, gruelling military quagmire to weaken Russia on the world stage.

This is further confirmed by a new Politico report that British Prime Minister Boris Johnson has discouraged France’s President Macron from facilitating a negotiated peace settlement between Moscow and Kyiv, which would support an earlier Ukrainian media report that Johnson had discouraged President Zelensky from such a settlement during his visit to Kyiv in April.

These revelations emerge in the wake of western officials admitting that Ukraine is crawling with CIA personnel and special forces operatives from the US and other NATO countries.

“As usual it appears that the administration wants to have it both ways: assure the American people that it is being ‘restrained’ and that we are not ‘at war’ with the Russians, but doing everything but planting a U.S. soldier and a flag inside Ukraine,” writes Responsible Statecraft’s Kelley Beaucar Vlahos of this admission.

“The Russians may not see the distinction and consider this news as further evidence that their war is more with Washington and NATO than with Ukraine.”

The empire is guided by so little wisdom in its escalations against Russia that the US congress is now pushing expensive ship-launched nuclear cruise missiles on its naval forces even as the US Navy tells them it doesn’t want those weapons and has no use for them.

Like hey, just take the nukes anyway. What’s the worst that could happen?

We need to really start taking seriously the possibility that a nuclear weapon could detonate as a result of misunderstanding or malfunction amid the chaos and confusion of all these frenzied, foolish escalations and lead to an exchange which ends our entire world. This nearly happened on multiple occasions in the last cold war, and there’s no rational reason to believe we’ll get lucky again.

The only sane course of action here is de-escalation and detente, and all the major players in these escalations are pointed in the exact opposite direction.

This is so much more dangerous than most people are letting themselves consider. It’s being sustained by psychological compartmentalization, emotional avoidance, and a profound lack of wisdom.

As David S. D’Amato recently remarked, “If our species does find a way to survive into the distant future, our descendants will look at right now as the near miss; they’ll think, ‘Wow, that was close.’ How do we convince people in power to preserve that future?”

*  *  *

My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on FacebookTwitterSoundcloud or YouTube, or throwing some money into my tip jar on Ko-fiPatreon or Paypal. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. All works co-authored with my American husband Tim Foley.

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Tyler Durden Thu, 06/30/2022 - 02:00
Published:6/30/2022 1:45:57 AM
[Markets] The Age Of Discord The Age Of Discord

Authored by Charles Hugh Smith via OfTwoMinds blog,

It's very difficult to find common ground that supports cooperation in the disintegrative stage of scarcities, rising prices, catastrophically centralized power and social discord.

Today's topic echoes Peter Turchin's 2016 book, Ages of Discord, which I have often referenced in blog posts.

I'll also discuss two other books I've often referenced, Global Crisis: War, Climate Change and Catastrophe in the Seventeenth Century by Geoffrey Parker and The Great Wave: Price Revolutions and the Rhythm of History by David Hackett Fischer.

Turchin proposes repeating cycles of history of social integration (people finding reasons to cooperate) and disintegration (people finding reasons to not cooperate).

Clearly, we're in a disintegrative stage.

Fischer proposed a repeating cycle of history in which humans expand their numbers and economy to consume all available resources.

Once all the low-hanging fruit has been consumed, scarcities arise, pushing prices above what commoners can afford, and the result is economic stagnation and social/political revolution.

Either humans exploit a new energy source at scale to provide for the larger population and higher consumption per person, or the population and consumption decline to fit available resources.

Parker covers the mutually reinforcing climate, political, social and economic crises of the 17th century. A long cycle of cold, wet summers reduced crop yields, leading to hunger and strife.

Parker also identifies another cause of the tumultuous, war-plagued 1600s: political leaders had consolidated too much power, enabling them to pursue disastrous wars without any restraint from competing domestic social-political interests.

Clearly, we're in Fischer's stage of overshoot and resource scarcity and Parker's extremes of centralized power free to pursue catastrophic wars of choice.

In the 1600s, those launching wars reckoned a clean, decisive victory was within easy reach. In every case, the wars dragged on inconclusively or generated even wider conflicts.

In the end, all the wars were settled diplomatically, not by military victory. The military gains were nil while the destruction was widespread and devastating.

Fischer details how poorly humans respond to scarcity and higher prices, also known as inflation or more. accurately, as the decline in purchasing power of money and labor. As scarcities and higher prices take their toll, society unravels: crime and social disorder accelerate.

What we're seeing in real time is a "circle the wagons" mentality of weeding out everyone but the True Believers in every movement. Litmus tests are handy for this test: answer wrong on any question and you're cast out: heretic!

It's not enough to tick one "progressive" or "conservative" box; you have to tick them all or you're a heretic who cannot be trusted. If you leave one box unticked, you might untick a few more in the days ahead.

This puts pressure on everyone to declare their loyalty to the "party" even if the loyalty is just for show. This dishonesty pleases those demanding every box be ticked but this forced loyalty creates an illusion of solidarity that unravels under pressure.

Officials vie to offer pledges of loyalty to Chinese President Xi Jinping ahead of 20th Party Congress

Exacerbating this is social media, which rewards those promoting the most extreme and divisive positions and deranges the populace by substituting recognition online, which encourages disintegration, for real-world engagement, which encourages moderation and cooperation.

Online, it's easy to be all-or-nothing: there should be no restrictions on social media, or we should just pull the plug and shut the whole mess down.

In the real world, these are knotty, nuanced problems. The Founding Fathers would not have tolerated sedition under the guise of free speech. The social order can only be maintained if every participant adheres to standards of civility and the common good.

When put under stress, humans harden their positions as a defensive measure. They become more argumentative and less tolerant, more strident in insisting that the One True Thing is the answer to our problems.

This leads to magical thinking, for example, that we can replace hydrocarbons with fusion or wind and solar. When the physical and cost limits of minerals are presented as impassable obstacles, people respond with denial: there must be a way to keep everything the same.

Humans have an easy time expanding their population and consumption per person and a hard time consuming less.

It's very difficult to find common ground that supports cooperation in the disintegrative stage of scarcities, rising prices, catastrophically centralized power and social discord.

This requires accepting that we can cooperate with people on one issue even though all the other boxes of our group/party/movement are left unticked.

History suggests the disintegrative stage will run its course and consumption will realign with available resources one way or another, and the best we can do is preserve our own sanity, community and willingness to nurture small patches of common ground that support productive cooperation.

*  *  *

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Mon, 06/27/2022 - 17:15
Published:6/27/2022 4:23:48 PM
[Markets] What A Time To Be Alive What A Time To Be Alive

Submitted by Jack Raines via Young Money,

A few things going on in the world today:

  • War in Ukraine
  • Global pandemic
  • Political uncertainty
  • Crashing financial markets
  • $7 gas
  • Layoffs
  • Inflation

And we are only two years into this century's "Roaring 20s." There is so much chaos in the world today that it's easy to say "life sucks, the world sucks, and everything sucks."

Today, I am asking you to consider a different, more optimistic take: Life is good. In fact, it isn't just good. Life is the best that it has ever been.

Turn Back the Clock


If we were living in Alexandria in year 0, Kyoto during the samurai era, Stockholm in 1655, or Paris during Napoleon's reign, each of us would have had a coin flip's chance of surviving adolescence. Maybe we wouldn't have survived our own births. Maybe we would have fallen victim to famine, sickness, war, infection, labor, or an abundance of other adverse conditions. 

From 500 BC to 1900 AD, death reigned supreme. The world's average youth mortality rate, defined as death before age 15, was 46.7%. Additionally, one-quarter of all infants didn't reach their first birthdays.

For 2400 years, your odds of reaching your 15th birthday were reduced to the spin of a roulette wheel. But over the last century, everything changed.

By 1950, the global youth mortality rate had nearly been cut in half to 27%. In 2017, we hit 4.6%. Somalia, which currently boasts the world's highest youth mortality rate at 14.8%, sits at just 1/3 of the global average from ~100 years earlier.

In 2022, the death of a child is a tragic occurrence. In 1822, it was a normal part of daily life. We can't comprehend a world where early deaths were so common, yet that was the real world for millennia.

Static mortality rates for centuries, then a 90% decline in just a few generations. Insane progress.


In 1820, with a global population of 1.08B, 964.93M people lived in extreme poverty (living on less than $1.90 per day in 2015, adjusted for inflation). In 2015, with a global population of 7.35B, 733.48M people lived in extreme poverty. While the world's population increased by 6.3B, the number of people living in extreme poverty decreased by 230M.

We often focus on wealth inequality in the US. And it's true, the wealth gap is growing. But what gets missed in this wealth gap comparison is just how much better off poor people are now than at any point in the past.

You can be "poor" in the United States today and have a cellphone, an internet connection, food, and shelter. Those living in government housing today have a higher standard of living than the upper class did in year 1900. JD Rockefeller, the richest man in modern history, didn't even have air conditioning.

As recently as 1981 (!!!) 42% of the world lived in extreme poverty. Today, that number is just 9%. In the last generation, global extreme poverty has dropped by 84%.

A variable highly correlated to poverty? Literacy.


Even centuries after the advent of the printing press, books were still reserved for the elites. Written knowledge passed down from generation to generation could only be accessed by a select few, with the rest of the populace relying on word-of-mouth communication. Letters couldn't be written. Notes couldn't be taken. Information couldn't be recorded, unless you were born into the right house.

In year 1800, just 12% of the world's population was literate.

In year 1900, just 21% of the world's population was literate.

In year 2016, an astounding 86% of the world's population was literate.

Spreadsheet built on Rows


If you were born in Paris, France in 1820, you had a 56% chance of making it to your 15th birthday. Assuming you survived, there was a 38% chance that you knew how to read and write. And even if you were alive and literate, (a combination with just a 21% chance of happening), you had a 50/50 shot of being in extreme poverty.

But let's say that you beat the odds. You were a living, literate Parisian with a modest income. Welcome to the good life.

You would have spent your entire adulthood in a chaotic, politically unstable post-Napoleon France. Your grandchildren would have fought in WW1, and their children would have fought in WW2.

The reward for overcoming all of life's obstacles was two generations of war that tore your country apart.

But at least gas wasn't $7 per gallon.

It's hard to internalize just how good we have it because our own life experiences are our homeostasis, our base point for comparison. We read about the hardships of history, but we don't experience them. We don't feel them. How could we? Decades of war, sickness, and hardship have been reduced to paragraphs and documentaries.

But those wars, sicknesses, and hardships were all-too-real for those who lived through them.

The Plague of Justinian wiped out 40% of Constantinople's population in four months. The Russian Plague killed 33% of Moscow's population in a single season, and 75% of the remaining populace fled.

The Covid-19 pandemic has been bad, no doubt. But can you imagine a world with 4M New York City deaths in just four months? Where millions of others flee, fearing for their lives?

Because that happened. And it happened more than once.

These accounts feel like faraway stories from an era in the distant past. Lost somewhere between fact and fantasy. But they were just as real to the past generations as our conflicts are to us today.

A Million Little Miracles

History is nothing if not a series of mankind conquering nature's limitations.

The printing press allowed our knowledge to conquer death.

Penicillin allowed our bodies to conquer infection.

Fertilizers allowed our farms to conquer famine.

Steam engines allowed our ships to conquer windless seas.

Airplanes allowed us to conquer gravity and distant travel.

Phones allowed us to conquer long-distance communication.

Computers allowed us to conquer the spatial limitations of data storage.

Over time, these little miracles, these little breakthroughs, they compounded. Each generation built from the shoulders of their predecessors, beginning life on third base thanks to a triple hit by the generation before.

And innovation has accelerated as a result.

Every single thing that we take for granted today would be nothing short of a miracle to anyone who lived just 100 years ago.

Supermarkets with fresh selections of every food imaginable are magic. Planes that will transport you anywhere in the world in under a day are magic. Clean water is magic. Antibiotics are magic. Cell phones are magic. Plumbing systems are magic. Anesthesia is magic. The fact that you can read this blog from New York, to New Delhi, to New Zealand is magic.

But to us, none of this is magic. To us, the real magic is that our ancestors survived with so much less.

Inflation sucks. Covid sucks. War sucks. High gas prices suck.

But we live in a world where you can Facetime your best friend from another country, and they can fly to visit you the next day. You can instantly communicate with anyone who has an internet connection. The poorest people in first-world countries still have food, water, shelter, and access to healthcare, while 200 years ago a large gash on your leg was a death sentence.

We struggle with purpose, our ancestors struggled with survival.

Asking "What do I want to do with my life?" is a privilege, considering the primary concern for everyone before us was "How do I stay alive?" 

So while we tweet, text, and opine about the disastrous state of the world today, it is important to remember that the depths of our modern hells would be the pinnacles of our ancestors' lives. Our problems are a privilege.

- Jack

If you liked this piece, make sure to subscribe by adding your email below!

Tyler Durden Mon, 06/27/2022 - 05:00
Published:6/27/2022 4:17:07 AM
[Energy] Biden’s Radical, Anti-Fossil Fuel Energy Policy Costs Americans Dearly

There’s a popular genre of fiction books and TV programs that explore what the world might have been like if history had taken a different... Read More

The post Biden’s Radical, Anti-Fossil Fuel Energy Policy Costs Americans Dearly appeared first on The Daily Signal.

Published:6/27/2022 2:52:41 AM
[Entertainment] Bette Howland, nearly forgotten, is now getting the notice she deserves New editions of her books, including “Things Come and Go” reveal Howland’s singular talent Published:6/26/2022 9:06:52 AM
[] Don't like the SCOTUS Decisions this Week? Blame a Greedy Liberal Published:6/25/2022 1:51:02 PM
[] Fresh term for women thoroughly rejected by the 'womb carriers' Published:6/24/2022 3:06:16 AM
[World] Unburnable Books and Jokers Not in on the Joke

Few libs seem to see why a flame-retardant copy of A Handmaid’s Tale that costs $130,000 is a brutal piece of self-satire.

The post Unburnable Books and Jokers Not in on the Joke appeared first on The American Conservative.

Published:6/14/2022 6:53:04 AM
[] The Morning Report - 6/14/22 Good morning, kids. Well, day 2 of the kangaroo court J-6 show trial is in the books and, although I don't have the ratings, my guess is that it was an even bigger "stealth-turd" than the opener. Stealth-turd is an... Published:6/14/2022 6:53:03 AM
[Culture] How We Achieved Naval Supremacy—And How We Could Lose It

Polymathic economist Tyler Cowen recently observed, "as a general rule you can never read enough good books about World War II, even after you feel you have read enough good books about World War II." In Victory at Sea, Paul Kennedy and Ian Marshall created an engaging and interesting work about the most consequential event of the 20th century.

The post How We Achieved Naval Supremacy—And How We Could Lose It appeared first on Washington Free Beacon.

Published:5/30/2022 6:53:08 PM
[Campus] Parental Advisory: Court Rules ‘Gender Queer’ Novel Too Sexually Explicit for Schools

Two sexually explicit novels may soon be removed from Virginia public school libraries thanks to a circuit court decision that called the books "obscene."

The post Parental Advisory: Court Rules ‘Gender Queer’ Novel Too Sexually Explicit for Schools appeared first on Washington Free Beacon.

Published:5/21/2022 2:55:50 AM
[Entertainment] Jim Murphy, children’s author who humanized U.S. history, dies at 74 His books about the Great Chicago Fire and America’s first epidemic were Newbery Honor winners. Published:5/19/2022 9:53:32 PM
[Entertainment] Washington Post hardcover bestsellers A snapshot of popular books. Published:5/11/2022 10:53:28 AM
[Markets] The Psychology Of Manipulation: 6 Lessons From The Master Of Propaganda The Psychology Of Manipulation: 6 Lessons From The Master Of Propaganda

Authored by Ryan Matters via,

Edward L. Bernays was an American business consultant who is widely recognized as the father of public relations. Bernays was one of the men responsible for “selling” World War 1 to the American public by branding it as a war that was necessary to “make the world safe for democracy”.

During the 1920s, Bernays consulted for a number of major corporations, helping to boost their business through expertly crafted marketing campaigns aimed at influencing public opinion.

In 1928, Edward Bernays published his famous book, Propaganda, in which he outlined the theories behind his successful “public relations” endeavours. The book provides insights into the phenomenon of crowd psychology and outlines effective methods for manipulating people’s habits and opinions.

For a book that’s almost 100 years old, Propaganda could not be more relevant today. In fact, its relevance is a testament to the unchanging nature of human psychology.

One of the key takeaways of the book is that mind control is an important aspect of any democratic society. Indeed, Bernays maintains that without the “conscious and intelligent manipulation of the organized habits and opinions of the masses”, democracy simply would not “work”.

We are governed, our minds molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society.

According to Bernays, those doing the “governing” constitute an invisible ruling class that “understand the mental processes and social patterns of the masses”.

In Propaganda, Bernays draws on the work of Gustave Le Bon, Wilfred Trotter, Walter Lippmann, and Sigmund Freud (his uncle!), outlining the power of mass psychology and how it may be used to manipulate the “group mind”.

If we understand the mechanism and motives of the group mind, is it not possible to control and regiment the masses according to our will without their knowing about it?

I recently explored this topic in an essay about how occult rituals and predictive programming are used to manipulate the collective consciousness, influencing the thoughts, beliefs and actions of large groups of people, resulting in the creation of what occultists call “egregores”.

Here I have extracted some key insights from Bernays in an attempt to show how his book Propaganda is, in many ways, the playbook used by the globalist cryptocracy to process the group mind of the masses.


Bernays tells us that one of the easiest ways to influence the thoughts and actions of large numbers of people is to first influence their leader.

If you can influence the leaders, either with or without their conscious cooperation, you automatically influence the group which they sway.

In fact, one of the most firmly established principles of mass psychology is that the “group mind” does not “think”, rather, it acts according to impulses, habits and emotions. And when deciding on a certain course of action, its first impulse is to follow the example of a trusted leader.

Humans are, by nature a group species. Even when we are alone, we have a deep sense of group belonging. Whether they consciously know it or not, much of what people do is an effort to conform to the ideals of their chosen group so as to feel a sense of acceptance and belonging.

This exact method of influencing the leader and watching the people follow has been used extensively throughout the last few years. One notable instance that comes to mind is the horrendously inaccurate epidemiological models created by Neil Ferguson, which formed the basis for Prime Minister Boris Johnson’s lockdown policies.

Once Johnson was convinced of the need to lockdown and mask up, the people gladly followed.


Certain words and phrases are associated with certain emotions, symbols and reactions. Bernays tell us that through the clever and careful use of language, one can manipulate the emotions of a group and thereby influence their perceptions and actions.

By playing upon an old cliché, or manipulating a new one, the propagandist can sometimes swing a whole mass of group emotions.

The clever use of language has been employed throughout the Covid-19 pandemic to great effect. An obvious example of this was when the definition of “vaccine” was changed to include injections utilising experimental mRNA technology.

You see, the word “vaccine” is associated in the public mind with a certain picture – that of a safe, proven medical intervention that is not only life-saving but absolutely necessary.

If governments had told people to go get their “gene therapies”, the vast majority of the public would likely question the motives behind such a campaign; they would feel extremely sceptical because the phrase “gene therapy” is not associated with the same images, emotions and feelings as “vaccine”.

The same goes for the word “pandemic”, the definition of which was also changed. The word “pandemic” is generally associated in the collective consciousness with fear, death, chaos and emergency (largely thanks to Hollywood and the myriad virus films it has released over the years).


Any system of communication, whether phone, radio, print, or social media, is nothing more than a means of transmitting information. Bernays reminds us that any such means of communication is also a channel for propaganda.

There is no means of human communication which may not also be a means of deliberate propaganda.

Bernays goes on to stress that a good propagandist must always keep abreast of new forms of communication, so that they may co-opt them as means of deliberate propaganda.

Indeed, systems that most people would associate with freedom of speech and democracy are none other than means of circulating propaganda. Facebook fact-checkers, Big Tech censorship and YouTube’s Covid banners certainly fall into this category.

Other examples of this include the recent algorithm updates made by various search engines (including Google and DuckDuckGo) to penalize Russian websites. Although this should come as no surprise (Google has been engaging in this type of “shadow propaganda” for many years).


Although Bernays terms this a technique used by the “old propagandists”, he, nonetheless, recognizes its usefulness.

It was one of the doctrines of the reaction psychology that a certain stimulus often repeated would create a habit, or that the mere reiteration of an idea would create a conviction.

Repeating the same idea or the same “mantra” again and again is a form of neuro-linguistic programming aimed at instilling certain concepts or emotions into the subconscious mind. Indeed, people who are feeling sad or depressed are often advised to repeat to themselves an uplifting saying or affirmation.

There are many examples of this simple, yet effective, technique being used to great effect over the last few years. Think Q’s “trust the plan”, the globalist favourite, “build back better” or the incessant repetition of that twisted phrase, “trust the science”. Included in this category are the 24/7-in-your-face death statistics and case numbers, aimed at promoting the illusion of a pandemic.

There are more obvious examples of this as well, such as news anchors in different areas all reading from the exact same script.


After studying why people make certain purchasing decisions, Bernays observed that people often don’t desire something for its usefulness or value, but rather because it represents something else which they unconsciously crave.

A thing may be desired not for its intrinsic worth or usefulness, but because he has unconsciously come to see in it a symbol of something else, the desire for which he is ashamed to admit to himself.

Bernays gives the example of a man buying a car. From the outside, it may appear as if the man is buying the car because he needs a means of transport, but in actuality, he is buying it because he craves the elevated social status that comes with owning a motor vehicle.

This idea, too, applies to the events over the last few years.

For example, masks are a symbol of compliance. Everyone knows they don’t work but they wear them because of their desire to “fit in”, and to be seen as an upstanding citizen who follows the rules. Covid-19 injections are also a symbol and many people choose to get them because they have a desire to avoid being called an “anti-vaxxer” or a “conspiracy theorist”.


Lastly, Bernays tells us that if one wishes to manipulate the actions of an individual, the most effective way to do so is to create circumstances that engender the desired behaviour.

What are the true reasons why the purchaser is planning to spend his money on a new car instead of on a new piano? […] He buys a car, because it is at the moment the group custom to buy cars. The modern propagandist therefore sets to work to create circumstances which will modify that custom.

For example, why all of a sudden does everyone “stand with Ukraine”? According to Bernays, it’s not because there is a war going on and innocent people need our love and support, but rather because it is the new “group custom” to do so.

The process of altering group customs begins from the top down. In every nation or social clique, there are leaders, public figures and influencers. Manipulating those with the most sway eventually filters down into the public mind. That is why when a celebrity decides to wear something extravagant on the red carpet, a whole new trend can arise overnight.

Similarly, at the beginning of the Covid saga and then the Russia-Ukraine war, the media were quick to circulate stories of celebs “catching Covid” and urging people to stay home, or public figures condemning Russian actions and calling for stricter sanctions (which just so happened to hurt the West more than they hurt Russia).


The world is a volatile place right now. Things seem to change quickly and no one knows what might happen next. However, amid all this chaos there is one thing that has not changed and is unlikely to change any time soon, and that is human psychology.

Because of this, the tactics used to manipulate people’s thoughts, beliefs and actions have not changed either. In fact, most of them were outlined in detail 100 years ago by Edward Bernays in his 1928 book, Propaganda.

That’s right, the Puppet Master’s playbook isn’t a secret. It’s right there, freely available to anyone who cares to understand how the powers that be seek to influence them on a daily basis.

*  *  *

Propaganda by Edward Bernays has now been added to our Forbidden Library. Read it now, along with other forbidden books.

Tyler Durden Sun, 05/08/2022 - 23:20
Published:5/9/2022 12:54:44 AM
[Comedy] body horror A genre – for film, books, comics, etc. – in which the [main feature] is the graphically depicted destruction or [degeneration] of a human body or bodies. This usually involves one or more of the following; aliens, bloating, blood, bones, fungi, humiliation, involuntary transformation, parasites, puss, screaming, sex, torture and xenogenesis . It is [not for the faint of heart] of weak of stomach.
Published:5/5/2022 9:56:17 AM
[History] March 1917 revisited (Scott Johnson) The current (May 12) issue of the New York Review of Books carries Gary Saul Morson’s chilling essay/review (behind the NYRB paywall) taking up March 1917: The Red Wheel/Node III (8 March–31 March): Book 3 and Between Two Millstones: Book 2, Exile in America, 1978–1994, the most recent of the books by Aleksandr Solzhenitsyn to be translated and published in English. Professor Morson channels Solzhenitsyn’s thinking on the preface to Published:4/26/2022 4:25:47 PM
[Markets] Communist China Has Thrown Out The Old Rules of War Communist China Has Thrown Out The Old Rules of War

Authored by Robert Spalding via RealClear Books & Culture,

When I first read the Chinese war manual “Unrestricted Warfare” in 1999, I thought it was wacky. I was flying B-2 Stealth bombers out of Whiteman Air Force Base in western Missouri and reading a lot about war. As an Air Force officer, I thought it was part of my day job to understand the bigger picture – even though the prevailing attitude in the military was “Just fly the planes.” “Unrestricted Warfare” was one of those books that caused a stir among some military folks because it had recently been translated into English. It had that insider whiff of mystery and secrets, a peek into the mind of the Chinese Communist Party.

(AP Photo/Pavel Golovkin, Pool)

Despite that mystique, not a lot of people were finishing the book. For one thing, regardless of its title, no one thought we were ever going to be fighting a war with China, so it seemed like a lot of work for very little payoff. For another, the book itself is not a light read. It is a dense compendium of strategy, economics, social theory, and futuristic thoughts about technology. It imparts centuries of military history, particularly as it relates to the United States, but I already knew a lot of that. It seemed vague and also a little sci-fi, not relevant to a U.S. bomber pilot – even one with a fascination for military history. My mistake.

If you look closely at everything China has done since 1999 – at all aspects of its economic, military, diplomatic, and technological relations with the rest of the world – it’s like watching “Unrestricted Warfare” come to life. One can find other glimpses into the secretive mentality of the CCP leaders, but this one is the single most important book for understanding the China of today. “Unrestricted Warfare” is the main blueprint for China’s efforts to unseat America as the world’s economic, political, and ideological leader. It shows exactly how a totalitarian nation set out to dominate the West through a comprehensive, long-term strategy that includes everything from corporate sabotage to cyberwarfare to dishonest diplomacy; from violations of international trade law and intellectual property law to calculated abuses of the global financial system. As one of the authors stated, “The only rule in ‘Unrestricted Warfare’ is that there are no rules.”

The book is the key to decoding China’s master plan for world domination, which has been progressing more steadily and successfully than most Americans realize – even accelerating in the reign of Xi Jinping. The manipulation of COVID policies, stonewalling the world about its origins, and mounting a massive disinformation campaign to blame the United States are merely recent examples.

So why is “Unrestricted Warfare” so obscure, even to people who study China professionally on behalf of the U.S. government, the Fortune 500, the investment world, the nonprofit world, academia, or the military? It’s not as if the book is some secret document that has never escaped the inner sanctum of the Chinese Communist Party. Just the opposite: The original translation by the U.S. government is in the public domain; you can google it and click on an English translation, for free, in less than a second.

The problem is that “Unrestricted Warfare” is hard to read. While any American can access it, few can understand it. The prose is dense and confusing, even in the original Mandarin, and even more so in that crude, free translation you’ll find on the web. Its insights are clouded by endless repetitions and meandering discursions into military history, cultural theory, and attacks on U.S. policy. The colonels, Qiao Liang and Wang Xiangsui, get tangled in semantics and draw on faulty citations and unsourced references. They obsess about the Persian Gulf War of 1990-91 to an extent that puzzles Americans who consider that war to be a minor footnote to history. And the authors’ metaphors are so weird to our ears as to seem utterly baffling. Just consider two chapter titles: “The War God’s Face Has Become Indistinct” and “What Do Americans Gain by Touching the Elephant?” Huh?

I mentioned “Unrestricted Warfare” several times in my previous book, “Stealth War: How China Took Over While America’s Elite Slept.” I noted that the book was well known to modern-day China scholars but that perhaps because of its strange complexity, Western strategists had failed to connect its strategic vision with the seemingly random actions of China’s misleadingly benign and smiling countenance. Although some of the text is pretty clear: “Using all means, including armed force or non-armed force, military and non-military, and lethal and non-lethal means to compel the enemy to accept one’s interest.”

As I wrote at the time, that strategy can justify meddling in all manner of another country’s affairs: silencing ideas or promoting political discord, stealing technology, dumping products to disrupt markets. I was intrigued with the idea of creating an “army” of academics who could be used to gather medical, technological, and engineering information. The list of incursions goes on – and has grown since then.

Consider just a small number of the things the Chinese Communists have done:

  • Seized on COVID as a weapon to be used to their benefit, not a humanitarian crisis to be solved.
  • Viewed the climate change issue as a bargaining chip to win them economic concessions from global elites in return for reforms that they never intend to make.
  • Sponsored corporate espionage on a scale beyond what the United States acknowledges.
  • Launched unrelenting cyberattacks against Western companies and governments.
  • Fueled America’s deadly fentanyl drug crisis by allowing illegal smuggling of banned substances.
  • Used slave labor to produce goods such as clothing for sale to Western shoppers.

Despite all of these actions by the CCP, since publication of “Stealth War,” I’ve encountered skepticism from some readers who simply can’t believe that China has been methodically undermining the rest of the world with a patient, long-term, multidisciplinary strategy. Some even dismissed “Stealth War” as the work of an alarmist.

In the wake of that reaction, I realized how useful it would be to make the Chinese manual of war accessible to American readers so that they can see it for themselves. I set out to write a user-friendly guide that would explain “Unrestricted Warfare” chapter by chapter, adding examples while editing out the irrelevant and distracting parts of the original text. In the process I’ve drawn on history, military strategy, and Chinese culture to explain the context in which “Unrestricted Warfare” was written and then applied. My goal is to show how “Unrestricted Warfare’s” advice to the leadership of the CCP maps with terrifying consistency onto the events of the past two decades.

This book has opened my eyes to how the CCP has essentially sneak attacked us in slow motion. And made me think hard about where they are going next. I hope it can have the same effect on others. I want to share with the men and women in our government, my respected former colleagues, who have to make some important – maybe life and death – decisions about how we deal with the Chinese government in the very near future.

I know it can seem excessive to compare any country with Nazi Germany. But as we rethink our views on China, what other comparison is appropriate for a regime that casually and cold-bloodedly allowed COVID-19 to spread to the rest of the world at the same time it was forcing its Muslim citizens into concentration camps? Hong Kong parallels the takeover of Austria in 1938. And how do you account for the increasingly warlike rhetoric and military movements directed at Taiwan?

Imagine the reaction during World War II if an American company had tried to export its goods to imperial Japan, or if a Wall Street firm had tried to underwrite the bonds of a Nazi arms manufacturer. Unthinkable, right? And yet today countless Americans are still trying to do business with and in China, misunderstanding or ignoring the CCP’s war without rules.

I am deeply concerned that the Biden administration, despite some positive moves, is seriously underestimating the malevolence and power of the Chinese threat. Our adversaries wrote up their long-term plans in 1999 and have been executing them relentlessly ever since. Our leaders have a moral obligation to understand what’s happening, sound the alarm, wake up the country, and inspire Americans of all political stripes to do everything in their power to stop this totalitarian regime.

I also want the average American to have access to this book. It’s time for every influential person in America – policy makers, diplomats, business executives, investors, journalists, scientists, academics, and more – to become part of the resistance to the Chinese Communist Party.

My hope is that by explaining “Unrestricted Warfare” and its consequences, this book will make it impossible for my fellow Americans to continue to deny the reality of our existential conflict with China. The simple, chilling truth is that the CCP is doing everything in its power – mostly via economics, technology, diplomacy, and the media, not yet via military power – to destroy our way of life. To understand that plan, you need to understand “Unrestricted Warfare.” The stakes couldn’t be higher.

*  *  *

Robert Spalding retired from the U.S. Air Force as a brigadier general after more than 25 years of service. He is the CEO of SEMPRE and the author of “War Without Rules: China's Playbook for Global Domination” (Sentinel, 2022).

Tyler Durden Fri, 04/22/2022 - 23:40
Published:4/23/2022 1:25:19 AM
[Society] Kids’ Books in the Woke Era

Bookstores now sell only certain kinds of children’s books. “Go into Barnes & Noble,” says Bethany Mandel in my new video, “and you will be... Read More

The post Kids’ Books in the Woke Era appeared first on The Daily Signal.

Published:4/12/2022 3:55:16 PM
[Entertainment] Jack Higgins, best-selling author of ‘The Eagle Has Landed,’ dies at 92 The British thriller writer's 85 books have sold more than a quarter of a billion copies. Published:4/11/2022 1:14:44 PM
[Markets] Jordan Peterson Champions Capitalism At Bitcoin 2022 Jordan Peterson Champions Capitalism At Bitcoin 2022

Authored by Casey Carrillo via,

Bitcoin 2022 is a gathering of freedom, a place for conversations of sovereignty; and who better to invite to speak than Jordan Peterson, a prominent Canadian psychologist who’s attracted much attention for his books and podcast appearances. Peterson has been classified as “the most influential public intellectual in the Western world right now,” and a “right-wing internet celebrity,” but his wide appeal certainly testifies to the fact that he’s speaking to a growing audience of people seeking his ideals.

His fireside appearance was hosted by Tuur Demeester, an early bitcoin investor and analyst. Given Demeester’s experience and knowledge, it was set to be an excellent discussion.

Much of the Bitcoin community already has an ideological intersection with Peterson. At the conference, his chat was delivered to a very crowded audience — people were interested in what he had to say.

Demeester started by asking Peterson about what sparked his entrepreneurial ventures. Peterson responded:

“The most appropriate way to understand something is to try it.”

In a way, it’s a nod to proof of work as a concept.

Peterson then jumped into what became the main theme of his responses, which was his profuse belief in capitalism.

“Don’t be defensive about the ethics of your capitalistic enterprise, on the contrary you should be on the offensive, proudly proclaiming that people should ... make free choices about what they value.”

He added, “One of the fundamental axioms of a free market system is that the only way to properly compute the horizon of the future is by sampling and perhaps summing the free choice of a multitude of free agents.”

Demeester asked Peterson about his curiosity in Bitcoin, to which Peterson replied, “First of all, I thought I would be motivated to understand bitcoin if I actually invested some money in it because I do believe the proposition that you don't really make genuine decisions if your sampling a domain unless you have ‘skin in the game.’”

But Peterson wasn’t entirely bullish on Bitcoin — he did have a demeanor of cautious optimism.

“We have no idea what would happen if money per se was actually decentralized … If we manage that and say Bitcoin maintains privacy, is it irreversible? Is that permanent? … Well what if its a bad idea and its irreversible?

Peterson rounded back to capitalism to finish off, saying, “Here's two justifications for free markets and capitalism. It gives warlike people something to do that isn't destructive.”

He then added:

“If you can't make your idea attractive enough to other people so that they're willing to give you money, it's possible that its a stupid idea and you’re doing it badly… We shouldn’t subsidize zombies. Do you want to be one?” 

Watch the full 'fireside chat' below:

Tyler Durden Sat, 04/09/2022 - 13:30
Published:4/9/2022 12:57:26 PM
[] THE MORNING RANT – Do The “Read Banned Books” Activists Support Students Reading “Rush Revere” and “When Harry Became Sally”? My wife and I visited a crafts fair at our suburban town’s community center recently, and I noticed that a volunteer had placed a sign on the table in the entryway that read “Read Banned Books.” My initial reaction was... Published:4/8/2022 10:16:19 AM
[Markets] Why Won't The Fed Be Able To Shrink Its Balance Sheet? Why Won't The Fed Be Able To Shrink Its Balance Sheet?

Authored by Michael Maharrey via,

Earlier this week, Federal Reserve governor and vice-chair nominee Lael Brainard indicated the central bank will shrink its balance sheet at a “considerably” more rapid pace than it did during the previous cycle. I, Peter Schiff and a few others outside the mainstream have said the Fed won’t be able to do this.

Why not?

The Fed first expanded its balance sheet in the wake of the 2008 financial crisis. Through three rounds of quantitative easing (QE), the Fed expanded its balance sheet from under $1 trillion to $4.5 trillion. When the central bank started QE, then-Fed Chair Ben Bernanke swore the central bank wasn’t monetizing federal government debt. He said the balance sheet expansion was an emergency measure and that the Fed would eventually sell the bonds it was buying.

The Fed didn’t get around to balance sheet reduction until 2018, and it did so at a relatively slow pace. By the time it ended tightening in August 2019, the balance sheet was just below $3.8 trillion. In all, the Fed shed about $700 billion from its balance sheet in a little more than 18 months.

Why did the Fed abandon tightening in 2019?

Because in the fall of 2018, the stock market tanked and the economy went wobbly. The markets and the economy couldn’t handle even the modest monetary tightening the Fed managed to implement.

It’s important to remember that the Fed resumed QE months before the pandemic — although it didn’t call it QE. By the time the Fed launched QE 4 in 2020, the balance sheet had already expanded back to just over $4 trillion.

Over the last two years, the Fed has added another $5 trillion to the balance sheet expanding it to nearly $9 trillion.

Brainard indicated that the upcoming balance sheet runoff will be “considerably” faster than last time. She did not say what that actually means, but the Fed minutes from the March meeting shed a little bit of light on the nuts and bolts of the plan.

According to the minutes, the plan is to reduce the balance sheet by about $3 trillion over a three-year period. This would leave the balance sheet at $6 trillion – up by $2 trillion from its pre-pandemic level and more than $5 trillion above the pre-2008 financial crisis level. So much for Bernanke’s promise.

Looking at the big picture, the Fed’s plan is relatively modest. If it sticks to this plan, it will shrink the balance sheet by about $1 trillion per year.

But I don’t even think it can accomplish this.

If the central bank couldn’t run off $700 billion in 2018 without popping the bubbles and shaking up the economy, what makes anybody think it can decrease its balance sheet holdings by $3 trillion this time around with even bigger bubbles and more debt in the economy?


I’m not basing my skepticism purely on speculation. The process of balance sheet reduction makes it extremely unlikely that the Fed can accomplish its goal.

First, you have to understand how and why the Fed expanded its balance sheet to begin with.

Through quantitative easing, the Fed buys US Treasury bonds and mortgage-backed securities with money created out of thin air on the open market. For our purposes, we’ll focus on US Treasuries.

QE accomplishes two important things for the US government. First, it injects currency and liquidity to juice the economy. (By that I mean inflate bubbles.) Second, it reduces the supply of bonds on the market and holds bond prices artificially high. Bond yields are inversely correlated with bond prices. When the price of a bond rises, the yield falls. Propping bond prices up through its artificial demand keeps interest rates low.

So, QE benefits the federal government in two ways. It allows the US Treasury to sell more bonds to finance its deficits because the Fed is absorbing some of the supply and keeping demand higher than it otherwise would be. And it keeps the government’s borrowing costs low by artificially suppressing interest rates.

Balance sheet reduction, or quantitative tightening (QT), reverses this process.

The Fed can shrink its balance sheet in two ways.

  1. Typically, the Fed rolls over the bonds on its balance sheet as they mature. In other words, it takes the money the government pays for the mature bond and buys a new one to replace it. The Fed can shrink its balance sheet simply by letting the old bonds roll off the books without replacing them. This is a relatively slow way to shrink the balance sheet.

  2. The Fed can decrease its bond holding more quickly by selling them on the open market.

Either way, it creates a big problem for the federal government. If the Fed sheds $1 trillion in bonds from its balance sheet over the next year, the US Treasury will have to find buyers for $1 trillion in additional bonds, on top of the $1 trillion or so in new bonds it will have to sell to finance the annual deficit.  And it will also have to sell new bonds to replace maturing bonds that are currently out there in the market. That’s how the government Ponzi scheme works. It pays off old debt with money borrowed from new lenders.

We’re talking about $3 to $4 trillion in bonds that will need buyers over the next year.

This raises a very important question: who is going to buy all of these bonds?

The Fed ranks as the second-largest holder of US debt behind US individuals and institutions. If the Fed is out of the market, and shedding some of its holdings, who is going to fill that gap? Where will the Fed find buyers for an additional $1 trillion in Treasuries every year for the next three years, on top of all the new bonds it needs to sell to finance its massive deficits? The Fed was in the QE game to prop up the bond market. What happens when it pulls out those props?

Supply and demand dictate that as the Fed dumps bonds onto the market, supply will rise and the price will fall. That means yields will rise.

This creates another big problem for the US government.

Rising interest rates mean Uncle Sam’s borrowing costs rise. It’s the same problem you would have if the bank started rising your mortgage rate, or your credit card company raised your interest rate. The US government will have to pay more to finance its debt. That means it will have to borrow more. And that means even more bonds on the market.

This will ripple through the entire financial system and the broader economy. We saw the impacts of tightening in 2018. There is no reason to think it will be any different this time around.

The Fed can talk about balance sheet reduction all it wants. But talking and doing are two different things.

Tyler Durden Fri, 04/08/2022 - 09:01
Published:4/8/2022 8:12:25 AM
[Entertainment] 15 Romance Novels To Read if You Loved Bridgerton E-comm: Bridgerton-inspired booksWe independently selected these products because we love them, and we think you might like them at these prices. E! has affiliate relationships, so we may get a commission if you purchase...
Published:4/6/2022 3:57:21 PM
[Markets] Putin's Inflation? Homegrown Modern Monetary Theory Is To Blame Putin's Inflation? Homegrown Modern Monetary Theory Is To Blame

Authored by Vibhu Vikramaditya via The Mises Institute,

Prices of goods and services in the economy seem to be going through the roof, and both consumers and producers suffer from the falling value of their money. Unfortunately, the public turns to politicians in Washington and economists around the world for answers.

While president Joe Biden and his administration call it Putin's price hike, the US Bureau of Labor Statistics reports that over the last twelve months, the all items index increased 7.9 percent before seasonal adjustment. The reported twelve-month increase has been steadily rising and is now the largest since the period ending January 1982. The all items less food and energy index rose 6.4 percent, the largest twelve-month change since the period ending August 1982. The energy index rose 25.6 percent over the last year, and the food index increased 7.9 percent, the largest twelve-month increase since the period ending July 1981.

Meanwhile, the government’s debt has exploded to $30 trillion, up from about $10 trillion at the start of the 2008 downturn and $5 trillion in the mid-1990s. While such startling evidence is directly in contradiction with the official narrative of the White House, political elites either ignore the problem altogether or blame the wrong people. Part of the root of this calamity is found in the foundation of economic beliefs of the Biden administration.

Even though Treasury secretary Janet Yellen has distanced herself from modern monetary theory (MMT), as a student of James Tobin, she continues to remain an inflationist who believes that government should play a more active role in the economy. For example, she supported the $1.9 trillion stimulus plan signed in March 2020 even though the money was created from thin air. While she does not officially endorse MMT, nonetheless her views of economics do not stray far from MMT orthodoxy.

Stephanie Kelton, author of The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy, also began doing regular interviews on the topic, becoming the de facto face of the MMT movement. She served as an economic adviser to Sen. Bernie Sanders during his presidential campaign and has since advised the Biden administration as well, going as far as to declare that Biden has adopted her principles.

What Is Modern Monetary Theory?

Modern monetary theory begins with the government budget constraint under a system of fiat money. According to William Mitchell, L. Randall Wray, and Martin Watts in Macroeconomics, the standard MMT approach, which relates the present value of tax revenue to the present value of government spending and the government debt, is misleading. Further,

the most important conclusion reached by MMT is that the issuer of a currency faces no financial constraints. Put simply, a country that issues its own currency can never run out and can never become insolvent in its currency. It can make all payments as they come due. (p. 13)

As a result, “For most governments, there is no default risk on government debt” (p. 15).

The most important implication of such a radical theory is that government enjoys potentially limitless power as an arbitrator in the economy. Based on this theory, Congress supposedly can use the printing press effectively via accumulation of debt, raising aggregate demand to the level of full employment. Inflation, according to MMT theorists, is a phenomenon borne out of the class conflicts between workers and capitalists as they jostle for higher shares of the national income (Macroeconomics, p. 255). According to them, moreover, virtually “all spending (private or public) is inflationary if it drives nominal aggregate demand above the real capacity of the economy to absorb it” (Macroeconomics, p. 127).

As is the case with most “crank” theories, the world that this theory describes can never come to life. Full employment is not a criterion that real prices wait for to increase as buyers and sellers compete for scarce resources in the market economy. The view that inflation is a purely monetary phenomenon and that inflation takes place that is beyond the economy's absorbing capacity are both true to an extent, but both miss the vital picture of the interconnectedness of the market economy.

Inflation in the Structure of Production

The general increase in the price level, as the mainstream and MMT theorists want to believe, does not come directly from an increase in money supply or full employment (the “overheated” economy) but from an increase in the scarcity of goods and services whose ability to impact the prices of other goods and services is relatively higher and whose production takes substantial time. The full employment criterion of MMT is therefore not needed for prices to start increasing, as economists like Murray N. Rothbard have demonstrated when they refer to “stagflation,” the simultaneous increase of inflation and unemployment.

The structure of production in the economy starts with goods produced at the primary stages and ends with the final goods used by consumers. Goods used in the primary stages of the structure of production are created through agriculture, forestry, fishing, mining, oil extraction, and other natural resources. These inputs form the base of almost every other product or service provided to consumers. Due to their vital role as the base products of the economy, these products' price changes due to changes in demand are the most inflationary to all other goods.

The second most effective influencers of prices of other goods are the semifinished goods and services used as inputs by producers during the middle stages to create final goods and services. Given their nongeneral nature, these goods, such as steel and plastic, are used by multiple producers for various next-stage goods. As demand for semifinished goods increases due to increased competition among producers of final goods, it exerts inflationary pressures directly on final-goods prices.

When additional money is introduced into the economy as a result of increased government spending, it leads consumers to increase their consumption of final goods due to their increased money balances. As demand for final goods increases, producers of final goods look to purchase more primary order goods and various other intermediate goods, whose scarcity then increases due to increased competition among producers, which leads to an increase in these goods' prices.

This reorients prices of the entire structure of production, and the shift is then observed as a general increase in prices through various indexes. The severity of increases in prices depends upon the ability to meet the increased demand for base goods and intermediate goods. 

We can understand that inflation is a phenomenon that takes place due to changes in scarcity as a result of increased competition between producers each pursuing their independent ends. While increases in prices are a part of the adaptive market process that guides production and consumption, soaring inflation levels or sudden general increases in prices require an additional generation of money in the economy that is more than the money created through consumer and producer credit in the natural course of the economy. Had the changes in money supply been internal to the economy, the adaptive market process would have worked to allocate goods efficiently.

When governments create artificial demand and try to increase their spending in an unchecked manner, they effectively create inflationary pressures in the structure of production. At the same time, they also destroy the allocating price mechanism of the markets, which gets worse the more they spend. While printing and digitally transferring money might take seconds, production and distribution takes much longer.

The Proper Role of Prices in the Market Process

As Congress armed with MMT attempts to dictate the course of the economy based on their political leanings, it leads to distortions of prices in the structure of production, but the rise in prices is not the problem per se. The rise in prices in a well-functioning market has a specific role; when an object of use becomes scarce in the market, it is a signal to consumers to economize on it. At the same time, price increases point in the direction of a more profitable employment of resources—production of the expensive good—until supernormal profits are exhausted. When prices rise artificially, however, this destroys the efficient allocation mechanism of markets and is a tax levied on consumers that reduces the purchasing power of their money, as well as their saved-up wealth.

Inflation-driven price increases act as signals that misdirect the employment of resources, leading producers to make inefficient choices and allocate factors erroneously. They undermine the trust in the price mechanism from all sides. Prices in this situation are like traffic signals that always misdirect traffic.


The only thing modern about MMT is the unprecedented amount of confidence in both its advocacy and application. The US economy already has experienced the Keynesian spending spree of the sixties, which ended in the stagflation of the seventies. When the government’s economic policies are based on the belief that the government can print unlimited amounts of money with little or no repercussions, we should not be surprised to find ourselves living under the most inflationary period in forty years.

Tyler Durden Tue, 04/05/2022 - 14:27
Published:4/5/2022 1:42:31 PM
[Markets] Doomsday 'Preppers' Warn Of Hard Times Ahead As Preparedness Goes Mainstream Doomsday 'Preppers' Warn Of Hard Times Ahead As Preparedness Goes Mainstream

Authored by Allan Stein via The Epoch Times (emphasis ours),

Food scarcity. Food vouchers. Food riots and flash mobs.

All of that’s coming - and soon, says Texas-based food scientist and “Health Ranger” podcaster Mike Adams, who sees dire events unfolding in America in the short term.

Texas-based food scientist Mike Adams, known online as the "Health Ranger," sees food shortages and heightened security later in 2022. (Courtesy of Mike Adams)

His advice: people need to get prepared now.

The thing to really watch for is the food inflation,” Adams said.

My position is we’re going to see food riots in America before the end of this year. We’re going to see flash mobs in grocery stores—especially for meat products.

“Grocery stores are going to respond with increased security and checkpoints. At some point, we’re probably going to see an attempt at price controls and rationing. 

And not on everything—certain types of things. It’s almost certain that the rationing they will attempt to enforce with a vaccine passport app that becomes a food rationing app,” Adams told The Epoch Times.

Adams is not alone in his predictions of hard times coming to America—and the world.

With food production buckling under the weight of runaway inflation, skyrocketing fuel costs, and fertilizer shortages, much of what’s in store is already “built-in.”

Unfertile Ground

In North America two years ago, it cost around $200 an acre to fertilize a 1,000-acre commercial farm, Adams said. Right now, with spring planting, farmers can expect to pay $1,200 to $2,000 an acre.

And consumers will pay for it in higher prices for basic necessities. 

“Many farmers are deciding not to plant. In addition, the diesel fuel prices and diesel fuel scarcity is going into their equation whether they should plant,” Adams said.

The upshot, he said, is that fewer farmers are planting, which means less food to go around.

As a food scientist Adams is a big proponent of clean, organically grown food free of heavy metals, which he makes available through the online sale of “Ranger Buckets.” The demand for his products has seen extremely high since the COVID-19 lockdown began in 2020. 

Adams said it takes on average six to eight weeks to produce 2,000 buckets, which typically sell out within 30 minutes to three hours.

“Health Ranger” Mike Adams says surviving hard times depends on how well one prepares for them. (Courtesy of Mike Adams)

Even before the Russian invasion of Ukraine, the demand for survival food in the United States has been on the increase among a number of national suppliers. 

The supply chain in the United States continues to crumble. More Americans are realizing it takes four trips to different home improvement stores for parts to make home repairs, instead of all their needs being in one store,” said Lori Hunt at Practical Preppers in South Carolina. 

“That is making folks realize this extends to everything: food, books, solar equipment—and considering Ukraine is a source for critical raw materials in the solar industry, this is going to get much worse in the coming months,” she told The Epoch Times. 

“Many of our customers are moving toward energy independence, and this is making a greater demand and diminishing supply situation. We are urging our customers to be prepared for a 2–4 month wait to amass all parts needed for their systems. Many installers around the United States are telling us they are experiencing the same.”

Byron Walker, Founder and CEO of Survival Frog in Denver, told the Epoch Times, “We have struggled with supply chain issues and things only appear to be getting worse.”

Allied Marketing Research (AMR) reported that the global incident and emergency market, valued at $75.5 billion in 2017, is projected to reach $423 billion by 2025.

“Factors such as rise in need for safety and security solutions, owing to increase in natural calamities and terrorist attacks, implementation of regulatory policies for public safety, and the necessity for emergency preparedness drive the growth of the global incident and emergency management market,” AMR said on its website.

“In addition, the surge in smart cities is expected to drive the adoption of intelligent evacuation systems and surveillance systems, thereby fueling the incident and emergency management market growth.”

Price Hikes ‘Here to Stay’

In recent weeks YouTube survival “preppers” such as City Prepping and Alaska Prepper have been sounding the alarm that hard times are just ahead. 

Matt the “Magic Prepper,” in North Dakota, said being prepared continues to go mainstream as a “financial and scarcity genre” in view of current global events.

“With food production issues, supply chain problems, a slow economic recovery from the pandemic, and the cascading effects of an overseas conflict, it seems rather clear that shortages, disruptions, and price hikes are here to stay,” Matt told The Epoch Times. 

He said the situation in Ukraine has revived interest in preparedness in case of a nuclear, biological, or chemical attack. 

“With the conflict creating volatile rhetoric from multiple global superpowers, we find ourselves closer to such an event than any point in recent history,” Matt said. “I operate under the assumption that there is and will likely always be more time to prepare.”

Still, the state of being prepared is “exponentially limited” by the length of time it takes to get prepared, and other factors, he said. 

“Every dollar spent today is worth less in value toward preparations than a dollar you would have spent three years ago. Therefore, by waiting to begin, you’ll inherently be able to prepare less and less. 

YouTube’s Matt the “Magic Prepper” in North Dakota says it’s not too late to begin preparing for difficult economic times ahead. (Courtesy of Matt the “Magic Prepper”)

“This is most obviously apparent when you relate it to items such as ammunition. Stocking up on it now provides you with anywhere from 50 percent [to] 75 percent less ammunition for the same amount spent on it three years ago.

Even if we find ourselves in the midst of a full-on economic collapse or hot conflict, training and learning skills will likely still be accessible,” he said.

Preparedness also requires the ability to network and communication, having supplies in sufficient quantity, a “hardened” location, and knowledge on how to survive an economic collapse. 

“I have suggested to keep moving forward regardless of the events unfolding currently. If things finally fall apart to the point of relying on our preparedness efforts, we will have prepared as best as we could up to that point.

I am making phone calls, appointments, and plans every day to try and enhance my own personal preparedness,” Matt said. 

Given the economic protectionism of halting food exports from countries like Hungary, Ukraine, Russia, and Belarus, the world supply of grain is going to be severely limited, Adams said.

This, he said, will result in the “most extreme food shortages we’ve seen in our lifetime.”

Better Now Than Never

“It will begin about August and continue until the end of the year. A lot of this depends on [President Joe] Biden’s economic decisions on whether he allows U.S. oil companies to finish pipelines and do more drilling. If he does not we are going to see even more shortages throughout 2023.”

Out of chaos, however, Adams foresees a reawakening of freedom and self-reliance in the way we grow and produce food.

I think this is a red pill moment for the people of the world that they need to be more self-reliant. We need decentralization of food production. I’m a big proponent of decentralization—food grown locally.”

The bad news is that only about 5 percent of people in the United State are prepared. But “the more people prepare, the less they panic when shortages appear,” Adams said.

Tyler Durden Sun, 04/03/2022 - 22:30
Published:4/3/2022 9:32:44 PM
[Markets] Lessons From A Trading Great: Stanley Druckenmiller Lessons From A Trading Great: Stanley Druckenmiller

By Macro Ops

The “greatest money making machine in history”, a man with “Jim Roger’s analytical ability, George Soros’ trading ability, and the stomach of a riverboat gambler” is how fund manager Scott Bessent describes Stanley Druckenmiller. That’s high praise, but if you look at Druckenmiller’s track record, you’ll find it’s well deserved.

Druck averaged over 30% returns the last three decades — impressive. But what’s even more astonishing is the lack of volatility… the guy almost never loses.

He never had a single down year and only had five losing quarters out of 120 altogether! That’s absolutely unheard of. And he did all of this in size. At his peak, Druck was running more than $20 billion and he was still managing to knock it out the park.

When you study Druckenmiller you get the sense that he was built in a laboratory, deep in a jungle somewhere, where he was put together piece by piece to create the perfect trader. Every character trait that makes up a good speculator, Druck possesses in spades… things like:

  • Mental flexibility

  • Independent thinking

  • Extreme competitiveness

  • Tireless inquisitiveness

  • Deep self-awareness

Maybe he’s a freak of nature or perhaps a secret Jesse Livermore / George Soros lovechild… or maybe he’s just a relentlessly determined trader who’s been on a lifelong path of mastery. Either way, it behooves us to study the thoughts and actions of one of the game’s greatest. And with that, let’s begin.

On what moves stocks

In Jack Schwager’s book The New Market Wizards, Druckenmiller said this in response to the question of how he evaluates stocks (emphasis is mine):

When I first started out, I did very thorough papers covering every aspect of a stock or industry. Before I could make the presentation to the stock selection committee, I first had to submit the paper to the research director. I particularly remember the time I gave him my paper on the banking industry. I felt very proud of my work. However, he read through it and said, “This is useless. What makes the stock go up and down?” That comment acted as a spur. Thereafter, I focused my analysis on seeking to identify the factors that were strongly correlated to a stock’s price movement as opposed to looking at all the fundamentals. Frankly, even today, many analysts still don’t know what makes their particular stocks go up and down.

The financial world is chock full of noise and nonsense. It’s filled with smart people who don’t know a damn thing about how the world really works. The financial system’s incentive structure is set up so that as long as analysts sound smart and pretend like they know why stock xyz is going up, they get rewarded. This holds true for all the talking heads and “experts” except for those who actually trade real money. They either learn the game or get competed out.

Being one of those who compete in the arena, Druckenmiller was forced to learn early on what actually drives prices. This is what he found:

Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.

Liquidity is the expansion and contraction of money, specifically credit. It’s the biggest variable that drives demand in an economy. It’s something our team at Macro Ops follows closely.

The federal reserve has the biggest lever on liquidity. This is why a trader needs to keep a constant eye on what the Fed is doing.

This is not to say that things like sales and earning don’t matter. They are still very important at the singular stock level. Here’s Druckenmiller again (emphasis mine):

Very often the key factor is related to earnings. This is particularly true of the bank stocks. Chemical stocks, however, behave quite differently. In this industry, the key factor seems to be capacity. The ideal time to buy the chemical stocks is after a lot of capacity has left the industry and there’s a catalyst that you believe will trigger an increase in demand. Conversely, the ideal time to sell these stocks is when there are lots of announcements for new plants, not when the earnings turn down. The reason for this behavioral pattern is that expansion plans mean that earnings will go down in two to three years, and the stock market tends to anticipate such developments.

The market is a future discounting machine; meaning earnings matter for a stock, but more so in the future than in the past.

Most market participants take recent earnings and just extrapolate them into the future. They fail to really look at the mechanism that drives the bottom line for a particular company or sector. The key to being a good trader is to identify the factor(s) that will drive earnings going forward, not what drove them in the past.  

Druckenmiller said in a recent interview that his “job for 30 years was to anticipate changes in the economic trends that were not expected by others, and, therefore not yet reflected in security prices.” Focus on the future, not the past.

Another thing that sets Druck apart is his willingness to use anything that works; as in any style or tool to find good trades and manage them.

Another discipline I learned that helped me determine whether a stock would go up or down is technical analysis. Drelles was very technically oriented, and I was probably more receptive to technical analysis than anyone else in the department. Even though Drelles was the boss, a lot of people thought he was a kook because of all the chart books he kept. However, I found that technical analysis could be very effective.

I never use valuation to time the market. I use liquidity considerations and technical analysis for timing. Valuation only tells me how far the market can go once a catalyst enters the picture to change the market direction.

Druckenmiller employs a confluence of approaches (fundamental, macro, technical and sentiment) to broaden his view of the battlefield. This is a practice we follow at Macro Ops. It doesn’t make sense to pigeonhole yourself into a single rigid scope of analysis… simply use what works and discard what doesn’t.

How to make outsized returns

Druckenmiller throws conventional wisdom out the window. Instead of placing a lot of small diversified bets, he practices what we call the “Big Bet” philosophy, which consists of deploying a few large concentrated bets.

Here’s Druckenmiller on using the big bet philosophy (emphasis mine):

The first thing I heard when I got in the business, not from my mentor, was bulls make money, bears make money, and pigs get slaughtered. I’m here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere. And if you look at all the great investors that are as different as Warren Buffett, Carl Icahn, Ken Langone, they tend to be very, very concentrated bets. They see something, they bet it, and they bet the ranch on it. And that’s kind of the way my philosophy evolved, which was if you see – only maybe one or two times a year do you see something that really, really excites you… The mistake I’d say 98% of money managers and individuals make is they feel like they got to be playing in a bunch of stuff. And if you really see it, put all your eggs in one basket and then watch the basket very carefully.

A lot of wisdom in that paragraph. To earn superior long-term returns you have to be willing to bet big when your conviction is high. And the corollary is that you need to protect your capital by not wasting it on a “bunch of stuff” you don’t have much conviction on.

This reminds me of what Seth Klarman wrote in his book Margin of Safety:

Avoiding loss should be the primary goal of every investor. This does not mean that investors should never incur the risk of any loss at all. Rather “don’t lose money” means that over several years an investment portfolio should not be exposed to appreciable loss of capital. While no one wishes to incur losses, you couldn’t prove it from an examination of the behavior of most investors and speculators. The speculative urge that lies within most of us is strong; the prospect of free lunch can be compelling, especially when others have already seemingly partaken. It can be hard to concentrate on losses when others are greedily reaching for gains and your broker is on the phone offering shares in the latest “hot” initial public offering. Yet the avoidance of loss is the surest way to ensure a profitable outcome.

You need to keep your powder dry so that when the stars align you can go for the jugular and turkey neck that son of a gun.

The importance of striking when the iron is hot is something Druckenmiller learned while trading for George Soros.

I’ve learned many things from [George Soros], but perhaps the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. The few times that Soros has ever criticized me was when I was really right on a market and didn’t maximize the opportunity.

An intense focus on capital preservation coupled with a big bet approach is the barbell philosophy used by many of the greats.

Keeping your losses small and pushing your winners hard is the name of the game in profitable speculation.

The fund washout we’re seeing today is not just because of the glut of mediocrity in the money management space, but also because even decent managers are scared to take the necessary risks to have big return years. They manage too much to the benchmark and are too short-term focused. That’s a recipe for average performance. Here’s Druck on how it should be done:

Many managers, once they’re up 30 or 40 percent, will book their year [i.e., trade very cautiously for the remainder of the year so as not to jeopardize the very good return that has already been realized]. The way to attain truly superior long-term returns is to grind it out until you’re up 30 or 40 percent, and then if you have the conviction, go for a 100 percent year. If you can put together a few near-100 percent years and avoid down years, then you can achieve really outstanding long-term returns.

Once you’ve earned the right to be aggressive and can bet with the house’s money (profits), you should plunge hard when that high conviction trade arises and push for outsized returns.

The trader’s mindset and handling losses

According to Druck, to be a winning trader you need to be “decisive, open-minded, flexible and competitive”.

The day before the crash in 1987, Druckenmiller switched from net short to 130% long because he thought the selloff was done. He saw the market bumping up against significant support. But through the course of the day he realized that he made a terrible mistake. The next day he flipped his book and got short the market and actually made money. You see this type of mental flexibility in all the greatest traders. And Druckenmiller is one trader that epitomizes it perhaps better than anybody else.

The practice of having “strong opinions, weakly held” is difficult but paramount to success.

In order to attain that level of mental flexibility, you need to learn to detach ego from your immediate trade outcomes. If you allow losses to affect your judgement, you’ll inevitably make bigger mistakes. Druckenmiller learned this lesson early on from Soros.

Soros is the best loss taker I’ve ever seen. He doesn’t care whether he wins or loses on a trade. If a trade doesn’t work, he’s confident enough about his ability to win on other trades that he can easily walk away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you’re extremely confident, taking a loss doesn’t bother you.

One of the best parts about this game is that as long as you stay alive (protect your capital) you can always make another trade. Druckenmiller said the “wonderful thing about our business is that it’s liquid, and you can wipe the slate clean on any day. As long as I’m in control of the situation — that is, as long as I can cover my positions — there’s no reason to be nervous.”

I remember watching Charlie Rose interview Druckenmiller a few years ago. Charlie asked him why, after all these years, and with all the money he’s made, does he still put in 60-hour weeks trading? Druck responded (and I’m paraphrasing here) “because I have to… I love the game and I love winning, the money isn’t even important.”

To get to Druck’s level, you have to trade because that’s just what you do. It’s what you live for.

Tyler Durden Sun, 04/03/2022 - 16:50
Published:4/3/2022 4:00:18 PM
[Markets] Iowa House Passes Bill Requiring Schools To Post Curriculum Materials Online For Parent Review Iowa House Passes Bill Requiring Schools To Post Curriculum Materials Online For Parent Review

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

The Iowa House on March 29 voted to pass a bill that would require public schools in the state to publish their curriculum materials and library books online for parents to view, and give them the power to request that certain books be removed from classrooms.

A file photo of 4- and 5-year-old preschool students listening to their teacher read at a Des Moines, Iowa, elementary school. (Steve Pope, File/AP Photo)

The House voted 60–36 to pass HF2577, which would introduce a string of changes for both parents and teachers, as well as students and the school districts.

Every Republican member of the House voted in favor of the measure except Rep. Chad Ingels, while all Democrats except Reps. Bruce Hunter and Charlie McConkey voted against it.

The bill comes amid a push from GOP lawmakers in the state to create more transparency and parental involvement in what children are being taught in schools.

It is also a modified version of a previous proposal from Gov. Kim Reynolds that would require schools to publish their curriculum materials and lists of library book titles online.

Specifically, HF2577 would require teachers to give parents access to all “instructional materials”—printed or electronic textbooks and related core materials—that are to be taught in classrooms and allow them to opt out of certain content.

Teachers would need to provide parents with a course syllabus or written summary of the material that will be taught and also explain how the student’s class meets or exceeds the educational standards established in the Iowa Code.

If passed, the policy should be “prominently displayed” on the school’s website and the board of directors should, at least annually, provide a written or electronic copy of the policy to the parents of each student, according to the bill.

If any changes to the materials are made during the school year, the teacher must update the information for the parents to view before the end of the school week in which the changes occurred.

By 2024, teachers will have to use classroom software systems to provide parents with view-only access to the material.

Schools would also be required publish a list of all books that are available in their library and provide parents with a link to access the library and request a book be reviewed or removed, although school years beginning prior to July 1, 2025 that do not have such an electronic library catalog can apply for a waiver.

School districts that violate the rules could face fines of $500 to $5,000 if they do not correct the violations within 14 days.

The nonpartisan Legislative Services Agency estimates the bill would cost Iowa school districts $16.4 million annually to hire classroom cover so that teachers can prepare the materials that need to be reported.

Democrats fear the bill would leave teachers feeling micromanaged and having to spend more time focusing on providing parents with the specific set of information as opposed to spending more time helping children.

Teachers will be spending all their time trying to enter this information and then reenter what they didn’t do or what they changed,” Democratic Rep. Sharon Sue Steckman said. “[They’ll] be [so] worried about being attacked for what they’re doing that they won’t have any time to show their allegiance to our children.”

However, Republicans have championed the move for creating more transparency among parents and teachers.

“I welcome a change like this that will encourage parents to engage,” said GOP Rep. Garrett Gobble. “Transparency will strengthen trust … and rightfully turn down the temperature and rhetoric surrounding education discussions. I believe this will begin a great new period for parents and teachers to work together for the benefit of our students.”

Tyler Durden Sat, 04/02/2022 - 18:30
Published:4/2/2022 5:52:41 PM
[Markets] Edging Towards A Gold Standard Edging Towards A Gold Standard

Authored by Alasdair Macleod via,

Commentators are trying to make sense of Russian moves... However, there is a back story which differs from much of the speculation, which this article addresses.

The Russians have not put the rouble on some sort of gold standard. Instead, they have repeated the Nixon/Kissinger strategy which created the petrodollar in 1973 by getting the Saudis to agree to accept only dollars for oil. This time, nations deemed by Russia to be unfriendly will be forced to buy roubles – roughly 2 trillion by the EU alone based on last year’s natural gas and oil imports from Russia — driving up the exchange rate. The rouble has now doubled against the dollar from its low point of RUB 150 to RUB 75 yesterday in just over three weeks. The Russian Central Bank will soon be able to normalise the domestic economy by reducing interest rates and removing exchange controls.

The Russians and Chinese will be acutely aware that Western currencies, particularly the yen and euro, are likely to be undermined by recent developments. The financial war, which has always been in the background, is emerging into plain sight and becoming a battlefield between fiat currencies, and it is full on.

The winner by default is almost certainly gold, now the only reliable reserve asset for those not aligned with Russia’s “unfriendlies”. But it is still a long way from backing any currency.

Putin is losing the battle for Ukraine

President Putin is embattled. His army as let him down — it turns out that his generals lack the necessary leadership qualities, the squaddies are suffering from lack of food, fuel, and are suffering from frostbite. It is reported that one brigade commander, Colonel Yuri Medvedev, was deliberately run down by one of his own men in a tank, a measure of the chaos at the front line. And Putin is not the first national leader to have misplaced his confidence in military forces.

Conventional wisdom (from Carl von Clausewitz, no less) suggested Putin might win the battle for Ukraine but would be unable to hold the territory. That requires the willingness of the population to accept defeat, and a lesson the Soviets had learned in Afghanistan, with the same experience repeated by America and the UK. But Putin has not even won the battle and word from the Kremlin is of accepting a face-saving fall-back position, perhaps taking Donetsk and the coast of the Sea of Azov to join it up with Crimea.

There was little doubt that if Putin came under pressure militarily, he would probably step up the commodity and financial war. This he has now done by insisting on payments in roubles. The mistake made in the West was to believe that Russia must sell commodities, and even though sanctions harm the West greatly, the strategy is to put maximum pressure on the Russian economy for a quick resolution. It is obviously flawed because Russia can still trade with China, India, and other significant economies. And thanks to rising commodity prices the Russian economy is not in the bad place the West believed either.

Besides nations representing 84% of the world’s population standing aside from the Western alliance’s sanctions and with some like India sorely tempted to buy discounted Russian oil, we would profit from paying attention to some very basic factors. Russia can certainly afford to sell oil at significant discounts to market prices, and there are buyers willing to break the American-led embargoes. The non-Western world is no longer automatically on-side with American hegemony; that is a rotting hulk which the Americans are desperately trying to keep afloat. Observing this, the Kremlin seems relaxed and has said that it is willing to accept currencies from its friends, but Western enemies (the “unfriendlies”) would have to pay for oil in roubles or, it has also been suggested, in gold.

On 23 March the Kremlin drew up a list of these unfriendly countries, which includes the 27 EU members, Switzerland, Norway, the United States, the United Kingdom, Canada, Australia, New Zealand, Japan, and South Korea.

Payment in roubles is easy to understand. We can assume that all oil and natural gas long-term supply contracts with the unfriendlies have force majeure clauses, because that is normal practice. In the light of sanctions, the Russians are entitled to claim different payment terms. And it is this that the Russians are relying upon for insisting on payment in roubles.

Germany, for example, would have to buy roubles on the foreign exchanges to pay for her gas. Buying roubles supports the currency, and this was the tactic that created the petrodollar in 1973 when Nixon and Kissinger persuaded the Saudis to take nothing else but dollars for oil. It was that single move which more than anything confirmed the dollar as the world’s international and reserve currency in the aftermath of the temporary suspension of the Bretton Woods Agreement. That’s not quite the objective here; it is to not only underwrite the rouble, but to drive it higher relative to other currencies. The immediate effect has been clear, as the chart from Bloomberg below shows.

Having halved in value against the dollar on 7 March, all the rouble’s fall has been recovered. And that’s even before Germany et al buy roubles on the foreign exchanges to pay for Russian energy.

The gold issue is more complex. The West has banned not only Russian transactions settling in their currencies but also from settling in gold. The assumption is that gold is the only liquid asset Russia has left to trade with. But just as ahead of the end of the cold war Western intelligence completely misread the Soviet economy, it could be making a mistake again. This time, intel seems to be misled by full-on Keynesian macro analysis, suggesting the Russian economy is vulnerable when it is inherently stronger in a currency shoot-out than even the dollar. There is no need for Russia to sell any gold at all.

The Russian economy has a broadly non-interventionist government, a flat rate of income tax of 13%, and a government debt of 20% of GDP. There are flaws in the Russian economy, particularly in the lack of respect for property rights and the pervasive problem of the Russian Mafia. But in many respects, Russia’s economy is like that of the US before 1916, when the highest income tax rate was 15%.

An important difference is that the Russian government gets substantial revenues from energy and commodity exports, taking its income up to over 40% of GDP. While export volumes of energy and other commodities are being hit by sanctions, their prices have risen substantially. But it remains to be seen what form of money or currency for future payments will be used for over $550bn equivalent of exports, while $297bn of imports will be substantially reduced by sanctions, widening Russia’s trade surplus considerably. Euros, yen, dollars, and sterling are ruled out, worthless in the hands of the Central Bank. That leaves Chinese renminbi, Indian rupees, weakening Turkish lira and that’s about it. It’s hardly surprising that Russia is prepared to accept gold. Putin’s view on the subject is shown in Figure 1 of stills taken from a Tik Tok video released last weekend.

Furthermore, Russia’s official reserves are only a small part of the story. Simon Hunt of Simon Hunt Strategic Services, who I have found to be consistently well informed in these matters, is convinced based on his information that Russia’s gold reserves are significantly higher than reported — he thinks 12,000 tonnes is closer to the mark.

The payment choice for those on Russia’s unfriendly list, if we rule out gold, is effectively of only one — buy roubles to pay for Russian energy. By sanctioning the world’s largest energy exporter, the effect on energy prices in dollars is likely to drive them far higher yet. Additionally, market liquidity for roubles is likely to be restricted, and the likelihood of a bear squeeze on any shorts is therefore high. The question is how high?

Last year, the EU imported 155 billion cubic meters of natural gas from Russia, valued at about $180bn at current volatile prices. Oil exports from Russia to the EU were about 2.3 million barrels per day, worth an additional $105bn for a combined total of $285bn, which at the current exchange rate of RUB 75.5 is RUB 2.15 trillion. EU Gas consumption is likely to fall as spring approaches, but payments in roubles will still drive the exchange rate significantly higher. And attempts to obtain alternative sources of LNG will take time, be insufficient, and serve to drive natural gas prices from other suppliers even higher.

For now, we should dismiss ideas over payments to the Russians in gold. The Russian gold story, initially at least, is a domestic issue. Though it might spill over into international markets.

On 25 March, Russia’s central bank announced it will buy gold from credit institutions at a fixed rate of 5,000 roubles per gramme starting this week and through to 30 June. The press release stated that it will enable “a stable supply of gold and smooth functioning of the gold mining industry.” In other words, it allows banks to continue to lend money to gold mining and related activities, particularly for financing new gold mining developments. Meanwhile, the state will continue to accumulate bullion which, as discussed above, it has no need to spend on imports.

When the RCB’s announcement was made the rouble was considerably weaker and the price offered by the central bank was about 20% below the market price. But that has now changed. Based on last night’s exchange rate of 75.5 roubles to the dollar (30 March) and with gold at $1935, the price offered by the central bank is at a premium of 7.2% to the market. Whether this opens the situation up to arbitrage from overseas bullion markets is an intriguing question. And we can assume that Russian banks will find ways of acquiring and deploying the dollars to do so through their offshore facilities, until, under the cover of a strong rouble, the RCB removes exchange controls.

There is nothing in the RCB’s statement to prevent a Russian bank sourcing gold from, say, Dubai, to sell to the central bank. Guidance notes to which we cannot be privy may address this issue but let us assume this arbitrage will be permitted, because it might be difficult to stop. And if Russia does have undeclared bullion reserves more than those allegedly held by the US Treasury, then given that the real war is essentially financial, it is in Russia’s interest to see the gold price rise in dollars.

Not only would Eurozone banks be scrambling to obtain roubles, but the entire Western banking system, which takes the short side of derivative transactions in gold will find itself in increasing difficulties. Normally, bullion banks rely on central banks and the Bank for International Settlements to backstop the market with physical liquidity through leases and swaps. But the unfortunate message from the West to every central bank not on Russia’s unfriendly list is that London’s or New York’s respect for ownership rights to their nation’s gold cannot be relied upon. Not only will lease and swap liquidity dry up, but it is likely that requests will be made for earmarked gold in these centres to be repatriated.

In short, Russia appears to be initiating a squeeze on gold derivatives in Western capital markets by exploiting diminishing faith in Western institutions and their cavalier treatment of foreign property rights. By forcing the unfriendlies into buying roubles, the RCB will shortly be able to reduce interest rates back to previous policy levels and remove exchange controls. At the same time, the inflation problems faced by the West will be ameliorated by a strong rouble.

It ties in with the politics for Putin’s survival. Together with the economic benefits of an improving exchange rate for the rouble and the relatively minor inconvenience of not being able to buy imports from the West (alternatives from China and India will still be available) Putin can retreat from his disastrous Ukrainian campaign. Senior figures in the Russian army will be disciplined, imprisoned, or disappear accused of incompetence and misleading Putin into thinking his “special operation” would be quickly achieved. Putin will absolve himself of any blame and dissenters can expect even greater clampdowns on protests.

Russia’s moves are likely to have been thought out in advance. The move to support the rouble is evidence it is so, giving the central bank the opportunity to reverse the interest rate hike to 20% to protect the rouble. Foreign exchange controls on Russians can shortly be lifted. Almost certainly the consequences for Western currencies were discussed. The conclusion would surely have been that higher energy and other Russian commodity prices would persist, driving Western price inflation higher and for longer than discounted in financial markets. Western economies face soaring interest rates and a slump. And depending on their central bank’s actions, Japan and the Eurozone with negative interest rates are almost certainly most vulnerable to a financial, currency, and economic crisis.

The impact of Russia’s new policy of only accepting roubles was, perhaps, the inevitable consequence of the West’s policies of self-immolation. From Russia’s failure in Ukraine, Putin appears to have had little option but to go on the offensive and escalate the financial, or commodity-currency war to cover his retreat. We can only speculate about the effect of a strong rouble on the international gold price, but if Russian banks can indeed buy bullion from non-Russian sources to sell to the RCB, it would mark a very aggressive move in the ongoing financial war.

China’s position

China will be learning unpalatable lessens about its ambition to invade Taiwan, and Taiwan will be encouraged mightily by Ukraine’s success at repelling an unwelcome invader. A 100-mile channel is an enormous obstacle for a Chinese invasion that Russia didn’t have to navigate before Ukrainian locals exploited defensive tactics to repel the invader. There can now be little doubt of the outcome if China tried the same tactics against Taiwan. President Xi would be sensible not to make the same mistake as Putin and tone down the anti-Taiwan rhetoric and try the softer approach of friendly relations and economic integration to reunite Chinese interests.

That has been a costless lesson for China, but another consideration is the continuing relationship with Russia. The earlier Chinese description of it made sense: “We are not allies, but we are partners”. What this means is that China would abstain rather than support Russia in the various supranational forums where the world’s leaders gather. But she would continue to trade with Russia as normal, even engaging in currency swaps to facilitate it.

More recently, a small crack has appeared in this relationship, with China concerned that US and EU sanctions might be extended to Chinese entities in joint ventures with Russian businesses linked to sanctioned oligarchs and Putin supporters. The highest profile example has been the suspension of a joint project to build a petrochemical plant in Russia involving Sinopec, because of the involvement of Gennady Timchenko, a close ally of Putin. But according to a report from Nikkei Asia, Sinopec has confirmed it will continue to buy Russian crude oil and gas.

As always with its geopolitics, we can expect China to play its hand with great care. China was prepared for the consequences of US monetary policy in March 2020 when the Fed reduced its funds rate to zero and instituted quantitative easing of $120bn every month. By its actions it judged these moves to be very inflationary, and began stockpiling commodities ahead of dollar price rises, including energy and grains to project its own people. The yuan has risen against the dollar by about 11%, which with moderate credit policies has kept annualised domestic price inflation subdued to about 1% currently, while consumer price inflation in the West is soaring out of control.

China is not therefore in the weak financial position of Russia’s “unfriendlies”; the highly indebted governments whose finances and economies are likely to be destabilised by rising energy prices and interest rates. But it does have a potential economic crisis on its hands in the form of a collapsing property market. In February, its response was to ease the credit restrictions imposed following the initial pandemic recovery in 2021, which had included attempts to deleverage the property sector.

Property aside, we can assume that China will not want to destabilise the West by her own actions. The West is doing that very effectively without China’s assistance. But having demonstrated an understanding of why the West is sliding into an inflation crisis of its own making China will be keen not to make the same mistakes. Her partnership with Russia, as joint leaders in the Shanghai Cooperation Organisation, is central to detaching herself from what its Maoist economists forecast as the inevitable collapse of imperial capitalism. Having set itself up in the image of that imperialism, it must now become independent from it to avoid the same fate.

Gold’s wider role in China, Russia, and the SCO

Gold has always been central to China’s fallback position. I estimated that before permitting its own people to buy gold in 2002, the state had acquired as much as 20,000 tonnes. Subsequently, through the Shanghai Gold Exchange the Chinese public has taken delivery of a further 20,000 tonnes, mainly through imports from outside China. No gold escapes China, and the Chinese government is likely to have added to its hoard over the last twenty years. The government maintains a monopoly on refining and has stimulated the mining industry to become the largest national producer. Together with its understanding of the West’s inflationary policies the evidence is clear: China is prepared for a world of sound money with gold replacing the dollar’s hegemony, and it now dominates the world’s physical market with that in mind.

These plans are shared with Russia, and the members, dialog partners and associates of the Shanghai Cooperation Organisation — almost all of which have been accumulating gold reserves. Mine output from these countries is estimated by the US Geological Survey at 830 tonnes, 27% of the global total.

The move away from pure fiat was confirmed recently by some half-baked plans for the Eurasian Economic Union and China to escape from Western fiat by setting up a new currency for cross-border trade backed partly by commodities, including gold.

The extent of “off balance sheet” bullion is a critical issue, because at some stage they are likely to be declared. In this context, the Russian position is important, because if Simon Hunt, quoted above, is correct Russia could have more gold than the US’s 8,130 tonnes, which it is widely thought to overstate the latter’s true position. Furthermore, Western central banks routinely lease and swap their gold reserves, leading to double counting, which almost certainly reduces their actual position in aggregate. And if fiat currencies continue to decline we could find that the two ringmasters for the SCO have more monetary gold than all the other central banks put together — something like 30,000-40,000 tonnes for Chinese and Russian governments, compared with perhaps less than 20,000 tonnes for Russia’s adversaries (officially ,the unfriendlies own about 24,000 tonnes, but we can assume that at least 5,000 of that is double counted or does not exist due to leasing and swaps).

The endgame for the yen and the euro

Without doubt, the terrible twins in the major fiat currencies are the yen and the euro. They share much in common: negative interest rates, major commercial banks highly leveraged with asset to equity ratios averaging over twenty times, and central bank balance sheets overloaded with bonds which are collapsing in value. They now face rising interest rates spiralling beyond their control, the consequences of the ECB and Bank of Japan being trapped under the zero bound and being in denial over falling purchasing power for their currencies.

Consequently, we are seeing capital flight, which has accelerated dramatically this month for the yen, but in truth follows on from relative weakness for both currencies since the middle of 2021 when global bond yields began rising. Statistically, we can therefore link the collapse of both currencies on the foreign exchanges with rising bond yields. And given that rising interest rates and bond yields are in their early stages, there is considerable currency weakness yet to come.

Japan and its yen

The Bank of Japan has publicly stated it would buy an unlimited amount of 10-year Japanese Government Bonds at a 0.25% yield to contain the bond sell-off. A higher yield would be more than embarrassing for the BOJ, already requiring a recapitalisation, presumably with its heavily indebted government stumping up the money. Figure 2 shows that the 10-year JGB yield is already testing the 0.25% yield level (charts from Bloomberg).

Fig 2. JGB yields hits BoJ Limit and Yen collapsing

As avid Keynesians, the BOJ is following similar policies to that of John Law in 1720’s France. Law issued fresh livres which he used to prop up the Mississippi venture by buying shares in the market. The bubble popped, the venture survived, but the livre was destroyed.

Today, the BOJ is issuing yen to prop up the Japanese government bond market. As the issuer of the currency, the BOJ is by any yardstick bankrupt and in desperate need of new capital. Since it commenced QE in 2000, it has accumulated so much government and corporate debt, and even equities bundled into ETFs, that the falling value of the BOJ’s holdings makes its liabilities significantly greater than its assets, currently to the tune of about ¥4 trillion ($3.3bn).

Ignoring the cynic’s definition of madness, the BOJ is doubling down on its commitment, announcing on Monday further unlimited purchases of 10-year JGBs at a fixed yield of 0.25%. In other words, it is supporting bond prices from falling further, echoing Mario Draghi’s “whatever it takes” and confirming its John Law policy. Last Tuesday’s Summary of Opinions at the Monetary Policy Meeting on March 17 and 18 had this gem:

“Heightened geopolitical risks due to the situation surrounding Ukraine have caused price rises of energy and other items, and this will push down domestic demand while raising the CPI. Under the circumstances, it is necessary to improve labour market conditions and provide stronger support for wage increases, and therefore it is increasingly important that the bank persistently continue with the current monetary easing.”

No, this is not satire. In other words, the BOJ’s deposit rate will remain negative. And the following was added from Government Representatives at the same meeting:

“The budget for fiscal 2022 aims to realise a new form of capitalism through a virtual circle of growth and distribution and the government has been making efforts to swiftly obtain the Diet’s approval.”

A virtuous circle of growth? It seems like intensified intervention. Meanwhile, Japan’s major banks with asset to equity ratios of over twenty times are too highly geared to survive rising interest rates without a bank credit crisis threatening to take them down. It is hardly surprising that international capital is fleeing the yen, realising that it will be sacrificed by the BOJ in the vain hope that it can continue to maintain bond prices far above where they should be.

The euro system and its euro

The euro system and the euro share similar characteristics to the BOJ and the yen: interest rates trapped under the zero bound, Eurozone G-SIBs with asset to equity ratios of over 20 times and market realities forcing interest rates and bond yields higher, as Figure 3 shows. Furthermore, Eurozone banks are heavily exposed to Russian and Ukrainian debt due to their geographic proximity.

Fig 3: Euro declining as bond yields soar

There are two additional problems for the Eurosystem not faced by the BOJ and the yen. The ECB’s shareholders are the national central banks in the euro system, which in turn have balance sheet liabilities more than their assets. The structure of the euro system means that in recapitalising itself the ECB does not have a government to which it can issue credit and receive equity capital in return, the normal way in which a central bank would refinance its balance sheet by turning credit into equity. Instead, it will have to refinance itself through the national central banks which being insolvent themselves in turn would have to refinance themselves through their governments.

The second problem is a further complication. The euro system’s TARGET2 settlement system reflects enormous imbalances which complicates resolving a funding crisis. For example, on the last figures (end-February), Germany’s Bundesbank was owed €1,150 billion through TARGET2, while Italy owed €568 billion. It would be in the interests of a recapitalisation for the Italian government to want its central bank to write off this amount, while the Bundesbank is already in negative equity without writing off TARGET2 balances. Germany’s politicians might demand the balances owed to the Bundesbank be secured. This problem is not insoluble perhaps, but one can see that political and public wrangling over these imbalances will only serve to draw attention to the fragility of the whole system and undermine public trust in the currency.

With Germany’s CPI now rising at 7.6% and Spain’s at 9.8%, negative deposit rates are wildly inappropriate. When the system breaks it can be expected to be sudden, violent and a shock to those in thrall to the euro system.


For decades, a showdown between an Asian partnership and hegemonic America has been building. We can date this back to 1983, when China began to accumulate physical gold having appointed the Peoples’ Bank for the purpose. That act was the first indication that China felt the need to protect itself from others as it ventured into capitalism. China has navigated itself through increasing American assertion of its hegemony and attempts to destabilise Hong Kong. It has faced obstacles to its lucrative export trade through tariffs. It has been cut off from Western markets for its advanced technology. China has resented having to use the dollar.

After Russia’s ill-advised invasion of Ukraine, it now appears that the invisible war over global financial resources and control is intensifying. The fuse has been lit and events are taking over. The destabilisation of the yen and the euro are now as certain as can be. While the yen is the victim of John Law-like market-rigging policies and likely to go the same way as France’s livre, perhaps the greater danger is for the euro. The contradictions in its set-up, and the destruction of Germany’s sound money principals in favour of the inflationism of the PIGS was always going to be finite. The ECB has got itself into a ridiculous position, and no amount of conjuring and cajoling of financial institutions can resolve the ECB’s own insolvency and that of all its shareholders.

History shows that there are two groups involved in a currency collapse. International holders take fright and sell for other currencies and assets they believe to be more secure. They drive the exchange rate lower. The second group is the public in a nation, those who use the currency for transactions. If they lose confidence in it, the currency can rapidly descend into worthlessness as ordinary people accelerate its disposal for anything tangible in a final crack-up boom.

In the past, an alternative currency was always the sounder one, one backed by and exchangeable for gold coin. That is so long ago that we in the West have mostly forgotten the difference between money, that is gold and silver, and unbacked fiat currencies. The great unknown has been how much abuse of money and credit it would take for the public to relearn the difference. Cryptocurrencies have alerted us, but they are not a widely accepted medium of exchange and don’t have the legal standing of gold and gold substitutes.

War is to be our wake-up call — financial rather than physical in character. Western central banks and their governments have been fiddling the books, telling us that currency debasement is good for us. That debasement has accelerated in recent years. But by upping the anti against Russia with sanctions that end up undermining the purchasing power of all the West’s major currencies, our leaders have called an end to the reign of fiat.

Tyler Durden Sat, 04/02/2022 - 14:30
Published:4/2/2022 1:51:21 PM
[Entertainment] Let’s talk about Hollywood as inspiration for great fantasy novels Tinsel Town has influenced books from "The Princess Bride" to "Moving Pictures" and "Only the Dead Know Burbank." Published:4/2/2022 7:20:14 AM
[Markets] The Necro-Neologism Of Lethal Legal Experts The Necro-Neologism Of Lethal Legal Experts

Authored by Laurie Calhoun via The Libertarian Institute,

The power of language is magical to behold. Through the mere pronouncement of words, people can be persuaded to do what they would never have thought to do, left to their own devices. The playbook with the most success in this regard is that of war. When people are “informed” that they and their families are in mortal danger, they can and often will acquiesce to any and all policies which government authorities claim to be necessary in order to protect them.

Young people can be coaxed into killing complete strangers who never did anything personally to them. Citizens can be brainwashed to believe that suitably labeled persons can and indeed must be denied any and all human rights. When the stakes are claimed to be life and death, even apparently intelligent people can be goaded to accept that the mere possession of a divergent opinion is evil, and the expression of dissent a crime. The use of military weapons to execute obviously innocent, entirely innocuous civilians, including children, suddenly becomes permissible, so long as the victims have been labeled collateral damage. All any of this takes is to identify “the enemy” as evil.

In centuries past, “the laws of war” were said to require the humane treatment of enemy soldiers. They were diagnosed as suffering from “invincible ignorance,” misled and mistaken about the dispute said to necessitate recourse to war, but still acknowledged as persons capable of being courageous combatants who found themselves through historical fortuity on the wrong side. An enemy soldier was to be provided with the opportunity to lay down his weapon and surrender in order to save his own life. Disarmed or incapacitated soldiers were not to be executed by their captors, for they had already been neutralized and posed no more danger than unarmed civilians. Prisoners of war were to be treated as human beings, and when they were tortured or summarily executed, this constituted a war crime. Such “laws of war,” which form the basis of international agreements, including the Geneva Conventions, have needless to say often been flouted, but, in theory, they were to be upheld by civilized people.

After the terrorist attacks of September 11, 2001, political leaders and government officials proclaimed that “everything changed.” The Bush administration legal team deployed linguistic innovation to issue in an entirely new era of warfare, wherein the “laws of war” would still be said to obtain, but they would be inapplicable to entire classes of human beings. Jihadist soldiers for radical Islamist causes were labeled unlawful enemy combatants, whose “unlawful” status was said to imply that they were protected by neither international norms such as the Geneva Conventions nor the laws of civil society.

Under this pretext, terrorist suspects were tortured while held captive at prisons in Guantánamo Bay, Abu Ghraib and Baghram, in addition to many black sites around the world. Ever keen to cover their tracks, the CIA (Central Intelligence Agency) also flatly denied that they ever tortured anyone, by redefining as enhanced interrogation techniques the abusive practices inflicted on hundreds, if not thousands, of men in an effort to extract from them actionable intelligence. And just in case any of this “logic” was called into question by pesky human rights advocates, Bush administration officials also derided the Geneva Conventions as “quaint.”

Imminent vs. Immediate in the Global War on Terror

The “peace candidate” Barack Obama was elected in 2008 on the promise to rein in the excesses of the Bush administration, including what Obama characterized as the “dumb” war on Iraq. The new president publicly denounced “enhanced interrogation techniques” as torture but then proceeded to take linguistic neologism to an entirely new level by not only redefining assassination as targeted killing but also labeling any suspect eliminated through the use of lethal drones as an Enemy Killed in Action (EKIA).

The slaughtered “soldiers” were assumed to be guilty of possible complicity in future possible crimes, a preposterous position never fully grasped by Obama’s devotees, who somehow failed to recognize that the specific implement used to kill does not distinguish various types of homicide from one another, morally speaking. The extrajudicial execution of individual human beings in civil society is illegal, but the Obama administration effectively maintained that the targeting of suspicious persons and their associates in lands far away was perfectly permissible, so long as the victims were killed by missiles launched from drones, thereby rendering them “acts of war.”

The entire drone program, whether within or far from areas of active hostilities (i.e., war zones), was portrayed by Obama and his administration as just another facet of “just war.” Blinded to the moral atrocity of this new lethal-centric approach to dealing with suspected enemies, whereby they would be executed rather than taken prisoner, Obama’s loyal supporters blithely embraced the propaganda according to which he was a smart warrior. After demonstrating his death creds to the satisfaction of hawks, by killing not only Osama bin Laden, but also U.S. citizen Anwar al-Awlaki, suspected of complicity in factional terrorism, Obama was reelected for a second term in 2012, despite having summarily executed thousands of men—mostly brown-skinned, unnamed, and unarmed—located in their own civil societies, far from any U.S. citizen, and in clear violation of the Geneva Conventions.

The deft deployment of two simple words, immediate and imminent, played a key role in allowing Obama to get away with murder, even of U.S. citizens such as Anwar al-Awlaki and his sixteen-year-old son, Abdulrahman al-Awlaki. Guided by drone-killing czar John Brennan, Obama’s lawyers calmly explained in public addresses and official documents that suspects who posed imminent threats to the United States could be targeted by lethal drones because an imminent threat did not imply immediacy. In other words, they could be killed even when they were currently unarmed and living in their own civil society, surrounded by family members and friends, and even when the future crime of which they were vaguely suspected was merely hypothetical and therefore had no specific date.

When targets were “nominated” for execution, the administration operated under the assumption that they were guilty unless specific information was brought forth to demonstrate their innocence. The victims themselves obviously could not do this, initially, because they were not informed that they were being targeted and, later, because they were dead. Meanwhile, local residents and journalists on the ground who knew these people’s names and dared to assert that the victims were not terrorists were either denounced as propagandists or cast as misguided persons hoodwinked by the rhetoric of jihadists.

As the death toll mounted, outspoken critics in the vicinity of the missile strikes became progressively more terrified of being themselves eliminated for seeming to support terrorist groups. Their concerns were not unfounded, for they risked being affixed with the lethal label associate and added to hit lists for execution if they dared to question the drone warriors’ narrative. This oppressive climate needless to say served actively to suppress dissent from the U.S. government’s official story of what they had done, even among locals who witnessed the grisly scenes where entirely innocent community members were incinerated by missiles launched from drones.

Imminent vs. Immediate in the Opioid Crisis

Improbably enough, the very same two words, imminent and immediate, used by the Obama legal team to invert the presumption of innocence to a presumption of guilt in the case of terrorist suspects located abroad, proved to be deadly in an entirely different context during the twenty-first century as well.

The causes of the sudden and shocking increase in the number of narcotics addicts and overdose deaths all over the United States are manifold, but a tidal wave of diversion was made possible by drug-dealer doctors and the notorious “pain clinics” where they plied their trade. Manufacturers produced and pharmacies dispensed billions of pills as demand multiplied in tandem with the creation of more and more new addicts, who could no longer function without narcotics.

Purdue Pharma and the Sackler family are widely regarded as the prime movers of the opioid crisis, having undertaken a highly successful campaign to coax doctors into believing that their patented time-release prescription narcotic Oxycontin was nonaddictive and could be safely provided to patients even for moderate pain. This marketing feat was achieved by influencing key players at the FDA (Food and Drug Administration), who not only approved the medication but permitted it to be sold along with a package insert falsely suggesting that it was less prone to abuse than other narcotics.

In its quest to sell as many pills as possible, the pharmaceutical industry repeatedly pivoted to neologize in lethal ways over the two decades following the launch of Oxycontin in 1996. When it emerged that the pills sometimes wore off before the twelve-hour time release period, marketers and sales representatives claimed that those patients were suffering from breakthrough pain, the remedy for which was (surprise!) to double their dose. The narcotics marketers indulged in flat-out sophistry when they insisted that patients who appeared to be addicted to their painkillers were in fact suffering from pseudoaddiction, the remedy for which was (surprise!) even higher doses of their drugs. As farcical as these arguments may seem in retrospect, with the benefit of hindsight and in the light of the overdose epidemic now running rampant, many doctors appear to have been persuaded to believe that their patients’ miserable condition was not indicative of addiction but a manifestation of their ongoing and unbearable pain, the solution to which was to ply them with yet more powerful narcotics.

Pharma-coopted lawmakers were notified of the proliferating addiction problem early on but refused to stop the runaway train by demanding that the FDA cease playing along with Purdue’s insane pro-narcotics marketing campaign. Other companies needless to say contributed as well, through promulgating the “pain epidemic” propaganda so as to expand the market niche of such products, which had previously been reserved for terminally ill patients. Johnson & Johnson played a causal role in what became the opioid crisis by growing tons of poppies (in Tasmania) to meet the enormous increased industry need for raw opium, without which the billions of pills prescribed could not and would never have been produced.

As the opioid crisis began to become recognized for what it was, the Drug Enforcement Administration (DEA) sought to issue “Immediate Suspension Orders” (ISOs) against the three major drug wholesale distributors to pharmacies, Cardinal Health, McKesson, and Amerisource Bergen. Through issuing such orders, Joe Rannazzisi, the deputy director of the Office of Diversion Control, hoped to halt the ongoing mass shipments of opioids to retailers such as CVS in cases where the sheer volume of prescriptions could not be explained by ordinary medical practice and so was a clear indication that widespread diversion of narcotics was underway.

Rannazzisi ended up being hobbled by a team of corporate lawyers and lobbyists who managed to cobble together a new law in 2014 which, despite its beneficent-sounding name, “The Ensuring Patient Access and Effective Drug Enforcement Act” (HR4709), served to protect, above all, drug manufacturers and distributors. The Act rewrote the law already on the books through redefining the imminent danger required to issue an ISO to mean “a substantial likelihood of an immediate threat.” One of the new Act’s enthusiastic promoters, Linden Barber (a former DEA officer and lawyer who had left his government position to represent the drug distributors), persuasively explained on the floor of Congress that “having a clear legal standard is always better.” The measure passed unanimously, without a roll call vote, for the simple reason that it sounded like a policy to which no decent person could object. But rather than stemming the tide of the opioid crisis, the Act severely hampered the DEA’s ability to issue ISOs, for it was prohibitively difficult for officials to meet the newly stipulated legal standard of imminence as requiring immediacy.

President Obama signed the Ensuring Patient Access and Effective Drug Enforcement Act of 2014 into law, and the marketing campaign used to promote the use of highly addictive time-release narcotics barreled ahead. The DEA’s sudden inability to call a halt to the shipment of tons of narcotics to retailers effectively guaranteed that the number of dependent persons would multiply, as potent prescription pills continued to be diverted for recreational uses and thereby create more addicts. But more addicts meant more overdoses, not only from the potent pills themselves, but also because the street supplies of heroin to which many users eventually turned were often cut with extremely dangerous fentanyl.

Unfazed by the death tolls, which had already soared to many thousands by 2014, the pharmaceutical giants insisted that the sorry situation of addicts was no argument against helping patients genuinely in pain, who would in fact be wronged if their access to narcotics were curbed. The addicts dropping like flies were painted as solely responsible for their plight, despite ample evidence that many of the overdose victims began as legitimate pain patients, who became aware of their dependency only upon reaching the bottom of their amber vials.

The Role of Obamacare in Propelling and Augmenting the Opioid Crisis

“Everything changed” in the twenty-first century, not only with the war on terror, the rebranding of torture, and the normalization of assassination, but also in the pharma-friendly approach to healthcare ushered in by President Barack Obama. By pushing through his signature legislation, the Affordable Care Act (ACA) of 2010, which leftists were led to believe would create a system of socialized medicine (referred to by many as Obamacare), the president notoriously bowed to drug makers and the insurance industry, extending to those sectors the very form of crony corporate welfare already enjoyed by companies in the military industry.

Obama’s collaboration with pharmaceutical and insurance company executives in crafting the ACA allowed them to secure advantageous pricing arrangements to ensure the maximization of their profits, while at the same time massively increasing the sheer volume of sales. The pharmaceutical industry was greatly enriched through the provision of virtually limitless free psychiatric medications to low-income patients through government programs such as Medicaid and Medicare, and to veterans through the VA (Veterans Administration). Mental health-based disability claims soared, and the sales of SSRIs (selective serotonin reuptake inhibitors), anti-anxiety, atypical anti-psychotic medications and other psychotropes, including narcotics, increased accordingly. The millions of new prescription medications dispensed to formerly uninsured Americans ended up being paid for by the middle class, who were mandated by law to sign up for Obamacare or else face a hefty tax penalty, should they decline to comply.

Despite what may have been Obama’s initial good intention, to make healthcare available to uninsured persons, Obamacare ultimately made medical treatment in the United States prohibitively expensive for many middle class families, whose copays, premiums and deductibles increased dramatically. The new mandatory healthcare program skyrocketed the salaries of health industry executives while pricing drugs and procedures out of reach for many persons who had previously been able to afford them. Millions of people in the United States have filed medical bankruptcy in recent years. In cases where prescription narcotics addicts became uninsured because they lost their jobs, they turned to the streets for their needed drugs, given the impossibility of paying out of pocket for extraordinarily expensive prescription pills.

Given the story of Obamacare, perhaps no one should be surprised that when the Obama administration finally took action to address the opioid epidemic, most of the allocated $1.1 billion was for the alternative medication of already existing addicts. The pharma-friendly approach prevailed once again, encouraging the sale of more and more drugs (such as Suboxone) to help addicts to wean themselves off their narcotics. Obama’s dilatory and pro-pill approach to the opioid crisis ultimately generated even more people who, in order to kick their narcotics habit, would need to avail themselves of further pharmaceutical means, effectively trading one drug for another. In other words, both the problem of opioid overprescription, facilitated through Obamacare by providing easy access to narcotics to formerly uninsured persons, and the measures implemented by the Obama administration in response to the overdose epidemic, served to increase pharmaceutical industry profits.

The Death Connection

Whether or not one wishes to connect any further dots in the cases of drone assassination and the opioid epidemic, it does seem worth pointing out that Obama’s own attorney general, Eric Holder (2009-2015), was a former legal counselor to Purdue Pharma, who in fact defended the company in a 2004 lawsuit alleging deceptive marketing of Oxycontin. This is noteworthy because it was none other than Eric Holder who, in an infamous White Paper and various public addresses, so adamantly defended the creative interpretation of imminence as not implying immediacy, the crucial linguistic maneuver used to defend and promote Obama’s drone killing spree.

The normalization of assassination achieved by the Obama administration expanded the domain of what was said to be legitimate state killing by inverting the burden of proof on suspects while simultaneously claiming (illogically enough) that “areas outside active hostilities” were in fact war zones. Together, all of these linguistic tricks generated a veritable killing machine, opening up vast new market niches and dramatically increasing the profit potential for companies in the shockingly lucrative business of state-inflicted homicide. Not only weapons manufacturers but also logistics and analytics companies were able to reap hefty profits through eliminating as many people pegged as “terrorist suspects” as possible.

The imminent vs. immediate dichotomy was inverted and redeployed, but in the opposite direction, by pharmaceutical company legal teams and collaborating lawmakers in 2014 to permit the promiscuous sale of narcotics to continue on despite the opioid overdose epidemic on display throughout the United States. The Ensuring Patient Access and Effective Drug Enforcement Act of 2014 ironically “ensured” only profits for drug companies, as millions of new addicts would be created during the second decade of the twenty-first century, accelerating and multiplying the domino effect of diversion and overdoses already ravaging communities all across the United States. It matters not that pharmaceutical company executives sought not to kill people but to sell pills. They aggressively pushed narcotics without regard for the likely future consequences of their drive for profit. Indeed, they persisted in pushing narcotics even as drug overdose deaths reached record levels.

Under Obama, more than two thousand suspects outside areas of active hostilities were premeditatedly and intentionally incinerated by missiles launched from drones. The tally of overdose deaths in the United States exceeded 100K for the single year ending in April 2021. The long-range effects of the normalization of assassination, however, are likely to be more deadly than the opioid crisis, given that many other governments have followed suit in acquiring lethal drones for their own use, having been persuaded by the precedent set by the U.S. government that this form of state-inflicted homicide is perfectly permissible. In contrast, the promiscuous opioid prescription practices of doctors in the United States has been curtailed and was not emulated in the UK or in Europe, although the pharmaceutical giants do appear to have continued their morally dubious marketing practices in other countries abroad, especially in less-developed lands.

As both the drone program and the opioid prescription debacle illustrate, when government agencies such as the Pentagon and the FDA have been captured by industry forces focused above all on maximizing profits, they will simply look the other way as the corpses pile up, denying responsibility for any and all “collateral damage.” This tendency of bureaucrats and corporate leaders to shirk responsibility for the negative consequences of their policies helps to explain the ease with which lawmakers are coopted by lobbyists from not only the military but also the pharmaceutical industry. The recent deployment of imminent and immediate by lethal legal “experts” serves to underscore why the censorship of language by government officials themselves is inherently dangerous, given that their policies in recent years have multiplied, not prevented, the deaths of human beings.

In a representative democracy, the lawmakers promote the interests of the voters who elected them. What kind of government sacrifices the lives of human beings in order to maximize the profits of corporate leaders?

Tyler Durden Fri, 04/01/2022 - 23:40
Published:4/1/2022 10:45:13 PM
[Climate] Last-Minute Announcement: Steve Koonin at 3 pm Today (Steven Hayward) A couple days ago we posted in “Picks” my review (“Who Broke Climate Science“) of Steven Koonin’s terrific recent book Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters, now out from behind the paywall at the Claremont Review of Books. I have neglected to pass along that Dr. Koonin is speaking today at the Nuclear Physics Lab at UC Berkeley at 3 pm Pacific. It is Published:4/1/2022 4:42:59 PM
[Entertainment] 14 Books to Check Out in April April 2022 BooksWe love these products, and we hope you do too. E! has affiliate relationships, so we may get a small share of the revenue from your purchases. Items are sold by the retailer, not E! You...
Published:4/1/2022 7:47:27 AM
[Markets] China ADRs Surge As Beijing Considers Giving US Access To Audits  China ADRs Surge As Beijing Considers Giving US Access To Audits 

U.S.-listed Chinese stocks surged premarket after Bloomberg reports Chinese authorities are preparing to give the SEC full access to auditing reports for the more than 200 companies listed in New York as soon as this summer. 

For months, the SEC has shared its plan for forcing Chinese firms to delist from US exchanges should they refuse to open their books and abide by stringent US auditing standards. Now in what appears to be a rare concession to prevent further decoupling, China Securities Regulatory Commission and other government regulators are drafting a new framework to keep Chinese firms listed in the US, according to people familiar with the framework. 

Not all companies will remain listed in the US. Sources said some state-owned enterprises and private companies that utilize 'sensitive data' will be delisted. The framework is expected to provide clarity on what exact data may trigger national security concerns. 

One source said Chinese regulators discuss whether companies in the consumer sector, such as Alibaba Group Holding Ltd., would be considered a national security concern because of the vast amount of consumer data they process. 

Suppose the Bloomberg report is correct. This would undoubtedly be a rare concession by Beijing and possibly end the looming 2024 deadline for expelling non-compliant Chinese firms off top US exchanges. 

Discussions are still underway, and the new framework would need sign-off from Beijing, said one of the sources. They expect the new agreement to be announced around the midpoint of summer. 

Earlier this week, SEC Commission Chair Gary Gensler cast doubts that a deal with the Chinese was imminent. 

"There have been thoughtful, respectful, productive conversations, but I don't know where this is going to end up," Gensler said in a Tuesday interview, referring to continuing negotiations. "It's up to the Chinese authorities, and it could be frankly a hard set of choices for them."

Chinese companies who want to shield financial documents could delist their shares from US exchanges and move to non-U.S. bourses, such as Hong Kong. Riding-hailing Didi Global Inc. has already proposed such a move. 

As for China ADRs, Alibaba shares are up 5.8% in premarket trading, Didi Global jumped 18%, E-commerce firms +4%, and Pinduoduo +7.9%. 

The Bloomberg report comes after the Nasdaq Golden Dragon China Index posted its worst first-quarter performance since 2008 after more than a year of Beijing technology crackdowns, audit disputes, and sagging growth. 

China's plunge protection team stepped in last month the put a floor in stocks. The question everyone is asking is if the floor will hold. 

Tyler Durden Fri, 04/01/2022 - 07:28
Published:4/1/2022 6:39:23 AM
[Markets] March Payrolls Preview: Can Wage Growth Slow Enough To Dent The Fed's 50bps Rate Hike March Payrolls Preview: Can Wage Growth Slow Enough To Dent The Fed's 50bps Rate Hike

With the Fed's rates "lift off" already a done deal, traders will frame Friday's March jobs data (which comes just hours after the month of March is in the actual history books) in the context of monetary policy, where money markets are assigning a 76% probability that the Federal Reserve will lift interest rates by a 50bps increment in May. Accordingly, as Newsquawk writes in its NFP preview, there will be much attention on the average hourly wages measures in the jobs report for signs about how the recent surge in inflation is affecting Americans’ real incomes, and for any evidence of the so-called second-round effects of inflation. The consensus looks for wages to rise in the month, lifting the annual measure, but some desks argue that the pressure is easing in the labor market, which should see wage growth ease in the months ahead. Meanwhile, proxies in the month continue to suggest a healthy labor market (initial jobless claims fell in the payrolls survey week, while business surveys suggest firms are ramping up hiring). While the data will likely cause the typical stock price volatility over the release, analysts have said that it would take a significant miss, accompanied by weakness in other economic data, for the Fed to waiver from its seeming intent to raise rates by 50bps in May.

Wall Street Expectations:

  • Consensus is for 490k nonfarm payrolls to be added to the US economy in March, with the rate of job creation easing to below recent trend rates (12-month average 556k, 6-month average 583k, 3-month average 582k).

  • Jobless rate is expected to fall by 0.1ppts to 3.7% (the Fed sees the jobless rate ending this year at 3.5%).

  • Wage metrics will attract a lot of attention amid the recent surge in inflation and inflation expectations; policymakers have been attentive to the possibility of both a wage-price spiral and second round effects; average earnings are expected to rise 0.4% M/M (vs unchanged in February), pushing the annual measure up to 5.5% Y/Y (from 5.2% in February).

POLICY DEBATE: Fed Chair Powell recently said that the central bank would move to a more restrictive policy if that was needed to restore price stability (translation: the Fed can and will create a recession to contain inflation, something markets refuse to believe) . UBS said that Powell was referring to a deliberate policy of pushing growth below trend; “it is important to note that this policy option was presented in a conditional way–if that is what is required– deliberately pushing policy to generate growth below trend would only be required if there were evidence of a wage-cost spiral developing, and there is not really evidence of that at the moment.” Other analysts point out that average hourly earnings have outperformed other indicators, and accordingly, some relative underperformance could be seen ahead. Either way, the consensus remains that the Fed will raise interest rates by a 50bps increment in May (money markets assign a probability of around 76% of that happening), and it would therefore take a dreadful labor market report combined with other weak data metrics for the Fed to back away from that course.

WAGES: Anecdotally, the compensation software provider Payscale, citing its data, said US firms were planning to give the highest pay increases in years, but these would still not match inflation. But Capital Economics says that the easing in job postings on suggests that there has been a softening in labor demand. While it notes that the relationship isn’t perfect, it would be consistent with employment growth easing too, and would match the slowdown in GDP. “The apparent drop-back in job openings also implies that there is now less excess demand for workers, consistent with broader evidence that labour shortages are starting to ease,” and it argues that the “unemployment rate, which is still above its pre-pandemic low, hasn’t proved a useful gauge of labour market slack over the past year”; while it expects this rate will fall in March other indicators suggest that conditions are no longer tightening. “After rising to their highest levels on record last year, the share of small firms struggling to fill job vacancies and the net share of consumers saying jobs are easy to find have both edged lower in recent months,” and “that suggests that the upward pressure on wages will also ease.” The consultancy sees the rate easing back to 5.0% Y/Y in the months ahead.

JOB ADDITIONS: Weekly initial jobless claims and continuing claims that coincide with the BLS’ employment report survey period both declined (initial claims eased to 215k from 249k into the February jobs report, while continuing claims eased to 1.35mln from 1.47mln). The ADP’s gauge of private payrolls was more-or-less in line with market expectations (455k vs expected 450k), while the February data was revised up a little (to 486k from 475k). The ISM business surveys have not been released ahead of the March jobs data– these usually offer us some insight about hiring activity. The comparable Markit PMI data, however, noted that companies were stepping up hiring, with the rate of overall jobs creation the highest since April 2021; “manufacturers and service providers alike recorded steeper upturns in employment,” the report said, “numerous firms noted that investment in recruitment campaigns was starting to show gains.” Goldman estimates that payrolls rose by an above-consensus 575k in March as "dining activity rebounded further in March, and most Big Data indicators are consistent with strong job gains." Additionally, the bank believes that "fierce competition for workers incentivized firms to pull forward recruiting activities earlier in the spring hiring season."

CONSUMER CONFIDENCE: Within the Conference Board’s gauge of consumer confidence, the number of consumers saying that jobs were “plentiful” rose to 57.2% from 53.5%, a new record high; the number of consumers who said jobs were “hard to get” fell to 9.8% from 12%, taking the differential to 47.4 from 41.5, boding well for those expecting the unemployment rate to decline. However, the survey also revealed that consumers were mixed in their views about the short-term outlook for the labour market, where the number expecting more jobs in the months ahead falling, even though those who anticipate fewer jobs also fell. Consumers were also mixed about their short-term financial prospects. “Confidence continues to be supported by strong employment growth and thus has been holding up remarkably well despite geopolitical uncertainties and expectations for inflation over the next 12 months reaching 7.9%—an all-time high,” the Conference Board said, adding that “these headwinds are expected to persist in the short term and may potentially dampen confidence as well as cool spending further in the months ahead.”


  • Public health. After reaching new highs in December and early January, covid infections fell sharply in February and March, returning to last summer’s relatively low levels. Dining activity also rebounded sharply over the last two months. Coupled with the rise in ADP’s estimate of leisure and hospitality jobs, Goldman expects a significant contribution from leisure-sector payrolls in tomorrow’s report (our estimates embed a rise of 150k, mom sa).

  • Big Data. High-frequency data on the labor market also generally indicate strong growth in March employment. While Homebase is an outlier to the downside, that signal was overly pessimistic in five of the last six reports.

  • Seasonality. Some firms frontloaded spring hiring because of what Goldman believes was fierce competition for workers. In past tight labor markets, job growth tends to be stronger in the first quarter than in the second quarter. That being said, the March pace often slows relative to February’s. 

  • Employer surveys. The employment components of business surveys generally increased in March. Goldman's services survey  employment tracker increased 1.8pt to 55.7 and our manufacturing survey employment tracker increased 0.5pt to 57.9. This resilience in domestic business surveys also argues against a meaningful employment drag from the Russia-Ukraine war.

  • Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—increased by 5.4pt to an all-time high of +47.4. JOLTS job openings edged down by 17k in February to 11.3mn but remained above the pre-pandemic peak. Jobless claims. Initial jobless claims decreased during the March payroll month, averaging 209k per week vs. 231k in February. Continuing claims in regular state programs decreased 132k from survey week to survey week.


  • Job cuts. Announced layoffs reported by Challenger, Gray & Christmas increased by 4% month-over-month in March, after decreasing by 8% in February (SA by GS).


  • ADP. Private sector employment in the ADP report increased by 455k in March, in line with expectations but somewhat below tomorrow’s consensus for private payrolls (+496k mom sa).

Tyler Durden Thu, 03/31/2022 - 21:20
Published:3/31/2022 8:36:32 PM
[Markets] Waging War On Fossil Fuels Enflames Inflation Waging War On Fossil Fuels Enflames Inflation

Authored by Thomas McArdle via The Epoch Times,

When you pull aside the curtain of its moral pretensions, the green movement of global warming fanatics is just another socialist scheme to replace the free enterprise’s real-world judgment of how to navigate the economic long term with coerced, illegitimately law-enforced faith in government control.

An oil pumpjack (L) operates as another (R) stands idle in the Inglewood Oil Field in Los Angeles, Calif., on Jan. 28, 2022. (Mario Tama/Getty Images)

There is one preeminent tool that players in the economy—meaning all of us—use to transact honestly and productively with one another: price. And today we face a price crisis.

The global price of oil has skyrocketed thanks to the massive government spending of one-party rule by Democrats for more than a year now, cowardice on the part of the Federal Reserve, and all of this exacerbated in recent weeks by Russian aggression in the Ukraine induced by President Joe Biden’s weakness in failing to project American power, especially the debacle of the Afghanistan pullout.

But oil equals transportation, and the fact that everything else that is bought and sold—whether consumed, worn, slept or sat on, washed with, worked with, played with, or used as a means of transportation itself—must be delivered from producer to seller to buyer, means no escaping a widely dispersed ripple effect. When the cost of moving people and things rises, ineludibly the price of everything rises.

“There’s nowhere to hide,” Bankrate chief financial analyst Greg McBride told CNBC regarding the 7.9 percent, worst-in-40-years inflation hurting Americans today. “This is hitting everybody.”

Rents are currently rising at nearly 5 percent, the worst in over 30 years. Meat, appliances, furniture, buying or renting cars, and staying at a hotel were all up by double digits over 12 months toward the close of last year, months before the oil shock from the war on Ukraine. That 12-month period saw gas go up by over 50 percent.

The higher gas prices reach, the better, according to the left. Clinton administration economist Jeffrey Frankel wrote last year, “On one hand, the effect of high oil, gas, and coal prices on consumers is good for the environment, because they discourage demand for fossil fuels.” He added that, on the other hand, high fossil fuel prices also encourage fossil fuel supply—though he noted that the consequent private investment in the sector has proved to be weaker than expected.

In 2019, energy research firm Wood Mackenzie analyzed the objectives of the left’s war on oil. The various high-minded schemes for weaning America off fossil fuels have been estimated to cost between $1.7 trillion for the Biden plan seeking zero emissions, $5 trillion for Texas Democrat gubernatorial candidate Beto O’Rourke’s proposal, and $10 trillion for Rep. Alexandria Ocasio-Cortez’s Green New Deal.

This extreme political agenda is a war on the freedom to set prices. It is the equivalent of stormtroopers marching into your supermarket and removing from the shelves the offerings they don’t want you to be free to buy, based on ideological criteria. Maybe it’s Bayer aspirin they hate, or Tropicana orange juice. That less choice will mean higher prices because consumers are captive to a reduction of competitive alternatives.

Energy is the same. When the market is deprived of the full range of competitive options, sellers can get more than they rightfully should. It amounts to government-sanctioned price gouging. Optimum competition, on the other hand, reduces price. Domestic oil from the Permian Basin or Alaska, which has fewer miles to travel to the refinery and pump and thus ends up costing much less, can compete seriously with oil originating in the Middle East; the purchaser of a car today is likely to choose a gasoline-powered Toyota RAV-4 or Honda CR-V for under $30,000 rather than an electric Tesla costing over $60,000. But when the government abolishes fossil fuel vehicles altogether, cars themselves may no longer be within reach, which is what the left has long desired: a populace forced to use and love communal public transport, happy sardines stuffed into buses and subways.

As grossly underappreciated as it is by all too many consumers, price is the indispensable means through which a free economy operates. In a sense, the freedom to set prices is economic freedom. It is the manner in which shortages of essential commodities are averted. It is the way that the value of resources is communicated accurately to the public at large. It is how buyers differentiate between what they need versus the purchases that can wait, depending on changing economic conditions. Anything less than freedom in pricing attaches artificial, inaccurate value to goods and services.

Prices freely agreed upon by buyer and seller is the only way that resources can be allocated efficiently, a task beyond the ability of any central planner. And far from merely being the difference between comfort and hardship, price in the course of history has meant the difference between life and death, on a massive scale.

Remember the famine in Ethiopia that saw the world force fed with the moral outrage of our leading rock stars? Was that the world’s rich starving the world’s poor? Far from it. As Oklahoma State University political science professor Theodore M. Vestal wrote in July, 1985—the month of the Live Aid concert to raise money for relief of the Ethiopian famine—Ethiopia’s government under its military junta “made farmers accept artificially low prices for the main grains: teff, sorghum, barley, millet, wheat and maize.” Coffee was “so heavily taxed that peasants do not bother to expand its production. These policies destroyed the incentive of millions of peasants to grow surplus food, and productivity has declined notably.”

How about Stalin’s engineered famine of the early 1930s in Ukraine, one of Europe’s most fertile agricultural regions? As documented by Anne Applebaum in her 2017 book “Red Famine,” that genocide—a precursor to Russia’s current deliberate slaughter of innocent Ukrainian civilians—came after coerced collectivization in which Ukrainian farmers were forced to sell to the Soviet government at non-negotiable, extremely low artificial prices. In other words, stealing.

No doubt voters will hold Democrats responsible for today’s sky-high inflation in the November midterm elections this year. What too few realize, however, is that dramatically higher prices are not the unintentional result of mismanagement and incompetence; they are the expected, desired results of the Democrats’ game plan. And if they get the green revolution they want, the inflation of today will be dwarfed by what is to come in the years ahead.

Tyler Durden Wed, 03/30/2022 - 20:20
Published:3/30/2022 7:27:26 PM
[Free Speech] On the YLS debacle (Scott Johnson) Peter Wood is president of the National Association of Scholars and a frequent contributor to the Spectator. He is an anthropologist and author, most recently, of Wrath: America Enraged and 1620: A Critical Response to the 1619 Project. My favorite of his books is Diversity: The Invention of a Concept. All are published by Encounter Books, all are still in print, and everything he writes is worth reading. On March Published:3/30/2022 8:53:42 AM
[Markets] Humilitainment: How To Control The Citizenry Through Reality TV Distractions Humilitainment: How To Control The Citizenry Through Reality TV Distractions

Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

Big Brother does not watch us, by his choice. We watch him, by ours…. When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience, and their public business a vaudeville act, then a nation finds itself at risk; culture-death is a clear possibility.”

- Professor Neil Postman

Once again, the programming has changed.

Like clockwork, the wall-to-wall news coverage of the latest crisis has shifted gears.

We have gone from COVID-19 lockdowns to Trump-Biden election drama to the Russia-Ukraine crisis to the Ketanji Brown Jackson confirmation hearings to Will Smith’s on-camera assault of comedian Chris Rock at the Academy Awards Ceremony.

The distractions, distortions, and political theater just keep coming.

The ongoing reality show that is life in the American police state feeds the citizenry’s voracious appetite for titillating, soap opera drama.

Much like the fabricated universe in Peter Weir’s 1998 film The Truman Show, in which a man’s life is the basis for an elaborately staged television show aimed at selling products and procuring ratings, the political scene in the United States has devolved over the years into a carefully calibrated exercise in how to manipulate, polarize, propagandize and control a population.

This is the magic of the reality TV programming that passes for politics today: as long as we are distracted, entertained, occasionally outraged, always polarized but largely uninvolved and content to remain in the viewer’s seat, we’ll never manage to present a unified front against tyranny (or government corruption and ineptitude) in any form.

The more that is beamed at us, the more inclined we are to settle back in our comfy recliners and become passive viewers rather than active participants as unsettling, frightening events unfold.

We don’t even have to change the channel when the subject matter becomes too monotonous. That’s taken care of for us by the programmers (the corporate media).

“Living is easy with eyes closed,” observed John Lennon, and that’s exactly what reality TV that masquerades as American politics programs the citizenry to do: navigate the world with their eyes shut.

As long as we’re viewers, we’ll never be doers.

Studies suggest that the more reality TV people watch—and I would posit that it’s all reality TV, entertainment news included—the more difficult it becomes to distinguish between what is real and what is carefully crafted farce.

“We the people” are watching a lot of TV.

On average, Americans spend five hours a day watching television. By the time we reach age 65, we’re watching more than 50 hours of television a week, and that number increases as we get older. And reality TV programming consistently captures the largest percentage of TV watchers every season by an almost 2-1 ratio.

This doesn’t bode well for a citizenry able to sift through masterfully-produced propaganda in order to think critically about the issues of the day, whether it’s fake news peddled by government agencies or foreign entities.

Those who watch reality shows tend to view what they see as the “norm.” Thus, those who watch shows characterized by lying, aggression and meanness not only come to see such behavior as acceptable and entertaining but also mimic the medium.

This holds true whether the reality programming is about the antics of celebrities in the White House, in the board room, or in the bedroom.

It’s a phenomenon called “humilitainment.”

A term coined by media scholars Brad Waite and Sara Booker, “humilitainment” refers to the tendency for viewers to take pleasure in someone else’s humiliation, suffering and pain.

Humilitainment” largely explains not only why American TV watchers are so fixated on reality TV programming but how American citizens, largely insulated from what is really happening in the world around them by layers of technology, entertainment, and other distractions, are being programmed to accept the government’s brutality, surveillance and dehumanizing treatment as things happening to other people.

The ramifications for the future of civic engagement, political discourse and self-government are incredibly depressing and demoralizing.

This explains how we keep getting saddled with leaders in government who are clueless about the Constitution and out-of-touch with the needs of the people they were appointed to represent.

This is also what happens when an entire nation—bombarded by reality TV programming, government propaganda and entertainment news—becomes systematically desensitized and acclimated to the trappings of a government that operates by fiat and speaks in a language of force.

Ultimately, the reality shows, the entertainment news, the surveillance society, the militarized police, and the political spectacles have one common objective: to keep us divided, distracted, imprisoned, and incapable of taking an active role in the business of self-government.

Look behind the political spectacles, the reality TV theatrics, the sleight-of-hand distractions and diversions, and the stomach-churning, nail-biting drama, and you will find there is a method to the madness.

We have become guinea pigs in a ruthlessly calculated, carefully orchestrated, chillingly cold-blooded experiment in how to control a population and advance a political agenda without much opposition from the citizenry.

This is mind-control in its most sinister form.

How do you change the way people think? You start by changing the words they use.

In totalitarian regimes where conformity and compliance are enforced at the end of a loaded gun, the government dictates what words can and cannot be used.

In countries where tyranny hides behind a benevolent mask and disguises itself as tolerance, the citizens censor themselves, policing their words and thoughts to conform to the dictates of the mass mind.

Even when the motives behind this rigidly calibrated reorientation of societal language appear well-intentioned—discouraging racism, condemning violence, denouncing discrimination and hatred—inevitably, the end result is the same: intolerance, indoctrination, infantilism, the chilling of free speech and the demonizing of viewpoints that run counter to the cultural elite.

As George Orwell recognized, “In times of universal deceit, telling the truth is a revolutionary act.”

Orwell understood only too well the power of language to manipulate the masses.

In Orwell’s 1984, Big Brother does away with all undesirable and unnecessary words and meanings, even going so far as to routinely rewrite history and punish “thoughtcrimes.” In this dystopian vision of the future, the Thought Police serve as the eyes and ears of Big Brother, while the Ministry of Peace deals with war and defense, the Ministry of Plenty deals with economic affairs (rationing and starvation), the Ministry of Love deals with law and order (torture and brainwashing), and the Ministry of Truth deals with news, entertainment, education and art (propaganda). The mottos of Oceania: WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH.

Orwell’s Big Brother relied on Newspeak to eliminate undesirable words, strip such words as remained of unorthodox meanings and make independent, non-government-approved thought altogether unnecessary.

Where we stand now is at the juncture of Oldspeak (where words have meanings, and ideas can be dangerous) and Newspeak (where only that which is “safe” and “accepted” by the majority is permitted).

Truth is often lost when we fail to distinguish between opinion and fact, and that is the danger we now face as a society. Anyone who relies exclusively on television/cable news hosts and political commentators for actual knowledge of the world is making a serious mistake.

Unfortunately, since Americans have by and large become non-readers, television has become their prime source of so-called “news.” This reliance on TV news has given rise to such popular news personalities who draw in vast audiences that virtually hang on their every word.

In our media age, these are the new powers-that-be.

Yet while these personalities often dispense the news like preachers used to dispense religion, with power and certainty, they are little more than conduits for propaganda and advertisements delivered in the guise of entertainment and news.

Given the preponderance of news-as-entertainment programming, it’s no wonder that viewers have largely lost the ability to think critically and analytically and differentiate between truth and propaganda, especially when delivered by way of fake news criers and politicians.

While television news cannot—and should not—be completely avoided, the following suggestions will help you better understand the nature of TV news.

1. TV news is not what happened. Rather, it is what someone thinks is worth reporting. Although there are still some good TV journalists, the old art of investigative reporting has largely been lost. While viewers are often inclined to take what is reported by television “news” hosts at face value, it is your responsibility to judge and analyze what is reported.

2. TV news is entertainment. There is a reason why the programs you watch are called news “shows.” It’s a signal that the so-called news is being delivered as a form of entertainment. “In the case of most news shows,” write Neil Postman and Steve Powers in their insightful book, How to Watch TV News (1992), “the package includes attractive anchors, an exciting musical theme, comic relief, stories placed to hold the audience, the creation of the illusion of intimacy, and so on.”

Of course, the point of all this glitz and glamour is to keep you glued to the set so that a product can be sold to you. (Even the TV news hosts get in on the action by peddling their own products, everything from their latest books to mugs and bathrobes.) Although the news items spoon-fed to you may have some value, they are primarily a commodity to gather an audience, which will in turn be sold to advertisers.

3. Never underestimate the power of commercials, especially to news audiences. In an average household, the television set is on over seven hours a day. Most people, believing themselves to be in control of their media consumption, are not really bothered by this. But TV is a two-way attack: it not only delivers programming to your home, it also delivers you (the consumer) to a sponsor.

People who watch the news tend to be more attentive, educated and have more money to spend. They are, thus, a prime market for advertisers. And sponsors spend millions on well-produced commercials. Such commercials are often longer in length than most news stories and cost more to produce than the news stories themselves. Moreover, the content of many commercials, which often contradicts the messages of the news stories, cannot be ignored. Most commercials are aimed at prurient interests in advocating sex, overindulgence, drugs, etc., which has a demoralizing effect on viewers, especially children.

4. It is vitally important to learn about the economic and political interests of those who own the “corporate” media.

There are few independent news sources anymore. The major news outlets are owned by corporate empires.

5. Pay special attention to the language of newscasts. Because film footage and other visual imagery are so engaging on TV news shows, viewers are apt to allow language—what the reporter is saying about the images—to go unexamined. A TV news host’s language frames the pictures, and, therefore, the meaning we derive from the picture is often determined by the host’s commentary. TV by its very nature manipulates viewers. One must never forget that every television minute has been edited. The viewer does not see the actual event but the edited form of the event. For example, presenting a one- to two-minute segment from a two-hour political speech and having a TV talk show host critique may be disingenuous, but such edited footage is a regular staple on news shows. Add to that the fact that the reporters editing the film have a subjective view—sometimes determined by their corporate bosses—that enters in.

6. Reduce by at least one-half the amount of TV news you watch. TV news generally consists of “bad” news—wars, torture, murders, scandals and so forth. It cannot possibly do you any harm to excuse yourself each week from much of the mayhem projected at you on the news. Do not form your concept of reality based on television. TV news, it must be remembered, does not reflect normal everyday life. Studies indicate that a heavy viewing of TV news makes people think the world is much more dangerous than it actually is.

7. One of the reasons many people are addicted to watching TV news is that they feel they must have an opinion on almost everything, which gives the illusion of participation in American life. But an “opinion” is all that we can gain from TV news because it only presents the most rudimentary and fragmented information on anything. Thus, on most issues we don’t really know much about what is actually going on. And, of course, we are expected to take what the TV news host says on an issue as gospel truth. But isn’t it better to think for yourself? Add to this that we need to realize that we often don’t have enough information from the “news” source to form a true opinion. How can that be done? Study a broad variety of sources, carefully analyze issues in order to be better informed, and question everything.

The bottom line is simply this: Americans should beware of letting others—whether they be television news hosts, political commentators or media corporations—do their thinking for them.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, a populace that cannot think for themselves is a populace with its backs to the walls: mute in the face of elected officials who refuse to represent us, helpless in the face of police brutality, powerless in the face of militarized tactics and technology that treat us like enemy combatants on a battlefield, and naked in the face of government surveillance that sees and hears all.

It’s time to change the channel, tune out the reality TV show, and push back against the real menace of the police state.

If not, if we continue to sit back and lose ourselves in political programming, we will remain a captive audience to a farce that grows more absurd by the minute.

Tyler Durden Wed, 03/30/2022 - 00:05
Published:3/29/2022 11:22:56 PM
[Markets] Taibbi: Meet The Censored - Chris Hedges Taibbi: Meet The Censored - Chris Hedges

Authored by Matt Taibbi via TK News,

This past weekend, celebrated journalist and author Chris Hedges woke up to find six years of episodes of his Russia Today show On Contact vanished from the show’s account on YouTube. Though almost none of the shows referenced Russia or Vladimir Putin directly, and the few that did tended to be unflattering, his association with Russian state media was enough to erase hundreds of interviews about topics ranging from Julian Assange’s imprisonment to censorship to police brutality to American war crimes in the Middle East.

Now on Substack, Hedges has a long and uncomfortably colorful history of being muffled. The former New York Times correspondent covered wars from the Balkans to the Middle East to the Falkland Islands, and authored books like War is a Force That Gives Us Meaning, American Fascists, and The Death of the Liberal Class, and through 2002, when he won the Pulitzer Prize as part of a team for Exploratory Reporting, he defined mainstream respectability and excellence in journalism. He might have had it easy, spending the latter part of his career on the Thomas Friedman/David Brooks Memorial Gravy Train of overpaid lectures, University trusteeships, and fellowships at obscure think-tanks, if he’d just kept his mouth shut.

He didn’t. One of the few frontline American reporters who spoke Arabic, Hedges knew instantly the Iraq war would be a disaster and said so at every opportunity. He was booed offstage at a commencement address at Rockford College in 2003 by a crowd chanting “U-S-A! U-S-A!,” and hustled off campus so fast that the school wouldn’t let him grab his jacket on the way out. For those who haven’t seen it, the video of that scene is a remarkable museum piece of Bush-era war mania:

Episodes like this accelerated his departure from the New York Times and into the wilds of independent media, where paying options for dissident voices had been shrinking. As he points out below, someone like him in the past would have parachuted out of a big commercial enterprise like the Times into a life at NPR — broadcasting shows “at like one in the morning, or something,” he chuckles — but NPR, too, had by then been begun its purging of unorthodox and especially antiwar voices.

By the 2010s, one of the last places where media figures pushed off the traditional career track could pick up a paycheck was Russia Today. In an arrangement Hedges plainly describes as a cynical marriage of convenience, the Russian state was happy to give voice to figures covering structural problems in American society, and those quasi-banned voices were glad for the opportunity to broadcast what they felt is the truth, even understanding the editorial motivation. Hedges ended up working at RT for six years hosting On Contact, where he interviewed authors and thinkers resting outside the cultural mainstream, from Nathaniel Philbrick to Cornel West to Nils Melzer to Noam Chomsky to many others (disclosure: I’ve also been a guest).

As Hedges points out in the wide-ranging, unnerving interview below, the speech-control one-two he’s just experienced — first herded out of the mainstream for ideological offenses into a shrinking space of “allowable” dissent, then forced to watch as that space is demonized out of existence — is part of an effective pattern. “It’s how this works,” he sighs. He points to the Intelligence Community Assessment of January 6th, 2017, ostensibly intended to make a case for Russian interference in the 2016 presidential election, which actually spent much of its time complaining about RT, especially its coverage of real but unflattering domestic issues.

“They showed their hand,” he says, referring to the intelligence community’s complaints over reporting on everything from the pursuit of Assange to Occupy Wall Street to corporate overreach. From the Assessment:

RT’s reports often characterize the United States as a “surveillance state” and allege widespread infringements of civil liberties, police brutality, and drone use…

Hedges denounced Putin’s invasion of Ukraine as a “criminal act of aggression” after it began, and believes that if RT had been allowed to stay on YouTube, he — along with similarly critical former RT contributors like Jesse Ventura — wouldn’t have been permitted by the Kremlin to stay on air. On the other hand, seeing an American company vaporize six years of interviews having nothing to do with Russia shows space for voices like his continues to shrink in the West. In this sense he represents a kind of person we’ll be seeing more of in the future, caught between a censorship rock and a hard place, an outcast in domestic and foreign media systems.

You can find Chris’s work on Substack now at the Chris Hedges Report, and some of the On Contact shows that were re-posted by independent accounts remain up. The launch of the new site has gone very well, but he warns that no place in media is safe now. “They’ll shut down Substack, I absolutely know. Either that, or they’ll create a way that sites like yours and mine won’t be on it,” he says.

More from Chris on censorship, RT, Ukraine, and other issues:

MT: What happened with YouTube?

Chris Hedges: My entire archive of shows from On Contact was taken down. I was in London last week for Julian Assange — I was supposed to be a guest at the wedding, but then, the prison didn’t let me in of course. When I came back, I got a text from a friend of mine, with whom I’d done a half hour show, about a girlfriend who’d overdosed on fentanyl. And because I knew him, my interview with him is quite a powerful segment. And he said, the show doesn’t exist anymore. Then I checked, and nothing exists.

The RT On Contact website is still up, but everything on YouTube is gone, and people watched it on YouTube. Some of that stuff had hundreds of thousands of views.

MT: This two-step process feels like a backdoor way of getting rid of unorthodox voices. In other words, weren’t you on RT in the first place because you’d been bounced out for opposing the war in Iraq? Now, because of your association with RT, you’re off YouTube. Is this a way to get at, not just people connected with Russians, but people with unpopular views generally?

Chris Hedges: Yeah. That’s how it works. They push you to the margins and then, they demonize those spaces on the margins. This has long been the habit of the dominant ruling elites. So for instance, Robert Scheer, whose website I write for, Scheerpost — and of course, we were all fired from Truthdig, this is just a never ending saga — but he ran Ramparts. I think it was Spiro Agnew said, “It’s a magazine with a bomb in every issue.” We could never get advertisers.

So they push you into a space that they then demonize, and then use it as an excuse to shut you down. But they’ve already in essence created the space in which you exist.

I have a couple strikes against me. One, I was pushed out of the New York Times, because I spent so many years in the Middle East, and many years in Gaza. And of course, I was the Middle East Bureau Chief for the New York Times. I’m very outspoken about Israel, and I’m a very strong supporter of the Boycott, Divestment, and Sanctions movement. Which alone is enough — I just saw my friend, Cornel West, denied tenure at Harvard over this. And I’m also a fierce critic, as you are, of the Democratic party. Those are all flags that will get you locked out of even the quote- unquote “liberal media” like MSNBC.

MT: This freeze-out led to your tenure at RT?

Chris Hedges: I’d been marginalized for a long time because of those issues. RT gave me space, and I took it. But it wasn’t a show about Russia. We never did a show on Russia. The irony is that, in fact, the very few times Putin was mentioned, he was not described in flattering terms — it was as an autocrat. There was one show where Syria came up, and Russian war crimes. So there was nothing on the show, ever, that was in any way flattering to the Putin regime.

But the point of the show was, of course, critiquing and looking at our own society, and that was the problem.

TK News subscribers can click here to read the rest

Tyler Durden Tue, 03/29/2022 - 20:45
Published:3/29/2022 7:49:28 PM
[Markets] Jordan Peterson Set To Speak At The Largest Ever Gathering Of Bitcoiners Jordan Peterson Set To Speak At The Largest Ever Gathering Of Bitcoiners

By Jesse Willms of Bitcoin Magazine

World-renowned Canadian author and psychologist Dr. Jordan Peterson will be on stage at Bitcoin 2022 in Miami April 6-9, causing speculation that he may be planning a public endorsement of bitcoin in a city that prides itself on being friendly towards bitcoin, and other cryptocurrency-related industry and adoption.

Peterson has become wildly popular in recent years with millions of views on his YouTube podcast and millions of sales worldwide of his self-help book “12 Rules For Life. An Antidote To Chaos.”

A highlight of the Miami conference, Peterson is causing excitement and a certain amount of surprise as he has expressed an interest in bitcoin in the past, but has not been a regular on the Bitcoin front lines.

Francis Pouliot, CEO and founder of Canada’s largest noncustodial exchange Bull Bitcoin has been a fan of Peterson’s since 2018, and included his book “12 Rules For Life” in his picks for the top three books of 2018:

Pouliot is seeing an accelerating interest in bitcoin in Canada, likely in part because of what he calls “the out-of-control financial censorship that culminated in the Emergencies Act to suppress the Freedom Convoy protests by Canadian truckers,” as well as the Bank of Canada's dramatic increase in money printing.

Pouliot told Bitcoin Magazine that he sees the orange-pilling of Jordan Peterson as being perfectly representative of this new wave of bitcoin adoption.

“A growing constituency of Canadians, including within the traditional business establishments, realize that banking and government institutions do not have their best interest at heart,” he said.

“As they look for solutions to mitigate inflation and political uncertainty, Bitcoin stands out as the only credible alternative to the fiat system. Given the gravity of this rapidly deteriorating situation, they are now willing to give Bitcoin a shot,” he added.

An Original Thinker Outside The Box

Jordan Peterson - what is the attraction? He is credited with tens of millions of cumulative views from all around the world on his YouTube podcast.

Why do young people — in particular Generations X and Z, and mainly young men — follow a “boomer” professor emeritus from Canada’s University of Toronto?

In her article in The Atlantic, “Why the Left Is So Afraid Of Jordan Peterson,” author Caitlin Flanagan says:

Flanagan sees Peterson as occupying an intellectual niche all his own that is not conservative (although often characterized as such), not liberal and outside the overwhelmingly dominant politically-correct ethos found in academia today.

Young men particularly are getting what she calls “the only sustained argument against identity politics.”

“With identity politics off the table, it was possible to talk about all kinds of things — religion, philosophy, history, myth — in a different way. They could have a direct experience with ideas, not one mediated by ideology,” she added.

Passion For Free Speech

Francis Pouliot is a big fan of free speech and is thrilled that Peterson, another free speech advocate, will be attending what’s looking to be the largest Bitcoin event ever held with an estimated 20,000 in attendance.

“I am extremely stoked that Jordan Peterson is coming to Bitcoin 2022,” he told us. “Like many other Bitcoin professionals, Dr. Peterson's teachings about personal responsibility have had a profound positive effect on my life and I consider them to be a perfect complement to the Bitcoin ethos of self-sovereignty.”

Peterson is currently campaigning against an Ontario proposed law that will require critical race theory to be taught in public schools in Ontario. Peterson has been a thoughtful observer of Bitcoin but his priorities have mainly been with his clinical psychology practice.

In his podcast with John Vallis’ “Bitcoiner book club” in August 2021, Peterson asked the four Bitcoiners many of the right questions giving listeners one of the best insights into the workings of a Bitcoiner’s mind. In November 2021, Peterson interviewed Dr. Saifedean Amous, author of “The Bitcoin Standard” and he was clearly still learning about Bitcoin. He is especially impressed that Bitcoin can be kept completely out of the hands of governments.

What will Peterson have to say on April 8 at 12:30 pm?

Tyler Durden Tue, 03/29/2022 - 14:10
Published:3/29/2022 1:16:21 PM
[Markets] Calm Before The Storm? Calm Before The Storm?

Authored by Charles Hugh Smith via OfTwoMinds blog,

Stocks don't vanish when sold; somebody owns the shares all the way to the bottom. These owners who refuse to sell because they have convinced themselves the next dip will be the hoped-for resumption of the bullish trend are called "bagholders."

Trends are tricky. Humans anticipate the present conditions will continue on into the future. In economics and finance, we call this continuation a "trend." Trends continue until something fundamental changes and the trend takes a new course.

If asset prices, credit, sales, jobs, tax revenues and profits are all expanding, we call this trend "bullish."

If the economy and asset prices are contracting, we call this "bearish."

People are much happier in bullish trends because they're making money without any effort as the assets they own are going up in value. They feel wealthier and so they borrow and spend more money, which furthers the expansion.

This self-reinforcing feedback reverses in bearish trends as people feel poorer so they borrow and spend less, reducing demand for goods and services.

People don't like feeling poorer so bear trends are not favored. The focus of those in power is to reverse any bear trend into a bull trend and extend the bull trend as long as possible.

But eventually every bull trend runs into limits. People borrow the maximum their income can support and then they borrow more to bet that assets will continue rising in value.

This flood of money pushes assets up far beyond their previous value, disconnecting them from the fundamentals of yields, replacement value, etc.

As valuations soar, those who bought the assets find that most of their profits are capital gains from the rising value, not from income. So they buy more assets, expecting the trend of soaring valuations to continue more or less indefinitely.

But valuations only rise when demand from buyers exceeds the supply offered by sellers. Once the valuation bubble reaches a peak, sellers who decide to take profits or sell to pay down debt exceed demand from new buyers and valuations decline.

This is called "the credit cycle" or "the business cycle" but it's really a cycle of human nature: when gains are effortless, we want to increase our gains, so we increase our borrowing, leverage and risk to buy more assets.

"Investment" becomes pure speculation unmoored from fundamentals. Eventually valuations, leverage and debt all reach extremes and so valuations, debt and leverage all start to contract.

The euphoria of getting effortlessly richer is replaced by the fear of getting painfully poorer, and so buyers turn into sellers.

This becomes a self-reinforcing feedback: as valuations drop, more people decide it's time to sell. Once valuations decline, owners who bought more stocks with debt are forced to sell by margin calls.

What makes this transition interesting is that humans are reluctant to let go of a trend that has been good to them. The natural tendency is to think /assume / hope that the asset that is sinking will stop sinking and recover its former bullish trend.

During expansive trends, this "buying the dip"--buying more of an asset whenever it drops--is rewarded, as every downturn is brief and the uptrend soon resumes.

But once the trend has reversed, "buying the dip" is no longer rewarded, it is punished, as valuations continue sliding.

Experienced traders look for evidence of this transition because they've learned the hard way that those who cling on to the idea that the bull trend is basically forever because The Powers That Be want it to be forever end up losing most of their wealth.

Inexperienced traders have great difficulty believing the effortless gains are ending, as the majority of traders are still bullish and the financial media is also bullish. It's easy to find convincing reasons to believe the bullish expansion is simply taking another brief pause.

Money manager Jeremy Grantham has long studied speculative bubbles. Here is Grantham's perspective:

"I wrote an article for Fortune published in September 2007 that referred to three “near certainties”: profit margins would come down, the housing market would break, and the risk-premium all over the world would widen, each with severe consequences. You can perhaps only have that degree of confidence if you have been to the history books as much as we have and looked at every bubble and every bust. We have found that there are no exceptions. We are up to 34 completed bubbles. Every single one of them has broken all the way back to the trend that existed prior to the bubble forming, which is a very tough standard."

Grantham sees the current bubble as three simultaneous bubbles overlapping into a super-bubble. The US stock, bond, and housing markets are all three standard deviations from their historical average. Grantham says there have been only four super-bubbles in history: in the US in 1929, 2000, and 2006, and in Japan in 1989.

It's interesting to debate why the current super-bubble can't pop or won't pop, and argue whether this or that will cause the bubbles to pop. Nobody knows who will be right: those calling for a new bull trend to new highs or those calling for a crash as the super-bubble finally pops.

I titled this exploration of trend "calm before the storm" because the transition from bullish expansion to bearish collapse is ultimately an internal battle within bulls hoping for a quick return to effortless gains.

They have a great many reasons to want the rally to resume, and few reasons to willingly accept that holding onto the assets that made them so much money will now only decrease their wealth.

This tug of war is generally calm. The storm starts when the first "vital few" sellers (4% of owners, if the Pareto Distribution holds) cause 20% of owners to start selling. This avalanche of selling--the storm--triggers behavioral changes in the 80%.

Stocks don't vanish when sold; somebody owns the shares all the way to the bottom. These owners who refuse to sell because they have convinced themselves the next dip will be the hoped-for resumption of the bullish trend are called "bagholders." Every experienced trader has been a bagholder. The reasons and psychology are always the same: we are reluctant to let go of bullish trends and our belief that a long-term change of trend is unlikely.

Maybe the trend is still bullish and it will never be interrupted by the storm of a trend change. But maybe the trend has already changed, and the storm clouds are gathering just over the horizon.

*  *  *

This essay was first published as a weekly Musings Report sent exclusively to subscribers and patrons at the $5/month ($54/year) and higher level. Thank you, patrons and subscribers, for supporting my work and free website.

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Tyler Durden Mon, 03/28/2022 - 16:20
Published:3/28/2022 3:40:20 PM
[Markets] Greenwald: Biden's Reckless Words Underscore Dangers Of US Using Ukraine For Proxy War Greenwald: Biden's Reckless Words Underscore Dangers Of US Using Ukraine For Proxy War

Authored by Glenn Greenwald via,

The central question for Americans from the start of the war in Ukraine was what role, if any, should the U.S. government play in that war? A necessarily related question: if the U.S. is going to involve itself in this war, what objectives should drive that involvement?

Three long-range cruise missiles are launched from a Russian submarine in the Black Sea on Saturday, striking targets near the Ukrainian border with Poland, following President Biden's apparent declaration of regime change on Saturday (Credit: 7NEWS Melbourne, Twitter)

Prior to the U.S.'s jumping directly into this war, those questions were never meaningfully considered. Instead, the emotions deliberately stoked by the relentless media attention to the horrors of this war — horrors which, contrary to the West's media propaganda, are common to all wars, including its own — left little to no space for public discussion of those questions. The only acceptable modes of expression in U.S. discourse were to pronounce that the Russian invasion was unjustified, and, using parlance which the 2011 version of Chris Hayes correctly dismissed as adolescent, that Putin is a “bad guy.” Those denunciation rituals, no matter how cathartic and applause-inducing, supplied no useful information about what actions the U.S. should or should not take when it came to this increasingly dangerous conflict.

That was the purpose of so severely restricting discourse to those simple moral claims: to allow policymakers in Washington free rein to do whatever they wanted in the name of stopping Putin without being questioned. Indeed, as so often happens when war breaks out, anyone questioning U.S. political leaders instantly had their patriotism and loyalty impugned (unless one was complaining that the U.S. should become more involved in the conflict than it already was, a form of pro-war "dissent” that is always permissible in American discourse).

With these discourse rules firmly implanted, those who attempted to invoke former President Obama's own arguments about a conflict between Russia and Ukraine — namely, that “Ukraine is a core Russian interest but not an American one” and therefore the U.S. should not risk confrontation with Moscow over it — were widely maligned as Kremlin assets if not agents. Others who urged the U.S. to try to avert war through diplomacy — by, for instance, formally vowing that NATO membership would not be offered to Ukraine and that Kyiv would remain neutral in the new Cold War pursued by the West with Moscow — faced the same set of accusations about their loyalty and patriotism.

Most taboo of all was any discussion of the heavy involvement of the U.S. in Ukraine beginning in 2014 up to the invasion: from micro-managing Ukrainian politics, to arming its military, to placing military advisers and intelligence officers on the ground to train its soldiers how to fight (something Biden announced he was considering last November) — all of which amounted to a form of de facto NATO expansion without the formal membership. And that leaves to the side the still-unanswered yet supremely repressed question of what Undersecretary of State Victoria Nuland referred to as the Ukrainians’ "biological research facilities” so dangerous and beyond current Russian bio-research capabilities that she gravely feared they would "fall into Russian hands.”

As a result of the media's embracing of moral righteousness in lieu of debating these crucial geopolitical questions, the U.S. government has consistently and aggressively escalated its participation in this war with barely any questioning let alone opposition. U.S. officials are boastfully leading the effort to collapse the Russian economy. Along with its NATO allies, the U.S. has flooded Ukraine with billions of dollars of sophisticated weaponry, with at least some of those arms ending up in the hands of actual neo-Nazi battalions integrated into the Ukrainian government and military. It is providing surveillance technology in the form of drones and its own intelligence to enable Ukrainian targeting of Russian forces. President Biden threatened Russia with a response “in kind” if Russia were to use chemical weapons. Meanwhile, reports The New York Times, “C.I.A. officers are helping to ensure that crates of weapons are delivered into the hands of vetted Ukrainian military units."

The U.S. is, by definition, waging a proxy war against Russia, using Ukrainians as their instrument, with the goal of not ending the war but prolonging it. So obvious is this fact about U.S. objectives that even The New York Times last Sunday explicitly reported that the the Biden administration “seeks to help Ukraine lock Russia in a quagmire” (albeit with care not to escalate into a nuclear exchange). Indeed, even “some American officials assert that as a matter of international law, the provision of weaponry and intelligence to the Ukrainian Army has made the United States a cobelligerent,” though this is “an argument that some legal experts dispute.” Surveying all this evidence as well as discussions with his own U.S. and British sources, Niall Ferguson, writing in Bloomberg, proclaimed: “I conclude that the U.S. intends to keep this war going.” UK officials similarly told him that “the U.K.’s No. 1 option is for the conflict to be extended and thereby bleed Putin.”

In sum, the Biden administration is doing exactly that which former President Obama warned in 2016 should never be done: risking war between the world's two largest nuclear powers over Ukraine. Yet if any pathology defines the last five years of U.S. mainstream discourse, it is that any claim that undercuts the interests of U.S. liberal elites — no matter how true — is dismissed as "Russian disinformation.”

As we witnessed most vividly in the run-up to the 2020 election — when that label was unquestioningly yet falsely applied by the union of the CIA, corporate media and Big Tech to the laptop archive revealing Joe Biden's political and financial activities in Ukraine and China — any facts which establishment power centers want to demonize or suppress are reflexively labelled “Russian disinformation.” Hence, the DNC propaganda arm Media Matters now lists as “pro-Russian propaganda” the indisputable fact that the U.S. is not defending Ukraine but rather exploiting and sacrificing it to fight a proxy war with Moscow. The more true a claim is, the more likely it is to receive this designation in U.S. establishment discourse.

That there are few if any risks graver or more reckless than a direct U.S./Russia military confrontation should be too obvious to require explanation. Yet that seems to have been completely forgotten in the zeal, arousal, purpose and excitement which war always triggers. It takes little to no effort to recognize the current emergence of the dynamic about which Adam Smith so fervently warned 244 years ago in Wealth of Nations:

In great empires the people who live in the capital, and in the provinces remote from the scene of action, feel, many of them scarce any inconveniency from the war; but enjoy, at their ease, the amusement of reading in the newspapers the exploits of their own fleets and armies. To them this amusement compensates the small difference between the taxes which they pay on account of the war, and those which they had been accustomed to pay in time of peace. They are commonly dissatisfied with the return of peace, which puts an end to their amusement, and to a thousand visionary hopes of conquest and national glory, from a longer continuance of the war.

The grave dangers of the world's two largest nuclear-armed powers acting on opposite sides of a hot war extend far beyond any intention by the U.S. to deliberately engage Russia directly. Such a war, even with the U.S. waging it “only” through its proxies, severely escalates tensions, distrust, hostilities, and a climate of paranoia. That is particularly true given that — ever since Democrats decided to blame Putin for Hillary's 2016 loss — at least half of Americans have been feeding on a non-stop, toxic diet of anti-Russian hatred under the guise of “Russiagate.” As recently as 2018, 2/3 of Democrats believed that Russia hacked into voting machines and altered the 2016 vote count to help Trump win. This cultivation of extreme anti-Russian animus in Washington has been made even more dangerous by the virtual prohibition on dialogue with Russian officials, which during Russiagate was deemed inherently suspect if not criminal.

And all of those preexisting dangers are, in turn, severely exacerbated by an American president who so often is too age-addled to speak clearly or predictably. That condition is inherently dangerous, made all the more so by the fact that it leaves him vulnerable to manipulation by the Democratic Party's national security advisers who will never forget 2016 and seem more intent than ever on finally attaining vengeance against Putin, no matter the risks. Speaking to U.S. troops in Poland on Friday, a visibly exhausted and rambling President Biden — after extensive travel, time-zone hopping, protracted meetings and speeches — appeared to tell U.S. troops that they were on their way to see first-hand the resistance of Ukrainians, meaning they were headed into Ukraine:

It seems clear that this was not some planned decision to have the U.S. president casually announce his intention to send U.S. troops to fight Russians in Ukraine. This was, instead, an old man, more tired, unpredictable and incoherent than usual due to intense overseas travel, accidentally mumbling out various phrases that could be and almost certainly were highly alarming to Moscow and other countries.

But accidental or unintentional escalation — from misperception or miscommunication — is always at least as serious a danger for war as the deliberate intention to directly engage militarily. In January of this year, the Bulletin of Atomic Scientists announced that its so-called "doomsday clock” was set to 100 seconds before midnight, the metaphorical time they used to signify an extinction-level event for humanity. They warned that the prospect of a cataclysmic nuclear exchange among the U.S., Russia and/or China was dangerously possible, and specifically warned: “Ukraine remains a potential flashpoint, and Russian troop deployments to the Ukrainian border heighten day-to-day tensions.”

In 2018, when the clock was “only” at two minutes before midnight, they emphasized tensions between Russia and the U.S. as one of the primary causes: “The United States and Russia remained at odds, continuing military exercises along the borders of NATO, undermining the Intermediate-Range Nuclear Forces Treaty (INF), upgrading their nuclear arsenals, and eschewing arms control negotiations.” They urged recognition of this specific danger: “Major nuclear actors are on the cusp of a new arms race, one that will be very expensive and will increase the likelihood of accidents and misperceptions.”

That Biden's "gaffe” about U.S. troops headed into Ukraine could generate exactly this sort of "misperception” seems self-evident. So do the grave dangers from Biden's sudden yet emphatic declaration on Saturday that Putin "cannot remain in power” — the classic language of declared U.S. policy of regime change:

That clear declaration of regime change as the U.S. goal for Putin was quickly walked back by Biden's aides, who absurdly claimed he only meant that Putin cannot remain in power in Ukraine and other parts of Eastern Europe, not that he can no longer govern Russia. But this episode marked at least the third time in the past couple weeks that White House officials had to walk back Biden's comments, following his clear decree that U.S. troops would soon be back in Ukraine and his prior warning that the U.S. would use chemical weapons against Russia if they used them first.

That Biden seems to be stumbling and bumbling rather than following scripted recklessness seems likely in some of these cases but not all. The White House's vehement denial, in the wake of Biden's speech, that regime change in Russia is its goal was contradicted by Ferguson's reporting in Bloomberg last week:

Reading this carefully, I conclude that the U.S. intends to keep this war going….I have evidence from other sources to corroborate this. “The only end game now,” a senior administration official was heard to say at a private event earlier this month, “is the end of Putin regime"…..I gather that senior British figures are talking in similar terms. There is a belief that “the U.K.’s No. 1 option is for the conflict to be extended and thereby bleed Putin.” Again and again, I hear such language. It helps explain, among other things, the lack of any diplomatic effort by the U.S. to secure a cease-fire.  It also explains the readiness of President Joe Biden to call Putin a war criminal.

Whether deliberate or unintentional, these escalatory statements — particularly when combined with the U.S.’s escalatory actions — are dangerous beyond what can be described. As an Australian news outlet reported on Sunday, “Russia has launched a missile strike near Poland in what appears to be a deadly warning to the United States.” The accompanying video (see lead photo above) shows at least three long-range cruise missiles, launched from a Russian submarine in the Black Sea, precisely striking targets in western Ukraine, near to where Biden was in Poland. That missile launch, the outlet reasonably concluded, “appears to be a deadly warning to the United States.”

Whatever else is true, the U.S. and Russia are now in waters uncharted since the Cuban missile crisis. Even the savage US/USSR proxy wars of the 1980s in Latin America and Afghanistan did not entail these sorts of rapidly escalating threats. A Russian president who, validly or not, feels threatened by NATO expansion in the region and driven by questions of his legacy, on the other side of a U.S. president with a long record of hawkishness and war fever which is now hobbled by the carelessness and infirmities of old age, is a remarkably volatile combination. As former Greek finance minister Yanis Varoufakis put it on Saturday: “A U.S. President who, during an atrocious war, does not mean what he says on matters of War and Peace, and must be corrected by his hyperventilating staff, is a clear and present danger to all.”

Hovering above all of these grave dangers is the question of why? What interests does the U.S. have in Ukraine that are sufficiently vital or substantial to justify trifling with risks of this magnitude? Why did the U.S. not do more to try to diplomatically avert this horrific war, instead seemingly opting for the opposite: namely, discouraging Ukrainian President Zelensky from pursuing such talks on the alleged grounds of futility and rewarding Russian aggression, and not even exploring whether a vow of non-NATO-membership for Ukraine would suffice? How does growing U.S. involvement in this war benefit the people of the United States, particularly as they were already — before this war — weighed down by the dual burdens of pandemic-based economic depravations and rapidly escalating inflation?

These are precisely the questions that a healthy nation discusses and examines before jumping head-first into a major war. But these were precisely the questions declared to be unpatriotic, proof of one's status as a traitor or pro-Russia propagandist, as the hallmark of being pro-Putin. These are the standard tactics used to squash dissent or questioning when war breaks out. That neocons, who perfected these smear tactics, are back in the saddle as discourse and policy leaders — due to their six-year project of ingratiating themselves back into American liberalism with performative anti-Trump agitprop — makes it inevitable that such sleazy attacks will prevail.

As a result, the U.S. now finds itself more deeply enmeshed than ever in the most dangerous war it has fought in years if not decades. It may be too late for those questions to be meaningfully examined. But given the stakes, this is as clear a case of better late than never as one will ever encounter.

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Tyler Durden Mon, 03/28/2022 - 06:30
Published:3/28/2022 5:35:18 AM
[Markets] Stockman: Washington Is Delirious With War Fever (For No Reason To Do With Homeland Security) Stockman: Washington Is Delirious With War Fever (For No Reason To Do With Homeland Security)

Via David Stockman’s Contra Corner.

Economic, social and political dangers abound. That’s because Washington and its subservient mainstream media are delirious with war fever like at no time in the last seven decades.

The resulting reckless pursuit of an unhinged Sanctions War against Russia poses a dire threat to the global economy and domestic prosperity and does so for no good reason of homeland security whatsoever.

With respect to the latter, the sheer facts are overwhelming. So we repeat them with an added total for the respective military budgets: To wit, the economic might of NATO is 29X that of Russia and its combined defense budgets are 18X greater, which tells you all you need to know about the “Russian threat”:

  • NATO: $42.78 trillion of GDP; 945 million population; $45,130 per capita income; $1,200 billion defense budget;

  • RUSSIA: $1.46 trillion of GDP; 144 million population; $10,300 per capita income; $67 billion defense budget.

Given these realities, why should Washington care about an intramural battle among contiguous peoples and territories that have been joined at the hip for most of the last 1300 years?

The implicit answer is because it’s the world’s self-appointed policeman and Spanker-in-Chief.

Beyond that, it’s apparently due to a putative aggrandizement syndrome. That is, Putin’s Russia may be puny in the economic and military scheme of things today, but once it is permitted to acquire a taste for conquest it is certain to grow into a Hitlerian monster.

Needless to say, the former reason is based on Washington’s institutionalized arrogance and has no place at all in realistic thinking about national security, while the latter is based on sheer ignorance about the actual history of Hitler’s conquests.

The truth is, there was nothing inexorable about it. Contrary to today’s nostrums, Nazi Germany wasn’t a self-feeding deus ex machina of conquest, nor was it a generic model of what happens when ruthless dictators are not braced with opposing force early on.

To the contrary, Hitler was a product of a specific, unique and unfortunate history that bears no resemblance to current circumstances on the Ukrainian/Russian line of conflict. In fact, Hitler’s original expansion was rooted in deep German grievances about its territorial, industrial and financial (i.e. onerous reparations) decapitation by the vengeful winners at Versailles.

Thus, the re-occupation of the Alsace-Lorain and the Ruhr, the annexation of the German speaking Sudetenland, the dispute over the Danzig Corridor in Poland – all involved the reclamation of former German territories, while the Anschluss with Austria was a voluntary marriage of German-speaking losers from the abomination of 1919.

So Hitler’s rise and initial territorial expansion had been preventable, not inexorable, because it was rooted in historic mistakes that took on a life of their own: Namely, the irridentism of an aggrieved German population that had been stripped of 15% of its historic territory and upwards of 50% of its coal and other industrial resources by the “peacemakers” at Versailles.

Stated differently, Hitler was the metastasized residue of history gone wrong, not the inexorable product of annexing, for instance, the overwhelmingly German speaking population of the Sudetenland. The latter had been extracted from Germany in 1919 and handed to the new state of Czechoslovakia, which, in turn, had been carved out of whole cloth by Wilson & Co.

The correct lesson from the 1930s, therefore, is more nearly the opposite of the deus ex machina aggrandizement syndrome peddled by Washington and Brussels. It was the West’s insistence on the creation and perpetuation of the artificial states of Poland and Czechoslovakia that gestated Hitler, not the mere fact of neighboring territories being conquered after the fact.

As it happened, Poland had disappeared from the maps of Europe in 1795 and had no reason to come back in the fulsome extent provided by the Versailles Treaty except for Wilson’s courting of the Polish vote in the industrial Midwest. Similarly, the mongrel state of Czechoslovakia with its linguistic, religious and ethnic concoction had no historical basis or reason for existence at all. Well, again, except for American electoral machinations, which constituted the raw politics underlying Wilson’s messianic determination to remake the map of the world so as to be “safe for democracy” in his own exalted opinion.

The fact is, Ukraine is the Poland and Czechoslovakia of the present time – an artificial state loaded with Russians and with no reason for existence in its present form and girth. Well, still again, other than Washington’s fanatical insistence that the happenstance map of administrative units which fell out of the Soviet Union’s collapse constitute sacred borders that must be preserved at all hazards.

To the contrary, what Putin wants, ironically, is the pre-communist status quo ante. That is, he wants Crimea, where Ukrainians constitute but a tiny minority and which had been Russian since 1783. And, more crucially, which hosts the greatest strategic military asset possessed by Russia thereafter – -the great Naval base at the headwaters of the Black Sea in Sevastopol.

Likewise, the Donbas and territories east of the Dnieper River and along the northern edge of the Black Sea and the Sea of Azov have been Russian for upwards of 300 years. By all facts of pre-1922 history, these territories amounted to Novorossiya (“New Russia”) as shown in this map from 1897.

As it happened, they became “Ukrainian” only by writ of two of history’s greatest evil monsters – Vladimir Lenin and Joseph Stalin – who placed them in the administrative unit of the Ukrainian Soviet Socialist Republic for reasons that have no historic validity whatsoever.

Yet a devastating war goes on there today – a war which is careening to the precipice of WWIII – because Washington encourages Kiev to insist on retention of “every inch” of a map put together by Lenin, Stalin and Khrushchev.

In fact, the latter did for the map of Ukraine what Wilson & Co. did to Germany after the Great War. That is to say, these long gone commie dictators extracted from Russian and Polish territories a combustible mongrel that begs to be partitioned and returned to the status quo ante, not defended to the last drop of Ukrainian blood and US/NATO treasure.

Needless to say, there is no Washington policy-maker familiar with the above map, nor Capitol Hill armchair warrior who has a clue. Most especially, by shrieking about “borders” being violated and the need for all out support to a heroic nation valiantly resisting the Russian ogre, the GOP’s bloodthirsty hawks and neocons have made it easy as pie for Biden and his national security minions to pivot to an all-out war footing against Russia, thereby distracting the American public from the abysmal failure of their domestic policies.

Indeed, red in tooth and claw the vast majority of Republicans are now demanding suicidal measures like a No Fly Zone and secondary sanctions, including against China. The latter are being proffered in the vain hope that it will weaken Russia enough to eventually cause it to quit its “invasion” and permit the map of Ukraine to revert to what Lenin, Stalin and Khrushchev ordered it to be.

One of these war-loving Republicans is Senator Pat Toomey (R-Pa.), ranking member of the Senate Banking Committee, who recently relieved himself of the following gem in an op-ed published in The Wall Street Journal.

“To cut off Mr. Putin’s oil and gas sales globally, the administration and Congress should impose secondary sanctions on the entirety of Russia’s financial sector.”

What he means is that any bank on the entire planet which should dare to defy Washington’s writ and finance a Russian oil trade to a third party, such as China, India or Brazil, should be slapped with sanctions for aiding and abetting what amounts to global commerce–now redefined as an act of war against the US and NATO.

So to repeat: The GOP has gone for full-scale “war socialism.” Suddenly, the rights of private property owners are not so sacred after all – if they are involved in exporting, importing or financial intermediation with anything Russian. In those instances, they are far game for Washington’s economic draft – and the consequent loss of markets, sales, profits and value on the say so of war-loving blowhards like Senator Toomey.

The worst thing, of course, is that all of this “war socialism” has nothing to do with defense of the homeland or anything rational at all. To the contrary, it’s the rotten spawn of an Imperial City populated by careerist politicians who get their jollies pretending to be the suzerains of mankind and Spanker-in-Chief of the planet’s malefactors.

Unfortunately, the current mess isn’t the half of it. The MSM is presenting such a distorted and fanciful picture of on-the-ground conditions in the Ukraine that the American public is totally in the dark about what comes next. That is, the Ukrainian military has been decimated and the resistance of the Kiev government is on its last legs – notwithstanding the nonstop whistling past the graveyard of the nation’s clownish president.

Recently, the peripatetic Mike Whitney had a powerful interview with one Larry C Johnson. The latter is a veteran of the CIA and the State Department’s Office of Counter Terrorism. He is the founder and managing partner of BERG Associates, which was established in 1998 to provide training to the US Military’s Special Operations community. He has been vilified by the right and the left, which means he must be doing something right.

In any event, Johnson summarized what amounts to the dogs of war which are not barking on the Ukrainian side of the ledger. The implication is that its only a matter of time until a fait accompli on the ground in Ukraine results in the aforementioned partition of its borders and the demilitarization and neutralization of the rump state left behind, even as Washington finds itself in full-scale economic war with Russia.

That is to say, either Imperial Washington is going to surrender from its Sanctions War or the real truth of the matter will come to light. Namely, that the violation of Ukraine’s putative borders is only the excuse for Washington hegemonic determination to call the shots in the former Soviet Union – just like it has attempted to do elsewhere on the planet during the last 70 years in the name of promoting democracy.

As to the looming collapse of the Ukrainian resistance, here are the key spoiler alerts from the Johnson interview, conveying the inconvenient truths about where the war is actually heading.

Russia’s de facto No Fly Zone

Within the first 24 hours of the Russian military operation in Ukraine, all Ukrainian Ground Radar Intercept capabilities were wiped out. Without those radars, the Ukrainian Air Force lost its ability to do air to air intercept. In the intervening three weeks, Russia has established a de facto No Fly Zone over Ukraine. While still vulnerable to shoulder fired Surface to Air Missiles supplied by the U.S. and NATO to the Ukrainians, there is no evidence that Russia has had to curtail Combat Air Operations.

The Allegedly Stalled 40-Mile Russian Column

When a 24 mile (or 40 mile, depends on the news source) was positioned north of Kiev for more than a week, it was clear that Ukraine’s ability to launch significant military operations had been eliminated. If their artillery was intact, then that column was easy pickings for massive destruction. That did not happen. Alternatively, if the Ukrainian’s had a viable fixed wing or rotary wing capability they should have destroyed that column from the air. That did not happen. Or, if they had a viable cruise missile capability they should have rained down hell on the supposedly stalled Russian column. That did not happen. The Ukrainians did not even mount a significant infantry ambush of the column with their newly supplied US Javelins.

Cut Off to the South, North and East:

We have not seen a single instance of a Ukrainian regiment or brigade size unit attacking and defeating a comparable Russian unit. Instead, the Russians have split the Ukrainian Army into fragments and cut their lines of communication. The Russians are consolidating their control of Mariupol and have secured all approaches on the Black Sea. Ukraine is now cut off in the South and the North.

Destruction of De Facto NATO Military Bases:

The really big news came this week with the Russian missile strikes on what are de facto NATO bases in Yavoriv and Zhytomyr. NATO conducted cyber security training at Zhytomyr in September 2018 and described Ukraine as a “NATO partner.” Zhytomyr was destroyed with hypersonic missiles on Saturday. Yavoriv suffered a similar fate last Sunday. It was the primary training and logistics center that NATO and EUCOM used to supply fighters and weapons to Ukraine. A large number of the military and civilian personnel at that base became casualties.

Agreement With Colonel Douglas Macgregor – A Guest on the Tucker Carlson Show Who Said:

The war is really over for the Ukrainians. They have been ground into bits, there is no question about that despite what we hear from our mainstream media. So, the real question for us at this stage is, Tucker, are we going to live with the Russian people and their government or we going to continue to pursue this sort of regime change dressed up as a Ukrainian war? Are we going to stop using Ukraine as a battering ram against Moscow, which is effectively what we’ve done.”

Washington’s Massive Miscalculation:

I am shocked at the miscalculation in thinking economic sanctions on Russia would bring them to their knees. The opposite is true. Russia is self-sufficient and is not dependent on imports. Its exports are critical to the economic well-being of the West. If they withhold wheat, potash, gas, oil, palladium, finished nickel and other key minerals from the West, the European and US economies will be savaged. And this attempt to coerce Russia with sanctions has now made it very likely that the US dollar’s role as the international reserve currency will show up in the dustbin of history.

*  *  *

Former Congressman David A. Stockman was Reagan's OMB director, which he wrote about in his best-selling book, The Triumph of Politics. His latest books are The Great Deformation: The Corruption of Capitalism in America and Peak Trump: The Undrainable Swamp And The Fantasy Of MAGA. He's the editor and publisher of the new David Stockman's Contra Corner. He was an original partner in the Blackstone Group

Tyler Durden Mon, 03/28/2022 - 05:00
Published:3/28/2022 4:04:45 AM
[Entertainment] CODA's Troy Kotsur Makes History With Best Actor in a Supporting Role Win at 2022 Oscars Troy Kotsur, 2022 Oscars, 2022 Academy Awards, WinnerTroy Kotsur won an Oscar and entered the history books all in one very special night. On March 27, the 53-year-old CODA star took home the Academy Award for Best Actor in a Supporting...
Published:3/27/2022 9:03:12 PM
[Markets] Currency Strategy: An Overview Of Currency Trading History And Practical Strategy Currency Strategy: An Overview Of Currency Trading History And Practical Strategy

Part one of notes from "Currency Strategy", written by Callum Henderson, a solid overview of advanced currency trading theory and practical strategy. Authored by Macro Ops.

Although it reads a bit like a textbook and is somewhat dated (it was published in 2000) the meat of the book remains relevant and useful to currency speculators today. 

The following ?Ops Notes? cover important sections from the book that are useful to us as traders. I left out the parts devoted to corporate currency hedging and technical analysis (if you’re reading this you probably know what a H&S pattern is). 

I consider this book required reading if you’re serious about engaging in the currency markets. Two other excellent books to pair with it are ?Currency Forecasting? by Rosenberg and ?Handbook of Exchange Rates? by Jessica James.

These Ops Notes serve as a great reference for those who ?already have a foundation in currency theory and application. Keep in mind that this is pretty advanced stuff. In the future, we’ll be taking each of these sections and diving in deeper via separate ?Vault? pieces. 

Since ?Currency Strategy? is dense and packed full of useful information, we’re splitting its Ops Notes into four sections. 

The first section covers the positives and negatives of the various traditional approaches to exchange rate modelling. 

Chapter 1: Fundamental Analysis - The Strengths and Weaknesses of Traditional Exchange Rate Models

Traditional exchange rate models are based off equilibriums. The idea is that the exchange rate should balance out over time to reflect the differences in prices of various commodities and goods between one currency and the next. 

Each model varies in the primary data points it uses to determine equilibrium rates of exchange:

  • Purchasing Power Parity: The exchange rate as the relative price of goods

  • Monetary Approach: The exchange rate as the relative price of money

  • Interest Rate Approach: The exchange rate as the relative price of interest rates

  • Balance of Payments Approach: The exchange rate as the relative price of current and capital flows

  • Portfolio Balance Approach: The exchange rate as the relative price of assets

1.1 Purchasing Power Parity 

Purchasing Power Parity (PPP) or the “law of one price” is the best known exchange rate model within currency analysis. The basic idea is that in a world without barriers to free trade, the price of the same good must be the same everywhere over time. As a result, the exchange rate must move towards a long-term equilibrium value to ensure this is true. PPP or the law of price should hold if:

  1. There are no barriers to trade or arbitrage in the good 
  2. There are no transaction costs 
  3. The good being traded is perfectly homogeneous

Thus, the basic mathematical expression of PPP is: E = P / P*

Or, another way to express this is: P = E × P*


  • E = The PPP long-term equilibrium exchange rate value 

  • P = Domestic price level of goods

  • P* = Foreign price level of goods 

This reflects the fundamental view of PPP, which is that the long-term equilibrium value of an exchange rate is a direct function of the ratio between the “internal” prices of the same tradable goods between two countries. 

For example, let’s say that a basic basket of consumer goods are priced materially higher in Germany than in Norway. This would cause people to buy the goods in Norway and sell them in Germany — a form of consumer goods arbitrage. But in the process of doing so, they would drive up the demand for the Norwegian goods. As a result, the demand for Norwegian Krona (the currency used to buy those goods) would climb higher as well. The Krona would therefore become more expensive and in turn offset the differences in local pricing of the basket of goods. The arbitrage would bring the currencies into equilibrium. 

Cheap currency ? Attracts buyers ? Increased demand to buy goods ? Currency appreciates 

Practitioners think of exchange rates in terms of base and term currencies. The base currency is usually the US dollars and used first as a point of reference. 

For example, the exchange rate between the US and Japan is not seen as yen per dollar, but instead as dollar per yen. The dollar is the base currency and the yen is the term currency. This is how foreign exchange traders quote rates. We could express this slightly differently in our PPP formula as:

E = Pt? ? / Pb?


  • E = The PPP long-term equilibrium exchange rate value 

  • P?tb? = Price level in the term currency 

  • P? ? = Price level in the base currency 

1.1.1 Reasons for "Misalignment"

Exchange rates that don’t reflect the PPP value are “misaligned” and assumed to eventually revert. 

Misalignments are caused by temporary distortions, either to the price of the good or the exchange rate, that should ?quickly? be eliminated by a rational, profit-seeking market. But in reality, “misalignments” can last for months or even years. The track record of the PPP model over the short term leaves a lot to be desired. It’s known in the market as the “Pretty Poor Predictor”. 

The reasons for this are: 

  • We don’t have perfectly free trade? — Free trade would imply zero import tariffs, zero export subsidies, and perfect competition across all business sectors. Needless to say, this is not the case. As a result there are significant trade-related price (and therefore exchange rate) distortions. 

  • The adjustment mechanism is not necessarily immediate ?— During periods of market volatility, corporations may delay setting prices and budgeting their exchange rates. They may wait until they have a better idea of where appropriate levels should be to retain competitiveness and margin. 

  • The price of goods may not be the most important exchange rate determinant ?— A basic PPP assumption is that the relative pricing of goods is the main driver of exchange rates. However, since the liberalization of capital markets and the subsequent effect of speculation on exchange rates, this may no longer be the case. 

  • The good or basket of goods may be slightly different in different countries ?— The consistency of a good should not be taken for granted. The “same” good may vary between countries in terms of quality, cost, and speed to market. 

  • Base-year effects? — There’s also the question of when to start PPP analysis. PPP analysis requires a base year to compare changes over time. Logic might suggest starting from the end of the Bretton Woods exchange rate system in the 1971–1973 period, yet this took place at a time of very high inflation, thus significantly distorting results.

(Sidenote: Alex here. A surprisingly effective and free tool for comparing PPP is ?Th Economist’s? “McParity” index. It uses the adjusted prices of big macs from around the world. Link here.?)

1.1.4 PPP and the Real Exchange Rate

1. The real exchange rate is the nominal exchange rate adjusted for inflation (price) differentials

  • If PPP holds over the long term, the real exchange rate should remain constant
  • Inflation differentials between two countries will be offset by an appropriate adjustment in the nominal exchange rate 

2. Some final points: 

  • PPP provides a useful medium-term to long-term perspective of currency valuation 

  • If PPP holds, the real exchange rate remains stable over the long-term

  • However, there can be substantial short-term divergences from PPP 

  • PPP is therefore most useful in currency forecasting for corporations, long-term investors, and also leveraged investors, but much less so for short-term traders

1.2 The Monetary Approach

1. According to classical theory, a country’s price level is a function of the quantity of its money. However, according to PPP, exchange rates adjust to equalize prices of goods between countries. So if monetary factors determine prices, they must also play a part in determining exchange rates. The theoretical transition mechanism is: 

(i)   Change in money supply ? Change in price ? Change in exchange rate 

(ii)  Change in money supply ? Change in interest rate ? Change in exchange rate

  • For example, a rising money supply that pushes prices up is likely due to relatively loose monetary policy from the central bank.

  • Under the PPP law of one price, freely tradable goods must be the same price everywhere over time. Exchange rates must adjust to achieve that.

  • This means that as prices in one country rise relative to prices for the same goods elsewhere, the currency must depreciate to restore equilibrium.

  • There’s often significant lag time between monetary changes and their effect on the exchange rate. 

  • This delay is where the idea of “sticky” prices comes from. In reality, instead of the theoretical transmission mechanism above, we get something like:

Change in money supply ? Delayed price change ? Delayed exchange rate change

  • Rising money supply (of a currency) should eventually lead to depreciation. Supply will continue to increase as the currency depreciates until it’s met with a rising money demand. This equilibrium is where the currency will stabilize and recover lost ground.

1.2.1 Mundell-Fleming

1. Suppose in an economy with high capital mobility, a central bank loosens its monetary policy by cutting interest rates. They cut rates because of weak growth and benign inflation. 

  • Lowering interest rates reduces the incentive to hold interest-bearing securities. The reward isn’t worth the risk. So on a relative basis, the incentive to hold money or cash increases. 

  • This should lead to depreciation in the exchange rate so that the trade balance can revert to equilibrium. 

  • Another way to say it: Lower interest rates cause capital outflows, which in turn cause depreciation in the exchange rate. 

2. On the fiscal side, much depends on whether trade or capital flows dominate. 

  • On the one hand, looser fiscal policy, either through tax cuts or spending increases, should increase domestic demand, which in turn should cause deterioration in the trade balance.

  • On the other hand, looser fiscal policy causes higher domestic interest rates, which in turn attracts capital inflows. If trade flows dominate, then the exchange rate should depreciate. 

3. Conversely, tighter fiscal policy should, according to Mundell–Fleming, lead to weaker domestic demand.

  • On the trade flow side, this should result in reduced import demand, causing a positive swing in the trade balance. 

  • On the capital flow side, tighter fiscal policy should lead to lower interest rates, which in turn lead to capital outflows. 

  • If trade flows dominate, the exchange rate should appreciate, whereas if capital flows dominate, the exchange rate should depreciate. 

4. In a world of perfect or at least high capital mobility, it is assumed that capital flows dominate over trade flows. Therefore, we can express the likely impact on exchange rates via specific combinations of monetary and fiscal policies through Table 1.2.

 The assumption that a change in monetary policy leads directly and automatically to a parallel change in the exchange rate is flawed for the following reasons: 

  • There may be a delay in the transmission mechanism 

  • The initial exchange rate reaction may be the exact opposite of what standard models assume 

Over the medium to long term, the Mundell–Fleming model of policy combinations is an invaluable guide to future exchange rate direction. In the short term there may be delays and distortions, which at least put off the anticipated results.

1.2.4 Two Legs but not Three

1. The final word on the Monetary Approach and the exchange rate impact from policy combinations concerns the idea from the Mundell–Fleming model that a central bank can in a world of high capital mobility target the exchange rate or the interest rate but not both. Another way of expressing this is that you can have two of the following but not all three:

  • A fixed exchange rate regime 

  • Monetary policy independence 

  • High capital mobility

2. The first assumes the targeting of the exchange rate, while the second assumes the targeting of inflation and interest rates.

1.3 The Interest Rate Approach

1. The first principle involves the basic interest rate parity theory, which is that:

  • An exchange rate’s forward % premium/discount = its interest rate differential

2. The traditional forward discount on the dollar–yen exchange rate should equal the interest rate differential between the two currencies. 

  • This is seen as the equilibrium reflecting the relationship between the exchange rate and interest rates. 

  • Because forwards are a traded instrument and thus subject to supply and demand, the forward premium or discount can vary briefly from this equilibrium, but should always revert to norm. 

  • After all, if for argument’s sake the forward premium/discount for some reason did not equal the interest rate differential between the two currencies an arbitrageur could in theory make risk-free profits by borrowing in one currency, investing in the securities of the other currency and simultaneously opening a forward contract in the exchange rate for the same period as the initial loan. This is called covered interest rate arbitrage.

(Sidenote: Alex here. Covered interest arbitrage or parity has broken down since the financial crises in 07’. The break has left many economists scratching their heads. Here’s a good whitepaper from the BIS on the matter ?(link here)? . And also Alhambra Partners has done some decent presentations on the subject via Real Vision.)

1. Returning to the theory for now, interest rate parity theory states that the difference between a spot and forward exchange rate expressed as a percentage should equal the interest rate differential between the two currencies. Yet, we know from the PPP principle that exchange rates and inflation rates are linked. Can we not link these also with interest rates? Indeed we can, thanks to the seminal work of the economist Irving Fisher. 

  • Thus, according to what has become known as the “Fisher effect:”

    • The difference in interest rates = the difference in expected inflation rates

2. Thus, we have gone from the difference between the spot and the forward exchange rate equating to the interest rate differential through the interest rate parity theory, which in turn equates to the difference in expected inflation rates through the Fisher effect. Yet, PPP tells us that absolute or relative price growth levels can be used to forecast future exchange rates.

3. Through PPP we can extrapolate this one stage further to suggest that: 

  • The difference in expected inflation rates = the expected exchange rate change 

    • Bringing all these together, we get: 

      • The difference in spot and forward rates = the difference in interest rates (Interest rate parity theory) 

      • The difference in interest rates = the difference in expected inflation rates (Fisher effect) 

      • The difference in expected inflation rates = the expected change in spot exchange rate (Purchasing Power Parity) 

      • Logically from this, one may conclude that the difference between the spot and forward rates expressed as a percentage should equal the expected change in the spot exchange rate.? This is known as the expectations theory of exchange rates.

        • The difference in interest rates = the expected change in the spot exchange rate (International Fisher effect)

Summary: ?Over the long term, the interest rate parity theory is seen to work as enough market participants can be found to “discover” the opportunities available for covered interest rate arbitrage between currencies and interest rates, thus in the process eliminating such disparities. However, there are much longer lags than the theory might suggest is possible. 

Here again, the issue of incentive must be a focus. ?As noted earlier, it should behoove the theorists to know that the majority of currency market practitioners are currency interbank dealers and moreover that the main incentive for these to trade is directional gain rather than interest income.? Currency markets do focus on interest rate differentials for extended periods of time, but equally they focus on other factors, in many cases completely disregarding interest rates.

1.3.1 Real Interest Rate Differentials and Exchange Rates

1. Currency strategists do however use models comparing the real interest rate differential with either the nominal or the real exchange rate between two countries.

  • The logic behind this relates to both the international Fisher effect and to PPP, where on the one hand the difference in interest rates should, if not be exactly equal to an expected change in the spot exchange rate, at least be an important driver of it.

  • And nominal interest rate differentials are adjusted for inflation (i.e. domestic price growth) and thus relate to the exchange rate through the law of one price.

    • The link or correlation between real interest rate differentials and the exchange rate appears to have grown exactly in line with the gradual move since the end of the Bretton Woods exchange rate system to liberalize capital flows globally. 

    • As barriers to capital movement have fallen, so the overall importance of capital flow has grown exponentially relative to that of trade flow. 

    • As capital flows have gained in importance, so their importance within overall currency market flows has grown and thus the correlation between the two increased. 

    • Thus, currency strategists across the market continue to track this relationship between real interest rate differentials and nominal exchange rates as one of many useful and important indicators of currency over- or undervaluation.

1.4 The Balance of Payments Approach

1. The core idea behind the Balance of Payments Approach is that changes in national income affect both the current and the capital account and through this cause a predictable reaction in the exchange rate in order to restore balance of payments equilibrium. The best way of looking at this is to examine the transmission mechanism from the change in national income through to the exchange rate reaction. 

2. When considering the Balance of Payments Approach to exchange rates, it is good to keep in mind the classic accounting identity for economic adjustment:

S - I = Y - E = X - M 


S = Savings 

I = Investment 

Y = Income 

E = Expenditure 

X = Exports 

M = Imports 

Within economics, this is an unequivocal law which governs how economies adjust to changes in economic dynamics.

1.4.1 A Fixed Exchange Rate Regime

1. Under a fixed exchange rate regime where capital mobility is extremely limited, the focus is on the current account rather than the capital account.

  • a. The exchange rate cannot be the transmission mechanism for restoring balance of payments equilibrium since the exchange rate is fixed. 

    • i. Hence, the monetary authority has the choice of either selling its foreign exchange reserves in the market to alleviate pressure on the exchange rate or more practically tightening monetary policy in order to dampen domestic demand, thus reducing import demand and restoring the balance of payments equilibrium.

2. The dynamic whereby a change in national income is transmitted within a fixed exchange rate regime through the current account balance is expressed in the following diagram:

Change in national income ? Change in current account balance ? Monetary reaction ? Reversal of current account balance change ? Balance of payments equilibrium restored

1.4.2 A Floating Exchange Rate Regime

1. Under a floating exchange rate regime, we have to consider the capital account as well as the current account. 

  • a. Here, as national income rises, so import demand rises, in turn causing the current account balance to deteriorate. 

  • b. In the case of the floating exchange rate regime, the exchange rate is able to be the transmission mechanism for restoring the balance of payments to equilibrium. 

    • i.  On the capital account side, a rise in national income, causing the current account balance to deteriorate, must be accompanied by a rise in real interest rates. 

    • ii. The higher real interest rate will dampen import demand, which will in turn cause the current account balance deterioration to reverse. 

    • iii. As that happens, national income will fall back, causing real interest rates also to fall back. 

Thus, the current account improvement reverses and real interest rates rebound. We can express this transmission mechanism from a change in national income through the balance of payments within a floating exchange rate regime with the following diagram: 

Change in national income ? Change in current account balance ? Change in real interest rates ? Change in capital flows ? National income change reversed ? Current account reversed ? Capital flows reversed ? Real interest rates reversed ? Balance of payments equilibrium restored.

1.4.4 REER and FEER

1. In line with the external balance approach, the Real Effective Exchange Rate (REER) is the trade-weighted exchange rate (NEER) adjusted for inflation. 

  • a. The purpose of using REER is to try to gauge an exchange rate’s over- or undervaluation relative to a given norm. 

2. Significant REER overvaluation relative to a given norm of 100 tends to produce a widening current account deficit or “external imbalance” in the jargon of economists. 

  • a. In order to restore balance or equilibrium, there has logically to be a REER depreciation. This can be achieved either by a depreciation of the trade-weighted exchange rate — that is to say by a depreciation of the nominal exchange rate — or by a sharp decline in inflation.

3. Significant REER overvaluation can last for substantial periods of time. In some cases it can take several years before an adjustment process takes place to eliminate such overvaluation. 

4. The lesson of REER is that it can be a useful tool for diagnosing over- or undervaluation and a consequent need for an adjustment to restore equilibrium — but what it cannot do is tell you when that will happen. 

1. Another way to estimate a real exchange rate’s equilibrium is FEER, or Fundamental Equilibrium Exchange Rate.

  • a. FEER reflects the exchange rate value that is the result of a current account surplus or deficit that is in turn appropriate to the long-term structural capital inflow or outflow in the economy, assuming that the country does not have barriers to free trade and is also trying to pursue internal balance. 
  • b. Assessing the appropriate level of long-term structural capital inflow or outflow requires a considerable degree of value judgement. 
  • c. Indeed, models based on the FEER concept have been widely used within the private sector for some time. However, it is to say that using such a type of exchange rate model puts a considerable degree of emphasis on the value judgement of the analyst concerned, thereby undermining the point of using a model in the first place.

1.4.5 Terms of Trade

1. Another important aspect of the external balance approach to exchange rate determination is the so-called “terms of trade”, which is the relationship between a country’s export and import prices. A country’s terms of trade can be an important determinant of its long-term equilibrium real exchange rate.

  • a. Rising export prices should be reflective of rising global demand for that country’s exports, both on an absolute basis and relative to domestic demand levels. 
    • i. Consequently, one should assume that an improvement in the terms of trade should lead to an improvement in the current account balance, which in turn requires a real exchange rate appreciation to restore equilibrium. 
    • ii. Equally, a deterioration in the terms of trade leads to a current account deterioration, which requires a real exchange rate depreciation to restore equilibrium. For the sake of clarity, we can express this transmission mechanism using the following simple diagram:

Change in terms of trade ? Change in current account balance ? Real exchange rate change to restore equilibrium

1.4.6 Productivity

1. Rising productivity growth causes increased supply of a good. Supply/demand dynamics require that increased supply relative to demand leads to a fall in price. 

  • The principle of Purchasing Power Parity requires however that falling prices in one country relative to another lead to an offsetting exchange rate appreciation under the law of one price.
  • Thus higher productivity growth in tradable goods should lead to exchange rate appreciation to restore equilibrium to the current account.

2. Just as PPP is not a good short-term predictor of exchange rates, so productivity growth should not be used as a short-term trading model.

3. However, both are profoundly useful in predicting medium- to long-term exchange rate trends. 

1.5 The Portfolio Balance Approach

1. The Portfolio Balance Approach deals specifically with the relationship between the relative price of domestic and foreign bonds and the exchange rate. 

  • a. A change in monetary and/or fiscal conditions will in turn lead to changes in the supply and demand for domestic currency bonds and the demand for foreign currency bonds, which will in turn trigger a reaction in the exchange rate between the two currencies.

2. On the monetary side, assume that a cut in interest rates by the central bank causes outflows from domestic interest rate-bearing securities into money/cash, as per the Monetary Approach we looked at earlier. If one assumes for the sake of this simple model that domestic bond supply is unchanged, demand for those bonds should be reduced because of the lower interest rate. 

  • a. This effect should cause increased demand for the foreign currency bonds, which in turn should cause the domestic currency to depreciate against the foreign one. Equally, if one starts from the premise that the central bank raises interest rates, this should, according to this simple model, cause a domestic currency appreciation.

3. This Portfolio Balance Approach appears overly simplistic and it is. Indeed, it has been a very poor predictor of exchange rates, not least because it does not deal with the real-world realities of a fixed income fund manager who has to make asset allocation decisions.

1.6 Summary

1. Building on this, going forward, it seems logical to assume that traditional exchange rate models should be modified to suit the modern structure of currency market flows. 

  • a. More specifically, trade flows, which form the premise behind the PPP, Balance of Payments and External Balance Approaches, were once seen as the main driver of currency market overall flow. 
    • i. However, nowadays, they make up only around 1–2% of the USD5.3 trillion in daily volume going through the currency market. Hence, as the overall importance of trade to total market flow has declined, so to a degree has the relevance of those exchange rate models that rely solely on shifts in trade flow patterns.
    • ii. Meanwhile, just as the pre-eminence of trade flows has declined, so the importance of portfolio flows has grown exponentially as barriers to capital have been lifted over the past two decades. The Portfolio Balance Approach is clearly an attempt to focus on asset markets and specifically the bond market as a driver of exchange rates, yet this model remains unsatisfactory as a predictor of exchange rates for the reasons given.

In order to try to get to a better answer of exchange rate movement over the short term, we have to define the main flow drivers of exchange rates: 

  • “Speculative” flow (without an underlying attached asset) 

  • Equity flow & Fixed income flow 

  • Direct investment flow 

  • Trade flow

By far, speculative flow is the main driver of exchange rates over the short term. 

Sections 2-4 will dive into the various ways to measure and track speculative flow as well as discuss Thomas’ integrated “Signal/Grid” approach to currency speculation

Tyler Durden Sun, 03/27/2022 - 11:35
Published:3/27/2022 10:57:12 AM
[Markets] Biden Admin's Nuclear Deal: "This Isn't Obama's Iran Deal. It's Much, Much Worse." Biden Admin's Nuclear Deal: "This Isn't Obama's Iran Deal. It's Much, Much Worse."

Submitted by Majid Rafizadeh,

  • "By every indication, the Biden Administration appears to have given away the store... What is more, the deal appears likely to deepen Iran's financial and security relationship with Moscow and Beijing, including through arms sales." — Statement from 49 US Republican Senators, March 14, 2022.

  • With the increased flow of funds to the ruling mullahs, do expect an increase across Iran in human rights violations and domestic crackdowns on those who oppose the regime's policies, as hardliners tend to be the ones gaining more power as a result of any lifting of sanctions. Iran's hardliners already control three branches of the government: the executive, the legislative, and the judiciary.

  • Regionally speaking, a nuclear deal will undoubtedly escalate Iran's interference in the domestic affairs of other countries, despite what the advocates of the nuclear deal argue -- just as when then US President Barack Obama predicted that with a nuclear deal, "attitudes will change." They did. For the worse.

  • Sanctions relief, as a consequence of a nuclear accord, will most likely finance Iran's Islamic Revolutionary Guard Corps (IRGC) and the Quds Force (the IRGC branch for extraterritorial operations) and buttress Iran's terrorist proxies, including Lebanon's Hezbollah, Yemen's Houthis, Iraq's Shiite militias, and Hamas and Palestinian Islamic Jihad.

  • The worst parts of the new deal are, of course, that it will enable the Iranian regime, repeatedly listed by the US as a state sponsor of terrorism, to have full nuclear weapons capability, an unlimited number of nuclear warheads, and the intercontinental ballistic missile systems with which to deliver them. In addition, as a separate deal, the US will reportedly release the IRGC from the US List of Foreign Terrorist Organizations, "in return for a public commitment from Iran to de-escalation in the region" and a promise "not to attack Americans."

  • Iran's leaders, for a start, never honored their earlier "commitment," so why would anyone think they would honor this one? In a burst of honesty, though -- and a pretty explicit tip-off -- they stated that they "didn't agree to the U.S. demand and suggested giving the U.S. a private side letter instead."

  • Then there is that revealingly narcissistic condition, "not to attack Americans"? Oh, then attacking Saudis, Emiratis, Israelis, Europeans, South Americans and everyone else is just fine? Thanks, Biden.

  • Worse, the Iranians were complicit with al-Qaeda in attacking the US on 9/11/2001. So we are rewarding them?

  • To top it off, the US State Department just confirmed that Russia and its war-criminal President Vladimir Putin could keep Iran's "excess uranium." (Excess of what?) Seriously? So Putin can use Iran's uranium to threaten bombing his next "Ukraine"?

  • One can only assume that just as the region has become relatively more peaceful and stable, the Biden administration would like to destabilize it. After surrendering to the Taliban in Afghanistan and failing to deter Putin from invading Ukraine, has the Biden administration not created enough destabilization? Why would a US president want a legacy of three major destabilizations unless someone was interested in bringing down the West?

  • The US proposals -- negotiated for the Americans by Russia of all unimpeachable, trustworthy, above-board advocates -- have been described as: "This Isn't Obama's Iran Deal. It's Much, Much Worse." That sounds about right.

The Biden administration continues to disregard major concerns regarding the Iran nuclear deal, and has reportedly "refused to commit to submit a new Iran deal to the Senate for ratification as a treaty, as per its constitutional obligation." The US proposals -- negotiated with Iran for the Americans by Russia of all countries -- have been described as: "This Isn't Obama's Iran Deal. It's Much, Much Worse." That sounds about right.

The Biden administration continues to disregard major concerns regarding the Iran nuclear deal, and has reportedly "refused to commit to submit a new Iran deal to the Senate for ratification as a treaty, as per its constitutional obligation."

Forty-nine Republican Senators recently told the Biden Administration that they will not back the administration's nuclear deal with Iran. The Senators stated:

"By every indication, the Biden Administration appears to have given away the store. The administration appears to have agreed to lift sanctions that were not even placed on Iran for its nuclear activities in the first place, but instead because of its ongoing support for terrorism and its gross abuses of human rights. The nuclear limitations in this new deal appear to be significantly less restrictive than the 2015 nuclear deal, which was itself too weak, and will sharply undermine U.S. leverage to secure an actually 'longer and stronger' deal. What is more, the deal appears likely to deepen Iran's financial and security relationship with Moscow and Beijing, including through arms sales."

A Biden nuclear deal with the Iranian regime will have major benefits for the ruling mullahs. It will enrich the Iranian regime with billions of dollars in revenues as it lifts sanctions on Tehran's energy, banking and shipping sectors; reintegrate the Islamic Republic into the global financial system, enhance Tehran's legitimacy in the world, increase Iran's exports of oil, and ratchet up foreign investments in Iran -- particularly in the energy industry.

Do not expect the extra revenues to trickle down to the ordinary people of Iran or raise their standard of living. As Ashkan, a construction worker and father of three who lives in the capital Tehran with his family, told me, "people had a lot of hope in 2015 when the nuclear deal was reached," under the so-called moderate administration of then President Hassan Rouhani.

"The officials made us believe that the nuclear deal will be good for the people as well. But after the nuclear deal, inflation kept going up, wages stayed the same, the value of the currency kept going down, price of goods continued to go up, unemployment remained high, and people were still financially struggling during the period of the nuclear deal until the US government of Trump left the deal."

With the increased flow of funds to the ruling mullahs, do expect an increase across Iran in human rights violations and domestic crackdowns on those who oppose the regime's policies, as hardliners tend to be the ones gaining more power as a result of any lifting of sanctions. Iran's hardliners already control three branches of the government: the executive, the legislative, and the judiciary.

The Iranian regime will most likely first utilize the extra revenue by increasing its military budget. This scenario is what occurred in 2015 after the Obama's nuclear deal was struck. Iran immediately raised its military budget by $1.5 billion from $15.6 billion to $17.1 billion. On April 10, 2015, The Iranian Students News Agency (ISNA) quoted Mohammad Reza Pour Ebrahimi, a member of the parliament's Economic Affairs Committee, stating:

"In addition to the approved figures, $1.5 billion has been allocated to prop up defense of the country and this amount has been approved by this committee."

Regionally speaking, a nuclear deal will undoubtedly escalate Iran's interference in the domestic affairs of other countries, despite what the advocates of the nuclear deal argue -- just as when then US President Barack Obama predicted that with a nuclear deal, "attitudes will change." They did. For the worse.

For the first time, Lebanon's Hezbollah became emboldened and admitted receiving financial and military assistance from Iran. In addition, Iran's military adventurism in Iraq rapidly escalated. Iran became more forceful in supporting and assisting the Syrian regime of Bashar Assad militarily and economically.

Sanctions relief, as a consequence of a nuclear accord, will most likely finance Iran's Islamic Revolutionary Guard Corps (IRGC) and the Quds Force (the IRGC branch for extraterritorial operations) and buttress Iran's terrorist proxies, including Lebanon's Hezbollah, Yemen's Houthis, Iraq's Shiite militias, and Hamas and Palestinian Islamic Jihad.

The worst parts of the new deal are, of course, that it will enable the Iranian regime, repeatedly listed by the US as a state sponsor of terrorism, to have full nuclear weapons capability, an unlimited number of nuclear warheads, and the intercontinental ballistic missile systems with which to deliver them. In addition, as a separate deal, the US will reportedly release the IRGC from the US List of Foreign Terrorist Organizations, "in return for a public commitment from Iran to de-escalation in the region" and a promise "not to attack Americans."

"Administration officials who have briefed the media say the IRGC would only be delisted if it promises not to attack Americans and commits to curtailing its destabilizing activities outside Iran. If it doesn't keep its word, it can be redesignated an FTO. This might have been reassuring but for the fact that Biden is currently ignoring requests, from members of Congress as well as from U.S. allies, to put the Houthis back on the list."

Iran's leaders, for a start, never honored their earlier "commitment," so why would anyone think they would honor this one? In a burst of honesty, though -- and a pretty explicit tip-off -- they stated that they "didn't agree to the U.S. demand and suggested giving the U.S. a private side letter instead."

Then there is that revealingly narcissistic condition, "not to attack Americans"? Oh, then attacking Saudis, Emiratis, Israelis, Europeans, South Americans and everyone else is just fine? Thanks, Biden.

Worse, the Iranians were complicit with al-Qaeda in attacking the US on 9/11/2001. So we are rewarding them?

To top it off, the US State Department just confirmed that Russia and its war-criminal President Vladimir Putin could keep Iran's "excess uranium." (Excess of what?) Seriously? So Putin can use Iran's uranium to threaten bombing his next "Ukraine"?

One can only assume that just as the region has become relatively more peaceful and stable, the Biden administration would like to destabilize it. After surrendering to the Taliban in Afghanistan and failing to deter Putin from invading Ukraine, has the Biden administration not created enough destabilization? Why would a US president want a legacy of three major destabilizations unless someone was interested in bringing down the West?

The US proposals -- negotiated with Iran for the Americans by Russia of all unimpeachable, trustworthy, above-board advocates -- have been described as: "This Isn't Obama's Iran Deal. It's Much, Much Worse." That sounds about right.

*  *  *

Majid Rafizadeh is a business strategist and advisor, Harvard-educated scholar, political scientist, board member of Harvard International Review, and president of the International American Council on the Middle East. He has authored several books on Islam and US foreign policy. He can be reached He can be reached at Dr.Rafizadeh@Post.Harvard.Edu. Via The Gatestone Institute.

Tyler Durden Sun, 03/27/2022 - 09:20
Published:3/27/2022 8:26:17 AM
[Markets] How Bill Barr's Silence Impacted The Outcome Of An Election How Bill Barr's Silence Impacted The Outcome Of An Election

Submitted by The Epoch Times, authored by By Jeff Carlson and Hans Mahncke

On May 18, 2020, then-Attorney General Bill Barr made a statement to the media, declaring that special counsel John Durham’s investigation into the origins of the Russiagate hoax wasn’t focused on either former President Barack Obama or former Vice President Joe Biden, stating that “I don’t expect Mr. Durham’s work will lead to a criminal investigation of either man.”

In his new book, Barr has revealed that he made that statement in response to a series of tweets by then-President Donald Trump. A week earlier, Trump had started using the term “Obamagate” on Twitter, alleging that both Obama and Biden had “led the charge” on the FBI’s phony Russiagate investigation.

Barr recounts in his book that he felt it was unacceptable for Trump to attempt to drag his presidential election opponent into the Russiagate scandal and that Barr felt that it was incumbent upon him to make a public statement.

The corporate media immediately seized upon Barr’s statement, with The Washington Post running a same-day headline that “Barr says he does not expect Obama or Biden will be investigated by prosecutor reviewing 2016 Russia probe.” The New York Times’ headline went further, claiming that “Barr Dismisses Trump’s Claim That Russia Inquiry Was an Obama Plot.”

Barr’s May 18 claim is an often underappreciated statement, the fallout of which was felt throughout the 2020 presidential election. Although Barr now claims that he issued his statement from a position of fairness, what he actually did was insert himself and the Department of Justice (DOJ) into the presidential campaign, and in doing so, he set the stage for the media’s whitewashing of questions of corruption that swirled around Biden throughout the campaign.

It’s also worth noting that Barr’s decision to make a public statement contrasts sharply with former FBI Director James Comey, who claimed that as a matter of DOJ policy he wouldn’t confirm or deny if President Trump was actually under investigation in 2017.

More importantly, Barr’s May 18 statement stands in stark contrast to his decision to remain silent after the second presidential debate in October 2020, when Biden falsely blamed the story about his son Hunter’s laptop on a “Russian plot.”

Barr recently recounted that he “was very disturbed during the debate when candidate Biden lied to the American people about the laptop.” Barr told Fox News in an interview that Biden “was squarely confronted with the laptop and he suggested that it was Russian disinformation. … And I was shocked by that. … When you’re talking about interference in an election, I can’t think of anything more than that kind of thing.”

Barr’s supposed “shock” over Biden’s claims of Russian disinformation during the debate begs a simple question: If Barr actually felt that Biden’s assertions of “Russian disinformation” amounted to “interference in an election,” why didn’t Barr say anything at the time?

The only discernible action taken by Barr’s DOJ was an Oct. 20 written reply from an FBI congressional affairs liaison to Sen. Ron Johnson (R-Wis.). That letter, which preceded the second debate, was intentionally vague and, rather than countering potential narratives, it allowed the media to advance Biden’s claim that the laptop was a Russian plot. Crucially, the letter took pains to conceal that the FBI had physical possession of Hunter’s laptop at the time the letter was written—a fact that eliminated any possibility of a Russian plot.

During the second 2020 debate, Biden had asserted that his claims of “Russian disinformation” were backed by our intelligence agencies by citing a letter written by Obama-era intelligence officials such as former CIA Director John Brennan, former Director of National Intelligence James Clapper, and former CIA Director Leon Panetta. That letter was issued on Oct. 19, 2020, just days before the debate on Oct. 22, 2020, and was widely circulated by the media as proof of Biden’s claims.

In their letter, the intelligence officials claimed that the information from Hunter’s laptop had “all the classic earmarks of a Russian disinformation operation,” and stated that “this is Russia trying to influence how Americans vote in this election,” noting that “we believe strongly that Americans need to be aware of this.”

That four different CIA directors would be willing to publicly promote false allegations about Russia in order to shield a presidential candidate from public attention is particularly troubling. These former CIA directors—whose tenure spanned more than 10 years of U.S. foreign policy activity—invoked their government positions and lied to the American public in order to protect and get their preferred candidate, Joe Biden, elected.

During his recent interview, Barr conceded that he knew that letter from our nation’s intelligence officials “was baseless” and that he believed Biden himself fully understood that it “was a lie.” Unlike Trump, Biden was citing published claims by intelligence officials that Barr now says he knew to be inaccurate at the time those claims were made. But, in contrast to his earlier actions regarding Trump’s tweets, Barr chose to stay silent on Biden’s claims.

In doing so, Barr decisively interfered in the election through his inaction.

The sharply differing stances that Barr took in those months preceding the 2020 presidential election are puzzlingly contradictory. Barr apparently felt that it was necessary to make sure that U.S. citizens were aware that Biden wasn’t under investigation as a part of Durham’s probe, but he didn’t feel it was important to counter a false narrative from former intelligence officials, including four CIA directors, that Barr knew to be untrue.

At the time of that second presidential debate, the FBI already had Hunter’s laptop in its possession—and had held the device for 10 months. The FBI had also opened an investigation into Hunter Biden for multiple offenses—including allegations of money laundering and possible violations of the Foreign Agents Registration Act. Hunter’s laptop contained emails and other information that were directly connected to these allegations.

Barr’s differing treatment of Biden and Trump leaves many questions unanswered. Although many in the media, along with Biden’s current spokeswoman Jen Psaki, have claimed that Hunter is a private citizen who wasn’t running for office, Hunter’s laptop directly implicated Joe Biden in a number of dubious foreign dealings. Biden repeatedly lied about these matters while on the campaign trail.

In one particularly notable instance, Biden had personally met with Hunter’s Ukrainian business partner only a few months before that same partner demanded that Hunter end the investigations into Burisma, the Ukrainian energy firm that was paying Hunter $1 million per year. On the campaign trail, Biden declared that he had never talked to his son about his foreign business dealings.

Not only did Barr choose to remain silent about Hunter’s laptop, but he had also, in fact, “instructed prosecutors and senior colleagues to prevent word of investigations into Hunter Biden from becoming public and keep the Justice Department out of campaign politics,” according to sources cited by The Wall Street Journal.

As we now know, Hunter’s emails and laptop are real. Indeed, shortly after the election, Hunter Biden suddenly released a statement acknowledging that he was under federal investigation.

The silence from Barr enabled the media’s blackout on the laptop story that had direct ramifications on the 2020 election. A poll by Media Research showed that 45 percent of the Biden voters were unaware of the allegations against Hunter and Joe Biden and that 16 percent of Biden voters–well over the margin of victory–wouldn’t have voted for him had they known this crucial information.

In 2016, the Hillary Clinton campaign accused Russia of trying to help elect Trump. Then-CIA Director John Brennan played an important role in advancing the Clinton campaign’s narrative. In an eerie parallel to those events, the Biden campaign, again with the help of Brennan and other intelligence officials, falsely accused Russia of trying to help elect Trump in 2020.

Barr argues in his book that Trump’s claims about Biden required Barr to insert himself because he didn’t want a repeat of the Russia collusion claims that plagued the 2016 election; that same argument, however, should have required Barr to speak out on Biden’s debate claims that Hunter’s laptop was a Russian plot.

If Barr was truly concerned about a potential repeat of the 2016 election, it would have been incumbent on him to step forward publicly as soon as Biden made his false accusations against Russia, particularly given the involvement of Brennan, who was himself entangled in the 2016 election interference.

The national security implications from Biden’s repeated invocations of Russia is another important factor that should have required Barr to act.

“Russiagate was not only a despicable dirty trick that hobbled the first part of the president’s administration, but it also affected [sic] great damage to the United States,” Barr acknowledged in his recent interview with Fox News.

“Russiagate essentially froze the Trump administration from engaging with Russia.”

While Barr acknowledged the massive geopolitical damage caused by the Clinton campaign’s Russiagate hoax, he inexplicably ignored Biden’s false claims about his son’s laptop, which has served to undermine our national security in ways that are perhaps even worse than the actions taken by Clinton.

Both Clinton and Biden recklessly leveled false accusations against Russia, jeopardizing national security for their own personal and political gain. Clinton, among other things, had her 30,000 deleted emails to contend with. However, while no one has seen Clinton’s emails, the emails on Hunter’s laptop contain a multitude of damning disclosures of foreign dealings and payoffs involving the Biden family.

Beyond the direct ramifications from the emails on Hunter’s laptop, Biden’s fabricated accusations regarding Russia would have immediately been understood by the Kremlin as a fundamental weakness. There is no doubt that Biden’s statement worsened relations with Russia and might have contributed to the current situation in Ukraine.

By first speaking out and then remaining silent, Barr very directly put his thumb on the scale, leading to material ramifications for our country—including the geopolitical landscape we now face.

Tyler Durden Sat, 03/26/2022 - 20:30
Published:3/26/2022 7:53:38 PM
[Entertainment] How Hannah Ferrier's Below Deck Legacy Sails On Hannah Ferrier, Below Deck MediterraneanPut it in the shipstory books. It's been nearly two years since Captain Sandy Yawn fired Hannah Ferrier, subsequently ending the longtime chief stewardess' stint on Bravo's...
Published:3/26/2022 10:48:43 AM
[Uncategorized] DeSantis Signs Curriculum Transparency Bill Giving Parents a Say on Books, Teaching Material

"We believe parents not only have a role, they have the fundamental role to be involved in the education of their kids, and that's how it's going to be in the state of Florida."

The post DeSantis Signs Curriculum Transparency Bill Giving Parents a Say on Books, Teaching Material first appeared on Le·gal In·sur·rec·tion.
Published:3/25/2022 4:11:46 PM
[Columnists] No, School Boards Are Not ‘Banning Books’

by David Harsanyi at CDN -

Publica repeatedly refers to the efforts of a volunteer committee set up to review titles as a "book ban." This is a category mistake. Public school curriculum and book selection are political questions decided by school boards. Schools have no duty to carry every volume liberals demand.

Click to read the rest HERE-> No, School Boards Are Not ‘Banning Books’ first posted at Conservative Daily News

Published:3/25/2022 5:37:11 AM
[Markets] Turley: Jackson Confirmation Shows Striking Differences From Prior Confirmations Turley: Jackson Confirmation Shows Striking Differences From Prior Confirmations

Authored by Jonathan Turley via,

Below is my column in USA Today on the confirmation hearings for Judge Ketanji Brown Jackson. For the most part, the hearings remained respectful and civil. I criticized some of the questioning from Republican senators on relevance or tone, but the difference with the prior three nominations was striking in a number of respects. Judge Jackson faced tough questioning on her prior decisions, but there were no giant pictures of alleged future victims or attacks on her religion or family that we saw two years ago. Indeed, as Sen. Cory Booker (D., N.J.), stated “This is not a normal day for America. We have never had this moment before.”

Here is the column:

The famous “gonzo journalist” Hunter S. Thompson once said, “Politics is the art of controlling your environment.” The confirmation hearing of Judge Ketanji Brown Jackson is about to vividly show what Thompson meant. Less than two years after the abusive treatment of Justice Amy Coney Barrett, the Senate is holding a hearing that is dramatically different in the treatment of the Supreme Court nominee and the issues considered relevant to her confirmation.

For those with memories going back to 2020, there have been striking differences in how the news media haved covered Jackson’s nomination in recent weeks. When Barrett was nominated, the media ran unrelenting attacks on her and her background. Nothing was viewed as out of bounds, from her religion to her personal life to fabricated theories of prior assurances on pending cases.

From the start of the Jackson hearing, this is clearly different in both optics and approaches. Barrett was surrounded by pictures of people relying on the Affordable Care Act, a framing to portray Barrett as threatening the very lives of sick people. It was all part of an absurd claim (fostered by liberal legal experts) that Barrett was appointed to kill the ACA.

I objected at the time that senators were radically misconstruing the pending case and that Barrett was more likely to vote to preserve the ACA. (Barrett ultimately voted to preserve the actas expected.)

There will be no gallery of endangered people surrounding Jackson. Most senators will give her the confirmation hearing that was denied to Barrett: respectful and civil. That is a good thing.

Yet, the Jackson nomination should not be treated as inviolate.

Questions about judicial philosophy

Almost immediately after Jackson’s nomination, liberal members and commentators made clear that past questions or criticisms would not be tolerated or would even be declared racist. For example, while past Republican nominees were called “political deliverables” on presidential campaign promises, the phrase was declared categorically  “offensive” by Sen. Amy Klobuchar, D-Min., in this nomination.

That is a triviality in comparison to more substantive and outstanding questions. While every prior nominee has been subject to questions about judicial philosophy, it was declared a racist dog whistle to even note that Jackson’s philosophy is not clear (particularly given her past refusal to discuss her philosophy).

While past nominees have been found to have similarly limited records on constitutional interpretation, a senior editor at Above the Law declared asking such questions as akin to declaring her a “lesser Black woman.”

Indeed, the expectations for the hearing were made clear by Rep. Jim Clyburn, D-S.C., who insisted that Jackson’s confirmation is “beyond politics,” and that the vote is not about her alone but “about the country, our pursuit of a more perfect union.”

For those of us who have covered virtually every living member of the Supreme Court in their confirmations, the expected limitations are glaring and troubling.

As I said immediately after her nomination, I like many aspects of Jackson’s background, particularly her work as a public defender and a trial judge. I also stated that President Joe Biden did Jackson and others a great disservice in declaring that he would not consider anyone but Black female candidates. Jackson would have been on the shortlist without such a threshold exclusionary criteria.

Jackson herself rejected the notion (pushed by Biden and supporters) that she would rule differently as an African American female. In her prior confirmation, Jackson said, “I don’t think that race plays a role in the kind of judge that I have been and that I would be.”

I commended Jackson for that position, and I expect she will handle herself brilliantly this week. However, the Senate hearing will be manifestly different from the prior nomination.

Barrett was the subject of disgraceful attacks on the basis of her religious beliefs. Senators called on her to explain her association with People of Praise, a small Christian group in Indiana. The group once referred to female leaders as “handmaids,” and liberal commentators had a field day with vicious and vulgar assaults.

Yet, there is virtually no mention of Jackson’s position on an advisory board for the now-defunct Montrose Christian School in Rockville, Maryland.

As one conservative commentator has documented, the school provided “Christ-centered education for the glory of the Savior and the good of society.” Among the school’s “uncompromisingly” held principles were that gender is a gift that’s “part of the goodness of God’s creation”; that Christians must oppose “all forms of sexual immorality, including adultery, homosexuality, and pornography”; that marriage is the “uniting of one man and one woman in covenant commitment for a lifetime”; and that Christians should “speak on behalf of the unborn and contend for the sanctity of all human life from conception to natural death.”

Even the fact that the Barrett family is interracial (like the Jackson family) was not off-limits. Ibram X. Kendi, the director of the Center for Antiracist Research at Boston University, declared that her adoption of two Haitian children raised the image of a “white colonizer” and suggested the children were little more than props to their mother.

What needs to be answered

I do not agree with some objections to Jackson, like her alleged support of critical race theoryher advocacy for clients or her work as a judicial clerk.

There are other issues that need to be addressed, including what could be the ultimate issue for confirmation. In the Barrett confirmation, some Democratic members not only demanded Barrett tell them how she was likely to vote on pending cases, they also declared they’d vote against her purely for holding a conservative judicial philosophy.

Sen. Dick Durbin, D-Ill., opposed Barrett because her interpretive approach would work “against change and evolution in America that is inevitable and in fact necessary.”

According to that standard, every Republican senator could presumably vote against Jackson if they viewed her as supporting liberal interpretative models like the “living Constitution.” After all, Biden pledged that he would only nominate someone who holds a liberal view of the Constitution on “unenumerated rights.”

What is striking about the pushback on asking about Jackson’s interpretative approach is that some of us do not want to simply assume that she will just apply a liberal approach. Her trial court decisions shed little light on that question, and she previously refused to discuss her philosophy. Yet, those who insist that she has a clear philosophy are more clear in their objections than their analysis – or what that constitutional interpretative approach is.

Jackson is not the first nominee with such questions over judicial philosophy. However, no nominee is inviolate. This is not about the republic. It is about this nominee and her approach to questions of judicial interpretation and judicial ethics.

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University and a member of USA TODAY’s Board of Contributors. Follow him on Twitter: @JonathanTurley

Tyler Durden Thu, 03/24/2022 - 18:20
Published:3/24/2022 5:32:54 PM
[Entertainment] Ted Cruz gave the nation a lesson on misreading kids books Ted Cruz misinterpreted and misrepresented Black children's books as he questioned Ketanji Brown Jackson during her Supreme Court confirmation hearing. Published:3/23/2022 1:00:55 PM
[Markets] The Future Is Here: Dystopian Movies Fit For A Dystopian World The Future Is Here: Dystopian Movies Fit For A Dystopian World

Authored by John Whitehead via The Rutherford Institute,

“The Internet is watching us now. If they want to. They can see what sites you visit. In the future, television will be watching us, and customizing itself to what it knows about us. The thrilling thing is, that will make us feel we’re part of the medium. The scary thing is, we’ll lose our right to privacy. An ad will appear in the air around us, talking directly to us.”

- Director Steven Spielberg, Minority Report

We have arrived, way ahead of schedule, into the dystopian future dreamed up by such science fiction writers as George Orwell, Aldous Huxley, Margaret Atwood and Philip K. Dick.

Much like Orwell’s Big Brother in 1984, the government and its corporate spies now watch our every move.

Much like Huxley’s A Brave New World, we are churning out a society of watchers who “have their liberties taken away from them, but … rather enjoy it, because they [are] distracted from any desire to rebel by propaganda or brainwashing.”

Much like Atwood’s The Handmaid’s Tale, the populace is now taught to “know their place and their duties, to understand that they have no real rights but will be protected up to a point if they conform, and to think so poorly of themselves that they will accept their assigned fate and not rebel or run away.”

And in keeping with Philip K. Dick’s darkly prophetic vision of a dystopian police state—which became the basis for Steven Spielberg’s futuristic thriller Minority Report which was released 20 years ago—we are now trapped into a world in which the government is all-seeing, all-knowing and all-powerful, and if you dare to step out of line, dark-clad police SWAT teams and pre-crime units will crack a few skulls to bring the populace under control.

Minority Report is set in the year 2054, but it could just as well have taken place in 2022.

Seemingly taking its cue from science fiction, technology has moved so fast in the short time since Minority Report premiered in 2002 that what once seemed futuristic no longer occupies the realm of science fiction.

Incredibly, as the various nascent technologies employed and shared by the government and corporations alike—facial recognition, iris scanners, massive databases, behavior prediction software, and so on—are incorporated into a complex, interwoven cyber network aimed at tracking our movements, predicting our thoughts and controlling our behavior, Spielberg’s unnerving vision of the future is fast becoming our reality.

Both worlds—our present-day reality and Spielberg’s celluloid vision of the future—are characterized by widespread surveillance, behavior prediction technologies, data mining, fusion centers, driverless cars, voice-controlled homes, facial recognition systems, cybugs and drones, and predictive policing (pre-crime) aimed at capturing would-be criminals before they can do any damage.

Surveillance cameras are everywhere. Government agents listen in on our telephone calls and read our emails. Political correctness—a philosophy that discourages diversity—has become a guiding principle of modern society.

The courts have shredded the Fourth Amendment’s protections against unreasonable searches and seizures. In fact, SWAT teams battering down doors without search warrants and FBI agents acting as a secret police that investigate dissenting citizens are common occurrences in contemporary America.

We are increasingly ruled by multi-corporations wedded to the police state. Much of the population is either hooked on illegal drugs or ones prescribed by doctors. And bodily privacy and integrity has been utterly eviscerated by a prevailing view that Americans have no rights over what happens to their bodies during an encounter with government officials, who are allowed to search, seize, strip, scan, spy on, probe, pat down, taser, and arrest any individual at any time and for the slightest provocation.

All of this has come about with little more than a whimper from an oblivious American populace largely comprised of nonreaders and television and internet zombies, but we have been warned about such an ominous future in novels and movies for years.

The following 15 films may be the best representation of what we now face as a society.

Fahrenheit 451 (1966). Adapted from Ray Bradbury’s novel and directed by Francois Truffaut, this film depicts a futuristic society in which books are banned, and firemen ironically are called on to burn contraband books—451 Fahrenheit being the temperature at which books burn. Montag is a fireman who develops a conscience and begins to question his book burning. This film is an adept metaphor for our obsessively politically correct society where virtually everyone now pre-censors speech. Here, a brainwashed people addicted to television and drugs do little to resist governmental oppressors.

2001: A Space Odyssey (1968). The plot of Stanley Kubrick’s masterpiece, as based on an Arthur C. Clarke short story, revolves around a space voyage to Jupiter. The astronauts soon learn, however, that the fully automated ship is orchestrated by a computer system—known as HAL 9000—which has become an autonomous thinking being that will even murder to retain control. The idea is that at some point in human evolution, technology in the form of artificial intelligence will become autonomous and human beings will become mere appendages of technology. In fact, at present, we are seeing this development with massive databases generated and controlled by the government that are administered by such secretive agencies as the National Security Agency and sweep all websites and other information devices collecting information on average citizens. We are being watched from cradle to grave.

Planet of the Apes (1968). Based on Pierre Boulle’s novel, astronauts crash on a planet where apes are the masters and humans are treated as brutes and slaves. While fleeing from gorillas on horseback, astronaut Taylor is shot in the throat, captured and housed in a cage. From there, Taylor begins a journey wherein the truth revealed is that the planet was once controlled by technologically advanced humans who destroyed civilization. Taylor’s trek to the ominous Forbidden Zone reveals the startling fact that he was on planet earth all along. Descending into a fit of rage at what he sees in the final scene, Taylor screams: “We finally really did it. You maniacs! You blew it up! Damn you.” The lesson is obvious, but will we listen? The script, although rewritten, was initially drafted by Rod Serling and retains Serling’s Twilight Zone-ish ending.

THX 1138 (1970). George Lucas’ directorial debut, this is a somber view of a dehumanized society totally controlled by a police state. The people are force-fed drugs to keep them passive, and they no longer have names but only letter/number combinations such as THX 1138. Any citizen who steps out of line is quickly brought into compliance by robotic police equipped with “pain prods”—electro-shock batons. Sound like tasers?

A Clockwork Orange (1971). Director Stanley Kubrick presents a future ruled by sadistic punk gangs and a chaotic government that cracks down on its citizens sporadically. Alex is a violent punk who finds himself in the grinding, crushing wheels of injustice. This film may accurately portray the future of western society that grinds to a halt as oil supplies diminish, environmental crises increase, chaos rules, and the only thing left is brute force.

Soylent Green (1973). Set in a futuristic overpopulated New York City, the people depend on synthetic foods manufactured by the Soylent Corporation. A policeman investigating a murder discovers the grisly truth about what soylent green is really made of. The theme is chaos where the world is ruled by ruthless corporations whose only goal is greed and profit. Sound familiar?

Blade Runner (1982). In a 21st century Los Angeles, a world-weary cop tracks down a handful of renegade “replicants” (synthetically produced human slaves). Life is now dominated by mega-corporations, and people sleepwalk along rain-drenched streets. This is a world where human life is cheap, and where anyone can be exterminated at will by the police (or blade runners). Based upon a Philip K. Dick novel, this exquisite Ridley Scott film questions what it means to be human in an inhuman world.

Nineteen Eighty-Four (1984). The best adaptation of Orwell’s dark tale, this film visualizes the total loss of freedom in a world dominated by technology and its misuse, and the crushing inhumanity of an omniscient state. The government controls the masses by controlling their thoughts, altering history and changing the meaning of words. Winston Smith is a doubter who turns to self-expression through his diary and then begins questioning the ways and methods of Big Brother before being re-educated in a most brutal fashion.

Brazil (1985). Sharing a similar vision of the near future as 1984 and Franz Kafka’s novel The Trial, this is arguably director Terry Gilliam’s best work, one replete with a merging of the fantastic and stark reality. Here, a mother-dominated, hapless clerk takes refuge in flights of fantasy to escape the ordinary drabness of life. Caught within the chaotic tentacles of a police state, the longing for more innocent, free times lies behind the vicious surface of this film.

They Live (1988). John Carpenter’s bizarre sci-fi social satire action film assumes the future has already arrived. John Nada is a homeless person who stumbles across a resistance movement and finds a pair of sunglasses that enables him to see the real world around him. What he discovers is a world controlled by ominous beings who bombard the citizens with subliminal messages such as “obey” and “conform.” Carpenter manages to make an effective political point about the underclass—that is, everyone except those in power. The point: we, the prisoners of our devices, are too busy sucking up the entertainment trivia beamed into our brains and attacking each other up to start an effective resistance movement.

The Matrix (1999). The story centers on a computer programmer Thomas A. Anderson, secretly a hacker known by the alias “Neo,” who begins a relentless quest to learn the meaning of “The Matrix”—cryptic references that appear on his computer. Neo’s search leads him to Morpheus who reveals the truth that the present reality is not what it seems and that Anderson is actually living in the future—2199. Humanity is at war against technology which has taken the form of intelligent beings, and Neo is actually living in The Matrix, an illusionary world that appears to be set in the present in order to keep the humans docile and under control. Neo soon joins Morpheus and his cohorts in a rebellion against the machines that use SWAT team tactics to keep things under control.

Minority Report (2002). Based on a short story by Philip K. Dick and directed by Steven Spielberg, the film offers a special effect-laden, techno-vision of a futuristic world in which the government is all-seeing, all-knowing and all-powerful. And if you dare to step out of line, dark-clad police SWAT teams will bring you under control. The setting is 2054 where PreCrime, a specialized police unit, apprehends criminals before they can commit the crime. Captain Anderton is the chief of the Washington, DC, PreCrime force which uses future visions generated by “pre-cogs” (mutated humans with precognitive abilities) to stop murders. Soon Anderton becomes the focus of an investigation when the precogs predict he will commit a murder. But the system can be manipulated. This film raises the issue of the danger of technology operating autonomously—which will happen eventually if it has not already occurred. To a hammer, all the world looks like a nail. In the same way, to a police state computer, we all look like suspects. In fact, before long, we all may be mere extensions or appendages of the police state—all suspects in a world commandeered by machines.

V for Vendetta (2006). This film depicts a society ruled by a corrupt and totalitarian government where everything is run by an abusive secret police. A vigilante named V dons a mask and leads a rebellion against the state. The subtext here is that authoritarian regimes through repression create their own enemies—that is, terrorists—forcing government agents and terrorists into a recurring cycle of violence. And who is caught in the middle? The citizens, of course. This film has a cult following among various underground political groups such as Anonymous, whose members wear the same Guy Fawkes mask as that worn by V.

Children of Men (2006). This film portrays a futuristic world without hope since humankind has lost its ability to procreate. Civilization has descended into chaos and is held together by a military state and a government that attempts to keep its totalitarian stronghold on the population. Most governments have collapsed, leaving Great Britain as one of the few remaining intact societies. As a result, millions of refugees seek asylum only to be rounded up and detained by the police. Suicide is a viable option as a suicide kit called Quietus is promoted on billboards and on television and newspapers. But hope for a new day comes when a woman becomes inexplicably pregnant.

Land of the Blind (2006). In this dark political satire, tyrannical rulers are overthrown by new leaders who prove to be just as evil as their predecessors. Maximilian II is a demented fascist ruler of a troubled land named Everycountry who has two main interests: tormenting his underlings and running his country’s movie industry. Citizens who are perceived as questioning the state are sent to “re-education camps” where the state’s concept of reality is drummed into their heads. Joe, a prison guard, is emotionally moved by the prisoner and renowned author Thorne and eventually joins a coup to remove the sadistic Maximilian, replacing him with Thorne. But soon Joe finds himself the target of the new government.

All of these films—and the writers who inspired them—understood what many Americans, caught up in their partisan, flag-waving, zombified states, are still struggling to come to terms with: that there is no such thing as a government organized for the good of the people. Even the best intentions among those in government inevitably give way to the desire to maintain power and control at all costs.

Eventually, as I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, even the sleepwalking masses (who remain convinced that all of the bad things happening in the police state—the police shootings, the police beatings, the raids, the roadside strip searches—are happening to other people) will have to wake up.

Sooner or later, the things happening to other people will start happening to us.

When that painful reality sinks in, it will hit with the force of a SWAT team crashing through your door, a taser being aimed at your stomach, and a gun pointed at your head. And there will be no channel to change, no reality to alter, and no manufactured farce to hide behind.

As George Orwell warned, “If you want a picture of the future, imagine a boot stamping on a human face forever.”

Tyler Durden Wed, 03/23/2022 - 00:05
Published:3/22/2022 11:17:43 PM
[] Day Two of Judge Ketanji Brown Hearings: Lies in Claiming She Doesn't Know CRT is Taught in the School Whose Board She Serves On, Lies About Why She Consistently Under-Sentences Child Pr0n Criminals She serves on the board of a Georgetown school. The school recommends books by Ibrahim X. Kendhi, including "Anti-Racist Baby," which claims that babies are born racist and must be taught "anti-racism" and must also be forced to confess their... Published:3/22/2022 4:45:19 PM
[Markets] Soft-Landing Chances Slipping Away According To Bonds Soft-Landing Chances Slipping Away According To Bonds

Speaking to Bloomberg TV earlier today, Fed's uberhawkish St Louis Fed President James Bullard said, among many other hawkish things, something notable: he believes the Fed can achieve a soft landing. Unfortunately, we have some bad news for Jim: as Deutsche Bank recently showed, "every Fed hiking cycle in the fiat high debt era has led to some kind of financial crisis somewhere across the world"...

... and this time will be no different; in fact one can argue that tightening at a time of record liquidity sloshing around and a CPI print which will hit double digits in a few months, the coming collapse will be one for the history books.

It's not just our view, however: as Bloomberg's Cormac Mullen writes, the bond market suggests that "the chance the Federal Reserve can engineer a soft landing is fading by the week, with the war in Ukraine exacerbating the inflationary pressures."

As Mullen notes, Jerome Powell’s aggressive tone Monday sent Treasuries into a tailspin and refocused attention on the various recession signals they are throwing up. The spread between five-year and 30-year Treasuries slumped to its flattest since 2007 as the yield curve hurtles towards an inversion. Meanwhile, as we showed yesterday, bets are rising on interest rate cuts as soon as next year.

Meanwhile, the eurodollar futures curve - a proxy for the direction of the Fed’s policy rate - now shows a peak in June of next year, followed by the equivalent of more than two 25bp rate cuts by December 2024. In the Fed’s dot plot, officials’ median projection was for the benchmark rate to hit about 2.8% in 2023 and remain steady in 2024.

As Mullen concludes, "even Powell himself acknowledged the severity of the test the Fed now faces, withdrawing stimulus as inflation accelerates at the fastest pace in four decades."

Tyler Durden Tue, 03/22/2022 - 11:05
Published:3/22/2022 10:12:24 AM
[Markets] Teachers' Union Teams Up With Steven Brill's NewsGuard To Flag "Misinformation" For Children Teachers' Union Teams Up With Steven Brill's NewsGuard To Flag "Misinformation" For Children

Authored by Jonathan Turley,

Under the leadership of Randi Weingarten, the American Federation of Teachers (AFT) has long been criticized by conservatives for its support of far left policies and support for Democratic candidates. Nevertheless, as a union, it is entitled to be political and most unions favor the Democrats due to their pro-union policies.

However, the concern over the AFT’s agenda become far greater when it announced that it would team up with NewsGuard to start to flag news sources deemed “misinformation.”

NewsGuard is co-founded by Steve Brill who has been accused of bias against Republicans and conservatives. Conservative sites have previously tagged NewGuard as “heavily skewed” in favor of the left. The “misinformation” label has been used extensively by liberal media to kill stories like the Hunter Biden laptop stories as unreliable.

Indeed, Brill is under fire for being one of the voices falsely claiming that the Hunter Biden laptop was likely false Russian disinformation. His company will now put “traffic lights” on information for children on what sources they rely upon.

The ratings of NewsGuard have long been criticized by conservative sites as favoring liberal sites like The Nation (with a 93 percent rating) over more conservative sites like Fox News (at 66 percent).

The timing of the announcement could not be worse after the New York Times finally recognized that the Hunter Biden laptop story was legitimate and the controversial emails authentic.

For two years, some of us have been hammered as spreading “Russian disinformation” and false allegations in raising concerns over the raw influence peddling by the Biden family. Steven Brill was one of those voices flagging the story as likely “disinformation.”

Brill assured viewers on CNBC that this was likely all untrue:

“My personal opinion is there’s a high likelihood this story is a hoax, maybe even a hoax perpetrated by the Russians again.”

The media campaign to bury or block the story worked. The Biden family had long been accused of special dealing and influence peddling. The emails were potentially devastating with references to millions from foreign sources, including shady Chinese, Russian, and Ukrainian interests while Joe Biden was Vice President. The media actively participated in shielding the Bidens from the scandal.

In fairness to Brill, he opposed efforts to block the story and did not support moves like Twitter to bar references to the story before the election. (After Biden was elected, Twitter admitted it was a mistake by Democrats then demanded more censorship). I agree with him entirely that the solution is to allow readers to decide by comparing news sources.

However, the interview had an interesting element. Brill’s objections to Twitter and FaceBook killing the story was that they are not qualified to make that decision on what, in his words, is likely a Russian “hoax.”

That is what NewsGuard does in flagging unreliable sources. He is clearly referring to himself as one of those qualified to make that decision. Yet, he was entirely wrong. At the time, many of us were noting that Biden did not deny that this was his laptop, that it was seized by the FBI in an ongoing criminal investigation, and some recipients of the emails had confirmed their authenticity.  Nevertheless, Brill still thought it was all a hoax.

Weingarten has declared using Brill’s NewsGuard will be a “game changer” in preventing students from being “misled” by news sources. It may well be. It would allow the AFT and school districts to teach students to distrust certain news sources like Fox News, which is given a lower rating by NewsGuard. (For full disclosure, I appear on Fox as a legal analyst).

Conservative and independent sites continue to bedevil many on the left. The laptop story shows how advocacy journalism is now the norm in many newsrooms. Viewers and readers were told by most media figures, including Brill, that the story was likely Russian propaganda and untrue.

The unsupported hoax claim (which contradicted readily available authenticating evidence at the time) raises the specter of a type of de facto state media. The problem is that such an echo chamber is only fully successful if there is no alternative source of information. Yet, Fox and New York Post continued to cover the story as did some of us as columnists.

The most extreme effort was a letter from Democratic members to pressure companies like AT&T to reconsider whether viewers should be allowed to watch Fox News and other networks. It does not matter that Fox News is the most popular news cable station and even has a greater percentage of Democratic viewers than CNN. The members insisted that “not all TV news sources are the same” and called on these companies to protect viewers from “dissemination” of false viewpoints.

Other members have sought to create algorithmic interventions to steer people away from certain stories or books, including the current NUDGE Act being proposed by Sen. Amy Klobuchar (D., Minn.).

The AFT is now seeking a much earlier intervention with children by getting Brill’s NewsGuard to rate reliable and unreliable sources of news. Weingarten has declared that, with Brill’s help, children and families will no longer be “drowning in an ocean of online dishonesty.”

It is unlikely to be reassuring for many that the children instead will be swimming in a pool carefully maintained by the AFT and NewsGuard.

Tyler Durden Sat, 03/19/2022 - 17:30
Published:3/19/2022 4:44:32 PM
[Markets] Another Lost Decade Ahead? 60/40 'Balanced' Books Suffer Worst Streak Since 2008 Another Lost Decade Ahead? 60/40 'Balanced' Books Suffer Worst Streak Since 2008

Since the "Powell Pivot" was unleashed on global markets, precious metals have strongly outperformed so-called safe-haven portfolios...

Source: Bloomberg

...and in fact, as Bloomberg reports, the classic 60/40 portfolio - a strategy named for the share allocated to equities and high-grade debt, respectively - is down more than 10% this year, leaving it on pace for the worst drubbing since the financial crisis of 2008.

Source: Bloomberg

In fact, for the first time on record, Bonds (TLT) and Stocks (SPY) are both down over 10% in Q1 together...

Source: Bloomberg

And on a 50-50 Bonds/Stocks basis, Q1 looks set to be the worst quarter on record...

Source: Bloomberg

Why? Why the sudden shift for a portfolio mix that is - by name - defined as 'balancing' risk, rather than aggregating it.

The answer is both simple and terrifying for the world's central planners (and commission-takers) - Stagflation is back.

Unlike the last major crisis of faith in 60/40 books in 2008, though, the current environment is not driven by just a growth scare. Assets are being hammered by the double whammy of the risk that a stagnant economic expansion and fears of out-of-control 'non-transitory' inflation (a combination that could cause poor returns, or even losses, to extend for some time to come).

With rising stagflation risks, Goldman warns that investors face lower real returns and higher risks from 60/40 portfolios. There is pressure for higher equity allocations given the prospect of poor returns and less diversification potential from bonds. But while higher equity allocations increase the potential for attractive real returns in the long run, they increase the risk of large and fast drawdowns in the near term.

“You cannot count on the sort of investment returns seen over history for a period of time,” said Chris Brightman, chief investment officer at Research Affiliates.

“Bond yields, dividend and earnings yields are at a low starting point and it means future returns will be low when compared to history.”

During the the so-called “lost decade” of the 2000s, the “60/40 portfolio generated a meager 2.3% annual return and investors would have lost value on an inflation-adjusted basis,” Goldman Sachs Asset Management’s Nick Cunningham, the vice president of strategic advisory solutions, wrote in October.

“The very good returns of the past decade mean that is important for investors to establish more realistic return expectations,” said Izabella Goldenberg, U.S. head of portfolio strategy at Goldman Sachs Asset Management. She said that may involve seeking returns in global equities and “in principle being diversified for the long term.”

Andrew Patterson, senior economist at Vanguard Group Inc., said markets are verging on a period of low gains for the 60/40 portfolio.

He estimated that annual returns over the next 10 years will be “south of 5% and our estimates have been grinding down in recent years, mainly driven by equities.”

Equity and bond prices falling together may be a feature of the inflation shock. In past eras of supply-driven inflation, government bonds failed to offset equity losses, as prices in both markets moved together, said Jean Boivin, head of the BlackRock Investment Institute.

“Investors will have to live with higher inflation and that will challenge the role of government bonds in a portfolio,” he said.

“Central banks will find it harder to contain inflation and also harder to ease if economic growth slows materially.”

Markets have further repriced risk of stagflation, boosted by the commodities rally due to the Russia/Ukraine crisis – US 10-year breakeven inflation has reached the highest level since the 1990s, while real yields remain near all-time lows, resulting in a similar gap to that in the 1970s.

This points to little optimism on long-term real growth and material concerns on inflation risk.

For those looking for alternatives, Goldman suggests a combination of allocations to commodities, real estate, infrastructure, more international diversification as well as value, high dividend yield stocks and convertibles could help to reduce the risk of another 60/40 'lost decade'. Private markets might offer more opportunities to gain exposure to these themes.

During the 1970s stagflation there were material benefits from broader diversification...

PIMCO recently recommended shifting a portion of 60/40 portfolios into in commodities to hedge against elevated inflation.

“When inflation increases, asset values generally fall,” and “even a small allocation to commodities may materially improve the inflation protection of a traditional 60/40 stock/bond portfolio,” it said.

We already saw that Gold has outperformed dramatically as the stagflation fears rise.

And finally, Goldman has a lower conviction suggestion for those struggling with 'balanced' bond-stock portfolios... add some Bitcoin...

Our analysis suggests that just a small allocation to Bitcoin in a standard US 60/40 portfolio would have enhanced risk-adjusted returns materially since 2014 (while Bitcoin prices are available from mid-2010, we use prices since 2014 as Bitcoin was not easily accessible to investors before then), even as balanced portfolios performed strongly on their own. The strong risk-adjusted performance of Bitcoin was due to strong returns rather than to low risk.

But Goldman warns that Bitcoin’s history is too short to cover several business cycles or a period of high inflationary pressures, so it is unclear how Bitcoin would behave during a period of stagflation. Additionally, Bictoin's high relative volatility can quickly come to dominate the diversified book's performance.

Given its limited and known supply, the price of Bitcoin should primarily depend on investor demand and its perceived value. But investor demand so far seems to be linked to the asset itself rather than macro factors; adoption by retail investors – and recently some institutions – has boosted prices while regulatory and tax concerns, as well as positioning, have driven sharp setbacks. Without more clarity on these idiosyncratic drivers, assessing Bitcoin’s future risk/reward and role in balanced portfolios remains difficult.

Since the GFC, many of these alternative strategies have had mixed success due to low and anchored inflation, but Goldman believes that in the Post-Pandemic Cycle they are likely to enhance risk-adjusted returns for a balanced portfolio.

Tyler Durden Sat, 03/19/2022 - 16:00
Published:3/19/2022 3:14:20 PM
[] GAINZZZ I'm still doing my arm-weighted walks. And still fixin' to consider starting to ponder weightlifting again. What about you? What are your GAINZZZ? Any recommendations in books or TV? Any projects or plans you want to share? Here's a recommendation.... Published:3/18/2022 5:36:35 PM
[Markets] How Does One Trade The Xi-Biden Call? How Does One Trade The Xi-Biden Call?

By Michael Every of Rabobank

'Sol' comfort

There has been a hyperbolic overreaction to cancel all things Russian in some Western circles way beyond economic sanctions: Tchaikovsky, Mussorgsky, Dostoevsky – all gone-ski. Sorry, but not in my household. ‘Pictures at an Exhibition’ remains one of my favourite pieces of classical music; Gogol is preferred to Google; and in times that try one’s soul, one of my sole comforts will remain Solzhenitsyn. Indeed, one of his quotes is sadly of supreme relevance today: “We know they are lying. They know they are lying. They know we know they are lying. We know they know we know they are lying. But they still lie.” In our hyper-polarised times, wherever you are on the political spectrum you probably see the validity of the statement – even if it came from Russia.

Without getting partisan there is one key example today. The Hunter Biden laptop --with its emails detailing corruption linked to Ukraine and China and “10% for the Big Guy”-- was called fake news by The New York Times ahead of the last US presidential election; dismissed as “Russian disinformation” by 50 US intelligence officials; and the story banned by Twitter. (Remember when that kind of ban was shocking?) The New York Times belatedly now says the laptop is genuine.

Consider that, and Solzhenitsyn, when trading markets. For another example, this week has seen considerable efforts to start to partially price for peace between Russia and Ukraine. After all, some snippets of headlines on a Bloomberg screen said so! Throughout, I kept pointing out that the logic did not back that assessment. And what did we just see?

  • The advisor to President Zelenskiy @Podolyak tweet: “I would like to softly recommend the “active commentators of the negotiation process” who are NOT inside: Don't spread your lies in a country that is at war. Negotiations are complicated. The positions of the parties are different. For us, fundamental issues are inviolable.”
  • Reports of Major Progress in Ukraine Talks ‘Wrong,’ Kremlin Says’;
  • The French say Russia is only pretending to negotiate;
  • Ukrainian media claiming Russia wants to ship in 40,000 Syrians to fight;
  • The Financial Times say ’US pours cold water on hopes of diplomatic solution in Ukraine’; and
  • Russia claims Bosnia could suffer same fate as Ukraine if it decides to join NATO’ – and please recall I have been warning that the pot was being stirred in the Balkans too.

I know, I know, it’s frustrating that this isn’t over yet for those traders with ADHD or better things to be doing or better prices on their books needed. I know it’s annoying to point out that the Siege of Sarajevo lasted three years; or that the Syrian civil war is still raging after 11, and half of its population became refugees, which if transcribed across to Ukraine would mean 10 times the population flows we have seen so far. Or that there are potentially very awkward geopolitical links between Syria and Ukraine and the US, Russia, and Iran that far exceed the level of ‘whocouldanooed?!’ faux innocence related to the Hunter Biden laptop.

But it really isn’t over yet. Today, we wake in Asia to Western military intelligence underlining that the Russian invasion has slowed to a crawl, while its level of destruction has consequently increased, and as such the underlying economic equation of the war, if there ever was one, is further undermined: is Russia going to rebuild even parts of Ukraine supposing it were to win? (On which, see here.) If not, the policy is either one of deliberate ruination of a nation, or points towards escalation ahead to shift the military, political, and economic dials.

Indeed, we also see high-level US warnings of a potential Russian chemical attack or even a tactical nuclear one: ‘Putin May Play Nuclear Card if War Drags on: US’ as Bloomberg puts it, echoing geostrategic logic I have been stressing from the day it became clear he could not win conventionally as planned. Open signals intelligence yesterday showed Kremlin planes heading to parts of Siberia widely regarded as the location for underground nuclear bunkers. Of course, the transponders would not be on if this was a real escape; that they are shows Russia is warning which direction it might still head in, or wants us to think they will, if they cannot get what they want on the ground. “We know they are lying. They know they are lying. They know we know they are lying. We know they know we know they are lying. But they still lie.” But what do we do if the use of nuclear weapons is the lie now?

We already know what one bank analyst says: buy stocks, because if you are short and there is no nuclear war it’s ‘far worse’ --in market terms-- than being long and having one. There is mad logic to that view… unless this isn’t about nuclear war, but nuclear blackmail – and if it might just work. Because if it does, the global economy and markets will be reshaped even more than they already are being.

Meanwhile, financial markets are also focusing on the fact that central banks are perhaps already back-pedalling (for example, the Bank of England was less hawkish than some had expected yesterday – see here for more from Stefan Koopman) – which is bullish. They are not focusing on the fact that the LME is still in total chaos due to the war and sanctions, with nickel trading breaking down again, and we see a warning that ‘Too-Big-to-Fail Risk Looms Over Commodities’. Indeed, it’s one thing for a financialised economy to create CDOs, and then CDOs squared and CDOs cubed – but how is this supposed to work for things you actually need to *eat*, like wheat, or to *make things*, like nickel? The short answer is - it isn’t. And yet Wall Street is now piling into the markets that are literally the very bread of life.

No, broader markets are instead focusing on the fact that Russia did not default on its sovereign debt after all. On which note, allow me to quote Adam Tooze’s must-read chartbook:

“So, Russia is not defaulting after all? As of 20 minutes ago the news is that JP Morgan processed interest payments from the Russian government. Acting as Russia’s correspondent bank, JP Morgan will pass the $117 million in coupon payments to Citigroup, who as the payment agent will distribute the money to investors. The US Treasury signed off on the payment as not violating sanctions.

On the news, the price of a Russian dollar bond maturing in 2043 surged to 47 cents on the dollar, versus 20 cents a week ago. 47 cents on the dollar is hardly bad considering that we are perched on the edge of World War III. But is this time to rejoice? Surely not.

If you invest in Russia to open hamburger franchises or Ikea’s stores, or to build cars, you are hoping to profit by selling daily necessities to ordinary Russian consumers, pretty much as you would anywhere else. If you invest in Russian government debt what are you hoping to profit from? As I argue in a piece that appeared in the Guardian earlier today, you are investing in Putin’s regime, warts and all.” (And I strongly recommend the linked article.)

Of course, the same is true for *every* government bond. For all the highfalutin market talk about the wonders of ESG, we don’t get much scrutiny of the domestic or foreign policies various governments spend internationally borrowed funds on. Does war now represent a new red line if we are seeing a more moral market in action? If so, how about preparation for a war, which would surely be a better time to act – but how does one know when this is real and when it is just a bluff? What a minefield. So, far easier to ‘do a Solzhenitsyn’, pass moral judgements to those who set the bond investment benchmark, and then say “whocouldanooed?” if a country subsequently gets marked down to zero for its actions, or opts to default - which at least means everyone else in the industry following said benchmark fails conventionally with you, as Keynes put it. (And see another headline today: ‘China Credit Investors Face Billions in Losses, Shrinking Power’.)

Against this backdrop, US President Biden is holding an urgent call with China’s Xi Jinping. The US readout states it will be about Ukraine and “managing the competition” between the two economic giants. That’s a phrase that even in English alone has multiple interpretations. If it came from the mouth of an EU bureaucrat it would mean one thing; from the Russian mafia, another altogether. And this is as Bloomberg reports ‘Biden Team Hardens View of China Tilting Toward Putin on Ukraine’:

“Even as the Chinese government publicly voices some support for the Ukrainian people and calls for a peaceful solution, top American officials see signs that China is seeking ways to soften the blow of sanctions imposed on Russia by the US and its allies, according to the people, who say they have knowledge of deliberations in Beijing. The people, who asked not to be identified because of the sensitivity of the matter, did not offer details on how China might be able to offset the economic consequences of the sanctions. They also declined to elaborate on US sources of information about China’s government and its interactions with the Kremlin. Some of the people said China is also considering supplying Russia with weapons such as armed drones….

In his call with Xi, Biden is expected to try to persuade his Chinese counterpart to back away from any support for Russian President Vladimir Putin and his war. The stakes are potentially ground-shifting, after a six-hour meeting on Monday in Rome in which White House National Security Adviser Jake Sullivan warned China’s top diplomat, Politburo member Yang Jiechi, of serious consequences should Beijing support Russia through its banks or on the battlefield….

But US officials currently don’t know China’s true intentions toward Russia and Ukraine, according to diplomatic correspondence seen by Bloomberg. China could regard the war as an opportunity to exploit Russia’s growing economic dependence, such as by buying up strategic assets or making other efforts to damage the West’s leverage. Beijing’s position is ambiguous and contradictory, and recent exchanges with U.S. officials --including Yang’s Rome meeting with Sullivan-- have produced little clarity, according to the correspondence…

The relationship between the world’s two economic titans is fraught, and the Ukraine crisis has highlighted the mistrust between them. The US and China now find themselves drawn into a conflict provoked by a country, Russia, that once was so close to the Western world as to host the Group of Eight, but that has for years been drifting into Beijing’s orbit.”

So how does one trade that kind of binary? First, to recognize that if the call goes well, markets will take it as positive even if D.C. is now filled with China hawks and far more will almost certainly arrive in the 2022 and 2024 elections; second, to recognise that if the call goes badly, markets will take it as a huge negative - and rightly so; and third, to recognise that what we are told happened on the call might not be the whole story anyway.

I conclude yet again with my ‘Sol’ comfort: “We know they are lying. They know they are lying. They know we know they are lying. We know they know we know they are lying. But they still lie.” And markets happily swallow it, it seems.

Tyler Durden Fri, 03/18/2022 - 09:51
Published:3/18/2022 9:02:22 AM
[Entertainment] Maureen Howard, novelist of refinement and self-exploration, dies at 91 Her books often focused on the struggles in women's lives and were praised for their precise, shimmering prose. Published:3/17/2022 8:29:00 PM
[Podcasts] Podcast: The “Claremont Question,” with Charles Kesler and John Yoo (Steven Hayward) Prof. Charles Kesler, editor of the Claremont Review of Books, and author, most recently, of The Crisis of the Two Constitutions, recently visited Berkeley to give a lecture on his book, and sit down with John Yoo and me to discuss what we’re calling the “Claremont Question,” which is really just a headline for several controversies. The largest is the “Trump question” and the character of nationalism and populism generally, Published:3/17/2022 12:59:09 PM
[Markets] Futures Fade As Yields Soar, Oil Slides And China Stocks Crater Futures Fade As Yields Soar, Oil Slides And China Stocks Crater

US equity futures held on to modest gains overnight as the market desperately clung on to hope that the latest ceasefire talks between Russia and Ukraine which started on Monday, may yield results (clearly forgetting how the rug was pulled from under the market on Friday in an identical setup), which initially sent stocks higher especially in Europe, despite a surge in 10Y TSY yields to 2.10%, the highest since July 2019, two days ahead of the first Fed rate hike, and a complete collapse in Chinese stocks. And while U.S. index futures were still pointing to a positive open with negotiations between Russia and Ukraine set to continue, this gain is fading fast, with spoos now up just 0.5% after rising 1% earlier...

... as headlines from the Kremlin suggested that a ceasefire is the last thing on Putin's mind.


And while futures would normally be deep in the red by now, and will be shortly now that AAPL is at LOD...


... this morning algos are confused by the drop in oil which has emerged as a barometer of peace, however the reason oil is down today is due to the unprecedented lockdown of China's Shenzhen, announced over the weekend, and which the market is worried may spread to the rest of the market and lead to another Chinese shutdown (spoiler alert: it won't, but it will cripple US-facing supply chains as the Russia-China alliance makes itself felt).

Meanwhile, and as previewed last night, in addition to the latest surge in covid cases and Shenzhen lockdown, Chinese stocks listed in Hong Kong had their worst day since the global financial crisis, as concerns over Beijing’s close relationship with Russia and renewed regulatory risks sparked panic selling. The Hang Seng index dropped more than 4%, sliding below 20,000 to the lowest level since 2015...

... while the Hang Seng China Enterprises Index closed down 7.2% on Monday, the biggest drop since November 2008.

The Hang Sang Tech Index tumbled 11% in its worst decline since the gauge was launched in July 2020, wiping out $2.1 trillion in value since a year-earlier peak, after the southern city of Shenzhen, a key tech hub near Hong Kong, was placed into lockdown to contain rising Covid-19 infections. The broader Hang Seng Index lost 5%.

“If the U.S. decides to impose sanctions on China in total or on individual Chinese companies doing business with Russia, that would be a concern,” said Mark Mobius, who set up Mobius Capital Partners after more than three decades at Franklin Templeton Investments. “The whole story is still up in the air in this case.”

In premarket trading, U.S.-listed Chinese stocks resumed a steep selloff on Monday, following an 18% rout last week, as concerns about Beijing’s close relationship with Russia added to losses spurred by a Chinese crackdown on tech giants and the growing risk of U.S. delistings. Alibaba (BABA US), (JD US) both fall 5%. U.S. casinos stocks are also lower in premarket, with multiple headwinds weighing on the sector, including inflation, while listed names with exposure to Macau face additional pressure from surging Covid cases in China’s Guangdong province and in Hong Kong. Wynn Resorts (WYNN US) -1.8%; Las Vegas Sands (LVS US) and MGM Resorts (MGM US) also down in thin trade. Meanwhile, Apple is down 1.6% after supplier Foxconn announced it was halting operations at its Shenzhen sites, one of which produces iPhones, in response to a government- imposed lockdown on the tech-hub city. Apple +0.2% in premarket.

Besides all the geopolitical chaos, this week’s main focus will be on the Fed’s policy meeting, with traders expecting a quarter percentage-point rate hike. “There is little a central bank can do about commodity prices -- Fed Chair Powell can hardly dig an oil well in the middle of Washington D.C.,” said Paul Donovan, chief economist at UBS Global Wealth Management. “The concern will be about second-round effects -- prices encouraging higher wage costs.”

In Europe, the Stoxx 600 was 1.7% higher with automakers and banks leading gains, while miners and energy stocks underperformed.  Tech investor Prosus falls as much as 11% in Amsterdam, the most since March 2020 and touching a record low, following a continued selloff in Chinese technology shares as concerns about Beijing’s close relationship with Russia added to worries over regulatory headwinds. Naspers, which holds a 29% stake in Chinese online giant Tencent through Prosus, slides as much as 15% in Johannesburg, the steepest plunge since November 2000. Here are some of the biggest European movers today:

  • VW preference shares jump as much as 8.7% in Frankfurt and are among the top performers in a buoyant Stoxx 600 Automobiles & Parts Index after the carmaker pre-released results late Friday. Stifel called it a strong fourth quarter and a “surprisingly confident” outlook.
  • Uniper gains as much as 11%; the power plant operator might benefit from the U.K. government’s potential plans to extend the life of coal-fired power plants, RBC says.
  • Telecom Italia shares rise as much as 9.7% after the firm agreed to a deeper review of KKR’s takeover proposal and said it will ask the private equity giant for more details about its business plan.
  • Phoenix Group shares rise as much as 3.7% after reporting full-year results, with Peel Hunt saying the insurer’s cash generation was “better than expected.”
  • Danone rises as much as 5.6% after Bernstein says the French yogurt maker “seems to be doing everything right” under new management. The brokerage raises its recommendation on Danone and downgrades Reckitt and Unilever.
  • Prosus shares fall as much as 11% in Amsterdam, the most since March 2020, following a continued selloff in Chinese technology shares as concerns about Beijing’s close relationship with Russia added to worries over regulatory headwinds
  • Sanofi slumps as much as 6.2% after the French drugmaker says its mid- stage trial for amcenestrant in breast cancer didn’t meet the primary endpoint.
  • Basic resources shares drop in Europe as commodity prices decline, underperforming the benchmark Stoxx Europe 600, which is gaining on Monday. Rio Tinto falls as much -4.2%, Glencore -4.5%, Anglo American -5.3% lead drop in the Stoxx Europe 600 basic resources sub-index.

As noted above, Asian stocks plunged, led by a record 11% plunge in Chinese tech shares as a lockdown in Shenzhen added to woes including Beijing’s crackdown on the sector and mounting concerns about the economic fallout from sanctions on Russia. The MSCI Asia Pacific Index dropped as much as 1.5% to reach a low last seen September 2020, with heavyweights Alibaba and Tencent diving 11% and 9.8%, respectively. The Hang Seng Tech Index plunged 11% after the southern city of Shenzhen, a key tech hub near Hong Kong, was placed into lockdown to contain rising Covid-19 infections. The broader Hang Seng Index lost 5%. “The latest coronavirus outbreak is raising uncertainties over the Chinese economic outlook while high commodity prices are a drag for the Chinese economy no less than for many other countries, limiting the room for monetary easing,” said Aw Hsi Lien, a strategist at Tokai Tokyo Research. “There’re rising perceptions that this year’s growth target of 5.5% is becoming difficult to achieve.”    Investors also remain on edge over risks for Chinese companies stemming from U.S. actions due to Russia’s invasion of Ukraine. Sentiment was also rattled late last week as U.S. regulators identified Chinese companies that could be kicked off exchanges if they fail to open their books to U.S. auditors. While the delisting risk has been known since last year, the Securities and Exchange Commission’s list served as a “wake up call,” said Willer Chen, an analyst at Forsyth Barr Asia Ltd. “I see no way to solve the dispute” between the U.S. and China under current policies, he said.  The historic sell-off in China also drove many peer Asian equity gauges into the red. Still, shares in resource-rich Australia gained and Japan’s Topix climbed amid expected benefits for exporters from the yen’s fall to a five-year low near 118 per dollar.

Japanese equities climbed, rebounding after last week’s losses, as a weaker yen bolstered the outlook for exporters and a decline in oil provided a respite amid recent inflation concerns. Auto makers and banks were the biggest boosts to the Topix, which gained 0.7%. Tokyo Electron and Advantest were the largest contributors to a 0.6% rise in the Nikkei 225. The yen approached 118 per dollar, extending its loss after weakening more than 2% last week.  The Nikkei 225 dropped 3.2% last week, its worst since November, while the Topix fell 2.5%. In addition to developments on Russia’s war in Ukraine, investors this week will be monitoring monetary-policy decisions from the Bank of Japan and Federal Reserve. “As Japan’s economy and wage growth are more subdued than in the U.S., and, thus, the BOJ will be slower to tighten than the Fed, the yen may well trend weaker, although any move beyond 120 would not be encouraged by officials,” Nikko Asset Management strategist John Vail wrote in a note.

In FX, the Bloomberg Dollar Spot Index inched inched lower and the greenback traded mixed against its Group-of-10 peers. European currencies, lead by the Swedish krona and Norwegian krone, were the best performers while the Australian and New Zealand dollars, as well as the yen, fell. Sweden’s krona rallied as much as 1.8% as sentiment improved and as economists expect the country’s central bank to make a policy U-turn later this year, after inflation reached a new 28-year high last month and as price increases are seen accelerating on the fallout from Russia’s invasion of Ukraine The pound was steady after falling to November 2020 lows on Friday, while gilts slumped. Focus this week will be on the Bank of England, which is expected to raise interest rates for a third time in a bid to control inflation. The yen fell to a five-year low against the dollar as traders boosted bets on the pace of the Federal Reserve’s rate hikes this year amid accelerating U.S. inflation and as risk reversals backed a less-favorable outlook for the Japanese currency. Australia’s dollar dropped for a second day as oil and iron ore lead commodity prices lower, while sliding Chinese equities weighed on risk sentiment.

In rates, as noted above, Treasuries sold off, led by the belly, following wider losses across bunds as core European rates aggressively bear-steepen. Treasuries and the 5-year Treasury yield topped 2% for the first time since May 2019 while the yield on 10-year Treasuries rose to 2.10%, the highest since July 2019, before easing back to 2.06%. The US front-end slightly outperforms, steepening 2s5s and 2s10s spreads by 1.7bp and 1.3bp. IG dollar issuance slate empty so far; volumes projected for the week are around $30b, following one of the busiest weeks on record

In commodities, WTI drifts ~5% lower to trade at around $103. Brent falls more than 4% to the $107 level. Spot gold falls roughly $27 to trade near $1,962/oz. Spot silver loses 2.6% near $25. Most base metals trade in the red; LME aluminum falls 3.6%, underperforming peers.

Bitcoin was initially subdued beneath USD 38,000 ahead of an EU vote on environmental sustainability standards measure that could lead to a ban on Bitcoin, but later recovered with support also seen following a tweet from Elon Musk. Elon Musk tweeted "I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw". Japan demanded that cryptocurrency transactions be blocked if they are sanctions related.

Besidesall that, it is a quiet start to thge week with no macro news on today's calendar.

Market Snapshot

  • S&P 500 futures up 0.5% to 4,223.50
  • STOXX Europe 600 up 0.4% to 433.05
  • German 10Y yield little changed at 0.31%
  • Euro up 0.4% to $1.0952
  • MXAP down 1.4% to 168.91
  • MXAPJ down 2.1% to 549.22
  • Nikkei up 0.6% to 25,307.85
  • Topix up 0.7% to 1,812.28
  • Hang Seng Index down 5.0% to 19,531.66
  • Shanghai Composite down 2.6% to 3,223.53
  • Sensex up 1.2% to 56,207.96
  • Australia S&P/ASX 200 up 1.2% to 7,149.40
  • Kospi down 0.6% to 2,645.65
  • Brent Futures down 2.7% to $109.60/bbl
  • Gold spot down 0.8% to $1,971.65
  • U.S. Dollar Index down 0.21% to 98.92

Top Overnight News from Bloomberg

  • The U.S. and China plan to hold their first high-level, in- person talks since Moscow’s invasion on Monday. The meeting comes after China rejected accusations by U.S. officials that Russia had asked it for military equipment to support the invasion of Ukraine
  • Chinese stocks listed in Hong Kong had their worst day since the global financial crisis, as concerns over Beijing’s close relationship with Russia and renewed regulatory risks sparked panic selling
  • Global bond markets are flirting with a 10% drawdown for the first time in over a decade as surging inflation forces yields higher. The Bloomberg Global Aggregate Index, a benchmark for government and corporate debt, has fallen about 9.9% from a high in early 2021, the biggest decline from a peak since 2008, the data show
  • Already pivoting to tightening monetary policy amid the fastest consumer price gains in four decades, Fed Chair Jerome Powell and colleagues now have to deal with the economic fallout of the war, which threatens to deliver the twin blows of weaker growth and even-quicker inflation
  • ECB Governing Council member Martins Kazaks says “it’s very possible that the bond-buying program will end in the third quarter”
  • Germany’s coronavirus infection rate hit a record for the third straight day on Monday, with the renewed surge prompting the country’s top health official to issue a grim warning
  • Leveraged fund net short aggregate Treasuries bets across the curve have hit the highest in over a year, the latest CFTC data show. The U.S. Treasury market just endured one of its worst weeks of the past decade, with yields propelling toward their highest levels of the past year thanks to worsening inflation and the imminent expected shift in policy
  • The yen’s plunge to a five-year low shows no signs of easing as surging commodity prices have worsened the outlook for Japan’s trade balance and put pressure on the currency’s haven credentials. The nation is a net importer of a long list of raw materials from crude oil and grains to metals, exposing it to higher costs as prices of all these have risen due to sanctions imposed on Russia over its invasion of Ukraine
  • Russia has already lost access to almost half of its reserves and sees more risks to President Vladimir Putin’s war chest due to increased pressure from the West on China, said Finance Minister Anton Siluanov
  • Nickel’s 250% price spike in little more than 24 hours plunged the industry into chaos, triggering billions of dollars in losses for traders who bet the wrong way and leading the London Metal Exchange to suspend trading for the first time in three decades. It marked the first major market failure since Russia’s invasion of Ukraine jolted global markets, showing how the removal of one of the world’s largest exporters of resources from the financial system in the space of weeks is having ripple effects across the world

A more detailed look at global markets courtesy of newsquawk

Asia-Pacific stocks were somewhat mixed as participants digested varied geopolitical headlines ahead of key risk events. ASX 200 was underpinned by strength in its largest-weighted financial sector and encouragement from M&A related headlines. Nikkei 225 benefitted from further currency weakness but failed to hold above the 25,500 level. Hang Seng and Shanghai Comp. were pressured amid several headwinds, including COVID-19 concerns with the technology hub of Shenzhen under a one-week lockdown, which pressured tech and weighed on Macau casino names, as well as dragged the Hong Kong benchmark beneath the 20K level for the first time since 2016

Top Asian News

  • Developers Sink After Weak Home Mortgage Data: Evergrande Update
  • Marcos Keeps Big Lead in Philippine Presidential Survey
  • Funds Managing $130 Trillion Target Lobbying in Climate Plan
  • Hang Seng China Stock Gauge Sinks 7.2%, Most Since Nov. 2008
  • China Locks Down Shenzhen, Entire Jilin Province as Covid Swells

European bourses are firmer, Euro Stoxx 50 +2.1%, following a mixed APAC handover amid conflicting headlines as we await details of the latest Ukrainian-Russia talks. Stateside, US futures are firmer across the board but with magnitudes more contained, ES +0.9%, ahead of multiple risk events. Sectors in Europe are mostly firmer though some of the more defensive names are lagging modestly, Autos outperform post-Volkswagen

Top European News

  • European Gas Slumps as Russia, Ukraine to Hold Further Talks
  • British Airways-Operator Comair Still Grounded in South Africa
  • Funds Managing $130 Trillion Target Lobbying in Climate Plan
  • ECB’s Kazaks: ‘Very Possible’ Net Bond-Buying Will End in 3Q
  • U.S.-Listed Chinese Stocks Sink Again as China-Russia Ties Weigh

In FX, Aussie bears the brunt of reversal in commodity prices; AUD/USD hovering around 0.7250 ahead of RBA minutes tomorrow. Yen extends decline on yield and BoJ policy divergence towards 118.00 vs the Dollar. Euro rebounds with risk appetite amidst hopes of constructive Russian-Ukrainian dialogue; EUR/USD finds support around 1.0900 where 1.84bln option expiries reside to trade above 1.0960. Rouble firmer on the premise that positive words will speak louder than negative actions. Yuan depreciates as Covid cases mount in China and PBoC sets a weaker than expected onshore midpoint rate, USD/CNH probes 6.3800 at one stage. Swedish Crown strong in line with latest inflation data and hawkish Riksbank rate calls from Nordea and SEB, EUR/SEK tests Fib support circa 10.5252

In commodities, WTI and Brent continue to unwind geopolitical premia amid mixed Russia-Ukraine developments and the possibility of progress soon. Currently, benchmarks lie near fresh lows of USD 103.42/bbl and USD 107.59/bbl respectively, further impeded by IEA's Birol. Iraq set April Basrah medium OSP to Asia at Oman/Dubai + USD 3.50/bbl, OSP to Europe at Dated Brent - USD 3.05/bbl and OSP to North and South America. UK PM Johnson is seeking a mega oil deal with the Saudis and is pushing for solar and nuclear energy to cut reliance on foreign oil, while the UK is also considering keeping some coal-fired power stations operational, according to Express and The Times. IEA Chief Birol says responsible producers should increase oil output. French PM Castex said the government will offer EUR 0.15/litre rebate on petrol prices from April to counter high prices with the rebate on fuel to last four months and is expected to cost around EUR 2bln. Japanese PM Kishida will look at measures for high oil prices and raw material food prices whilst watching the situation carefully, according to the Japanese ruling party secretary general; subsequently, Japanese government is to increase the petrol subsidy to around JPY 24/litre and close to the ceiling of JPY 25/litre. Gazprom says it is continuing shipping gas to Europe via Ukraine, Monday's volume is broadly unchanged at 109.5mln cubic metres; does not intend holding spot gas sale sessions on its electronic sales platform this week. China is planning to boost its coal output by as much as it imports. Spot gold and silver are pressured unwinding safe-haven appeal in-fitting with other typical havens

In Fixed income, the debt rout rages on on as futures take out near term technical supports and yields reach or breach psychological
levels. Curves continue to steepen on resurgent risk sentiment rather than any read respite from sharp retracement in crude prices.
USTs and Gilts anticipating tightening from the Fed and BoE later this week.

US Event Calendar

  • Nothing major scheduled

DB's Jim Reid concludes the overnight wrap

I've tried to keep the introductory paragraphs fairly sober in recent weeks as the challenging time for the world doesn't really need my flippancy. However I have to share with you this morning that 5 minutes before I started typing this I started walking again for the first time in 6 weeks. The crutches were left by the bed and my morning coffee made without hopping between the cupboard, the sink and the fridge, and then working out how to get my coffee back upstairs while on crutches. It's amazing how good normality felt. Fingers crossed this operation will buy me a few years before knee replacement. We will see.

The newsflow didn't look good late on Friday as some earlier positive signs on the conflict talks petered out. In terms of developments there was mixed news last night though as on the positive side some progress seemed to be made on talks, but on the negative side the FT reported that US officials suggested that Russia have asked China for military and economic assistance since the invasion began. The article said that the officials didn't details China's response but this came just few hours after White House officials announced that a high-level delegation from the US would meet with a top Chinese official in Rome today.

On the positive side however, Ukrainian negotiator and presidential adviser Mykhailo Podolyak tweeted and posted a video online saying, "Russia is already beginning to talk constructively... ... I think that we will achieve some results literally in a matter of days,". A Russian delegate echoed the sentiment and US Deputy Secretary of State Wendy Sherman also highlighted that Russia was showing signs of willingness to engage in substantive negotiations.

DM equity futures are making modest gains in Asia with contracts on the S&P 500 (+0.59%), Nasdaq (+0.35% and DAX (+0.59%) all trading higher. US Treasuries are seeing a pretty big move for an Asian session with the 5-yr yield (+6.3bps) moving above 2% for the first time since May 2019 whilst the 10-yr yield is up +5.3bps to 2.044%. Elsewhere Brent futures (-1.93%) are down to $110.50/bbl while WTI futures (-2.41%) are at $106.70/bbl.

Asian equity markets are mostly trading lower though as we start the week following the broadly negative cues from Wall Street on Friday. The Hang Seng (-3.81%) is leading losses across the region with Chinese tech stocks again seeing major declines. Shares in mainland China are also weak with the Shanghai Composite (-1.30%) and CSI (-1.73%) both in negative territory after the southern Chinese tech hub Shenzhen was put under a citywide lockdown over the weekend to slow an outbreak of Covid-19. Elsewhere, the Kospi (-0.72%) is down but the Nikkei (+0.95%) is trading up this morning, reversing its previous session's losses.

Coming back to the Covid news, the Chinese authorities have placed 17.5 million residents of Shenzhen under lockdown after the city reported 66 fresh Covid cases on Sunday while the nationwide official figure nearly doubled to 3,400. The lockdown and suspension of public transport will last until March 20 and will be accompanied by three rounds of mass testing of residents. At the same time, the surge in cases across China has also prompted the authorities to shut schools for students from kindergarten through middle schools next week in Shanghai. In the neighbouring Hong Kong, the health authorities reported 32,430 new Covid-cases on Sunday with city leader Carrie Lam highlighting that the outbreak has not past its peak yet despite recent number of daily cases “slightly levelling off”.

Looking forward now, and as we all know it's a big central bank week with the Fed the obvious focal point mid-week. The BoE and the BoJ also hold meetings, along with some of their emerging markets counterparts. We'll also see CPI for Japan and Canada and a number of housing market statistics in the US and China. Earnings will include Volkswagen, FedEx and Enel, among others.

Wednesday will also be a landmark day even outside of the Fed as this is the date that two Russian Eurobonds have coupon payments. These are small (c.$120bn out of c.$1.75bn of annual hard currency coupons) but will be hugely symbolic. Speaking to one of our EM strategists, Christian Wietoska, and one of our European economists, Peter Sidorov, over the weekend their view was that this would likely mark the start of the 30-day grace period that issuers have before a default is officially triggered. 30-days still gives time for there to be a negotiated end to the war and therefore this probably isn't yet the moment where we see where the full stresses in the financial system might reside. There has already been a huge mark to market loss already anyway with news coming through or write downs. However this is clearly an important story to watch.

Onto the Fed now and the FOMC concludes on Wednesday, with the Fed expected to raise rates for the first time since December 2018. Markets are pricing in a +25bps hike, in line with the rhetoric from Chair Powell at his congressional testimonies a couple of weeks back. Before the invasion we thought a 50bps was likely this week and the problem is that by delaying such a move they may have to do more later. The market seems to agree to some degree as at Friday's close the market was pricing in 6.7 hikes this year, the most seen in this cycle and above the post invasion intra-day lows of 4.45. This morning we are at 6.92.

A full preview from our US economists is available here. With regards to QT, they anticipate that the Fed will use this upcoming meeting to announce caps determining the maximum monthly runoff and, in May, announce QT that would begin in June. They think we will see $800bn of runoff this year and an additional $1.1tn drawdown in 2023, a cumulative reduction we think is roughly equal to between three and four rate increases (see "QT update: The sooner the better"). The fascinating thing for me is what this does to the yield curve if they are correct. For me nirvana for the Fed is getting to around neutral, somewhere with a 2 handle on Fed Funds and trying to ensure that 10yr yields rise enough to prevent inversion but not enough to lead to a tightening of financial conditions. So if in 12-18 months time 2 year yields are 2.25-2.5%, 10 year yields are 2.75-3% and inflation is coming back towards trend then the Fed have pulled off a masterstroke. If however, 2yr yields are above 2% and 10yr yields below this level, the inversion will likely bite. On the other hand, if the curve steepens up too much and longer end yields are notably above 3% the risk is that financial conditions tighten too much given the global debt load. So the Fed are trying to thread a needle and its possible inflation will give them an impossible task. Time will tell.

Ahead of the Fed watch out for US PPI (Tuesday) and Retail Sales (Wednesday). They are highly unlikely to change the equation for this FOMC but will be important for the direction of the economy and inflation thereafter. We also get a plethora of US housing data to end the week with Thursday's housing starts and Friday's existing homes sales. These are going to be important for both activity and the rents component in CPI.

Back to central banks and on Thursday, it will be the BoE's turn. Our UK economist previews the meeting here, and is expecting a +25bps hike to 0.75%, the pre-pandemic level. Their projected terminal rate is 1.75%.

Finally, on Friday, the Bank of Japan will hold a meeting as well and a preview can be found here. The central bank is expected to hold the key rate steady but there is a chance of economic assessment being downgraded. The Bank of Russia's decision on the same day will be scrutinised for the response to risks to the economy from the ongoing geopolitical turmoil.

Back to the week that was now. The war in Ukraine raged on, while negotiations continued to generate little tangible progress as leaders managed expectations down for any near-term resolution. However, there were various green shoots throughout the week when it appeared both Ukrainian and Russian officials left some room for compromise from their original positions.

The glimmers of hope on the war front, along with a more hawkish-than-expected ECB sent sovereign bond yields higher on both sides of the Atlantic this week. Positive news about the supply of oil and gas sent futures lower on the week, despite the US and UK moving to restrict Russian imports.

Oil and European natural gas prices fell -5.07% (+3.05% Friday) and -30.15% (+3.82% Friday) over the week, following a proclamation from President Putin that Russia would honor its energy export commitments, instead of unilaterally cutting off supply in retaliation to sanctions. For its part, the Iraqi oil minister noted OPEC would increase oil production were supply to reach scarcity levels.

The other major story on the week was the ECB meeting, where the central bank signaled more focus on price stability than the potential downside impact to growth from the war. The governing council announced an accelerated tapering of its APP purchases, which would end in Q3, maintaining the option for increases to their policy benchmark rate sometime thereafter should the data merit. The ECB also updated their forecast for 2022 inflation to 5.1 percent and 2.1 percent for 2023.

The tighter than expected policy stance gave rise to higher sovereign bond yields on both sides of the Atlantic, with 10yr bunds, OATs, gilts, and Treasuries rising +31.8bps (-2.5bps Friday), +28.9bps (-2.6bps Friday), +28.3bps (-3.2xbps Friday), and +26.1bps (+0.5bps Friday), respectively. For 10yr bunds that was the largest weekly gain since June 2015, 10yr gilts the largest weekly gain since September 2017, September 2019 for Treasuries, and March 2020 for OATs. Money markets ended the week pricing +40.5bps of ECB tightening this year, up from +24.1bps of tightening at last week’s close.

European equities latched on to this week’s marginally more optimistic news, with the STOXX 600 finishing +2.23% (+0.95% Friday), the first weekly gain in a month. The DAX and CAC also finished the week +4.07% (+1.38% Friday) and +3.28% (+0.85% Friday) higher, respectively. US investors proved more pessimistic, with the S&P 500 retreating -2.88% (-1.30% Friday), with tech underperforming again, as the NASDAQ fell -3.53% (-2.18% Friday). The US indices took a leg lower Friday afternoon after Europe called it a week when Ukrainian leadership didn’t strike as optimistic a tone as Russian leaders surrounding the prospects of negotiations, as well as reports that Belarussian troops were about to join the invasion of Ukraine.

University of Michigan consumer inflation expectations for the next year increased to 5.4 percent, above expectations of 5.1 percent on Friday. This followed the February US CPI data which showed headline and core measures increasing to their highest readings in four decades, which would have headlined just about any other week. In line with this, market-based measures of inflation expectations increased, with 10yr Treasury breakevens widening +27.3bps on the week.

Tyler Durden Mon, 03/14/2022 - 08:15
Published:3/14/2022 7:33:52 AM
[Markets] Covid, Weak Credit Spark Talk Of China Rate Cut Covid, Weak Credit Spark Talk Of China Rate Cut

By Ye Xie, Bloomberg Markets Live commentator and analyst

Three things we learned last week:

1. China’s worst Covid outbreak since the early days of the pandemic and disappointing bank lending data add pressure for further policy easing. Domestic infections topped 1,000 a day, prompting a lockdown of a city of 9 million people in the northeast. The outbreak has increased challenges for the government to reach its “about 5.5%” growth target this year. Apple supplier Foxconn is halting operations at its Shenzhen sites, one of which produces iPhones, in response to a government-imposed lockdown on the tech hub city.

On Friday, credit data came in well below expectations, underscoring the growth drag from Covid and the housing slowdown. Long-term household borrowing – a proxy for mortgage loans – fell for the first time ever. The data led some economists, including those at Citigroup, to expect a cut in the medium-term lending facility rate on March 15. If delivered, it would sharpen the policy divergence with most other central banks, as the Fed is expected to raise rates this week.

2. The risk of being delisted from American exchanges triggered a record slump among U.S.-traded Chinese stocks. The Nasdaq Golden Dragon China Index lost 18% last week, surpassing the previous record slump during the financial crisis in 2008. The move came after the SEC identified five Chinese companies that could be kicked off the exchanges, if they fail to open their books to U.S. auditors as required by a new law. While considered a routine procedure to implement the law passed in December 2020, the move nonetheless rattled investors who have already been unnerved by rising geopolitical risks.

So how does an investor hedge the risk? Morgan Stanley advised clients to go long those ADRs eligible for a Hong Kong listing and short those that are unqualified, and with high foreign ownership.

3. Negative sentiment toward Chinese assets finally penetrated the strong yuan. The offshore yuan weakened 0.5% on Friday, the worst day in six weeks. The currency has weakened past its 50-day moving average and is on track toward the 100-DMA. Further spread of the virus - possibly leading to factory closures and port disruptions - could cloud China’s export outlook and add pressure to the yuan selloff.

To be clear, any depreciation is likely to be limited. Friday’s credit data showed that foreign-currency deposits onshore surged to a record, suggesting that the domestic market is still awash with dollars.

Tyler Durden Sun, 03/13/2022 - 22:59
Published:3/13/2022 10:01:42 PM
[] The Top Three Reasons the Democrat Party Needs to Die a Quick and Brutal Death Published:3/13/2022 5:59:47 PM
[Markets] Turning The Wealth Pyramid Upside Down Turning The Wealth Pyramid Upside Down

Authored by Bruce Wilds via Advancing Time blog,

When we look at upside down wealth pyramid below, I have a big problem with the picture it promotes. It is clearly based on someone's opinion of what investments are safe. The one thing it does well is to scream that some investments have a high degree of risk and it is best not to put all our eggs in the same basket. 

Another issue is how a 401(k) or pension will fare during hard times or if we do see a huge number of defaults. Consider this an indication that placing your wealth into paper promises means it has the potential to vanish or be converted into something to would never agree to. Again, the devil is in the small print or the fact "they" can change the rules at any time.

While a great deal of speculation has been showered upon us concerning inflation turning to deflation, we will not know the true direction of things until they occur. One thing to keep in mind is that government employs a tremendous number of people that will never accept a cut in pay. This will put a solid net under falling prices. Combined with the refusal of many workers to consider working for anything near minimum wage helps push away the notion of deflation. In fact today, my local paper announced the City Council in Fort Wayne, Indiana just approved retroactive COVID-19 hazard bonuses for all city workers.

It is important to move towards forecasting based on probability rather than predictions. Keep in mind a great deal of how we deal with the options before us is centered on how we position ourselves. This can result in a lot of study and hard work or, in the case of many people, be a duty we cast off to other people. The harsh reality is that there is no guarantee that any strategy we choose will be able to stand up to the barrage life throws at us. 

If we are indeed about to enter a body-slamming bear market that will reshape the financial landscape, what many people want to hear is how to make a million dollars overnight in a bear market. This is far more difficult to do than say. So much depends on timing and the direction the dominoes fall. Sadly, the inverted pyramid above should give us little reassurance we are in control of our own destinies. 

While overall I see investing in precious metals in a positive light, even investing in gold has a slew of drawbacks. The same holds true with bonds and cash. With bonds, there is the huge risk that they will be repaid in deflated or less valuable dollars or defaulted on. When it comes to holding cash in its truest form, not only are you bludgeoned by inflation but risk it will be stolen or lost. 

Old Chart, Derivatives Are Now Much Bigger

Interestingly, the widest and most perilous area of where to stash your wealth is that of derivatives. On occasion, it is important to revisit issues that have been swept under the rug or simply overlooked. For most people, the derivatives market falls into this category, partly because they don't understand exactly what derivatives are or why this market is so important. The problem is the derivative market has the potential to explode like a bomb.

Derivatives are financial contracts, set between two or more parties, that derive their value from an underlying asset, group of assets, or benchmark. These contracts hold the power to unleash a great deal of pain and grief during volatile markets. Years ago, Paul Wilmott who holds a doctorate in applied mathematics from Oxford University has written several books on derivatives. At the time, Wilmott estimated the derivatives market at $1.2 quadrillion, to put that in perspective it is about 20 times the size of the world economy. 

Since then, the derivative market has only grown larger. today, the world’s annual gross domestic product is around 100 trillion dollars. Trying to regulate this complex market is easier said than done. While QE was able to halt an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system following the 2008 financial crisis this time we may not be so lucky. 

Returning to the inverted wealth pyramid, I see little to spur optimism going forward, add in geopolitical tensions and slowing economic growth across the world and it is very easy to envision risks pushing things over the edge. If history is any indication, the idea this time is different will prove to be false. Contagion seeping over from one sector of the economy to another has the potential to create a rather grim future in which we are forced to pay for our past sins of excessive greed and arrogance.

Several things are moving down a path I saw coming but like many of you, I'm shocked by the twist and speed things are moving. The one big surprise is how a little war can rapidly turn things upside down and be declared as the catalyst for our economic downfall. I have not been writing much as of late because I've been spun by much of what is happening, however, I plan to settle back in and crank out a few new articles soon. Stay safe, and remember this is not the time to take on new risks or believe the propaganda being thrown at us.

In a special update, co-founder and CEO of Real Vision Raoul Pal shares with us how he’s approaching the market amid this incredibly chaotic environment. Raoul outlines several scenarios for how the Russia-Ukraine situation could play out.

Tyler Durden Sun, 03/13/2022 - 14:45
Published:3/13/2022 1:58:21 PM
[Markets] Fiat Currencies Are Going To "Fail Spectacularly": Lawrence Lepard Fiat Currencies Are Going To "Fail Spectacularly": Lawrence Lepard

Submitted by QTR's Fringe Finance

Friend of Fringe Finance Lawrence Lepard released his most recent investor letter a few weeks ago with his updated take on the monetary miasma spreading across the globe.

Larry had joined me for several interviews last year and I believe him to truly be one of the muted voices that the investing community would be better off for considering. He’s the type of voice that gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely.

Lawrence Lepard (Photo: Kitco)

Larry was kind enough to allow me to share his thoughts heading into 2022.

Before Russia invaded Ukraine, Larry predicted that a “crack up boom” could be on its way and also offered his take on gold, inflation, monetary policy, bitcoin, fiscal policy, the ongoing supply chain crunch, and much, much more. That analysis is included.

Now, the invasion of Ukraine has helped catalyze a number of his predicted scenarios.

Here are several Fringe Finance excerpts from Larry’s thoughts on the Ukraine invasion and the markets heading into 2022, from prior to the invasion.

Russia Invading Ukraine Has Caused A ‘Monetary Earthquake’

What just happened in the last two weeks is enormously important and misunderstood by many investors.

The Russian invasion of Ukraine and the corresponding Western sanctions and seizure of Russian FX reserves are nothing short of a monetary earthquake. The last comparable event was Nixon's abandonment of the gold standard in 1971. 

Russia, with the backing and support of China, just told the world that it is no longer going to sell its oil, gas and wheat for Western currencies which are programmed to debase. 

The West in its response just said to all countries around the world: “If you have foreign exchange reserves, held in our system, they are no longer safe if we disagree with your politics.” 

Russian FX Reserves

It is similar to what the Canadians did when they moved to seize the bank accounts of Canadians who had demonstrated support for the truckers without due process of law.

Both of these political moves are blatant advertisements for what I call "non state controlled money without counterparty risk", like gold and bitcoin. If governments can weaponize their money when they do not like what you are doing, what is the natural defense?

Gold Will Rip Higher Because Of What Russia Is Doing

The US Dollar has been the reserve currency of the world since WW II and the Bretton Woods agreement. This has given the US an enormous advantage and subsidy from the rest of the world because everyone else needs to produce goods and services to obtain dollars and the US can simply produce dollars at no cost by printing them.   

Putin is now cast in the role of Charles de Gaulle who complained about the "exorbitant privilege" of the US with its dollar hegemony. As we all know, de Gaulle demanded gold in exchange for France's US dollar FX surpluses and this outflow forced Nixon to close the gold window.   

Silver Raid August 15th: 50 Year Anniversary of Nixon Closing Gold Window :  r/Wallstreetsilver

Recall that post this event, gold went from $35 per ounce to $800 per ounce (23x).  Russia's move will lead to a similar move in favor of gold. Putin could see that the US fiscal and monetary situation was becoming untenable and he decided to use this to create an existential threat to the US and the world financial system. 

He undoubtedly knows that the West has artificially suppressed the price of gold and that is why he has been building his gold reserves steadily for the past 20 years.

Russia's Massive Gold Accumulation | Suisse Gold - Precious Metals Dealers

Putin just shot "King Dollar" in the head. 

We can see it in the financial markets, as the price of everything commodity related is going up relentlessly in dollar terms. 

Russia is long commodities, long gold and doesn't need fiat currency. His debt to GDP ratio is low and taxes are low. If the world financial markets collapse on a relative basis, the position of Russia will be improved significantly. This is what I believe he is playing for. If investors do not recognize this they will be caught wrong footed as I believe many are today.

The implications for investors are quite clear. None of us own enough gold, real assets or commodities. Fiat currencies are going to fail spectacularly, and soon, in my opinion.

Before Russia invaded Ukraine, Larry predicted that a “crack up boom” could be on its way and also offered his take on gold, inflation, monetary policy, bitcoin, fiscal policy, the ongoing supply chain crunch, and much, much more.

Now, the invasion of Ukraine has likely catalyzed a number of his scenarios.

A Crack Up Boom Could Be Coming

The bottom line is that the monetary system is exhibiting many of the early characteristics of a crack-up boom.

A crack-up boom is the crash of the credit and monetary system due to continual credit expansion and price increases that cannot be sustained long-term. 

In the face of excessive credit expansion, consumers' inflation expectations accelerate to the point that money becomes worthless and the economic system crashes. 

Wow, does that sound familiar? “Real resource crunch” - do we have any shortages in commodities or labor? Well, ask the people in Europe who are worried about their costs for electricity, natural gas and heating oil this winter. Or, how about the labor shortages that we are seeing develop everywhere? How about the shortages of goods that are backed up in ships off the California coast? Supply chain issues have been blamed on COVID and government officials have, until recently, tried to spin the resulting inflation as transitory. 

Certainly some of the current rip-roaring inflation could abate as supply chain delivery times improve (left chart below) which may permit PMI Input / Output prices to soften (right chart below): But to date there is little evidence of abatement.

But perhaps there is also something else going on.

Labor and product supply shortages can easily lead to further price increases and there is the potential for a vicious “cost-push” spiral upward. Eventually businesses may not be able to operate and business failures begin to occur. (They cannot get the necessary inputs, or properly price their goods and services). When highly levered businesses fail, the destruction of credit and demand soon follow.

Historically, the Government response is to print more in a vain attempt to prevent failures - as if money printing could produce goods and services. 

We are seeing some of this in our personal observations. We know of builders who cannot get needed supplies to build houses. One builder in Las Vegas reported that his cost of building a house went up 40% LAST QUARTER. We know of an interior designer who cannot source products (furniture delivery times of 6 months plus) and so his business is likely to fail.

We are concerned that if inflationary expectations continue to grow, the path to a crack up will become clear. We believe that inflation expectations will continue to grow as this present inflation is “cost-push” rather than the more temporary “demand-pull” form of inflation. 

Today’s blog post has been published without a paywall because I believe the content to be far too important. However, if you have the means and would like to support my work by subscribing, I’d be happy to offer you 22% off to become a subscriber in 2022: Get 22% off forever

While we may not be on the precipice of a Crack Up Boom (yet), the probabilities of it occurring have certainly increased. We believe investors must begin to consider the “tail risk” that all confidence could be lost in our current monetary system. 

When price signals are so distorted that markets no longer function, the only possible outcome is total collapse of the market structure. We believe that the US Treasury and Federal Reserve see these risks and that is why they are trying hard to control Government spending, and are accelerating the pace of tapering the extraordinary QE that was initiated in March 2020 when Jerome Powell vowed to do whatever it takes to keep the markets functioning (the Third Fed Mandate). 

So, just how probable is a crack up boom? Sometimes it is easier to see these things visually. The US stock market below:

And the Venezuelan Stock market just before its currency became worthless as a result of hyperinflation:

Bolivar | Precious Metals Message Board Posts

The important driver here is inflationary expectations. Note the earlier quote on Crack Up Booms, “consumers' inflation expectations accelerate to the point that money becomes worthless”. This is the major point of the Austrian School Economists: when individuals discover that not only is inflation occurring, but it is the policy of government, and that inflation cannot and will not be reversed. Then there becomes a rush to substitute their store of value savings of the inflated fiat money with stores of value that are of more limited supply and will hold value for the future.

This is Gresham’s Law: bad money drives out good. If people perceive that the money is becoming worthless they will spend it as quickly as possible on any tangible good before prices rise further. 

We are not at or near that point yet, but inflation awareness and inflation expectations are growing.

Here are some of Larry’s additional observations about 2021:

  • The last time an inflation print came in at 7.0% (June 1982), 10-year Treasury yields exceeded 14%. Ten-year yields ended 2021 at 1.51%, with inflation-adjusted “real” yields deeply into negative territory. (-5.49%) 

  • Producer Price Index (PPI) was up 13.3% in November y-o-y (highest since 1980). The Bloomberg Commodities Index jumped 27.1% in 2021. 

  • The S&P hit over 70 new all-time highs, ending the year up 27%. Off the March 2020 low, the S&P is now up 113% and trading at 21.2x forward P/Ex, near its March 2000 peak P/Ex.

  • The 2021 federal fiscal deficit reached $2.77 TN, with a historic $5.9 TN two-year shortfall (28% of GDP). The federal deficit was $3.1T in fiscal 2020 (September year-end). Recall that US Federal Tax Revenues totaled $3.86T in 2021. Budget deficit was 42% of total fiscal spending. 

  • The Fed’s balance sheet inflated an astonishing $5.015 TN, or 135%, in the 120 weeks since QE was restarted in September 2019. Federal Reserve Assets have now inflated nearly 10x since the mortgage finance Bubble collapse. [went from $0.907T at Sept. 2008 to $8.766T today]

  •  In the same time frame (2008-2021) the US CPI gauge of inflation went from 211.4 to 278.9 or an increase of 31.9% (annual average 2.2%). If inflation is a monetary phenomenon (we believe it is) there is a lot of catching up to be done as CPI increases to reflect money supply growth.

  • During the same time frame (2008-2021) M2 (Money supply) went from $8.2T to $21.4T, growth of 161%, or annualized growth of over 7.7%. 

    o Notably, M2 growth since March 2020 has been 38.6%, a sharp acceleration above trend.· The monthly U.S. Goods Trade Deficit ballooned to a record $98 billion in November vs. a two decade average $56bn.

Larry echoed the sentiments of Doug Noland when opining on inflation in 2021:

Books will be written chronicling 2021. I’ll boil an extraordinary year’s developments down to a few simple words: “Things Ran Wild”. COVID ran wild. Monetary inflation ran wild. Inflation, in general, ran completely wild. Speculation and asset inflation ran really wild. More insidiously, mal-investment and inequality turned wilder. Bucking the trend, confidence in Washington policymaking ran - into a wall.

M2 “money” supply inflated another $2.478 TN (12 months through November) to a record $21.437 TN – with egregious two-year growth of $6.185 TN, or 40.6%. Bank Deposits surged $1.957 TN over the past year (12.1%), with two-year growth of $4.812 TN (36%). Money Fund Assets rose another $408 billion y-o-y, or 9.5%, to $4.70 TN. The myth that QE effects remain well contained within Treasury and securities markets has been debunked. 

And took to pointing out analysis by Trey Reik on gold:

Between 3/31/20 and 12/31/21, the Fed grew its balance sheet $3.503 trillion (66.67%). During this time span, the S&P 500 appreciated 84.41% while spot gold increased just 15.98%.

We find it bewildering that even though gold has been maligned for “not doing better” while stocks soared during 2021’s QE and inflation, now that the Fed is telegraphing tightening, consensus is equally confident that equity markets are well prepared and will power-through on the back of strong earnings, but gold will surely suffer. 

Watching The Fed

In March 2020, COVID erupted and the US Stock and Bond markets began to plunge. In a period of just 23 days, the S&P 500 Index plunged 35% from its high in late February to a low on March 23rd.

At the same time, something very unusual happened in the US Treasury bond market. In the early part of the stock sell off, government bond prices rallied and yields declined as selling stock investors sought safety in US Treasuries. This was normal. But then suddenly, 10 year US Treasury bonds sold off hard too and the treasury yield went from 39 bps to 126 bps in a period of just 7 days! The Fed meeting minutes from that period discussed that for a brief period the US Treasury bond market went “no bid”. This led to Fed Chairman Jay Powell’s announcement on March 15, 2020 to cut the discount rate to effectively zero, resume quantitative easing and expand swap lines. 

This was the Fed’s worst nightmare. If the market for US Treasury securities fails, the entire world financial system collapses. What transpired from there was another chapter of the long standing “Fed Put” that was initially written by Greenspan and then enthusiastically renewed by Bernanke, Yellen and now Powell. Originally the put only protected equities but at the base of the entire financial system is the so called “risk free” US Treasury bond.

The put now clearly includes the US Treasury bond. Additionally, we have seen the Fed and financial commentators discuss an additional mandate: “maintaining orderly markets”. Powell has explicitly said that the Fed will take “whatever action is necessary” to maintain orderly markets which we believe is now a Third Fed Mandate, behind stable prices and full employment. In extremis, the Fed will print as much money as is necessary, perhaps a nearly infinite amount. 

The stock and bond markets have taken the recent Fed “hawkish” policy shift in stride. Yes, there is still tons of liquidity in the system, but also, we believe investors realize that Powell will execute another “pivot” when the market stumbles. Perhaps investors are willing to front run the next episode of money printing. Thus the market behavior which looks like a “crack up boom” is actually rational if you know that the Fed can never stop printing. 

Recently, to the Fed’s credit (and to preserve their credibility), Chairman Powell admitted that it is turning out that inflation is not transitory. Thus, they have announced that they will accelerate the tapering of QE which began slowly a few months ago.

Today’s blog post has been published without a paywall because I believe the content to be far too important. However, if you have the means and would like to support my work by subscribing, I’d be happy to offer you 22% off to become a subscriber in 2022: Get 22% off forever

At the current proposed rate they will not be purchasing any bonds in April of 2022. Furthermore, they have also indicated that taking interest rates off the zero bound in 2022 and the consensus dot plot is that the Fed Funds rate will go to 0.75% via three quarter point hikes this year. Now, whether the markets can handle this withdrawal of monetary stimulus appears to be an open question. [QTR: In the past few weeks, since this letter, inflation has continued, most recently at a 7.5% clip and investment banks are predicting up to 9 or 10 rate hikes for 2022].

In a system that is dependent upon the supply of new money and credit growing at an ever accelerating rate, it is merely a matter of time until the next crisis erupts and the Fed is forced to reverse course again. Hopefully for them, by that time inflation will have abated a bit and so we will start the next inflationary episode off a lower base.

We fear that, as Luke Gromen said, that in trying to control the economy the Fed thinks they have a thermostat when it may be more akin to an on/off switch on a nuclear reactor! 

Interestingly, given the Repo markets enhancements by the Fed, it’s possible the Taper of QE is irrelevant. As a former Federal Reserve Open Markets Senior Trader Joseph Wang points out: 

There is still $1 trillion in Fed liquidity that will gradually flow into the private sector after QE stops. A large chunk of liquidity created by QE over the past two years never entered the banking system, but instead sat first in the Treasury’s Fed account and later in the RRP Facility. In the coming months Treasury will restart bill issuance and draw those funds out of the RRP into the TGA, and then spend those funds into the banking sector. Over time that will leave the banking sector with about $1T more in reserves, and the non-banks with a $1T more in deposits. If the past is any guide, that suggests more portfolio rebalancing where banks will purchase more Treasuries and non-banks more risk assets.

Why Soft Gold And Bitcoin Prices?

Gold and Bitcoin, analog and digital sound money, respectively, are the two monetary fire alarms in our system.

Gold began 2020 at $1,550. It is at $1,830 at year end 2021, appreciation of 18%. Bitcoin began 2020 at $8,000 per coin. It closed 2021 at $47,000, appreciation of 487%.

As we have discussed in the past, we believe the price of gold is heavily suppressed through the futures markets and the issuance of paper claims on gold. Bitcoin does not suffer from this problem yet, although there is a $20B futures market in Bitcoin.

Bitcoin’s total market value is $966B and it trades approximately $25B of value per day in on chain transactions. We do not believe the futures market is a big factor in Bitcoin price discovery….yet. But there is no doubt that the leveraged Bitcoin exchanges and their growth have had an impact on prices. Still, Bitcoin is the monetary debasement fire alarm which is working. 

Both the Bitcoin and gold prices are somewhat soft at present. Gold is 11% below its recent all-time high. Bitcoin is 40% below its recent all-time high. We believe this is occurring because the market is reacting to the threat of less monetary accommodation.

And while we concede that the Fed is trying to slow down the printing (sort of), as stated above we do not believe that in the intermediate term they can stop in any sort of meaningful way.

The prescient words of Richard Russell apply here: INFLATE OR DIE. 

Our friend and Austrian based investor Ronnie Stoeferle recently posted this missive on Twitter which serves as a good reminder of how history often rhymes: 

“Two years ago gold bugs ran wild as the price of gold rose nearly six times. But since cresting two years ago it has steadily declined, almost by half, putting the gold bugs in flight. The most recent advisory from a leading Wall Street firm suggests .that the price will continue to drift downward, and may ultimately settle 40% below current levels. The sharply reduced rates of inflation combined with resurgence of other, more economically productive investments, such as stocks, real estate and bank savings have combined to eliminate gold’s allure. Although the American economy has reduced its rate of recovery, it is on a firm expansionary course.” 

New York Times, August 1976 

And as our friend Brien Lundin, CEO of the New Orleans Investment Conference points out:

“Gold bottomed in early September 1976, but really took off when the Treasury began gold auctions in ’78. This overt manipulation for covert reasons was a desperation move that ironically fueled another 8x rise in the gold price!”

History often rhymes indeed, in this case in terms of an inflationary decade like the 1970s and the reaction of hard money assets. 

About Larry Lepard

Larry manages the EMA GARP Fund, a Boston based investment management firm. Their strategy is focused on providing "Monetary Debasement Insurance". He has 38 years experience and an MBA from Harvard Business School. On Twitter he is @LawrenceLepard Managing Partner and, via email, he is

Disclaimer: QTR is long various gold and silver miners and have both long and short exposure to the market through equities and derivatives. I have no position in Larry’s funds. Larry is a subscriber to Fringe Finance and has been on my podcast. The excerpts from Larry’s letter, above, shall not be construed as an offer to sell, or the solicitation of an offer to sell, any securities or services. Any such offering may only be made at the time a qualified investor receives from EMA formal materials describing an offering plus related subscription documentation. There is no guarantee the Fund’s investment strategy will be successful. Investing involves risk, and an investment in the Fund could lose money. The strategy is also subject to the following risks: Currency Risk, Non-US Investment Risks, Issuer Specific Risk.

Tyler Durden Sat, 03/12/2022 - 22:30
Published:3/12/2022 9:55:49 PM
[Markets] Macleod: The End Of Fiat Is Hoving Into View... Macleod: The End Of Fiat Is Hoving Into View...

Authored by Alasdair Macleod via,

Tragic though the situation in Ukraine has become, the real war which started out as financial in character some time ago has now become both financial and about commodities. Putin made a huge mistake invading Ukraine but the West’s reaction by seeking to isolate Russia and its commodity exports from the global marketplace is an even greater one.

Furthermore, with Ukraine being Europe’s breadbasket and a major exporter of fertiliser, this summer will bring acute food shortages, worsened by China having already accumulated the bulk of the world’s grains for its own population. Inflation measured by consumer prices has only just commenced an accelerated rise.

Because they discount falling purchasing power for currencies, rising interest rates, and collapsing bond prices are now inevitable. Being loaded up with bonds and financial assets as collateral, the consequences for the global banking system are so significant that it is virtually impossible to see how it can survive. And if the banking system faces collapse, being unbacked by anything other than rapidly disappearing faith in them fiat currencies will fail as well.

Unforeseen financial and economic consequences

Back in the 1960s, Harold Wilson as an embattled British Prime Minister declared that a week is a long time in politics. Today, we can also comment it is a long time in commodity markets, stock markets, geopolitics, and almost anything else we care to think of. The rapidity of change may not be captured in just seven calendar days, but in recent weeks we have seen the initial pricking of the fiat currency bubble and all that floats with it.

This is turning out to be an extreme financial event. The background to it is unwinding of economic distortions. Through a combination of currency and credit expansion and market suppression, the difference between state-controlled pricing and market reality has never been greater. Zero and negative interest rates, deeply negative real bond yields, and a deliberate policy of artificial wealth creation by fostering a financial asset bubble to divert attention from a deepening economic crisis in recent years have all contributed to the gap between bullish expectations and market reality.

Today, almost no one thinks that our blessèd central banks and their governments can fail, let alone lose control over markets. And if you walk like a Keynesian, talk like a Keynesian you are a Keynesian. Everyone does — even the gait of mathematical monetarists is indistinguishable from them in their support of inflationism. And Keynesians believe in the state theory of everything, despising markets and now fearing their reality.

This week sees growing concerns that American-led attempts to kick Putin’s ass comes with consequences. Put to one side the destruction wreaked on the Ukrainian people as the two major military nations wage yet another proxy war. This one is in Europe’s breadbasket, driving wheat prices over 50% higher so far this year. Having laid waste over successive Arab nations since Saddam Hussein invaded Kuwait in 1990, the people who have survived American-led wars in the Middle East and North Africa and not emigrated as refugees are now going to face starvation.

Fuelled by the expansion of currency and credit, it is not just wheat prices which are soaring. Other foodstuffs are as well. And we learn through various sources that the Chinese have been prescient enough to stockpile enormous quantities of grains and other comestible materials to protect their citizens from a summer food crisis. Twenty per cent of the world’s population has secured more than half the globe’s maize and other grains (Nikkei Asia, 23 December – see Figure 1). And that was two months before Putin ordered the invasion of Ukraine, which has made the position over global food supplies even worse. And China’s dominant position in maize will hit sub-Saharan Africa especially hard, while global shortages of rice will hit Southern and East Asian nations.

All we need now is crop failures. Speaking of which, fertiliser shortages, exacerbated by the Ukraine war and high gas prices, are bound to affect global food production adversely for this year’s harvest. And well done to our elected Leaders for imposing sanctions on Russian exports of fertiliser, which added to China’s conservation of its supplies will ensure our poor, and everyone else’s poor, face soaring food prices and even starvation in 2022.

Yet, few seem aware of this developing crisis. While Ukraine is an obvious factor driving up food and energy prices, the root cause has been and will continue to be monetary policies driving the leading currencies. History is littered with examples of currency debasement leading to a food crisis and civil unrest: the Emperor Diocletian’s edict controlling prices in 301AD; coin debasement leading to soaring food prices in 1124AD at the time of England’s Henry I; the collapse of John Law’s livre in 1720 France, to name but a few.

From the dollar as the reserve currency, to euros, yen, pounds, and the rest, all of them have been debased in what used to be called the civilised world. And an understanding of money and the empirical evidence both point to a consequential food crisis this summer.

How will we pay for the higher prices? Well, no one need go without, because it will be a Keynesian designated slump. And the authorities will be onto it. Your central bank will simply issue more currency and you might even get some helicoptered to you. Price controls will prove irresistible to our leaders, and just as Diocletian penalised butchers and bakers who raised their prices under pain of death, today’s providers of life’s essentials will be accused of profiteering and taxed accordingly.

And how do we ensure our lifestyles will be not undermined? We can borrow more to pay for cars and holidays. And how do we ensure we preserve our wealth? Your central bank will suppress interest rates to keep stock markets bubbling.

It is, in essence, a trick played on us all by using fiat currency masquerading as traditional money. The risk is that the investing public, and then the public on Main Street, will twig it. First the financial asset bubble pops and then we will be unable to feed ourselves. Those who vaguely see the danger by projecting known factors think that decline is a gradual process. The mistake they make is a human element, which results in unforeseen consequences in the form of a sudden financial and economic crisis.

This article is about the approaching financial and banking crises, which we can now say will likely overwhelm us sooner rather than later. We start with a reality check on the current state of the commodity, financial and economic war. That is raging now, and it will almost certainly destabilise the current world order. And the consequences for interest rates will require the entire global financial system to be recapitalised, starting with the central banks.

The developing commodity and financial crisis

If Putin had stuck to his original objective of driving a wedge between Europe and America, he would have been able to push up natural gas prices in Western Europe without resorting to any other economic weapons. Events have dictated otherwise. And now America in kick-ass mode has united its NATO European members to drive up energy prices beyond Europe and food prices globally by proscribing all financial payments with Russia. The wider economic concern is that soaring commodity, energy, and food prices will lead to a worldwide slump.

Driven by an initial flight by investment funds away from risk towards safety, bond yields were initially driven lower from recent highs. Figure 2 shows how bond yields for the 10-year bonds in America, Germany, and Japan had declined from recent peaks earlier this week.

Though yields have risen slightly since, these declines were something of a lifeline for the Fed, ECB, and BOJ, and it would be convenient for them if they were to stabilise at current levels. It fits their preferred narrative, which is that inflation, by which they mean rising consumer prices, is fuelled by temporary factors which will diminish in time. And when Putin is forced to give up his aggression against Ukraine, prices will normalise.

Western policy planners see signs that their economies are being undermined by these developments and expect the outlook will change from inflation to recession. Therefore, central bankers and economists are beginning to think that to raise interest rates would prove to be an error of policy which could drive a mild recession into a possible slump.

Currencies are also affected by the flight to safety. The conventional view is that the safest currency is the dollar, and that has rallied sharply, as shown in Figure 3.

But it should be noted that foreign ownership is already heavily skewed into US dollars and US dollar assets. According to the latest US Treasury TIC figures, Long-term and short-term securities and bank deposits owned by foreigners totalled $34 trillion last December. This represents about 150% of US GDP and has almost certainly risen further since.

By any measure, the US dollar is over-owned by foreigners.

The current wave of foreign currency deposits fleeing into dollars is storing up trouble for the dollar in future, because they either represent inefficiently deployed liquidity for foreigners accounting in other currencies or they are invested in over-valued financial assets. But for now, not only is the dollar the king of currencies, but the proximity of the Eurozone to Ukraine and the commercial links to Eastern Europe in the wider sense undermines confidence in the euro. The euro is the largest component of the dollar’s trade-weighted index in Figure 3 above.

But the flight to safety in currencies and bonds is a temporary step driven by investors in thrall to Keynesian macroeconomics. Having been educated exclusively in Keynesianism they lack an understanding of gold and its monetary role. When freely exchangeable for gold coin, only then does a currency take on gold’s monetary qualities. It has been eighty-nine years since the dollar enjoyed this status, and for the last fifty-one years it has been totally fiat, taking all other currencies off gold with it. In fact, the temporary suspension of the Bretton Woods agreement has been replaced with American anti-gold propaganda in to secure dollar hegemony.

The few people who both understood money as opposed to fiat currencies and manage financial assets have long since retired. All currencies are now state-issued fiat, vulnerable to a schism between their purchasing power and that of gold. The escape from these unsound characteristics will undoubtedly be into metallic money, that is gold and silver, when public confidence in fiat finally disappears. That is not yet the current situation.

Russia’s central bank will be considering its position

The position in Russia is contrastingly different. Over the last two years its M2 money supply has increased by 27% compared with 41% for the dollar. The rouble has not been driven down so much by inflationary policies but by an external threat to it. This has led to cash withdrawals from their bank accounts by middle-class Russians, reflecting an erosion of domestic confidence in the commercial banks. On the foreign exchanges, the rouble has almost halved against the dollar. The Russian Central Bank will be considering its reserves policy, beyond its initial response of raising interest rates to 20% and imposing restrictive foreign exchange controls.

Of the RCB’s total foreign reserves, about $500bn equivalent is in foreign currencies and $130bn is in gold. Sanctions against it have rendered the foreign currency element valueless, at least so long as sanctions are enforced. The difference between fiat currency and gold has been clearly demonstrated. Only physical gold reserves, which have no counterparty risk, has any value to the Russian state. The question now faced by the RCB is how to stabilise the currency and return public confidence in it.

It has some high-value cards in its hand. The run on the banks is likely to diminish in time and the rouble should stabilise after the initial fall on the foreign exchanges. A period of currency stability will take the pressure off the banking system as the panic recedes. The increase in global commodity prices will go a long way towards stabilising Russia’s finances, despite Western sanctions. Russia will adapt to sanctions and find ways to export energy and raw materials. Whenever sanctions have been imposed, such as against South Africa in the apartheid years, after an initial shock the nation emerges stronger. And in the near term, labour costs have been halved relative to commodity outputs.

Meanwhile, a consequence of the failure to take Ukraine will increase the likelihood that Putin will escalate the energy and commodity crisis as a means of destabilising Russia’s Western enemies. He has been forced into a corner in this respect, and we have not yet seen his response. The intriguing question is what Russia will do about gold.

Clearly, with the bulk of its currency reserves sanctioned by the West, gold has become the stand-out asset. And if the RCB feels the need to stabilise the rouble in the longer term, then its gold reserves could be deployed to stabilise the currency and insure it against future hostilities. To advance a gold policy, the RCB might want to drive the dollar gold price higher before fixing a rate for the rouble, which would also have the effect of increasing the value of its gold reserves relative to roubles in circulation. It could do this through Asian markets, particularly the Shanghai Gold Exchange, deploying its yuan reserves.

For the moment, any such action is merely conjecture. But the consequences for the West and its dollar-based currency system would likely be to see confidence in its fiat money system undermined, making it an interesting option for Putin. Together with rising commodity and energy prices rising gold prices would draw attention to the counterparty risks faced by holders of currencies in the foreign exchanges. The West’s response is likely to be hampered by the mindset of fifty-one years of American anti-gold propaganda. And the lack of physical bullion in the US Treasury’s possession to sell into the markets could become widely suspected — this was exposed by the difficulties Germany had in getting the Federal Bank of New York to return a minor portion of its earmarked gold back in 2013.

If gold became an issue, doubtless America would apply pressure on the Europeans to supply some of their gold into bullion markets to drive the price down. But this would probably play into Putin’s hands because the European central banks, facing their own difficulties (more on this below) are unlikely to cooperate. That would drive the wedge between America and Europe, which before his mistaken invasion of Ukraine was Putin’s real objective.

Despite what might happen on gold, if interest rates in Western currencies are not permitted to rise, their purchasing power will be undermined at an increasing pace. Let it be explained for our Keynesian friends: interest rates are not the price of money, but compensation demanded by markets for expectations of a currency’s loss of purchasing power. Withhold that compensation and your currency is toast.

Recapitalising the West’s global banking system

The flight into government bonds and the dollar shown above in Figures 2 and 3 respectively is merely an initial market response seeking safety and to preserve fiat liquidity. And bond yields remaining low are consistent with unrealistic expectations that the outlook will become less inflationary and more recessionary over time. This appears to reflect hope that Putin will fail in his attack on Ukraine, and the crisis will soon be over.

A proper understanding of the crisis in prices is that they are fuelled not by war itself, but by currency debasement. Following both the Lehman failure and covid lockdowns global currency debasement in the Western partnership has been both substantial and universal, and the fallout from Putin’s war can only increase it further. Therefore, measures of inflation will not decline back towards the 2% target but increase substantially. Following the initial commodity and financial crisis, driven by market expectations interest rates are bound to rise significantly despite central bank suppression.

The effect of higher interest rates on the banking system will be materially different from past cycles. US commercial banks have not increased their lending to Main Street materially in recent years, focusing on credit creation for the financial sector and the Federal Government. According to the Fed’s H.8 Table, since 11 March 2020 (before the Fed reduced its funds rate to zero and instituted QE of $120bn per month) the expansion of bank credit in favour of securities in bank credit has increased by 32%. The increase in favour of loans and leases has been only 6%. We can assume that the cycle of bank credit in its contraction phase will be driven more by rising bond yields and collapsing stock markets than by conventional business credit contraction.

Central banks have become similarly vulnerable themselves. They have taken on the role of investors in government and agency debt, and the Bank of Japan has also accumulated equities through exchange traded funds. So not only will commercial banks suffer losses that threaten to wipe out their equity, but the major central banks face the same problem when rising interest rates getting beyond their control undermine the value of their investments. Rising interest rates mean that the entire Western banking system will need to be bailed out by a recapitalisation.

It may surprise those unfamiliar with the differences between money, currency, and credit, that new capital for a bank is always financed from its own balance sheet. In effect, temporary credit is turned into permanent capital. This is because either a deposit from an existing customer is re-allocated, or one is paid in from another bank creating a new deposit. Alternatively, and this is usually the case today, an agent is appointed to arrange subscriptions for the new capital, be it in the form of a rights issue or placing. On completion, the agent transfers subscribers’ deposits to a deposit account created for the purpose at the recapitalising bank. The deposit is then exchanged for the extra capital promised to the depositors under the terms of subscription.

Understanding the process is important. Most people would think that money or currency is involved when it never is. Bank capital is always provided out of bank credit.

A central bank raises capital by the same means but has the additional facility of creating and then redeeming its own bank notes, swapping them across its books for permanent capital. For this reason, a note issuing bank or central bank is never stuck for permanent capital. Furthermore, when you read that a bank has permanent capital of a billion dollars, most people think it is paid up in hard money. But it is an illusion funded entirely by bank credit — credit created by the bank itself.

To explain the mechanics, we can refer to how the Bank of England’s capital was increased in 1697. The Bank was founded in 1694 to act as banker to the government with an original capital of £1,200,000.

In the second half of 1696 the Bank had stopped payment due to a depositor’s run on its stocks of silver, brought about by a shortage of new coin following the Recoinage Act of January that year, and its circulating notes fell to a discount of 20% to their face value. To restore public credit in the Bank, Parliament in 1697 determined to increase the capital of the bank by £1 million (the actual figure in the Bank’s records was £1,001,171 10s[i]) but no part of the increased capital was actually paid up in money, which was silver (England was on a silver standard at that time). In pursuance of the Act £800,000 were paid in Exchequer tallies (effectively a loan issued to the Treasury by the Bank to allow the Treasury to subscribe for stock) and £200,000 in the bank’s own depreciated notes which were taken at the full value in cash. Thus, at the first increase of capital from the original £1,200,000, £200,000 of the capital consisted of its own depreciated bank notes. And the Bank was then authorised to issue its own banknotes to the amount of this portion of the increase in capital, so that the quantity of circulating banknotes remained the same.

Such are the methods by which the capital of a bank which issues notes may be increased. But the capital of a bank which does not issue notes may be increased by similar means. The essence of banking is to make advances by creating credits or deposits, and they can be used to increase its capital. The method was proved in the case of the Bank of Scotland when it increased its capital in 1727.

Suppose that a bank wishes to increase its capital and its customers wish to subscribe. In theory, they may pay in currency (that is bank notes) but today that never happens. But they can give the bank a check drawn on their account. This is the same thing as paying the bank in its own debt to subscribe for capital. It is the release of a debt owed by the bank to its customer, and that debt released then becomes a matching increase of capital. The recently agreed procedures for bank bail-ins, whereby a failing bank is recapitalised by exchanging bond obligations and large deposits for equity stock, accords entirely with these principals and is the way in which the capital of all commercial banks is increased.

Having clarified the procedures, we can now understand how the global banking system can be recapitalised and the potential difficulties.

The consequences of a mass bank recapitalisation

The recapitalisation of commercial banks which are not irretrievably bankrupt has been not uncommon in the past. For the first time, we are likely to see additional losses on central bank bond investments at all the major central banks (excepting China and Russia) which on a mark-to-market basis will wipe out their notional equity, leaving balance sheet liabilities exceeding their assets. And because this will occur as interest rates rise and bond prices fall, it is likely to occur when commercial banks need rescuing from the same effects of rising interest rates on loan collateral and their bond investments, along with the complications of the usual cyclical contraction of commercial bank credit.

In 1697 the recapitalisation of the Bank of England was to stop the run on silver coin. No specie was involved in the recapitalisation. The outward appearance of the bank’s stability was enhanced which removed the embarrassing discount on its bank notes, making them acceptable as a substitute for silver coin. Today, the objective of a mass central bank recapitalisation will be so that their credit as issuers of fiat currencies can be maintained.

The obvious concern becomes how such an exercise will affect confidence in their currencies. With the Fed, the ECB, the BOJ, and the BOE all technically bust and with no money backing them (that is physical gold), the fiat currencies they issue rely on confidence in the issuer and its currency. The losses on their bond investments from rising interest rates and the need for their recapitalisation will be synchronised by circumstances. How this plays out in terms of public confidence in financial markets and currencies for now is a matter of speculation. But we should bear in mind that while the other central banks can perform a modern version of the Bank of England’s 1697 recapitalisation, the ECB has no government treasury ministry to act as the principal counterparty.

Its shareholders are the nineteen national central banks in the euro system. Nearly all the national central banks have liabilities in excess of their assets as well or will have on just a small increase in euro-denominated bond yields. There is the further complication that through the TARGET2 settlement system some NCBs are creditors of the ECB already, and most of them owe euro credits to Germany’s Bundesbank, that of Luxembourg, Finland, and a few others.

A further concern will be about the survival of commercial banks in a higher interest rate environment. Of the expansion of commercial bank credit in the US since March 2020, the overwhelming majority has been into government and agency debt. The average balance sheet leverage of the US’s global systemically important banks (the G-SIBs) is about eleven times, so a rise in interest rates sufficient to discount the falling purchasing power of the dollar will wipe out the capital in all of these banks, even before other negative effects of a collapse of financial collateral values are accounted for.

The commercial banking networks with the highest leverage are in the Eurozone with its G-SIBs asset to equity ratios averaging over 21 times, with some considerably higher. The Japanese banks are also at about 21 times. Both the ECB and the BOJ have imposed negative interest rates, so the rise in global interest rates are bound to wipe out commercial bank capital in these jurisdictions first.

These problems are only defrayed for as long as the Keynesian establishment, including the investment community, is unaware of the consequences of currency inflation past, present, and future. When it has become clear that whatever happens in Ukraine only aggravates a situation over food, energy, and other prices with their knock-on effects we will have seen bond prices already collapsing, taking down the whole banking system from top to bottom.

Full faith and credit in fiat currencies is bound to evaporate, repeating on a global scale what happened in John Law’s France in 1720.

Tyler Durden Sat, 03/12/2022 - 12:30
Published:3/12/2022 11:51:39 AM
[Markets] Sperry: Ukraine Worked With Democrats Against Trump In 2016 To Stop Putin -- And It Backfired Badly Sperry: Ukraine Worked With Democrats Against Trump In 2016 To Stop Putin -- And It Backfired Badly

Authored by Paul Sperry via RealClearInvestigations,

Six years ago, before Russia’s full-scale invasion of their country, the Ukrainians bet that a Hillary Clinton presidency would offer better protection from Russian President Vladimir Putin, even though he had invaded Crimea during the Obama-Biden administration, whose Russian policies Clinton vowed to continue.

Working with both the Obama administration and the Clinton campaign, Ukrainian government officials intervened in the 2016 race to help Clinton and hurt  Donald Trump in a sweeping and systematic foreign influence operation that's been largely ignored by the press. The improper, if not illegal, operation was run chiefly out of the Ukrainian Embassy in Washington, where officials worked hand-in-glove with a Ukrainian-American activist and Clinton campaign operative to attack the Trump campaign. The Obama White House was also deeply involved in an effort to groom their own favored leader in Ukraine and then work with his government to dig up dirt on – and even investigate -- their political rival.

Ukrainian and Democratic operatives also huddled with American journalists to spread damaging information on Trump and his advisers – including allegations of illicit Russian-tied payments that, though later proved false, forced the resignation of his campaign manager Paul Manafort. The embassy actually weighed a plan to get Congress to investigate Manafort and Trump and stage hearings in the run-up to the election.

As it worked behind the scenes to undermine Trump, Ukraine also tried to kneecap him publicly. Ukraine's ambassador took the extraordinary step of attacking Trump in an Op-Ed article published in The Hill, an influential U.S. Capitol newspaper, while other top Ukrainian officials slammed the GOP candidate on social media.

Ukraine's ambassador to the U.S. attacked Trump in an Op-Ed weeks before the 2016 election.

At first glance, it was a bad bet as Trump upset Clinton. But by the end of his first year in office, Trump had supplied Ukrainians what the Obama administration refused to give them: tank-busting Javelin missiles and other lethal weapons to defend themselves against Russian incursions. Putin never invaded on Trump's watch. Instead, he launched an all-out invasion during another Democratic administration – one now led by President Biden, Barack Obama's former Vice President, whose Secretary of State last year alarmed Putin by testifying, “We support Ukraine's membership in NATO.” Biden boasted he’d go “toe to toe” with Putin, but that didn't happen as the autocrat amassed tanks along Ukraine’s border in response to the NATO overtures.

The Ukrainian mischief is part of Special Counsel John Durham’s broader inquiry – now a full-blown criminal investigation with grand jury indictments – into efforts to falsely target Trump as a Kremlin conspirator in 2016 and beyond.

Sources say Durham has interviewed several Ukrainians, but it’s not likely the public will find out exactly what he's learned about the extent of Ukraine’s meddling in the election until he releases his final report, which sources say could be several months away.

In the meantime, a comprehensive account of documented Ukrainian collusion – including efforts to assist the FBI in its 2016 probe of Manafort – is pieced together here for the first time. It draws from an archive of previously unreported records generated from a secret Federal Election Commission investigation of the Democratic National Committee that includes never-before-reviewed sworn affidavits, depositions, contracts, emails, text messages, legal findings and other documents from the case. RealClearInvestigations also examined diplomatic call transcripts, White House visitor logs, lobbying disclosure forms, congressional reports and closed-door congressional testimony, as well as information revealed by Ukrainian and Democratic officials in social media postings, podcasts and books.

2014: Prelude to Collusion

U.S. envoys Victoria Nuland and Geoffrey Pyatt helped bring to power Ukraine's Petro Poroshenko, right. (AP)

The coordination between Ukrainian and Democratic officials can be traced back at least to January 2014. It was then when top Obama diplomats – many of whom now hold top posts in the Biden administration – began engineering regime change in Kiev, eventually installing a Ukrainian leader they could control.

On Jan. 27, U.S. Ambassador to Ukraine Geoffrey Pyatt phoned Assistant Secretary of State Victoria Nuland at her home in Washington to discuss picking opposition leaders to check the power of Ukrainian President Viktor Yanukovych, whom they believed was too cozy with Putin. “We’ve got to do something to make it stick together,” Pyatt said of a planned coalition government, adding that they needed “somebody with an international personality to come out here and help to midwife this thing.”

Nuland responded that Biden’s security adviser Jake Sullivan had just told her that the vice president – who was acting as Obama’s point man in Ukraine – would give his blessing to the deal. “Biden’s willing,” she said. But they agreed they had to “move fast” and bypass the European Union. “Fuck the EU,” Nuland told the ambassador, according to a leaked transcript of their call.

Hunter Biden: His father helped engineer the rise of an amenable Ukrainian leader who would later fire a prosecutor investigating the son.

Nuland’s role in the political maneuvering was not limited to phone calls. She traveled to Kiev and helped organize street demonstrations against Yanukovych, even handing out sandwiches to protesters. In effect, Obama officials greased a revolution. Within months, Yanukovych was exiled and replaced by Petro Poroshenko, who would later do Biden’s bidding – including firing a prosecutor investigating his son Hunter. Poroshenko would also later support Clinton's White House bid after Biden decided not to run, citing the death of his older son Beau.

The U.S. meddling resulted in the installation of an anti-Putin government next door to Russia. A furious Putin viewed the interference as an attempted coup and soon marched into Crimea.

Nuland is now Biden’s undersecretary of state and Sullivan serves as his national security adviser.

Whispering in their ear at the time was a fiery pro-Ukraine activist and old Clinton hand, Alexandra “Ali” Chalupa. A daughter of Ukrainian immigrants, Chalupa informally advised the State Department and White House in early 2014. She organized multiple meetings between Ukraine experts and the National Security Council to push for Yanukovych’s ouster and economic sanctions against Putin.

In the NSC briefings, Chalupa also agitated against longtime attorney-lobbyist Manafort, who at the time was an American consultant for Yanukovych's Party of Regions, which she viewed as a cat’s paw of Putin. She warned that Manafort worked for Putin’s interests and posed a national security threat.

At the same time, Chalupa worked closely with then-Vice President Biden’s team, setting up conference calls with his staff and Ukrainians.

Another influential adviser at the time was former British intelligence officer Christopher Steele, who provided Nuland with written reports on the Ukrainian crisis and Russia that echoed Chalupa’s warnings. Nuland treated them as classified intelligence, and between the spring of 2014 and early 2016, she received some 120 reports on Ukraine and Russia from Steele.

2015: The Move Against Manafort Commences

Paul Manafort: Targeted by Chalupa over work for the ousted Ukrainian president and ties to Trump. (AP)

In April 2015, the DNC hired Chalupa as a $5,000-a-month consultant, according to a copy of her contract, which ran through the 2016 election cycle. (Years earlier, Chalupa had worked full-time for the DNC as part of the senior leadership team advising Chairwoman Debbie Wasserman Schultz.) After Trump threw his hat in the ring in June 2015, Chalupa grew concerned that Manafort was or would be involved with his campaign since Manafort had known Trump for decades and lived in Trump Tower. She expressed her concerns to top DNC officials and “the DNC asked me to do a hit on Trump,” according to a transcript of a 2019 interview on her sister’s podcast. (Andrea Chalupa, who describes herself as a journalist, boasted in a November 2016 tweet: “My sister led Trump/Russia research at DNC.”)

Chalupa began encouraging journalists both in America and Ukraine to dig into Manafort’s dealings in Ukraine and expose his alleged Russian connections. She fed unsubstantiated rumors, tips and leads to the Washington Post and New York Times, as well as CNN, speaking to reporters on background so a DNC operative wouldn’t be sourced.

“I spent many, many hours working with reporters on background, directing them to contacts and sources, and giving them information,” Chalupa said.

But no reporter worked closer with her than Yahoo News correspondent Michael Isikoff. He even accompanied her to the Ukrainian Embassy, where they brainstormed attacks on Manafort and Trump, according to FEC case files.

Chalupa was also sounding alarm bells in the White House. In November 2015, for example, she set up a White House meeting between a Ukrainian delegation including Ukraine Ambassador Valeriy Chaly and NSC advisers – among them Eric Ciaramella, a young CIA analyst on loan to the White House who later would play a significant role as anonymous "whistleblower" in Trump’s first impeachment. In addition to Putin’s aggression, the group discussed the alleged security threat from Manafort. Chalupa was back in the White House in December. All told, she would visit the Obama White House at least 27 times, Secret Service logs show, including attending at least one event with the president in 2016.

Eric Ciaramella (middle right) across from Ukrainians in a June 2015 meeting at the White House, flanked by Biden security adviser Michael Carpenter and Ciaramella's NSC colleague Liz Zentos. (

January 2016: High-Level Meetings With Ukrainians in the White House

On Jan. 12, 2016 – almost a month before the first GOP primary – Chalupa told top DNC official Lindsey Reynolds she was seeing strong indications that Putin was trying to steal the 2016 election for Trump. Emails also show that she promised to lead an effort to expose Manafort – whom Trump would not officially hire as his campaign chairman until May – and link him and Trump to the Russian government. That same day, Chalupa visited the White House.

A week later, Obama officials gathered with Ukrainian officials traveling from Kiev in the White House for a series of senior-level meetings to, among other things, discuss reviving a long-closed investigation into payments to American consultants working for the Party of Regions, according to Senate documents. The FBI had investigated Manafort in 2014 but no charges resulted.

One of the attendees, Ukrainian Embassy political officer Andrii Telizhenko, recalled Justice Department officials asking investigators with Ukraine’s National Anti-Corruption Bureau, or NABU, if they could help find fresh evidence of party payments to such U.S. figures. (Three years later, Democrats would impeach Trump for allegedly asking Ukraine to dig up dirt on a political rival, Joe Biden.)

The Obama administration’s enforcement agencies leaned on their Ukrainian counterparts to investigate Manafort, shifting resources from an investigation of a corrupt Ukrainian energy oligarch who paid Biden’s son hundreds of thousands of dollars through his gas company, Burisma.

“Obama’s NSC hosted Ukrainian officials and told them to stop investigating Hunter Biden and start investigating Paul Manafort,” said a former senior NSC official who has seen notes and emails generated from the meetings and spoke on the condition of anonymity.

Suddenly, the FBI reopened its Manafort investigation. “In January 2016, the FBI initiated a money laundering and tax evasion investigation of Manafort predicated on his activities as a political consultant to members of the Ukrainian government and Ukrainian politicians,” according to a report by the Justice Department’s watchdog.

The White House summit with Ukrainian officials ran for three days, ending on Jan. 21, according to a copy of the agenda stamped with the Justice Department logo. It was organized and hosted by Ciaramella and his colleague Liz Zentos from the NSC. Other U.S. officials included Justice prosecutors and FBI agents, as well as State Department diplomats. The Ukrainian delegation included Artem Sytnyk, the head of NABU, and other Ukrainian prosecutors.

Ciaramella was a CIA detailee to the White House occupying the NSC’s Ukraine desk in 2015 and 2016. In that role, Ciaramella met face-to-face with top Ukrainian officials and provided policy advice to Biden through the then-vice president's security adviser Michael Carpenter. He also worked with Nuland and Chalupa.Ciaramella was carried over to the Trump White House. As RealClearInvestigations first reported, he would later anonymously blow the whistle on Trump asking Ukraine’s new president, Volodymyr Zelensky, to help “get to the bottom of” Ukrainian meddling in the 2016 election, a phone call that triggered Trump’s first impeachment by a Democrat-controlled House. Ciaramella’s former NSC colleague Alexander Vindman leaked the call to him. Vindman, a Ukrainian-American, is also aligned with Chalupa. (Vindman is now back in the news for his demands that the United States provide more active military support to Ukraine and his insistence that Trump shares great blame for the war.)

As Manafort drew closer to Trump, Obama officials zeroed in, and the FBI reopened a closed 2014 probe. (Justice Department Office of the Inspector General)

February 2016: Obama White House-Ukraine Coordination Intensifies

On Feb. 2, two weeks after the White House meetings, Secret Service logs reveal that Ciaramella met in the White House with officials from the U.S. Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN, which would later provide the FBI highly sensitive bank records on Manafort. (In addition, a senior FinCEN adviser illegally leaked thousands of the confidential Manafort records to the media.)

On Feb. 9, less than a month after the White House summit, Telizhenko, who worked for the Ukrainian Ministry of Foreign Affairs, met with Zentos of the NSC at a Cosi sandwich shop in Washington, according to emails obtained by the Senate. It's not known what they discussed. In addition, on Feb. 23, the two emailed about setting up another meeting the following day. “OK if I bring my colleague Eric, who works on Ukraine with me?” Zentos asked Telizhenko, apparently referring to Ciaramella. In the emails, they discussed the U.S. primary elections, among other things.

NSC's Zentos and Ukraine's Telizhenko would meet and correspond numerous times during 2016. (HSGAC-Finance Committee Hunter Biden Report)

Telizhenko would later testify that Ambassador Chaly had ordered him then to “start an investigation [into the Trump campaign] within the embassy just on my own to find out with my contacts if there’s any Russian connection that we can report back.” He suspects the Ambassador delivered that report to Chalupa and the DNC. Chalupa visited the White House on Feb. 22, entrance records show, just days before the second meeting Telizhenko had planned with Zentos.

March 2016: Chalupa Engineers Manafort Messaging Assault With Ukrainians

After Manafort was named Trump campaign chair, the campaign against him went into overdrive. New York Times

On March 3, Zentos and Telizhenko planned to meet again, this time at a Washington bar called The Exchange. According to their email, Zentos wrote, “I’ll see if my colleague Eric is up for joining.” The pair also met the next day at Swing’s coffee house in Washington. After the meeting, Telizhenko emailed Zentos seeking a meeting with senior Obama NSC official Charlie Kupchan, an old Clinton hand who was Ciaramella’s boss on the Russia/Ukraine desk. Kupchan is an outspoken critic of Trump who has made remarks suggesting what countries “can do to stop him” and “protect the international institutions we’ve built .” Zentos and Telizhenko also met on March 10, patronizing the Cosi coffee shop again.

On March 24, 2016, four days before the Trump campaign announced that it had hired Manafort, Chalupa met at the Ukrainian Embassy with Ambassador Chaly and his political counselor Oksana Shulyar, where they shared their concerns about Manafort, according to Politico.

When news broke on March 28 that Manafort was joining the Trump campaign, Chalupa could hardly contain herself. “This is huge,” she texted senior DNC officials. “This is everything to take out Trump.”

She immediately began circulating anti-Manafort memos, warning the DNC of the “threat” he posed of Russian influence. The next day, March 29, she briefed the DNC communications team about Manafort. They, in turn, hatched a plan to reach out to the Ukrainian Embassy to get President Porochenko to make an on-camera denouncement of Manafort and feed the footage to ABC News, where former Clinton aide George Stephanopoulos works as a top anchor. On March 30, Chalupa fired off an email to Shulyar, her contact at the Ukrainian Embassy:

"There is a very good chance that President Poroshenko may receive a question from the press during his visit about the recent New York Times article saying that Donald Trump hired Paul Manafort as an adviser to his campaign and whether President Poroshenko is concerned about this considering Trump is the likely Republican nominee and given Paul Manafort’s meddling in Ukraine over the past couple of decades,” Chalupa wrote. "It is important President Poroshenko is prepared to address this question should it come up. In a manner that exposes Paul Manafort for the problems he continues to cause Ukraine."

Within minutes of sending the email, Chalupa wrote the DNC’s communications director Luis Miranda, “The ambassador has the messaging.”

Then she reached out to a friend in Congress, Democratic Rep. Marcy Kaptur of Ohio, about holding hearings to paint Manafort as a pro-Kremlin villain.

April 2016: Chalupa Solicits Ukrainian Dirt on Trump, His Campaign, and Manafort

Though accounts differ, Chalupa discussed Trump dirt with Ukrainian representatives. Federal Election Commission

American presidential campaigns aren't supposed to work with foreign governments to dig up dirt on their political opponents. Geneva Convention rules bar diplomats from becoming entangled in their host country’s political affairs, particularly elections. There are also federal laws banning foreign nationals from engaging in operations to influence or interfere with U.S. political and electoral processes. In 2018, Special Counsel Robert Mueller indicted 13 Russian nationals on charges of conspiring to defraud the U.S. government for that purpose.

But just weeks after Manafort was hired by the Trump campaign, the Ukrainian Embassy appeared to be working with the Clinton campaign to torpedo him and the campaign.

Emails reveal that Chalupa and Shulyar, a top aide to Ambassador Chaly, agreed to meet for coffee on April 7, 2016, at Kafe Leopold, a restaurant near the Ukrainian Embassy in Washington. (Chalupa had paid a visit to the White House just three days earlier.) One of the purposes of the meeting, according to FEC case files, was to discuss Manafort and the danger he allegedly posed. They were joined at the café by Telizhenko, who said he was working on a “big story” on Manafort and Trump with the Wall Street Journal.

In a sworn 2019 deposition taken by the FEC, Telizhenko alleged that Chalupa solicited “dirt” on Trump, Manafort, and the Trump campaign during the meeting. Telizhenko also testified that Chalupa told him that her goal was “basically [to] use this information and have a committee hearing under Marcy Kaptur, congresswoman from Ohio, in Congress in September and take him off the elections."

Telizhenko later approached Ambassador Chaly about the DNC representative's overtures and he responded: “Yes. And I know that this is happening. You should work with her."

After speaking with Chaly, Telizhenko claims that he went back to Shulyar who instructed him to help Chalupa. “I went to Oksana and said, ‘Like what are we doing?’” he testified. " And she told me, ‘You have to work with Chalupa. And any information you have, you give it to me, I’ll give it to her, then we’ll pass it on later to anybody else we are coordinating with.’”

Less than a week later, on April 13, Telizhenko met again with White House official Zentos, email records reveal.

Telizhenko said he resigned the next month because of concerns regarding his embassy’s work with Chalupa and the Clinton team.

In her sworn account of the meeting, Chalupa acknowledged discussing Manafort and the “national security problem” he allegedly presented, but denied asking the embassy for help researching him. She allowed that she “could have mentioned the congressional investigation … that I had talked to Marcy Kaptur,” but maintained she couldn't recall trying to enlist the embassy in the effort.

Shulyar, however, clearly recalls that Chalupa sought the embassy’s help warning the public about Manafort – including pitching stories to the press and lobbying Congress, according to a 2020 written statement to the FEC. An “idea floated by Alexandra Chalupa was that we approach a co-chair of the Congressional Ukraine Caucus to initiate a congressional hearing on Paul Manafort,” Shulyar said, though she denied the embassy acted on the idea.

Around the same time, two Ukrainian lawmakers – Olga Bielkova and Pavlo Rizanenko – visited the U.S. and met with journalists, as well as a former State Department official with close ties to Sen. John McCain – David Kramer of the McCain Institute. Kramer would later leak the entire Steele dossier to the media. The meeting was arranged by major Clinton Foundation donor Victor Pinchuk, a Ukrainian oligarch who lobbied Clinton when she was Obama’s secretary of state. Bielkova was also connected to the Clinton Foundation, having once managed a Clinton Global Initiative program for Ukrainian college students.

While Clinton was at Foggy Bottom from 2009 to 2013, Ukrainians gave more money – at least $10 million, including more than $8 million from Pinchuk – to the Clinton Foundation than any other nationality including Saudi Arabians. Pinchuk's donation was a down payment on an astounding $29 million pledge.

On April 12, 2016, Bielkova also attended a meeting with Ciaramella and his NSC colleague Zentos, head of the Eastern Europe desk, according to lobbying disclosure records.

In late April, Chalupa helped organize a Ukrainian-American protest against Manafort in his Connecticut hometown. Activists shouted for Trump to fire Manafort, whom they called “Putin’s Trojan Horse,” while holding signs that read: “Shame on Putin, Shame on Manafort, Shame on Trump” and “Putin, Hands Off the U.S. Election.” Chalupa also organized social media campaigns against Manafort and Trump, including one that encouraged activists to share the Twitter hashtags: “#TrumpPutin” and "#Treasonous Trump."

Also that month, Chalupa reached out to Yahoo News reporter Isikoff to pitch a hit piece on Manafort. She connected him with a delegation of Ukrainian journalists visiting D.C. Isikoff would later be used by Steele to spread falsehoods from his dossier.

May-June 2016: Manafort Dirt Spreads

In a May 3 email, Chalupa alerted DNC communications director Luis Miranda and DNC opposition research director Lauren Dillion that there was “a lot more [dirt on Manafort] coming down the pipe[sic].”

Chalupa told them the dirt has “a big Trump component” and would “hit in the next few weeks.” It’s not clear if she was referring to the notorious "black ledger” smear against Manafort, who was promoted to campaign chairman on May 19, but a story about it was brewing at the time.

On May 30, Nellie Ohr, an opposition researcher for the Clinton-retained firm Fusion GPS, emailed her husband, Bruce Ohr, a top official at the Justice Department who would become a prime disseminator of the Steele dossier within the government, and two federal prosecutors to alert them to an article indicating NABU had suddenly discovered documents allegedly showing Manafort receiving illicit payments.

Amid the flurry of anti-Manafort activity, Zentos met again with Telizhenko on May 4, records show. And Chalupa visited the White House for a meeting on May 13.

Chalupa paid another visit to the White House on June 14, Secret Service logs show. On June 17, Ciaramella held a White House meeting with Nuland and Pyatt of the State Department to discuss undisclosed Ukrainian matters.

In late June, the FBI signed an evidence-sharing agreement with NABU, less than two months before the Ukrainian anti-corruption agency released what it claimed was explosive new evidence on Manafort.

July 2016: Ukrainian Officials Attack Trump Publicly

Chalupa continued to pow-wow with the Ukrainian Embassy and got so cozy with officials there that they offered her a position, which she declined, as an “embedded consultant” in the country’s Ministry of Foreign Affairs.

That same month, high-ranking Ukrainian officials openly insulted Trump on social media in an unusual departure from normal diplomacy.

For instance, Ukraine Minister of Internal Affairs Arsen Avakov tweeted that Trump was a “clown” who was “an even bigger danger to the U.S. than terrorism.” In another July post, he called Trump “dangerous for Ukraine.” And on Facebook, Ukrainian Prime Minister Arseny Yatseniuk warned that Trump had “challenged the very values of the free world."

(After Trump upset Clinton, Avakov and other officials tried to delete their statements from their social network accounts, saying that they had been wrong and had rushed to conclusions.)

“It was clear that they were supporting Hillary Clinton’s candidacy,” Ukrainian lawmaker Andriy Artemenko told Politico. “They did everything from organizing meetings with the Clinton team to publicly supporting her to criticizing Trump."

While attending the Democratic convention in Philadelphia, Chalupa spread the scurrilous rumor that Manafort was the mastermind behind the alleged Russian hacking of the DNC and that he “stole" her and other Democrats’ emails. She later told her sister’s podcast that she had reported her conspiracy theory to the FBI, eventually sitting down and meeting with agents in September to spin her tale of supposed espionage (the Senate has asked the FBI for copies of her interview summaries, known as FD-302s). Chalupa also prepared a report for the FBI, as well as members of Congress, detailing her Russiagate conspiracy theories, which Mueller later found no evidence to support.

In addition, Chalupa helped spread a false narrative that Trump removed a reference to providing arms to Kiev from the Republican platform at the party's convention earlier that month. Internal platform committee documents show the Ukraine plank could not have been weakened as claimed, because the “lethal” weapons language had never been part of the GOP platform. The final language actually strengthened the platform by pledging direct assistance not just to the country of Ukraine, but to its military in its struggle against Russian-backed forces.

August-September 2016: The Phony Manafort Ledger Leaks 

A page released by Ukrainian authorities from the fake Manafort ledger.
New York Times/NABU

In another attempt to influence the 2016 election, Ukrainian lawmaker Serhiy Leshchenko leaked to the U.S. media what he claimed was evidence of a secret handwritten ledger showing Manafort had received millions in cash from Yanukovych’s party under the table. He claimed that 22 pages of the alleged ledger, which contained line items written by hand, had mysteriously appeared in his parliament mailbox earlier that year. Leshchenko would not identify the sender. A fuller copy of the same document showed up later on the doorstep of a Ukrainian intelligence official who passed it to NABU, which shared it with FBI agents stationed in Kiev. Leshchenko and NABU officials held press conferences declaring the document was “proof" of Manafort corruption and demanding he be “interrogated.”

The Clinton campaign seized on the story. In an Aug. 14 statement, campaign manager Robby Mook stated: “We have learned of more troubling connections between Donald Trump's team and pro-Kremlin elements in Ukraine.” He demanded Trump "disclose campaign chair Paul Manafort's and all other campaign employees' and advisers' ties to Russian or pro-Kremlin entities."

But there was a big hole in the story. Though Manafort was a consultant to Yanukovych's party, he was paid by wire, not in cash, casting serious doubt on the ledger’s authenticity. Another problem: the ledger was alleged to have been kept at party headquarters, but rioters had destroyed the building in a 2014 fire.

Leshchenko admitted that he had a political agenda. He told The Financial Times at the time that he went public with the ledger because “a Trump presidency would change the pro-Ukrainian agenda in American foreign policy.” He added that most of Ukraine’s politicians are “on Hillary Clinton’s side."

Leshchenko also happened to be "a source for Fusion GPS,” as Nellie Ohr confirmed under questioning during a 2019 closed-door House hearing, according to a declassified transcript. Fusion was a paid agent of the Clinton campaign, which gave the private opposition-research firm more than $1 million to gin up connections between Trump and Russia. Fusion hired Steele to compile a series of “intelligence” memos known as the dossier. As a former MI6 operative, Steele gave the allegations a sheen of credibility.

FBI counterintelligence veteran Mark Wauck said the dossier and the black ledger both appear to have originated with Fusion GPS, which laundered it through foreigners who hated Trump – Steele and Leshchenko.

"The ledger and the dossier are both Fusion hit jobs,” Wauck said. “The two items shared a common origin: the Hillary campaign’s oppo research shop."

In an August 2016 memo written for Fusion GPS, “The Demise of Trump’s Campaign Manager Paul Manafort,” Steele claimed he had corroborated Leshchenko’s charges through his anonymous Kremlin sources, who turned out to be nothing more than beer buddies of his primary source collector, Igor Danchenko, a Russian immigrant with a string of arrests in the U.S. for public intoxication, as RealClearInvestigations first reported. Danchenko had worked for the Brookings Institution, a Democratic think tank in Washington that Durham has subpoenaed in connection to its own role in Russiagate. Danchenko was indicted last year by Special Counsel Durham for lying about his sources, including one he completely made up, as RCI reported.

“YANUKOVYCH had confided in PUTIN that he did authorize and order substantial kick-back payments to MANAFORT as alleged,” Steele claimed in the unsubstantiated report, citing “a well-placed Russian figure” with knowledge of a "meeting between PUTIN and YANUKOVYCH” allegedly “held in secret” on Aug. 15. As a paid informant, Steele had long reported to the FBI about alleged corruption involving Yanukovych.

The FBI used his Clinton-funded dossier as a basis to obtain warrants to spy on former Trump adviser Carter Page, including the false claim that Page acted as an intermediary between Russian leadership and Manafort in a “well-developed conspiracy of cooperation” that included sidelining Russian intervention in Ukraine as a campaign issue. Steele also falsely claimed that Page had helped draft the RNC platform statement to be more sympathetic to Russia’s interests by eliminating language about providing weapons to Ukraine, according to a report by the Department of Justice's watchdog. In fact, Page was not involved in the GOP platform. The misinformation came from Danchenko’s fictional source.

Fusion co-founder Glenn Simpson worked closely with the New York Times on the Manafort ledger story. In his book, “Crime in Progress,” Simpson boasts of introducing Leshchenko to the Times as a source, who ended up providing the paper some of the dubious ledger records. On Aug. 19, Manafort stepped down from the Trump campaign the day after the Times reported what it had been fed by the anti-Trump operatives.

In effect, Ukrainian government officials tried to help Clinton and undermine Trump by disseminating documents implicating a top Trump aide in corruption and telling the American media they were investigating the matter.

In 2018, a Ukrainian court ruled that Leshchenko and NABU’s Sytnyk illegally interfered in the 2016 U.S. election by publicizing the black ledger. Among the evidence was a recording of Sytnyk saying the agency released the ledger to help Clinton’s campaign – “I helped her,” Sytnyk is recorded boasting. But the damage was done. The Ukrainians, along with Chalupa and the Clinton camp, achieved their goal of undermining the Trump campaign by prompting Manafort’s ouster though they never proved he was colluding with the Russians. Neither did Special Counsel Mueller. In fact, Mueller did not use the ledger to prosecute Manafort after a key witness for the prosecution told him it was fabricated. “Mueller ended up dropping it like a hot potato,” Wauck said. 

Ukraine’s neutrality in the election was also called into further question that September, when Porochenko met with Clinton during a stop in New York. He never met with Trump, who appeared to get the cold shoulder from the Ukrainian leader. In statements following Trump’s surprise victory over Clinton in November, Ukraine’s embassy has denied interfering in the election and insisted that Chalupa was acting on her own.


After Trump won the election in spite of her efforts to sabotage him, Chalupa predicted: “Under President Trump, the Kremlin could likely invade U.S. allies in Europe without U.S. opposition.”

Not only did Russia not invade Europe “under Trump,” it didn’t even invade Ukraine. Rather, the invasion came under Biden, whose campaign Chalupa supported. Yet she continues to blame Trump. Recent tweets show a still-obsessed Chalupa has not dialed back her extremist views about Trump or Manafort, whom she believes should be prosecuted for “treason."

In a Feb. 28 post on Twitter, for example, Chalupa claimed that Putin installed “a puppet regime in the U.S. with the help of Paul Manafort.” The previous day, she tweeted, “We had a Putin installed Trump presidency.” A day before that, she wrote: “Now would be a good time to release the Putin-Trump treason calls.”

And on Feb. 25, Chalupa tweeted another wild conspiracy theory: "It’s important to note that Putin’s imperial aspirations are of a global criminal empire, as we saw when he installed Donald J. Trump president and tried to turn the U.S. into a Russian satellite state."

Tyler Durden Fri, 03/11/2022 - 19:00
Published:3/11/2022 6:16:25 PM
[Markets] Morgan Stanley Trader Sent Packing After Racking Up Tens Of Millions In Losses Morgan Stanley Trader Sent Packing After Racking Up Tens Of Millions In Losses

We were wondering when we would see a Jerome Kerviel-inspired prop trading blow up as a result of the recent market turmoil, and this morning we got it. According to Bloomberg, Morgan Stanley derivatives trader Hamza El Hassani, is leaving the firm after racking up tens of millions of dollars in losses following the recent burst of market volatility.

El Hassani, who traded dividends in the New York-based bank’s equities division, is leaving the bank after his trading book blew up racking up losses "less than $50 million", Bloomberg reports citing people with knowledge of the matter.

According to his Linked-In profile, El Hassani had been with Morgan Stanely since 2017; previously he worked at Deutsche Bank and with French derivatives-trading powerhouse, Societe Generale, home of such prior spectacular blows up as Jerome Kerviel's infamous January 2008 trade which prompted the Fed to cut rates by 75bps.

It is unclear if El Hassani's trades had anything to do with the recent push by other Wall Street banks, most notably from Goldman Sachs, to get clients into dividend-linked trades.

One thing that is almost certain, however, is that the trader's implosion was linked to the recent record collapse in European Dividend Futures (DEDZ5), whose underlying is the ordinary gross cash dividends announced and paid by the individual constituents, and which suffered a spectacular collapse in the past two weeks following the start of the Ukraine war which left countless dividend paying Russian stocks worthless and crippled countless Russia-exposed European companies.  In light of El Hassani's SocGen's background, it is likely that the cause of his loss was a blow up in one or more structured note exposures linked to SX5E derivatives.

Trading dividends is a niche of Wall Street financial engineering that lets investors bet on the dividend flows from a basket of shares or even single companies. The recent market uncertainty hit dividend books across the street, opening up those trading desks to unexpected losses.

As Bloomberg notes, the bank’s equity-derivatives unit sits within its equities business that also deals in common stocks and provides services to hedge funds. At Morgan Stanley, that business is normally seen as a market leader but fell behind Goldman Sachs Sachs Group Inc. in the final tally last year due to losses tied to Bill Hwang’s Archegos Capital Management.

Morgan Stanley has also been facing heightened public attention in another area of its operations: its handling of large stock transactions known as block trades. The bank acknowledged in a regulatory filing late last month that U.S. authorities are investigating various aspects of that business.

Tyler Durden Fri, 03/11/2022 - 09:09
Published:3/11/2022 8:12:50 AM
[e6348170-e5d8-5a80-bfaf-8b84199b0e71] Putin's desire to bring back Soviet Union, advanced age driving invasion, Ukraine caucus co-chair says Rep. Brian Fitzpatrick, co-chair of the Congressional Ukrainian Caucus, said the Ukraine invasion is driven by Vladimir Putin's desire to cement his legacy in Russian history books. Published:3/8/2022 1:48:50 AM
[Markets] Professor Calls Parents "Ignorant Racist[s]" For Opposing Critical Race Theory Professor Calls Parents "Ignorant Racist[s]" For Opposing Critical Race Theory

Authored by Terrance Kible via,

A Vanderbilt University professor recently said that parents who oppose Critical Race Theory (CRT) are "ignorant racist[s]."

"Meanwhile, ignorant racist [sic] are worried about scaring their kids w CRT," Gilman Whiting tweeted last month after a bomb threat against Howard University, an historically Black college in Washington, DC.

Earlier the same day, Whiting tweeted“[S]chool boards across the country are banning teaching history while ignorantly calling it CRT.”

Between these tweets, Whiting opined that individuals were using their opposition to CRT to disguise their true intentions: eliminating equity in schools and “not teaching Black, Brown, & indigenous history, [and] banning books.”

Whiting, whose pinned tweet accuses another user of being “ignorant or simply racist or probably both,” holds three positions at Vanderbilt University. He is an Associate Professor of African American and Diaspora Studies, the Director of the Scholar Identity Institute, and the Director of Graduate Studies for African American and Diaspora Studies.

Whiting received his Ph.D. in curriculum and instruction with a focus on special education populations from Purdue University in 2004. He also holds an individualized M.A. in multicultural education and urban affairs from Rhode Island College.

Whiting’s areas of specialization include special needs populations, which he identifies as “at-risk learners, gifted identification, adult learners, incarceration of young Black men, [and] special education”; as well as urban education and achievement, including black identity and masculinity; and race, poverty, and fatherhood initiatives.

Campus Reform reached out to Vanderbilt University, Whiting, and Dr. Tracy Sharpley-Whiting, the chair of African American and Diaspora Studies, for comment. At the time of publication, none had responded to Campus Reform’s request for comment.

Tyler Durden Mon, 03/07/2022 - 23:00
Published:3/7/2022 10:20:16 PM
[Markets] On The Cusp Of An Economic Singularity On The Cusp Of An Economic Singularity

Submitted by Doomberg

One mustn't look at the abyss, because there is at the bottom an inexpressible charm which attracts us.” – Gustave Flaubert

In 1988, Stephen Hawking published one of the best-selling science books of all time. In A Brief History of Time, Hawking made the impossibly complex topics of astronomy and modern physics accessible to a lay audience, inspiring countless young students (and at least one green chicken) to pursue a career in the sciences. It is estimated that the book has sold an incredible 25 million copies worldwide.

A Brief History of Time | photo credit: BBC

In Chapter 3 of the book, Hawking introduces the reader to the Big Bang Theory and the concept of a gravitational singularity, which Wikipedia describes as “a condition in which gravity is so intense that spacetime itself breaks down catastrophically.” Essentially, since the laws of physics are eviscerated at a singularity, what happened before it is both irrelevant and unknowable, and one could consider such an event as having reset the universe’s clock. Here's how Hawking describes it in his book (emphasis added throughout):

This means that even if there were events before the big bang, one could not use them to determine what would happen afterward, because predictability would break down at the big bang. Correspondingly, if, as is the case, we know only what has happened since the big bang, we could not determine what happened beforehand. As far as we are concerned, events before the big bang can have no consequences, so they should not form part of a scientific model of the universe. We should therefore cut them out of the model and say that time had a beginning at the big bang. Many people do not like the idea that time has a beginning, probably because it smacks of divine intervention.

The simple truth of a singularity applies whether it occurred in the past or will in the future: what transpires on the other side is unknowable from here.

Given the horrific and still-unfolding events of Vladimir Putin’s invasion of Ukraine and the West’s collective response to it, one can’t help but wonder whether we are on the cusp of an economic singularity in which the laws and bedrock beliefs that formed the foundation of international economic order for decades break down. The consequences are similarly unknowable, but we suspect a great reset may indeed be upon us. Even if a ceasefire is announced moments after we publish this piece, shocking damage to the global economic system has undoubtedly already been done and certain genies won’t easily be put back into their bottles.

Before proceeding, we should state clearly that what follows is not a critique of the Western response to the invasion but rather an assessment of the potential first- and second-order consequences of these historic moves, as well as speculation on where some of the harshest economic crises might manifest in the near future. While we join in the hope that these measures achieve their desired direct effect, there’s no denying these are truly unprecedented times.

The most stunning move by the US and its allies was cutting off the Russian central bank’s access to most of its $630 billion of foreign reserves. Without access, one wonders if these funds are really “its” reserves at all? What is ownership without access? No matter how justified that move might seem today, there’s no escaping that this action will reverberate for years to come. In a blunt opinion piece in the Wall Street Journal titled “If Russian Currency Reserves Aren’t Really Money, the World Is in for a Shock,” reporter Jon Sindreu had this to say about how central banks everywhere must now view their reserves:

Many economists have long equated this money to savings in a piggy bank, which in turn correspond to investments made abroad in the real economy. Recent events highlight the error in this thinking: Barring gold, these assets are someone else’s liability—someone who can just decide they are worth nothing. Last year, the IMF suspended Taliban-controlled Afghanistan’s access to funds and SDR. Sanctions on Iran have confirmed that holding reserves offshore doesn’t stop the U.S. Treasury from taking action. As New England Law Professor Christine Abely points out, the 2017 settlement with Singapore’s CSE TransTel shows that the mere use of the dollar abroad can violate sanctions on the premise that some payment clearing ultimately happens on U.S. soil.

Photo credit: Bloomberg

In for a shock, indeed. In essence, Sindreu’s piece argues that this move substantially increases the risk that the US dollar loses its privileged status as the global reserve currency and, at a minimum, likely ensures a polarization of the global economy into at least two camps – the West in one and Russia/China/Iran/Saudi Arabia plus other targeted or aligned countries in the other. If $20-30 trillion or more of global GDP spurns the preexisting reserve currency, is it still the reserve currency? If reserves can be negated overnight, are they even reserves? How many other countries must hedge against the possibility of similar sanctions? Should we add India to the list?

The Biden administration is weighing whether to impose sanctions against India over its stockpile of and reliance on Russian military equipment as part of the wide-ranging consequences the West is seeking to impose on Moscow over its invasion of Ukraine. 

Donald Lu, the assistant secretary of State for South Asian affairs, on Thursday told lawmakers in a hearing that the administration is weighing how threatening India's historically close military relationship with Russia is to U.S. security.”

Another eyebrow-raising development is the US Department of Justice’s establishment of the ominously-named Task Force KleptoCapture, which has the stated intent of seizing (not freezing) the assets of Russian oligarchs. Here’s how the New York Times describes it:

The creation of the task force reflects the harsh scrutiny cast on Russian oligarchs, many of whom built their fortunes because of their ties to Mr. Putin. Even though they may not be directly involved in Russia’s invasion of Ukraine, they enable Mr. Putin by helping him conceal his own assets and remain in power.

Russia’s oligarchs have invested their fortunes in assets around the world, and their ties to Mr. Putin have helped them gain influence and connections in the worlds of fine art, real estate, Wall Street and Silicon Valley.

Oligarch’s not-yacht | photo credit: Forbes

We are the first to admit that “Russian oligarch” is a less sympathetic faction than “Canadian trucker,” and perpetrating a war on another sovereign nation is way more serious than honking horns in downtown Ottawa, but many of the same questions we raised about the consequences of Justin Trudeau’s impulses seem apropos here. Who gets to define oligarch? What qualifies as enabling? Do the accused have any recourse? If assets in the West are subject to swift confiscation without due process for even indirectly enabling a currently unpopular-with-us national political leader – no matter how justified that unpopularity might be – what sane foreign asset owner wouldn’t at least consider liquidating assets now and onshoring what wealth they can preserve? Have we thought through the dominos that fall by fundamentally rewriting property laws?

Further down in the same New York Times article, we find another interesting passage. We’ve long argued that a crackdown on cryptocurrencies is imminent. Will the US use the Russian invasion of Ukraine as a pretext for doing so? It sure seems like it:

The task force will target people and companies that are trying to evade anti-money laundering laws, hide their identities from financial institutions and use cryptocurrencies to evade sanctions and launder money. The Justice Department said that it would use civil and criminal asset forfeiture to seize assets belonging to people subject to sanctions.

The department said that its work would complement that of a trans-Atlantic task force announced this past weekend to identify and seize the assets of penalized Russian individuals and companies around the world.

Yet another meaningful development is the move by multinational corporations to self-sanction all aspects of their business activity tied to Russia, undoubtedly motivated by the disturbing images coming out of Ukraine and pressured by their stakeholders to do something about it. This is not the first time corporations have been called to action after certain political events – Western governments have a long history of trying to implement controversial policies by leaning on business leaders to do their dirty work for them – but these recent developments likely cause concern even among Western leaders. Perhaps naïvely, the US and its NATO allies specifically tried to carve out Russian oil and gas from the reach of sanctions, recognizing our critical need for these essential supplies (a weakness we’ve been writing about for many months). But as the Financial Times describes in a recent report, if the zeitgeist uniformly labels an entity toxic – even an entire G20 country – there can be no carve-outs:

In reality, however, many western banks, refineries and shipowners are in effect ‘self-sanctioning’ — behaving as if Russian oil has already been placed under sanctions. ‘Russia’s oil has effectively become toxic,’ said one banker.

Some of the biggest buyers of Russian crude have cancelled shipments and orders as companies from banks to insurers and shippers retreat from Russian business.

Roughly 70 per cent of Russian crude was ‘struggling to find buyers,’ according to consultancy Energy Aspects. As proof, Russia’s flagship Urals crude, a staple for refiners in north-west Europe and the Mediterranean, was quoted at a record discount of more than $18 a barrel on Wednesday.

Here are just some of the potentially catastrophic economic consequences to ponder if these events continue to snowball down a steepening slope. The obvious place to start is in the energy sector, where European natural gas prices have been trading like a crypto scam coin, rising and plunging by unthinkable amounts on a daily basis. The economic impact of both the elevated price and the volatility of energy on Europe’s manufacturing sector will be revealed in the coming weeks and months – we suspect the results will stun many.

Similarly, Russia and Ukraine are among the most prolific producers and exporters of critical foodstuffs in the world, and prices of agricultural goods are flashing red. In a piece we wrote all the way back in October of last year called Starvation Diet, we predicted a global mass starvation event was nearly inevitable, and that was before war broke out in Ukraine. Here’s how the piece opened:

We are on the cusp of a significant mass starvation event of our own making. Soon, tens of millions of the world’s most impoverished people will die from an inability to feed themselves, while many of those comfortably getting by now – especially in the Western World – are in for a shock.

Unsurprisingly, wheat has traded limit up for several days in a row and prices are reaching levels that condemn vast swaths of the global population to the fate we reluctantly described above. Food inflation is the catalyst for many popular uprisings, and the path from empty shelves to the guillotine has historically been a direct one. Now consider further that the West has outsourced the production of energy and critical mining materials to impoverished countries. What happens when those governments get overthrown and the production assets get nationalized?

There are countless other alarming consequences which we could document here – ahem, Russia produces 40% of global Palladium supplies and, ahem, Ukraine is responsible for the majority of global Neon gas exports (critical for the production of lasers used to make microchips, which are already in chronically short supply) – but even we are losing the capacity to ponder the totality of the economic doom that awaits.

Recent statements by US political leaders don’t inspire much confidence in our ability to navigate this crisis without substantial further economic and political escalation. In a single 24-hour period, House Speaker Nancy Pelosi called for a ban on Russian oil imports while simultaneously stating her opposition to the development of US oil to replace them. Meanwhile, Republican Senator Lindsay Graham went on live television and flippantly called for the assassination of the President of Russia. To drive his reckless point home, he then took to Twitter and amplified his message:

A big bang is coming. Brace for impact.

Tyler Durden Mon, 03/07/2022 - 20:00
Published:3/7/2022 7:19:10 PM
[Markets] LA Mega Mansion Sells For Less Than Half Its Listed Price At Bankruptcy Auction LA Mega Mansion Sells For Less Than Half Its Listed Price At Bankruptcy Auction

This doesn't bode well for America's luxury real-estate market.

America's extremely robust post-pandemic housing market, spurred in part by families adjusting to a more remote style of work, or other pertinent changes, has continued to see homes sell for higher and higher prices, as first-time buyers are forced to compete with investors, flippers, and previous owners enjoying a capital boost from their own inflated home equity. But one thing that's been on the minds of many (particularly those on the lower end of the income spectrum, who are seeing prices move beyond what's budgetarily feasible): when is this bubble going to end?

Of course, the jury's still out on that: the real-estate market continued to register outsize gains in January 2022,as existing-home sales rose to a seasonally adjusted annual rate of 6.5 million – an increase of 6.7% from the prior month, as home sales increased in all regions.


But on Friday, Bloomberg reported that LA's infamous megamansion "the One" has finally sold - for roughly half of its listing price at a bankruptcy auction.

The mega-mansion known as "The One" sold Thursday for $126 million at a bankruptcy auction. That's a huge discount from its $295-million listing price, even with a 12% auction fee bringing the total to about $141 million.

To be sure, the sale still entered the record books as the costliest home ever sold at auction in California.

The Bel-Air property set a record for the costliest house sold at auction, but it fell well short of the California sales record set by venture capitalist Marc Andreessen, who purchased a Malibu estate for $177 million in October. The most ever spent on a U.S. residence was $238 million by hedge fund mogul Ken Griffin for a New York City penthouse in 2019. Several international sales have surpassed $300 million.

The name of the buyer won't be disclosed until March 8, the deadline to submit paperwork to US Bankruptcy Court Judge Deborah Saltzman. BBG said more than three dozen prospective buyers toured the 944 Airole Way property over the last couple of months, including billionaires from all over the world. Of course, at least initially, the identity of the buyer might be shielded by an LLC, which can be registered as the official owner.

However, after the online auction opened Monday, only five bidders from the United States and New Zealand participated. Most of the action occurred in the last few minutes.

The property has already become something of an albatross for its developer and its creditors. The amount of debt attached to the property originally totaled about $180M,  but has swelled to  $256M as more creditors have made claims, according to the latest court filings.  That means many creditors will take losses, even as the bankrupt court recoups the auction house's 12% fee to the bankrupt estate.

The project's largest creditor, LA billionaire Don Hankey, who said the buyer just got "a great deal" at auction.

The largest single creditor is Los Angeles billionaire Don Hankey, who lent $106 million to the dream project of developer Nile Niami. The lender is owed more than $130 million in secured debt, including money he provided in bankruptcy to repair and spiff up the property for sale.

Hankey, who previously said he might bid for the property if it was severely underpriced at the auction, said he did not make an offer. He said the sale should allow him to recover the cash he put into the project, but added that he was surprised at how low the final price was.

"The guy who bought it just got a great deal. He's got people willing to pay $50,000 a day just to do commercials and films," Hankey said.

That's a tough loss. But exactly what this might mean for the broader market is something that remains to be soon.

Tyler Durden Mon, 03/07/2022 - 05:00
Published:3/7/2022 4:12:00 AM
[Higher education] From inside the asylum (Scott Johnson) James Hankins is professor of history at Harvard. He is a distinguished intellectual historian of the Renaissance and the author, most recently, of Virtue Politics: Soulcraft and Statecraft in Renaissance Italy. I happened on to Professor Hankins through the Claremont Review of Books, as in his Spring 2021 essay “Political Thought in an Age of Conformity” (more here). Paul Rahe reviewed Virtue Politics for the CRB in “The Petrarchan moment.” Published:3/5/2022 7:01:43 AM
[Entertainment] Shirley Hughes, beloved English children’s author, dies at 94 Her books sold more than 11 million copies and earned her top literary honors in Britain. Published:3/4/2022 6:59:22 PM
[Markets] Johnstone: Defending Freedom And Democracy Sure Requires An Awful Lot Of Censorship Johnstone: Defending Freedom And Democracy Sure Requires An Awful Lot Of Censorship

Authored by Caitlin Johnstone via,

Kremlin-backed media outlets have been banned throughout the European Union, both on television and on apps and online platforms. RT has lost its Sky TV slot in the UK, where the outlet is also blocked on YouTube. Australian TV providers SBS and Foxtel have dropped RT, and the federal government is putting pressure on social media platforms to block Russian media in Australia.

In the Czech RepublicSlovakia, and Latvia, speaking in support of the Russian invasion of Ukraine will get you years in prison.

Twitter, historically the last of the major online platforms to jump on any new internet censorship escalation, is now actively minimizing the number of people who see Russian media content, saying that it is “reducing the content’s visibility” and “taking steps to significantly reduce the circulation of this content on Twitter”. This censorship-by-algorithm tactic is exactly what I speculated might emerge after former Twitter CEO Jack Dorsey resigned back in November, due to previous comments supportive of that practice by his successor Parag Agrawal.

Twitter is also placing warnings labels on all Russia-backed media and delivering a pop-up message informing you that you are committing wrongthink if you try to share or even ‘like’ a post linking to such outlets on the platform. It has also placed the label “Russia state-affiliated media” on every tweet made by the personal accounts of employees of those platforms, baselessly giving the impression that the dissident opinions tweeted by those accounts are paid Kremlin content and not simply their own legitimate perspectives. Some are complaining that this new label has led to online harassment amid the post-9/11-like anti-Russia hysteria that’s currently turning western brains into clam chowder.

This is all on top of all the other drastic escalations in censorship which came roaring in at the beginning of the Ukraine war, and I personally find it a bit scary how fast it’s all happening, how fine people are with it, and how much worse it seems likely to get.

Others agree.

“The purge of RT and other Russian media outlets in the US and Europe is 100% censorship,” tweets journalist Michael Tracey.

“Go ahead and argue it’s justified, but at least don’t be a coward and admit you are advocating censorship.”

“The western world believes that it has a monopoly on what constitutes ‘political truth’ and that their ideological worldview is the only correct, valid and authoritative one,” writer and analyst Tom Fowdy observed.

“They preach freedom of speech and the press to other countries, but exempt themselves from it.”

And I can’t help but find it odd that the fight for freedom and democracy should require such copious amounts of censorship. You’d think a free society would have no objection to people trying to learn the other side of the debate about a war which NATO powers very plainly had a hand in starting, rather than being forced to consume only western mass media narratives which tell us this is happening exclusively because Vladimir Putin is evil and Hitlery and hates freedom.

You’d think a society devoted to truth and freedom, the kind of society western powers purport to be trying to defend in Ukraine, would not require a Ministry of Truth to protect us from “disinformation” about a government long targeted by the US-centralized empire, or from trying to seek out alternative perspectives beyond the homogeneous blanket of authorized mainstream narratives.

You’d think the truth would be more robust than that. You’d think freedom would extend farther than that. You’d think democracy would be more tolerant of dissent than that.

Almost like this has nothing to do with freedom, or truth, or democracy.

Almost like it never has.

Kind of makes you wonder if perhaps rallying behind the idea that it’s fine to censor people to preserve the establishment narrative about things, like Covid-19 and vaccines for example, was every bit the slippery slope that everyone warned it would be. If perhaps we have foolishly consented to a reality where the most powerful people in the world get to control the information people consume in order to shut down dissent against a murderous and oppressive globe-spanning oligarchic empire.

And it kind of makes you wonder, as we watch the same empire that just destroyed Iraq, Libya, Syria and Yemen being entrusted to carefully navigate extremely delicate nuclear brinkmanship escalations without ending the world, if we might perhaps be better off with a lot more dissent, rather than a lot less.

*  *  *

My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on FacebookTwitterSoundcloud or YouTube, or throwing some money into my tip jar on Ko-fiPatreon or Paypal. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here.

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Tyler Durden Fri, 03/04/2022 - 17:40
Published:3/4/2022 4:56:35 PM
[Markets] When The Financial System Is Weaponized, Bitcoin Becomes The Peacemaker When The Financial System Is Weaponized, Bitcoin Becomes The Peacemaker

Authored by Mark Jeftovic via,

When the financial system is weaponized, Bitcoin becomes the peacemaker.

When Hobbes wrote Leviathan, he proposed an all powerful government possessing an incontestable monopoly on force that would prevent humanity from descending into a the battle of “all-against-all”.

Today, with government authority and overreach seemingly at its zenith we’re seeing that Hobbes didn’t anticipate what would happen if Leviathan lost the consent of the governed. Thanks to the pandemic and two years of COVID tyranny, that now seems to be happening.

Leviathan used to be the so-called “international rules based order” of globalism, which was an industrial age concoction fuelled by cheap debt and fiat currency. The steering committee behind that paradigm, unelected plutocrats like the World Economic Forum are now frantically trying to pivot globalism into some other set of rules where they still get to call the shots. Call it Stakeholder Capitalism, The Great Reset, or The Great Narrative, the problem is that these are all just industrial age constructs in an emerging decentralized world.

Most people agree that at the very least, we’re heading into a new multi-polar world, but it may not unfold  the way PolySci majors  characteristically think of it. Not only is the US inexorably relinquishing its role as global hegemon behind Leviathan, but globalism itself is rapidly imploding. Along with it last vestiges of legitimacy and credibility that the institutions and political class who held it together still had.

Globalists: Careful what you wish for

Whether was an all-encompassing conspiracy or not, COVID was gleefully seized upon by the uber-wealthy Davos crowd as an opportunity to “reimagine” this rapidly changing world in their own image. It’s literally in the playbook that the pandemic enabled

“changes that would have seemed inconceivable before the pandemic struck, such as new forms of monetary policy like helicopter money (already a given), the reconsideration/recalibration of some of our social priorities and augmented search for the common good as a policy objective, the notion of fairness acquiring political potency, radical welfare and taxation measures, and drastic geopolitical realignments.

The broader point is this: the possibilities for change and the resulting new order are now unlimited and only bound by our imagination, for better or for worse. Societies could be poised to become either more egalitarian or more authoritarian, or geared towards more solidarity or more individualism, favouring the interests of the few or the many…

you get the point: we should take advantage of this unprecedented opportunity to reimagine our world, in a bid to make it a better and more resilient one as it emerges on the other side of this crisis.”

— Klaus Schwab & Thierry Malleret, COVID-19 & The Great Reset

The political and oligarchical class that typifies Davos attendees and WEF membership, had largely driven the agenda and the priorities of the post-Bretton Woods era. Thanks to Cantillon Effect and fiat debasement, these self-appointed elites achieved vast riches and undue influence at the expense of impoverishing the masses through debt and inflation.


After 50+ years of the fiat currency standard, the debt side of the equation was hitting the end of the runway, and the pandemic was their chance to impose their Great Reset which would simply wipe the slate clean and re-up their lease on the reigns of power.

But that isn’t what’s happening. Covid looked like it set the table for yet an another unprecedented power grab and wealth transfer from the masses, but this time it all happened too fast, too soon. Twenty-years of future creeping totalitarianism and plunder was crammed into 18 months.

So yes, there will be some sort of Great Reset, but it won’t be what the globalists hoped for, which was a linear extrapolation of the industrial age kleptocracy into a digitized Technocracy with themselves firmly ensconced at the helm.

Decentralization, network computing and cryptography has changed all that. With it, the very architecture of power, finance and civil society. Because of that, no amount of industrialized authoritarianism will succeed at anything other than catalyzing the demise of the outgoing system. All you have to do is look at the top graph of the debt and realize that propagandized narratives are no substitute for reality

The Band-Aid moment

A major inflection point has occurred with the breathtaking incompetence of the Trudeau Regime’s abject mishandling of the #FreedomConvoy movement.

After cowering for weeks, the PM came out and did more for the cause of decentralization and Bitcoin in a few days than any of us writing about it could accomplish in a decade. As Frank Holmes, Hive Blockchain’s Executive Chair described it “Justin Trudeau is the Greatest Salesman for Bitcoin in Canada”.

Everybody involved in the fumbling of the trucker’s revolt completely discredited themselves, from Trudeau to Freeland to the NDPs to the corporate, state-funded media, all of it.

Canada, a G7 nation and ostensible pillar of democracy had weaponized the financial system against its own citizens. Abandoning any pretence of due process or civil rights, they nearly blew up the banks in the process, expended all of their political capital to ram it through Parliament, and then after all that they had to ignominiously back down.

The world can never unsee what happened in Canada.

Without saying so explicitly, those events hammered home what we should all expect from the relentless push toward Central Bank Digital Currencies (CBDCs). If the government of a G7 nation like Canada can simply freeze bank accounts based on unvetted, illegally obtained data, with no due process and no recourse, how will life be when these very same capabilities are baked-in to a CBDC?

The intent is clear. They spell it out in their white papers. We’ve already looked at the Bank of Canada’s white paper on CBDCs in the September issue (of The Crypto Capitalist Letter). The salient quote is:

“Although still early in their development, smart contracts could enable entirely new digital economy applications with many potential benefits. To start, smart contracts could enable programmable money by adding certain attributes to it. For example, money could be programmed to gain or lose value over time, or it could be programmed to be used in transactions for only specific goods or services. Furthermore, smart contracts can enable programmable payments—automated payments that are executed after certain conditions are met. These can range from simple push payments to more complex ones. For instance, smart contracts could enable automatic routing of tax payments to authorities at the point of sale, pay-as-you-go insurance or payments that can support IoT applications.”

And as I mentioned previously,

this all sounds generic and non-biased enough. However take a look around. Those “certain attributes” and “certain conditions” may well end up being things like what Justin Trudeau, or whomever replaces zim thinks about your activities (or “unacceptable opinions”).

Donating to #FreedomConvoy? Listening to Joe Rogan Experience? Those aren’t approved activities. That’ll cost you some demerits.

So too does the importance of un-censorable access to the financial system come into focus on another front as the world reacts to Russia’s military invasion of Ukraine.

Cancel-culture goes Full Hobbesian

People may be predisposed to view what happened in Canada and the Russian invasion of Ukraine as separate incidents with their own unique inciting incidents and ramifications. I think they are related, but not in the context of a “shadowy global conspiracy” where this is all part of an over-arching plan to impose a New World Örder  (yes, I think a lot of globalist elites pine for that, but that’s not what I’m talking about here).

They are related in two other key ways:

First: we’re seeing time and again that technocrats have over-played their hands and leaders are over-estimating their own power. Trudeau’s humiliation has faded to the background for now,  but mark my words: his career is all but finished.  Whatever WEF-inspired agenda there actually was in play, Trudeau may have single-handedly derailed it.

Over in the Ukraine, Putin almost certainly thought he would have steamrolled the country in under 48 hours and that hasn’t happened. He may now be  in a very precarious position because of it.

What? Me worried?

In the US the government, the establishment and the clerisy are all embattled by scandal,  incompetence and the perception of weakness and hypocrisy.

Absolutely nobody in the world thinks any government has handled the pandemic well (other than a sliver of  Zoom-class apparatchiks who were largely unaffected by two years of lockdowns) and corporate media is fast becoming universally reviled.

Secondly, against this backdrop of wholesale loss of credibility and institutional bankruptcy, those in power are getting desperate and increasingly resort to weaponizing the rails of society itself against normal citizens, everywhere:

These are just a few samplings of an accelerating dynamic. It’s a Hobbesian war of everybody canceling everybody else.

The only thing everybody has in common is that nobody doing the canceling can possibly fathom that someday, they’ll be on the receiving end of it and it won’t feel very good when it happens.

The Geopolitical Minsky Moment has arrived

Whether it’s the innocent civilians of Ukraine fighting for their lives against invading Russian troops (of mainly conscripts), or if it is people coming to realize that none of us had informed consent when it came to taking the jab, or if it’s citizens of a G7 nation being de-personed by their own government for doing something that was legal the day before an emergency decree, there is one common factor across all of it:

It’s that the political class has lost control, their own policies have led to disaster. Possibly even a new world war, and instead of admitting their own errors, they will, everywhere and always, double down on failure and impose the costs on the populace.

What all this does is create a new incentive structure – a new dynamic. One where people begin to act unilaterally in ways that the government can’t impede. This dynamic is one of decentralization, peer-to-peer networks, and public-key cryptography. This is the game-changer that restructured the terrain so that no matter how hard the current ruling class tries to impose their model of society on the rest of us, it won’t fit.

Bitcoin is now part of the game theory and the incentive structure everywhere. The Ukrainian government is using it to crowdfund donations to repel the invasion, the Russian citizens are using it to protect their savings from the havoc their leaders have brought upon them.

But the transition period will take years to play out and it will be very turbulent. It will be a Fourth Turning-style dynamic, of which the defining characteristic will be, I think, the people everywhere, turning against their own oligarchs.

Living in the Jackpot

In the  summer of 2020 I started writing a series on Bombthrower called The Jackpot Chronicles, cribbing the term from a recurring theme in William Gibson’s near future cyberpunk novels. Those books described a world careening from crisis to crisis in the wake of a fictional pandemic that set off a never-ending series of rolling catastrophes (one of which was a limited thermonuclear exchange with Russia).

The Jackpot is what we have to go through as we transition to a decentralized, network-based society. We’re living in The Jackpot now. The most precious commodity in The Jackpot is optionality.

Things that are long optionality are: cryptos, precious metals, real estate, income producing businesses, second passports, second homes outside of major cities and in other countries.

Things that are short optionality include: money in bank accounts, relying on credit cards, unproductive debt, living pay check to pay check, having a single source of income, being in poor health, having zero critical thinking skills, being addicted to anything, believing your TV or being reliant on government programs in any fashion.

From here on in folks, if it wasn’t already, the core focus now and evermore should be optionality, Plan B, bug-out plans, resiliency, local communities, family and anti-fragility.

*  *  *

Today’s post  contained excerpts from the most recent letter to my premium list: The Crypto Capitalist Letter.
The world is undergoing a monetary regime change. Get the Crypto Capitalist Manifesto investment thesis free when you join the Bombthrower mailing list. Follow me on Gettr, join my Telegram, or if you’re still on Twitter

Tyler Durden Thu, 03/03/2022 - 17:00
Published:3/3/2022 4:17:40 PM
[] Dr. Seuss’s Legacy Is About to Get ‘Woke-Washed' Published:3/3/2022 10:46:21 AM
[Opinion] Jack Reacher Is The Cultural Antidote To Our Testicularly-Challenged Times

by Ron Nutter -

This week I finished watching Amazon Prime Video’s excellent rendition of Reacher, which is based on a series of novels by Lee Child. The character Jack Reacher, a 6-5 strapping hulk of a man, is well played by Alan Richson, who actually looks like the character Child portrays. He is …

Jack Reacher Is The Cultural Antidote To Our Testicularly-Challenged Times is posted on Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:3/3/2022 9:45:25 AM
[Books] Stalin’s library and mine (Scott Johnson) In his review of the Stalin’s Library: A Dictator and His Books, by Geoffrey Roberts, Nigel Jones writes in the Spectator: Roberts takes us through Stalin’s life and shows how his reading molded his actions. Books transformed the bright seminary student into a ferocious revolutionary, prepared to sacrifice family, friends and a vast array of enemies — capitalists, kulaks, fellow Bolsheviks, imperialists, Trotskyist deviationists and millions of ordinary Soviet citizens Published:3/3/2022 6:44:34 AM
[Podcasts] Podcast: A Sit. Rep. on Ukraine, with Col. Austin Bay (Steven Hayward) The “fog of war” is even foggier in the age of 24/7 news and social media, so it is impossible to know what the hell is happening on the ground in the Ukraine, let alone in Moscow. High time, then, to check in with Col. Austin Bay, author of Cocktails From Hell and other books, Creators Syndicate columnist, and contributor to StrategyPage. I was delighted to discover that we’re both Published:3/2/2022 9:44:04 PM
[Markets] : Amazon to shutter its 4-star, Books, and Pop Up stores to focus on grocery, Go and fashion Amazon has decided to close a number of its chains, including Amazon Books, in order to focus on other brick-and-mortar endeavors.
Published:3/2/2022 2:40:23 PM
[Entertainment] How do you choose a book? Book lists by other writers are a great place to start Critic Michael Dirda explores book compilations and how they can steer readers to great books. Published:3/2/2022 11:09:41 AM
[Markets] McElligott: "Equities Are Exhausting, I Hate To Even Write About Them Now" McElligott: "Equities Are Exhausting, I Hate To Even Write About Them Now"

After yesterday's epic rollercoaster in rates, where we first a dual VaR shock, first in the front-end of the curve as eurodollar exploded higher sending rate hike expectations plunging, and then moved to the long end with coupon bond yields crashing, especially in Germany, where the 10Y bund saw the biggest one day drop in yields in a decade...

... today we are seeing a sharp reversal in much of yesterday's move - to be expected after Biden's SOTU address yesterday when he again tasked Powell with easing inflation (even if it means an even sharper economic slowdown, although Biden's speechwriter was unfamiliar with the trade-offs of monetary policy and so this particular part wasn't mentioned) with Dec 22 Eurodollars sinking, and leading to one of the sharpest one day drops in the past year, although we are still nowhere near where we were just last week when absolutely everyone on Wall Street was convinced the Fed would hike as much as 7 times this year alone, and who knows how much in 2023.

As Charlie McElligott, who correctly called yesterday's dual VaR shock, writes, the highly stagflationary - and obvious risk-off- implications of the next phase of the Russian invasion of Ukraine - has "effectively then seen the market aggressively pricing-OUT the prior implied “front-loaded” policy tightening across global CBs (e.g. March Fed now pricing firm 25bps, as 50bps having been entirely erased…while full year ’22 is now down to ~5 hikes from touching 6.8 intraday back on Feb 14)."

That said, as McElligott notes, with DM breakevens continuing to push higher alongside with gapping Commodities (European Nat Gas to new record highs, while Crude and broad Ags are ripping yet again), the stunning move lower of Real Yields into more negative territory, which we noted yesterday and which today has persisted with the 10Y real trading just around -1%

... has perversely only increased the need for CB hiking, "as their already brutal “inflation problem” is set to go exponential."

To be sure the Fed is aware of this, and is why both Powell and Bullard made the case for staying the course on a March rate hike (and much more tightening), a case made even more pressing by the latest fresh “beat” in Eurozone Flash Inflation this morning (core “catching up” with headline): where headline CPI soared to 5.8% yoy, up from 5.1% yoy in January and smashing expectations of 0.6% (EU Feb Core CPI 2.7% yoy vs 2.3% yoy).

It is this divergence between soaring inflation and the threat of sharply slower growth that Jerome Powell steps into the spotlight with his Humphrey Hawkins Congressional testimony today, where according to McElligott he can attempt to “thread the needle” between the two purported “policy error” narratives:

  • Powell can reset the conversation back on the US Labor- and Inflation- realities which necessitate liftoff and BS run-off and get the “animal spirits” working again for hawkish trades (particularly with NFP and CPI looming over the next 1w)—as this is the “Fed behind the curve on inflation” policy-error which has to be addressed domestically
  • While at the same time, Powell can acknowledge that the geopolitical ramifications of Ukraine / Russia (“higher uncertainty”) could in-fact alter the distribution of the Fed’s tightening path into something that may help him “thread the needle” for risk assets, tamping-down on the worst of the “tightening into a slowdown / recession” or “tighten until it breaks” left tail narrative in the market

Of course, both of these options are equally as bad, and have diametrically opposed “policy error” potentials and as the Nomura x-asset strategist notes, "really just describe a chicken-or-egg worldview dynamic—the reality is, recession / slowdown risks emerge because the Fed has to address their primary focus on their inflation mandate, which continues to over-realize and is creating negative pressures in the economy…. especially where IF growth were to slow precipitously in the future, the Committee would need higher interest rates to cut from it comes time to loosen policy from again."

Needless to say, this has been our main point for the past 6 months, and one way or another it will soon get resolved, although there may be a handicap: as McElligott reminds us, the Fed does NOT have a “growth” mandate (although Powell will hardly be happy when Powell is accused to sending the US into a recession, hence "lose lose") and easing financial conditions have actually counter-productively been easing vs Biden's raging inflation problem, so the Fed will have to get back in hawk mode soon into the seeming “peak inflation” window of 1Q22, which in-light of the current Commodities pain, could again be extended further-out into 2022.

In the meantime, Charlie asks readers to imagine the following scenario:

"based on the above rationale, it is an entirely plausable scenario that we see a “still tilted hawkish” message from Powell today, which could then be followed by “upside beats” in both NFP (Friday) and CPI (next Weds) and which could see Rates zooming higher again, especially with such a cleaner positioning profile in the trade—which of course would be “pure pain” for Macro PMs who were just tapped-out of the “correct” position and thesis over the first two days of this week, before crowding and the geopolitical deterioration saw their PNL get wiped."

Indeed, more pain all around.

So what does all this mean for stocks? Well, between the direct causal links and the market's endogenous reflexivity, McElligott is close to throwing up his hands in trying to predict short-term moves, voicing what everyone else thinks, namely that "equities are exhausting, I hate to even write about them now, as I’m largely repeating myself." So what does he think?

  • We are seeing client “range- / day- trading” via very short-dated / highly convex options which keep us lunging around, as Dealers remain embedded in “short Gamma, short Delta” dynamic: customers buying 0 day-to-expiry or weekly type downside optionality because of the tightening and risk-off environment which presses into down days, but then are quick to monetize if hedges go ITM and then turn to actual short-dated Upside / Call buying playing “Long Delta” for a bounce…which sees other hedgers quick to cover / unwind into spot rallies, as downside Puts “bleed” and Dealers cover their hedges, while Calls are then monetized and pivoted away from, with “Short Delta” trades then re-engaged.

  • That is exactly what Nomura has seen the past few days: Thursday and Friday were huge “Long Delta” days (sell Puts / buy Call), but then as we rallied / stalled-out, traders yesterday were quick to go “Short Delta” (sell Calls / buy Puts)…rinse, repeat.
  • This is driven not just Geopol headlines, but also too the realization that the Fed is de facto “short strangles”: the “Fed Put” likely still exists, but according to CME it is "struck waaaaay down from spot" (somewhere around 3800- 3900 according to BofA) because of the inflation issue and a policy tightening / BS reduction cycle which has-yet to even begin; but this then too sees the Fed effectively “selling OTM Calls” if the market were to push back anywhere close to prior highs, as any time we rally back, financial conditions ease and forces the Fed to increase their “hawkish inflation” rhetoric to tighten FCI and push Real Yields higher / less negative
  • This macro chop drives the intraday volatility chop when then creates a dynamic where traders are left with no choice but to “de-gross / VaR-down” as both long- and short- books push through risk limits continually…so within Equities, it's why Nomura is seeing its “1m Reversal Factor” strategy +4.3% over the past 5 days, while our “HF L/S” proxy (Crowded Longs vs High Short Interest) is -1.7%, as everyone is whipsawed out of legacy positions


  • Meanwhile, brutally high absolute levels of Vol (SPX ATM rank, VIX strip out into 30s as its everybody’s “convexity” hedge) have increasingly made “dynamic hedging” with futures a preferred play that everybody is seemingly doing—but by nature, this is a form of “synthetic short Gamma” as traders short into down trades, and covering into rallies


Meanwhile, adding to the confusion, the market is seeing heavy support in the form of large corporate buyback flows being seen around Street repurchase desks running HIGH 2x’s recent activity, a risk backstop further boosted by the utterly de-allocated “Vol Control” segment, which has now bought +$9.8B of US Equities over the past two sessions (89.4%ile 2d chg), as trailing 1m rVol has rolled-over from > 25 to now 22.5 (still 98.1%ile), and still with further buying expected by the end of the week.

Finally, those wondering what the trend-followers are doing after the recent chaos, here is the latest CTA position estimates from McElligott.


Tyler Durden Wed, 03/02/2022 - 11:05
Published:3/2/2022 10:08:25 AM
[Entertainment] Washington Post hardcover bestsellers A snapshot of popular books. Published:3/2/2022 8:38:36 AM
[Entertainment] 16 Books to Add to Your Reading List in March March 2022 BooksWe love these products, and we hope you do too. E! has affiliate relationships, so we may get a small share of the revenue from your purchases. Items are sold by the retailer, not...
Published:3/1/2022 7:30:46 AM
[PLR] Top 10 Best PLR(Private Label Rights) Websites | Which One You Should Join in 2022?

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Today, we have a fantastic opportunity to use other people's products by purchasing Private Label Rights.

To find a good PLR website, first determine the type of products you want to acquire. One way to do this is to choose among membership sites or PLR product stores. Following are 10 great sites that offer products in both categories.

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Published:2/26/2022 8:00:30 AM
[Entertainment] Leonard Kessler, children’s author whose books endured, dies at 101 A writer and illustrator, he created more than 200 books for young readers, including the ode to individuality “Mr. Pine’s Purple House." Published:2/25/2022 11:34:46 PM
[Markets] The Burden Of Proof Is Always On The Ones Making The Claim (Even If It's About Russia) The Burden Of Proof Is Always On The Ones Making The Claim (Even If It's About Russia)

Authored by Caitlin Johnstone via,

Well you’ll be shocked to learn that, while the Ukraine invasion we’ve been told for weeks was happening any day now still has not occurred, the US and UK have declared that Russia attacked Ukraine in an invisible and unverifiable way for which the evidence is secret.

“The White House blamed Russia on Friday for this week’s cyberattacks targeting Ukraine’s defense ministry and major banks and warned of the potential for more significant disruptions in the days ahead,” AP reports.

“Anne Neuberger, the Biden administration’s deputy national security adviser for cyber and emerging technologies, said the U.S. had rapidly linked Tuesday’s attacks to Russian military intelligence officers.”

“Technical information analysis shows the GRU was almost certainly involved in disruptive DDoS attacks,” adds a statement from the UK Foreign Office.

No evidence for this claim has been provided beyond the assertive tone with which American and British officials have uttered it, but that likely won’t stop arguments from western narrative managers that this “attack” justifies immediate economic sanctions.

You’ve probably also heard by now that President Biden announced at a press briefing that Vladimir Putin has made the decision to invade Ukraine and violently topple Kyiv “in the coming days,” citing only “intelligence”.

“What reason do you believe he’s considering that option at all?” a reporter asked Biden after his speech.

“We have a significant intelligence capability, thank you very much,” the president answered, and made his exit.

As we were reminded earlier this month in an interesting exchange between State Department spinmeister Ned Price and AP’s Matt Lee, US officials firmly believe that simply placing assertions next to the word “intelligence” should be considered rock solid proof that those assertions are true, and the press are expected to play along with this.

And indeed, a large percentage of the political/media class is responding to Biden’s unevidenced claim that Putin has decided to launch a full-scale ground invasion of Ukraine as though that invasion is actually happening.

There are also accusations of false flags amid the fighting in eastern Ukraine and numerous other claims about what Russia is doing as it prepares for this invasion it’s supposed to launch, and it’s all just being blindly accepted as objectively true in mainstream political discourse. Nowhere is it questioned. Nowhere is the fault of the US and NATO in creating these tensions between Russia and Ukraine ever reported, nor are the geostrategic benefits the US hegemon stands to reap from this standoff. Few even bother trying to articulate what Moscow would gain from invading Ukraine, except the occasional infantile “they hate us for our freedom”-style think piece about how Putin just can’t stand democracy.

If online you question the veracity of any of these claims in light of the extensive history these institutions have of lying to us about just this sort of thing, it’s treated as a freakish and bizarre interjection that is at best misguided and at worst proof that you’re an agent of the Kremlin. I haven’t received so many notifications from people calling me a Russian operative since 2018, which to me is funny because everything I was saying about western Russia narratives in 2018 has since been completely vindicated.

And I think it’s important while this all unfolds to take a moment to remind ourselves that the burden of proof is always on the party making the claim. This is a basic principle we all hold true in matters of logic and debate and in the legal system, and really anywhere that disputed claims are scrutinized, and it doesn’t magically stop being the case just because a claim is spoken in an assertive tone by powerful people about a country they don’t like. If you make a claim in an irrelevant time-wasting Twitter argument you’ll immediately be asked for proof that it’s true, but if the most powerful government in the world makes an incendiary claim of potentially world-shaping consequence we’re all just expected to accept it, even though that government has a proven track record of making false claims.

The onus is not on anyone else to prove that the US and UK governments are lying when they make these claims, the onus is on the US and UK governments to prove that they are telling the truth. At some point after Donald Trump’s election it became a mainstream liberal doctrine that you can say whatever you want about Russia no matter how outrageous and suffer no professional consequences if it proved completely false, and nobody’s really been pushing back on that. So many people built entire careers out of suggesting for years on end that the entire Trump family was going to be dragged out of the White House in chains for Kremlin collusion, and when this failed to prove true everyone just acted like it was fine and continued on with their careers.

But it’s not fine. It’s not okay that this bizarre cold war hysteria environment has melted everyone’s brain over the last five years. It’s not okay that the most basic standards of logic and evidence have been flushed down the toilet. It’s not okay that we now have MI6 spooks and CIA mouthpieces openly acknowledging that the government is using the western press to wage an information war geared at undermining Russia when both the government and the press are supposed to be simply telling us the truth.

I don’t know what’s going to happen with Ukraine. What I do know is that it would be good to drag the Overton window of acceptable debate kicking and screaming back to the point where the burden of proof needs to be met even, and especially, by the world’s most powerful people. And where, if that burden is not met, their claims are treated with all the disdain they deserve.

*  *  *

My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on FacebookTwitterSoundcloud or YouTube, or throwing some money into my tip jar on Ko-fiPatreon or Paypal. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here.

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Tyler Durden Mon, 02/21/2022 - 23:40
Published:2/21/2022 11:59:45 PM
[Books] Lincoln with Chase(r) (Scott Johnson) Barton Swaim commends three new books in the popular history mode on Lincoln — by Brian Kilmeade, Brad Meltzer and John Avlon — in the Wall Street Journal’s Review section this weekend. Swaim recounts this anecdote lifted from John Avlon’s Lincoln and the Fight For Peace, with which Swaim concludes his review: On April 8, 1865, Lincoln visited Gen. Grant’s headquarters near Richmond and consoled wounded Union soldiers in a Published:2/20/2022 6:56:48 PM
[Columns] The Great P.J. O’Rourke

P.J. O'Rourke, who died Tuesday at the age of 74, will be remembered for his legendary career, his many books, his generosity, and his oversized presence in the Penguin Dictionary of Modern Humorous Quotations. Deservedly so.

The post The Great P.J. O’Rourke appeared first on Washington Free Beacon.

Published:2/18/2022 8:56:39 AM
[Columnists] Reading, Writing and Gender Bending

by Debra J. Saunders -

The New York Times is concerned about censorship in American schools. “Book Ban Efforts Spread Across the U.S.” reads Sunday’s headline. “Parents, activists, school board officials and lawmakers around the country are challenging books at a pace not seen in decades,” the story reports. The story generally focuses on parents, …

Reading, Writing and Gender Bending is posted on Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:2/6/2022 6:59:15 AM
[Markets] The UK And Its Lost Opportunities The UK And Its Lost Opportunities

Authored by Alasdair Macleod via,

Two years after leaving the EU Britain has made almost none of the promised progress towards economic liberalisation. While Brussels hasn’t been helpful, libertarian ministers in the Tory government have been both conquered by the bureaucracy of the civil service and even turned into high spending statists. There has been no attempt to reduce the state’s suffocating dominance over the economy.

On current policies, the private sector is set to continue its long-term decline, with higher taxes and ever-increasing regulation. But it needn’t be so. This article looks at the dangers and opportunities that Britain faces, principally inflation, the challenge of government spending, of maintaining a balanced budget, trade policy and why Britain should just declare unilateral free trade, foreign policy in a world where the future is American decline and a rising Russia—China partnership, and the economic craziness of the green agenda.

There is no sign that these important issues are being addressed in a constructive and statesman-like manner. Fortunately or unfortunately, rising interest rates threaten to bring forward a crisis of bank credit of such magnitude that fiat currencies are likely to be undermined. Most of the policies recommended herein should be incorporated after the banking and currency crisis has passed as part of a reset designed to avoid repeating the mistakes of big government, Keynesianism, and the socialisation of economic resources.

Decline and fall

“This is the week a government that began with such promise finally lost its soul. Its great policy relaunch is a tragic mush, proof that it no longer believes in anything, not even in its self-preservation.”

Allister Heath, Editor of The Sunday Telegraph writing in today’s Daily Telegraph 3 February

Two years ago this week, Britain formally left the EU. Yet, it is estimated there are 20,000 pieces of primary EU legislation still on the statute books. And only now is there going to be an effort to remove or replace them with UK legislation. Obviously, going through them one by one would tie the legislative calendar up for years, so it is proposed to deal with them through an omnibus Brexit Freedoms Bill.

Excuse me for being cynical, but one wonders that if the Prime Minister had not come under pressure from Partygate, would this distraction from it have got to first base? After two years of inaction, why now? And it transpires that instead of doing away with unnecessary regulations as suggested in the Brexit Freedoms Bill, legislative priority will be given to the economically destructive green agenda. This underlines Allister Heath’s comment above.

There is also irrefutable evidence that a remain-supporting civil service has continually frustrated the executive over Brexit and has discouraged all meaningful economic reform. The way the Brexit Freedoms Bill is likely to play out is for every piece of EU legislation dropped, new UK regulations of similar or even tighter restrictions on production freedom will be introduced — drafted by the civil service bureaucracy with its Remainer sympathies. For improvement, read deterioration. It will require ministers in all departments to strongly resist this tendency — there’s not much hope of that.

The track record of British government is not good. Since Margaret Thatcher was elected, successive conservative administrations have pledged to reduce unnecessary state intervention and ended up fostering the opposite. They raise taxes every time they are elected, even though they market themselves as the low tax party. While the number of quangos (quasi-autonomous national government organisations) has been reduced, in practice it is because they have been merged rather than abandoned and their remits have remained intact. Another measure of government intervention, the proportion of government spending to total GDP, has risen from about 40% to over 50% in 2020. An unfair comparison given the impact of covid, some would say. But there is little sign that the explosion of government spending will come back to former levels.

Like the unelected bureaucracy in Brussels from which the nation sought to escape, the UK’s civil service has no concept of the economic benefits of free markets. Without having any skin in the game, they believe that government agencies are in the best position to decide economic outcomes for the common good. Decades of Keynesian reasoning, belief in bureaucratic process and never having had to work in a competitive environment have all fostered an arrogance of purpose in support of increasing statist economic management. It is a delusion that will end in crisis, as it did in 1975 when under a Labour government Britain was driven to borrow funds from the IMF that were reserved for third world nations.

Against this background of restrictions to economic progress, the nation is unprepared to deal with some major issues appearing on the horizon. This article examines some of them: inflation, state spending, trade policies, foreign policies, and the economic harm from the green agenda. These are just some of the areas where policies can be improved for the good of the nation and create opportunities for greatness through economic strength.


In common with other central banks, the Bank of England would have us believe that inflation is of prices only, failing to mention changes in the quantity of currency and credit in circulation. Yet even schoolchildren in primary education will tell you that if a cake is cut into a greater number of pieces, you do not end up with more cake; you end up with smaller pieces. It is the same with the money supply, or more correctly the quantity of currency and credit. Instead, central banks seem to believe in the parable of the feeding of the five thousand: five loaves and two fishes can be subdivided to satisfy the multitudes with some left over.

The source of an increase in the general price level is increasing quantities of currency and credit, leading to each unit buying less, just like the smaller slices of cake. And measured by the Bank of England’s M4 (the broadest measure of currency and credit) the currency cake has been subdivided into many more smaller pieces in recent times.

Figure 1 shows that M4 has increased from £1.82 trillion at the time of the Lehman failure to £2.96 trillion last September, an increase of 63%. But the rate of increase accelerated substantially in the first six months of 2020 to an annualised rate of 19.3%. This is the engine driving prices of goods higher, and to a lesser extent, services.

At that time, currency inflation was everywhere, leading to significantly higher commodity prices. The commodity inputs to industry represent sharply rising production costs, coupled with skill shortages and supply chain disruptions. But these are merely the evidence of the currency cake being more thinly sliced. Buying and installing a new kitchen in your house requires more of the smaller slices of the currency cake than it did last year.

All else being equal, there are still significant price effects to come with past currency debasements yet to work their way through to prices. And given that monetary policy is to meet rising prices by raising interest rates while still inflating, higher interest rates will follow as well. The effect on bond yields and equity prices will be beyond doubt. But all else is never equal, and the effect of higher production costs will be to close uneconomic production and put overindebted manufacturers out of business. This development is already becoming evident globally, with the post-pandemic bounce-back already fading.

Being undermined, the effect on financial collateral values is likely to make banks more cautious, reduce bank lending, and at the margin increase the rate of foreclosures. The problem is that most currency in circulation is the counterpart of bank credit. A bond and equity bear market will lead to a contraction of bank credit, triggering policies designed to counter deflation.

What will the Bank of England do? Undoubtedly, it will want to increase its monetary stimulation at a time of rising interest rates and falling financial values. The Bank will also find itself replacing contracting bank credit to keep the illusion of prosperity alive. The issuance of base currency will not be a trivial matter.

But according to the Keynesians, who can only equate price levels with consumer demand, inflation during an economic slump should never happen. Worse, it will come at a time when UK banks are highly leveraged at record levels — Barclay’s, for example, has a ratio of assets to equity of about twenty times. And as the European financial centre, London is highly exposed to counterparty risk from the Eurozone which, being in a desperately fragile condition, is a major systemic threat.

With these increased dangers so obviously present, it would behove the Bank and the Treasury to rebuild the national gold reserves, so foolishly sold down by Gordon Brown when he was Chancellor. It is the only insurance policy against a systemic and currency collapse that is becoming more likely as inflationary policies are pursued.

Government spending

As mentioned above, in 2020 the government’s share of GDP rose to over 50% and there appears to be no attempt to rein it in. And for all the rhetoric about post-Brexit Britain being an attractive place to do business, any government taking half of everyone’s income and profits in the form of taxes will fail to attract as many international businesses to locate in Britain as would otherwise be possible.

Government spending is inherently wasteful. To enhance economic performance, the solution is to cut government spending to as low as possible in the shortest possible time and to reduce taxes with it. But instead, the Treasury is seeking to cover the budget deficit, which was £250bn in the last fiscal year (11.7% of GDP) by increasing taxes without reforming wasteful government spending. The civil service has protected its practices by seeing off attempts by government appointees, such as Dominic Cummings, to remodel the civil service on more effective lines.

Critics of the Treasury’s policies say it is better to cut taxes to encourage growth which in future will generate the taxes to cover the deficit. But with the state already taking half of everyone’s income on average in taxes, the increase in the deficit while maintaining government spending will only add to inflationary pressures. The transfer of wealth from the private sector to the public sector by the expansion of currency will more than negate any benefit to the private sector from lower taxes. And the higher interest rates from yet higher price inflation will bankrupt overindebted borrowers in a highly leveraged economy.

Those who think the Bank of England is clueless about finances and economics should not omit the Treasury from their criticisms. About the only thing the Treasury gets right is the necessity to eliminate the budget deficit, albeit by the wrong approach which is simply to increase the tax burden on the private sector. But in this objective it has consistently failed, as shown in Figure 2.

From the seventies, budget deficits have only been eliminated briefly in the boom times of fiscal 1989/90 and 2000/01. The OBR’s forecast of a return to near balance in 2023/24 is a demonstration of wishful thinking. On the verge of a new downturn in production brought about by unsustainable cost pressures, the deficit is likely to decline only marginally, if at all.

Budget deficits create an additional problem, because without an increase in consumer savings (discouraged by the Keynesians), national accounting shows that a twin trade deficit is the consequence. And without the trade deficit contracting, the Remainers in the establishment are bound to claim that Brexit has not delivered the benefits in trade promised by the Brexiteers.

Trade policy

Besides gaining political independence, Brexit was said to lead to an opportunity for better terms of trade than could be obtained as a member of the EU. Britain’s industrial history and heritage is as an entrepôt, whereby goods were imported, processed, and re-exported to international markets. The concept of freeports was promoted with this in mind.

The UK government has so far made laborious progress in signing trade agreements in a protectionist world. A far better approach would be to abandon trade agreements and tariffs altogether, with the sole exception of protecting some agricultural produce, for which special treatment can be justified. Today, agriculture is a small part of the economy, and the benefits to the consumer of scrapping tariffs are relatively minor, but risk fundamentally bankrupting important parts of the rural economy.

To understand why Britain should abandon trade agreements for tariff free trade, we should refer to David Ricardo’s theory of comparative advantage. Ricardo argued that if a distant producer was better at producing a good or service than a local one which is therefore unable to compete, then it is better to reap the benefit of the distant production and for the local producer to either find a better way of manufacturing the product, or to deploy the capital of production elsewhere.

The theory was put to the test by Robert Peel, who as Prime Minister rescinded and finally repealed the Corn Laws between 1846—1849. The consequence for the British economy was that lower food prices in what was for most of the population a subsistence economy allowed the labouring masses to buy other things to improve their standard of living.

Not only did living standards improve, but employment was created in the woollen, cotton, and tobacco industries and much else besides. Furthermore, other countries began to adopt free trade policies, which combined with sound money led to widespread economic improvement. By the First World War, over 80% of the world’s shipping then afloat, central to international trade, had been built in Britain.

The situation today is different, in that the effect of removing food tariffs from what has become a relatively small sector is far too emotive for the potential gain. This is less true of industry, despite the undoubted cries that would emanate from protectionists. But a Glaswegian is perfectly free to buy a product made in Birmingham, or to contract for a service provided from London, even if there is an equivalent available in Glasgow. But what’s the difference between our Glaswegian buying something from Birmingham, compared with Stuttgart, or Lyons, or China?

The answer is none, other than he gets more choice, and the signal sent to domestic manufacturers is they are uncompetitive. And it’s no good claiming that foreigners are unfair competition. If a foreign manufacturer is subsidised in its production, that is all to the benefit of UK consumers. Tariffs are a tax on consumers and lead to less efficient domestic production.

The benefit for Britain is that if it becomes a genuinely free trade centre, international manufacturing and service activities would gravitate to the UK, providing additional employment — all the empirical evidence confirms this is what happens. It would be a direct challenge to the EU’s Fortress Europe trade policies designed to keep foreigners out. And to the degree that tariff reform is promoted, Britain would be doing the world a favour, because as in Robert Peel’s time, other nations would likely follow suit.

The dirty truth about tariffs is that they are a tax on one’s own people as well as an unnecessary restriction of trade. Instead of recognising this truth and the evidence of its own experience, Britain is pursuing a halfway-house of laborious trade agreements. Through limited relief on taxes, the half-hearted proposal to set up free ports is an admission of the burden the government places on business in the normal course: otherwise, why are free ports an incentive? Far better to reduce taxes on all production and remove the tariff burdens on everyone.

This conservative administration started with constructive trade policies, but the permanent establishment has whittled them down to the point where they are likely to be minimised and ineffective, confirming in its Remainer yearnings that Brexit was a political and economic blunder.

Foreign policy

One of the opportunities presented by Brexit was for the UK government to think through its foreign policy agenda, and how Britain can best serve itself and the rest of the world. The history of its foreign policy might have provided a guide, though it seems to have been ignored. Instead, Britain is sticking to the Foreign Office’s and intelligence services’ status quo, which is basically to be unquestioningly allied through the five-eyes partnership with America. Admittedly, it would have been difficult to do otherwise in the wake of President Trump’s successful takedown of Huawei, spreading fear of Chinese spying in a modern version of reds under the bed.

But the reality of modern geopolitics is that Halford Mackinder’s Heartland Theory, first presented to the Royal Geographical Society in London in 1904, is coming true:

“Who rules East Europe commands the Heartland;

who rules the Heartland commands the World-Island;

who rules the World-Island commands the world.”

— Mackinder, Democratic Ideals and Reality, p. 150

There can be no doubt that the alliance between Putin’s Russia and Xi’s China together with the other members of the Shanghai Cooperation Organisation are proving Mackinder’s prophecy and that they are destined to become the dominant geopolitical force in the world. Therefore, Britain remains hitched in the long term to the eventual loser when it should be reconsidering its relationship with Eastern European nations, for which read Russia.

A substantial rethink over foreign policy is due, and instead of the status quo, there is profit to be had in studying the status quo ante — Britain’s foreign policies at the time of the Napoleonic wars and subsequently. Lord Liverpool was Prime Minister, with Castlereagh as Foreign Secretary and Wellington as commander-in-chief of the army. They had an iron rule never to interfere in a foreign state’s domestic policies but only to act to protect British interests. Those interests principally concern trade, and they guided foreign policy and protected British property in the colonies until the First World War.

Compared with the foreign policy principals of the nineteenth century, the support given to American hegemony in attacking nations in the Middle East and North Africa on purely political grounds has been a disaster, leading to unnecessary deaths and the displacement of millions of refugees. Some of these ventures could have been prevented if Britain had not joined in. Britain’s refusal to support a Syrian invasion after a parliamentary vote turned it down was a rare example of Britain standing up for its own interests, no thanks to a government which would otherwise have sent the troops in.

The US is dragging its heels with respect to a trade agreement with the UK, and that should be considered as well. A modern Castlereagh would take these factors into consideration in proposing a new treaty securing trade and defence considerations for both European nations and Russia, thereby respecting their sovereignties. There are enough elements in play for a sensible outcome, particularly if America is made to accept that its role in Europe is divisive and that it has no option but to accommodate compromise. The British government is in a unique position to broker a deal, if it can demonstrate political independence from all parties, including America.

The green agenda

The government’s green agenda, whereby the nation is mandated to cut carbon emissions by 78% from 1990 levels by 2035 with a target of net zero by 2050 is a deliberate policy of economic destruction. After the boost to non-fossil fuel investment, initially funded by yet more government spending, the costs imposed on the population to replace domestic heating by gas and oil with heat pumps is prohibitive and impractical. It can only be achieved by the destruction and rebuilding of swathes of existing residential and commercial properties. The energy available will be overdependent on unreliable wind and solar panel sources, and the available supply will be facing far larger demands on the grid than imposed today.

Keynesians advising the government seem to believe that all the investment and rebuilding to new ecological standards stimulates economic activity — this has been argued by them before in the context of post-war reconstruction. But then Bastiat’s broken window fallacy, whereby the alternative use of economic resources is not being considered, appears to have passed them by. The green replacement of transport logistics, which is well over 95% diesel driven, is a destruction of efficient and current capacity to be replaced by electrical powered transportation whose energy source is to be shared with all other energy demands.

The only possible solution to the problem created by climate change activism involves the rapid development of nuclear energy. But besides taking decades from drawing board to switch on, nuclear is stymied on cost grounds, with wind and solar being far cheaper on a per therm basis. Furthermore, only 16% of Britain’s electricity supply is nuclear, and almost half of that is due to be decommissioned by 2025, with only one new plant under construction.

The UK government’s green policies are propelling the nation into an energy disaster, when it has substantial fossil fuel reserves available in the form of coal and natural gas. Coal driven electricity supply has been reduced to under 3%. Instead of being phased out it should be brought back into supply production, because scrubbers remove almost all particulates and sulphates, and doubtless can be further developed to deal with CO2 emissions as well.

There are good reasons to reinstate coal and for that matter gas fracking. China and India retain and are increasing their coal powered supplies, giving them a significant energy price advantage for their own economies over the West. And while they have signed up to eventually reducing their coal dependency, it is a promise to do so at a vanishingly future date. On energy grounds alone, Britain along with other European nations are committing themselves to swapping their economic status with emerging nations, so that when the latter have fully emerged, Britain and Europe will then have the third world status.

Whatever climate change debate merits, it is an argument which is not to be confused with economics. It must be admitted that in the enthusiasm for doing away with fossil fuels and primary and reliable sources of energy, under this current government the outlook for Britain’s economy is of an accelerated decline.

The likely outcome of government policies

From what started as a government of ministers with a strong libertarian approach, two years later we see the opportunity to improve Britain’s economic consequences sadly squandered. Politically, the position is fragile, with the Prime Minister struggling to survive in the wake of the report on Partygate and the ongoing police investigation. Furthermore, he appears to have found it far easier and more pleasurable to increase spending than address wasteful government spending.

It is difficult to be optimistic, with the signs that the permanent civil service establishment remains firmly in charge and is increasing its economic and bureaucratic influence over weak ministries.

Perhaps the most important of the difficulties outlined above is monetary inflation, likely to lead to higher interest rates in the coming months. This is not a trend isolated to sterling, and even on a best-case basis whereby a Conservative government addresses the issues raised in this article, it is very likely that attempts at economic, monetary, trade policy, foreign policy, and administrative reforms will be overtaken by the repetitive cycle of bank lending contraction. So highly geared have banks in the Eurozone become, for which London acts as the principal financial centre, that rising interest rates seem sure to trigger a global banking crisis with London as an epicentre on a scale larger than that of thirteen years ago when Lehman failed.

Such an event is likely to destroy not only banking and central banking as we know it today, but currencies, the debasement of which socialising governments increasingly rely upon. Nevertheless, the issues raised in this article will remain and need to be addressed after a currency and credit crisis has passed and economic stability begins to return. The role for a British government with respect to foreign policy will become more important, particularly for post-crisis European political stability when the euro and possibly the entire Brussels construct have been destroyed. In this event the threat of another European war cannot be dismissed, and we will need the wisdom of a modern Lord Liverpool and Viscount Castlereagh.

The destruction of the fiat currency system will provide opportunities for a reset, based on the lessons learned. The post-crisis government must learn from the mistakes of past errors and be the servant of the people and not its master. It must not interfere in the economy, and keep its size to the minimum possible, taxing no more than 10—15% of everyone’s income and profits. It must restrict its role to providing a framework for contract and criminal law and the policing of the latter, as well as the defence of the realm. It must not respond to any demands for special treatment from either businesses or individuals. Individuals must take full responsibility for their own actions, and any welfare strictly limited. And most importantly, the state must ensure that currency is sound, backed by and exchangeable for gold coin.

Tyler Durden Sun, 02/06/2022 - 07:35
Published:2/6/2022 6:59:13 AM
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