Jan 06

Today’s News 6th January 2018

  • Trump Cuts The Gordian Knot Of Foreign Entanglements

    Authored by Patrick Armstrong via The Strategic Culture Foundation,

    President Trump is a new phenomenon on the American political scene.



    Not a professional politician begging for funds but a rich man who spent his own money and raised money on his own name: he arrived in office unencumbered with obligations. Free from a history in politics, he owes nothing to anyone. Add in his personality, grandiosity and late-night tweets and the punditocracy is in a state of angry incomprehension. Even more offensive to their notions of propriety is that this “dangerously incompetent“, unqualifiedmentally ill man beat the “most qualified presidential candidate in history“. No wonder so many of them believe that only cunning Putin could have made it happen – even if they don’t know how. But the punditocracy is as befuddled about him today as it was last year and the year before. (Scott Adams, who got it right, reminds us just how clueless they were.) The very fact that Trump won despite the opposition of practically every established constituency in the United States shows that there is more to him than readers of the NYT and WaPo or watchers of CNN and MSNBC (can) understand.

    What follows is an attempt to divine Trump’s foreign policy. It proceeds from the assumption that he does know what he’s doing (as he did when he decided to run in the first place) and that he does have a destination in mind. It proceeds with the understanding that his foreign policy intentions have been greatly retarded by the (completely false) allegations of Russia connections and Russian interference. There was no Russian state interference in the election (the likelihood is that Moscow would have preferred known Clinton) and, as I have written here, the story doesn’t even make sense. I expect when the Department of Justice Inspector General completes his report that the Russiagate farrago will be revealed as a conspiracy inside the US security organs. We do not have a date yet, but mid-January is suggested. Readers who want to follow the story are recommended to these websites: DystopiausaCTH and Zerohedge.

    We start with four remarks Trump often made while campaigning. Everyone would be better off had President Bush taken a day at the beach rather than invade Iraq. The “six trillion dollars” spent in the Middle East would have been better spent on infrastructure in the USA. NATO is obsolete and the USA pays a disproportionate share. It would better to get along with Russia than not.

    To the neocon and humanitarian intervention crowd, who have been driving US foreign policy for most of the century, these four points, when properly understood (as, at some level, they do understand them), are a fatal challenge. Trump is saying that

    1) the post 911 military interventions did nothing for the country’s security;

    2) foreign interventions impoverish the country;

    3) the alliance system is neither useful nor a good deal for the country;

    4) Russia is not the once and future enemy.

    A Chinese leader might call these the Three Noes (no regime change wars, no overseas adventures, no entangling alliances) and the One Yes (cooperation with Russia and other powers).

    Which brings us to his slogan of Make America Great Again. We notice his campaign themes of job loss, opiates, lawlessness, infrastructure, illegal immigration, the stranglehold of regulations, the “swamp”, the indifference of the mighty, the death of the “American Dream”. None of these can be made better by overseas interventions, carrier battle groups or foreign bases. But they can be made worse by them. There is every reason to expect that by MAGA he means internal prosperity and not external might. Trump has little interest in the obsessions of the neocon and humanitarian intervention crowd. “We need a leader that can bring back our jobs, can bring back our manufacturing, can bring back our military – can take care of our vets… The fact is, the American Dream is dead.” No foreign adventures there. So, in summary, Trump’s foreign policy of Three Noes and One Yes is a necessary part of making America “great” again.

    If I am correct in this and this is indeed his aim, how can he do it?

    There is a powerful opposition in the United States to the Three Noes and One Yes. And it’s not just from the neocon/humanitarian interventionists: most Americans have been conditioned to believe that the USA must be the world’s policeman, arbiter, referee, example. Perhaps it’s rooted in the City on a Hill exceptionalism of the early dissenter settlers, perhaps it’s a legacy of the reality of 1945, perhaps it’s just the effect of unremitting propaganda, but most Americans believe that the USA has an obligation to lead. Gallup informs us that, in this century, well over half of the population has agreed that the USA should play the leading or a major role in the world. The percentage in the punditocracy believing the USA must lead would be even higher.

    Interventionists are becoming aware that they do not have a soulmate in the White House and they’re wagging their rhetorical fingers. The fact is, though, that there is no alternative great power willing and able to step in“. “If nations in the South China Sea lose confidence in the United States to serve as the principal regional security guarantor, they could embark on costly and potentially destabilizing arms buildups to compensate or, alternatively, become more accommodating to the demands of a powerful China” warns the intervention-friendly Council on Foreign RelationsThe US has an obligation to lead in North Korea. It must lead for “Middle East progress“. A former NATO GenSek proclaims the US must lead. “US should be the great force for peace and justice globally“. “The absence of American leadership has certainly not caused all the instability, but it has encouraged and exacerbated it.” The ur-neocon tells us that America must leadChaos is the alternative. Must resume (resume??!!) its imperial role (which apparently means even more military expenditure lest its military lead be lost). Innumerable more examples calling on the US to lead something/somewhere everything/everywhere can easily be found: it would be much more difficult to find one pundit advising the US to keep out of a problem somewhere than find twenty urging it to lead.

    If I have understood him right, what would Trump see if he read this stuff? Lead, lead, lead… everything everywhere. The South China Sea, the Middle East and North Korea specifically but everywhere else too. More infrastructure repairs foregone so as to ensure what?… That ships carrying goods to and from China safely transit the South China Sea? “Friendly” governments installed in “Kyrzbekistan“? Soldiers killed in countries not even lawmakers knew they were in? 40,000 troops out there somewhere? Trying to double the Soviet record for being stuck in Afghanistan? How many bridges, factories or lives is that worth? Trump sees more entanglements but he sees no benefit. He’s a businessman: he can see the expense but where’s the profit?

    How to get out of these entanglements? It’s too late to hope to persuade the legions bleating that “America must lead” and, even if they could be persuaded, there isn’t enough time to do so: they salivate when the bell rings. President Trump can avoid new entanglements but he has inherited so many and they are, all of them, growing denser and thicker by the minute. Consider the famous story of the Gordian Knot: rather than trying to untie the fabulously complicated knot, Alexander drew his sword and cut it. How can Trump cut The Gordian Knot of American imperial entanglements?

    By getting others to untie it.

    He walks out of the Paris Agreement (“a watershed moment when it comes to debating America’s role in the world“). And the TPP (“opened the door toward greater Chinese influence, and won’t benefit the U.S. economy in the slightest“). His blustering on Iran caused the German Foreign Minister to express doubts about American leadership. He brusquely tells NATO allies to pay their own way (“America’s NATO allies may be on their own after November if Russia attacks them“). By announcing Jerusalem as the capital of Israel he unites practically everybody against Washington and then uses that excuse to cut money to the UN. His trash talk on North Korea has actually started the first debate about the utility of military force we’ve seen for fifteen years. He pulls out of Syria (quietly and too slowly but watch what he doesn’t talk about). One last try in Afghanistan and then out. Re-negotiate all the trade deals to US benefit or walk away. Be disrespectful of all sorts of conventions and do your best to alienate allies so they start to cut the ties themselves (his tweet on the UK was especially effective). Attack the media which is part of the machinery of entanglement. Confiscate assets. It’s a species of tough love – rudely and brusquely delivered. He (presumably) glories in opinion polls that show respect for the USA as a world leader slipping. He doesn’t care whether they like him or not – America first and leave the others to it.

    The Three Noes and One Yes policy will be achieved by others: others who realise that the USA is no longer going to lead and they will have to lead themselves. Or not. Perhaps, as the neocons love to say, US leadership was necessary in the immediate postwar situation, perhaps NATO served a stabilising purpose then but there has been nothing stabilising about US leadership in this century. Endless wars and destruction and chaos and loss. Thus abroad and – the part that Trump cares about – so at home. It’s not incompetence, as the people who fail Adams’ test tell themselves; it’s a strategy.

    (All real theories must be falsifiable; let’s see in a year’s time whether the US is more entangled or less entangled. It should be pretty apparent by then and, by the end of Trump’s first term, obvious to all.)

  • Visualizing The Global Millionaire Population

    When we think of the term “millionaire”, it’s only natural for our thoughts to be skewed towards the famous business magnates that have amassed giant fortunes, like Jeff BezosElon Musk, or Warren Buffett.

    However, as Visual Capitalist’s Jeff Desjardins notes, the reality is that those types of ultra high net worth individuals (UHNWIs) with fortunes above $30 million are a fairly rare commodity – and when it’s all said and done, they make up a very tiny percentage of the millionaire population as a whole.

    The vast majority of millionaires (90.0%) globally have fortunes between $1 million and $5 million, and you’re probably not going to find many of them with a sprawling mansion or a new Rolls Royce in the garage.



    In fact, most millionaires drive a Ford.


    So where will you find all of the world’s millionaires?

    Courtesy of: Visual Capitalist


    They are most likely to be found in big cities – places where they can use and display their wealth. These are also the places where big opportunities tend to be found, so it’s no surprise to see millionaires cluster in world-class cities like New York, Hong Kong, London, Tokyo, or Singapore.

    Regions below are sorted by the total millionaires in each city. Data comes from the Knight Frank 2017 report.




    Tokyo, Hong Kong, and Singapore are the undisputed millionaire population capitals in Asia, but mainland China is coming up quick from behind.

    In just the last 10 years, China has upped its millionaire count by 281% to 719,400 in total – and Beijing (with 122,100 millionaires) now cracks the top five list in Asia.




    Australia’s millionaire count has soared 85% over the last 10 years, thanks in part to red-hot property prices.




    London is the millionaire capital for the world, with 357,200 of them.

    Despite its relatively small size in comparison to the European heavyweights, Switzerland also has two cities in the top five: Geneva and Zurich.




    Not surprisingly, Dubai is the biggest destination for the ultra-rich to flock to in the Middle East.




    Mexico City, and then the two big ones in Brazil (São Paulo and Rio), are where millionaires congregate in Latin America.




    The U.S. has 4.3 million millionaires, and they are widely dispersed through the country.

    The Knight Frank 2017 report lists five cities: NYC, Washington, D.C., San Francisco (incl. Bay Area), Los Angeles, and Miami – all of which, according to their calculations, have more than 30k millionaires.

    Canada’s Toronto also has broken the six-digit barrier with over 100,000 millionaires. That puts the Big Smoke in pretty unique company, as only 17 cities globally can make such a claim.



  • New Video Emerges Of ISIS Convoys Leaving Raqqa Under US Coalition Watch

    Submitted by Leith Fadel via Al-Masdar News,

    New footage has recently emerged which offers further confirmation that the US coalition facilitated the exit of Islamic State terrorists from Raqqa when the city was liberated in October. Fighters of the US-backed Syrian Democratic Forces (SDF) confirmed from Raqqa that they had shot the footage showing militants of the self-proclaimed Islamic State (IS; formerly ISIL/ISIS) peacefully leaving Raqqa on their watch.

    Thought to have been filmed towards the end of the battle for Raqqa, the footage shows buses and trucks carrying dozens of IS militants from the embattled city, according to one of the fighters.


    A Kurdish SDF fighter looks as smoke rises above Raqqa, Summer 2017. Image source: Reuters via Al-Masdar News

    This is the footage we shot. We still keep them,” said the SDF fighter in late November, holding the mobile phone on which the footage was recorded. “We saw them with our own eyes. I was on shift at the Grain Containers turnabout when IS were leaving. There were many of them, we were not afraid of them,” he said.

    An investigative report by the BBC in early November alleged a “secret deal” that allowed hundreds of IS fighters to depart embattled Raqqa under the eyes of the SDF in early October, as the fight for the city was drawing to a close in early October.

    The new footage was obtained from the SDF and published online a week ago. In the above clip, SDF members also confirm that they filmed the ISIS convoys leaving on their personal cell phones. The BBC also confirmed the deal which even allowed foreign fighters to relocate to different parts of Syria and even neighboring countries like Turkey.

    The BBC leaked details of the deal in a bombshell report which began: “The BBC has uncovered details of a secret deal that let hundreds of IS fighters and their families escape from Raqqa, under the gaze of the US and British-led coalition and Kurdish-led forces who control the city.”

    “The deal to let IS fighters escape from Raqqa – de facto capital of their self-declared caliphate – had been arranged by local officials. It came after four months of fighting that left the city obliterated and almost devoid of people. It would spare lives and bring fighting to an end. The lives of the Arab, Kurdish and other fighters opposing IS would be spared,” the BBC continued.

    According to the report, some 250 Islamic State terrorists were allowed to leave the city, along with 3,500 of their family members that were trapped in Raqqa with them – though other reports put it at a far higher number. 

    “We didn’t want anyone to leave,” says Col Ryan Dillon, spokesman for Operation Inherent Resolve, the Western coalition against IS, as quoted by the BBC. “But this goes to the heart of our strategy, ‘by, with and through’ local leaders on the ground. It comes down to Syrians – they are the ones fighting and dying, they get to make the decisions regarding operations,” he added.

    The Islamic State fighters reportedly fled to many areas, including Turkey and the Deir Ezzor Governorate. The U.S. Coalition had previously criticized the Syrian government and Hezbollah for allowing a smaller convoy of ISIS terrorists and civilians to leave the Lebanese border for the Deir Ezzor Governorate.

  • China's Xi Warns Military: Be Ready For War & "Don't Fear Death"

    In what is being characterized as a rare address to the world’s largest fighting force, President Xi Jinping on January 04 urged the Chinese military to be ready for war and ‘don’t fear death’.

    As the beat of the war drums gets louder in East Asia and abroad, Xi’s rare speech to the military kicked off the New Year with a grim warning, as China and other countries in the region could be preparing for a turbulent year ahead.

    China’s soldiers should “neither fear hardship nor death,” Xi told thousands of troops during an inspection visit Wednesday to the People’s Liberation Army’s (PLA) Central Theater Command in northern Hebei province, according to the official Xinhua news agency.



    Xi advised the military to continue improving upon its equipment, tactics, technology, and combat readiness by engaging in “real combat training.”

    He further said, the need to “create an elite and powerful force that is always ready for the fight, capable of combat and sure to win in order to fulfill the tasks bestowed by the Party and the people in the new era.”

    In recent years, Xi has ushered in a period of modernization of China’s military, which has worried Asia and Washington alike. Xi is head of the Communist Party’s Central Military Commission, who is also the commander-in-chief of China’s two million-strong military. In October, he claimed his status to be the strongest leader in China that country has seen in decades during the 19th communist party congress.

    Local Chinese media outlets report that Xi’s mobilization meeting with the entire armed forces is a first of its kind. Xi stated the goal of the Chinese military is to become a “world class” force by 2050. Perhaps, Xi has hinted at the time period when China expects to overtake the United States.

    Analysts say there is a low probability that Xi will put his military in harm’s way in the intermediate time. However, the potential for conflict is high on the South China Sea, on the Korean Peninsula, Japanese territories around the Senkaku/ Diaoyu islands, the South China Sea, the Tibet and Xinjiang regions, as well as two potential hotspots in the Himalayan region along the Indian border.

    Bottomline: President Xi Jinping’s rare military address should serve as a warning, that the region is marching towards war. For the address to be conducted early in the year, it’s leading many to believe that the second half of 2018 could be quite turbulent. The one question we ask: Which powderkeg goes off first?

  • Phillips Curve R.I.P.

    Authored by Paul Craig Roberts,

    For a decade central banks have printed enormous quantities of new money. The excuse is to stimulate the economy by reviving inflation. However, the money has, for the most part, driven up the prices of financial assets instead of consumer and producer prices. The result has been a massive increase in the inequality of income, wealth, and opportunity.

    The quantitative easing policy followed by central banks is based on belief in an economic relationship between inflation and GDP growth—the Phillips curve—that supply-side economics disproved during the Reagan administration. The belief in the Phillips curve persists, because supply-side economics was misrepresented by the financial media and neoliberal junk economics.

    The fact that something as straightforward and well explained as supply-side economics can be misrepresented for 35 years should give us all pause. When successive chairmen of the Federal Reserve and other central banks have no correct idea what supply-side economics is, how can they formulate a workable monetary policy? They cannot.

    Phillips Curve R.I.P.

    Paul Craig Roberts

    Republished with permission from The International Economy

    The Phillips Curve is the modern day version of the Unicorn. People believe in it, but no one can find it.  The Fed has been searching for it for a decade and the Bank of Japan for two decades.  So has Wall Street.


    Central banks’ excuse for their massive injections of liquidity in the 21st century is that they are striving to stimulate the 2% rate of inflation that they think is the requirement for sustained rises in wages and GDP.  In a total contradiction of the Phillips Curve, in Japan massive doses of central bank liquidity have resulted in the collapse of both consumer and financial asset prices.  In the US the result has been a large increase in stock averages propelled by unrealistic P/E ratios and financial speculation resulting in Tesla’s capitalization at times exceeding that of General Motors. 

    In effect pursuit of the Phillips Curve has become a policy of ensuring financial stability of over-sized banks by continually injecting massive amounts of liquidity. The result is greater financial instability.  The Fed is now confronted with a stock market disconnected from corporate profits and consumer disposable income, and with insurance companies and pension funds that have been unable for a decade to balance equity portfolios with interest bearing debt instruments.  Crisis is everywhere in the air. What to do?

    The Phillips Curve has been working its mischief for a long time. During the Reagan administration the Philips Curve was responsible for an erroneous budget forecast. In the 21st century the Phillips Curve is responsible for an enormous increase in the money supply. The Reagan administration paid a political price for placing faith in the Phillips Curve.  The price for the unwarranted creation of money by central banks in the 21st century is yet to be paid.

    The Phillips Curve once existed as a product of Keynesian demand management and high tax rates on personal and investment income. Policymakers pumped up consumer demand with easy money, but high marginal tax rates impaired the responsiveness of supply. The consequence was that prices rose relative to real output and employment. Supply-side economists said the solution was to reverse the policy mix: a tighter monetary policy and a “looser” fiscal policy in terms of lower marginal tax rates that would increase the responsiveness of supply. 

    During the 1980s the economics establishment was too busy ridiculing supply-side economics as “voodoo economics,” “trickle-down economics,” “tax cuts for the rich,” and for allegedly claiming that tax cuts pay for themselves, to notice what I pointed out at the time: the dreaded Phillips Curve with its worsening trade-offs had disappeared. The high GDP growth rates of the economic expansion beginning in 1983 were accompanied by inflation that collapsed from near double-digit levels to 3.8% in 1983 and 1.1% in 1986. Of course, the economics establishment wasn’t interested in such embarrassing results, and so the story became the “Reagan deficits.”  The establishment reduced supply-side economics to the claim that tax cuts paid for themselves, and the deficits proved supply-side economics to be wrong. Case closed. This remains the story today as told by Wikipedia and in economic classrooms. 

    The implementation of the Reagan administration’s policy was disjointed, because Fed chairman Paul Volcker saw the supply-side policy as a massive fiscal stimulation that would send already high inflation rates soaring.  Concerned that monetarists would blame him for what he thought would be the inflationary consequences of irresponsible fiscal stimulus, Volcker slammed on the monetary brakes two years before the tax rate reductions were fully implemented. This was the main reason for the budget deficits, not a “Laffer Curve” forecast that was not made. The Treasury’s forecast was the traditional static revenue estimate that every dollar of tax cut would cost a dollar of revenue.

    In effect, the Phillips Curve became an ideology, and economists couldn’t get free of it. Consequently, they have misunderstood “Reaganomics” and its results and subsequently policymakers have inflicted decades of erroneous policies on the world economy.

    As so many have observed, if we don’t understand the past, we cannot understand the present. To understand the past, let’s begin with Reaganomics.

    So what Was Reaganomics?

    “Reaganomics” was the media’s name for supply-side economics, which was a correction to Keynesian demand management. Worsening “Phillips curve” tradeoffs between employment and inflation became a policy issue during the Carter administration. The Keynesians had no solution except an incomes policy that had no appeal to Congress.  This opened the door to a supply-side solution.

    Demand management treats the aggregate supply schedule as fixed. Fiscal and monetary policies were assumed to have no impact on aggregate supply, a function of technology and resources.  Changes in marginal tax rates, for example, would, if expansionary (lower rates), move aggregate demand along the aggregate supply schedule to higher employment; if contractionary (higher rates), the policy would reduce inflation by reducing aggregate demand and employment.

    Supply-side economists said that some fiscal policies directly shift the aggregate supply schedule and that neglect of this by Keynesians was the explanation for the worsening Phillips curve trade-offs. The Keynesian policy stimulated demand but high tax rates held back the responsiveness of supply, so prices rose relative to output and employment. This was the explanation of the worsening Phillips curve trade-offs.

    Supply-side economists pointed out that marginal tax rates affect two important relative prices.  One is the price of leisure in terms of forgone current income.  The other is the price of current consumption in terms of forgone  future income.  Thus, marginal tax rates affect both the supply of labor and the supply of savings.  The higher the tax rate on labor income, the cheaper is leisure. The higher the tax rate on investment income, the cheaper is current consumption or what is the same thing, the higher is the opportunity cost of saving and investing.  

    Supply-side economists said that the solution to the worsening Phillips curve trade-offs was to change the policy mix: tighten monetary policy and “loosen” fiscal policy by lowering marginal tax rates.

    Despite the clarity of my explanations in The Supply-Side Revolution (Harvard University Press, 1984) The New Palgrave Dictionary of Money and Finance (1992), The McGraw-Hill Encyclopedia of Economics (1994), Zeitschrift fur Wirtschaftspolitik (38 Jahrgang 1989), Rivista di Politica Economica  (Maggio 1989), The Public Interest (Fall 1988) and http://www.paulcraigroberts.org/2017/07/17/supply-side-economics-theory-results/, the myth has been established that supply-side economics is about tax cuts paying for themselves.  As the Wikipedia entry, for example, puts it, “The Laffer curve is one of the main theoretical constructs of supply-side economics.”  This is nonsense.  The issue that the policy addressed was the worsening Phillips curve trade-offs, not  raising revenues for the government. As all official documents show, the Treasury’s revenue forecast of the Reagan tax rate reduction is the Treasury’s static revenue forecast that every dollar of tax reduction will lose a dollar of revenue.

    Where then did the “Reagan deficits” come from?  The answer is that they came from the Phillips Curve. The Council of Economic Advisers took the position that a forecast that departed significantly from the Phillips curve belief that the economy could not grow while inflation declined would lack credibility. A forecast of rapidly falling inflation would especially discredit a budget that encompassed a tax rate reduction that would be, despite our explanation,  interpreted as a demand stimulus policy.  The budget director, David Stockman, and the White House chief of staff took the position that the Republican Senate would not vote for a tax rate reduction that enlarged the budget deficit. Therefore, against my advice (I was Assistant Secretary of the Treasury for Economic Policy) the inflation numbers in the six-year (1981-86) budget forecast were raised to accommodate the Phillips curve and the Republican fear of budget deficits.  

    Having been present at Fed chairman Paul Volcker’s meetings with the Fed’s outside consultants, I heard them tell Volcker that the administration’s policy was a massive fiscal stimulus and that, in Alan Greenspan’s words, “monetary policy is a weak sister; at best it can conduct a weak rear-guard action.”  I saw that Volcker was not going to follow the Treasury’s request to gradually reduce the growth rate of money, but in order to protect himself would throw on the brakes before any part of the phased-in tax rate reduction had gone into effect.

    And that is what Volcker did.  Inflation collapsed relative to forecast. The collapse in inflation collapsed GDP and the tax base and is the origin of the budget deficits.  The Reagan inflation forecast was below the Carter administration and CBO forecasts, but high relative to actual inflation.  For example, Reagan’s budget forecast inflation rates (1981-86) of 11.1%, 8.3%, 6.2%, 5.5%, 4.7%, and 4.2%.  Actual inflation was 8.9%, 3.8%, 3.8%, 3.9%, 3.8%, and 1.1%.

    The budget deficits, which had been hidden by a curtsy to the Phillips curve and Republican deficit phobia, became a weapon in the Democrats’ hands.  As a member of the Senate staff during 1977-78, I succeeded in securing the support of leading Democrats, such as Russell Long, chairman of the Senate Finance Committee, Lloyd Bentsen, chairman of the Joint Economic Committee, and Sam Nunn on the Armed Services Committee, for a supply-side policy.  Indeed, the first Senate reports endorsing a supply-side policy were issued by the Joint Economic Committee under Bentsen’s chairmanship in 1979 and 1980.   Support for a supply-side policy had also spread into the House Democrats. House Speaker Tip O’Neil introduced a Democratic supply-side alternative to Reagan’s.  The only way Reagan could differentiate his tax cut from the Democratic alternative was by indexing the tax rates for inflation (beginning in the mid-1980s).

    Despite the willingness of Democrats to support a supply-side policy, the White House staff wanted to give Reagan a “political victory” by picking a fight and cutting the Democrats out of the tax bill.  This “victory” turned to ashes when the Phillips curve proved to be bogus.  Democrats, media, and academics turned on the administration, accusing it of a Laffer curve forecast, and Wall Street economists kept interest rates high with their absurd prediction that budget deficits resulting from the collapse of inflation would cause inflation to explode.  

    In the United States the Phillips curve has disappeared.  Not even a decade of quantitative easing and an enormous expansion in the Fed’s balance sheet have been able to bring it back.  The Fed is still trying and remains unsure whether it can raise the short term interest rate by 25 basis points.  And this despite enormous budget deficits. The miniscule rate increases about which the Fed worries are not even real increases as they do not offset the low reported inflation. 

    Those who recognize the Phillip Curve’s demise attribute it to globalization, that is, to the offshoring of high-productivity, high value-added manufacturing jobs that have destroyed manufacturing unions. However, the Phillips Curve disappeared long before globalization took off. The US 70% tax rate on investment income and the 50% tax rate on personal income from the Phillips Curve era have been absent for 35 years. To resurrect the Phillips Curve, the responsiveness of output to demand would have to again be impaired. 

  • Millennial Deaths Surge As Opioid Crisis Deepens

    Despite all the chatter surrounding the ‘globalized synchronized growth’ narrative rocketing equity markets to the moon, and or the constant bombardment of news stories about newly minted Bitcoin and Ripple millionaires living in their parents’ basement, the fracturing of the real and the financial economies has become more evident than ever, as many young millennials who are trapped in the real economy with high debts and wage stagnation are dying at an alarming clip.

    The figures are so concerning that millennials deaths have shifted the overall life expectancy rate for the United States lower for the second consecutive year. The last time this occurred, it was the early 1960s when the stock market zoomed to new highs, but then, shortly thereafter, experienced a sizeable downturn,


    According to the latest data from the Centers for Disease Control and prevention (CDC), 129 out of every 100,000 25-34-year-old US adults died in 2016. The last time these levels were seen it was 1995, at the height of the HIV/AIDS epidemic. Notice the v-shape recovery in young adult deaths?


    From 2014 to 2016, the rate at which 25-34-year-olds died advanced by 19%, from 108 per 100,000 to 129. For 15-24 and 35-44-year-olds it was much of the same with a significant increase in the death rate. On the other hand, the Baby Boomer death rates remained depressed or even stagnated, while they sat back, played bingo, and watched the younger generation implode on itself.


    This momentum of millennial deaths is astonishing. The trend does not bode well for the next decade – the period during which millennials are expected to take over the workforce – which however may explain the rapid ascent and increased reliance on AI and automation.

    According to the CDC, the explanation for the exploding deaths is simple: young Americans are overdosing on drugs, particularly opioids. 

    2010, just 18 out of every 100,000 Americans aged 25-34 died from a drug overdose. By 2014, that rate rose to about 23 in 100,000—then it really took off. From 2014 to 2016 it spiked by 50% to almost 35. The majority of this rise can be accounted for by an increase of deaths from heroin (3.4 to 4.9 for every 100,000), natural and semisynthetic non-heroin opioids like oxycodone (3.8 to 4.4) and, most importantly, synthetic prescription opioids like fentanyl (1.8 to 6.2).

    Beginning in the 1990s, doctors began overprescribing opioids for pain management, leading many patients to become addicted. Jay Joshi, the former chairman of the National Pain Foundation, wrote in Quartz that ignorance among physicians and aggressive marketing by opioid manufacturers are primarily to blame for the crisis. Prescription opioids like oxycodone aren’t that dangerous, but patients can become easily addicted and so seek out more potent, cheaper, and conveyors of opiates like heroin and fentanyl, which has led to the recent spike in opioid-related deaths.


    Quarterly provisional overdose estimates from 2016 via the CDC show death rates are trending higher; suggesting there is little evidence in preliminary 2017 data that the situation is improving.

    • The age-adjusted death rate for drug overdose was 20.7 in 2016 Q4, which is higher than the age-adjusted death rate of 16.1 in 2015 Q4.
    • The age-adjusted death rate for drug overdose for the 12-month period ending with 2016 Q4 was 19.8, which is higher than the age-adjusted death rate of 16.3 for the 12-month period ending with 2015 Q4.


    “Would you like some opioids with that avocado and toast?”

    Unfortunately, the opioid crisis will only get worse as it consumes the millennial generation, which is a double whammy for the US economy as Millennials age and are set to dominate the most productive age segment of the US labor market. Even the Federal Reserve has warned  about the impact of the opioid crisis on productivity and the labor market.

    But then again, an army of robots is quietly rising in the shadows, waiting for the moment of social acceptance before it pounces and formalizes the next labor (and capital) revolution.

  • Pat Buchanan: "Social Freedom Is Irreconcilable With Iranian Theocracy"

    Authored by Patrick Buchanan via Buchanan.com,

    As tens of thousands marched in the streets of Tehran on Wednesday in support of the regime, the head of the Revolutionary Guard Corps assured Iranians the “sedition” had been defeated.

    Maj. Gen. Mohammad Ali Jafari is whistling past the graveyard.

    The protests that broke out a week ago and spread and became riots are a fire bell in the night for the Islamic Republic.

    The protesters denounced President Hassan Rouhani, re-elected last year with 57 percent of the vote, for failing to curb inflation or deliver the benefits he promised when Iran signed the nuclear deal.

    Supreme Leader Ayatollah Ali Khamenei, commander in chief and head of state, in power three decades, was also denounced, as were Iran’s interventions in wars in Iraq, Syria, Lebanon, Gaza and Yemen.

    In 2009, the uprising of millions in Tehran was driven by middle-class rage over an election stolen by the populist President Mahmoud Ahmadinejad. This past week’s protests began in the working class, in what might be called Iran’s “fly-over country.”

    The protesters were Red State and Tea Party types, demanding their own version of “Come Home, Iran” and “Iran First!”

    The charge against Rouhani is that he has failed to deliver the good times promised. Against the ayatollah and the mullahs, the charge is that what they have delivered — power and wealth to the clerics, social repression, foreign wars — are not what the Iranian people want.

    The greater long-term threat of the protests is to the Islamic regime.

    For if the protests are about people being denied the freedom and material goods the young enjoy in the West, the protesters are demanding what theocracies do not deliver. How could the ayatollah and the mullahs, who restrict freedom by divine law, accept democratic freedoms without imperiling their own theological dictatorship?

    How could the Republican Guard surrender its slice of the Iranian economy and end its foreign interventions without imperiling its reason for being — to protect and promote the Iranian Islamic revolution?

    Half of Iran’s population is 31 or younger. This new generation was not even born until a decade after the Revolution that overthrew the Shah.

    How does a clerical regime speak to a people, 40 million of whom have smartphones connecting them to an outside world where they can see the freedom and prosperity they seek, but their government cannot or will not deliver?

    The protesters are also telling Rouhani’s “reformers,” in power now for five years, that they, too, have failed.

    Rouhani’s dilemma? To grow Iran’s economy and improve the quality of life, he needs more foreign investment and more consumer goods. Yet any surge in material prosperity Rouhani delivers is certain to undermine the religious faith undergirding the theocratic regime.

    And as any transfer of power to the elected regime has to come at the expense of the clerics and the Guard, Rouhani is not likely to get that power.

    Thus, he and his government are likely to continue to fail.



    Bottom line: The Islamic Republic of Iran was not established to create a materially prosperous and socially free society, because, in the ayatollah’s theology, such societies, like the USA, are of the devil and corruptive of the people.

    Social freedom is irreconcilable with Iranian theocracy.

    And Iranian hard-liners, clerical and military, are not going to permit protests demanding Western freedom and material goods, to cause them to commit what they believe would be ideological suicide.

    Yet the U.S. and President Trump also face a dilemma.

    If as Trump says, we wish the Iranian people well, how do we justify scraping the nuclear deal in which Iranians have placed so much hope, and reimposing the sanctions that will restore the hardships of yesterday?

    How does America proclaim herself a friend of the Iranian people, if we are trying to persuade Europeans to abrogate the nuclear accord and reimpose the sanctions that impoverish the Iranian people?

    Will we urge the Iranians to rise up and overthrow their regime, as we did the Hungarians in 1956, which resulted in their massacre by Soviet tanks sent into Budapest? Ike’s response: He sent Vice President Nixon to greet the surviving Hungarian patriots fleeing across the Andau Bridge into Austria.

    After Desert Storm in 1991, George H.W. Bush urged Iraqis to rise up against Saddam Hussein. When the Shiites did rise up, they, too, were massacred, as our Army from Desert Storm stood by in Kuwait.

    If there is an Iranian uprising and it results in a Tiananmen Square slaughter in Tehran, do we really want the U.S., which would not likely intervene to save the patriots, held morally accountable?

    The Iranian protests suggest that the Islamic Revolution, after 40 years, is failing the rising generation. It is hard to see how this is not ominous news for the Iranian regime.

    As it was not on the side of the Soviets, time is not on the side of the ayatollahs either.

    We need not go to war with them. Time will take care of them, too.

  • Another Broke Millennial Selling Her Virginity Online

    Another broke millennial, stuck in the gig economy – where wage stagnation has drowned out any hopes for a better life, is selling her virginity online to the highest bidder…

    In recent years, broke millennials have been selling their ‘assets’ online to pay bills or cover college expenses. Last November, we reported on one unconventional dating website called SeekingArrangement.com, where upwards of 2.5 million millennials could be selling sex for their next debt payment.

    Bailey Gibson, 23, is auctioning her virginity at the Moonlite Bunny Ranch legal brothel in Carson City, Nevada.

    Her pitch: she is a ‘good girl’ gone bad, and says she’s selling her virginity after giving up on marriage following a rough breakup.

    According to the MirrorGibson grew up with Christian foster parents in a gated community in the suburbs of Sacramento, California. Her childhood was very sheltered from the outside world, but something snapped when her ex-boyfriend cheated on her.

    In a blog post she tries to explain herself:

    I learned that love can be deceiving when I discovered that he slept with his ex on Valentine’s Day, however. Being the naive 19 year old that I was, I thought that if I stayed with him and we enrolled in couples therapy, I could make our relationship right again.

    At that point I had virtually nobody and my ex-boyfriend brought me companionship. So, I stayed. Foolishly. Only to be heartbroken after one of our couples therapy sessions when I found out that he had already met and slept with someone else – on their first date no less.

    After grieving for a while, I came to the conclusion that waiting until marriage to lose my virginity was the wrong decision, because my ex-boyfriend wasn’t worth waiting for.

    Bailey added, “I wanted to lose my virginity in the most profitable way possible.”

    She then contacted Dennis Hoff, who runs the Bunny Ranch. It’s unclear where Bailey’s virginity has been priced at, but nevertheless, Hoff stands to earn 50 percent of the winning bid.

    Further, Baily clarifies why selling her virginity online is the trendy thing to do:

    Society perceives me as a deviant, and I am okay with that. At the end of the day, it is my body. I have the right do what I want with it.

    Going through the Bunny Ranch allows me to legally have sex for money. Does this make me a prostitute? Gasp! Meh, I don’t know. If you take a picture once, does that make you a photographer?

    I do not think that capitalizing upon your purity makes you a bad person. Just like having sex with multiple men does not make you a bad person. We all make choices. Mine was to wait. Now it is to sell.

    Last year, Katherine Stone, then 20, sold her virginity for $400,000, with Hof taking his 50 percent cut of the final bid. Last November, we reported on an Abu Dhabi businessman who paid $2.9 million for a 19-year-old model’s virginity. In April of 2017, a Hong Kong businessman paid $2.5 million for an 18-year-old Romanian model’s virginity.

    As explained by UBS strategist Matthew Mish, millennials have never been more in debt and this shocking development could hint why millennials are selling their virginities and or resorting to unconventional dating websites, in the millions to trade sex for the next debt servicing payment.

    As Mish points out in the Figures below, the median debt-to-asset ratio for Americans under the age of 35 has gotten out of control.

    With the financial security of the millennial in grave danger, as per UBS strategist Matthew Mish’s charts, we start to get a sense for why the millennials are auctioning off their ‘assets’ to the highest bidder; they are simply broke.

  • 'African Studies' Exam Blasts Trump As Bigot, Touts Hillary As Unifier

    Authored by Osje Pena via Campus Reform,

    The final exam for one California State University-Northridge class left students with little doubt as to their professor’s opinion of Donald Trump and Hillary Clinton.

    The online final for African Studies 161, “American Political Institutions: A Black Perspective,” taught by Professor Karin Stanford, asked students about both 2016 presidential nominees in similarly formatted questions, both of which included an “all of the above” option.

    “Donald Trump frequently made statements of an _____ nature throughout this presidential campaign,” one question asked, offering students answer choices of “anti-Mexican,” “anti-Muslim,” “anti-woman,” and “all of the above.”



    Another question asked students to name the groups Hillary Clinton addressed “in terms of breaking down barriers and bringing people together?” The students could select from “races,” “religions,” “genders and sexualities,” or “all of the above.”


    An anonymous student, who was enrolled in the online class, does not recall learning any anti-Trump rhetoric in class nor in the textbook reading.

    “The class is online-based, so the professor has not had a political bias for the most part and neither did the chapter readings, so it was really surprising to see this material on the final exam,” said the student.

    “It was pretty random and annoying,” the student continued. “Like, don’t try and make me think a certain way, because everyone’s view is different.”

    Campus Reform reached out to professor Karin Stanford for comment, but did not receive a response in time for publication.

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