Jan 18

Today’s News 18th January 2021

  • Looking Through An Adversary's Eyes: A KGB Agent's Prophecy
    Looking Through An Adversary’s Eyes: A KGB Agent’s Prophecy

    Authored by ‘Jean Chen’ via The Epoch Times,

    Human beings have a weakness: It is easy for us to see others’ problems, but not our own problems. Actually, most of us are nearly blind to our own problems.

    However, if we examine how our enemies look at us, some insights may be revealed.

    For many people right now, the aftertaste of the 2020 presidential election is bitter. They feel that something is very wrong with our country. But what is it?

    For current events, it may be useful to look through the eyes of an adversary that many thought had been vanquished: the USSR in the 20th century

    The Prophecy of a KGB Agent

    I came across a YouTube video of a 1985 interview of Yuri Bezmenov, a KGB agent who defected to the West in 1970.

    The interview is about the Soviet Union’s strategy to subvert the United States. It is eye-opening and I wish to share a quote here first:

    “Marxism-Leninism ideology is being pumped into the soft heads of at least three generations of American students, without being challenged or counter-balanced by the basic values of Americanism and American patriotism … The demoralization process in the United States is basically completed already … Most of it is done by Americans to Americans thanks to lack of moral standards.

    As I mentioned before, exposure to true information does not matter anymore. A person who was demoralized is unable to assess true information. The facts tell nothing to him. Even if I shower him with information, with authentic proof, with documents, with pictures. Even if I take him by force to the Soviet Union and show him concentration camp he will refuse to believe it until he is going to receive a kick in his fat bottom. When the military boot crashes him, then he will understand, but not before that. That’s the tragic of the situation of demoralization.”

    It is scary to watch the video. (More video here and here.)

    What Mr. Bezmenov described 35 years ago is unfolding in front of our very eyes. To me, what is most alarming is that the demoralization is mostly “done by Americans to Americans due to lack of moral standards.” Actually, as Bezmenov pointed out, “for the last 25 years, actually it’s over-fulfilled because the demoralization now reaches such areas where previously not even Comrade Andropov [KGB leader during 1967–1982] and all his experts would even dream of such a tremendous success.”

    According to Bezmenov, only 10 to 15 percent of the KGB’s personnel and resources were allocated to traditional clandestine espionage in James Bond’s style, with the rest going to “legitimate, overt, and open” ideological subversion. He said that subversion happens in four stages: demoralization, destabilization, crisis, and “normalization.”

    The first stage, lasting for about 15 to 20 years, the period of time needed to raise a generation, is to brainwash the public with communist ideology. Manipulation of the media and academia is required for this purpose.

    The second stage focuses on throwing society into chaos, and it usually takes 2-5 years. During this stage, the status quo in economy, foreign relations, and defense systems are changed. The establishment promises all kinds of goodies in order to win people’s support for creating a massive government that is intrusive to people’s lives. Media and academia are also essential to make it successful.

    The third stage instigates a crisis that leads to a civil war, revolution, or foreign invasion. This stage only took 2-6 months. This is the stage when the leftist idealists, or “useful idiots,” are no longer needed, because they would be disillusioned and become obstacles. They are going to be eliminated, exiled, or imprisoned, like what has happened in Grenada, Afghanistan, Bangladesh, and China. “It is the same pattern everywhere,” said Bezmenov.

    These three steps culminate in the fourth and final stage of “normalization”—the populace begins to accept and assimilate communism. This final stage can take up to 20 years to complete.

    Today, 35 years after the interview, Bezmenov’s chilling prophecy still sounds so relevant. According to annual polls by the Victims of Communism Memorial Foundation, support for socialism and Marxism among young people in the United States increases steadily. Actually, that is happening in all Western countries. Ambitious proposals like the “Great Reset Initiative” are aiming to change the world fundamentally in economy, international relations, and defense systems, and establish global governance, which sounds like Bezmenov’s stage two, destabilization.

    The United States is lauded as the beacon of democracy and freedom. But our once-proud institutions based on the Constitution and the separation of powers seems so powerless under the stress test of the 2020 presidential election. The deep frustration and distrust of the system cannot be dissipated by political intimidation, or deliberate ignoring of evidence-based allegations of irregularities. Many people are deeply worried about our country’s future.

    “The United States is in a state of war. Undeclared total war against the basic principles and the foundations of this system… The time bomb is ticking. Every second, the disaster is coming closer and closer. Unlike myself, you will have nowhere to defect to unless you want to live in Antarctica with penguins. This is it. This is the last country of freedom and possibility.” (Bezmenov)

    How did we get this far almost unknowingly?

    The Surreptitious Path of Infiltration

    Sen. Ted Cruz once commented about the law school of a prestigious university he attended:

    “There were more self-declared communists [in the faculty] than there were Republicans. … If you asked [them] to vote on whether this nation should become a socialist nation, 80 percent of the faculty would vote yes and 10 percent would think that was too conservative.”

    The amazing book, “How the Specter of Communism Is Ruling Our World,” gives a comprehensive analysis of the non-violent infiltration of communism in the West. In 1884, a year after Karl Marx’s death, the British Fabian Society was founded to bring about communism gradually. It encourages its members to advance socialist aims by joining suitable organizations and ingratiating themselves with important figures, such as cabinet ministers, senior administrative officials, industrialists, university deans, and church leaders. Since then, many American intellectuals began accepting communist ideas or its Fabian socialist variant.

    The 1960s counterculture movement produced a large number of young anti-traditional students who were influenced greatly by cultural Marxism and Frankfurt School theory. After graduation, they entered the institutions with the most influence over society and culture, such as universities, news media, government agencies, and non-profits. What guided them at that time was mainly the theory of “the long march through the institutions” proposed by Italian Marxist Antonio Gramsci. This “long march” aimed to alter the most important traditions of western civilization. As a result, generations of young people have been indoctrinated with the communist ideology.

    Why are Intellectuals So Prone to Communism?

    Intellectuals tend to be fooled by radical ideologies. This phenomenon has drawn the attention of scholars. British historian Paul Johnson found that radical intellectuals share the fatal weaknesses of arrogance and egocentrism.

    This arrogance is exhibited in a statement by nineteenth-century French politician and art critic Jules-Antoine Castagnary: “Beside the divine garden from which I have been expelled, I will erect a new Eden … At its entrance, I will set up Progress … and I will give a flaming sword into his hand and he will say to God, ‘Thou shalt not enter here.’”

    Rapid scientific progress since the 18th century greatly strengthened humankind’s confidence in its own ability and fueled the intellectual trend of progressivism. People started to worship humanist reason instead of God. Reason is believed to be able to lead people to the path of happiness and morality. People want to create a utopia, a “paradise on earth,” which is the essential idea of communism. As the “pastors” of modern science, intellectuals believe that they are the interpreter of the truth, and their cause is so important that no means are off-limits to serve their ends. This has caused a deluge of blood and misery.

    What Can We Do?

    Two hundred years of experimenting with human pride and reason has led to the declining of morality and the loss of tens of millions lives due to the ravages of communism.

    Founding Father John Adams said, “Our Constitution was made only for a moral and religious People. It is wholly inadequate to the government of any other.” Interestingly enough, a ruthless communist dictator, Joseph Stalin, echoed his point from another angle, “America is like a healthy body and its resistance is threefold: its patriotism, its morality, and its spiritual life. If we can undermine these three areas, America will collapse from within.”

    It is time for us to be humble again, look inward, and follow the true wisdom of righteous spiritual beliefs. This is our only solution.

    Tyler Durden
    Sun, 01/17/2021 – 23:30

  • ​​​​​​​Feds Warn Amateur Radio Operators "Not To Commit Criminals Acts" Ahead Of Inauguration
    ​​​​​​​Feds Warn Amateur Radio Operators “Not To Commit Criminals Acts” Ahead Of Inauguration

    As tech giants shift into censorship overdrive – between Parler’s deplatforming, Twitter purges, and Facebook seemingly cracking down on just about any political discussion ahead of the inauguration – and Sunday’s imagery of anti-government anarchists who showed up to several US capitols on Sunday, those who wish to coordinate peaceful protests (and perhaps not-so peaceful protests) may try to use less-monitored methods to coordinate efforts.

    As such, the feds have put would-be criminals on notice.

    The Enforcement Bureau (Bureau) of the Federal Communications Commission is out with a Sunday warning reminding “licensees and operators in the Personal Radio Services, that the Commission prohibits the use of radios in those services to commit or facilitate criminal acts.“

    The Bureau has become aware of discussions on social media platforms suggesting that certain radio services regulated by the Commission may be an alternative to social media platforms for groups to communicate and coordinate future activities. The Bureau recognizes that these services can be used for a wide range of permitted purposes, including speech that is protected under the First Amendment of the US Constitution. Amateur and Personal Radio Services, however, may not be used to commit or facilitate crimes.

    Specifically, the Bureau reminds amateur licensees that they are prohibited from transmitting “communications intended to facilitate a criminal act” or “messages encoded for the purpose of obscuring their meaning.” 1 Likewise, individuals operating radios in the Personal Radio Services, a category that includes Citizens Band radios, Family Radio Service walkie-talkies, and General Mobile Radio Service, are prohibited from using those radios “in connection with any activity which is against Federal, State or local law.” 2 Individuals using radios in the Amateur or Personal Radio Services in this manner may be subject to severe penalties, including significant fines, seizure of the offending equipment, and, in some cases, criminal prosecution. – the memo read 

    The Bureau’s warning comes days before President-elect Joe Biden’s inauguration on Jan. 20. 

    The FBI released a special bulletin last week warning about armed protests at 50 state capitols and the US Capitol in Washington, DC, ahead of the inauguration. Considering Sunday’s footage of armed ‘boogaloo boys’ who actually showed up – and who appear to be largely leftist anti-government anarchists – it stands to reason that they, or others, may try to use radio amateur radio frequencies to coordinate rallies and or attacks.

    Tyler Durden
    Sun, 01/17/2021 – 23:00

  • As Tech Companies Purge Users, Here Are Some Alternatives
    As Tech Companies Purge Users, Here Are Some Alternatives

    By Simon Black at Sovereign Man

    By now you’re probably aware of the various purges taking place across tech platforms and social media. Major companies have used the events of January 6th at the US Capitol as an excuse to delete users and deplatform businesses. But the scope of the purge has gone much further than removing calls for violence.

    For example, 147 members of Congress are being blacklisted by banks, insurance providers, and hotel companies because they objected to certifying the results of the election.

    The entire social media company Parler was shut down when Amazon banned it from its servers, while Apple and Google dropped the app from their stores.

    Twitter executed over 70,000 accounts.

    PayPal cut ties with the US President, as well as a Christian website that raised funds to send protesters to DC. Shopify removed accounts “associated” with Trump, and payment processor Stripe joined in the purge as well.

    Facebook even suspended Ron Paul’s account for a time, before claiming it was a mistake. Ron Paul, keep in mind, has been an outspoken critic of this administration’s defense and monetary policies.

    The message is clear: your access, your data, and potentially your livelihood is not safe in the hands of the biggest tech companies, which we have been conditioned to rely on. Express the wrong opinion, and you may be the next casualty.

    What this means:

    The good news is there are alternatives, and the purge has been a major driving force for people to move to alternative platforms.

    For example, Telegram, a private messaging app which allows you to enable encryption in private chats, attracted 25 million new users in a 72-hour period. The app now has over 500 million active daily users worldwide.

    Almost 18 million people downloaded the (arguably better) encrypted messaging app Signal between January 5th and January 12th– a 61x increase.

    Meanwhile, Facebook-owned WhatsApp’s downloads were down about 20% week on week.

    Facebook and Twitter just voluntarily handed market share to their competitors. From January 5-14, Facebook lost over $70 billion of valuation. Twitter lost over $5 billion during the same period.

    Don’t go where you aren’t wanted.

    Spy-apps that repeatedly censor and abuse their customers have faced calls for an exodus for some time now. But now a critical mass is actually moving, which makes it more likely that the amount of content and users will keep people engaged in social media alternatives.

    In that sense, you could consider the purge a good thing.

    What you can do about it:

    The following are some popular alternatives to common social media platforms. Keep in mind that we aren’t endorsing or vouching for the safety/ privacy of any particular company listed below. The point is to start exploring alternatives so that all your eggs aren’t in one tech-company basket.

    Social Networks Alternatives to Facebook and Twitter

    • Gab.com – Similar to Twitter, Gab bills itself as a champion of free speech. It owns and operates its own servers, which means it can’t simply be shut down like Parler. But that also means the website is a little stressed at the moment, as so many new users flock to it.

    • MeWe.com – As a Facebook alternative, MeWe’s main draw is that it does not share or sell user data. But it does state in the user agreement that it reserves the right to terminate users who post “hateful, threatening, harmful” content.

    • Minds.com – This is a blockchain-based social media website which rewards engagement with tokens. Tokens can be used to boost your own content, fund other users, or redeemed for other currency. The website’s code is open source for transparency and accountability, and the content moderation policy is based on the First Amendment.

    Private Messaging Alternatives to Whatsapp

    • Signal – This messaging app is end-to-end encrypted so no one can snoop on your communications. And its technology is open source, so anyone who knows the coding language can check that it’s truly secure. Signal does require your phone number to use, but that’s about all the information it collects.

    • Telegram – Plenty of Whatsapp groups are migrating to Telegram for privacy reasons. But it is important to note that only private messages can be encrypted, and even then you have to specifically select the “secret chat” feature.

    Video Posting and Viewing Alternatives to YouTube

    • LBRY.com – This is an open source, blockchain-based, decentralized digital content sharing protocol. That means anyone can use it to build apps that allow peer to peer sharing of digital content. But the main selling feature is LBRY.tv or Odysee.com which facilitate the video sharing and viewing portions of the platform. Unlike Youtube, you have ultimate control over your own content.

    • Brighteon.com – Mike Adams, the creator of Natural News, started this video hosting website as a free speech alternative after he was repeatedly censored on YouTube and other social media.

    Then there is Brave Browser to replace Chrome, Protonmail to replace Gmail, and plenty of methods to accept cryptocurrency, instead of using typical payment processors.

    Clearly, this list is not exhaustive. And in the future we will be talking about more alternatives, and doing a deeper dive on their privacy and accountability. The point is you don’t have to allow these tech giants to have power over you.

    Tyler Durden
    Sun, 01/17/2021 – 22:30

  • China Reports Stronger Than Expected GDP, Is Only Major Economy To Grow In 2020
    China Reports Stronger Than Expected GDP, Is Only Major Economy To Grow In 2020

    China, which a little over a year ago unleashed a global pandemic on the world which reshaped economies, global supply chains, capital markets, and societies and was directly responsible for the downfall of a US president, was hell bent on demonstrating that it was the biggest winner from said plague, and early on Monday local time, Beijing’s National Bureau of Statistics announced that Gross Domestic Product in 2020 growth beat expectations of 6.2% to reach 6.5% in the fourth quarter of last year, with the economy expanding 2.3% for the full year 2020, making China the only major economy to expand last year on the back of an unprecedented multi-trillion credit expansion.

    That China’s sprawling economy managed to calculate all this just two weeks into the new year was perfectly normal as nobody actually believes any “data” out of China; instead all that matters is what Beijing wishes to telegraph to the outside world, and for now that message is “all is well.”

    The “data” underlines a rapid turnround in the world’s second-largest economy, which declined in early 2020 for the first time in more than four decades after the country was hit by the pandemic and authorities imposed a harsh lockdown. 

    The recovery was aided by record fiscal and monetary stimulus that boosted investment in infrastructure and real estate. Once China had virus cases under control and factories were able to resume production, growth was spurred by strong overseas consumer demand for Chinese exports, especially medical equipment and work-from-home devices.

    Despite the stronger than expected GDP, overall December activity data were mixed – industrial production growth was stronger than market expectations, but retail sales and fixed investment growth were below market expectations. In particular, December industrial production came in at +7.3% yoy, above market expectations, and was faster vs. November. Based on IP by major product data, cement production decelerated to 6.3% yoy in December from 7.7% yoy growth in November; steel product production grew 12.8% yoy in December vs. 10.8% yoy in November; electricity production accelerated to 9.1% yoy, from +6.8% in November. Meanwhile, retail sales missed expectations and slowed from November – in December, retail sales growth was 4.6% yoy, vs. +5.0% in November. Automobile sales growth slowed to +6.4% yoy (vs. +11.8% yoy in November). Fixed investment growth also weakened in December. On single month basis FAI growth was +5.1% yoy in December (vs. +9.4% yoy in November), and on a full year year-over-year basis, FAI growth was +2.9%yoy in 2020, below market expectations.

    “The quarter really seems to have shown the economy ended the year on a strong note, manufacturing is doing well,” said Cui Li, head of macro research at CCB International Holdings in Hong Kong said in an interview with Bloomberg Television. The softer-than-expected retail sales data in December may reflect the cooler weather and the resurgent virus in northern parts of China as some cities enforce new restrictions to control the outbreak.

    Separately, the unemployment rate was unchanged at 5.2% in December, while fixed asset investment added 2.9% over the full year, while real estate investment jumped 7% .

    Ning Jizhe, head of the National Bureau of Statistics, said the economy “recovered steadily” last year but added that the “changing epidemic dynamics and external environment pose a multitude of uncertainties”.

    China’s activity was boosted by shifts in orders as other countries struggled with virus outbreaks and further lockdowns, which was evident in the continued jump in China’s exports, while factory data had been encouraging during the prior quarter as November Official Manufacturing PMI printed its strongest reading in over 3 years and although it then eased in December, it still registered the 8th consecutive month in expansion territory.

    The GDP figures, which beat expectations, came days after China recorded its highest-ever monthly trade surplus in December, stoked by three consecutive months of double-digit exports growth. Exports rose 18% last month compared with the same period in the previous year.

    Meanwhile, global demand for Chinese-made goods is expected to remain strong as the pandemic continues to keep large parts of the world’s population locked down. Already the top exporter, the value of China’s goods shipments increased 3.6% in 2020, according to official data. Imports declined 1.1%, resulting in a $535 billion annual trade surplus, the highest since 2015.

    Of course, there is nothing organic about China’s resurgent growth and the fiscal and monetary stimulus to support the economy has been accompanied by a record surge in debt, a development that authorities are now seeking to address as the recovery takes hold. At a December meeting to lay out economic goals for 2021, the ruling Communist Party signaled that stimulus would be gradually withdrawn, although it would avoid any “sharp turns” in policy.

    In terms of forecasts, economists expect China’s GDP will expand 8.2% this year, continuing to outpace global peers, even as other large economies begin to recover with vaccines being rolled out. Chinese President Xi also recently touted positive growth whereby he expects China’s 2020 GDP to exceed CNY 100tln after around CNY 99tln in 2019. The country’s mandated return to growth last year attracted strong appetite from foreign investors, who injected about 1 trillion yuan ($154bn) into Chinese stocks and bonds  in 2020.

    As with anything China related, there is always the question how manipulated this “data” is: in China, where new cases of Covid-19 slowed to a trickle in the middle of 2020, but a recent outbreak in the northern province of Hebei has prompted a renewed wave of social restrictions and lockdowns. Last week, the country reported its first coronavirus death since April.

    The ongoing recovery in 2021 will depend on whether China can prevent a large-scale spread of virus infections, and on whether it can pass the baton of spending from local governments and large state companies to smaller businesses and consumers. Household spending and investment by manufacturing companies has lagged overall growth in 2020.

    In any case, the onshore yuan strengthened as much as 0.06% to 6.4779 versus the dollar after the release of GDP data, while the ChiNext Index of small caps gained 1.6%. The yield on the most actively traded contract of 10-year government bonds gained 2 basis points to 3.165%, set for the highest in two weeks.

    Tyler Durden
    Sun, 01/17/2021 – 22:03

  • Blue State Economies Will Soon Crumble – But Will They Take Red States With Them?
    Blue State Economies Will Soon Crumble – But Will They Take Red States With Them?

    Authored by Brandon Smith and originally published at Birch Gold Group,

    Over the past six to eight months, the U.S. has seen perhaps one of the largest migrations of people based on economic and ideological concerns in almost a century. Not since the Great Depression has there been so many Americans relocating in search of a better life. Today, however, those who relocate seem to be largely conservatives and moderates. There is a very good, multifaceted, reason for this.

    One of the best recent explanations for the conservative migration is visible in the near-180-degree turnaround by New York Governor Andrew Cuomo on his draconian lockdown mandates. All of a sudden, Cuomo has announced that New York simply cannot stay closed any longer and that businesses need to reopen quickly.

    What could have possibly forced the thick-skulled Cuomo to finally see the light?  I think it has a lot to do with the fact that New York has attempted to distribute millions of doses of the COVID-19 vaccine and they have only been able to give out 30% of them. This means that around 70% of people eligible to get the vaccine in New York are apparently refusing to take it (a smart move in my opinion considering the highly experimental and untested nature of the cocktail). Surprisingly, at least 30% of NY healthcare workers are also refusing to take the vaccine. Cuomo has resorted to threatening hospitals with fines if they do not distribute the vaccines fast enough.

    In his latest statement Cuomo is trying to send a message that New Yorkers need to take the vaccine so that a reopening can begin. In other words, “take the vaccine or the economy will collapse”.

    I don’t believe Cuomo is mending his totalitarian ways, but at least for now, I think he is realizing what most of us in the alternative economic field have been saying for the past year:  Blue state economies are dying because they are oppressive and this stifles trade and business.

    Beyond the business factor and the restrictions on people’s daily movements and activities, the lockdowns and subsequent financial crisis have triggered rising crime levels across the country, but predominantly in blue states and democratic controlled cities.

    According to the U.S. Postal Service, New York City alone saw over 300,000 residents pick up everything and leave from March to October. This is an unprecedented spike, an exodus the likes of which New York has not seen in a long time.

    On the other side of the country, California is witnessing its own exodus, and it started well before the pandemic struck. In 2019, California saw over 653,000 residents escape the state’s suffocating bureaucracy and high taxes. In 2020, the state has hit its lowest population growth rate in history, even after accounting for babies born. More than 200,000 people left the state than moved in in the past year, and before anyone claims that these people are “liberals” invading red states, even the California media admits they are mostly conservatives seeking to escape the socialist sinkhole.

    U-Haul, one of the largest moving companies in the nation, has compiled data on the top states which Americans are moving to during the pandemic. The list is loaded with well-known conservative strongholds and red states, with Tennessee, Texas and Florida at the top.

    But what does this mean for leftist states in economic terms?  First, a huge loss of tax revenue, and this is dangerous for blue states in particular. California was projecting a $5.6 billion surplus in January of last year, only to face a $54 billion deficit by August. The state’s net tax revenue fell by 42% from March to May year-over-year, far outpacing losses in the rest of the country. Democratic Gov. Gavin Newsom begged Congress for $14 billion in federal aid, claiming that the government has a “moral and ethical obligation to help the states”.

    And this seems to be exactly how states like California are surviving, by stealing tax dollars from people in other states that have been more responsible in caring for their economies.

    We often hear about states like California and New York as having GDPs comparable to entire countries. We hear about all the manufacturing and agricultural production, and a couple of years ago, there were even calls for secession in California on the grounds that “orange man bad” and that the state could fiscally support itself “easily.”

    Nothing could be further from the truth. What leftist cheerleaders often refuse to mention is the deep and insidious debt problems and deficits blue states suffer from. Looking at a list of the most indebted states in the U.S. in terms of total assets and liabilities, you will find that the vast majority of them are Democrat controlled.

    Furthermore, blue states tend to have the highest levels of unfunded pension liabilities. In other words, their public pension obligations are only partially funded and are suffering a net loss. California, Connecticut and Illinois top the list and the only red state that comes close in terms of percentages is Alaska. Red states top the list in terms of the best funded pensions and the lowest debt per capita.

    These debts are caused by irresponsible spending policies and endless socialist welfare measures, and as with most socialist systems, they always end up spending more money than they can bring in. They also end up wasting money more than they effectively spend money. This translates to much higher taxes, as blue states refuse to admit policy errors and fix their mistakes. Instead, they punish the citizenry with increased taxation. A list of the highest personal income taxes across the country is dominated by blue states.

    Blue states like Illinois also stack the list of highest property taxes.

    One might assume that with such high taxation that social welfare programs would be in place to help the needy and to reduce poverty, but this is not the case. California and New York have the highest population of homeless people by far (151,278 in CA and 92,091 in NY). The next highest homeless population is in a red state, Florida, with only 28,000.

    Add to this the fact that blue states have been the most lockdown-happy during the pandemic despite the fact that the lockdowns have done nothing to stop the spread of COVID-19, and now you know why people are leaving these places en masse.

    This dynamic has led to red states outperforming blue states across the board in terms of economic recovery. Job recovery in red states far outpaces blue states, along with recovery in GDP. As a result, a call has been rising for a “Blue State Bailout”, and with Biden ostensibly entering the White House they may very well get what they are asking for.

    The problem is, the amount of bailout money that would satiate the hunger of blue states would have to be in the multi-trillions. As more and more people and businesses leave these places for more free states, it’s inevitable that tax revenues will dry up. And, as leftists raise taxes to cover the deficit even more people will relocate. It is a vicious cycle that will lead to complete dependency on federal dollars for blue states to survive.

    Red states, on the other hand, will not be enforcing strict lockdown mandates. In fact, I suspect that even if Biden tries to institute a Level 4 federal lockdown that many red states will defy him and carry on with business as usual while blue states quickly bow and submit. The only practical option is for blue states to ignore the lockdowns and fully reopen, not just for a couple of months, but permanently. Will they do this?  I doubt it.

    It is also important to consider at a fundamental level the types of people that make up the populations of red states versus blue states. Blue states have built a culture of dependency and the majority of leftists have no useful skill sets that would allow them to adapt to an economic crisis. Meanwhile, red state culture encourages independence, self-reliance and productivity.

    The most likely reaction among blue states or the federal government under Biden will be to try to “redistribute” the wealth and stability from red states to blue states. This could happen in the form of stimulus measures that unfairly benefit blue states. The resulting dollar devaluation and price inflation might hit red states harder because they would not be receiving bailouts to offset the higher costs. In the worst-case scenario, in which a full spectrum financial collapse occurs, we may even see the federal government attempt to redistribute production and manufacturing from red states to blue states in the name of “national emergency.”

    There could also be an attempt to stop people from moving away from blue states entirely. We have already seen a beta test for this in California, where legislators are attempting to pass a bill which would legally require former residents to continue paying taxes to the state for years after they leave.

    Of course, this would lead to severe resistance from conservatives, but that is a discussion for another time. The bottom line is this: the economic and pandemic policies of blue states have failed miserably. Their only option is to see the error of their ways, become fiscally responsible and remove totalitarian lockdown measures, or, attempt to leech success from the red states like parasites. Which one do you think they will choose?

    *  *  *

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    Tyler Durden
    Sun, 01/17/2021 – 21:30

  • Armed Protesters Begin To Arrive At State Capitols Around The Nation
    Armed Protesters Begin To Arrive At State Capitols Around The Nation

    Update (1918 ET): Heading into the overnight, in a show of force, hundreds of National Guard troops protecting the US Capitol are marching in the city streets amid threats of armed protests. 

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    At least 25,000 Guardsmen are protecting the Capitol complex. 

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    Armed protesters have arrived at multiple state capitol complexes across the country Sunday morning. This follows a special bulletin from the FBI last week that warned: “armed protests” were being planned at 50 state capitols and the US Capitol in Washington, DC, ahead of President-elect Joe Biden’s inauguration on Jan. 20. 

    While the protesters are being identified across various platforms as members of a so-called “boogaloo” movement, they largely appear to be generic anti-government anarchists – some of whom call themselves “liberty boys,” and others who oppose the conservative Proud Boys. Their sudden emergence surrounding the inauguration is curious, to say the least.

    A field reporter at The Daily Caller, Jorge Ventura, reports from the Ohio Statehouse, where he notes that “580 National Guard members” were activated “to provide security around the Ohio Statehouse in downtown Columbus through Wednesday.”

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    “We are not a pro-Trump group,” said one of the armed protesters at the Ohio demonstration. 

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    An armed protester in Ohio told the “Proud Boys do not come here.” 

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    In Michigan, a dozen or so armed protesters are now showing up at the State Capitol.

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    Daily Mirror’s Derek Momodu tweeted, “this is very worrying…” as armed protesters gather in front of the Michigan State Capitol as Guardsmen are on “standby.” 

    “If you continue to oppress the American people, they will remain rational no longer,” said an armed protester in Michigan. 

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    In New Hampshire, a handful of armed protesters showed up outside the Capitol.

    While a similarly small group began to assemble outside the Oregon Capitol. 

    The group in Oregon refers to themselves as the “liberty boys.” 

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    At the Illinois State Capitol, Guardsmen and State Troopers are heavily armed, waiting for protesters. 

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    There’s a large police presence at the Minnesota State Capitol building as threats of armed protesters could assemble today.

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    Armed protesters rally at the Texas Capitol. 

    More armed protesters at the Texas Capitol. 

    Bloomberg notes, “militia groups from both the left and right gathered outside the state capitol in Frankfort, Kentucky.” 

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    Meanwhile, in Washington, DC, at least 25,000 Guardsmen and other law enforcement agencies have the US Capitol to White House area on lockdown. 

    On top of this all, civil flight observers have said, “amount of USAF cargo aircraft (C130s C17s KC135s KC46s) bringing National Guard troops to Washington DC/Capitol is truly impressive. Almost a constant air bridge for the past several days.”

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    *Check back for more updates. 

    Tyler Durden
    Sun, 01/17/2021 – 21:20

  • SEC Whistleblower Tips Have Soared 31% Since Most Employees Started Working From Home
    SEC Whistleblower Tips Have Soared 31% Since Most Employees Started Working From Home

    Sitting around at home with nothing to do during the pandemic? Why not become a corporate whistleblower! It allows you to exact revenge on your boss and co-workers for years of misery and can also pay well!

    That must be exactly what many are thinking, as it is being reported that since the work from home boom started, whistleblower tips to the SEC have soared. The SEC received 6,900 tips for the fiscal year ending September 30, 2020, which marked a 31% rise from the previous 12 months, Bloomberg reported. 

    The increase in tips “really started gaining traction in March when Covid-19 forced millions to relocate to their sofas from office cubicles,” the report notes.

    Jordan Thomas, a former SEC official who helped set up the agency’s whistle-blower program, said: “You’re not being observed at the photocopy machine when you’re working from home. It’s never been easier to record a meeting when you can do it from your dining room table.”

    Adam Waytz, a psychologist and professor at Northwestern University’s Kellogg School of Management, said: “When you feel disconnected from work, you feel more comfortable speaking up.”

    And the increase in tips has led to larger and more consistent payouts from the SEC. Since the beginning of the pandemic, the agency has paid out $330 million in awards, including one award of $114 million to a single tipster in October. The payments are likely tied to cases prior to the pandemic, but are indicative of a trend of growing payouts. 

    The SEC has been paying whistleblowers since the 2010 Dodd-Frank Act, which was put into effect as a result of massive financial blowups like Madoff and Enron. Bloomberg wrote:

    Under the program, tipsters can receive financial awards if they voluntarily provide unique information that results in an enforcement action. Payouts can range from 10% to 30% of the money collected in cases where sanctions exceed $1 million. Awards are paid from a fund set up by Congress — not money owed to harmed investors.

    Whistleblowers are never named and, on occasion, when working with lawyers, the SEC may not even know the name of a whistleblower. 

    Joseph Grundfest, a former SEC commissioner, said: “Corporations and their lawyers are acutely aware of the fact that tips are flooding in and that whistle-blower awards have ballooned. You pay whistle-blowers more than $100 million, you’re going to get more whistle-blowers.”’

    “Making more awards — certainly larger awards — all those things do go toward incentivizing whistle-blowers to come forward,” former SEC Enforcement Director Stephanie Avakian said.

    “The problem is that they’re being flooded with tips and don’t have a robust mechanism for separating the wheat from the chaff,” Grundfest concluded. 

    Since the program’s inception it has paid out about $737 million.

    Tyler Durden
    Sun, 01/17/2021 – 21:00

  • Biden To 'Immediately' Send Congress Bill That Would Offer Citizenship To 11 Million Illegals
    Biden To ‘Immediately’ Send Congress Bill That Would Offer Citizenship To 11 Million Illegals

    President-elect Joe Biden will ‘immediately’ send a legislative package to Congress which would provide a pathway to citizenship for some 11 million illegal immigrants, according to the Los Angeles Times, according to “immigrants rights activists in communication with the Biden-Harris transition team.”

    The bill would also provide a shorter pathway to citizenship for hundreds of thousands of people living in the United States under a temporary protected status and/or who qualify under the Deferred Action for Childhood Arrivals (DACA) program who were brought into the US as children.

    And in what the Times calls a “significant departure from many previous immigration bills under both Democratic and Republican administrations,” the Biden plan would contain zero provisions for stepped-up immigration enforcement and security measures, according to Marielena Hincapié, executive director of the National Immigration Law Center Immigrant Justice Fund, who was informed of the details by Biden staffers.

    Both Biden and Vice President-elect Kamala Harris have said their legislative proposal would include a pathway to citizenship for millions of immigrants in the U.S. without legal status, and The Times has confirmed the bold opening salvo that the new administration plans in its first days doesn’t include the “security first” political concessions of past efforts.

    Hincapié, who was co-chair of the Biden-Sanders Unity Task Force on Immigration — part of Biden’s outreach to his top primary rival, Vermont Sen. Bernie Sanders, and his progressive base — said that Biden’s decision to not prioritize additional enforcement measures was probably a result of lessons learned from the Obama administration’s failed attempt to appease Republicans by backing tighter immigration enforcement in hopes of gaining their support for immigration relief. –Los Angeles Times

    “On Inauguration Day, President-elect Biden will sign roughly a dozen actions to combat the four crises, restore humanity to our immigration system, and make government function for the people,” reads a Saturday memo by incoming Biden chief of staff, Ron Klain, who said the incoming president’s agenda included “the immigration bill he will send to Congress on his first day in office.“

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    Under BIden’s plan – the most sweeping and comprehensive since President Regan’s 1986 Immigration Reform and Control Act granting some 3 million people legal status (after which California flipped blue), immigrants would be eligible for legal permanent residence after five years, and US citizenship after three more years.

    Several immigration activists who spoke with The Times praised the reported scope and scale of the bill and expressed surprise at its ambition. A number of legislators and analysts had predicted that the new administration, at least in its first months in power, would be likely to pursue immigration measures that would stir the least controversy and could be achieved by executive actions rather than legislation. -LA Times

    Will it pass?

    Given the sweeping changes, Democrats are likely to face serious pushback despite holding slim majorities in both chambers of Congress – and the bill will likely face months of political debate as conservative members and immigration hard-liners push back.

    Meanwhile, Texas Democratic Rep. Juaquin Castro said in a Friday call with reporters that he’s formulating a bill which would offer illegals immediate protection from deportation and a fast-tracked path to citizenship for essential workers who are undocumented.

    “It’s time for essential workers to no longer be treated as disposable, but to be celebrated and welcomed as American citizens,” said Castro, adding “If your labor feeds, builds and cares for our nation, you have earned the right to stay here with full legal protection, free from fear of deportation.”

    And look at this – just in time:

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    Tyler Durden
    Sun, 01/17/2021 – 20:45

  • Conservatives Should Learn From The Left
    Conservatives Should Learn From The Left

    Authored by Heather Higgins via RealClearPolitics.com,

    As the political right struggles to regroup after the horrible events at the U.S. Capitol, it should learn from the masters. The left has a consistent pattern when responding to terrible behavior by activists associated with their cause — from the widespread destruction and violence last summer during protests of police brutality to mobbing Republican senators during the Brett Kavanaugh confirmation hearings to the Bernie Sanders acolyte who opened fire at GOP members of Congress in 2017.

    The left starts by driving the narrative that their protests or movements were mostly peaceful while amplifying participants’ concerns to give them legitimacy.

    They downplay any violence, positioning it as nothing to do with them, a distraction from the cause. Having disassociated themselves from the bad behavior, they never act embarrassed.

    Compare this to those on the right:

    Everyone has unambiguously condemned the rioters in the Capitol, as they should. But many have fallen into the trap of accepting that they ought to be embarrassed, as though the rioters represented them, or even most Trump supporters, neither of which is the case. Nor have they defended the right to protest and the importance of recognizing and hearing concerns. Failing to do so has allowed the false equivalence between the rioters and the Trump supporters who were protesting to advance their concerns about election fraud, even though the vast majority of those in Washington on Jan. 6 were peaceful people who revere the Constitution.

    The left has used those missteps to play a semantic game of expanding definitions and thus tar an ever widening circle. They start with the remarkable premise that there were no election shenanigans whatsoever, and consequently that it’s heresy to question rule changes or unrequested mailed ballots. Why? To label legitimate issues as merely a “fringe” contentions. 

    Over the course of a week we’ve watched this metastasizing of definitions — President Trump “should have known” what his statements would lead to became “he deliberately incited” the rioting. And assertions that “everyone should have known” was expanded to “everyone who supported Trump incited the violence,” which led to “those who were silent and didn’t oppose Trump are enablers” and — when you are on a roll, why stop? — that conservatives are nascent Nazis.

    With blame comes punishment — not just deserved penalties for the rioters but threatened retaliation, starting with employment prospects, against the peaceful protesters, those who worked for the administration, and now even anyone who supported Trump and his policies.

    They are also ratcheting up censorship of conservatives by de-platforming the president and tens of thousands of others, shutting down alternate platforms, and revoking book publishing deals, all by applying standards that magically do not pertain to others. 

    Most toxic is the assault on speech through redefinition — it is no longer what was said or intended, it is how it might be interpreted. That subjective non-standard gives an excuse to those on the left to define what constitutes permitted opinion, not just on this matter but a range of issues where disagreement will be labeled as dangerous. 

    The implications of that are dire. It will mean the left  can use social pressure against cowering corporations, and foundations, to cut off the oxygen of speech and commerce — not just  access to social media platforms or hosting servers, but also banking services and funding — for individuals and organizations with a different view. 

    To prevent this, the right needs to defend the peaceful participants and their right to protest, explain the roots of their deep legitimate concern (years of fake news, social media suppression, and election rule overrides and ballot proliferation), and use this as an opportunity to unite, not divide. 

    Some conservative leaders and commentators, especially Never Trumpers, seem to see this as an opportunity to purge the movement of everyone associated with Trump and mistakenly presume that by feeding him and his allies to the alligator, they will be allowed to escape and achieve the left’s promised unity.  

    But as the social media putsch shows, this kind of “unity” really means “accept your guilt and be silenced.” With Trump out of the White House, the alligator won’t go away; his menu will simply shift to any others who won’t shut up and “unify.” The penalty: their platforms, social standing, and sources of funding will all be cut off.

    Efforts to force the 74 million people who voted for Trump over Joe Biden to feel ashamed and responsible or to publicly punish and silence their advocates, will be devastating not just to the Republican Party but to our country. We must instead regroup around our positive agenda, defend the tremendous policy gains that have been made — and stand strongly for the right of free speech and association, applied with neutral rules to everyone, including conservatives.

    Tyler Durden
    Sun, 01/17/2021 – 20:30

  • Whole Foods CEO Suggests Americans Wouldn't Need Healthcare If They Ate Better 
    Whole Foods CEO Suggests Americans Wouldn’t Need Healthcare If They Ate Better 

    Whole Foods CEO John Mackey said Americans would not need healthcare if they ate better and lived healthier lives. 

    “I mean, honestly, we talk about healthcare. The best solution is not to need health care,” Mackey told Freakonomics Radio on Nov. 4 and was first reported on Monday by CNBC.

    “The best solution is to change the way people eat, the way they live, the lifestyle, and diet,” he said. “There’s no reason why people shouldn’t be healthy and have a longer healthspan. A bunch of drugs is not going to solve the problem.” 

    Whole Foods CEO John Mackey

    Mackey dropped some pretty alarming health statistics that show Americans make bad health choices. 

    “71% of Americans are overweight and 42.5% are obese. Clearly, we’re making bad choices in the way we eat,” he said. “It’s not a sustainable path. And so, I’m calling it out.” 

    The numbers also shed light on why the US has had a relatively difficult time containing the virus pandemic because obese Americans are more at risk of contracting the infection. 

    To make matters worse, lockdowns and restrictions have led the most obese nation in the world, the US, to become ever more overweight. About a quarter of Americans gained between five and ten pounds since the coronavirus lockdowns.

    The reason for the “Quarantine 15” weight gain has been changes in diet, lack of regular exercise and a more sedentary lifestyle.

    Mackey has been vocal about adult health for years. In 2009, he argued in a WSJ op-ed that “the last thing our country needs is a massive new healthcare entitlement.”

    “This begins with the realization that every American adult is responsible for his or her own health,” Mackey wrote. “We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health.”

    Suppose Americans listened to Mackey’s advice. Then how would big pharma make their billions of dollars from obese people who suffer from heart disease, diabetes, cancer, and high blood pressure? 

    Tyler Durden
    Sun, 01/17/2021 – 20:00

  • Russia Advances In The Field Of Autonomous Combat Robotic Platforms
    Russia Advances In The Field Of Autonomous Combat Robotic Platforms

    Via South Front.org,

    Russia has been testing autonomous combat robotic platforms.

    The experimental robotic platform “Marker” completed a trek of approximately 30 kilometers, entirely in autonomous mode, the Advanced Research Fund (FPI) reported on December 30th. The tests were carried out in the Chelyabinsk region.

    The route of the vehicle was laid through an unprepared territory – a forest-steppe with a snow cover. The autonomous platform motion control system, having received a route assignment with the coordinates of a given point, ensured the platform’s arrival at the finish line in an hour and a half. The vehicle relied on the data of the technical vision system built on new neural network algorithms.

    The autonomous control system of the platform movement provides autonomous laying and adjustment of the route of movement in the event of obstacles – trees, rises, ravines, bushes, etc.

    The technical characteristics of the platform provide the possibility of autonomous operation for up to 48 hours on paved roads and up to 24 hours on rough terrain. As part of the next tests, the “Marker” platform will have to cover 50, 100 and 200 kilometers.

    The “Marker” experimental robotic platform was developed as part of a project by the Advanced Research Foundation, which was launched in 2018. The goal of the project is to create and conduct a full-scale development of technologies and basic elements of ground-based robotics.

    The “Marker” in the version on a tracked platform completed movement trials in July 2019, and then moved towards the firing practice. the Marker platform was developed and produced by the NPO Androidnaya Tekhnika as part of the first stage of the FPI project. The “Marker” uses two types of platforms: tracked and wheeled. A total of five robotic complexes will be manufactured to test the technologies.

    The robotic platform “Marker” is a joint project of the Foundation for Advanced Study and NPO “Android Technology”. It is assumed that this combat robot will become the basis for working out the joint interaction of ground robots, unmanned aircraft and special forces. The “Marker” is positioned as a constructor for creating models of warfare in the future.

    The evolution of modern ground-based robotic systems for military purposes is moving towards increasing the ability to perform tasks in an autonomous mode with a gradual decrease in the involvement of the operator in the process of controlling. To increase the level of autonomy of ground-based robotic systems, the development of a number of key technologies is required, which together determine the appearance of promising robotic system. Therefore, it is relevant to develop robotics technologies and bring them to the level of readiness that allows the technologies being created to be applied on promising autonomous robotic systems in real conditions.

    To test the technologies being created, to bring their level of readiness, a mobile demonstrator of robotics technologies was created using the modular design principle, with an open information architecture of construction, which provides the possibility of carrying out a full-scale development of technologies and basic elements of ground-based robotics.

    Tyler Durden
    Sun, 01/17/2021 – 19:30

  • There's Now A 12 Minute $175 Chopper Ride From Westchester Or Greenwich To Manhattan
    There’s Now A 12 Minute $175 Chopper Ride From Westchester Or Greenwich To Manhattan

    The irony of New York City getting new helicopter travel options is that the traffic these rides once sought to avoid has thinned out significantly. As a result of both Covid-19 and a general exodus from the city that is taking place as a result of the wonderful job Mayor Bill de Blasio is doing, the once super-crowded streets of Manhattan have been downgraded to simply just crowded.

    Regardless, those with the means in NYC may be happy to hear there is a new 12 minute helicopter ride option for those who want to travel between Westchester County Airport and Manhattan. The ride, put into service by Blade Urban Air Mobility, can carry five and will cost $175, according to Bloomberg.

    Rob Wiesenthal, the company’s CEO, said: “We believe people will be willing to pay to go once a week by Blade, because we’re saving so much friction. These people are working remotely four days a week, and it can feel comfortable to do this once a week.”

    A Blade chopper / Photo: BBG

    The program comes after the success of a pilot program in and out of the Hamptons last year. The chopper’s helipad will be in Ross’s terminal in Westchester.

    Blade is looking to introduce even more helipads that it calls “vertiports” alongside of electric choppers within four years. The expansion, especially in NYC, could come as more people start meandering back to the office daily for work. 

    Mitchell Moss, director of the Rudin Center for Transportation Policy and Management, concluded: “The helicopter and vertical technology are going to surge, because of the savings in time. It’s one of the best investments, because you can be twice as productive when you’re in your Manhattan high rise office: You can do far more in face to face, which makes the helicopter worth it.”

    He concluded: “There’s a new hierarchy of how you commute. The helicopter is superseding the limousine and the SUV for hedge-fund executives and high-tech leaders.”

    Tyler Durden
    Sun, 01/17/2021 – 19:05

  • Stockman: Why Does Sleepy Joe Think We Need Another $850 Billion Of Transfer Payments?
    Stockman: Why Does Sleepy Joe Think We Need Another $850 Billion Of Transfer Payments?

    Authored by David Stockman via EconomicPolicyJournal.com,

    In light of Sleepy Joe’s swell new $1.9 trillion package of more free stuff, it’s time to get out our magnifying glasses again. The purpose is to compute the size of the hole in  America’s collective paycheck that purportedly requires such continued, extraordinary beneficence from our not so rich Uncle Sam.  

    To repeat: There is no reason in the world why the February (pre-Covid) level of wage and salary disbursements is not a solid and appropriate benchmark for measuring the pocketbook hit from the Covid-Lockdowns that have wreaked havoc on the US economy since March. That is, from the point at which the evil Dr. Fauci convinced the Donald to pull the plug on MAGA and his own tenure in office, too (of course, 80-year old Dr.  Fauci is still there, fixing to bamboozle yet another notionally “elected” president).  

    Still, back in February the Donald was boasting to one and all that he had delivered the greatest economy the world had ever seen and Wall Street apparently agreed, pushing stocks high into the nose-bleed section of history.  

    As it happened, the February run rate (annualized) of wage and salary disbursements was $9.659 trillion, which computes to about $805 billion per month. So we would suggest that if $805 billion of monthly wages was enough to justify celebration of the  Greatest Economy Ever, then the shortfall from that benchmark is a solid measure of the hit to US worker earnings that has occurred since February.  

    Based on the red bars in the chart below and translated to actual monthly numbers, the  Covid-wage and salary loss computes as follows:  

    • March: -$25b;  

    • April: -$76b;  

    • May: -$61b;  

    • June: -$43b;  

    • July: -$31b;  

    • August: -$19b;  

    • September: -$12b;  

    • October: -$6b; 

    • November: -$3b;  

    • December est: $0b;  

    • 10-month total: -$276b 

    The total of $276 billion of lost paychecks compares to $8.05 trillion of wages and  salaries which would have been earned during that period at the February rate ($805  billion). So the cumulative shortfall through year-end amounted to just 3.4%. 

    More importantly, the $0-$6 billion monthly shortfall since September has been so small as to constitute a rounding error in the scheme of things, as suggested by the fact that American households spend far more—about $8 billion per month—-on pet food and pet care alone.  

    Yet Sleepy Joe has now teed up another $850 billion of direct aid to households, which in the aggregate are no longer suffering any material paycheck shortfall. And what is  especially egregious about filling a non-existent income hole in this manner is  that 53% of this amount goes to “stimmy” checks and child tax credits, which are  essentially not even mean-tested except at the tippy-top of the income scale ($200,000  for a married couple):  

    Sleepy Joe’s $850 Billion of Direct Handouts to Households: 

    • Stimmy checks and child tax credits: $450b;  

    • Unemployment benefits: $200b;  

    • Health insurance aid: $100b;  

    • Rental assistance: $35b;  

    • Child care aid: $40b  

    • Safety net: $20b  

    Still, to paraphrase Walter Mondale’s famous campaign slogan from 1984: Another  $850 billion for income replacement but “Where’s The Hole?” 

    Compensation of All US employees, Annualized Run Rate, February 2020- November 2020

    Of course, there are other ways to measure the hit to the national economy stemming from the Covid-Lockdown impact, as we will amplify below. But first it would be well to summarize the “solution” that Washington’s fiscally incontinent politicians have heaved at the “problem” during the last 11 months—a “problem” that they have never bothered to quantify.  

    With the new Biden package, spending authorized by the five major Covid relief  measures can be summarized as follows (billions):  

    • Families First act: $192b;  

    • CARES act: $2,200b;  

    • Paycheck Protection Program: $733b;  

    • Response and Relief Act: $935b;  

    • Biden Jan. 14th plan: $1,900b;  

    • Five package total: $5,960b. 

    That’s right. The Washington pols are fixing to heave nigh onto $6 trillion at a $274  billion hole in the nation’s wage bucket. That’s a solution 22X bigger than the putative problem!  

    Of course, we do not mean to dwell lightly on the “putative” part, nor embrace the notion that government owes citizens reparations for the damage its actions have caused.  

    Yes, the overwhelming share of the actual economic harm since March is due to the misguided (and unconstitutional) lockdown policies of the government and the vastly disproportionate and unwarranted public hysteria fanned by Dr. Fauci and the Virus  Patrol, not the disease itself. But if the state gets into the business of fully indemnifying the public for the endless harm wrought by its policies, insolvency would be thereafter guaranteed, and in short order, too.  

    Besides, why does Washington have the right to burden future taxpayers with permanent debt service payments in order to make-whole a $276 billion loss of income and 3.4% inconvenience among taxpayers today?  

    And don’t stiff us with the humanitarian relief bit. The simple fact is that the overwhelming share of this $276 billion of wage losses has been visited upon low-wage and part-time workers in the social-congregation sectors of the economy (bars,  restaurants, gyms, hotels, movies, ball parks etc.) that the Virus Patrol in its wisdom has shutdown. The right solution is to send the Virus Patrol packing and let these unfairly penalized employees go back to work.  

    Moreover, even if you want to plug that “hole” beyond what the in-place safety net is already providing (see below), well, then, tax the more affluent section of today’s citizenry to pay for it, not unknowing, unborn and voiceless future taxpayers.  

    Then again, the bipartisan duopoly is not about to give that fiscally honest approach the  time of day; they specialize in the joint gang-mugging of voiceless future taxpayers.  

    Even if you think that the total wage and salary loss computed above understates the  economic damage caused by the lockdowns, the massive fiscal overkill owing to the  Everything Bailouts cannot be gainsaid.  

    For instance, GDP is the most comprehensive measure of economic activity that we have  (despite its manifest flaws), but the loss of GDP after February has also been only about  3.6%. In fact, based on the Atlanta Fed’s GDPNow forecast, we project that nominal  GDP during Q4 will post at about $21.650 trillion, a figure only 0.46% below the  Greatest Economy Ever level of Q4 2019.  

    So, again, if we assume that Q4 2019 is a reasonable pre-Covid benchmark for the level  of total economic activity in the USA, we get the following shortfall, including an  estimate for Q4 based on the Atlanta Fed’s latest outlook.  

    Quarterly GDP Change From Q42019 Benchmark: 

    • Q1 2020: -$47b;  

    • Q2 2020: -$559b;  

    • Q3 2020: -$144b;  

    • Q4 2020E: -$25b;  

    • 4-quarter total: -$775b

    So even if you want to count everything including losses from the $2.5 trillion of  imputed activity in the GDP, the pending $6 trillion of Everything Bailouts is 7.7X the  size of the problem!

    Quarterly GDP At Annual Rates

    Of course, the real point of the bailouts is to compensate the private sector for the economic harm done by the government in its exertions in furtherance of the public health. But when you look at the impact of the Covid-Lockdowns on value-added of the non-financial business sector, the hit compared to pre-Covid levels is also quite small.  

    Again, using Q4 2019 as the pre-Covid benchmark and actual results through Q3 2020  and the Atlanta Fed estimates for Q4, the loss in business output relative to Q4 2019 is  just $594 billion or 2.7% of total GDP. So by this measure of the “problem”, the  impending Everything Bailouts would amount to 10X the size of the hole in the bucket.  

    Likewise, our Atlanta Fed-based estimate of Q4 nonfinancial business value added of  $10.251 stands at fully 99.1% of the Q1 2019 level. That’s hardly a setback that warrants  burying future taxpayers in $6 trillion of new debt, and most especially not the $1.9  trillion part recommended by our day-late-and-dollar short incoming POTUS, who has  just emerged from his Delaware bunker.  

    Quarterly Change In Business Value-Added Versus Q4 2019 Benchmark: 

    • Q1 2020: -$23b;  

    • Q2 2020: -$347b;  

    • Q3 2020: -$142b;  

    • Q4 2020E: -$82b; 

    • 4-Quarter total: -$594b

    Quarterly Nonfinancial Business Sector Gross Value Added (Annualized):

    By contrast, it is well worth looking at the other side of the coin: Namely, the surge in transfer payments since last February stemming from a combination of the built-in safety net (principally unemployment insurance, foods stamps and Medicaid) and disbursements of stimmy checks, enhanced Federal UI benefits and the rest authorized by the Everything Bailouts.  

    At the pre-Covid level in February, total government transfer payments (including state  and local) were running at a $3.165 trillion annual rate or about $265 billion per  month. As shown in the chart below, however, that monthly figure skyrocketed by 107%  to $546 billion in the month of April alone.  

    And, no, that latter figures is not the annualized rate: In their infinite generosity,  government programs pumped more than one-half trillion dollars into the household  sector during April alone. That’s $18.2 billion per day! 

    Thereafter, the tsunami of transfer payments began to abate, but were still running at a  $400 billion monthly level in July and $306 billion level in November. Overall, the 10- month total of incremental transfer payments above the February level totaled $1.05  trillion.

    You can’t make this up. Transfer payments to households during the past 10 months have exceeded the loss of household wages and salaries ($276 billion) by nearly four times.  

    So the question recurs: Why does Sleepy Joe think we need another $850 billion of transfer payments to households on top of the immense generosity already dispensed per the chart below?  

    The answer is simple: He’s doing it because he can—because the nation-wreckers in the  Eccles Building have determined to purchase $120 billion of government debt and  GSE securities per month for the indefinite future. As JayPo rattled on at his presser this week, they are not even thinking about thinking about tapering this tsunami of fake money plucked from thin air by the Fed’s digital printing presses.  

    Accordingly, under this crooked regime of massive debt monetization, there is no here  and now economic sting to rampant Federal borrowing; no “crowding-out” as in times  of yore before the Fed went off the deep-end with Keynesian money-pumping; and no  

    surging interest rates to rouse Wall Street and the business community from their happy  slumber in the lap of ultra-cheap borrowing costs.  

    Stated differently, when it comes to the rampant fiscal incontinence in the Imperial City  enabled by the Fed, did the election outcome make any difference?  

    It did not. Sleepy Joe is about to give the once and former King of Debt a run for his money when it comes to the annals of fiscal infamy in America.

    Total Government Transfer Payments, Annualized

    Even if you set-aside things like increased Medicaid and food stamp spending embedded in the above figures for total government transfer payments and focus just on the change in Federal-state unemployment insurance disbursements since February, the sheer fiscal madness at loose on Capitol Hill is baldly evident.  

    To wit, prior to the Covid-Lockdown battering of the US economy, which has so far caused the filing of an incredible 70 million in new unemployment benefit claims, the  Federal-state unemployment systems was pumping out benefit payments at a $27.8  billion annual rate in February or about $2.3 billion per month. 

    Here is the subsequent increase in UI payments from both existing state programs and the Federal pandemic assistance benefits and $600 per month topper payments. They total $518 billion or nearly two-times the $276 billion cumulative loss of wages and salaries during the same 10-month period.  

    Moreover, the alacrity with which the system poured money into the ranks of unemployment claimants is a wonder to behold. By April the February payment level of  $2.3 billion had soared to $41 billion, per month and by July the figure came in at an astounding $117 billion per month.  

    That’s right. At the June peak rate of $117 billion per month ($1.4 trillion annualized per  the chart below), the monthly payment rate was 51X higher than it had been in  February, and exceeded the full year UI payout rate during the depths of the Great  Recession.

    Monthly UI Payments Annualized

    But consider this: If the Federal-State unemployment system was already overcompensating for actual lost wages and salaries by 2X, why did we need to send helicopter checks, or what Washington now fondly calls “stimmy checks”, to 155 million households on top of that, when most of these households had not lost their jobs or paychecks?  

    Nevertheless, here is the “stimmy check” and related non-means tested money in the  five Everything Bailouts including Sleepy Joe’s new edition to the Fiscal Demolition  Derby:  

    Non-Means-Tested Stimmy Funding: 

    • Families First act: $105b;  

    • CARES act: $315b;  

    • Response & Relief Act: $191b;  

    • Biden Jan. 14th plan: $625b;  

    • Total non-means tested stimmy: $1.235 trillion.

    In short, the wage loss hole in the bucket was already filled two-times over by the  increase in UI benefit payments since February, but this massive drop of cash on the  American public will have filled it again by another 4.5X. 

    As we said, free lunches for one and all……except, except the debt is never going away  and future generations will surely rue the day. 

    * * *

    The above originally appeared at David Stockman’s Contra Corner.

    Tyler Durden
    Sun, 01/17/2021 – 18:40

  • Parler Back From The Dead As CEO Posts New Message
    Parler Back From The Dead As CEO Posts New Message

    Authored by Jack Phillips via The Epoch Times (emphasis ours)

    Parler’s website suddenly appeared online Sunday with a message from its CEO, John Matze, who said, “Hello world, is this thing on?”

    The message suggests Parler was able to find another hosting service, coming about a week after Amazon Web Services booted the social media website from its services, taking the site down. It came as Parler—billed as a “free speech” platform—was seeing an unprecedented surge in users as prominent conservatives, among others, were being banned from Twitter, Facebook, and other platforms.

    Matze also issued a temporary status update.

    “Now seems like the right time to remind you all—both lovers and haters—why we started this platform,” Matze. “We believe privacy is paramount and free speech essential, especially on social media. Our aim has always been to provide a nonpartisan public square where individuals can enjoy and exercise their rights to both. We will resolve any challenge before us and plan to welcome all of you back soon. We will not let civil discourse perish!”

    A screenshot of Parler.com on Jan. 16, 2020. (Screenshot/Parler)

     

    Amazon Web Services’ rationale behind jettisoning Parler was due to a lack of moderation and came in the backdrop of the Jan. 6 U.S. Capitol riots. Parler, in a court filing, citing text messages between Matze and an Amazon representative, claimed Amazon was primarily concerned with whether President Donald Trump would migrate to Parler after his Twitter account was banned last week.

    The same filing asserted that Amazon didn’t appear to care much about alleged violent threats that were made by Parler users.

    Last week, Parler asked a federal court in Washington state to block Amazon’s decision, while maintaining that Amazon engaged in monopolistic practices by booting the platform. Twitter is also a major client of Amazon Web Services.

    This illustration picture shows the social media website from Parler displayed on a computer screen in Arlington, Va., on July 2, 2020. (Olivier Douliery/AFP via Getty Images)

    According to a WHOIS search, Parler appears to be hosted by Epik, which also hosts social media website Gab.

    While it did not confirm Parler was seeking its services, Epik in a statement last week blasted Big Tech companies’ “kneejerk reaction” of “simply deplatforming and terminating any relationship that on the surface looks problematic or controversial.” The statement noted that Epik is “not quick to abandon our administrative positions,” as it attempted to contrast it and Amazon.

    Other than Amazon’s decision, Google and Apple removed Parler from its respective app stores.

    Earlier on Sunday, Matze said there was no indication Amazon, Google, and Apple would pull their services.

    In the days up to the suspension, “Amazon, as usual, [was] basically saying, ‘Oh, I never saw any material problems. There’s no issues.’ You know, they played it off very nonchalantly. And so we had still even, you know, on the 8th and the 9th, you know, we had no real indication that this was, you know, deadly serious,” Matze told Fox News.

    Tyler Durden
    Sun, 01/17/2021 – 18:34

  • Fox News Ratings Plummet After Abandoning MAGA Viewership
    Fox News Ratings Plummet After Abandoning MAGA Viewership

    Before the 2020 election, Fox News was dominating its cable rivals – in large part due to Tucker Carlson and Sean Hannity, whose pro-Trump messaging and coverage of the Russiagate and Biden scandals helped lead the network to its #1 ratings spot for several years.

    Then, after host Chris Wallace ‘moderated’ the first Presidential debate by overtly protecting Joe Biden while attacking Trump, the network’s establishment bias upstaged even their ratings darlings. Disgusted MAGA viewers began turning to alternatives such as One America News and Newsmax for pro-Trump coverage after Fox made clear where they stand.

    According to the Daily Beast, Fox News’ ratings have plummeted – as the network finished third to both CNN and MSNBC in the ratings on Friday for the third straight day, their poorest showing since September 2000.

    On Wednesday, CNN averaged 5.941 million total viewers and 2.074 million in the key 25-54 demographic for the entire day, compared to MSNBC’s 4.543 million viewers overall and 1.106 million demo audience and Fox News’ total audience of 3.464 million and 852,000 in the demo.

    The disparity increased on Thursday, with CNN drawing 3.854 million total viewers, MSNBC averaging 3.321 million, and Fox pulling in 1.935 million for the day. CNN also led in the demo, nabbing 1.193 million with MSNBC finishing second at 653,000 and Fox bringing in the rear at 384,000.

    The streak continued on Friday as CNN finished first once again with 3.121 million total viewers, followed by MSNBC’s 2.816 million and FNC’s 1.702 million. In the total day demo, CNN drew 878,000 viewers, compared to MSNBC’s 512,000 and Fox News’ 320,000. MSNBC, meanwhile, experienced its highest-rated week ever, averaging a total of 3.1 million viewers. –Daily Beast

    Fox is trying to salvage their ratings disaster. Last Monday they announced a massive overhaul of its daytime and early primetime weekday lineup – shifting Martha MacCallum from 7 p.m. to 3 p.m., and moving anchors Dana Perino and Bill Hemmer out of their early afternoon broadcasts for a co-anchored segment from 9-11 a.m. with a rebooted America’s Newsroom.

    Tyler Durden
    Sun, 01/17/2021 – 18:15

  • The Trial Of Citizen Trump Would Raise Serious Constitutional Questions
    The Trial Of Citizen Trump Would Raise Serious Constitutional Questions

    Authored by Jonathan Turley,

    Below is my column in USA Today on the upcoming Senate trial of President Donald Trump. The Hill recently ran my second column on why the best defense of Trump could be no defense — to skip the Senate trial and force a threshold vote on the constitutionality of the trial of an ex-president. Here is my column:

    With the second impeachment of President Donald Trump, the Congress is set for one of the most bizarre moments in constitutional history: the removal of someone who has already left office. The retroactive removal would be a testament to the timeliness of rage. While it is not without precedent, it is without logic.

    The planned impeachment trial of Donald Trump after he leaves office would be our own version of the Cadaver Synod.  In 897, Pope Stephen VI and his supporters continued to seethe over the action of Pope Formosus, who not only died in 896 but was followed by another pope, Boniface VI.  After the brief rule of Boniface VI, Pope Stephen set about to even some scores. He pulled Formosus out of his tomb, propped him up in court, and convicted him of variety of violations of canon law. Formosus was then taken out, three fingers cut off, and eventually thrown in the Tiber River.

    While some may be looking longingly at the Potomac for their own Cadaver Synod, Speaker Nancy Pelosi and other Democrats have stated that their primary interest is in the possible disqualification of Trump from holding future federal office. Disqualification however is an optional penalty that follows a conviction and removal. It may be added to the primary purpose of removal referenced in the Constitution. The Trump trial would convert this supplemental punishment into the primary purpose of the trial.

    This did happen before but that precedent is only slightly better than the Cadaver Synod. That case involved William Belknap who served as Secretary of War to President Ulysses S. Grant. Belknap resigned after allegations of corruption — just shortly before a House vote of impeachment. The Senate held a trial but acquitted him. Twenty nine of 66 voting senators disagreed in a threshold motion that Belknap was  “amenable to trial by impeachment . . . notwithstanding his resignation.”

    In fairness to the Democrats, I have long rejected the argument that there comes a point when it is too late to impeach a president while he is in office. As I said in both the Clinton and Trump impeachment hearings, the House is under a duty to impeach if it believes that a president has committed a high crime and misdemeanor. If that occurred on the last day of a term, it would still be warranted.

    My objection to this second impeachment was that it proceeded without any deliberation of the traditional impeachment process. It was a snap impeachment, which is to the Constitution what Snapchat is to conversations. It reduces the process to a raw, brief and partisan vote. This could have been avoided. A hearing could have been held in a day to allow the language of the article to be amended and the implications of the impeachment considered. It would also have allowed for a formal demand for a response from the president.

    Instead, the impeachment was pushed through on a partisan muscle vote with only ten Republicans supporting the single article. It was an ironic moment. In the last Trump impeachment, I chastised the Democrats for pushing through an impeachment on the slimmest record and the shortest time frame of any presidential impeachment. They insisted that there was no time for witnesses before the House Judiciary hearing, but later waited weeks to submit the articles to the Senate. Now they have outdone that record with an impeachment with no traditional record in a matter of a couple of days. The Senate will not sit until January 19th and any trial would likely occur after January 20th.

    I have long wrestled with the notion of a retroactive impeachment trial. I can see the value of establishing that a president was not just accused but convicted of unconstitutional acts. There is also the value of disqualification of such an individual from future office. However, what was an intriguing academic puzzle is now a pressing constitutional concern.

    The impeachment trial of a private citizen raises a host of constitutional and practical problems. For example, a president can rely on publicly-funded lawyers like the White House Counsel and can assert presidential privileges. After leaving office, an ex-president would not only pay for his own defense, but he will lose the ability to make privilege determinations. Indeed, many such assertions would be subject to the review of his successor, Joe Biden. It would be like Pope Stephen making determinations on critical evidence of Pope Formosus after pulling him out of the crypt.

    The main issue however would be whether this is really an impeachment trial, as opposed to some curious constitutional post-mortem on a passed presidency. That question could face Supreme Court Chief Justice John Roberts if he has summoned for this role. A chief justice does not simply show up at anything deemed an impeachment trial. He must make an independent judgment over his carrying out a constitutional function.  Even if he rules that this is a valid trial, that ruling could be rejected by the Senate in a motion to dismiss the article. In the Clinton impeachment, Democrats demanded such a threshold vote before a trial. Of course, since there is no president to try for impeachment, the Senate may not even ask Roberts to preside — a telling departure that only undermines the trial as a whole.

    This impeachment should end with the Trump administration. I do not fault those who view the president’s conduct as impeachable. The speech was reckless and wrong. My primary objection was to the use of a snap impeachment and the language of the article of impeachment. That is now part of Trump’s presidential legacy. The question is now what will be the troubling constitutional legacy left by the Senate in the trial of an ex-president.

    In my view, a retroactive removal vote would combine with the use of a snap impeachment to fundamentally altering the role of impeachment in the United States. It would take a rush to judgment and turn it into a parade of constitutional horribles. Any party could retroactively impeach or remove a former president for the purpose of disqualifying him from office. Thus, if a party feared a one-term president’s possible run, they could hold use impeachment to eliminate the political threat. With the snap impeachment, it would be worse than creating a type of “no confidence vote” under our Constitution. After a non confidence vote in the United Kingdom, a former prime minister can still run again for office.

    A conviction would also not bring the closure as many may hope. Such disqualification would be one of the few impeachment issues that could be challenged in court. Trump would have standing to sue for his right to run again and he could well win. He would then be more popular than ever with many citizens eager to defy the Washington establishment. There is another path. The Senate could end the trial with a threshold vote and let history and the voters be the final judge of Donald J. Trump.

    Tyler Durden
    Sun, 01/17/2021 – 17:50

  • Incoming $1400 "Stimmy" Checks Could Push The S&P Over 4,000
    Incoming $1400 “Stimmy” Checks Could Push The S&P Over 4,000

    There’s no doubt that the $600 stimulus checks that went out earlier this month put a charge into the market. Will the coming $1,400 checks push the market even higher? We think so.

    We believe that another round of stimulus – at more than 2x the amount of the previous round – is an obvious catalyst that will move the market higher once again. We noted as such on January 13 when we posted to Twitter that the top 3 banks were “probably right” in suggesting calendar spreads because stimulus would pave the path for the S&P to breach 4,000.

    https://platform.twitter.com/widgets.js

    This question was also explored by Bloomberg on Sunday morning, who arrived at a similar conclusion. Noting that the recent $600 checks caused option trading to explode and penny stock volume to skyrocket, the report points out that people “can’t help notice how tiny traders with money to spend keep turning up in the vicinity of almost every market spectacle these days”.

    Then, the obvious question becomes: where does that extra money come from? 

    Brrr…

    Peter Cecchini, founder and chief strategist of AlphaOmega Advisors LLC, commented: “If the additional $1,400 goes to the same income levels it did before, we are highly likely to see additional speculation in stocks, which could continue to inflate an already-existing bubble. If it goes to people with below-average incomes, speculation will be less likely.”

    Data suggests that people who got a stimulus check, across all income groups, traded 30% more in the first 10 days of January than at the start of December. Those who earn less than $75,000 per year saw a 53% jump in their trading, Bloomberg wrote.

    And the coming $1,400 will hit bank accounts during a “full-blow market mania”. Speculation is rampant not just in risky asset classes like cryptocurrencies, but in penny stocks, dubious startup companies and cash burning entities across all exchanges in the U.S. – we are at peak euphoria. In fact, the options market saw its second busiest day ever for bullish equity calls this week and penny stock volume is up 6x from last year.

    Retail stocks, as we have noted many times on Zero Hedge, are blowing away hedge fund favorites and the S&P 500 index:

    And while people certainly need the stimulus to help offset rising costs and job losses, many will instead divert their checks to the market. 

    23-year-old Ava Frankel of Boston, who works in the financial services sector, said: “I told my friends, if you’re going to spend your stimulus check on shoes, you might as well just put it in Robinhood instead. The $600 check was just something extra I didn’t need so I just threw it in the stock market.”

    Frankel put her entire $600 check in to a SPAC that is reportedly in talks with Lucid Motors and says she would consider doing the same with the next check she gets. “I would love to see a pullback in the tech sector because I would like to add to my positions in the tech names,” she also said. 

    Chris O’Keefe of Logan Capital Management concluded: “If there is a bubble being created within the financial markets, to some degree, those checks do add to it because I think they’re going to chase performance. It used to be you added money to the economy and people went out and bought things — cars and furniture — now it seems to amplify what’s going on in the financial markets.”

    Or, in other words:

    https://platform.twitter.com/widgets.js

     

    Tyler Durden
    Sun, 01/17/2021 – 17:25

  • Ice Cream From China Contaminated With COVID: Officials
    Ice Cream From China Contaminated With COVID: Officials

    Authored by Jack Phillips via The Epoch Times,

    Officials in a Chinese municipality said that three samples of ice cream tested positive for the CCP virus, and thousands of boxes were confiscated, according to state-run media.

    Storage of the ice cream, produced by Tianjin Daqiaodao Food Co., was sealed after samples sent by the firm to a local disease control center last week tested positive for the virus.

    Officials said that the company’s more than 1,662 workers were placed under quarantine due to the CCP (Chinese Communist Party) virus—also known as the novel coronavirus that causes COVID-19.

    Authorities in Tianjin said the company produced more than 4,836 boxes of COVID-contaminated ice cream, according to state media. Hundreds of boxes of ice cream entered the market.

    The Tianjin Municipality is located in northeastern China and borders Hebei Province and Beijing.

    According to reports in October 2020, CCP authorities had detected and isolated the virus on the outer packaging of frozen cod during efforts to trace the virus in an outbreak in Qingdao.

    Officials’ claims about the virus being found in frozen food could be a tactic to blame other countries for COVID-19 cases in the country. In November, regime authorities said that allegedly COVID-contaminated food was imported from other countries in what some experts said was an attempt to blame those countries for the outbreak.

    State media reports over the weekend said the raw material used to produce the ice cream came from Ukraine and New Zealand.

    The ice cream development comes as CCP authorities relocated about 20,000 people in Shijiazhuang, the capital of Hebei Province, to other areas for quarantine several days ago. The outbreak, according to officials, also spread to Qiqihar—one of the largest cities in northern China in Heilongjiang Province.

    The new wave of the COVID-19 outbreak in Shijiazhuang was concentrated in Zengcun township of Gaocheng district, and has spread to other parts of China.

    The Epoch Times learned on Jan. 11 that after many residents in Zengcun were sent to quarantine sites, nearly 20,000 people who had remained were urgently notified by local authorities to be transferred to quarantine centers in remote areas.

    And leaked government documents obtained by The Epoch Times showed that officials in Hebei are anticipating a surge in CCP virus cases and are making preparations to curb its spread.

    Chinese officials in Heilongjiang Province on Jan. 14 told all 38 million residents to self-quarantine at home, although they didn’t say for how long.

    Tyler Durden
    Sun, 01/17/2021 – 17:00

  • Luke Gromen: The Fed Has No Good Options Right Now As Yields Rise And Deficits Explode
    Luke Gromen: The Fed Has No Good Options Right Now As Yields Rise And Deficits Explode

    One of the biggest questions right now, especially as yields climb as Joe Biden promises trillions of dollars in additional COVID-19-inspired stimulus spending, is when the Fed and the Treasury, soon to be run by Janet Yellen, will conspire to stop the rise in yields and stave off another eruption of market chaos. With US deficits rising thanks to COVID, and the Fed reviving QE thanks to COVID, the global dollar-based financial system is in trouble, if for no other reason than that Europe, Japan and China are spending so much more domestically, they won’t have as much left over to spend on buying Treasury bonds to finance the US deficit and build up their foreign-exchange reserves.

    One of the biggest questions right now, especially as yields climb as Joe Biden promises trillions of dollars in additional COVID-19-inspired stimulus spending, is what’s going on with Treasury yields, and why hasn’t the US dollar strengthened like it’s “supposed to do” (according to the textbook). But in reality, situations can be a lot more complicated than one might expect.

    With US deficits rising thanks to COVID, and the Fed reviving QE thanks to COVID, the global dollar-based financial system is in trouble, if for no other reason than that the global economy is slowing (meaning Europe, Japan and China won’t have as much left over to pour back into Treasuries).

    And with countries like Russia moving unprecedented amounts of their foreign exchange reserves into gold, like Russia, which now holds more gold in its central bank reserves than at any point in its modern history, there’s a real mutiny against the dollar that’s driving the pace of de-dollarization.

    During the latest MacroVoices interview with Luke Gromen, a macro analyst who founded his own shop back in 2014, the longtime macro analyst shared his long-term outlook for the dollar, gold and Treasuries, and how global central banks will drive macro market dynamics during the post-COVID era.

    At one point early on during the interview, Gromen said “[w]hat’s been interesting to me in this whole process is that the dollar hasn’t responded to these yield increases at all. And I think Louis Gave said it best a couple of weeks ago in an interview, he said when I see a nation who has rising yields and a falling currency, alarm bells go off. That’s a symptom of a balance of payments problem.”

    Using Occam’s Razor, it’s clear: the reason the dollar is sinking is because the puppeteers who run the economy Jerome Powell and the rest of the Fed’s board of governors need it to sink so the US brings more dollars back in trade.

    And I think that’s a way – from the yield increases, which I think the Occam’s razor explanation for why yields are rising, particularly post-election, is on expectation of the stimulus.

    I think the reason behind the reason is that the reason we need the stimulus is because the US has a balance of payments problem in the aftermath of COVID. When you look at the hole that was blown in the US fiscal budget after COVID, it really looks, to our eyes, irrecoverable without some massive stimulus or a big devaluation in the dollar or something of that sort.

    As Gromen reminds us, central banks started pulling back on QE back in 2014 when the Fed said it would start tapering its asset purchases.  But even before COVID struck, purchases started trending higher. 

    The discussion then circles back to “deficits don’t matter…until they do.”

    Erik: Now, a phrase that I’ve heard you use a lot before, Luke, is deficits don’t matter until they do. The implication being that, at some point, if you no longer have the position of prominence that the US has enjoyed, with the rest of the world buying up its debt, all of a sudden the game is different.

    But, on the other hand, you can spend pretty much an unlimited amount of money if the Fed just buys all the Treasuries and you don’t have to depend on outside investors for that.

    How do you see this increased spending, lots and lots of stimulus planned, a growing political sentiment around MMT to say let’s just spend whatever we need to, we can always print the money to buy the bonds if necessary?

    How long does that game go on until deficits do matter?

    Luke: I think they’ve started to matter already. I think they started to matter in 3Q14 when global central banks stopped buying Treasuries on net.

    If you look at what they have bought from 3Q14 to present on net, they have not added any Treasury bonds on net to their FX reserves, which I think that is really the kickoff of when they started to matter.

    There have been on this front a couple of interesting op-eds in the Wall Street Journal in the last month, one by former Goldman CEO and Treasury Secretary Hank Paulson, one by former Fed governor Kevin Warsh last week.

    And both of them I think are really important op-eds because they both suggest that the Fed and the US government have a problem, which is that the US needs to refinance (call it) $7 to $8 trillion net this year.

    So, what does this mean for yields and the dollar?

    Readers can listen to the full interview below, courtesy of MacroVoices:

    Tyler Durden
    Sun, 01/17/2021 – 16:35

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