Today’s News 30th May 2022

• How To Cut Crime In The Murder-Capital Of America
  How To Cut Crime In The Murder-Capital Of America

  Authored by Douglas Carswell via RealClear Policy (emphasis ours),

  In the first week of May there were six homicides in Jackson, Mississippi. How many more will there be before the end of the month?

  

  Last year Jackson had the highest homicide rate of any city in America, with 155 homicides. To put that grisly statistic in perspective, that was about the same number of homicides as happened in Atlanta, a city with almost four times the population.

  As a recent arrival in the city, what shocks me is not the murder rate, but the attitude of those who make endless excuses for it.

  Some officials invoke that catch-all excuse for every failure, Covid. Homicide rates did increase at the same time that there was a pandemic, but correlation is not causation. I am unconvinced that the virus somehow made people more violent.

  Some of the Mississippi media seem desperate to avoid being seen to blame Jackson’s city leadership. Rather like the failure to provide the city with running water, everything but the city leadership is held responsible. Why? It does a disservice to Jackson residents.

  Honest reporting should hold to account those making bad public policy choices today, and not insist on looking at everything that happens in Mississippi in 2022 through the prism of a distant past.

  There is far too much wishful thinking when it comes to crime. If only, some imply, we had one more rehabilitation program or enacted another bill that purported to help ex-offenders all would be okay. Sadly, good intentions don’t cut crime. Being honest about the causes of crime might.

  Responsibility for crime lies with criminals. Responsibility for failing to deal with criminals rests with those public officials mandated to run the criminal justice system.

  Next time there is another killing, Jackson’s leaders will do what they always do. They will emote about it. What we need to hear instead is what they will actually do.

  Here are five specific actions they could take that would cut crime in Jackson:  

  1. More police: Despite the often heroic efforts of individual law enforcement officers, there are simply not enough of them. 

  2. Prosecute: No matter how effective the police are at chasing suspects through the streets, there are serious failings when it comes to pursuing them through the courts. Who in Jackson has not heard stories of suspects being allowed to walk free?

  3. Detention: The failure to have enough detention capacity in Hinds County is outrageous. Build it. 

  4. Clear the courts: The bureaucratic backlog in the courts is perhaps the single biggest impediment to effective justice. Clear the backlog of cases. If those that administer the court system can’t cope, bring in administrators that can.

  5. Work with the state: Every city likes to manage its own affairs. I get that. But the state capital ought to be able to team up with state-wide officials, police forces and prosecutors to tackle a problem that impacts us all. 

  I live and work in Jackson – and I love to call this city home. Jackson might seem caught in downward spiral, but every city has the power to regenerate itself.

  New York in the early 80s seemed caught in a spiral of decline. But the city revived once it got a grip on crime. The key to Jackson’s future is to follow this example.

  Tyler Durden
  Sun, 05/29/2022 – 23:30

• DARPA Experiments With Soviet-Style 'Ground-Effect' Vehicle 
  DARPA Experiments With Soviet-Style ‘Ground-Effect’ Vehicle 

  The Pentagon’s top research agency has unveiled a highly unusual kind of plane that is a blend between a hovercraft and an aircraft to skim the ocean’s surface to deliver cargo much faster than convention transport vessels. 

  Defense Advanced Research Projects Agency’s (DARPA) “Liberty Lifter” uses a trick of physics known as the “ground effect” to reduce aerodynamic drag by only flying no more than the length of its wingspan above water. This allows the plane to travel much faster and carry large amounts of payload. 

  Liberty Lifter “will combine fast and flexible strategic lift of very large, heavy loads with the ability to take off/land in water,” DARPA said in the press release. 

  

  The agency pointed out the Soviet Union developed a ground-effect vehicle called ekranoplans, explaining that “these vehicles were high speed and runway- independent, but were restricted to calm waters and had limited maneuverability.” 

  Ekranoplans was designed in 1975 and used by the Soviets in the late 1980s through the 90s. Only three Orlyonok-class ekranoplans were operational and flew 13 feet above the water at a top speed of 342 mph. They were nicknamed the “Caspian Sea Monster” and were only limited to good weather and calm seas. All three were retired by the late 1990s. 

  

  DARPA’s Liberty Lifter appears to be an evolution of the ekranoplans and can operate in rough conditions or even sustained flight at mid-altitudes, something the Soviets could never achieve. 

  “This first phase of the Liberty Lifter program will define the unique seaplane’s range, payloads, and other parameters.

  “Innovative advances envisioned by this new DARPA program will showcase an X-plane demonstrator that offers warfighters new capabilities during extended maritime operations,” said Alexander Walan, a program manager in DARPA’s Tactical Technology Office.

  Watch a simulation of Liberty Lifter below:

  Tyler Durden
  Sun, 05/29/2022 – 23:00

• Stockman: Perpetual Debt, Perpetual War
  Stockman: Perpetual Debt, Perpetual War

  Authored by David Stockman via AntiWar.com,

  It’s always useful to visit the museum in order to offset the recency bias that distorts perceptions of current realities.

  In the great scheme of things, the picture below is admittedly not that ancient – from just 42 years ago. But it is nevertheless a museum piece because it pertains to a matter that has long since faded from the scene. Namely, the public debt and in this instance the day when your editor was compelled to warn the Gipper that the Federal debt was about to cross the dreaded one trillion dollar mark.

  Back then, that prospect gave one and all the fiscal heebie-jeebies. Massive public debt was viewed as an immoral imposition on future generations and an economic scourge on the present. That’s because when properly financed in the bond pits it drove up interest rates, thereby crowding-out household and business borrowers and economic growth and rising prosperity on main street.

  

  1/28/1981: President Meeting with David Stockman, Don Regan, Murray Weidenbaum, and Martin Anderson to discuss the economy in oval office

  No more. Massive fiscal deficits year-after-year have become a way of life in the Imperial City, but even then CBO’s latest 10-year forecast is a shocker. It shows that even if there is no recession for the next ten years (fat chance!) and existing tax and spending policies (dashed red line) remain in place without enactment of a single new spending program or tax cut (even fatter chance!), the deficit will exceed $3 trillion per year by the end of the decade.

  That would amount to a structural deficit equal to 8.4% of GDP and a ticket to fiscal perdition. In dollar terms, it would add $20.3 trillion to the public debt over the next decade, taking the total debt to $50 trillion by 2032.

  That is to say, 50-years on from the photo above, the public debt will have risen fifty-fold.

  

  Here’s the thing, however. Such horrendous projections do not phase these clowns one single bit – as was underscored in spades by Congress’ shameful boondoggling on the Ukraine aid bill. That $40 billion was rushed into law sight unseen and without the benefit of any committee hearings at all.

  Worse still, the historic party of the antiwar left went abjectly AWOL. The vote among Dems was 48-0 in the Senate and 223-0 in the House. And those stunning counts include Bernie Sanders and the House “squad” all in the “yea” column.

  That is to say, if Washington cannot muster even a single Dem “nay” vote on the funding of a mindless war that has no bearing whatsoever on America’s homeland security, then the prospects for restoration of even a semblance of fiscal discipline are somewhere between slim and none.

  Indeed, what in the world is wrong with these blithering knuckleheads? Last week’s action brings  already spent and promised Ukraine weapons and aid to $54 billion.

  For crying out loud, Ukraine’s GDP last year was just $155 billion. At the current run rate, they have spent 120% of Ukraine’s GDP on its own destruction, and with no end in sight.

  It is no wonder, therefore, that the pretentious little peacock who parades as the country’s president is now telling the world that the war will go on until the last Ukrainian soldier is dead and Washington’s endless bounty is finally used up.

  After all, at a moment when Russia is making steady gains in Donbas, reportedly now poised to take all of Luhansk province, Zelensky instructed the grandees gathered at Davos that Ukrainian forces would fight to liberate all occupied territory:

  Ukraine will fight until it reclaims all its territories,” he stressed. “It’s about our independence and our sovereignty.” This as there have been calls from a handful of European leaders to make some territorial concessions for the sake of ending the war based on a negotiated settlement.

  Zelensky had said the day prior, on Tuesday, that negotiating recognition of Russia’s possession of Crimea is not on the table. 

  “Russia will also have to leave Crimea,” he had said during a daily briefing according to the Kyiv Independent.

  Speaking of Kherson, Melitopol, Enerhodar, Mariupol, he said the Russians must exit these and “all other cities and communities where they are still pretending to be the owners.”

  There is no other way to say it: Washington has empowered a madman, who is so smitten by his own strutting on the world stage that rationality itself has become the victim.

  There is not a snowball’s chance in the hot place that Putin is about to give back Crimea, nor the Donbas and all the cities listed above by Zelensky. And when they stay in Russian possession it will not make a damn bit of difference to America’s national security anyway.

  But, of course, that’s not what Ukraine is actually about. Those 271 Dem “yea” votes were merely an exercise in political virtue-signalling. They were a vote against Donald Trump’s avatar on the scene – the endlessly demonized Vladimir Putin.

  That’s why the discourse about this calamity has lost all touch with reality. For instance, Zelensky is now saying that if Ukraine is not victorious, the Baltics will be next on Putin’s agenda and American servicemen will soon be shedding Article 5 blood in Latvia.

  That’s absurd, yet nary of word of rebuke was to be heard from Washington. The town is in full on war heat with no compunction at all about the massive waste of American treasure or putting the American economy itself in harm’s way.

  Thus, according to current reports the Biden Administration is looking for more ways to inflict damage on Russia’s economy by targeting buyers of Russian oil. As the New York Times reported last week, these proposed measures include so-called secondary sanctions that would block Russian oil buyers from doing business with companies based in the US and in other nations aligned with Washington.

  Right. In order to win a pointless battle over some no count real estate along the Dnieper River, Washington is prepared to declare war on Chinese, Indian, Greek, Brazilian etc. companies.

  Likewise, no matter that Russia wants to pay its international debts and US and European lenders are more than happy to receive the proceeds they are owed. But, no, these lenders are being expropriated by Washington’s writ – all to make sure that Putin gets the message.

  So after Wednesday, US investors will no longer be allowed to receive bond payments from Russia without breaching sanctions. And this whole misbegotten Ukraine escapade is supposedly about defending economic freedom!

  Finally, when it comes to becoming untethered from reality, last week’s pitiful double-talk about the “evacuation” of upwards of 3,000 Azov Battalion soldiers in Mariupol surely takes the cake.

  The fact is, they surrendered hook, line and sinker in the first of what will soon be multiple occurrences along the Donbas front. But that did not stop Zelensky from powdering the pig:

   “…our soldiers were transported to occupied territory for future exchange.”

  Right. We have now reached the point where Pravda of the Soviet era is looking like a plausible journalistic enterprise by comparison.

  As one commentator chided,

  We can, of course, laugh, and often with a good reason. But that chorus of “not a surrender but carrying out orders”, “not a surrender but an evacuation,” “not an surrender but an exchange” is that Pravda newspaper from the anecdote.

  A citizen can focus on a topic for several days. Kiev hopes that by the end of the week everyone will happily forget Azov surrendered, if they are not reminded of it. And who is to remind them of it when Ukraine’s media have been purged and placed under government control?

  It’s the same in the economy.

  Incidentally, one of Marchenko’s (finance minister)  complaints concerned military salaries. He called them a heavy burden (they’ve been greatly increased, and the budget did not reflect it). But what then of Ukraine’s minister of defense’s plans to increase the size of the army to one million?

  The “we have almost won, any minute now” approach might seem naïve. But Kiev has perfected it. It doesn’t matter whether it’s Azov or the economy. It all revolves around the effort to protect Zelensky’s ratings. The purpose of stubborn resistance is the same.

  Historians will someday wonder how today’s insanities actually came to pass, but there is actually no mystery. Washington has become the world’s capital of perpetual war because it was able – for a time – to perpetually issue debt and then monetize it at the central bank.

  At the end of the day, that’s the greatest central banking sin of all: It has turned the nation’s politicians – including so-called progressives – into Sunday afternoon warriors who are a menace to the nation, and, for that matter, to the entire planet.

  Tyler Durden
  Sun, 05/29/2022 – 22:30

• A Golden Opportunity: How To Invest For The Coming Stagflation
  A Golden Opportunity: How To Invest For The Coming Stagflation

  Now that even hardened permabulls are forced to pick between two poisons and debate whether the US is sliding into stagflation or merely recession, last week Deutsche Bank’s Jim Reid and Henry Allen published their latest must-read note, “Investing during Stagflation: What happened in the 1970s” (available to pro subscribers in the usual place), a follow-up to their note back in October last year comparing the 2020s to the 1970s (which we discussed extensively here at the time).

  While Reid hedges that the decade is still young, he asks what if inflation stays around for much of the next few years? What should we expect from returns?

  While we will present a more extensive answer tomorrow when we dissect his recent report, the short answer is that for traditional financial assets like bonds and equities one would expect real wealth destruction rather than the massive real wealth creation seen over the last four decades.

  On the other end, commodities will be a far better bet, although given the run up already seen so far this decade, it is possible that the easy gains have already been made although we doubt that because as we noted recently, quoting from BofA, “Energy’s weight is now ~5%, the sector is still 30% underweight. The pain trade in Energy is up.””

  “Energy’s weight is now ~5%, the sector is still 30% underweight. The pain trade in Energy is up.” – BofA https://t.co/24A9W7arEk

  — zerohedge (@zerohedge) May 27, 2022

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

  However, Gold and Silver haven’t made much progress over the last two years so if the playbook follows the 1970s they are the standout cheap asset from this starting point, according to Reid, who concludes that while “history never exactly repeats it provides a framework as to how to think about the next few years if inflation remains high even after a Fed-induced recession.”

  

  Tyler Durden
  Sun, 05/29/2022 – 22:00

• "I'm Watching": Image Of Father Standing Guard Outside Daughter's Elementary School Goes Viral
  “I’m Watching”: Image Of Father Standing Guard Outside Daughter’s Elementary School Goes Viral

  Authored by Lorenz Duschamps via The Epoch Times,

  A picture of a father in Central Texas standing guard at his daughter’s elementary school where his wife also works has gone viral on social media in the wake of this week’s mass shooting incident in Uvalde.

  

  Ed Chelby, a U.S. Army veteran who has a background in security, told KWTX that he couldn’t sleep after news emerged that an 18-year-old gunman killed 19 children and two teachers on Tuesday at Robb Elementary School.

  Chelby said he contacted the school’s superintendent to ask for permission to stand guard at the main entrance of Saegert Elementary School in Killeen, which is located about 180 miles northwest of Uvalde.

  “I said I would just be out there unarmed to let people know that I’m watching. Let the parents have a little bit of relief,” Chelby said in an interview with the local news station.

  “I can’t let this go,” he added.

  “This is just a testament to the sleeplessness caused by the grief I experienced.”

  The U.S. Army veteran was already in the process of becoming a volunteer at his daughter’s school and was undergoing a background check when the superintendent approved his application to stand guard outside.

  Chelby said with 11 years of experience in the U.S. Army, he isn’t afraid to be in front of the school without a gun.

  Parents of other children at Saegert Elementary School have approached Chelby to express their gratitude for what he’s doing.

  “I’ve had a lot of emotional people come up to me,” he said,

  “They didn’t want to send their kids to school. They struggled with sending their kids to school. And I told them, I was like, ‘I got them.’”

  Eli Lopez, the principal at Saegert Elementary School, told Newsweek that another parent, identified as a veteran mother, has also volunteered to help guard the back entrance of the school.

  

  A makeshift memorial at Robb Elementary School is filled with flowers, toys, signs, and crosses bearing the names of all 21 victims of the mass shooting that occurred on May 24, in Uvalde, Texas, on May 27, 2022. (Charlotte Cuthbertson/The Epoch Times)

  Other parents have volunteered for a safety program for the next school year, Lopez told the magazine.

  “As I took time to check on them and express my personal appreciation, they both expressed the simple act they felt they were taking on of being present as the least they could do,” said Lopez.

  “I was humbled that they demonstrated what it is to be part of the village that cares for each other. Neither one chose this task for recognition.”

  Tyler Durden
  Sun, 05/29/2022 – 21:30

• Visualizing 30 Years Of Gun Manufacturing In America
  Visualizing 30 Years Of Gun Manufacturing In America

  While gun sales have been brisk in recent years, the uncertainty surrounding COVID-19 was a boon for the gun industry.

  

  From 2010-2019, an average of 13 million guns were sold legally in the U.S. each year. In 2020 and 2021, annual gun sales sharply increased to 20 million.

  While the U.S. does import millions of weapons each year, a large amount of firearms sold in the country were produced domestically. In the following Visual Capitalist’s Nick Routley digs into the data behind the multi-billion dollar gun manufacturing industry in America.

  Gun Manufacturing in the United States

  According to a recent report from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the U.S. has produced nearly 170 million firearms over the past three decades, with production increasing sharply in recent years.

  

  America’s gunmakers produce a wide variety of firearms, but they’re generally grouped into five categories; pistols, rifles, shotguns, revolvers, and everything else.

  Below is a breakdown of firearms manufactured in the country over the past 30 years, by type:

  

   

  Pistols (36%) and rifles (35%) are the dominant categories, and over time, the former has become the most commonly produced firearm type.

   

  In 2001, pistols accounted for 21% of firearms produced. Today, nearly half of all firearms produced are pistols.

  Who is Producing America’s Firearms?

  There are a wide variety of firearm manufacturing companies in the U.S., but production is dominated by a few key players.

  Here are the top 10 gunmakers in America, which collectively make up 70% of production:

  

   

  One-third of production comes from two publicly-traded parent companies: Smith & Wesson (NYSE: RGR), and Sturm, Ruger & Co. (NASDAQ: SWBI)

   

  Some of these players are especially dominant within certain types of firearms. For example:

  • 58% of pistols were made by Smith & Wesson, Ruger, and SIG SAUER (2008–2018)
  • 45% of rifles were made by Remington*, Ruger, and Smith & Wesson (2008–2018)

  *In 2020, Remington filed for Chapter 11 bankruptcy protection, and its assets were divided and sold to various buyers. The Remington brand name is now owned by Vista Outdoor (NYSE: VSTO)

  The Geography of Gun Manufacturing

  Companies that manufacture guns hold a Type 07 license from the ATF. As of 2020, there are more than 16,000 Type 07 licensees across the United States.

  These manufacturers are located all around the country, so these numbers are somewhat reflective of population. Unsurprisingly, large states like Texas and Florida have the most licensees.

  Sorting by the number of licensees per 100,000 people offers a different point of view. By this measure, Wyoming, Montana, and Idaho come out on top.

  

  If recent sales and production trends are any indication, these numbers may only continue to grow.

  Tyler Durden
  Sun, 05/29/2022 – 21:00

• Presence Of New, More Potent Opioid Growing In Canada's Illegal Drug Supply, Warns Substance-Use Research Org
  Presence Of New, More Potent Opioid Growing In Canada’s Illegal Drug Supply, Warns Substance-Use Research Org

  Authored by Isaac Teo via The Epoch Times (emphasis ours),

  A national substance use research organization is warning about a new type of opioid that is increasingly appearing in Canada’s illegal drug supply.

  

  In an alert issued in March, the Canadian Centre on Substance Use and Addiction (CCSA) warned there is a rising presence in the drug supply of potent synthetic opioids referred to as nitazenes that are “several times more potent than fentanyl.”

  Nitazenes usually appear unexpectedly in drugs assumed to contain other types of opioids like fentanyl, oxycodone, and non-medical benzodiazepines, said the CCSA, while noting the substance was first identified in Canada’s unregulated drug supply in 2019.

  “They were developed 60 years ago as potential pain relief medication, but were never approved for clinical use.”

  The centre noted that even though nitazenes were only detected in less than 1 percent of samples analyzed by Health Canada’s Drug Analysis Service (HC DAS) in 2021, the percentage was a “four-fold increase” compared to 2020.

  HC DAS analyzes the content of drugs seized by law enforcement agencies.

  Sarah Konefal, research and policy analyst at the CCSA, said the presence of nitazenes is likely underestimated, given some drug-checking services in Canada don’t have the tools to actually detect this type of substance.

  “One of the concerns is that we’re only looking at the tip of the iceberg,” she said in an interview with The Canadian Press, reported on May 21.

  Konefal added that the centre issued a similar alert when fentanyl first appeared in Canada in 2013. The prevalence of fentanyl in Canada’s drug supply started picking up in 2015, she said.

  In April 2016, British Columbia declared a public health emergency due to the significant rise in opioid-related overdose deaths reported in the province since the beginning of that year.

  Citing data from HC DAS, the CCSA said the majority of samples with nitazenes came from Ontario at 64 percent, followed by a quarter of samples coming from Quebec, in 2021.

  In addition, only one type of nitazene was detected in January 2020. But in a span of two years, the overall case counts increased, as well as the types of nitazenes detected, the data showed.

  “Note that more than one nitazene can be identified in a single sample,” the CCSA said.

  “In 2021, approximately 14 percent of nitazene-positive samples contained two or more.”

  Konefal said the fact that more different types of nitazenes are showing up is an indication that “probably the reach of nitazenes is expanding.”

  Because newer opioids in the unregulated drug supply, like nitazenes and benzodiazepines, tend to show up in drugs with fentanyl, the risk of people overdosing increases, she said.

  Given that nitazenes are more potent, along with the fact that they’re in drugs that have the same effect, it will increase risk of opioid poisoning, she added.

  In an October 2021 brief, Public Health Ontario said the risk of nitazenes is “likely moderate to high, with a high degree of uncertainty.”

  “The presence of these substances is increasing in Ontario and they pose an increased risk of severe overdose, particularly when present with other sedating substances,” the agency said.

  The deaths of four people in Ontario have been directly attributed to nitazenes, according to Stephanie Rea, spokesperson for the Office of the Chief Coroner. Nitazenes have been detected in the examination of other deaths, and the investigations are still underway, Rea told The Canadian Press.

  The CCSA said overdoses involving nitazenes may be difficult to reverse and might require extra doses of naloxone.

  “But protocols around this are not yet clear,” it said.

  The Public Health Agency of Canada reported an estimated 26,690 Canadians died from an apparent opioid-related overdose between January 2016 and September 2021, in its latest update in March.

  Tyler Durden
  Sun, 05/29/2022 – 20:30

• What Happens To Markets After Peak Inflation: Goldman Answers
  What Happens To Markets After Peak Inflation: Goldman Answers

  In recent days we have speculated that while food and energy prices are likely set to keep soaring for many months ahead, core prices especially among goods have likely peaked…

  

  … and will trend lower over the next year, especially if our thesis that the US is about to experience a major downside shock to the labor market – one which crushes US consumer whose savings rate just hit a 14 year low as the amount of credit card debt goes vertical …

  

  … materializes. Finally, all of this takes place as markets have fallen sharply amid sharply higher inflation and as growth expectations slump, leading to further deceleration in the inflationary impulse.

  That said, it’s not just us who thinks that core (if not headline, because as noted above both food and energy inflation will continue to rise for a long time) inflation has peaked: as Goldman economists write this weekend, “US inflation has probably already peaked and expect European inflation to peak in the next 2-3 months (see Exhibit 1). Even in the UK, where the inflation spike has been especially sharp, we think core inflation has peaked in April and headline will do so in October once the Energy price cap rises”

  To be sure, the impact of the rate tightening cycle, growth slowing and the falling out of the Y/Y numbers of some sharp rises from 2021 (autos prices for example) should all help to bring down the pace of inflation.

  

  In addition, the Y/Y growth of energy prices is moderating and semis supply is starting to ease. It is also notable that market implied inflation has started to moderate too.

  

  Overall, Goldman thinks headline inflation is likely to be peaking, which also prompts the Vampire Squid to ask “could this be a catalyst to support a turn equities?” Their answer: “it is probably more a necessary than sufficient condition.”

  Looking at US history, Goldman identified the peaks in headline inflation going back to 1950 (the bank only took clear peaks above 3% yoy inflation and found 12 peaks above 3% prior to today.)

  

  In terms of what to expect in markets as inflation peaks, Goldman shows in the next chart that the market usually falls in the run up to the peak in headline inflation, just as we have seen in recent months. But after the peaks, there is a little more variance and on average the market does recover.

  

  Of course there are times when this didn’t happen. Goldman admits that the peak in inflation might be helpful but equities really need other supports, especially if investors fear a sharper downturn. Among these are:

  The economy: Interestingly the peak in inflation is often followed by a continued weak economic outlook with the ISM continuing to fall as was the case in the 50s/60s after the peak in inflation and in the mid-1980s. But as Goldman’s economists note, there are some exceptions – post the late 1974 peak in inflation, the market recovered sharply and the economy did too with the ISM up 24pts in the 12 months from December 1974 (from a low of 31). The early 1990s also saw a strong rise in the ISM post the peak in inflation. Dec-74, Mar-80 and Oct-90 peaks in inflation were all good times to buy the market but they were also at or around economic troughs. There were three times when it would have been a clear mistake to buy equities at the peak in inflation: Dec-69, Jan-01 and Jul-08. In two of these cases, it was because the economy was at or about to enter recession (1969 and 2008). And while a recession after the recent inflation peak is very much assured, the $64 trillion question is what will the Fed do to offset it?

  Valuation: In January 2001, the market continued to fall even after the peak in inflation as the starting point for valuation was still high. In a different case, in September 2011, inflation peaked and again it was a good entry point, but this was not because the economy was about to turn, but more because valuations were low. The forward P/E on S&P 500 was 11x in late 2011.

  Rates: Another support for the market in the post-inflation-peak period has been falling rates – both long and short rates have typically declined – but especially at the shorter end of the curve: on average in the 12m after the peak in inflation the 2-year yield has been down 90-130bp (Exhibit 5).

  

  October 1990 is a good example of all three supports – the market rose 30% in the subsequent 12-months post the peak in inflation with the ISM rising almost 10pt and the 2-year yield falling almost 200bp. Still, as Goldman again reminds readers, “the starting point for valuation was just 11x forward EPS. A very different set-up from the one we have today.”

  

  Looking across the Atlantic, the profile of European stocks is similar to the US around peaks in inflation: European markets are weak in the months preceding the peak in inflation but on average rise after inflation has peaked. Indeed, European equities typically outperform as US inflation peaks (as shown below). This may be a function of the higher beta of European equities, the UK with a lower beta tends not to outperform after inflation peaks. The fact that the UK has a large share of commodity stocks might also account for its relative resilience in the run up to inflation peaking as well.

  

  To be sure, periods of higher inflation are generally associated with lower equity valuations, which is why Goldman warns that even if inflation does come down from the peaks, assuming it stays sticky and high and is higher than last cycle then it’s likely that valuations – especially in the US – won’t rise to the levels we saw last cycle when inflation was lower and less volatile. This is a similar point BofA just made in an earlier post. Indeed in the 1970s the average PE in the US was 12.0 and in the UK 11.7 (based on trailing earnings). Of course, if we get a rapid reversal and inflation quickly mutates into deflation, then all bets are off.

  

  It’s not just the level of inflation but the volatility of inflation too – when inflation is more volatile (spikes followed by sharp falls as growth slows) this can be even worse for equities. The uncertainty both in terms of monetary policy and margin setting make high inflation volatility generally difficult for equities to digest. The tightness of both energy and labor markets makes not just high inflation more likely but also more volatility and bigger spikes (as we have seen in gas prices for example).

  

  With all these caveats in mind, Goldman asks, rhetorically, If inflation peaks who has most to gain?

  It answers by pointing out that relationships with inflation are not stable over time: in the last decade, higher inflation was associated with cyclicals and value outperforming, and low inflation – which was main concern in Europe until relatively recently – was associated with underperformance. But now relationships have reversed and higher inflation has been damaging to cyclicals and value stocks (outside of commodities). This is because it has been seen as increasingly supply-side rather than demand driven and because ultimately it provides a speed-limit to growth and prevents CBs from loosening even in the event that growth is slowing. In that sense, inflation peaking should be good for cyclicals. Banks and Consumer discretionary stocks are also now sharply negatively correlated to inflation.

  

  Much depends on whether the inflation peak is seen as marking an end to the sharply rising rate expectations we have seen in recent months and ultimately providing room for CBs to loosen policy should they need to. The uncertainty around the potential paths for inflation and the likelihood of it remaining sticky and high probably mitigate against equities rallying sharply. As Goldman shows below, the bank’s economists model various scenarios for inflation and in most cases – unlike just a few months ago – inflation remains sticky and high, which is precisely why we are confident in our view that the not too distant future, inflation will be replaced with deflation.

  

  Here Goldman also notes that another consideration is how much of the higher inflation we are seeing now is discounted, and cautions that consumer discretionary names remain vulnerable even as inflation moderates. While stock valuations have fallen, demand is likely to be hit by the persistent and sticky inflation and its impact on real wage growth.

  As the bank shows in the charts below, considering the pace of inflation and the consequent sharply negative real wage growth, the hit to consumer areas that Goldman has been looking at have seen so far still looks relatively modest. While we think that is rapidly changing in the US, where we just saw a historical plunge in new home sales and the abovementioned record jump in credit card debt coupled with tumbling savings…

  

  … other places are looking somewhat better: consider the UK, where the available cash flow for households to spend on non-essentials (food/energy/rent) is set to decline in 4Q22/1Q23, yhet the high level of savings and still capped energy costs is cushioning consumers now the cap is set to rise further in October, higher rates will slowly feed through to higher mortgage payments and finally households will have used more of their savings by late this year/early next.

  

  With all that in mind, Goldman continues to recommend four areas in Europe: strong balance sheets, High & Stable margins and companies with exposure to a structural rise in Capex and/or government investment. Nonetheless, the bank is cautious on Consumer areas of the market and while falling inflation will be helpful, it remains of the view that “discretionary spend will take a sharp dip.”

  

  Tyler Durden
  Sun, 05/29/2022 – 20:04

• San Francisco School District Drops 'Chief' From Job-Titles, Cites Native-American Concerns
  San Francisco School District Drops ‘Chief’ From Job-Titles, Cites Native-American Concerns

  Authored by Bill Pan via The Epoch Times,

  San Francisco’s public school district, which not too long ago underwent a recall election fueled by its controversial priorities, said it will remove the word “chief” from all job titles to avoid offending the Native American community.

  

  Gentle Blythe, a spokesperson for San Francisco Unified Schools District (SFUSD) told the San Francisco Chronicle that the word “chief” will no longer be used in job titles because of its connotations with Native Americans.

  “While there are many opinions on the matter, our leadership team agreed that, given that Native American members of our community have expressed concerns over the use of the title, we are no longer going to use it,” Blythe said, reported The Chronicle.

  The word “chief” entered English via Old French and shared the same Latin origin with words such as “capital” and “captain.” In the 17th century, English settlers started to use the word to describe the headmen of indigenous tribes of America.

  The SFUSD’s website lists a dozen officials who have the word “chief” in their titles, including Chief Technology Officer Melissa Dodd, Chief of Staff Jill Hoogendyk, and Chief General Counsel Danielle Houch. As of May 26, these titles remain unchanged on the website.

  The school district, which has approximately 10,000 employees, has not yet decided what top officials will be called instead of chiefs. Blythe clarified that the name change does not mean demotion.

  “By changing how we refer to our division heads we are in no way diminishing the indispensable contributions of our district central service leaders,” the spokesperson explained.

  The decision comes about three months after a recall vote that decisively ejected three members from the San Francisco Board of Education.

  According to San Francisco Mayor London Breed, voters were frustrated because the school district had been focusing on things other than its “fundamental job.”

  “It was really about the frustration of the board of education doing their fundamental job, and that is to make sure that our children are getting educated, that they get back into the classroom,” Breed said in February on NBC programming.

  “That did not occur.”

  As an example of the school district’s misplaced priorities, Breed pointed to a now-shelved plan to find alternative names for 44 schools that weren’t even open at that time.

  In January 2021, the SFUSD unanimously approved a decision to start replacing names of schools named after prominent figures who allegedly have connections to injustices in history, such as slavery, oppression of women, and “inhibiting societal progress.”

  The namesakes that were planned to be dropped, in addition to U.S. Presidents George Washington, Thomas Jefferson, James Monroe, Abraham Lincoln, and Theodore Roosevelt, included two-time Secretary of State Daniel Webster, Spanish missionary Junipero Serra, American revolutionary Paul Revere, and Francis Scott Key, the author of the lyrics for “The Star Spangled Banner.”

  The plan was met with immediate opposition from the district’s families and the general public. The backlash continued until board president Gabriela López announced that the district would focus on reopening those schools instead of finding new names for them. López was ousted in this year’s recall election.

  Tyler Durden
  Sun, 05/29/2022 – 19:30

• When Will Powell Trigger The "Fed Put": Here Are The Four Things To Watch, As Well As The Most Important One
  When Will Powell Trigger The “Fed Put”: Here Are The Four Things To Watch, As Well As The Most Important One

  Despite the market’s long-overdue rebound after a near-record 7 consecutive down weeks for the S&P (a 20yr record), the Fed has so far offered no help to risk assets and appears far from stepping in or triggering the elusive “Fed Put”. This is despite, as BofA’s Gonzalo Aziz warns in the bank’s latest Global Equity Volatility Insights note (available to pro subs), risks building in financial markets to an extent that central banks wouldn’t have allowed in years past.

  Indeed, as we observed recently (see “When Will The Fed Capitulate And Stop Hiking: Finally Some Good News For The Bulls“), credit spreads, historically the most reliable predictor of Fed interventions, have reached levels of prior Fed rescues. Furthermore, over 85% of dovish Fed turns in the last 50yrs were preceded by less volatile equity selloffs than today’s. And as we highlight virtually every day, S&P futures liquidity has only been worse in the depths of the GFC and the Covid shock, adding to fragility risk and the potential the Fed put is tested in a dysfunctional market.

  And yet, despite all these growing risk-factors, so far Powell has ignored all appeals for help from the market. Of course, no matter how hard the US central bank may try to signal otherwise, the Fed put isn’t fully gone, and it will likely be tested, as it has repeatedly since Greenspan gave birth to it in 1987.

  So what signposts should investors watch to know when the Fed put’s strike is near? According to Bank of America there are key indicators to keep an eye on:

  1. Credit stress: We have discussed before that credit stress has been the most consistent predictor of dovish Fed pivots in the last 10yrs, particularly stress in Investment Grade bonds (which have historically used by companies to fund buybacks, if not so much capex). This is notable because CDX IG spreads are near those key levels now, but the Fed’s focus on inflation means spreads are likely to widen further before triggering a policy response.

  

  2. S&P drawdown: Perhaps just as important as nascent credit stress, the size of the equity drawdown from all-time highs has according to BofA become an important signal for investors looking to buy the dip in recent years. However, while this may have worked relatively well in the era of high Fed sensitivity to markets, it has been a much less reliable predictor of dovish Fed turns over a longer history. As chart 10 shows, the Fed has either stopped hiking or begun cutting rates during S&P drawdowns of very different magnitudes – from as low as 2-3% in the mid-1990s to over 30% in ‘75 and ‘87.

  

  3. Economic data: Economic data is of course critical to the Fed’s reaction function, and a sustained cooling of inflationary pressures is arguably the data point most likely to slow their tightening plans (something we expect is gradually taking place now and will become manifest at the Jackson Hole Pivot^TM). Indeed, BofA’s rates team’s 20-May Global Rates Weekly argues that a Fed pivot requires a meaningful slowdown in job market data. However, that type of data is much slower-moving, and it would take several months or quarters to convince the Fed that a dangerous inflationary spiral has been averted. On the other hand, as PIper Sandler quantified recent layoff announcements, it is clear that mass layoffs have begun, and the bank expects “a million layoffs or more” which will be more than sufficient to force the Fed to pivot.

  

  4. Market dysfunction: While all of the above are certainly important catalysts for the Fed to “panic” and go into full-blown Fed Put mode, BofA’s derivatives traders believe that an episode of market dysfunction is the most likely trigger for central banks, or as they quote us (quoting BofA’s Michael Hartnett), “markets stop panicking when central banks start panicking”, but today it will take more market panic for the Fed to start panicking.

  So are we there yet? Not quite, but getting closer. The near-record low liquidity in equity futures (a key feature of fragility shocks) which we highlight virtually every day…

  

  … indicates that such risk may be closer than the relatively orderly pace of the YTD selloff may suggest.

  

  And in fact 85% of the Fed’s dovish turns in the last 50yrs were preceded by less volatile equity selloffs than today’s.

  

  In other words, while the Fed may need a lower inflation and higher unemployment print to greenlight a dovish pivot, one which will send high beta growth names and cryptos limit up in milliseconds, the actual catalyst that prompts the Fed’s capitulation may simply be a market crash which the illiquidty in the market accelerates to the point where not even the Fed will be able to ignore what is going on.

  One final, important point, according to the BofA strategists: the Fed pivoting to rescue markets may not crush volatility or create a sustained rebound back to new highs, as the 2013, 2015, and 2018 pivots did. If inflation remains a pressing concern, a Fed intervention may only bring temporary relief to risk assets.

  Despite the lack of a Fed capitulation so far, BofA believes markets will continue to test the Fed put, but they caution that it will take more market panic for the Fed to start panicking. To hedge this event, BofA’s derivatives traders like owning local SPX skew near 10yr lows through Dec put ratios. The trade is designed for a tail event in which markets test the Fed put and find that it’s heavily compromised in the face of inflation. As one example, consider selling 1x SPX Dec 4050 put to buy 2.5x of the Dec 3500 put for an upfront debit of ~1% (ref. 3973.75). More details on this highly convex trade in the full BofA note available to pro subscribers.

  Tyler Durden
  Sun, 05/29/2022 – 19:00

• GOP Must Hold 'Radical' Health Officials Like Fauci 'Accountable': Republican Study Committee
  GOP Must Hold ‘Radical’ Health Officials Like Fauci ‘Accountable’: Republican Study Committee

  Authored by Joseph Lord via The Epoch Times (emphasis ours),

  In a May 24 policy memo, the Republican Study Committee (RSC) argued that if Republicans take back Congress in November 2022, holding “radical” public health officials like Dr. Anthony Fauci accountable must be a “major oversight priority” for the party.

  

  Once a figure trusted by Republicans and Democrats alike, Republicans have increasingly balked at Fauci’s handling of the COVID-19 pandemic.

  Several Republican lawmakers, most prominently Sen. Rand Paul (R-Ky.), have quarreled openly with Fauci, accusing him of lying intentionally and of attempting to seize powers that should belong to Congress under the Constitution. In one official email, Paul attached an image showing Fauci’s face with the caption, “Fire Fauci.”

  Many Republicans remain anxious to do just that, particularly in light of information that Fauci and his associates may have worked to intentionally mislead the public about the so-called “lab leak theory” of the origin of COVID-19.

  Now the RSC, a GOP research group comprising several sitting Republican House members, is demanding that GOP leadership take a strong stance against Fauci and his allies if they take back Congress in the 2022 midterms.

  “If Congress fails to hold the Fauci clique accountable, and fails to reform public health agencies, we will be giving far-left bureaucrats a blank check to shut the country down whenever they want to,” RSC Chairman Jim Banks (R-Ind.) told Breitbart. “We need to send a message that the restrictions, the mandates, and the school closures can never happen again.”

  “Before the New Normal™, the most dreaded symptoms of flu season were fever, sniffles, and cough,” the RSC wrote in a May 23 news release. “Now, as families prepare for the coming winter and corresponding flu seasons (or growing cases of Monkey Pox), Americans have something much worse to fear: Government health officials.”

  “Far-Left activists have taken over our public health agencies, abused their power, undermined the public’s trust, and wreaked havoc on our nation,” the news release continued.

  The RSC pointed out that the NIH funded 257 grants to study social disparities related to COVID-19, but only four grants to study how the virus spreads.

  “Even worse,” the release continued, “President Biden’s budget includes $100 MILLION EACH for the CDC and NIH to fight ‘climate change.’”

  “If we want to ever restore trust in these institutions and preserve our once-cherished freedoms and liberties, radicals like Dr. Fauci must be held accountable and our public health agencies be reformed,” the RSC demanded. “If Republicans don’t use congressional oversight powers to do so, we will be giving far-left bureaucrats a blank check to shut the country down whenever they want.”

  In a policy memo, the RSC expanded on these points.

  “Trust in the public health bureaucracy is at a historic low,” the memorandum began. “Americans rightly feel that Washington bureaucrats have abandoned common sense and the common good for political purposes.”

  “During the COVID-19 pandemic, the Left embraced Rahm Emmanuel’s famous quip, ‘never let a good crisis go to waste.’ At first, many of their policies went unchallenged. But public health authorities soon started issuing nonsensical, contradictory directives and embracing partisan rhetoric.

  “These directives increasingly burdened Americans but had no obvious effect on the spread of COVID,” the memo stated. “When Americans pointed this out, authorities responded with censorship, not evidence, and commanded them to ‘follow the science.’ Dr. Fauci clarified what he meant when he declared, ‘I am the Science.’”

  The memo continued, stating that many Americans realized that left-wing bureaucrats had “twisted the term ‘public health’ into a catch-all for leftist policies that limited their basics liberties.”

  Concluding the memorandum, the RSC wrote: “The CDC and NIH have strayed far from their original missions. The CDC was founded to combat infectious diseases. The NIH’s established mission is to seek fundamental knowledge to enhance health, lengthen life, and reduce illness and disability. Instead, both agencies have been influenced by an ideological public health academia and advance the Left’s war on American culture.

  “Conservatives would be wise to root out this institutional rot at these institutions and return them to their core missions,” the RSC stated.

  Fauci and the NIH did not respond to a request for comment.

  Tyler Durden
  Sun, 05/29/2022 – 18:30

• …Turns Out Keynes Was A Commie
  …Turns Out Keynes Was A Commie

  Authored by Mark Jeftovic via BombThrower.com,

  Why The Cantillon Effect Creates Communism

  

  Awareness of the centuries old concept of The Cantillion Effect has been experiencing a revival of late, particularly since the extraordinary acceleration of monetary injections that occurred under COVID. Named for the French-Irish economist who died in 1734 (he was murdered), the Cantillon Effect is when you create a bunch of new money and inject it into an economy. What happens is the people at the front of the line who receive the new money first become wealthier, while the people at the end of the line who receive it last are further impoverished.

  

  The Cantillon Effect

  This is not peculiar to the post-Covid era. For more than a decade I’ve been describing how rampant money creation and credit expansion skews formerly free markets into a kind of economic vampirism, without actually knowing there was a term like this to describe it.

  From my vantage-point as a tech CEO running a company that has never taken on VC funding, it unfolded as having to compete with multiple deep-pocketed 800lb gorillas and billion dollar unicorns who were losing money on every transaction and driving a race to the bottom across the entire industry. Companies like ours have to be profitable or perish. Serially funded unicorns just have to keep their burn rate below their fund-raising tempo.

  Marc Andreesen, the noteworthy VC icon touched on it with his famous “Software is eating the world” euphemism, but it failed to capture the financialization aspect of it. It’s more like “serial up-rounds are eating the world”.

  The dynamic intensified dramatically under COVID. Not only were the monetary injections accelerating, but governments globally shut down small and independent businesses for nearly two years, and then central banks went out and bought the bonds of the quasi-monopolies who were left.

  

  Via Statista – the Fed purchased bonds of companies controlled by every person on this list.

  But even if the people at the front of the line have a privileged position, why does this necessarily translate into them either using that position to launch, fund and flip money-losing unicorns, or hollowing out via financial engineering what would have otherwise been long term viable businesses?

  It’s the currency debasement, stupid

  When the cost of capital is cheap, like near-zero cheap, companies never have to be profitable. In fact if the capital pool is growing faster than the operating earnings are, you’re actually incentivized to eschew profits in favour of taking on funding – provided you have a short-term time horizon.

  Here’s the thing about printing money: because it devalues the currency, it compresses time horizons.

  If you think of currency as “shares” in the economy they denominate, then it should be easy to grasp that by increasing the number of currency units, you aren’t magically growing the economy. You’re just increasing the numerator (the currency units) while keeping the denominator (the actual goods and services available) the same.

  If the numerator grows, that means it takes more currency to buy the same goods and services, so it is experienced as variations of “number go up”:

  • For people who are already wealthy: assets increase in “value” because they are being measured in more units

  • For everybody else: food, shelter and essentials get more expensive, same reason.

  In fact government metrics that define some arbitrary “poverty line” as being based on some level of income almost completely misses the point. The line between poverty and wealth should more accurately be measured in terms of net assets. The wealthy have assets – that compound. The poor have bills – that get more expensive.

  Whenever the monetary authorities increase the currency supply or expand credit, it is always proffered as a necessity of saving the system. The fact that the reason the system needed saving in the the first place was a direct consequence of previous expansions is ignored or shouted down.

  There are only three real moves in the central banker toolbox: print money, expand credit, suppress interest rates.

  The intellectual basis of this approach is often rationalized as a prescription dictated by  “Keynesianism” or “Keynesian economics”, after John Maynard Keynes, the intellectual father of mainstream “economics” as it is known today.

  Keynes was a bit of a mixed bag. Though often cited for his “gold as a barbarous  relic” quote, he ended up heavily allocated in South African gold miners years after he wrote that. Mid-way through his career he swore off macro investing, coming to the opinion that no amount of macro knowledge would give you an edge at the company level: he had become a sort of proto-value investor.

  He was also a pederast, having kept detailed records of  numerous young, mostly male partners, their names and ages, which are preserved still in the archives at King’s College, Cambridge …he was a Malthusian believing it was “the salvation of the British economy” and eugenicist – having served on the board of the British Eugenics Society.

  …and, as it turns out, Keynes was a raving pinko. Full blown Commie.

  The Socialist scaffolding of Keynesian Economics

  Vladimir Lenin is often attributed as saying “the best way to destroy the capitalist system is to debauch the currency.” However the quote is possibly apocryphal, because the earliest reference to it is a citation by Keynes in his Economic Consequences of Peace. 

  Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. … As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless;…

  Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

  Keynes is describing The Cantillon Effect, and yet, as we’ll see, Keynes may not have been viewing this as a bad thing. While Keynes clearly understood that government spending and money creation drove wealth inequality, it seems as though he viewed this as a beneficial dynamic, because it would inexorably lead toward the ultimate wealth inequality: Communism.

  

  Contrary to the popular platitudes that socialism and communism are about achieving equality for all, going so far to prescribe absurdities like “equality of outcome”. The reality, documented by the likes of Dr. Kristian Niemietz in his “Socialism: The Failed Idea That Never Dies”, is that the only equality brought about by collectivism is where everybody beneath the thin scab of elites and their apparatchiks are equally mired in poverty and servitude.

  In Edward W Fuller’s “Was Keynes a socialist” paper, published 2019 in The Cambridge Journal of Economics, Fuller looked at whether John Maynard Keynes, the chief architect behind the entire edifice of conventional economics (and arguably it’s intellectual descendants like Modern Monetary Theory) was a socialist.

  He compared the defenses of Keynes as “a liberal who wanted to save Capitalism” against various writings, correspondence and accounts of Keynes himself and from those who knew him, including his own father.

  John Neville Keynes,  journaled on Sept 6, 1911 ‘Maynard avows himself a Socialist and is in favour of the confiscation of wealth’. Turns out this was not a passing fad, it was a lifelong devotion. Young Keynes first came out as a socialist in February 1911, declaring that:

  “the progressive reorganization of Society along the lines of Collectivist Socialism is both inevitable and desirable”

  Over the course of his career Keynes authored numerous odes to socialism, fraternized with notorious socialists like George Bernard Shaw (head of the Fabian Society) and Owen Mosley, who founded the socialist New Party in 1931, which later morphed into The British Union of Fascists.

  Keynes supported the Bolshevik Revolution, even though it had seized power in a coup d’etat against what was then the only democratically elected government in Russia’s history (“the only course open to me is to be a buoyantly bolshevik”.) Keynes became a regular attendee at the 1917 Club, a Soho meeting place in vogue amongst socialists of the day, named to honour the year of the revolution.

  It was at the 1917 Club where members of The Fabian Society met. The Fabians wanted to usher in global communism, but instead of doing that through, sudden, violent revolutions (a la Marx) they would take their time.

  They thought in generational increments and proposed the slow, steady infiltration of higher education, government bureaucracies, cultural chokepoints (theatre, pop-culture, the media and the press), and posited that over time they could pull society toward collectivism without anyone realizing it.

  Their emblem was a wolf in sheep’s clothing.

  

  As per Keynes: “Socialism can be introduced gradually… the economic transition of a society [into Socialism] is a thing to be accomplished slowly”.

  Fuller’s paper concludes that Keynes was a non-Marxist socialist, meaning he eschewed the obsession with the idea of class struggle and focused his thinking around increased State control over the economy.

  If Keynes was a commie, why does it matter?

  In a previous incarnation of this blog, I wrote about Keynes’s predictions of a theoretical future where humanity would be freed from all care of day-to-day concerns through expert management of the economic cycle by credentialed technocrats.

  He called this future state “Bliss” and described it in his essay The Economic Possibilities of Our Grandchildren (coincidentally cited via marxists.org)

  The pace at which we can reach our destination of economic bliss will be governed by four things – our power to control population, our determination to avoid wars and civil dissensions, our willingness to entrust to science the direction of those matters which are properly the concern of science, and the rate of accumulation as fixed by the margin between our production and our consumption; of which the last will easily look after itself, given the first three.

  Economic bliss sounds a lot like fully automated luxury communism. But you can’t get there if the rabble is still making economic decisions for itself. Free markets must be destroyed, and only credentialed elites can be permitted economic autonomy. (That’s why nobody’s life, liberty or property is safe whenever the World Economic Forum is in session).

  Keynes laid out a path to get there. Through endless money printing, the Cantillon Effect would lead to the destruction of the middle class. By wrapping it within a cloak of crypto-socialism, he gave it a veneer of intellectual acceptability:

  “The work of monetary cranks like John Maynard Keynes taught in the modern universities the notion that government spending only has benefits, never costs. The government, after all, can always print money and so faces no real constraints on its spending, which it can use to achieve whatever goal the electorate sets for it”

  – Saifedean Ammous, The Bitcoin Standard.

  In Saifedean’s follow up, The Fiat Standard, Keynes and Marxism are mentioned as having large areas of overlap, goals and practically identical results:

  “The number and influence of third-world leaders who were educated in British and American universities from the 1930s onward is staggering…anyone familiar with the economic history of developing countries, or with the rhetoric of any development agency or ministry in a developing country, will see this influence in the distinct stench of Marxist and Keynesian notions of central planning.The entire framing of the notion of economic development is driven ultimately by a highly socialist view of how an economy works.”

  “By the 1970s, the development failures piled high, and a lot of soul-searching within the misery industry would lead to more government control and more centralized economic planning. As the “dependency school” approach became more popular, government central planning became far more pervasive. The combination of global easy money, following the U.S. government’s decision to suspend gold redeemability, and governments and international bureaucracies staffed with Keynesians and Marxists proved disastrous.”

  Fuller’s paper goes a long way in providing an explanation on why collectivism and Keynesianism seem to resemble each other: it’s the same thing. It is all statist, centralized technocracy under the guise of

  a) high-minded collectivism for the useful idiots of the working class, and

  b) high-powered intellectual macro-economic policy for the useful idiots in the universities and think tanks.

  This could be why we’re demonizing capitalism, energy, self-reliance, family, spirituality and anything else that falls to the right of Stalin. This is why Big Tech unicorns are by their own admission “commie as f*ck”, and why many of the celebrity class these days are self-proclaimed “woke” socialists. Especially the super-rich ones.

  The good news

  There was a time, especially under lockdowns, when I looked at the direction things were going, and I thought the Fabians had achieved complete victory. World socialism was practically here, having arrived under banners with names like The Great Reset, The Fourth Industrial Revolution and Stakeholder Capitalism.

  Even worse, large swaths of the public seemed to be clamouring for it.

  COVID stimulus showed how the lubricant for a globalized socialism was the monetary printing press. In his day, Friedrich Hayek (the anti-Keynes) realized this as well and was similarly pessimistic.

  “I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop.”

  – Hayek, quoted in The Bitcoin Standard, p72

  Enter, Satoshi.

  The epiphany I had, and I’m not alone, is that we are not entering an age of centralized, technocratic authoritarianism, we are in the process of departing from it. We’re in the end game now. The crescendo of an age which has been unfolding for over a century – the era of the welfare state.

  With the arrival of the Internet, and then Bitcoin, we’re undergoing a phase shift into the decentralized era of network states and micro-sovereigns.

  The near universal mismanagement of COVID, from the possibility of a lab leak in the first place to being absolutely wrong about everything after that, pulled forward about 20 years of this tension and crammed it into 18 months. Too much, too soon. We were on track to gradually transition to a decentralized society via an interim phase of technocratic authoritarianism that could have lasted for decades, before giving away to the inevitable decentralized society. But now, we’re looking instead at a disorderly phase shift into deglobalization and decentralization. It’s already happening.

  We’re at a point where reality is intervening with ideology and it was the pandemic that brought us here a few decades before I would have otherwise expected it. The conventional COVID narrative has all but broken down completely. Trust in institutions and experts is plummeting, the corporate media is a joke.

  We may have already blundered our way into World War 3, while incumbent politicians around the world are being swept out of office on a wave of public backlash. Then there’s the economic and physical consequences of batshit policies that threaten to overwhelm our supply chains and energy availability everywhere.

  Woke capitalism is being exposed as a sham. The public increasingly sees The Party at Davos as saturated with hypocrisy and arrogance.

  Make no mistake, we’re talking about the end of an epoch and the demise of the legacy power structure. Not only in terms of who the incumbents are, but the very architecture and fabric of how geopolitical and economic power is configured.

  The old guard will not go down without a fight, and for the moment, they have the institutions and the media, but that is already changing.

  “We’re all Keynesians now” was the intellectual rallying cry of the fiat era. Laser eyes will be the defining meme of the next one.

  If I had to offer advice to anybody who was looking for ways to pivot their existing affairs and navigate the coming changes I would bullet point them as follows:

  • Do not be reliant on government entitlements: these will soon be delivered via CBDCs and be full-throated social credit systems

  • Turn off your TV, cancel all mainstream media subscriptions: read more books, get your news through alternative / indie media channels (start with The Sovereign Individual, both Saifedean Ammous books, and George Gilder’s Life After Google)

  • If you’re a business owner: start taking crypto payments and HODL them

  • If you’re not a business owner: Start one. Even a kitchen table business that you can grow over time.

  • And stack sats. Always be stacking sats.

  Buying Bitcoin is calling bullshit on everything

  — Interstellar (@InterstellarBit) May 27, 2022

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

  We’re going through a Fourth Turning-style phase shift. It will be turbulent, violent and at times terrifying.  But it will also bring boundless opportunity. Never before have we lived in age where nearly anybody can go from a standing start to spectacular success in the shortest amount of time with the lowest barriers to entry.

  This dynamic will only intensify over the coming years and in the long run, this is what will propel a quantum leap in the human endeavour.

  *  *  *

  The world is undergoing a monetary regime change. Get the Crypto Capitalist Manifesto free, when you join the Bombthrower mailing list. Follow me as @bombthrower on Gettr or if you haven’t been kicked off Twitter (yet), @StuntPope

  Tyler Durden
  Sun, 05/29/2022 – 17:30

• Nancy Pelosi's Husband Arrested For Misdemeanor DUI
  Nancy Pelosi’s Husband Arrested For Misdemeanor DUI

  The bear market has taken its toll on the richest “husband” in US Congress: as first reported by TMZ, Paul Pelosi – husband of House Speaker Nancy Pelosi – perhaps best known for putting on massive call option trades in names like Google, Micron, Roblox, Disney which are now massively underwater, was arrested at 11:44pm on Saturday night in Napa County and booked hours later into jail on two counts – driving under the influence and driving with a blood alcohol content level of 0.08 or higher, both of which are misdemeanors.

  

  Since the bail for Paul – who has been been married to Nancy since 1963 – was set at paltry $5,000, a pittance for the multi-millionaire, he was released at 7:26, shortly after he was booked at 4:13am on Sunday morning.

  For now details of the incidents are scarce: TMZ said that it is working on getting a full narrative – as well as a mug shot once it is available.

  We do know that the Pelosis own a vineyard in Napa Valley. In 2015, the LA Times reported that the vineyard made her the fourth richest person in California.

  Way back in 1990, according to property record recourse PropertyShark, The Pelosi’s paid $2,350,000 for a 16.55-acre vineyard in Saint Helena, CA aka Napa Valley. Nestled just north of Napa and sitting directly across from the Napa River, Pelosi is living in the lap of luxury.

  The sprawling estate came with a 3,314 square foot structure built in 1958, and in 2006, records show that a 2,400 square foot, 2-story structure was added. Inside the original structure, there are said to be 6 generously sized rooms that include 2 bedrooms. There are also two fireplaces and a pool in the backyard for entertaining guests.

  She’s known to throw lavish parties at her estate, often inviting financial supporters and other political figures over for dinner. Neighbors say there’s no missing her when she is in town – gaggles of black SUVs and air traffic are everywhere.

  In 2005, the Napa Valley Planning commission granted the Pelosi’s a permit to operate a 5,000-gallon-per-year winery, allowing for weekly wine tastings. However, as Napa County Deputy Planning Director John McDowell said, “They did enough to activate the permit…The ball is in their court to pursue the rest of the construction project.” They have yet to do so.

  

  Those wondering if Nancy was with her husband when he was busted last night, the answer is no even though a spokesperson for the California Democrat said that she would not be commenting on the “private” matter.

  “The Speaker will not be commenting on this private matter which occurred while she was on the East Coast,” the spokesperson said.

  Pelosi’s designated driver husband was more drunk than she was.

  — John Cardillo (@johncardillo) May 29, 2022

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

  Nancy did, however, tweet that she delivering the Brown University commencement speech on Sunday afternoon, so clearly she was not with her husband.

  Join me live @BrownUniversity as I deliver the Commencement Oration to 2022 graduates and receive an honorary doctorate degree. https://t.co/uBhdzJyOej

  — Nancy Pelosi (@SpeakerPelosi) May 29, 2022

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

  According to Fox News’ Chad Pergram her speech was just the usual “January 6 US terrorism” and pro-Ukraine war propaganda:

  1) Pelosi giving commencement address at Brown University: As we gather here, war rages in Ukraine, all in awe of the heroism and resolve of the people of Ukraine as they courageously defend democracy not only

  2) Pelosi: Our nation is no stranger to dark and anti-democratic forces. On July January six, 2021, an unprecedented insurrection unleashed unimaginable violence on the grounds in the halls of the Capitol. A strike at the heart of our democracy. The peaceful transfer of power.

  3) Pelosi: And in the months since the insurrection, we’ve seen further assaults on democracy. Shameful campaigns of voter suppression and election nullification. A Supreme Court poised to erase the woman’s right to decide and threaten even more privacy rights

  4) Pelosi: In just the last two weeks, two senseless mass shootings..This, in addition to countless deadly attacks rooted in racism, anti-Semitism, Islamophobia and white supremacy…hope remains democracy’s most powerful weapon.

  5) Pelosi: When I had the great privilege of visiting Kiev a month ago, we saw firsthand the hope in the eyes of the Ukrainian people as they defied the odds against a more powerful and brutal cell.

  And so on; there was naturally no mention of her drunk husband, although we are confident that  Soros-handpicked DA Chesa Boudin and his cronies…

  

  … will make sure that any record of last night’s crime is promptly deleted from the public record, because after all, laws are for the little people.

  Tyler Durden
  Sun, 05/29/2022 – 17:05

• Demand For Bulletproof Backpacks Surges After Texas School Shooting
  Demand For Bulletproof Backpacks Surges After Texas School Shooting

  Demand for bulletproof backpacks soars (again) after the elementary school mass shooting in Uvalde, Texas. Over the years, mass shooting incidents at schools have increased sales for companies that manufacture bulletproof gear. 

  Nationwide, the search trend for “bulletproof backpack” is rising after last week’s horrific mass shooting at Robb Elementary School that left 19 students and two teachers dead. Parents are concerned about their children’s safety. 

  A surge in search trends for bulletproof backpacks has occurred after significant shootings in the last ten years. This weekend’s search trend is at a three-year high and back to 2019 levels when there were several mass shootings that summer. Another spike in early 2018 occurred after a 19yo kid walked into Marjory Stoneman Douglas High School in Parkland, Florida, killing 17 people and injuring 17 others. A smaller jump was seen in late 2012 when a gunman killed 26 people at Sandy Hook Elementary School in Newtown, Connecticut. 

  

  After the events in Uvalde last week, bulletproof backpack demand is surging, Bussiness Insider reports, citing Guard Dog Security, a Florida-based company that manufactures and distributes bulletproof gear. Guard Dog President Yasir Sheikh said they’re “seeing an increase” in customers interested in bulletproof backpacks. 

  

  Sheikh said there’s “an increase from our national retailers who carry our bags.” He noted retailers like Dick’s Sporting Goods, Home Depot, and Lowe’s already carried the bags that act as a shield in the event of a shooting. The bags are equipped with a level 3 plate that is designed to protect against 9mm and .44 magnum rounds.

  Prices of the backpacks range from $100 to $300. 

  

  A diagram on Guard Dog Security’s website shows how the bags are used in the event of a shooting. 

  

  For five years, we have pointed out the increasing popularity of these bags:

  • Bulletproof Backpacks And Combat Apparel Sales Soar
  • Philly Middle-School Students Given ‘Bulletproof Backpack’ As Graduation Gift
  • Company Making Bulletproof Backpacks For US Students Flooded With Orders
  • Bulletproof Backpack Sales Spike Once Again During ‘Back To School’ Shopping

  A spike in bulletproof backpack sales has been typical after tragic events like a school shooting. Next thing you will know, the minivan is swapped out with an Audi Q5 Security (Audi’s first armored vehicle on a production line). 

  Meanwhile, lawmakers around the country have called for a ban on body armor since the Buffalo supermarket mass shooting earlier this month and the Uvalde shooting, where both gunmen wore plates. 

  Tyler Durden
  Sun, 05/29/2022 – 16:50

• Morgan Stanley: We're Through The Worst Of Markets Being Surprised By Inflation And Policy
  Morgan Stanley: We’re Through The Worst Of Markets Being Surprised By Inflation And Policy

  Excerpted from the latest Morgan Stanley Sunday Start note authored by Andrew Sheets, Chief Cross-Asset Strategist; full note available to professional subs.

  Better Late than Never

  In a world filled with so much tragedy, any good news is welcome. And so it was this week as London saw the opening of the Elizabeth line, a new railway that tunnels from one end of this great city to the other. It’s been the largest infrastructure project in Europe, a marvel of modern engineering and a testament to the fact that great, big things are still possible.

  It was also several years overdue. This big, transformative project required more than a bit of patience. But the end result will be a better, more sustainable system.

  This idea of ‘better late than never’ also rings true for markets.

  The post-GFC period was filled with paradoxes. It was a period of serially disappointing economic growth but exceptional cross-asset returns. Wealth exploded in relation to the economy, while capital investment withered. It was a period of fragility that demanded enormous policy support, yet produced a remarkably consistent pattern of performance. From the January 1, 2010 trough to the end of last year:

  • US equities outperformed RoW in 10 of 12 years;
  • Growth outperformed Value in 9 of 12 years;
  • Bonds (US Agg) outperformed cash in 9 of 12 years;
  • Global equities outperformed commodities in 9 of 12 years;
  • The fed funds rate averaged 0.67%.

  That consistency in performance often mirrored consistency in the macro economy. Generally speaking, 2010-21 saw low inflation (US core PCE averaged 1.8%Y), low growth (US GDP averaged 2.0%Y) and central bank policy that was both supportive and predictable, with investor faith in a central bank ‘put’.

  All this is changing. Year to date, commodities have outperformed stocks, cash has outperformed bonds, Value has outperformed Growth and non-US stocks are beating their US counterparts (especially if you hedged the currency). The macro backdrop is also different; US core PCE just printed at 4.9%, US 1Q nominal GDP was +10.6% YoY and capital investment is strong, while global central bank policy has been more restrictive, less predictable and has thrown cold water on the idea of a policy solution to every market wobble.

  Does this shift have risks? Yes. But how many conferences did you attend in the last decade that bemoaned the trapped state of the global economy, doomed to a future of insufficient demand that required extreme monetary policy as far as the eye could see. As recently as December, German 30-year bond yields were -0.07%. Today, the ECB policy rate is expected to be ~1.0% in 12 months. In a choice between those two economic futures, give us the latter.

  Trends below the surface also point to encouraging change. Any bear market leads to the question of whether to ‘abandon the process’, because rational analysis can be overwhelmed by questions like: ‘will the financial system survive’ (2008-09), ‘will the European Union survive’ (2011-12), ‘will the VIX create forced sellers’ (2018) or ‘can we handle a global pandemic’ (2020).

  But this is not one of those trauma-induced bear markets. Year to date, relative value has been working, especially when it comes to cross-asset factors (see Cross-Asset Spotlight: Systematic Strategies (CAST): RV Rules, May 27, 2022). And price action has often been about (finally) normalizing some extreme valuations. Not sure how a particular asset has done so far this year? ‘Moved closer to its average valuation over the last 20 years’ is a pretty good guess.

  ‘Better late than never’ also feels appropriate for the central bank debate. It’s easy to argue that policy remained too accommodative for too long. But hindsight is cheap and easy; what matters now is that policy is normalizing, in a significant way. More importantly, this shift has credibility. The US, eurozone and Australia are priced for terminal rates that assume the economy can handle further tightening. Inflation expectations are now falling, the housing market is cooling and credit risk premiums are back near the long-run average. If this is a ‘policy error’, more than a few central bankers must be thinking, ‘that’s fine by us!’

  What does all this mean for the markets? We think we’re through the worst of markets being surprised by inflation and policy. That should help yields to stabilize over the summer and bring down rate volatility, which in turn should help mortgages, munis and IG credit (in that order). We think it’s too soon to buy HY, especially after this week’s pop, but expect outperformance of CDS over cash as investors decide they are well hedged for the current uncertainty (see Cross-Asset Playbook: Organized Chaos, May 20, 2022).

  Finally, energy over metals remains a good example of relative value that can continue to work. Energy commodities generally have better carry, better momentum and more fundamental support (tighter markets). The ratio of 12-month Brent crude to gold has risen, but it is still 30% lower than it was 20 years ago. Better late than never.

  All reports mentioned in this note available to pro subs in the usual place.

  Tyler Durden
  Sun, 05/29/2022 – 16:34

• "Only Criminals Are Gonna Have Guns": Joe Rogan Warns Against Confiscation
  “Only Criminals Are Gonna Have Guns”: Joe Rogan Warns Against Confiscation

  Podcaster Joe Rogan has come out against attempts to confiscate guns in the aftermath of the Uvalde, Texas school shooting, arguing that criminals will be the only ones left with firearms.

  

  “It’s like, how do you stop that? No one knows how to stop that. What is the answer? Is the answer to take everyone’s guns? Well, they’re not gonna give their guns up. Only criminals are gonna have guns. It’s not gonna be a good situation. Is the answer to make schools these armored compounds, where you have armed guards outside of every school? … Boy, that’s not something we want either,” Rogan told guest Lex Fridman.

  “I don’t think it’s wise to take all the guns away from people and give all the power to the government. We see how they are with an armed populace, they still have a tendency towards totalitarianism. And the more increased power and control you have over people, the easier it is for them to do what they do. And it’s a natural inclination, when you’re a person in power, to try to hold more power and acquire more power.”

  “This Country Has a Mental Health Problem Disguised as a Gun Problem,” said the host, echoing his comments from 2013.

  Watch:

  Tyler Durden
  Sun, 05/29/2022 – 16:00

• A Roman Lesson On Inflation
  A Roman Lesson On Inflation

  Authored by Alasdair Macleod via GoldMoney.com,

  “While it is the duty of the citizen to support the state, it is not the duty of the state to support the citizen” 

  – President Grover Cleveland

  After two centuries of debasement the Roman denarius ended up with no silver content.

  The decline of the empire was accompanied by increasingly costly bureaucracy, stifling the economy.

  It was a template for today.

  There are differences.

  But we share suffocating bureaucracy and the lack of specie in our currency systems.

  As Rome did from Nero onwards, we have lost the plot. A general deterioration in our sense of purpose is an additional factor.

  Perhaps Diocletian was the Joe Biden of his day. He was infamous for his edict on maximum prices, which basically shut down the production of goods. Will Joe Biden introduce a similar edict? Don’t rule it out…

  

  Intervention’s slippery slope

  The point President Cleveland made back in the 1880s was that individuals and vested interests had no rights to preferential treatment by a government elected to represent everyone. For if preference is given, it is always at the expense of others.

  Those days are long gone, and the last president to take this stance was Calvin Coolidge in the 1920s. He was followed by Herbert Hoover, who was very much an interventionist. As Coolidge reportedly said of his Vice-President, “That man has given me nothing but advice, and all of it bad”. Hoover was criticised for his disastrous intervention policies by Franklin Roosevelt, who succeeded in ousting him in the 1932 election, and then outdid him with even more intervention. The outflows of gold generated by accelerating government spending and the Fed’s monetary policies led in 1933 to the suspension of gold convertibility for American citizens and the devaluation of the dollar in 1934 from $20.67 to $35 per ounce of gold.

  Interventionsism has increased ever since, not just in America but in all other advanced nations. The socialisation of earnings and profits and the regulation of our behaviour by governments dominates economic activity today. Despite the warnings of sound-money theorists, a process that commenced over a century ago has not yet led to economic collapse, though the dangers of escalating state liabilities are a growing threat to economic stability.

  A point that is ignored by nearly everyone is that government spending is an expensive luxury for any economy, tying up capital resources in the most inefficient way. Furthermore, governments, through tax and the diversion of savings and monetary inflation, destroy personal wealth. Yet, it is clear both through observation and logic that a successful economy is one that instead maximises personal prosperity.

  This is clearly illustrated by observing the difference between Venezuela and America. Venezuela overtly and covertly has transferred nearly all personal wealth to its socialist government in the name of equality for all. The costs of government increased exponentially relative to its sources of available finance, bringing forward the day when economic and civil order cease entirely. America, despite decades of growth in government spending, has not yet sequestered most of its citizens’ wealth, though the process has been accelerating in recent years.

  However, the problem is likely to become more of a public issue in the coming months, triggered perhaps by an increase of US Government bond issues at a time of an economic downturn and a downturn in bond demand due to a reluctance by the Fed to raise government borrowing costs.

  At the same time as President Biden’s administration faces increasing spending demands, the Fed is trying to normalise its balance sheet by ceasing QE, and then presumably running off its bond exposure. Add to the mix marginal reductions of financial securities exposure in foreign-owned portfolios, and we have the potential for a perfect storm in the reserve currency’s bond market.

  We have already seen a sharp increase in bond yields since March 2020, with the benchmark 10-year US Treasury yield increasing from 0.5% to 3%. On an historic basis and given that the Fed’s inflation target of 2% is left in the dust, the time-value on this bond is still far too low, despite the increase in yields so far.

  Official consumer price inflation already exceeds 8%, and there is unlikely to be any significant let-up in this rate. And readers should give more credence to independent estimates than clearly biased government ones. ShadowStats.com currently has consumer prices rising at well over 15%.

  We should not be surprised if these dynamics soon result in a derating of US Government bonds, and of the US Government’s finances. The derating won’t come from rating agencies which rightly fear official sanctions, but from markets themselves. But then markets are always the final arbiters of value.

  Instead of passively accepting the Fed’s monetary cool-aid, proper assessments of bond risk can be expected to increasingly dominate valuations. Assuming the Fed continues to suppress interest rates, market pressures will lead to bond yield curves steepening and overcoming attempts at yield curve control. The interest cost to the Treasury will increase for all its new debt, except for very short-term borrowing. After snoozing through the period of zero interest rates, we are bound to awaken with some suddenness to the consequences of monetary debasement, which we have been collectively ignoring for too long.

  Therefore, when thinking about risk, the economics of inflation are likely to become central to our thoughts. And as bond yields adjust by rising, we will be increasingly aware of the debt trap faced by the US Government. A one per cent increase in interest costs it an extra $230bn. Will President Biden pay for this by cutting the overall budget at a time of economic downturn? Unlikely, on the evidence so far. And when we begin to think in terms of what the time-value on US Government debt should be, possibly two per cent above a rising, but heavily doctored, CPI, how will an increase of borrowing costs of perhaps three or four per cent or even more look on the government’s books?

  The UK faced a similar situation in the 1970s, when the IMF had to rescue government finances. Putting to one side the IMF’s mandated function which is to rescue emerging market economies from policy errors, there is no way the IMF or any other supranational organisation can intervene in US economic policy. In the absence of a supranational agency, the checks and balances which force the politicians to accept economic and monetary reality are entirely in the hands of the market —a situation which the establishment simply does not understand or recognise.

  An inflationary collapse is the oldest of stories

  The pressure to increase the rate of wealth-transfer from the productive private sector by dollar debasement will simply increase as bond yields rise. And the more wealth is transferred, the less there is left to transfer. This was the underlying reality faced in the Roman Empire, when the spendthrift Nero began the process by reducing the silver content of the denarius to pay his soldiers, having run out of funds. Among other costly acts, he set much of Rome on fire to rebuild it, through which legend has it he fiddled. This was perhaps a metaphor, because according to Suetonius, Nero was dedicated to the arts, sex, and debauchery, and may have been a pyromaniac as well. If Nero fiddled with anything, it was the currency. Some forty-three emperors following Nero continued the debasement process until the final monetary destruction under Diocletian over two centuries later.

  The current century’s-worth of spending-led monetary debasement includes the additional burden (that is additional to Roman profligacy) of promises to the public in defiance of President Cleveland’s maxim quoted under the heading of this article. Depending on the rate at which future financial liabilities are discounted, in addition to current liabilities these are anything between five- and ten-times current GDP for America, and probably considerably more proportionately for Japan and many EU member states. Not even heavily-doctored price inflation figures can suppress the debt trap in which governments are now visibly ensnared, which all precedence tells us will be met with accelerating monetary debasement.

  Since Herbert Hoover’s presidency, the US Government has been unconsciously rhyming the American economy with the Roman. Just as Rome’s emperors debased the coinage to pay for their profligacy and armies, so have America and her western allies debased their currencies to pay for welfare and military spending.

  Excessive military spending was a Roman theme: pay the soldiers or courtesy of the Praetorian Guard the emperor dies. A declining empire and increasing bureaucracy further strangled its finances. 225 years after Nero, Diocletian went on to issue an edict in stone, banning traders from raising prices any higher than in the edict. Trade ceased, and Rome and other cities emptied for lack of food and growing disorder. The table below translates a few items from Diocletian’s price edict into current values, using the gold price as the exchange medium between then and now.

  

  Other than beer and wine, price caps then were not too dissimilar from those of today and the cost of a jacket is almost the same as a modern blazer. While Biden is not Diocletian, perhaps these disparities indicate the levels towards which the US administration will be tempted to introduce price controls. And with respect to food, meat and dairy staples prices could reach Diocletian’s maximum prices this summer.

  But Joe Biden and his predecessors have overseen other methods of achieving the same result. For the last forty years, prices for goods and services have been officially controlled by doctoring the inflation figures, though the reality is prices have continued to rise. The government’s inflation-linked spending commitments have been curbed and the state’s beneficiaries cheated. That cannot go on for ever.

  Wage increases, which normally keep pace with rising prices, have been replaced by the simple expedient of encouraging the expansion of bank credit to fund personal consumption, along with discouragements to saving. Consequently, US Household debt now stands at $15.6 trillion funding personal consumption expenditures of $16.6 trillion. It amounts to modern smoke-and-mirrors deflecting attention from an underlying problem. But that is coming to an end, with labour shortages and a renaissance in union power.

  The comparison with Rome has a further, worrying similarity. Roman silver and gold coins were the principal money for the known world. The US dollar is the world’s reserve currency today, and nearly all the other 170-odd government fiat currencies are aligned with or refer to it. An accelerating dollar collapse will take most of them down, just as surely as the Roman currency collapse propelled the world into the Dark Ages.

  So far in this article, we have seen that the US economy has provided us with an example of a modern debt trap, that if not faced up to, will inevitably lead to an acceleration of monetary inflation and ultimately a collapse of purchasing power for the dollar.  Most other nations are in the same position, though the high levels of personal borrowing are more endemic to America and the UK than anywhere else. Consequently, when the final currency collapse happens, profligate Anglo-Saxons will suffer a slightly different fate from the citizens of nations who habitually save.

  The next phase of today’s monetary debasement

  The next major expense facing governments and their central banks is a future credit crisis, likely to tip the inflation story into hyper-drive. Possibly, it will be a modern Diocletian moment, the final act of debasement before the lights go out, and we (only metaphorically, one hopes) leave the cities to forage in the country. A credit crisis is always the culmination of a cycle of credit, endemic to economies destabilised by banking systems trying to stimulate consumption by the inflation of currency and credit.

  The time for the next credit crisis is rapidly approaching. We should be prepared for it to happen by the year-end. Crucially, inflation prospects will be set by the response of central banks. If they do not stand ready to bail out the commercial banks with monetary inflation, the global banking system will almost certainly collapse. Assuming central banks will attempt to prevent it, it will require the injection of enormous quantities of extra currency and central bank credit, potentially far larger than was required to bail out the global banking system in 2008/09. Not only that, but with their enormous holdings of interest-rate sensitive financial assets, central banks will themselves need to be recapitalised.

  The Lehman rescue was itself of historic proportions, but the looming crisis is far larger. The risk is that governments and their central banks won’t succeed next time without collapsing their unbacked currencies. Additionally, since the last credit crisis all G20 nations agreed to introduce bail-in procedures to replace bail-outs, creating rescue uncertainty. The false reasoning was that governments shouldered the cost of the Lehman crisis, when bondholders and large depositors should have borne it instead. Governments never shoulder the costs of a crisis because it is paid for by debauching the currency. But bail-ins may be logical for rescuing single banks, or the banking system of a small country, but is likely to complicate the difficulties in a broader systemic crisis, because bondholders and large deposit holders will cause anticipatory runs on the system to protect themselves.

  Large depositors have only two escapes, now the alternative of withdrawing cash notes in quantity is effectively closed. They can buy physical assets, at any price, to get rid of bank balances, or alternatively buy physical commodities. And top of the list of commodities must be gold, followed by silver, because they are widely accepted as the mediums of exchange everywhere.

  But when you sell a currency to buy an asset, you are simply passing the currency to a willing buyer. The prescient observer might expect that there will be no bid for the riskiest currencies on the foreign exchanges, and then possibly no bid for the dollar itself. In other words, what in the past has been a systemic crisis for the global banking system could rapidly become a systemic crisis for the currencies themselves.

  A currency crash is a growing risk

  The future might be forecastable, but its timing is not. We can only speculate how rapidly events might evolve. However, unlike the Roman experience, which took 225 years to destroy the denarius, its successors, and the empire itself, today’s wave of monetary destruction looks like terminating soon after only a century or so.

  Central banks are keenly aware of some systemic dangers, which is why they want to move us to a cashless society. With no cash, there cannot be an old-fashioned bank run. Their response to every successive credit crisis has been to restrict how businesses and people can protect themselves in the event of a systemic meltdown.

  But now, long after President Cleveland made the remark that heads this article, his successors’ attempts to curry electoral favour have led to escalating costs, now demonstrably out of control. The combination of a debt trap sprung on governments by higher interest rates, and the unsustainability of private sector debt threatens a financial and monetary crisis world-wide, from which any attempted rescue through money-printing is bound to fail.

  The rate at which inflation and the destruction of paper currencies accelerates from now will be determined by how swiftly the financially aware and the ordinary public wake up to the true scale of the monetary fraud governments have perpetrated. The consequences of currency and bank credit expansion have not yet been reflected in official price statistics, which have been hedonically manipulated to hide the evidence. An awakening to the reality, that fiat currencies have been badly abused by all governments, can be expected to have a suddenness about it.

  Reflecting a loss of purchasing power, prices could begin to move rapidly higher. If the effects of Roman inflation over more than two centuries progressed with the lumbering speed of a laden oxcart, today it could suddenly accelerate like a post-Roman Ferrari.

  Tyler Durden
  Sun, 05/29/2022 – 15:30

• "We Are Going To Shoot You Graveyard Dead": Florida Sheriff Warns Potential School Shooters
  “We Are Going To Shoot You Graveyard Dead”: Florida Sheriff Warns Potential School Shooters

  In the aftermath of the elementary school mass shooting in Uvalde, Texas, a Central Florida sheriff made it very clear that if a shooter were even to attempt to attack a school in his county, armed personnel at the school would put a bullet through their head. 

  On Friday, Sheriff Grady Judd in Polk County told reporters: “If you come to a school in this county, armed, we’re going to do our best through either our guardians, our school resource officers, or our school resource deputy sheriffs to eliminate the threat outside of the school before they ever get to the children. We’re trained to do that.”

  

  “This is the last thing you’ll see before we put a bullet through your head if you’re trying to hurt our children,” Judd said while holding a picture of two heavily armed officers equipped with AR-15-style rifles. 

  

  “We are going to shoot you graveyard dead if you come onto a campus, with a gun, threatening our children or shooting at us,” he warned. 

  Judd’s comments come days after the Robb Elementary School mass shooting that left 19 children and two adults dead. The sheriff said good guys with guns would end the terror even before it started. 

  Sheriff Judd mixes no words (Polk County vernacular) when it comes to letting you know how he feels about keeping kids safe. We’re praying for Uvalde. Have a safe and happy summer everyone. #PrayersForUvalde #UnitedWithUvalde pic.twitter.com/E7swt5oT55

  — Polk County Sheriff 🚔 Grady Judd (@PolkCoSheriff) May 27, 2022

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

  Ryan Petty, a Florida father whose daughter died in the 2018 Parkland, Florida, school shooting, joined Judd on stage. Petty has become an activist for school safety and advocates for armed teachers on school grounds. 

  “Since the year 2000, there has yet to be a single case of someone being wounded or killed from a shooting, let alone a mass public shooting, between 6:00 AM and midnight at a school that lets teachers carry guns,” Petty tweeted

  Since the year 2000, there has yet to be a single case of someone being wounded or killed from a shooting, let alone a mass public shooting, between 6:00 AM and midnight at a school that lets teachers carry guns. 2/ https://t.co/fivocF5EQD

  — Ryan Petty (@rpetty) May 27, 2022

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

  “In Florida, we have the Coach Aaron Feis Guardian program with rigorous training requirements,” he explained, adding: “I’ve been through the training. It was tough and Guardians are required to pass marksmanship training with a higher proficiency score than law enforcement.”

  Polk County is not alone. Schools in Connecticut, Michigan, and New York have increased police presence since the tragedy in Uvalde. 

  It’s becoming clear that the presence of good guys with guns at schools to protect children is a necessity in this day in age. This idea is nothing new. School resource officers have been embedded at some schools across the country for more than two decades. 

  There should not even be a debate to harden schools across the country because of the threat of copycats. 

  Rarely does the mainstream media cover good guys or even good girls with concealed carry licenses preventing mass shootings. That’s exactly what happened last week when one law-abiding woman saved the lives of dozens of people by immediately eliminating the threat, not waiting for police, of a crazed man who attempted to shoot up a graduation party.

  Tyler Durden
  Sun, 05/29/2022 – 15:00

• These Public Oil Companies Are Joining Forces With Bitcoin-Miners To Reshape The Industry
  These Public Oil Companies Are Joining Forces With Bitcoin-Miners To Reshape The Industry

  Authored by Zack Voell via BitcoinMagazine.com,

  As more major oil and gas operations partner with bitcoin miners, it’s clear that this magic internet money is transforming energy…

  

  One of the world’s largest industries – oil and gas – is converging with magic internet money infrastructure, but bitcoin’s prolonged market selloff has taken some of the shine off of these monumental partnerships. Some cryptocurrency traders are even facetiously asking if energy will be a new bullish narrative for Bitcoin, bringing wind to fill its metaphorical sails as the leading cryptocurrency sits over 50% below its record price highs from late 2021.

  Jokes aside, the “energy narrative” for bitcoin mining is real and gaining momentum as a growing list of mining companies and energy producers join forces. Assessing the short-term price implications of these partnerships are well outside the scope of this article, but the long-term benefits for bitcoin mining as an industry and the broader bitcoin economy are enormous.

  This article overviews the partnerships that are leading the merge between bitcoin mining and oil companies, and it offers some summary analysis into the specifics of why these corporate unions matter.

  NORTH AMERICAN MINING PARTNERSHIPS

  In the news media and general discourse, the focus on partnerships between miners and oil companies has primarily centered on North America. Most of this attention is being paid here for good reason as several of the biggest names in the oil industry are working with North American miners.

  In 2021, ExxonMobil reported annual revenue of more than $285 billion with global daily production during the same period reaching more than two million barrels per day of oil and gas. This titan of the oil industry is also reportedly working with a bitcoin mining company in North Dakota to turn otherwise wasted gas into energy for mining operations. This news spread like wildfire through the Bitcoin community when it was first published, but some off-grid mining teams already knew of Exxon’s relationships with miners. In August 2021, for example, Giga Energy co-founder Matt Lohstroh said Exxon was already selling some gas to miners.

  But as the premise of this article suggests, Exxon is far from the only oil company dealing with miners.

  ConocoPhillips is also supplying gas to bitcoin miners, which has been widely reported by various mainstream media outlets, including CNBC and Bloomberg.

  Marathon Oil, a multi-billion-dollar oil company based in Houston, also powers co-located bitcoin mining operations with its gas. On its website’s page about emissions control, Marathon indicates it uses gas “that would otherwise be flared due to lack of a gas connection or gas takeaway capacity constraints [to] generate electricity to power co-located computing and data centers used for Bitcoin mining.”

  EOG Resources, another American oil company, is also rumored to be dealing with miners by members of the industry, although official deals have not yet been reported.

  And Texas Pacific Land recently signed a deal with two mining companies, Mawson and JAI Energy, to begin what JAI Energy co-founder Ryan Leachman called “the biggest bitcoin related announcement in oil and gas to date.”

  INTERNATIONAL MINING PARTNERSHIPS

  American companies aren’t the only ones making headlines for their bitcoin-and-oil deals though.

  A subsidiary of the Russian oil giant Gazprom has been planning and building its own bitcoin mining venture on its oil drilling sites since late 2020.

  Below the equator, oil wells in remote areas of Australia are being used by Canadian gas company Bengal Energy to power bitcoin mining machines. According to a report from The Australian, Bengal CEO Kai Eberspaecher said his team is “dealing with stranded assets,” adding that, “We were basically looking at six months of having wells ready but without an outlet.”

  That sounds like a perfect fit for some off-grid hashing.

  WHY THESE PARTNERSHIPS MATTER

  Bitcoin mining as an industry gains mainstream legitimacy as more traditional energy companies start to work with bitcoin miners. Even though the total magnitude of ongoing partnerships is small relative to the entire mining industry, let alone the global energy market, the significance of these first few deals cannot be understated.

  Exxon and others are sprinkling legitimacy on a historically maligned, misunderstood and shadowed industry. These are some of the biggest names in oil and gas production working with companies who manage computing power for a barely-decade-and-a-half-old magic internet money industry. Even four years ago, the idea of all of these names inking contracts with mining companies would be nearly unbelievable. Other metaphorical dominos will inevitably fall soon.

  Related to its legitimacy is the effect that these partnerships have on bitcoin mining taking a place as energy infrastructure on or off the electric grid. Speaking to the audience at Bitcoin 2022, Paul Prager, CEO of the public mining company TeraWulf, said, “Bitcoin mining is energy infrastructure. That’s what it is.”

  That notion is hard to ignore as corporate energy titans sign deals with bitcoin miners. Of course, these mining partnerships occupy a very small share of Bitcoin’s total hash rate, but that share is sure to grow in the coming years.

  WHERE EVERY MAJOR OIL PRODUCER IS A BITCOIN MINER

  A future where every major oil producer is also a bitcoin miner — or at least operates a bitcoin mining arm — is very easy to imagine and could become reality soon. Particularly for the oil and gas industry, bitcoin miners continue to make inroads with more reported deals between these two industries. The milestones that these partnerships represent would be nearly unimaginable three to five years ago.

  Even though bitcoin’s price is well off its record highs, the future for the infrastructure undergirding the Bitcoin network is brighter than ever. The union between oil producers and bitcoin miners is just beginning.

  Tyler Durden
  Sun, 05/29/2022 – 14:30

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