Category Archives: Economics

Gas Prices Are Rising. Who Did That? By Nathan Worcester

Gas prices are rising as is the price of most everything else, which means we’re experiencing a monetary inflation. Blame for that can be laid at the door of the Federal Reserve. From Nathan Worcester at theepochtimes.com:

The stickers are a smash hit.

At the top: President Joe Biden, pointing with double finger guns or, in one of several other versions, a single outstretched finger.

Underneath him, in bold black text: “I Did That!” or a variation thereof.

Slapped on a gas pump next to the digital meter display, the stickers tell a simple, powerful story: Today’s gasoline prices, the highest in years, are courtesy of the commander in chief.

Biden, this story goes, has pursued an agenda that undermines U.S. oil and gas production and energy independence, while raising the costs of gasoline and other energy sources: halting construction of the Keystone XL pipeline, pausing oil and gas leasing on public land and water, and suspending oil and gas leases on Alaska’s Arctic National Wildlife Refuge, among other moves.

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Latest Treasury, Fed and BIS Reports Confirm: All Twisted Paths Lead to Gold, by Matthew Piepenburg

Gold is its owner’s revenge against lying monetary authorities. From Matthew Piepenburg at goldswitzerland.com:

The facts keep piling up, and recent BIS, Treasury and Fed reports confirm that all twisted paths lead to gold.

In a recent article, I posed the rhetorical question of when will policy makers finally stop lying and allow honest facts and natural market forces to return?

Lying is the New Normal

Unfortunately, as we examine the two latest working papers from the Fed/Treasury Dept cabal and the Bank of International Settlements, each confirms that lies are officially the new normal.

Over the years, we’ve tracked popularized delusions masquerading as policy with evidence rather than awe, addressing such topics as the open fictions of CPI inflation reporting and its “transitory” myth to the latest sample of double-speak spewing out of the Fed or White House.

Frankly, these well-masked fibs happen so frequently we never run out of material, including Biden assuring us earlier—and once again last week– of an “independent Fed.”

He’s trying a bit too hard to convince us, no?

History (Debt) Repeating Itself

History’s patterns confirm that the more a system implodes under the weight of its own self-inflicted extravagance (typically fatal debt piles driven by years of war, wealth disparity, currency debasement and political/financial corruption), the powers-that be resort to increasingly autocratic controls, distractions and automatic lying.

The list of such examples, from ancient Rome, 18th century France, and 20th century Europe to 21st century America are long and diverse, and whether it be a Commodus, Romanov, Batista, Biden, Franco or Bourbon at the helm of a sinking ship, the end game for bloated leaders reigning over bloated debt always ends the same: More lies, more controls, less liberty, less truth and less free markets.

Seem familiar?

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The Fed’s Moral Hazard Monster Is About to Lay Waste to “Wealth”, by Charles Hugh Smith

When everyone thinks they can’t lose, they’re going to lose, big time. From Charles Hugh Smith at oftwominds.com:

If the Fed set out to destroy the financial system, they’re very close to finishing the job.

If you set out to destroy markets and the financial system, your most important weapon is moral hazard, the disconnection of risk and consequence. You disconnect risk from consequence by rewarding those making the riskiest bets and bailing out gamblers whose bets went bad.

You reward those making the riskiest bets by pushing markets higher regardless of any other factors. Nothing matters except your support of ever higher markets.

This implicit guarantee that any bet on markets lofting higher will be a winning gamble rewards those making the riskiest bets. The punters who played small with cash made a few bucks, but the punters who borrowed heavily and then leveraged those bets to the hilt made a killing.

In other words, moral hazard incentivizes maximizing debt and leverage to increase the risk and size of bets because every bet is a can’t-lose proposition. The hesitant, the cautious, the prudent, those who hedge their riskiest bets, are all left in the dust. Anyone who doesn’t max out borrowing and leverage is a loser.

By pushing markets ever higher, you bail out every participant. To make up any losses, all the punters have to do is increase the size and risk of their next bet.

To make sure everyone is properly incentivized and assured, you bail out the biggest gamblers should they somehow lose. You do this by offering them unlimited lines of credit (so they can leverage up their next bet and and win back their losses), you eliminate transparency in market pricing to mask their losses (eliminate mark-to-market requirements, etc.) and you overlook fraud, racketeering, price-fixing, collusion and embezzlement because all these activities serve to increase risk-taking and delegitimize markets.

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Net-Zero Policies: Taking From The Poor And Giving To The Rich, by Clan Hussey

Don’t be too surprised, but the new green economy that’s part of the Great Reset will benefit its wealthy proponents and hurt those at the bottom of the economic ladder. From Clan Hussey at The Epoch Times via zerohedge.com:

It is too often overlooked in all the discussions about the “transition” to a net-zero emissions economy that the most consequential transition is that from democratic capitalism to feudal serfdom.

This is the conclusion of American demographer and “blue-collar Democrat” Joel Kotkin, who has highlighted that the supposedly well-intentioned green policies being adopted across the West come at enormous expense to the working- and middle-classes.

As Kotkin wrote in ‘Spiked’ earlier this year, “extreme climate measures have driven the loss of traditional blue-collar jobs in manufacturing, construction and energy, while other environmental regulations have boosted housing prices.”

Kotkin’s thesis is that the West is on the road to serfdom. Rather than maintaining our capitalist societies where a large, asset-owning middle-class underpin a stable democratic system, we are becoming stratified feudal societies.

Home and small business ownership are declining, especially among the young and the less well-off, a group of technocratic elites are establishing themselves as permanent rulers in the apparatus of the administrative state, and corporate oligarchs are coming to dominate both the economy and broader society.

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Electrification Irony . . . Or Is It? By Eric Peters

Electric cars are all well and good if they’re freely chosen in a free market for automobiles. That’s not what the climate commissars have in mind, but what if the masses they presume to direct can’t afford electric cars, even with subsidies? From Eric Peters at ericpetersautos.com:

Electrification requires one thing to succeed – assuming the objective isn’t to impoverish everyone.

It must be  . . . affordable.

The range-recharge issues – and the fire issue – are important functional issues but at the end of the day, it doesn’t matter how far an EV can go nor how long (or little) it takes to recharge if most people cannot afford it.

The EV, that is.

Private jets are neat. They are something most of us would love to have. But most of us can’t afford one, so we fly commercial – assuming we can endure that.

Fewer people can afford a private jet right now – or for that matter, a ticket on a commercial airplane – precisely because of the economic catastrophe created by the very regime that is pushing electric cars as hard as it is pushing drugs.

The entry-level electric car that cost $40,000 last year costs substantially more this year even if its sticker price hasn’t changed because the cost of everything else has increased by roughly 20 percent over the course of this year. Very few people are making 20 percent more to make up for it. Rough math, they therefore have about 20 percent less in the way of spending power, courtesy of the very regime that is pushing everyone to pay twice as much for their next car, the mandated electric car.

The regime, of course, is not very good at math – or rather, at balancing books – because it isn’ obliged to balance them. Unlike us – the people being forced to pay 20 percent more for everything and who are thus obliged to find ways to get by with 20 percent less of everything – the regime simply prints (digitizes) another 20 percent, for itself – or takes another 20 percent off the top.

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Gold-O-Mania Is Coming, by Egon von Greyerz

You can’t debase money as the Federal Reserve and European Central Bank are doing without people turning to real money—gold and silver—if they’re allowed to do so. From Egon von Greyerz at goldswitzerland.com:

The buoyancy of markets in recent years has lulled central bank heads into a false conviction that they had saved the world after the 2006-9 Great Financial Crisis.

But central bankers continue to navigate like drunken sailors between the evil forces of Scylla and Charybdis as in Homer’s Odyssey.

Few of the bankers have understood that printing unlimited and worthless paper money will not allow them a pass the strait of Messina without major, or more likely catastrophic, damage to the world economy.

As exuberance continues to dominate intoxicated stock market investors, they haven’t yet noticed that all is not well on the perilous seas.

Still, most markets continue to respond positively to the printing press rather than to the underlying fundamentals.

Printing presses don’t create real value, instead they create bubbles full of worthless air. But sadly intoxicated investors confuse air, which is free and has no value, with real, intrinsic values.

To take an example, what is the intrinsic value of Bitcoin or BTC? How should BTC be valued?

Does the $60,000 price today reflect the real value or was the 10 cent price 10 years ago more correct?

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Returning to sound money, by Alasdair Macleod

Sound money is a currency freely convertible into gold and silver at set exchange rates. It’s a monetary straight jacket that keeps the government reasonably honest (at least compared to fiat money systems). From Alasdair Macleod at goldmoney.com:

With the threat of dollar hyperinflation now becoming a reality it is time to consider what will be required to stabilise the currency, and by extension the other fiat currencies which regard the dollar as their reserve.

This article takes its cue from Ludwig von Mises’s 1952 analysis of what was required to return to a proper and enduring gold standard —metallic money, particularly gold, having been sound money for thousands of years, to which everyone has always returned when government fiat currency fails.

When Mises wrote his 1952 article the dollar was nowhere near the state it is in today. But Mises had had practical experience of what was involved, having advised the Austrian government during and after its hyperinflation of the early 1920s, making his analysis doubly relevant.

As a remedy for the developing collapse of the dollar, this article can do little more than address the major issues. But it shows how an economic and monetary collapse of the dollar can be turned to advantage — the opportunity it creates through the destruction of Keynesian and other inflationist fallacies to secure long-term economic and monetary stability under which economic progress can be maximised.

Introduction

There are two charts which sum up why the dollar and fiat currencies tied to it will collapse if current monetary policies persist, shown in Figure 1.


The growth in the M1 quantity since February 2020 has been without precedent exploding from $4 trillion, already an historically high level, to nearly $20 trillion this September. That is an average annualised M1 inflation of 230%. It is simply currency debasement and has yet to impact on prices fully. Much of the increase has gone into the financial sector through quantitative easing, so its progress into the non-financial economy and the effects on consumer prices are delayed — but only delayed — as it will increasingly undermine the dollar’s purchasing power.

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Davos Billionaires Want to Save the Planet… Why Don’t Developing Countries Trust Them? By Matthew Ehret

Beware billionaires bearing global plans. From Matthew Ehret at strategic-culture.org:

For the time being, the world’s developing sector is generally not going to accept being sacrificed on the altar of a new Gaia cult managed by a priesthood of Davos billionaires.

A miracle appears to be happening, as the multibillionaires of the World Economic Forum (WEF) appear to have grown consciences.

As if by magic, it appears that these gold collar elites no longer yearn for profit and power as they once had. As COP26 closes up its 12 day annual ceremonies, leading WEF-connected figures like Prince Charles, Jeff Bezos, Mario Draghi, Mark Carney and Klaus Schwab have announced a new system of economics that is based on virtue over profit!

According to the COP26 website, “95 high profile companies from a range of sectors commit to being ‘Nature Positive,’ agreeing to work towards halting and reversing the decline of nature by 2030.”

Prince Charles has boasted that he has coordinated 300 companies representing over $60 trillion to get on board with a global green transition, and after meeting with the Prince on November 2, Jeff Bezos announced his new $2 billion Earth Fund to protect nature’s ecosystems with a focus on Africa. Even Prime Minister Mario Draghi has joined Mark Carney on this new green path, as both men have moved beyond their old Goldman Sachs money worshipping days and embraced a better destiny. At the Nov 1 G20 Summit, Draghi embraced Prince Charles’ Green Markets Initiative and threw Italy’s full support behind the de-carbonization initiative.

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CEO of American Trucking Association Reveals 37 Percent of Truckers Will Not Comply With Vaccine Mandate – The Consequences Would Collapse Supply Chains and Civic Society, by Sundance

Force 37 percent of truckers off the job and you really don’t have an economy, you have unmititigated chaos. This madness must stop. From Sundance at theconservativetreehouse.com:

A very interesting interview with Chris Spear, president and CEO of the American Trucking Association.

During a House Transportation Committee hearing on supply chain issues, CEO Chris Spear shares an internal survey showing that 37% of truck drivers “not only said no, but said hell no” to the Biden vaccine mandates.

To give some perspective of the downstream consequence, the ATA President noted that “if just 3.7 percent, not 37 percent, just 3.7 percent” of the drivers left the industry, there would be over a quarter million vacancies resulting in a “catastrophic” collapse of the U.S. supply chain.  Mr. Spear also shared his opinion the OSHA rule is completely unworkable and unlawful.

The consequences are grave if just 3.7% did not work.  However, if ten times that many, 37 percent of truck drivers, stopped hauling products because of the Biden vaccine requirement, American civic society would collapse within days as panicked citizens took to the streets.  Desperate Americans would be clamoring for scarce products, and the impact on society could not be measured.  WATCH:

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The U.S. Is a Powder Keg, by Jeffrey Tucker

It’s a question of when, not if, the powder keg is going to blow. From Jeffrey Tucker at dailyreckoning.com:

Last night I did my usual grocery run. I don’t shop at stores with philosophies. I go for el cheapo places that don’t have olive bars and don’t play Schubert on the intercom. I just want the stuff I need at the lowest possible prices. Even I was stunned at the 40% increase in my usual bill. I thought I was buying in a minimalist way.

Later I looked more carefully at what went wrong. I bought beef and bacon. Beef price increases are now at double-digit rates, and bacon is even higher. You are paying much more per pound than one year ago. Pork and chicken are less, but that could change.

Turkeys are in short supply for Thanksgiving. It will be the most expensive Thanksgiving meal in our lifetimes.

Stores don’t tag groceries based on the percentage increases in prices. Those you have to remember from last week and last month. Indeed, stores have every reason to disguise this. Manufacturers too, which is why packaging these days is holding ever less product. This is called “shrinkflation.” It is an epidemic right now, as manufacturers are struggling to survive huge increases in their own costs.

Biggest Inflation Spike in Over 30 Years

The Consumer Price Index came out this week. It revealed that consumer prices soared 6.2% in October, the biggest inflation spike in over 30 years. And it’s probably even worse than the official figures show.

Meanwhile, the Producer Price Index revealed that the year-over-year change in the index for construction materials is up almost 20%.

Now let’s look at gasoline. You experience it daily, the high prices at the pump. Last year at this time, the average price per gallon was $1.81. Now it is $3.40. It is also rising as demand intensifies and supply faces restrictions.

Most important here are the monetary effects, as all the money that the Fed sloshed up in the last 20 months reduces its value or what it can buy. This inflation will never hit all products and all sectors evenly. It moves from sector to sector. These days the toxin is moving so fast and in so many directions it makes one’s head spin.

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