Month: November 2020

In a move we are sure won’t have any negative repercussions on the state’s quality of life going forward, Oregon looks slated to the be the first state in the U.S. to decriminalize “hard drugs” like heroin, cocaine and LSD.

The move could come as part of a ballot measure that voters will decide on during election day. 

The initiative, called Measure 110, could “drastically change” the state’s justice system, ABC News noted. Those who are caught with hard drugs would now have the option of paying a $100 fine or attending new addition recovery centers, paid for with taxes from retail marijuana sales.

Under the new measure, possession of less than 1 gram of heroin or meth, 2 grams of cocaine, 12 grams of psilocybin, 40 doses of LSD, oxycodone or methadone and 1 gram of MDMA would all be decriminalized. 

Countries like Portugal, the Netherlands and Switzerland have already implemented similar decriminalizations. In Portgual, the change saw “no surge” in new drug use. In fact, drug deaths fell while the number of people in the country treated for addiction rose 20% between 2001 and 2008. Then, the number stabilized. 

The U.N. Chief Executives Board for Coordination announced in 2019 that it would also “promote alternatives to conviction and punishment in appropriate cases, including the decriminalization of drug possession for personal use” in order to “address prison overcrowding and overincarceration by people accused of drug crimes.”

The new proposed measure in Oregon has the backing of “the Oregon Nurses Association, the Oregon chapter of the American College of Physicians and the Oregon Academy of Family Physicians,” according to ABC.

The groups contend that: “Punishing people for drug use and addiction is costly and hasn’t worked. More drug treatment, not punishment, is a better approach.” 

On the other side of the argument is 24 district attorneys, who claim the measure “recklessly decriminalizes possession of the most dangerous types of drugs (and) will lead to an increase in acceptability of dangerous drugs.”

Multnomah County District Attorney Mike Schmidt argued back: “Misguided drug laws have created deep disparities in the justice system. Arresting people with addictions is a cruel punishment because it slaps them with a lifelong criminal record that can ruin lives.”

Jimmy Jones, executive director of Mid-Willamette Valley Community Action, a group that helps the homeless, said: “Every time that this happens, not only does that individual enter the criminal justice system but it makes it very difficult for us, on the back end, to house any of these folks because a lot of landlords won’t touch people with recent criminal history.”

He continued: “They won’t touch people with possession charges.”

So now, landlords simply won’t know when their renters have a hard drug problem. That should fix things, Jimmy. 

Authored by Professor Sunetra Gupta, op-ed via The Daily Mail,

Lockdown is a blunt, indiscriminate policy that forces the poorest and most vulnerable people to bear the brunt of the fight against coronavirus. As an infectious diseases epidemiologist, I believe there has to be a better way. 

That is why, earlier this month, with two other international scientists, I co-authored a proposal for an alternative approach — one that shields those most at risk while enabling the rest of the population to resume their ordinary lives to some extent.

I expected debate and disagreement about our ideas, published as the Great Barrington Declaration.

As a scientist, I would welcome that. After all, science progresses through its ideas and counter-ideas.

But I was utterly unprepared for the onslaught of insults, personal criticism, intimidation and threats that met our proposal. The level of vitriol and hostility, not just from members of the public online but from journalists and academics, has horrified me.

I am not a politician. The hurly-burly of political life and being in the eye of the media do not appeal to me at all.

I am first and foremost a scientist; one who is far more comfortable sitting in my office or laboratory than in front of a television camera.

Of course, I do have deeply held political ideals — ones that I would describe as inherently Left-wing. I would not, it is fair to say, normally align myself with the Daily Mail.

I have strong views about the distribution of wealth, about the importance of the Welfare State, about the need for publicly owned utilities and government investment in nationalised industries.

But Covid-19 is not a political phenomenon. It is a public health issue — indeed, it is one so serious that the response to it has already led to a humanitarian crisis. So I have been aghast to see a political rift open up, with outright abuse meted out to those who, like me, question the orthodoxy.

At the heart of our proposal is the recognition that mass lockdowns cause enormous damage.

We are already seeing how current lockdown policies are producing devastating effects on short and long-term public health.

The results — to name just a few — include lower childhood vaccination rates, worsening cardiovascular disease outcomes, fewer cancer screenings and deteriorating mental health.

Such pitfalls of national lockdowns must not be ignored, especially when it is the working class and younger members of society who carry the heaviest burden.

I was also deeply concerned that lockdowns only delay the inevitable spread of the virus. Indeed, we believe that a better way forward would be to target protective measures at specific vulnerable groups, such as the elderly in care homes.

Of course, there will be challenges, such as where people are being cared for in their own multi-generational family homes.

I am certainly not pretending I have all the answers, but these issues need to be discussed and thrashed out thoroughly.

That is why I have found it so frustrating how, in recent weeks, proponents of lockdown policies have seemed intent on shutting down debate rather than promoting reasoned discussion.

It is perplexing to me that so many refuse even to consider the potential benefits of allowing non-vulnerable citizens, such as the young, to go about their lives and risk infection, when in doing so they would build up herd immunity and thereby protect the lives of vulnerable citizens.

Yet rather than engage in serious, rational discussion with us, our critics have dismissed our ideas as ‘pixie dust’ and ‘wishful thinking’.

This refusal to cherish the value of the scientific method strikes at the heart of everything I, as a scientist, hold dear. To me, the reasoned exchange of ideas is the basis of civilised society.

So I was left stunned after being invited on to a mid-morning radio programme recently, only for a producer to warn me minutes before we went on air that I was not to mention the Great Barrington Declaration. The producer repeated the warning and indicated that this was an instruction from a senior broadcasting executive.

I demanded an explanation and, with seconds to go, was told that the public wouldn’t be familiar with the meaning of the phrase ‘Great Barrington Declaration’.

And this was not an isolated experience. A few days later, another national radio station approached my office to set up an interview, then withdrew the invitation. They felt, on reflection, that giving airtime to me would ‘not be in the national interest’.

But the Great Barrington Declaration represents a heartfelt attempt by a group of academics with decades of experience in this field to limit the harm of lockdown. I cannot conceive how anyone can construe this as ‘against the national interest’.

Moreover, matters certainly are not helped by outlets such as The Guardian, which has repeatedly published opinion pieces making factually incorrect and scientifically flawed statements, as well as borderline defamatory comments about me, while refusing to give our side of the debate an opportunity to present our view.

I am surprised, given the importance of the issues at stake — not least the principle of fair, balanced journalism — that The Guardian would not want to present all the evidence to its readers. After all, how else are we to encourage proper, frank debate about the science?

On social media, meanwhile, much of the discourse has lacked any decorum whatsoever.

I have all but stopped using Twitter, but I am aware that a number of academics have taken to using it to make personal attacks on my character, while my work is dismissed as ‘pseudo- science’. Depressingly, our critics have also taken to ridiculing the Great Barrington Declaration as ‘fringe’ and ‘dangerous’.

But ‘fringe’ is a ridiculous word, implying that only mainstream science matters. If that were the case, science would stagnate. And dismissing us as ‘dangerous’ is equally unhelpful, not least because it is an inflammatory, emotional term charged with implications of irresponsibility. When it is hurled around by people with influence, it becomes toxic.

But this pandemic is an international crisis. To shut down the discussion with abuse and smears — that is truly dangerous.

Yet of all the criticisms flung at us, the one I find most upsetting is the accusation that we are indulging in ‘policy-based evidence-making’ — in other words, drumming up facts to fit our ideological agenda.

And that ideology, according to some, is one of Right-wing libertarian extremism.

According to Wikipedia, for instance, the Great Barrington Declaration was funded by a Right-wing think-tank with links to climate-change deniers.

It should be obvious to anyone that writing a short proposal and posting it on a website requires no great financing. But let me spell it out, since, apparently, I have to: I did not accept payment to co-author the Great Barrington Declaration.

Money has never been the motivation in my career. It hurts me profoundly that anyone who knows me, or has even a passing professional acquaintance, could believe for a minute that I would accept a clandestine payment for anything.

I am very fortunate to have a house and garden I love, and I couldn’t ask for more material wealth than that. Far more important to me are my family and my work. Yet the abuse continues to flood in, increasingly of a personal nature.

I have been accused of not having the right expertise, of being a ‘theoretical’ epidemiologist with her head in the clouds. In fact, within my research group, we have a thriving laboratory that was one of the first to develop an antibody test for the coronavirus.

We were able to do so because we have been working for the past six years on a flu vaccine, using a combination of laboratory and theoretical techniques. Our technology has already been patented and licensed and presents a rare example of a mathematical model leading to the development of a vaccine.

Even more encouraging, however, is that there is now a groundswell of movements — Us For Them, PanData19 and The Price of Panic, to name but three — seeking to give a voice to those, like me, who believe that the collateral damage of lockdown can be worse than the virus itself.

On Thursday, a broad coalition was launched under the banner of Recovery. Drawing people from across the mainstream of political views, the movement is calling for balance and moderation in our response to Covid-19, backed by a proper public debate and a comprehensive public inquiry.

I am delighted that it has received such a level of support.

For, ultimately, lockdown is a luxury of the affluent; something that can be afforded only in wealthy countries — and even then, only by the better-off households in those countries.

One way to go about shifting our perspective would be to catalogue all the ways in which lockdowns across the world are damaging societies. At present, I am collaborating with a number of colleagues to do just this, under the banner www.collateralglobal.org.

For the simple truth is that Covid-19 will not just go away if we continue to impose enough meaningless restrictions on ourselves. And the longer we fail to recognise this, the worse will be the permanent economic damage — the brunt of which, again, will be borne by the disadvantaged and the young.

When I signed the Great Barrington Declaration on October 4, I did so with fellow scientists to express our view that national lockdowns won’t cure us of Covid.

Clearly, none of us anticipated such a vitriolic response.

The abuse that has followed has been nothing short of shameful.

But rest assured. Whatever they throw at us, it won’t do anything to sway me — or my colleagues — from the principles that sit behind what we wrote.

* * *

Professor Sunetra Gupta is an infectious disease epidemiologist and a professor of theoretical epidemiology at the Department of Zoology, University of Oxford.

As discussed earlier, the record-shattering growth in vote-by-mail which means that the bulk of votes in key battleground states has already been cast…

… is likely to distort the pattern of vote counting and reporting on election night that we’ve become accustomed to. And, as we also touched upon in an earlier post, there’s potential for many twists and turns, with candidates seemingly ahead falling back quickly behind as different types of votes are counted at different times.

But, according to Morgan Stanley, there’s an increasingly viable path to knowing the result on election night. For investors, the bank laconically notes that “knowing the result is all about when markets will conclude who has won, not necessarily when a candidate has conceded or when media networks call the winner.” And the road to having a result on election night goes through Florida and North Carolina.

According to Morgan Stanley’s chief political strategist Michael Zezas, 65% of Florida mail-in ballots have been returned, as have 56% of NC ballots. Both states can count those votes ahead of Election Day, and have stated publicly those counts will be quickly released upon poll closing. Hence, both states could return quick results, which opens the possibility of knowing the election outcome early in the night. For example, President Trump’s path to victory without Florida is a much more narrow one. In fact, if he appears to have lost Florida, markets may quickly conclude he has probably lost the presidency.

Similarly, if the North Carolina senate race is won by Cal Cunningham (the Democratic candidate), then that, Morgan Stanley believes, will be an indicator to markets that Democrats have taken control of the Senate by also winning seats in other close races, like Colorado or Arizona where polls close later in the night. And while networks likely won’t call it that early because there are slow-counting states with enough electoral votes in play still out there, in particular Michigan, Wisconsin and Pennsylvania, Morgan Stanley thinks “markets would bake it in relatively quickly.“

Still, the bank sees as more likely that markets will need 24 hours or more to form a reliable view. If President Trump wins Florida or keeps the vote count close, both of which are viable possibilities given close polling numbers, then the Electoral College outcome may depend on those slower-counting states of Michigan, Wisconsin and Pennsylvania.

And while they have substantial amounts of mail-in ballots already returned, 65%, 62%, and 50%, respectively, they can’t count these votes until Election Day, so those results could take a few days to come in reliably.

As a result, Morgan Stanley is adjusting its election night timing probabilities, and while it no longer sees the odds of an “election week” at 70% as it did last month, it still gives 65% odds that we will not know the result on election night.

Authored by Don Brown via AmericanThinker.com,

In the last twenty years, Democrats have twice lost presidential elections when the Electoral College has “trumped” the popular vote, leading to Republican victories. First came George W. Bush’s presidential victory over Al Gore in 2000, then Trump’s shocker over Hillary Clinton in 2016.

You will find more infographics at Statista

Thus, radical Democrats demand the abolition of the Electoral College.

 “It’s undemocratic,” they say.  “The will of the people should rule,” they cry.

Yes, it’s undemocratic, which, believe it or not, is an exceptionally good thing.

That’s because the United States is not, and never has been a “democracy.”

The word “democracy” is not in the Constitution. In fact, the founders hated pure, unrestrained democracies.

Instead, Article 4, Section 4, states that the Constitution provides a “Republican” form of government. Not a democracy. There’s a difference.

“Democracy” equals mob rule, where angry, fist-shakers “vote” for or demand whatever they want. Imagine that, against the rights and interests of others. Think of the mobs burning Portland and Seattle.

“Republic” equals freedom and the rule of law, featuring internal checks-and-balances against overconcentration of power.

Remember that phrase, checks-and-balances. It’s key to understanding the Electoral College.

That’s because the Electoral College erects a constitutional check-and-balance to prevent corrupt urban politicians and voters from wielding disproportionate power over the less powerful. In this case, that means rural and small-town America.

Though the Constitution contains 7 Articles and 27 Amendments, two powerful concepts emerge as keys to understanding the Constitution. 

1. To Protect Freedom

First, the Constitution establishes government’s primary role, which is to protect individual freedom.  The broadest freedoms designated for governmental protection are found at the Fifth and Fourteenth Amendments, guaranteeing Americans the right to life, liberty and property. Jefferson expresses a similar concept in the Declaration of Independence, discussing life, liberty and the pursuit of happiness.

So, protecting freedom is the government’s principal role, not to become a giant lollypop factory dispensing free goodies as the Democrats advocate.

2. A Restraining Device Against Overconcentration of Power

Here’s the second concept: The Constitution is also a restraining device against over-concentrated governmental power.         

When lecturing on the Constitution, to illustrate a point, I often show a photograph of a drunk driver, just after being arrested by police officers, with handcuffs clamping his hands behind his back.

Likewise, the Constitution handcuffs government on multiple levels, restraining excessive governmental power to protect citizens.

That’s because the Founders understood an age-old concept: “Power corrupts absolutely, and absolute power corrupts.”  So, to deter overconcentrated governmental power, the Constitution features many internal restraining devices known as checks-and-balances.

Some of these checks-and-balances we may know, like divided government.

Our federal government is divided to prevent overconcentrated power.  Congress passes bills. The president signs bills into law, or vetoes bills. Congress may override vetoes. The president is commander-in-chief of the armed forces, etc, etc. The courts decide cases based on federal law.  It’s about dividing power.

The Bill of Rights places even more restraints on power. The First Amendment provides that Congress cannot pass any laws infringing upon (1) freedom of religion, or (2) of the press, or (3) speech, or (4) the right of the people to peaceably assemble, (5) or the right to petition the government for redress of grievances.

The Constitution creates many other checks against government: No search without a warrant. No warrant without probable cause.  No taking property without just compensation. No criminal trial without a right to confront witnesses. These are but a few of many governmental checks in the Bill of Rights.

3. The Electoral College – The Ultimate Check-and-Balance

Then comes the Electoral College.

The Founders understood that festering like a deadly cancer, political corruption metastasizes within large cities. They were right. Urban corruption has been a common thread since the beginning of the Republic.

In recent years, we’ve seen graft in Chicago, New York, Detroit, and others, run by corrupt city bosses like Richard Daley.

More recently, we’ve seen big-city Democrat corruption on national television after George Floyd died while in police custody. We’ve seen Portland, Chicago, Seattle, New York, Minneapolis, and other cities burn and get looted while corrupt city governments don’t lift a finger to protect citizens.

In fact, liberal big-city leaders encouraged the violence, by ordering police stand-downs, and allowing thugs to burn and destroy property and lives without legal consequence.

Understanding this danger of urban graft, the founders created the Electoral College to protect small-town and rural America from being overrun by faraway, big-city corruption.

Perhaps the founders’ crystal ball foresaw modern-day Democrat urban corruption.

Consider this partial list of major Democrat mayors and city council members convicted on corruption-type  charges in recent years: Dwaine R. Caraway, Dallas; Megan Barry, Nashville;  Ray Nagin, New Orleans; Patrick Cannon, Charlotte; Kwame Kilpatrick Detroit; Larry Langford, Birmingham; Sheila Dixon, Baltimore; Joe Ganim, Bridgeport, CT; Gerald McCann,Jersey City;  Hugh Addonizio, Newark; Isaac Carothers, William Carothers, Wallace Davis – Chicago; Monica Conyers, Detroit; Miguel Martinez, Larry Seabrook, Alex Rodriguez – New York.

And the list goes on.

Electoral maps of the country from 2000 and 2016 show most of the nation’s counties voting red, with dots of blue concentrated around major urban cities. Geographically, it’s not even close. America remains an overwhelmingly red tapestry in terms of land.

Without the Electoral College, corrupt mobs in big cities like New York and Chicago, and shady socialist mayors like Bill DeBlasio and Lori Lightfoot who control election machines and graft in their cities, could always manipulate presidential elections, and control and manipulate the lives of farmers in Kansas, of coal miners in West Virginia, of fishermen working off the Carolina coast, of natural gas workers in places like Pennsylvania, Ohio, and Texas.

The Electoral College remains one of America’s last defenses to protect middle America against corrupt urban power, and a great check-and-balance against totalitarian rule-by-the mob.It must be defended at all costs.

The Pentagon is said to have “quietly begun withdrawing” high ranking military officers from posts in Africa and the Middle East as part of a broader strategy of shifting resources to prioritize countering China and Russia, also as congressional caps which designate max numbers of generals and admirals in any given year must be met. However some say it will do the opposite – that is, the move will actually embolden US rivals in developing and politically restive parts of the globe.

This includes military attachés being withdrawn from multiple countries in West Africa, according to a new report in The Wall Street Journal. The role of a military attaché connected to the embassy’s mission is crucial where the US works closely with a host country’s military in fighting terrorism and maintaining political stability.

According to the WSJ report, “The position of defense attaché, the senior U.S. military representative in American diplomatic posts, is being downgraded in rank in eight key allied countries—including the U.K. and Saudi Arabia—according to an Aug. 24 order signed by Defense Secretary Mark Esper.”

In many cases this will see generals or admirals replaced with colonels or Navy captains, which Congressional and defense critics of the move have said will harm US relationships and clout with the host countries, who will be less willing to coordinate key operations and intelligence sharing with lower ranking American officers. 

Esper’s order means that by December 2022 110 general or admiral positions must be cut, but without specifying the particular countries where that will take place. The African continent (where AFRICOM has had a growing post-9/11 presence) will reportedly see a large reduction of top commanders. 

Congressional and defense Russia and China hawks fear that when it comes to the Mideast-Africa regions especially, this will mean “ceding ground” and influence to Washington rivals. 

WTI just tumbled to a $33 handle in early trading (after being above $40 just 3 days ago) as demand fears (European lockdowns) and supply concerns (Libya ramped up its production) combined to spark anxiety about the energy complex outlook.

Dec WTI Futs are down over 5%…

This is the lowest front-month oil price since May…

Additionally some have suggested that waning odds of a Biden victory are also perhaps adding to supply concerns as the end of fracking is delayed.

Here’s OilPrice.com’s Robert Rapier detailing how the oil industry has fared under the last nine US presidents.

With the 2020 presidential election looming — and with many claims and counterclaims about a president’s impact on the oil industry — I thought it might be of interest to review the history of U.S. oil production and consumption over the past 50 years. Here are the highlights from each president’s term in office.

Richard Nixon was inaugurated as the 37th president on January 20, 1969. When President Nixon took office, U.S. oil production was nearing a peak after over 100 years of increasing production. Imports made up 10% of U.S. consumption. In 1970, U.S. oil production reached 9.6 million barrels per day (BPD) and began a long, steady decline.

Richard Nixon began his second term on January 20, 1973. U.S. oil production had declined to 9.2 million BPD while consumption had increased by 3 million BPD from the first year of Nixon’s first term. As a result, oil imports would more than double during Nixon’s presidency, and American citizens would learn the danger of the dependence on imports with the OPEC oil embargo of 1973.

Gerald Ford was inaugurated as the 38th president on August 9, 1974 after Nixon resigned in disgrace. During President Ford’s term in office, domestic oil production continued to decline. U.S. oil consumption and imports continued to grow, and both were at all-time highs during Ford’s last year in office.

Jimmy Carter was inaugurated as the 39th president on January 20, 1977. Recent trends in consumption, production, and imports all reversed themselves during President Carter’s term. Consumption fell by 2%, U.S. production increased by 6%, and imports—after initially rising to record highs during his first year in office—were a fraction of a percentage lower at the end of his term than during Ford’s last year in office. Factors beyond Carter’s control—such as the Iranian Revolution and the Iran–Iraq War—heavily influenced the oil markets.

Ronald Reagan was inaugurated as the 40th president on January 20, 1981. Oil consumption continued to decline during most of President Reagan’s first term, and oil production crept back to levels that had not been seen in a decade. Oil imports fell by 35% during his first term.  

Ronald Reagan began his second term on January 21, 1985. The trends from his first term all reversed themselves, as consumption rose 10%, domestic production fell by 8%, and oil imports increased by 49%.

George H. W. Bush was inaugurated as the 41st president on January 20, 1989. Consumption fell slightly during his term, but domestic production fell even more—down 12%. Imports increased by 19%, back above 6 million BPD for the first time since the 1970s.

Bill Clinton was inaugurated as the 42nd president on January 20, 1993. During his first term, consumption increased by another 7%, domestic production fell by 10%, and imports increased by another 23%—exceeding 7 million bpd for the first time in U.S. history.

Bill Clinton began his second term on January 20, 1997. His second term trends were almost identical to those of his first term. Consumption rose by another 8%, domestic production fell by another 10%, and imports increased by an additional 21%. Consumption and oil imports were at all-time highs, and production had fallen 40% from the 1970 production peak.

George W. Bush was inaugurated as the 43rd president on January 20, 2001. During his first term, consumption climbed above 20 million BPD for the first time in the nation’s history. Imports also reached new highs, above 10 million BPD. Domestic production continued to fall.

George W. Bush began his second term on January 20, 2005. During Bush’s second term, consumption began to decline as the nation entered a recession and oil prices reached record highs. Imports fell back to below 10 million BPD. The decline in domestic production continued, albeit at a slower rate of decline than during his first term. This marked the first trickle of oil production from hydraulic fracturing, which would make a major impact during the terms of the next two presidents. During Bush’s last year in office, the level of imports reached just over 50% of U.S. consumption.

Barack Obama was inaugurated as the 44th president on January 20, 2009. The economic sluggishness initially continued, but the impact of hydraulic fracturing began to be felt in President Obama’s first year in office. In a reversal of the long decline that began in 1970, crude oil production would rise all four years of Obama’s first term.

President Obama began his second term on January 21, 2013. The fracking boom caused oil production to accelerate until 2015. But then overproduction led OPEC to initiate a price war that ultimately crashed prices and production. Production began to decline in 2015, but 2016 — the last year of Obama’s second term — was the first year of his presidency that annual oil production declined.

Between 2009 and 2015 oil production had increased by 4.4 million BPD. This was the fastest increase in oil production in U.S. history, and marked the largest increase in oil production during a single term of any president. If natural gas liquids (NGLs) are included, the gains during Obama’s first seven years were 6 million BPD. U.S. net imports of finished products like gasoline turned into net exports during Obama’s second term, and next imports of finished products plus crude oil fell by over 6 million BPD.

Donald Trump was inaugurated as the 45th president on January 20, 2017. Oil production had declined during President Obama’s last year in office as the average annual price of West Texas Intermediate (WTI) fell to $43.34/bbl. But in 2017 that rose to $50.79/bbl, and then to $65.20/bbl in 2018. Oil production followed prices higher. During the first three years of President Trump’s first term, annual U.S. oil production gained 3.4 million BPD. Net imports of crude oil and finished products turned into net exports in late 2019. U.S. oil production eclipsed the previous 1970 peak (although if you include NGLs, that peak was eclipsed in 2013).

But then the Covid-19 pandemic crushed oil demand. Now, less than a month before the election, U.S. oil production is at 10.5 million BPD — a significant decline from the 12.2 million BPD of 2019.

The net impact of the past 50 years of U.S. presidents was a long, slow decline of oil production that was only reversed when the hydraulic fracturing revolution began.

U.S. oil production didn’t fall under Bush and rise under Obama based on the policies of these presidents. Production behaved according to policies that had been put in place years earlier, and in accordance with the behavior of oil prices in previous years. Jimmy Carter experienced a rise in oil production because the Alaska Pipeline—approved by Nixon—was completed while Carter was in office. Obama and Trump experienced a rise in oil production following years of climbing oil prices — which led to a fracking boom.

Presidents publicly fretted for decades about the loss of energy independence for the U.S. They tried many different approaches to solving this problem—from serious intervention in the energy markets to letting the free market solve the problem. Many billions of dollars were spent on programs with the intent of eliminating dependence on foreign oil.

Yet in 1969, Americans depended on oil imports for 10% of their consumption, and in 2008 that number had risen to over 50% of consumption. That trend was only reversed when fracking caused U.S. oil production to surge.

Thus, a president may have some impact on U.S. oil production, but it is mostly a factor of influences well beyond their control.

Submitted by Howard Wang at Convoy Investments

For as long as you’ve known me, I’ve been saying the Fed is the single most dominant player in the markets. That changed as of this year. The chart below may surprise you. Since the start of the pandemic, the ups and downs of the markets have exactly tracked changing inflation expectations.

Why is this significant? While the Fed can control short-term or long-term interest rates, they cannot directly control inflation. They can only influence inflation by changing interest rates, which are already anchored at close to zero. So the Fed is largely helpless in stimulating the economy and the markets. It is now in an era where it must rely on Congress bills in order to enact expansionary monetary policy.

Up until 2008, the Fed controlled the economy and the markets through short-term interest rates. By setting expectations of future short rates, the Fed can also indirectly influence long rates, thus impacting the financing rates of capital transfers over various time frames.

This approach was effective until 2008 when short rates hit zero and the Fed could no longer use this lever. In 2009, the Fed had to move further out on the yield curve and began to directly control long rates by buying bonds via quantitative easing. Because of the size of the bond market, these operations had to be in the $trillions in order to be effective. But ultimately it worked to lower borrowing rates and discount rates, propping up the economy and boosting financial assets.

When the pandemic hit this year and we saw historic levels of deterioration in the economy and the markets, QE was the lever the Fed immediately went to, quickly lowering long rates down to close to zero. Yet that wasn’t nearly enough stimulation for the economy.

At that point, the Fed had two options to avoid a deflationary depression, keep the same QE approach which would mean forcing long rates into the negative territory like Europe, or keep nominal interest rates low and steady and manage inflation expectations in order to force real interest rates negative. As you can see in the chart below, the Fed chose the second route. They kept the nominal interest rate nearly constant while stimulus checks from Congress boosted inflation expectations, thus suppressing real interest rates to be materially negative.

To the extent the US can, they will continue to prefer the second route because it is much less disruptive to the financial system to have low and steady nominal interest rates than negative ones, especially as the reserve currency of the world. While this second option seems more palatable, they both punish savers in the form of negative real returns. So what does this new era of monetary policy mean for the economy and markets?

First and foremost, the Fed is now no longer in control of monetary policy. Despite explicitly changing their mandate to target long-term average inflation, the Fed no longer has the tools to actually control inflation. All they can do is keep nominal interest rates steady and low, like they’ve been doing. To stimulate the economy during a downturn like the potential second COVID wave, they rely on the Congress passing fiscal stimulus to boost inflation expectations and drop real interest rates. Expansionary monetary policy relies solely on continued growth of US federal debt. This is why the Fed Chair Powell has been so desperately calling for more help from Congress recently.

Second, instead of economists fine tuning interest rates on a daily basis, monetary policy now depends on politicians passing stimulus bills. If the easing is overdone, the Fed can always increase interest rates or lower their bond holdings, but it is harder to take stimulus checks back once they are issued. This type of monetary policy is like doing a delicate surgery with a machete. Further, as we see in the recent gridlock around the second round of stimulus, the stability of the economy is often not the only goal in politics. I believe we are in an era of heightened volatility.

Finally, I believe market will dance to a new rhythm. In the 2010s, markets did well when the Fed bought bonds and did poorly when the Fed tapered buying. Now markets depend more on the timing of fiscal stimulus. As stimulus is being handed out, inflation expectations improve, commodity markets boom, real rates drop and almost all financial assets do well. When stimulus runs out, commodities markets drop, inflation expectations fall, real rates rise, and almost all financial assets lose money. Lack of political coordination on a second round of fiscal stimulus is why the markets have been so choppy in the last few months leading up to the US election. I expect continued market volatility until there is more coordination among the branches of the government.