Month: March 2023

TSA’s Biometric Screening May Not Be Optional for Long


Travelers lined up to go through a TSA security check.

The Transportation Security Administration’s facial recognition program is voluntary, for now. If you don’t want the federal government to scan your face each time you fly via a program going nationwide in 2023, you are, at least in theory, allowed to decline.

But eventually, TSA Administrator David Pekoske admitted in mid-March, biometric screening will cease to be optional. The TSA wants to make sure “that this system has as little friction as it possibly can,” Pekoske said, and, apparently, assertion of a basic constitutional right to (some remnant of) privacy is just too much friction.

It’s remarkable how casually Pekoske describes eliminating a simple opt-out procedure—one TSA representatives have previously touted as proof that all is above board—for a major new surveillance technology being foisted upon the public.

It’s maybe more remarkable how utterly useless our lawmakers have been in restricting the agency here, and that includes members of Congress who object to the biometrics rollout. Even a February letter from five senators, which casts the program as a threat to democracy itself, wields no bigger stick than urging the TSA to pause and answer a few questions.

The way this is going, TSA facial scanners will become a new example of a too-common pattern in state surveillance and law enforcement more broadly: What isn’t banned often becomes mandatory.

It’s easy to understand how this happens. It’s the result of an unconstrained interplay of technological advances and human fear. Better safe than sorry, we say when a new policing technology drops. Why wouldn’t you want law enforcement to have that tool at hand for catching criminals? we ask. Why would you hobble the TSA as they try to protect us from terrorists? Seems kind of suspicious that you don’t want to take advantage of everything science can offer to keep us safe.

This aspect of human nature isn’t new, of course, but the tech available to us certainly is. A Thursday New York Times report on a police conference in Dubai would’ve read like science fiction or a cheap spy novel not so long ago. “A brain wave reader that can detect lies. Miniaturized cameras that sit inside vape pens and disposable coffee cups. Massive video cameras that zoom in more than a kilometer to capture faces and license plates”—isn’t that James Bond stuff?

In more authoritarian countries whose pursuit of “zero crime” is unhampered by constitutional limits, it’s not. A United Arab Emirates official told the New York Times that a “headset that is said to detect when a part of the brain concerning memories is activated” is “useful during interrogations to determine if a suspect was lying.” In Dubai, police already have a “citywide facial recognition program called Oyoon—Arabic for eyes—[which] can pull the identity of anyone passing one of at least 10,000 cameras, linking to a database of images from airport customs and residents’ identification cards.” Private businesses are required to contribute footage from their own security cams.

Absent preemptive legal protections, ideally crafted after we get a good sense of where tech advances are heading but before some crisis sends us whirling into a do something panic, similarly invasive and dystopian technology will probably be adopted here, too.

The airport face scans are a good case study in how this works. The TSA is pursuing the program on the strength of the 2001 Aviation and Transportation Security Act, which was passed just eight days after the 9/11 attacks and authorized use of biometric technology “for providing access control and other security protections for closed or secure areas of the airports.”

But the biometrics tech of 22 years ago was not the biometrics tech we have today. Reports from the time speak of one-time fingerprinting for known travelers, and while facial recognition did exist, it was hardly the artificial intelligence–enhanced screening of 2023. Proposals from two decades ago tended to involve searching anonymous crowds for a small group of known terrorists. That’s meaningfully different from the organized, ID-linked facial recognition the TSA is now implementing—matching a photo of each traveler to their image in a massive database of government-issued IDs—evidently without any further congressional sign-off or oversight.

Pekoske said the reason the TSA isn’t saving every traveler photo it takes is just that agency itself decided not to do so. When asked under what conditions the TSA’s biometrics use would expand—perhaps “when you get approval from the stakeholders in Congress,” the interviewer helpfully prompts—he spoke of popular acceptance nudged upwards through sheer familiarity, not any explicit direction from legislators. That is: The public will accept it because the TSA is doing it already, and the TSA will do it more once the public accepts it.

But hey, don’t worry, they’re not saving the pictures. They value our trust. And our representatives haven’t banned this stuff. That’s why the TSA can make it mandatory.

The post TSA's Biometric Screening May Not Be Optional for Long appeared first on Reason.com.

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US-China Decoupling Will Force Europe To Choose Sides Sooner Rather Than Later

US-China Decoupling Will Force Europe To Choose Sides Sooner Rather Than Later

By Bas van Geffen of Rabobank

Financial markets finally enjoyed a somewhat quiet week again, with no further banks collapsing and market stress receding. Borrowing from the Fed’s discount window stood at ‘just’ $88 billion on 29 March, down from $110 billion a week ago.

So, thus far, the ECB’s base case that the market turmoil would prove to be fleeting and would not affect Eurozone banks, seems to be unfolding, paving the way for further rate hikes. Indeed, arguably, the banking stress aided central banks to some extent: it raised risk premia and, hence, banks’ cost of funding, which may have forced banks to tighten their credit standards and reduce their new lending. In other words, market conditions may amplify the ECB’s policy stance. As long as this happens in a gradual and predictable manner, this tightening of bank lending is desirable. However, the recent turmoil around the global banking sector suggests that this process may not always be so linear.

With cooler heads prevailing, that (hand) brake on credit provision has been lifted. So that leaves more tightening for the ECB, right? Indeed, the inflation data for March suggest as much. The available data for the euro area member states paint a picture of visibly retreating headline inflation. Yet, core readings remain stickier.

That said, the ECB – and other central banks for that matter – have to become more cautious. Not only because market stress could resurface, but also because data indicate that bank lending was already slowing prior to the episode of market stress. In fact, we estimate that the euro area credit impulse is now just marginally above zero. This is generally a premonition of slower consumption and investment spending. Again, that is currently desired by the central banks as they seek to dampen domestic demand; but if this credit impulse turns significantly negative, a deeper recession could be the result. Bloomberg Economics estimates that the US credit impulse had already turned negative by the end of last year. In short, central banks are still at risk of doing too little; but the risk of doing too much is clearly growing with each hike.

And whereas the ECB may have been right to assume that banking turmoil would be fleeting, their baseline growth forecasts may well miss the mark. They may be overly reliant on the assumption that trade with China would pick up significantly. That’s not just our words, a former senior official from the French central bank called these forecasts “heroic”. And it’s easy to see how a much less optimistic scenario could unfold.

The Wall Street Journal reported yesterday that chip makers may be forced to choose between the US and China. And why stop at chips? The US Treasury department will release more guidance on the Inflation Reduction Act today. Its aims have been clear for some time, but this think-tank report summarizes it well: “to generate new, globally distributed critical mineral supply chains that are not dependent on the Chinese Communist Party to access the building blocks of a more electrified, connected, and autonomous future.” Such attempts to reduce China’s stranglehold on e.g. the electric vehicles and clean-tech sectors will obviously increase global competition over key minerals and resources.

Europe will also closely watch these details of the Inflation Reduction Act, and to what extent it will hit the continent’s manufacturing. Earlier this week, the FT reported that, according to people with knowledge of the talks, Washington has offered to make cobalt, graphite, lithium, manganese and nickel, eligible for subsidies under its IRA, if they are mined or processed in the EU. But it remains questionable as to how much value this offer has in the eyes of European policy makers, as it will be a long time before increased mining capacity comes on stream on the European continent. Plus, the production and/or assembly of batteries and cars (the ‘value added part’ in the supply chain) still is required to take place in the US, Canada or Mexico.

Moreover, this US-China decoupling may force Europe to choose sides sooner rather than later. Indeed, the US has been pushing its allies to toughen their stance towards China. And the Netherlands have effectively already done so, when they followed the US in banning the export of certain semiconductor technology earlier this year. China’s ambassador to the EU threatened the bloc not to cut trade ties with China.

EC President Von der Leyen has refuted that Europe should ‘decouple’ from China, but did tell the bloc to start ‘de-risking’ in dealing with the country. That does not sound like the rejuvenation of close trade ties. De-globalization comes in many facets, but for the EU it may not so much stem from increased autonomy in the short-term (which, at least, would also have benefits for the domestic economy), but rather a more generic reduction of trade, as the US tightens the reins on China. That’s a losing business model for Europe.

Tyler Durden
Fri, 03/31/2023 – 12:25

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Manhattan Assistant DA Nukes Twitter Account After Anti-Trump Bias Exposed

Manhattan Assistant DA Nukes Twitter Account After Anti-Trump Bias Exposed

Less than 24 hours after the Gateway Pundit exposed Manhattan Assistant District Attorney Meg Reiss’ public hatred of Donald Trump on Twitter, Reiss – who’s been accused of masterminding the case against the former president, locked and then deleted her account.

As TGP documented Thursday morning, Reiss ‘liked’ several anti-Trump tweets, exposing her absolute bias against the man her office is about to indict over hush money paid to former adult actress Stormy Daniels (real name Stephanie Clifford).

Of note, Trump’s alleged payment to Daniels through former lawyer Michael Cohen would normally be a misdemeanor which falls outside the statute of limitations. Not for Bragg’s office. Not for Reiss.

For comparison, Hillary Clinton was allowed to pay a fine to the FEC for actual election interference with the Steele Dossier hoax her campaign paid for and then boosted throughout the media.

As TGP further notes;

The Institute for Innovation in Prosecution(IIP) which is a research center out of the Soros-funded John Jay College has tagged her dozens of times.

Reiss served as the Executive Director for the IIP.”

DA of Brooklyn Eric Gonzalez also tagged Reiss, who previously served in the Brooklyn District Attorney’s Office as the Chief of Social Justice, on several occasions too: 

Most of these tweets Reiss liked were while she served in the Brooklyn District Attorney’s Office as the Chief of Social Justice and as she served as the director of the IIP.

However, her political bias extends into her time at the Manhattan DA’s office as well.

Earlier in the year as she was serving as Manhattan’s Chief Assistant District Attorney she retweeted a video of Democrat representative Hakeem Jeffries giving a speech at the State of the Union.

At one point during the video Reiss shared, Rep. Jeffries says Democrats will put “Maturity over Mar-a-Lago”.

 *  *  *

And then there’s this guy…

Tyler Durden
Fri, 03/31/2023 – 12:05

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A closer look at Hungary’s Digital Nomad Visa (a.k.a.The White Card)

If working remotely in the heart of old Europe sounds like your thing, Hungary might already be on your bucket list. Situated in Central Europe and bordered by no less than seven other countries, it can serve as an excellent central base from which to explore the region.

And thanks to the introduction of Hungary’s Digital Nomad Visa program, doing so is now a LOT easier…

Why Hungary should be on your remote working radar in 2023…

Renowned for its culture, cuisine and old European architecture, Hungary – and its capital, Budapest, in particular – is a truly excellent travel destination.

And while we are not big fans of such comparisons, we believe that Budapest is the Paris of Eastern Europe… but at a 50% discount, making it one of the least expensive places to live in the EU.

Budapest is a magnificent and exceptionally livable city. In fact, one of Sovereign Man’s friends relocated from London to Budapest a few years back and reportedly loved it (premium report – Sovereign Confidential members only).

The city was one of two capitals of the Austro-Hungarian empire (the other being Vienna); hence it still feels like an imperial capital.

It has many gorgeous monuments and architecture dating to a bygone era. And it retains much of its Old World charm, despite featuring all the usual modern city amenities.
That charm — and its rich cultural diversity — make Hungary highly appealing from a lifestyle perspective.

And digital nomads adore it.

The country’s fixed broadband speed of 119 Mbps is lightning-fast, and its mobile download speeds are around 43 Mbps. You will therefore be able to work remotely from the country without any issues.

But without further ado, let’s get into the details of Hungary’s remote worker visa below.

A closer look at Hungary’s Digital Nomad Visa, a.k.a. the White Card

In 2022, Hungary joined the Digital Nomad Visa race by introducing the “Hungarian White Card” — a residence permit especially targeting remote workers.

Similar to Portugal’s D7 Residency program, the Hungarian White Card features a two-step application process:

First, you’ll apply for an D-Type entry stamp visa at your nearest consulate. This is what you’ll use to enter the country.

Once there, you’ll have a month to apply for your White Card residency permit at the so-called National Directorate-General for Aliens Policing. This permit is valid for one year, and it’s renewable once for another year.

But unlike in the case with many other Digital Nomad Visas, you will NOT be able to bring your family along based on a family reunification procedure.

Furthermore, it is important to note that the country’s DNV will NOT lead to any type of permanent residency or citizenship in Hungary. You will have to seek other residency types for that.

What are the key program requirements?

The program’s financial requirements are on the lower end – if you’re a solo applicant, that is. You can qualify for the Hungarian DNV if, in the past six months, you have enjoyed a monthly income of just €2,000 (~$2,171).

Unfortunately, the DNV seems to be geared toward single applicants only. Your spouse, for example, will have to submit their own independent application, making the combined income requirement for a couple €4,000 (~$4,341).

In addition, the usual bouquet of requirements apply:

  • You’ll have to provide documentary proof of being employed outside of Hungary, or of being the owner or co-owner of a business operating outside the country.
  • You’ll have to be able to work remotely.
  • You’ll have to have a fixed address in Hungary, hence you’ll likely need to obtain either a long-term accommodation reservation, a rental contract, or an invite letter from a friend or family member authorizing you to stay with them while in Hungary.
  • You’ll need to obtain health insurance for the entire duration of your stay in Hungary.

(IMPORTANT: Be sure to confirm the exact requirement with your nearest Hungarian consulate.)

Also remember that you will become a tax resident if you stay in the country for more than 183 days a year (and possibly even sooner).

The personal income tax rate in Hungary is a flat 15%, but it will generally be payable in addition to social security contributions of 18.5%.

According to one of our Hungarian immigration service providers on the ground, however, there are instances where your social security contributions could be lower.

It is also advisable to discuss your personal financial situation with a Hungarian tax specialist, as the country’s tax system tends to be complex…

Fortunately, however, you will likely be saving money on living expenses. For example, a one-bedroom apartment in a nice area of Budapest costs around $650 per month, while a three-bedroom costs around $1,000.

You can save significantly more if you settle elsewhere in Hungary, such as in Debrecen — the country’s second-largest city.

Not sold on Hungary? Discover ALL your EU residency options with Sovereign Confidential

Sovereign Confidential members have access to a range of deep-dive reports on topics like:

  • The most accessible Digital Nomad Visa programs across all of Europe, including detailed information on the respective program requirements and how to apply.
  • Detailed boots-on-the-ground reportage from our team, our close network, and our service providers on the ground.
  • Details on the most attractive tax incentives for new EU residents (yes, you can pay as little as a single-digit tax rate).
  • In-depth information regarding alternative visa options for retirees and investors.
  • And much, much more…

You can find out more about this class-leading internationalization product here.

In conclusion

In recent years, the advent of Digital Nomad Visas in Europe has made long-term stays on the continent a lot more accessible. And whilst the Hungarian program’s single-applicant focus and lack of family eligibility isn’t ideal, the country itself more than makes up for this in terms of its domestic attractions, low living costs and highly central location.

Yours in freedom,

Team Sovereign Man

Source

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OPEC Oil Production Drops In March

OPEC Oil Production Drops In March

By Tsvetana Paraskova of OilPrice.com,

Crude oil production from OPEC declined by 70,000 barrels per day (bpd) in March compared to February, as operators suspended some production in Kurdistan due to a halt in exports from the Mediterranean and as Angola carried out some field maintenance, the monthly Reuters survey showed on Friday.   

All 13 OPEC members produced 28.90 million bpd in March, according to the survey tracking the supply to the market from tanker tracking providers and sources at consultancies, OPEC, and oil firms.

The 10 OPEC producers part of the OPEC+ pact saw their compliance with the quotas jumping to 173% of pledged cuts in March, up from 169% in February.

The biggest drivers of lower OPEC output were two of the OPEC+ participants, Angola and Iraq.

Angola, which is severely lagging in its production quota anyway, saw output further slip in March due to field maintenance on the Dalia crude stream.

Iraq, for its part, halted on March 25 exports from the semi-autonomous region of Kurdistan via a pipeline through Turkey and the Turkish port of Ceyhan. Several foreign oil firms operating in Kurdistan have announced in recent days they were shutting in production as storage has hit capacity while exports are still halted.

Kurdistan’s crude oil exports – around 400,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted late last week by the federal government of Iraq after the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq had argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.

Meanwhile, OPEC+ is set to stick to the agreement from October 2022 to cut production by 2 million bpd until 2023, when delegates meet on Monday to discuss the state of the oil market, various sources have suggested.

Tyler Durden
Fri, 03/31/2023 – 11:45

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‘Flat To Lower’ By The Close? The S&P Level That Everyone Is Watching Today

‘Flat To Lower’ By The Close? The S&P Level That Everyone Is Watching Today

The shorts are being squeezed once again this morning, with ‘most shorted’ stocks up 4% from yesterday’s lows (but we note they are at a key resistance level (post-SVB) once again…

And that is lifting all the majors, especially Small Caps…

But, the question is – can this last?

As SpotGamma explained in a note this morning, what’s clear from the data is that the quarter end sessions either seem to be flat or down (last 8 q ends)…

However, today’s JPM roll may have a strong impact to markets, as somewhere mid-morning we are likely to see the initial roll placed (3-5% OTM call vs ~5% OTM put spread).

That spread likely prints with some type of deep ITM 0DTE call, and all of this is followed up by a late day spread adjustment (the flip the original spread to the final strikes, adjusting for any intraday market movement).

This trade is obviously heavily watched, and the implementation is likely adjusted to mitigate signals & impact.

Simply said: it’s hard to draw any conclusion/edge of the trades impact. Clouding this, too, are quarter end flows.

However, the JPM Collar Call Strike at 2065 is large…

And already this morning we have seen decisive trade action by options traders, aggressively fading the rally above that 2065 level…

Source: SpotGamma

We also note that 0DTE flow is concentrating around 4,100 to the upside (acting as resistance as day continues) with puts (downside) dominated at around 4040-4070…

So will 0DTE (and agg options flows) be the pressure for the historical ‘flat to lower q end’ come to pass by day’s end? 2065 remains the key level to watch.

However, through the options lens, for any extended upside the market needs to have some “real buyers” to carry us higher, vs the post-bank-crisis options short covering (negative gamma/vanna hedging).

Tyler Durden
Fri, 03/31/2023 – 11:33

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Italy Bans OpenAI’s ChatGPT Over Privacy Concerns

Italy Bans OpenAI’s ChatGPT Over Privacy Concerns

Italy’s data protection authority has temporarily banned OpenAI’s ChatGPT over alleged privacy violations. The ban will remain in effect until OpenAI complies with the European Union’s privacy laws. 

In a statement, the Italian National Authority for Personal Data Protection said ChatGPT violated the EU’s General Data Protection Regulation (GDPR) in multiple ways, including unlawfully processing people’s data and failing to prevent minors from accessing the AI chatbot. 

The Italian privacy regulator warned OpenAI it has 20 days to respond to the order or face fines: 

OpenAI, which does not have an office in the Union but has designated a representative in the European Economic Area, must communicate within 20 days the measures undertaken in implementation of what is requested by the Guarantor, under penalty of a fine of up to 20 million euros or up to 4% of the annual global turnover.

Calls to suspend new ChatGPT-4 have been increasing by the day. On Thursday, the tech ethics organization Center for Artificial Intelligence and Digital Policy filed a complaint with the Federal Trade Commission, asserting the new chatbot violates federal consumer protection law and asked for future chatbot releases to the public to be halted. 

The FTC complaint comes days after Elon Musk, Steve Wozniak, AI pioneer Yoshua Bengio and others signed an open letter calling for a six-month pause of new AI chatbots more powerful than ChatGPT-4. 

As of writing this, we were still able to access ChatGPT by using a VPN to route traffic through Milan, Italy.

The announcement from Italy comes days after European police agency Europol warned: “criminals can abuse large language models (LLMs) such as ChatGPT.”

It seems that a worldwide crackdown on AI chatbots is in progress.

Tyler Durden
Fri, 03/31/2023 – 11:13

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Nancy Pelosi Sums Up TDS, Says Donald Trump Has A ‘Right To Prove His Innocence’

Nancy Pelosi Sums Up TDS, Says Donald Trump Has A ‘Right To Prove His Innocence’

Authored by Mike Shedlock via MishTalk.com,

“No one is above the law, and everyone has the right to a trial to prove innocence.” Say what?

[ZH: ‘New’ Twitter provided some ‘context’ too in order to help Nancy understand]

The Right to Prove Innocence 

Dear Nancy Pelosi 

It is a cardinal principle of our system of justice that every person accused of a crime is presumed to be innocent unless and until his or her guilt is established beyond a reasonable doubt. 

26,000 people liked that Tweet!

*  *  *

Please Subscribe to MishTalk Email Alerts.

Tyler Durden
Fri, 03/31/2023 – 10:51

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Lukashenko Teases Belarus Hosting Russian Strategic Nukes While Urging ‘Truce’

Lukashenko Teases Belarus Hosting Russian Strategic Nukes While Urging ‘Truce’

Belarusian president and close Putin-ally Alexander Lukashenko warned in a Friday speech: “As a result of the efforts of the United States and its satellites, a full-scale war has been unleashed in [Ukraine]… a third world war with nuclear fires looms on the horizon.”

While his warnings of spiraling toward nuclear catastrophe are nothing new, his call for a truce with no preconditions is something unusual. He urged in the televised state-of-the-nation address, “We must stop now, before an escalation begins. I’ll take the risk of suggesting an end of hostilities… a declaration of a truce.”

Via Reuters

“All territorial, reconstruction, security and other issues can and should be settled at the negotiation table, without preconditions,” added Lukashenko.

Last weekend, Russia’s Vladimir Putin announced plans to station tactical nuclear weapons in neighboring Belarus for the first time since the war in Ukraine began. Lukashenko addressed this, saying the step is necessary due to “unprecedented” Western pressure on Belarus.

That’s when the Belarusian strongman went further, and introduced the possibility of intercontinental nuclear missiles, which would indeed be taken as a huge escalation by Europe and the US.

“Putin and I will decide and introduce here, if necessary, strategic weapons, and they must understand this, the scoundrels abroad, who today are trying to blow us up from inside and outside,” he said. “We will stop at nothing to protect our countries, our state and their peoples.”

“We will protect our sovereignty and independence by any means necessary, including through the nuclear arsenal,” Lukashenko continued. “Don’t say we will just be looking after them, and these are not our weapons. These are our weapons and they will contribute to ensuring sovereignty and independence.” He suggested Belarusian control over the nuclear weapons stationed on its territory, interestingly.

As significant as this fresh nuclear rhetoric is, it remains that it’s somewhat inflated given Russia’s nuclear-capable missile arsenal is certainly already capable of reaching locations in Europe, and doesn’t need to be deployed from Belarus.

You will find more infographics at Statista

We also recently noted just how close US nukes have been to Russia’s borders for many decades now, given the NATO nuclear-sharing program, which has placed US nukes at bases in Belgium, Germany, Italy, the Netherlands and Turkey. The Kremlin has pointed this out, saying this is why it’s hypocritical of the West to scream about Russia moving nuclear weapons just across its border to ally Belarus.

Tyler Durden
Fri, 03/31/2023 – 10:37

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Why a desperate America may soon annex its 51st state

At the center of Sovereign Man’s core ethos is the indisputable view that the United States is in decline.

I take absolutely zero pleasure in writing that statement. But it’s incredibly difficult, if not impossible, to objectively appraise the bountiful evidence at hand and not reach the same conclusion.

Consider the following:

US government finances are appallingly bad. The national debt exceeds 100% of GDP, annual deficits run into the trillions of dollars with no end in sight, and major trust funds for Social Security and Medicare will soon run out of money.

Political incompetence is mind-blowing; politicians fail to be able to even identify problems, let alone understand them, let along reach compromises to solve them.

Ditto for central bank incompetence. These people simply cannot understand how, by keeping interest rates at zero for nearly a decade and conjuring trillions of dollars out of thin air, they engineered record high inflation. And they also fail to understand how their actions to ‘fix’ inflation are causing widespread havoc in the economy and financial system.

Social divisions across the country are extreme. Censorship and cancel culture prevail, and corporations now wag their fingers at their own customers to “be better”.

The education system is in pitiful shape, with many politicians and school board officials turning classrooms into activist training camps.

The population is terribly unhealthy. Obesity and drug addiction are epidemics. Plus there’s an obvious mental health crisis that drives far too many people to commit horrific acts of violence on innocent people, including children.

National security is in decline. Military readiness is down, yet top officials seem more concerned about diversity and inclusion rather than the ability to prevail in war.

The rule of law has been perverted, including for political purposes and self-aggrandizement. We just saw another example of this yesterday.

Even the national fertility rate continues plummeting– an indication of the rising cost of living and social apathy.

The Wall Street Journal recently published a series of polls indicating that most Americans doubt their children will have a better future; pessimism is strong.

They also found that certain values which once defined American culture, including a sense of community, hard work, and civility, are no longer important to the majority of people.

This is all happening at a time when adversaries are circling. And that includes China.

Now, usually whenever I bring up China, there are always people who are quick to assert that China cannot possibly replace the US as the dominant superpower because they have just as many problems.

And it’s true that China has a ton of problems. They have their own debt issues, financial system chaos, and economic problems. They have social challenges, a major demographic crisis, and even a serious issue with childhood obesity.

But no civilization or empire throughout history has ever been problem-free.

Ancient Rome, even during its early republic days, had enormous problems. They had to deal with constant revolts, civil war, the genocidal dictatorship of Sulla, famine, war, plague, and more.

Yet there’s an enormous difference between taking on challenges while you’re on the rise… versus succumbing to them while on the way down.

Rome was able to deal with its challenges and continue its rise to become the dominant superpower. China may be able to do the same.

The US finds itself in a precarious position where they have a mountain of compounding problems… and no ability to even slow them down, let alone solve them.

I’ve written before about what I call the “Four Forces of Decline”, which I define as

1) Forces of History– the inevitable, cyclical nature in the rise and fall of Empire. No empire, no civilization in human history has ever retained the top spot forever, and most tend to experience similar challenges on the way down.

2) Forces of Society– the vicious way in which a society eats itself from within, vanquishing the ability and inclination to solve complex problems.

3) Forces of Economy– the debilitating toll that enormous debts, deficits, and currency inflation take on a nation and its people.

4) Forces of Energy– when energy is cheap and abundant, prosperity reigns. When energy is expensive, prosperity wanes. The relationship couldn’t be more clear.

Today’s podcast puts all of these together, with a particular focus on #4, Forces of Energy.

Part of being the dominant superpower in our modern world means having access to abundant energy. Yet the US government has spent the last few years trying to destroy its energy (oil and gas) industry.

They’ve been pretty successful. The President of the United States hardly misses an opportunity to bash oil companies. Politicians pass new rules and taxes to punish them. The media beats up on them. Investors have pulled funding for them.

So it shouldn’t be a surprise that US oil production, while not in terminal decline, is failing to keep up with growing demand.

Shale oil is especially problematic given that most of the highest quality “tier 1” sites have already been drilled. Many are already in decline.

This is a big deal. Shale oil is the reason why the US achieved near energy independence. With shale in decline, the US will be forced to import a LOT more energy (which, again, is critical for prosperity) from places where they have an increasingly adversarial relationship.

Russian oil is obviously off the table. So is Iranian oil. Saudi Arabia is rapidly becoming cozy with China; in fact the Saudis are now publicly considering to sell their oil in Chinese currency, the renminbi.

This is an enormous threat to the US. Saudi Arabia has been selling oil in dollars for decades; they’ve even had their currency, the riyal, pegged to the US dollar since 1986.

This concept of selling oil in US dollars is known as the petrodollar, and it’s one of the key reasons why the US dollar is the global reserve currency.

Anyone who wants to buy oil needs to own US dollars. And that pretty much includes ever country on the planet. So foreigners are forced to stockpile dollars, and by extension, US government bonds… simply because they need dollars to buy oil.

As a result the US government is able to get away with the fiscal equivalent of murder. They can run multi-trillion dollar deficits every year. They can wage expensive wars in foreign lands. They can go into debt to pay people to stay home and NOT work…

… and they’ve always had a bunch of suckers overseas– foreigners who have no choice but to buy US government bonds, simply because oil is priced in US dollars.

But what if Saudi Arabia started selling oil in renminbi?

Most likely a LOT of foreigners would dump at least some of their dollars and start holding renminbi as part of their official reserves.

America’s biggest privilege and benefit– its reserve currency– would vanish, practically overnight.

Suddenly the US government wouldn’t be able to run multi-trillion dollar deficits. It wouldn’t be able to go into debt to pay people to stay home and NOT work.

They’d have to be like almost every other country– act with some fiscal responsibility.

Think about it– if the President of Mexico shook hands with thin air, investors would be rightfully terrified and panic-sell Mexican government bonds. If South Korea ran a multi-trillion dollar deficit, its currency would probably plummet.

Back in September we saw the British pound and UK government bonds practically collapse… and the Prime Minister of one of the world’s largest democratically elected sovereign governments was forced to resign… simply because investors didn’t like her economic revival plan.

These issues are all linked. If the US continues to demonstrate incompetence and weakness… if they continue to subvert and destroy the energy industry… and if Saudi Arabia starts selling oil in renminbi…

… the consequences will be life-changing.

This is one of the biggest stories of our lives. It’s easy to miss because it’s playing out over a period of years. It gets lost in the day-to-day noise and the crisis du jour.

But rest assured this is happening in front of our very eyes; it’s a slow motion crash that’s already started.

The outcome isn’t inevitable yet. But nothing about these people’s actions demonstrate that they have the slightest clue what’s going on.

Join me in today’s podcast as we dive further into this… and I outline my “51st state” theory– a ‘solution’ that I wouldn’t be surprised to see in the near future.

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