Month: August 2024

Authored by Andrew Korybko via substack,

Belarusian President Alexander Lukashenko warned on Sunday in an interview with leading Russian media that:

“Such escalation on the part of Ukraine (by invading Kursk) is an attempt to push Russia to asymmetric actions.

Well, let’s say to use nuclear weapons. I know for sure that Ukraine would be very happy if Russia or we used tactical nuclear weapons there.

They will applaud it. Then, probably, we would hardly have allies left. In general, there would be no even sympathetic countries left.”

That sounds absurd on the surface, but it actually makes a lot of sense if one thinks more deeply about it.

The use of nuclear weapons is taboo because of the physical and environmental damage that they cause.

There are also credible fears that they’d lead to one’s nuclear-armed adversaries retaliating in a tit-for-tat fashion, thus rapidly climbing the escalation ladder to the brink of World War III. Nevertheless, several states still retain nuclear weapons for deterrence purposes in line with their respective doctrines.

As regards Russia’s, they can be employed in the event of a large-scale conventional attack that threatens the existence of the state, among other conditions. That hasn’t yet happened in the Kursk context, but the hypothetical scenario of that region or another being completely captured by Ukraine might be deemed by some decisionmakers as meeting the criterion depending on how rapidly the front lines collapse. To be clear, there’s no credible indication that anything of the sort will unfold.

Nevertheless, Ukraine might capitalize upon its attack there by striking the nearby nuclear power plant. A top Russian military journalist had earlier warned that “[Ukraine] plan[s] to strike the storage sites of spent nuclear fuel of a nuclear power plant” in either Kursk or Zaporozhye. This then prompted the Russian Defense Ministry to officially declare that “tough military and military-technical countermeasures will be taken immediately” in that event.

Russian Foreign Ministry spokeswoman Maria Zakharova said that such strikes against those targets “could result in a large-scale technogenic catastrophe in Europe”, not to mention in the Russian heartland if the Kursk Nuclear Power Plant melts down in the aftermath. These combined conventional (invasion) and unconventional (de facto dirty bomb) attacks could push Russian decisionmakers closer to seriously considering the use of tactical nuclear weapons in response as a last resort out of self-defense.

Whether dropped inside of Russia’s own borders or Ukraine’s, they’d send a political shockwave across the world due to breaking the previously mentioned taboo, which could indeed lead to there being “no even sympathetic countries left” in support of Russia barring a few like North Korea.

China and India would be under immense pressure to distance themselves from Russia, not just by the West, but also for appearance’s sake since they wouldn’t want to legitimize the use of nuclear weapons by their rivals.

Reports have also swirled that the US might conventionally retaliate against Russian forces inside of Ukrainian-claimed territory if nuclear weapons are used there, thus placing their proxy war on a direct path to World War III if that happens. Ukraine is still losing to Russia despite its sneak attack in Kursk so its leadership might have calculated, however “irrationally” it seems to objective observers, to provoke Russia into raising the stakes to that level.

It’s this escalation sequence that Lukashenko likely had in mind when warning that Ukraine wants Russia to use nuclear weapons, which could hypothetically occur if it completely captures a Russian region and/or is responsible for a nuclear catastrophe through its attacks against Russian nuclear power plants.

The first probably won’t happen since their offensive appears to have been halted, while the second is entirely in Ukraine’s hands, so it’s incumbent on the West to do its utmost to stop them from doing this.

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The Internal Revenue Service (IRS) announced a new coalition with members of the tax industry on Friday seeking to counter the growth of scams threatening tax systems and taxpayers.

The new “Coalition Against Scam and Scheme Threats” (CASST) initiative was convened at the request of IRS Commissioner Danny Werfel.

It will “work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems,” the IRS said in an Aug. 16 press release.

The agency has reported a rising number of identity theft cases. In the 2024 filing season, the IRS confirmed 15,242 instances of fraudulent returns, indicating they were filed by scammers to claim refunds owed to other people. The agency prevented the issuance of more than $180 million in refunds related to these returns.

The 2024 number was more than 20 percent higher than the confirmed identity theft cases during the 2023 season.

Additionally, the IRS’s Identity Theft Victims Assistance unit received 294,138 reports of identity theft in fiscal year 2023, according to a report by the Taxpayer Advocate Service. This is the second highest in five years and more than 217 percent up compared to fiscal year 2019.

The CASST task force will “better protect taxpayers from falling prey to unscrupulous actors by leveraging multilateral relationships across the tax ecosystem to minimize the filing of fraudulent tax returns,” the IRS stated.

In addition to the IRS, other members of the joint effort include the Federation of Tax Administrators which represents state tax agencies, national tax professional organizations, and leading tech firms operating in the tax industry.

Groups like the American Coalition for Taxpayer Rights and the National Association of Computerized Tax Processors have announced their support for the program. In total, the joint effort has the backing of more than 60 different groups from the private sector.

The joint effort aims to put in new protections by the 2025 filing season to prevent taxpayers from being scammed. The group will work to make structural changes to improve the ability to spot and stop the scams.

This includes improving PTIN and EFIN validation as well as steps to counter “ghost preparers,” referring to fake tax preparers who encourage people to claim credits and benefits for which they don’t qualify. They charge a hefty fee from taxpayers and then disappear after the return is prepared, leaving taxpayers to deal with the consequences of incorrect claims.

Scamming Taxpayers

Over the past months, the IRS has issued warnings about several scams targeting taxpayers. In April, the agency issued an alert over fake charities seeking donations from unsuspecting people.

“We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers. In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information,” said Werfel.

“People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

Some scammers make use of the IRS’s offer in compromise (OIC) program to mislead taxpayers. OIC is an initiative aimed at helping taxpayers who cannot pay federal tax debts.

Many taxpayers are applying for the program after being pushed into it by scamsters who charged excessive fees for their services, the IRS stated.

Earlier in March, the IRS warned taxpayers about phishing scams designed to steal their personal information. Identity thieves are attempting to trick taxpayers into clicking online links that entice them to submit private info or download malware to their systems.

IRS warned people not to click any unsolicited communication claiming to be from the agency as it could load malware onto their computers and steal information.

Then, there were scams that encouraged taxpayers to apply for refunds for which they are not eligible. For instance, some taxpayers were found claiming fuel tax credits that are only applicable for certain business activities such as running a farm or purchasing aviation gasoline. Taxpayers were found to have created fictional household employees to claim refunds.

“The IRS has seen hundreds of thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims,” the agency said.

Washington, D.C., Councilman Trayon White Sr. has been charged with bribery, according to court filings unsealed on Aug. 19.

White was arrested on Sunday by federal authorities.

As Zachary Stieber reports at The Epoch Times, according to an affidavit from an FBI agent, White agreed to accept $156,000 in cash in exchange for using his position as a member of Washington’s District Council to pressure government employees to extend contracts valued at $5 million.

White indeed took payment of $35,000 in cash across four separate occasions—the most recent on Aug. 9—from the owner of the companies that were given the contracts, according to the affidavit.

City code bars public officials from accepting any gifts from people or entities that have or are seeking to obtain contractual or other business with Washington’s government.

White and the owner met on June 26 to discuss a scheme that involved the owner paying White money to ascertain whether contracts for the owner’s companies with the District of Columbia Office of Neighborhood Safety and Engagement would be extended, according to charging documents. White accepted $15,000 at the meeting and said he would discuss with a certain government employee what would happen with the contracts.

In a meeting about three weeks later, the pair met again and White gave the owner updates on the contracts and received $5,000, the FBI agent said.

During another meeting in July, the owner allegedly gave White $10,000 and they talked about his ongoing efforts to extend the contracts the companies had with the neighborhood office and the D.C. Department of Youth Rehabilitation Services, which he oversees as chairman of the District Council’s Committee on Recreation, Libraries, and Youth Affairs. White was also working on helping secure new contracts for the companies.

“I feel good energy about what we embarking on, what we trying to do. I want to bring you up to speed before we go in here about stuff I’ve been working on, trying to get you where you need to be,” White was quoted as saying.

In the last meeting, in August, White received $5,000, according to the affidavit, which included images of White holding white envelopes that were said to be full of money. He said local officials had told him the contracts were poised to be extended.

The owner of the companies provided information to federal officials as part of a plea agreement he reached in which he pleaded guilty to conspiracy to commit bank fraud and bribery related to how he fraudulently obtained loans from the federal government and bribed White.

“Because the investigation into the alleged bribery scheme involved contracts that could soon be awarded and other potential official acts that could be taken, our Office took swift steps to address the alleged crimes we were investigating,” U.S. Attorney for the District of Columbia Matthew Graves said in a statement.

A query to a spokesperson for White returned an away message. White has not appeared to comment on his arrest and the charge. He did not have an attorney listed on the court docket.

White, a Democrat, first joined the District Council in January 2017 and was reelected to another term in 2020.

The law that White is accused of violating bars officials from demanding, seeking, receiving, accepting, or agreeing to receive or accept anything of value in return for “being influenced in the performance of any official act; being influenced to commit or aid in committing, or to collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or being induced to do or omit to do any act in violation of the official duty of such official or person.”

White faces up to 15 years in prison as well as a fine of up to three times the money he agreed to accept.

Authored by Tumoas Malinen via substack,

Something that has been a particular interest of mine is the Great Depression of the 1930s. It continues to be the deepest global economic malaise of modern times, which preceded the most destructive war in human history. The extreme nature of the economic contraction has intrigued me, in addition to the path that led to it. The latter mostly because of the role of the newly created central bank, the Federal Reserve, in it.

I’ve written extensively on the Great Depression in a book I am writing about forecasting financial crises. I think that the similarities between now and the era leading into the Depression are strikingly similar. This is why I decided to publish a series mapping the path of the U.S., and the world, into the deep global economic collapse. I start by mapping the route to the ‘Great Crash’, that is, to the collapse of the U.S. stock market at the end of October 1929.

In just four trading bays between 23 and 29 October 1929, the Dow Jones Industrial Average (DJIA) collapsed by 29% wiping out massive amounts of financial wealth. While the 1929 crash did not start the Great Depression, it laid the groundwork for it. Worryingly we seem to be on a similar road that led to the Great Crash, which I will map in this first entry to the series. I will also detail the creation of the Federal Reserve, which played a major role in the financial mania that led to the crash.

What is notable with the period, which preceded the Great Depression, is that many leading nations across the world experienced an economic decline at the same time, which manifested into a global banking crisis. We are seeing signs of the same kind of global slowdown now.

Before we dig deeper, let me inform that I decided to the make my piece on the Systemic Meltdown free to read. This is because, I think that everyone should understand what such an event would entail for the world, and how we could be able to manage it.

Now, let’s enter the ‘history lane’.

The Roaring Twenties

During the 1920’s, the United States became a dominant global power. She was the world’s leading exporter and second as an importer. Also, between 1924 and 1931, the US was responsible for around 60 percent of global international lending, making her the world’s banker.

High levels of imports and overseas investments from the US provided ample dollar liquidity to other countries, which were used to service international debts and to import goods and services. A high portion of this debt was short-term, but that did not bother the recipient countries.

The re-established global gold standard also acted in a pro-cyclical manner. Many countries were worried about their currencies appreciating due to capital inflows, and fixed their exchange rates to gold. This included, for example, Finland, France and Italy. But, because real appreciation through consumer price inflation was generally not allowed either, capital inflows were transformed into credit booms. Some countries, like the United Kingdom, fixed their exchange rate too high and were forced constantly to maintain restrictive credit conditions to support the overvalued currency. So, contrary to its original aim, the gold standard and fixed exchange rates actually fed the asset and credit booms or, alternatively, pushed countries to credit contraction.

The ‘Roaring Twenties’ was thus not a continuous economic boom, with for example the U.S. experiencing three recessions: from January 1920 to July 1921, from May 1923 to July 1924 and from October 1926 to November 1927, according to the NBER. However, it was a relentless financial asset boom with, for example, the DJIA pushing through two recessions without even flinching.

The role of the newly formed central bank, the Federal Reserve, behind the credit boom of the 1920’s and subsequent crash is undeniable. The creation of the “Fed” was also mired with worries it would end up socializing the economy. As we now know, these fears were not unfounded.

The creation of the Federal Reserve

There had been several attempts to create a national or central bank in the U.S. during the 1800s, but those efforts had failed. The Panic of 1907, the first financial crisis of the twentieth century, was a game changer. The crisis started after several investors suffered crippling losses on their speculative bets. This started runs in the banks these investors were associated with. Runs spread to trust companies, which were unregulated financial intermediaries outside the banking system, providing liquidity (loans) to stockbrokers. They were the “shadow banks” of the time, loosely tied to commercial banks but a crucial part of the financial ecosystem. To stem the panic, banker J.P. Morgan personally guaranteed parts of the US banking system and solicited cash from large financial institution and industries to the exchange to support brokers. He also created a group of financiers to support ailing institutions and to buy plummeting stocks of sound companies. Yet, the Panic evolved into a deep economic contraction surpassed only by the Great Depression. Moreover, it gave more power to demands that the US banking system required a “liquidity backstopper”, i.e. a central bank.

In 1908, a Republican controlled Congress passed the Aldrich-Vreeland Act creating the National Monetary Commission, led by Senator Nelson Aldrich. The Commission introduced a public-private consortium entitled the National Reserve Association, to serve as a central bank. In the proposed institution, the decision-making leaned heavily towards the private sector. For example, out of the 46 proposed directors, 42 were to be appointed, indirectly and directly, by banks. The 1912 elections turned both the Congress and the White House to Democrats, which then made their own efforts for the monetary reform. In 1912, legislation known as the Glass-Willis proposal was introduced. The legislation aimed at creating a central bank through a compromise, which eventually led to the passing of the Federal Reserve Act on 23 December, 1913.

The “socialization” of the economy, by the Federal Reserve, was especially worrisome to  the Republicans highlighted in the proposition for the National Reserve Association. A German-American banker, Paul Warburg, noted on the situation that “The view was generally held that centralization of banking would inevitably result in one of two alternatives: either complete governmental control, which meant politics in banking, or control by ‘Wall Street’, which meant banking in politics”. Efforts to establish a compromise between these two alternatives took many forms.

First of all, the power of the Fed to issue legal tender (currency) was restricted by both the ‘real bills doctrine’ and the gold standard. The regional privately-owned Reserve Banks, not the government-controlled Federal Reserve Board, were given the control for the creation of central bank credit, or money. That is, regional Reserve Banks lend to banks in accordance with their needs, and the Federal Reserve Board holds just a supervisory role. The Reserve Board did not conduct independent open-market operations, nor did it have any national interest rate policy. The “monetary policy” was conducted through Reserve Banks, who mostly responded to the needs of commercial banks.

The real bills doctrine stated that the Fed could only extend credit and thus increase the supply of money against collateral that already had established value through a “commercial transaction”. This meant that the value of the collateral could not be in the future and that it needed to have a price set in the markets. This, effectively, banned the monetization of the federal debt by the central bank, where the central bank buys debt directly from the Treasury. Yet, it was difficult to assess what constituted a “real bill”, which meant that different regional Reserve Banks had differing policies concerning the collateral they received from their loans.1

It was assumed that such a ‘two-tier system’ would ensure that neither the banks nor the government could take an upper hand in this newly created, “centralized” monetary system. This assumption failed.

The Fed started to takeover the economy, or to “socialize” it, effectively right after its inception. The real bills doctrine slowly faded away in the 1920s, and the Fed started its open-market operations, where it buys or sells securities of the US treasury to the banks to manipulate the short-term interest rate. Moreover, also in the 1920s, the Fed started to develop the federal funds market, where deposits or ‘reserves’,  obliged and voluntary savings by commercial banks at the Reserve Banks, would be transferred nationally to banks in need, overnight. Yet, the Board did not control it, neither did the Fed have a target rate to manipulate banking lending in the economy through the interest rate set on the reserves. Now, the Fed Funds Rate, set by the Federal Open Market Committee (FOMC) used in the overnight lending activities between banks and the Fed, effectively dictates the price (interest) of bank credit in the economy. This was never the idea.

The Banking Act of 1935 ended the autonomy of the Reserve Banks, and the Board received the authority over open-market operations. The government-side of the Fed started to take over, which meant that the fears regarding the socialization of the economy started to materialize. Yet, there was one factor standing in between the socialization of the economy by the Fed, and the still-somewhat-free monetary system: The gold standard.

The Gold Standard

In a gold standard, which had been returned somewhat forcefully after the First World War, the stock of gold of a nation and its demand affects the availability of money and inflation. This meant that the Federal Reserve had only a limited control over money in circulation in the economy. It could not print it at will.

In a gold standard, the flow of gold into a country through, e.g., international trade increases the gold reserves and thus the supply of money (credit) in the economy. To sterilize, the central bank can let the ratio of gold reserves to notes in circulation to increase or it can rise the interest rate to tighten the supply of short-term credit. Outflows of gold naturally has an opposite effect diminishing the amount of money in circulation, unless interest rates are lowered or ratio of gold reserves to notes lowered.

In the 1920’s, the Fed let the share of gold reserves to notes rise effectively sterilizing all gold inflows from abroad. This was seen as the main factor keeping the consumer price inflation at bay. However, the flow of gold to the US and its sterilization also “exported” deflation to other countries, who were forced to cut back the supply of domestic credit due to falling gold reserves. So, while the money stock of the US was kept at bay by letting the share of gold reserves to rise this also meant that the interest rates were kept relatively low from around 1922 till 1928, which fed the speculation in the asset and real estate markets. The credit boom intensified peaking in 1925 and again in 1927. In the absence of signs of inflation, the Fed had little motives to rise short term interest rates even there were rather clear signs of a real estate and consumer booms. The 1920’s kept on “roaring”.

Regardless of its flaws, the gold standard was a crucial element in the playbook of those, who tried stop the socialization of the economy by the Federal Reserve, because it restricted the creation of money by the central bank. This was removed in early 1970s by the dissolution of Bretton-Woods, unleashing the money printing and economy-manipulation ability of the Fed in its totality. We can also argue that, at that point, the government-side of the Fed totally took over.

During the Spring of 2020, at the wake of the Corona-shock, we wittnessed the full socialization of the financial market of the U.S. Durign that Spring, the Fed backstopped U.S. Treasury markets, intervened in corporate commercial-paper and municipal bond markets and short-term money-markets. Alas, the socialization of the U.S. economy, feared by those who objected the creation of the Federal Reserve over 100 years ago was complete, and I fear that the Fed will not stop there. More on that later. Now, back to the 1920s.

Feeding the speculation

A change in the mindset of the Federal Reserve arrived in January 1928, when a consensus was reached that the era of easy money (cheap credit) should end. The Reserve Banks began to sell their government securities, diminishing the supply of money, and gradually raised the discount rate, which determines the interest rate banks are charged on their loans from the Fed, to five percent from 3.5 percent. The Fed was afraid that a sudden change in monetary policy and tighter credit conditions might be destabilizing for business and the asset markets and tried to gently deflate the bubble on Wall Street by making the bank borrowing for speculation gradually more expensive. However, the policy had unintended and major domestic and international consequences.

A noticeable industry of non-bank lenders developed during the 1920’s, and higher rates made more funds available for stock market speculation from these non-bank sources. Stockbrokers’ loans were usually funded by the large balance sheets of corporations, which made them a viable option for investors as rates at money markets rose. For example, during 1929, Standard Oil of New Jersey contributed $69 million to call market per day, on average. As investors had looked overseas for funds, their sudden turn to domestic funds drew dollar liquidity from international markets. Although other foreign lenders stepped up to cover at least some of these flows, the withdrawal of dollar liquidity, e.g., drove Germany into a recession and the UK to the brink of a recession already before the crash in Wall Street. Moreover, as call rates for margin loans rose in the US, it became profitable for banks to borrow cheaply from the Fed and lend the money to speculators with a very good margin. During the last weeks of 1928, the call market rate rose to 12%, while the Fed funds rate was 5%. A window for a great arbitrage trading opened to all banks feeding the stock market frenzy. The prices of stocks increased three-fold between 1927 and August 1929.

There was a one major innovation in the stock markets during the 1920’s that fed the speculation. Trading at the margin enabled the buyer of the stock to greatly increase his/her leverage. The idea of buying a security at the margin is that the security is left with the broker as a collateral for the loan used to buy the asset, while the investor pays only a small cash deposit (the margin). The invention of margin trading thus greatly amplified the speculation in the stock market. In the 1920’s, earnings were also generally much less than the interest of the margin lending. Therefore, the buyer on margin was betting mostly on the rise of the stock price in question. Notably, broker’s loans, which define the collateral used to buy assets at the margin, started to rise strongly in 1928. In the same year, credit growth accelerated clearly above its long-term trend. A convincing case can therefore be made that the speculative bubble in the stock market started only as late as 1928.

Troubles emerge

On December 4, 1928, President Coolidge noted in his state of the union address that:

No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospects than that which appears at present time. In the domestic field there is tranquility and contentment […] and the highest record of years of prosperity.

There definitely were reasons for joy. The US economy had grown by close to 40 percent from the dismal year of 1921. The Federal Reserve index of industrial production had almost doubled (it did double when reaching its peak in June 1929). Wages had not risen so much, but prices were stable. Business earnings rose rapidly. There, of course, were also some problems. Most notably, the rich were getting richer much faster than the poor were able to escape from their impoverished state. Income inequality grew rapidly basically all though the 1920’s.

The first half of 1929 was marked with increasing market volatility and some close calls. The stock market kept on rising and the economic boom continued, but the Fed was becoming ever more nervous about the speculation and the flow of funds from corporations and individuals to feed it. The Board of the Fed did not want to address the issue directly, but it also kept on pondering how to respond. In early February 1929, the Federal Reserve Board issued two statements, from which the first was aimed to individual Federal Reserve banks and the latter for the general public, with one clear message: the Federal Reserve facilities were not to be used to aid the growth in speculation. At almost exactly the same time, the Bank of England raised its bank rate from 4.5 to 5.5%. Stock markets dropped, but soon recovered.

In March 1929, the Federal Reserve Board was meeting constantly in Washington. Because no statements were given from the meetings, it started to make investors nervous. On March 25, the selling in the highly over-valued stock market began. Banks also began to curb their loans to the call market and the rate of brokers’ loans rose strongly. On March 26, it looked like a selling panic could form, but one banker, Charles E. Mitchell, acted to stem the flow. He stated that his bank, the National City, would loan money as necessary to prevent a market liquidation. His bank also borrowed from the New York Fed and thus did what the Board of the Fed had explicitly warned against. Money rates eased and markets rallied. Charles E. Mitchell had single-handedly saved the stock market, and while he faced some grilling from the Senate there were no legal or other actions against him. There was a sense of relief, which was short-lived.

During the latter stages of the boom, it was a common belief that earning and dividends would continue to grow rapidly because of systematic application of science to industry, development of modern management technologies and business mergers. These were, in practice, the same ones that historians have used to explain the ‘Roaring Twenties’, and which have been used many times after the 1920’s to explain booms. As always, during the boom, they seem totally valid arguments. Like many times after the 1920’s, high stock prices and high price-earnings ratios were also a consequence of expected rapid growth in earnings.

So, while dark clouds gathered, the twenties kept on roaring, until suddenly they did not.

Authored by Andrea Widburg via AmericanThinker.com,

The Civil War tore America apart and left 600,000 dead. Still, despite its ferocity, it had at its heart only one big issue: whether the Constitution’s promise of individual liberty overrode states’ rights to govern themselves. Otherwise, Americans were much the same: the Bible, hard work, heterosexuality, the nuclear family, anti-crime, etc.

America today actually faces a more profound schism than it did then because we’ve become two entirely different people.

An opinion piece in the San Francisco Chronicle really hammers the point home, as a regular columnist looks at a county fair in the Heartland and sees a dystopian world.

Soleil Ho identifies herself a plural being who should be referred to as “they” and “them.” She is “an opinion columnist and cultural critic, focusing on gender, race, food policy and life in San Francisco.” She’s even made it to Joy Reid’s show for exposing the horror of parents who are opposed to the push to destroy their children’s biological reality with the lunacy of “transgenderism.”

Image by AI.

Ho recently took a trip to visit relatives in the American heartland (perhaps rural Illinois) and professed herself to be absolutely horrified by what she found there. The headline of Ho’s San Francisco Chronicle essay (and I don’t know whether Ho or the Chron came up with this headline) is “I took a trip to Trump country. It was more bleak than I could have imagined.”

I opened the essay assuming that I’d read about the economic despair that decades of Democrat policies have visited on rural America: Shuttered factories and stores, homelessness, drug addiction, foreclosed homes, crime-ridden communities, illegal aliens sucking up public funds, etc.

Instead, Ho described a bucolic county fair, complete with “rides, the charcoal-kissed meat skewers and the stall that churns out fried cheese curds, those little molten pebbles enrobed in crisp chambers of light-as-air batter,” along with happy people collecting “plenty of award ribbons for photography, cookies, crafts and giant garden-grown vegetables.”

But for Ho, none of this mattered. Attending the fair with Democrat relatives trapped in a Heartland hellhole, the real evil lurked beneath this Arcadian surface. These happy people celebrating their lives and eating wonderful fair food are evil. Truly evil. Why? Because they support Trump:

Along with corny fair merch and anime ponchos, every, and I mean every T-shirt stall was draped with Trump flags: “I’m voting for the felon,” “F— Biden” and the relatively anodyne, “I’m With Trump.” While browsing the pet supply shop across from the local Republican Party’s stall, I saw GOP staff greeted with cheers and raised fists — echoing Donald Trump’s triumphant pose after the assassination attempt on him — by numerous fairgoers wearing red caps and “Ultra MAGA” shirts. “Boo, Kambala!” yelled a woman, laughing.

In packed queues for roasted corn, I squeezed past parents balancing their children’s plastic lemonade cups in their arms with “Trump/Vance 2024” lawn signs tucked under their armpits. “Nice sign!” one blonde, elementary school-age girl shouted above the din, with her thumbs up at a woman holding one of them.

Ho was also confronted with the terrible specter of men in floral Hawaiian shirts.

You and I, staunch conservatives, may just think, “Ooh, I like Hawaiian shirts” or “Oh, that’s kind of tacky,” but the alert woke person knows better.

Ho hears the dog whistle of the “boogaloo” movement, a seriously fringe and ineffective group that no conservatives care about.

I suspect that while a scattering of Hawaiian shirts horrifies Ho, she’s copacetic about hundreds of masked Antifa members attacking people, fire-bombing federal buildings, and otherwise engaging in violent mayhem.

To Ho, the county fair represents everything evil in America:

My family, mostly Democrats or otherwise apolitical, are pragmatic about politics: This is their home. They quietly listen to the daily political rants and ravings about crime, immigrants and “transes” from MAGA colleagues, neighbors and friends, hoping for any opportunity to pivot to the weather.

There’s the divide. The evil Americans think that crime should be punished, immigrants should arrive legally, and that embracing the mental illness of body dysphoria should be discouraged, not encouraged. Ho also boasts that, in the Utopia of San Francisco, she need not fear wearing a “Notorious RBG” shirt, forgetting that conservatives in that Utopia risk physical assault, vandalism, and job loss for daring to voice their political opinions. By contrast, Ho could have worn her “Notorious RBG” shirt to that fair without worry. Republicans believe in free speech.

For Ho, her nightmare in the dystopia of the heartland culminated with the crowd at the rodeo singing “The Star-Spangled Banner.” The horror was too much for her. “I’d had enough. I stayed seated, head in my hands, and waited for the bulls to come charging out of their pens.”

It took America four years and 600,000 lives to resolve the one question of individual liberty versus state’s rights, a battle that conveniently divided itself along geographic lines. How is our country ever to resolve the fact that we have living cheek by jowl two entirely different cultures, each with values antithetical to the other, all vying for the same political control?

When the Democratic Party picked the city of Milwaukee as the location for its 2020 National Convention, it chose a Midwestern city other than Chicago for the first time in more than 100 years.

The Republican Party apparently hasn’t forgotten how Democrats invaded their National Convention turf four years ago. The 2024 RNC took place in Wisconsin’s most populous city as the Midwest is expected to once more play a key role in November’s presidential election.

As Statista’s Katharina Buchholz notes, with the the Democratic National Convention kicking off in Chicago today, Democrats have reverted to familiar Midwestern territory.

You will find more infographics at Statista

Republican have branched out much more within the region, visiting Kansas City and Cleveland multiple times (including in 2016) as well as St. Paul (in 2008) and Detroit once.

Both Democrats and Republicans have also favored New York City as well as Philadelphia, Pennsylvania, for their conventions and neither party has branched out to the West Coast more than a couple of times.

But while Democrats have also added East Coast locations Boston and Atlantic City to their roster over the years, Republicans have been more active in the South, visiting Dallas, Tampa and New Orleans. Both parties have held their annual events in Miami, Houston and Charlotte, North Carolina.

Authored by Mark Jeftovic via BombThrower.com,

It hasn’t worked once, so why would a politician go all-in on price controls now?

August 15th was the anniversary of the infamous “Nixon Shock”, when excessive spending and trade deficits had governments on the ropes, as prices climbed relentlessly, inflation soared into the double digits, while economic growth stalled.

In 1971 of that year, Nixon “temporarily” suspended convertibility of the US dollar for gold (still in effect), while simultaneously proclaiming a 90-day freeze on all wages and prices across the United States.

The stagflationary 70’s also saw Trudeau the 1st enact “The Anti-Inflation Act of 1975”, with his infamous “6 and 5” measures (a 6% cap on wage increases with a 5% cap on prices was supposed to put 1% back into the pocket of the peasants).

None of this worked, and as the lumpenpublic were mulched by higher prices and growing government, gold served as a barometer to it all – soaring from $35/oz at the time of the Nixon Shock to $850/oz in 1980 (that all-time high still won’t be exceeded in inflation adjusted terms until gold cracks about $2,580).

It took Paul Volcker  to get inflation under control with double-digit interest rates – (when the news came that he had been elevated from President of the New York Fed under Gerald Ford to Chairman by Jimmy Carter, Volcker’s wife burst into tears).

Today, 50 years later with a monetary regime that makes the 70’s look austere, double-digit interest rates are simply not an option – we’ve just seen a 5-sigma event nearly blow up the global monetary system from the BoJ nudging interest rates from the zero bound to 25bps.

With an unprecedented levels of monetary expansion and debt levels somewhere beyond nosebleed elevations, policy-makers and central bankers are trapped.

This is why we’re seeing a resurgence in popular rhetoric around the idea of price controls – everywhere from Jagmeet Singh here in Canada, who blames grocery store CEOs for inflation, to Dem nominee and incumbent Vice President Kamala Harris, channeling him with promises of food price controls as part of her election campaign.

Price Controls Invariably Presage Decline (& Tyranny)

The definitive chronicle of price controls throughout recorded history comes to us by way of Robert L. Schuettinger and Eammon F. Butler’s “Forty Centuries of Wage and Price Controls” – or “How Not to Fight Inflation“.

I could not for the life of me find my hard copy, but during the depths of the Global Financial Crisis, The Mises Institute saw the value in republishing it…

“By special arrangement with the authors, the Mises Institute is thrilled to bring back this popular guide to ridiculous economic policy from the ancient world to modern times. This outstanding history illustrates the utter futility of fighting the market process through legislation. It always uses despotic measures to yield socially catastrophic results.”

It starts as far back as Urakagina of Lagash, a King of Sumeria in around 2350BC who came to power and overturned wage and price controls held in place by an unnamed line of despotic predecessors:

“[he]began his rule by ending the burdens of excessive government regulations over the economy, including controls on wages and prices…
An historian of this period tells us that from Urakagina,

‘we have one of the most precious and revealing documents in the history of man and his perennial and unrelenting struggle for freedom from tyranny and oppression.’

This document records a sweeping reform of a whole series of prevalent abuses, most of which could be traced to a ubiquitous and obnoxious bureaucracy …it is in this document that we find the word ‘freedom’ used for the first time in man’s recorded history; the word is ‘amargi’.“

It is somewhat telling to find that the word “freedom” was seemingly coined to describe the end of price controls.

The Code of Hammurabi of ancient Babylon is often cited as one of the earliest legal codes, thought to be the first to enshrine the presumption of innocence, but it also contained detailed tables of price controls on everything from goods to services – like the hiring of a wagon (“forty qa of corn per diem”) to the wages of a field laborer (“eight gur of corn per annum”).

According to Schuettinger and Butler, historical records show that Hammurabi’s price controls dampened trade and economic activity for both Hammurabi and his successors, citing W. F Leemans, who found that:

Prominent and wealthy tamkaru (merchants) were no longer found in Hammurabi’s reign. Moreover, only a few tamkaru are known from Hammurabi’s time and afterwards . . . all . . . evidently minor tradesmen and money-lenders.

Concluding:

“it appears that the very people who were supposed to benefit from the Hammurabi wage and price restrictions were driven out of the market by those and other statutes.”

Finding that:

“There was a remarkable change in the fortunes of the people of Nippur and Isin and the other ancient towns which he ruled, which came in the middle of Rim-Sin’s reign [Hammurbi’s predecessor – whose policies he extended] . The beginning of the economic decline corresponds exactly with a series of “reforms” inaugurated by him.

For the first of many times throughout this piece, I will ask the reader to “hold that thought”.

We can fast forward to ancient Greece where Athens, a city state “perpetually short on grain” sought to control the prices at which it was sold in order to keep them “just”. At one point, under a measure that was supposed to be temporary (sound familiar?), state appointed corn buyers called “Sitonai” were mobilized to set the pricing.

Predictably, the problem got worse, and there were calls to make the measures permanent.  One politician, Lysian of Athens wanted to put grain dealers who broke the code to death.

The book is exhaustive in its examinations, covering China, India, the Medieval age, even modern times (Canada and the US in the seventies) – but ancient Rome warrants a deeper look – particularly the road to Emperor Diocletian’s Edict of 301AD.

“Under the tribune Caius Gracchus the Lex Sempronia Frumentaria was adopted which allowed every Roman citizen the right to buy a certain amount of wheat at an official price much lower than the market price.

In 58 B.C. this law was “improved” to allow every citizen free wheat. The result, of course, came as a surprise to the government.

Most of the farmers remaining in the countryside simply left to live in Rome without working.

If that wasn’t enough:

Slaves were freed by their masters so that they, as Roman citizens, could be supported by the state.

(There is a modern day analog here with open borders and the illegal immigration crisis – where we could be looking at mass migrations as being, at least partially, incentivized by governments of weakening economies trying to jettison dependents and potential rebels – offloading them to countries dumb enough to think they’re acting enlightened by taking them on and supporting them).

By 45BC, Julius Caesar found that roughly a third of the citizenry was living on “free food” from the government.

He managed to reduce this number by about half, but it soon rose again; throughout the centuries of the empire Rome was to be perpetually plagued with this problem of artificially low prices for grain, which caused economic dislocations of all sorts.

Succeeding emperors resorted to the ancient version of “Quantitative Easing” – currency debasement:

In order to attempt to deal with their increasing economic problems, the emperors gradually began to devalue the currency. Nero (A.D. 54–68) began with small devaluations and matters became worse under Marcus Aurelius (A.D. 161–80) when the weights of coins were reduced. “These manipulations were the probable cause of a rise in prices,” according to Levy. The Emperor Commodus (A.D.)

By Diocletian’s time in the 4th century it reached truly hyper-inflationary levels when measured in other provincial currencies:

Egypt was the province of the Empire most affected, but her experience was reflected in lesser degrees throughout the Roman world. During the fourth century, the value of the gold solidus changed from 4,000 to 180 million Egyptian drachmai.

Diocletian’s Dilemma

Gresham’s Law states that “bad money drives out the good” – it means that rapidly devaluing or debased currencies are traded for anything other than themselves (which drives prices denominated in that currency up) – while “sound” currencies, like gold, or nowadays Bitcoin are hoarded – or at least more carefully spent.

“[I]n the years before Diocletian, emperors were issuing tin-plated copper coins which were still called by the name ‘denarius.’ Gresham’s Law, of course, became operative; silver and gold coins were naturally hoarded and were no longer found in circulation.” 

The result of iterative generations of government mismanagement and currency debasement was the hollowing out of the middle class:

“The middle class was almost obliterated and the proletariat was quickly sinking to the level of serfdom. Intellectually the world had fallen into an apathy from which nothing would rouse it.”

The same thing is happening today, but in Diocletian’s time, he saw what was happening and moved to impose some kind of order, first by issuing a new Denarious, that after centuries of declining silver content, openly contained none:

Via Armstrong Economics

…and then, moving to a system that attempted to replace money entirely (again, hold that thought):

Since money was completely worthless, he devised a system of taxes based on payments in kind. This system had the effect, via the ascripti glebae [tenant serfs], of totally destroying the freedom of the lower classes—they became serfs and were bound to the soil to ensure that the taxes would be forthcoming. 

But he had a dilemma:

The principal reason for the official overvaluation of the currency, of course, was to provide the wherewithal to support the large army and massive bureaucracy—the equivalent of modern government.

Diocletian’s choices were to continue to mint the increasingly worthless denarius or to cut “government expenditures” and thereby reduce the requirement for minting them.

In modern terminology, he could either continue to “inflate” or he could begin the process of “deflating” the economy.

Diocletian decided that deflation, reducing the costs of civil and military government, was impossible. On the other hand: To inflate would be equally disastrous in the long run. 

Diocletian’s problem is the same one central banks and policy makers face today, all over the world:

Source: IMF

The world is awash in too much debt – with debt-to-GDP more than doubling from 100% to over 256% since the Nixon Shock. With interest rates being artificially suppressed for decades – austerity is off the table, for now — I’ve been writing for years how CBDCs and #Netzero are essentially setting the table for forced austerity.

But we’re not there yet – retail CBDCs are a few years away from being ready but the global financial system is unravelling now (in the meantime, you can get on the waiting list for my CBDC Survival Guide, which is coming out this fall).

How did Diocletian navigate the quagmire?

The Solution: Inflate with Price Controls

As Schuettinger and Butler recount,

It was in this seemingly desperate circumstance that Diocletian determined to continue to inflate, but to do so in a way that would, he thought, prevent the inflation from occurring.

He sought to do this by simultaneously fixing the prices of goods and services and suspending the freedom of people to decide what the official currency was worth. 

Contrary to our own political leaders,  Diocletian wasn’t stupid (in fact, he may have been the most intelligent Roman Emperor after a long string of weak minded half-wits who were propped up by the military).

He knew that the incentives would be against the productive class working, selling, and entrenpreneuring at a loss and he understood that Incentives Are Everything. In his case:

“if farmers, merchants and craftsmen could not expect to receive what they considered to be a fair price for their goods they would not put them on the market at all, but would await a change in the law (or in the dynasty).”

So Diocletian had to realign people’s incentives:

“From such guilt also he too shall not be considered free, who, having goods necessary for food or usage, shall after this regulation have thought that they might be withdrawn from the market; since the penalty ought to be even heavier for him who causes need than for him who makes use of it contrary to the statutes.”

The penalty was …death.

Same for anyone who purchased goods or services at prices above the prescribed amount (no matter how hungry or desperately you needed something or how scarce that something was).

As draconian as that sounds, it almost looks like more people were killed by deprivation and mob rule than were executed for violating price controls:

There was much blood shed upon very slight and trifling accounts; and the people brought provisions no more to markets, since they could not get a reasonable price for them and this increased the dearth so much, that at last after many had died by it”

The authors go on to cite Roland Kent:

“In other words, the price limits set in the Edict were not observed by the traders, in spite of the death penalty provided in the statute for its violation; would-be purchasers, finding that the prices were above the legal limit, formed mobs and wrecked the offending traders’ establishments, incidentally killing the traders, though the goods were after all of but trifling value; hoarded their goods against the day when the restrictions should be removed, and the resulting scarcity of wares actually offered for sale caused an even greater increase in prices, so that what trading went on was at illegal prices, and therefore performed clandestinely.

Within four years, the law was set aside, and Diocletian abdicated.

Michael Rostovtzeff, another leading Roman historian, remarked:

“Diocletian shared the pernicious belief of the ancient world in the omnipotence of the state, a belief which many modern theorists continue to share with him and with it.”

Here We Are Again

Since the unprecedented monetary stimulus during Covid, we are now beginning to see exactly how trapped we are – with politicians taking victory laps for 2.9% inflation (hedonically adjusted and perpetually revised) – nobody is really remarking that the official targeted inflation rate is in the process of being hiked by half from 2% to 3% target.

The Fed is getting ready to cut interest rates, the Bank of Canada, the Bank of England and the ECB are already cutting and as I told readers in the latest issue of The Bitcoin Capitalist, the Bank of Japan just showed the world that they can’t raise:

On Tuesday, August 6th, the Bank of Japan and the Ministry of Finance held an emergency meeting, and the next day announced “no more rate hikes” until the global financial system could handle it.

Which will be never.

For the first 50 years of the post-Bretton Woods era, since the Nixon Shock, monetary debasement has been mostly under-the-radar and after the stagflationary 70’s, had been largely confined to asset inflation.

This was thanks to a massive bond super-cycle that saw the cost-of-capital come down for 50 years, igniting an asset bubble on the other side of the ledger:

Consumer inflation never really started hitting hard until the aftermath of Covid, and the central banks took to hiking rates to try and get it back under control (my suspicion was always that what they really wanted to do was reload as high as possible so they could cut, once again):

Again, from this month’s TBC (see end of this post for a trial deal):

We’ve been saying since the Fed originally started hiking, that they would do so until something broke.

In March of 2023, something broke – with Silicon Valley Bank and the regional banking crisis; it was quickly papered over with FDIC backstops on all deposits, while the Fed abandoned their balance sheet reductions and quickly reinflated the money supply.

Everything since then has been a theatrical, slow-motion pivot.

Now, after this Bank of Japan miscalculation, something really broke – and the world now sees how the BoJ is trapped, the rest of the central banks are paused or already cutting, right when the global liquidity cycle is starting to turn back up.

Via RBC Global Asset Management

(Also – M2 is also beginning to rise again)

Price Controls Are The ‘Hail Mary’ Play of a Bankrupt System

All the usual tricks which got us this far, money printing, interest rate suppression, ballooning debt have finally run out of runway because they are now resulting in. consumer price inflation.

This is 100% the fault of bad political leadership and central bank policy but that will never be admitted.

Instead, politicians will resort ad hominem attacks on the productive class, and absurd accusations that it is the fault of investors and entrepreneurs, who must navigate the risks of monetary debasement, for causing it.

Hence, we have Kamala Harris seemingly anchoring her political campaign on “ending price gouging” once she’s in office.

She seems to be channeling Canada’s own champagne socialist, Jagmeet Singh, the Rolex wearing, Versace sporting millionaire  who routinely demonizes CEOs – particularly those of grocery store chains, for causing inflation:

Corporate greed in our country has reached a breaking point after decades of Liberal and Conservative governments that have rewritten the rules to favour the ultra-rich.

Now, every bill you pay makes CEOs richer.

It’s wrong.

I’ll change the rules to help you, not CEO profits. 

(What’s ironic in both cases, is Harris is promising to do something upon being elected, although she’s the incumbent Vice President since 2020, while Jagmeet Singh is the one person in Canada, who is single-handedly propping the Trudeau government in power with a coalition government that he could end at any time).

The Lure of Technocracy For Price Controls

After one looks at the historical record – 4,000 years of endless failures, in price controls, communism and every permutation of centrally planned economies, there has to be a reason politicians are still reaching for it as a solution to problems they have caused and why a small – but vocal and influential, segment of the public cheerleads this as a net benefit for society.

The secret sauce of “it’s different this time” is technology – particularly Big Tech, big platforms, Total Information Awareness and surveillance. Central planners think it is now technically feasible to run all the calculations and tracking in real time that would enable unrestrained monetary stimulus while keeping a lid on negative externalities like inflation.

Politicians like Kamala Harris and Jagmeet Singh are just farming public sentiment created by their own policy failures, but there are very serious people – mostly unelected technocrats of a particular globalist mindset, who think we have the means, motive and opportunity to create a kind of “fully automated luxury communism”.

One of my go-to clips for illustrating the mindset is J Michael Evans at a WEF meeting talking about coming personal carbon trackers:

Alibaba Group president J. Michael Evans boasts at the World Economic Forum about the development of an “individual carbon footprint tracker” to monitor what you buy, what you eat, and where/how you travel. pic.twitter.com/sisSrUngDI

— Andrew Lawton (@AndrewLawton) May 24, 2022

I’ll lay out the quote again here:

“We are developing, through technology, an ability for consumers to measure their own carbon footprint. What does that mean? That’s where are they travelling, how are they traveling? What are they eating? What are they consuming on the platform? So, individual – carbon – footprint – tracker. Stay tuned, we don’t have it operational yet, but it’s something we’re working on”.

The stage is set, when politicians tell you they want to be able to control prices, believe them – but what the public must understand is that price controls means spending controls.

The politicians will tell you that it’s all about putting “greedy CEOs” in their place.

What they won’t tell you is that price controls also means is telling  you what you can or cannot eat, how you use energy – whether you’ll be permitted to travel, or make any other kind of economic decision or make any kind of value exchange that you used to take for granted.

In a world of price controls, that’s over.

Throughout history, price controls have always brought about serfdom and tyranny because that is the only way to override individual incentives. In today’s highly wired world that would mean total technocratic feudalism.

The most vivid example we have today is Venezuela – where price controls were so effective, the rabble had to break into public zoos to eat the animals.

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The first shot to hit Thomas Crooks, the man who sprayed eight shots at a Butler, Pennsylvania Trump rally on July 13 – hitting Trump in the ear and killing an attendee – came from a local SWAT operator who was about 100 yards away from the building on which Crooks was positioned, Rep. Clay Higgins (R-LA) said in a preliminary investigative report.

When the SWAT officer saw Crooks moving around the rooftop, he quickly left his post and sprinted towards the man, “running to a clear shot position directly into the line of fire while Crooks was firing,” said Higgins.

“He stopped Crooks and importantly, I believe the shot damaged the buffer tube on Crooks’ AR,” Higgins added later, citing eyewitness testimony.

Shooting the buffer tube may have disabled Crooks’ rifle.

The next shot which killed Crooks came from a US Secret Service counter-sniper, according to Higgins.

As the Epoch Times notes further, Higgins, a member of the U.S. House of Representatives task force, traveled to Butler County to recreate how Crooks climbed onto the roof and assess what happened.

He said he was assisted in the investigation by local officials, including the Butler County Emergency Services Unit tactical team commander and a top official with the Butler County District Attorney’s office.

Higgins said that among the theories he probed was whether there was another shooter on top of a water tower overlooking the fairgrounds.

“There are videos on the internet showing a dark figure or a shadow on the water tower on J13. If there had been someone on that tower on J13, it would have to have been some top-shelf operator way beyond anything I’ve ever actually seen,” Higgins wrote. “Regular SWAT operators or snipers would not have the skills and gear to quickly overcome the first 25 feet of no ladder and then climb the remaining 75 feet to the catwalk, and then climb the quite intimidating and precarious dome vent access ladder.”

Higgins said he did not think it was possible for a second shooter to have been on top of the tower and that he did not see any evidence supporting the theory. He also stated that all 10 shots heard that day were accounted for, with eight coming from Crooks, one from a local SWAT officer, and one from the Secret Service.

Higgins said he plans on climbing to the top of the tower in the future as he continues to investigate the shooting.

“As I have said, every question will be answered, every theory explored, and every doubt erased. The American people deserve the full truth on the attempted assassination of President Trump,” Higgins said in a statement. “Our investigative efforts are moving forward in good faith. The release of my preliminary investigative report is reflective of my desire to deliver transparency and reassurance to the American people.”

Higgins sent his findings to Rep. Mike Kelly (R-Pa.), the chairman of the House task force.
The task force was created to issue subpoenas and take other steps to look into the shooting. It was given a deadline of Dec. 13 to produce a final report.

Kelly and Rep. Jason Crow (D-Colo.), the top Democrat on the committee, recently asked top federal officials, including U.S. Department of Homeland Security Secretary Alejandro Mayorkas, for documents and information related to the attempted assassination. Lawmakers have not yet disclosed what information they’ve received.

Authored by Brandon Smith, via Alt-Market.us,

In 2022 there was considerable debate among alternative economists what the Federal Reserve was likely to do in the face of rising stagflation. There were people who argued that the Fed would capitulate to stock market demands, stop raising interest rates and return to QE. These analysts operated on the assumption that the central bank WANTS to save the US economy from substantial deflationary crisis and that they will happily print money forever in order to delay such an event.

Some of us, however, understand that the Fed is not loyal to the US economy, nor is it necessarily interested in self preservation as an institution. In 2022 in my article ‘It’s A Fact That Needs Repeating: The Federal Reserve Is A Suicide Bomber’ I predicted:

“This leads us to the final question – What happens next? That’s easy to answer: The fed continues to hike rates well into next year and will not reverse course or capitulate and return to stimulus. The dovish predictions were wrong. The people that said the Fed would not raise rates were wrong. The people that said the Fed would never remove support from stock markets were wrong. This process is ongoing and the effects will grow as the months pass, but those that were hoping for a manic return to the days of bailouts and QE are going to be deeply disappointed.”

This prediction proved correct. I noted at the time that the Fed is not following its own program, it’s following a global program coordinated by the IMF and BIS. In order to understand why the Fed does the things it does, one must accept that they don’t care about the current world order. They care about facilitating a new world order.

Of course, part of that agenda requires that the central bankers never receive blame for their role in any economic crisis.  They have no problem blowing up the system as long as there’s a convenient scapegoat.  They’ve done it before and they’ll do it again.

I usually don’t put much energy into tracking stocks because I see them as a side show. Equities are primarily built on delusions, false hopes and unchecked fiat and the bubble will pop when those delusions are inevitably dashed by reality. Stock markets are not a leading indicator; they are a trailing indicator and they crash long after numerous other alarms have been triggered. That said, every once in a while the smoke and mirrors lift and you can get a glimpse of what is really happening behind the scenes.

The central bank has removed the primary backstop supporting US and European markets – The low interest rates that were feeding cheap money into corporate buybacks. Despite endless spin and false data from the Biden Administration the deflationary side of the crisis is starting to rear its ugly head.

A weaker-than-expected jobs report last week has fueled concerns about a potential economic recession and calls for an interest rate cut. Employers hired 114,000 workers last month, falling well short of economist expectations of 185,000 jobs, U.S. Bureau of Labor Statistics data showed. The unemployment rate climbed to 4.3%, the highest level since October 2021.  It’s only going to get worse from now on and I wouldn’t be surprised to see an unemployment avalanche in 2025.

Keep in mind that BLS jobs data has been rigged by the Biden White House for years; the majority of jobs “created” during Biden’s term are low wage part-time jobs and most have been going to illegal immigrants, not to American citizens. The same illegal immigrants that Biden has allowed into the country through open border and amnesty policies.

This trend is only going accelerate by winter. Why? Because the effects of the high interest rates are taking hold. It happens slow at first, then all at once. But how have stocks remained so high during this time period? A recent market shock may help us to understand…

As noted, the August stock slump has been partly driven by weaker-than-expected U.S. economic data at the end of last week. The readings led investors to worry that the Federal Reserve may be behind the curve in cutting interest rates to fend off a recession. But why does the Fed continue to keep rates high if this is the case?

There are two reasons.

First, as I have mentioned over and over since 2018, the end of QE and the raising of interest rates is a Catch-22; a trap.  Not for the Fed, but for the US economy.  Our financial system has become so addicted to cheap money from the central bank that it can barely function without it. We are seeing the addict begin to crash. Covid stimulus held up the system for another few years, but now that hit of sweet helicopter money is fading and the high is over.

At the same time we’re being crushed with a stagflationary hydraulic press. Prices continue to climb on most necessities and the cumulative inflation is around 30% (officially) on average since 2021. Compare grocery receipts from 2020 to today, though, and you’ll find a 30% to 100% increase in prices on most necessary goods and services.

The establishment (and the DNC) has been operating on the narrative that inflation has been defeated. The Fed knows that this is a lie. The moment they cut rates inflation will spike again and the illusion will be exposed. There’s FAR too many dollars floating around chasing too few goods.  For those that believe a rate cut is in the works to support the Kamala Harris campaign, I would suggest such a move might actually hurt her chances (whatever those chances may be) because her entire economic platform requires doubling down on the “success” of Bidenomics.  If CPI spikes again in October then her campaign is sunk.

Of course, over 54% of mainstream economists and investors polled now expect a rate cut next month and some Fed officials have mentioned the possibility.  I remain doubtful, but it will certainly make the election cycle even more interesting if they do.

The second issue is what appears to be a “carry trade trap.”

Carry trades refer to operations in which investors borrow in a currency with low interest rates, such as the Japanese yen, and reinvest the proceeds in higher-yielding assets elsewhere (the US). The strategy is a considerable driver of US stock markets and has kept stocks alive despite the Fed’s removal of QE.

This month’s stock plunge was triggered by fears that the Bank of Japan might hike interest rates, coupled with expectations that the Fed will cut rates in the near term due to the recession threat. This would kill the carry trade that has kept stocks going. To prevent a destructive carry trade unwind the Fed would have to coordinate with the BOJ and introduce a new stimulus program to soften the blow. But as I mentioned above, if the Fed returns to QE inflation will skyrocket yet again.

The public will demand an explanation as to how it’s possible for there to be deflation in markets and jobs and inflation in prices all at the same time?  The Fed won’t have answers for them.  It’s a Catch-22 on top of a Catch-22.

I believe there is no way out of this situation and that central banks deliberately maneuvered the US into this predicament. The only thing left for them to do is pull the plug when the timing is most advantageous. After the elections makes the most sense, especially if conservatives come out on top and there is a red sweep in 2025.

Then, the whole mess can be wrapped up and thrown in their laps.

One thing the events of this month prove is that the system is so unstable that even a hint of a change in the status quo could mean disaster. Don’t assume that banks will keep trying to kick the can down the road; they’re operating on a timeline that serves the interests of the global establishment, not the American public.

*  *  *

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US Secretary of State Antony Blinken met with Prime Minister Benjamin Netanyahu on Monday in Tel Aviv in what both called “a very good and important meeting.” Blinken touted that Netanyahu has accepted latest US proposal on a Gaza ceasefire deal, and now he’s urging that Hamas “must do the same”. 

Netanyahu in the meeting aftermath said that he appreciates “the understanding the US showed toward our vital security interests, amid our joint efforts to bring about the releases of our hostages.”

“I want to emphasize,” Netanyahu said, “efforts to release the maximum number of living hostages — in the first stage of the deal.” Blinken in a presser proclaimed that he’s in the region “to bring across the finish line” a ceasefire deal. He earlier warned this may be a “last chance” to secure a deal.

But the reality is that this is Blinken’s ninth visit to Israel since the war began after the Hamas terror attack of Oct.7, and each and every trip has been filled with statements of the voicing a US “ironclad” commitment to Israel’s security and simultaneous declarations that a truce as at the ‘goal line’. 

And yet the same blame-game always quickly ensues following such empty declarations, over the question of who is to blame for ultimately blowing supposedly ever-so close to the goal line deal – though realistically it doesn’t seem there is a viable deal on the table at all. 

All of this makes it hard to gauge the degree to which Blinken’s visit is just another empty exercise in Biden admin PR. 

The geopolitical analysis blog Moon of Alabama points out the following:

Axios claims that Hamas rejects a ceasefire deal with Israel:

Hamas rejects new U.S. proposal for Gaza hostage and ceasefire deal

The opener:

Hamas on Sunday rejected an updated U.S. proposal for a ceasefire and hostage deal in Gaza, blaming Israeli Prime Minister Benjamin Netanyahu for moving the goalposts and the U.S. for indulging him.

Seven paragraphs later we learn:

Zoom in: More specifically, Hamas objects to the fact that the proposal doesn’t include a permanent ceasefire or comprehensive Israeli withdrawal from the Gaza Strip.

Moon of Alabama concludes, “There is no ceasefire deal,” and questions: “How then could Hamas reject a ceasefire deal?”

Instead, this is what it really seems all about: projecting optics back home to Democratic voters who can yet again try to paint this meaningless trip as a “win” for Biden/Harris ahead of November…

BREAKING: HUGE Win for Biden /Harris Administration :

US Secretary of State Antony Blinken says Netanyahu has just accepted the latest U.S. proposal on a Gaza ceasefire deal. pic.twitter.com/MPxtXjVj7N

— Brian Krassenstein (@krassenstein) August 19, 2024

And Blinken’s own words reflect something which appears merely in abstract, ephemeral form and not yet actually agreed to or a working option in any firm way…

“There is a deep sense of urgency for getting this done,” said  Blinken. He described that this is “the best way to make sure the conflict doesn’t spread, that we don’t see escalation, that we can actually defuse some of the pressure points that we see throughout the region, and then open prospects for trying to build more enduring peace and security for everyone throughout the Middle East.”

On the recent build-up of Pentagon assets in the region, Blinken claimed that Washington does “not to provoke aggression” but rather it’s all about deterrence, and “also to make clear that if it does, we are fully prepared to defend Israel.” 

Meanwhile, Blinken on the ground in Tel Aviv, Al Jazeera is reporting that IDF strikes across Gaza have expanded and are relentless…

UNRWA says “Israeli ‘strikes are now relentless’ and some Palestinians in Gaza have no choice but to live in the rubble of destroyed buildings amid expanding Israeli evacuation orders.” https://t.co/4Wdefh0TeZ

— Kenneth Roth (@KenRoth) August 19, 2024

According to the latest AJ newswire headline: Senior Hamas Official says they agreed to proposal made by Biden and the US administration failed to convince Netanyahu of it, Al Jazeera reports.