Month: August 2024

Authored by James Grant via CoolidgeReview.com,

I stand with anachronism. I like the low hum of cultured voices, great books, and the dead authors who wrote them. I believe in the fedora hat, which should be tipped in the open air and doffed in an elevator. I support the gold standard.

Nothing against progress.

The sextant sailed us around the world and the slide rule got us up to the moon, but neither beats your pocket-sized GPS-cum-high-speed-computer-cum-Encyclopedia-Britannica.

I understand the imperative of creative destruction, but where has prudence gone?

It was nowhere to be seen in 2008, when a half dozen great American banks became wards of the state, triple­-A-­rated General Electric required a government bailout, and the edifice of subprime mortgages collapsed. “The greatest failure of ratings and risk management ever”—that’s what Doug Lucas, an executive director at the Swiss bank UBS, called this shameful episode when it was happening. And it was true.

Financial upheaval is as old as finance. Fractional reserve banking is inherently risky. But the so-­called Great Recession stands alone for the pedigree of the victims it claimed—or would have claimed except for the saving, smothering, costly federal intercession.

On Wall Street, the fear of loss is the best regulator. It inhibits the human tendency, especially marked in boom times, to overdo it. Zero percent interest rates and reams of paper money work in the opposite direction. They are the great disinhibitors.

“The creation of debt should always be accompanied with the means of extinguishment,” Alexander Hamilton said.

DRUNK ON CHEAP CREDIT

Recall, if you can, the dot-­com bubble of the late 1990s, its bursting in 2000–2001, and the Federal Reserve’s attempts to contain the damage. From 6.5 percent in 2000, the central bank slashed its policy interest rate to 1 percent in 2004.

The dot-­com bubble was indeed contained, but a new bubble, this one centered on fixed-income securities, especially mortgages, rose up in its place. It was titanic. And to contain the fallout of its bursting, in 2007–2009, the Fed slashed interest rates to zero. Its counterparts in Europe and Japan explored the new frontier of less-than-zero.

Ten years of ultra-­low rates, beginning in 2008, proved that money grew on trees. From Silicon Valley to Washington, D.C., from venture capital to private equity to cryptocurrency to private credit and the public debt, there was money for very nearly anything and everything.

Interest rates, arguably the most important prices in a market economy, inform. That is, market-determined interest rates inform. Manipulated interest rates misinform.

Observe, today, the immensity of the public debt. Note, especially, its accelerating growth. On Donald Trump’s inauguration day, it summed to slightly less than $20 trillion. Four years later, in 2021, it reached almost $28 trillion. In 2024, under President Joe Biden, it topped $34 trillion. The successive Republican and Democratic administrations boosted the debt by more than $14 trillion, as much as the totality of what the country owed as recently as 2011. Cheap dollars and artificial borrowing costs may not have made this dubious achievement inevitable. They certainly made it possible.

In the monetary vein, I think of the chaotic scenes at Cleveland’s Municipal Stadium, home of the old American League Indians, on the night of June 4, 1974. To draw fans into the cavernous ballpark, Indians’ management staged a ten-cent beer promotion. Before many innings had passed, spectators were wandering out on the field to introduce themselves to the players. The full moon didn’t help, but the underlying problem—the remote cause of the seven emergency-­room visits and nine arrests—was the mispricing of a substance nearly as intoxicating as artificially cheap credit.

America’s first secretary of the treasury famously wrote that “the proper funding of the present debt will render it a national blessing.”

A little less familiar are the cautionary words that followed. Alexander Hamilton said that he “ardently” wished “to see it incorporated, as a fundamental maxim, in the system of public credit of the United States, that the creation of debt should always be accompanied with the means of extinguishment.” Hamilton explained that he regarded this maxim “as the true secret for rendering public credit immortal.”

Now it’s the debt that’s immortal and the credit that’s at risk.

If good intentions could have solved the problem, the United States of America would command an across-­the-­board triple-­A credit rating. A succession of laws attests to lawmakers’ hopes that the federal accounts would somehow, one day, achieve balance: the Congressional Budget and Impoundment Act of 1974, the Gephardt Rule of 1979, the Balanced Budget and Emergency Deficit Control Act of 1985, the Budget Enforcement Act of 1990, the Balanced Budget Act of 1997, and the Budget Control Act of 2011.

But fiscal New Year’s resolutions have proven no match against the proverbial ten-cent beers on tap at the Federal Reserve. Rock-bottom interest rates and the Fed’s bond-buying program would have tempted a congress of saints to run up the debt. The incumbent sinners hardly needed the push.

The breakdown of American fiscal discipline and the explosion of the U.S. public debt did not occur during the first quarter century of the Bretton Woods system.

AUGUST 15, 1971

The late-­twentieth­-century sea change in the nature of money deserves more attention on this matter than it ordinarily receives. From Hamilton’s day to Richard Nixon’s, the dollar was defined as a fixed weight of silver or gold. It was exchangeable into that weight of metal, by one class of dollar holder or another, on demand. The Federal Reserve note was just that—a note, a debt instrument, an IOU. It was not money but the promise to pay money.

On August 15, 1971, President Nixon cut short the era of convertibility. The dollar henceforth would be undefined. It would be convertible into small change only. It would derive its value not from Fort Knox but from the U.S. economy, that great regenerative engine of wealth and opportunity. Was this not progress?

It must be said that little remained of the gold standard that Nixon put out of its misery. The classical gold standard died in 1914. A road-show variant, the gold exchange standard, succeeded the original in the 1920s. The Bretton Woods version followed in 1944. Its principal architect, John Maynard Keynes, called it, with some hyperbole, the “exact opposite” of a gold standard.

Under Bretton Woods, exchange rates were fixed, but they might be adjusted. The dollar alone was made exchangeable into gold, but only by America’s sovereign creditors. The United States retained the reserve currency privilege—that is, the privilege to borrow without visible limits in the currency that only America could lawfully print. It has proven enough fiscal rope to hang ourselves.

Certainly, the Bretton Woods system was a step down in monetary rigor and cohesiveness, but what did not occur during its quarter century of operation was the breakdown of American fiscal discipline and the explosion of the U.S. public debt.

To avoid giving political offense, Alfred Kahn, President Jimmy Carter’s inflation czar, called a recession a “banana.” Maybe “gold standard,” too, needs a verbal makeover, so low is its standing in the eyes of academic economists.

Or, perhaps, a better understanding of the gold standard itself—its workings and character—would move the debate forward. Simplicity is the archstone of the gold standard. What does that mean? First, defining money as a weight of gold; second, allowing that treasure to move freely among participating gold standard nations. It went where it was treated well. “To me,” Federal Reserve governor Adolph C. Miller told Congress during the Coolidge presidency, “the gold standard means a set of practices, a system of procedure, never formulated, never consciously thought out, not invented by anybody, but the growth of experience of the great commercial countries of the world, rather than merely the employment of gold…to redeem all forms of obligations.”

Among the practices to which Miller referred was the protection of bank depositors. Up until the advent of the Federal Deposit Insurance Corporation, that responsibility fell on a bank’s shareholders. In case of the insolvency or impairment of the institution in which they held a fractional interest, the shareholders got a call to stump up more capital—after all, it was their bank, not the taxpayers’. Here was a noble kind of social justice.

Under the gold standard, macroeconomic theory played little part in the formulation of policy. Under the PhD standard, macroeconomic theory drives policy making.

THE PhD STANDARD

The “exact opposite” of the gold standard is really the system in place today in the United States. One might call it the PhD standard. It’s the system of discretionary manipulation of interest rates by doctors of economics to achieve a little inflation—not too much, mind you—and maximum employment.

It’s a feature of the balance sheet of today’s Federal Reserve that operating losses swamp stated capital. Paying out in interest much more than it earns in interest, the Fed finds itself in the position that made Silicon Valley Bank infamous in 2023.

Under the gold standard, a central bank balance sheet held few, if any, government securities. Under the PhD standard, a central bank balance sheet holds almost nothing else.

Under the gold standard, the policy of each participating nation conduced to the prosperity of all participating nations; it was a synchronous, outward-looking system. Under the PhD standard, each nation looks entirely to its own interests.

Under the gold standard, macroeconomic theory played little part in the formulation of policy (indeed, the phrase monetary policy went uncoined until the 1930s). Under the PhD standard, macroeconomic theory drives policy making. And there is the rub. Which theory is correct? Which is relevant?

“Inflation is always and everywhere a monetary phenomenon,” Milton Friedman pronounced. Updating Friedman, John Cochrane, one of the brightest of today’s economic lights, declares, in so many words, that inflation is always and everywhere a fiscal phenomenon. With due respect to each theorist, it’s as if physicists were still arguing about the laws of motion.

“Things without all remedy should be without regard,” said Lady Macbeth. In other words, what’s done cannot be undone.

I take the point that the shift away from convertible currencies to the pure paper kind is a historical fact. But I wonder whether what stands in the way of a fundamental reappraisal of our monetary and fiscal arrangements isn’t really a cultural impasse.

The gold standard was a constructively inhibiting institution. How it would fare in this, the age of the overheard cell-phone discussion about the speaker’s ugly impending contested divorce, is anybody’s guess. Perhaps we should prepare the cultural ground for fundamental monetary reform by bringing back the telephone booth—and, of course, the fedora.

*  *  *

This article appears in the Summer 2024 issue of the Coolidge Review. Request a free copy of the print issue.

Nvidia shares plunged in early premarket trading in New York. The world’s most valuable chip maker is being battered by a global selloff, rising recession fears, AI bubble unwind (mid-July report: “Did The AI Bubble Just Burst, And What Happens Next”) , and reports of delays in its new AI chip production. 

The Information reports that Nvidia has informed Microsoft and other cloud providers that its most advanced AI chip models in the Blackwell series (B200 AI chip) face three months of delays following the discovery of a design flaw “unusually late in the production process.”

Google, Meta, and Microsoft are betting billions of dollars on Nvidia’s new chips to maintain top leadership in the AI arms race. All three companies have ordered “tens of billions of dollars” of advanced AI chips that might not be produced until later this year and might not be ready for mass shipment until the first quarter of 2025.

Nvidia spokesperson John Rizzo told The Verge that production of the new chip could begin “ramping in the second half of this year,” adding, “Beyond that, we don’t comment on rumors.”

For Nvidia, the new AI chips were supposed to lead to new yearly releases of advanced chips, with executives stating just months ago that “Blackwell-based products will be available from partners” starting in 2024.

Now, Nvidia must soon compete with other chip companies, such as AMD, in the AI race. 

Nvidia’s B200 chips will replace the popular H100 chips that unleashed huge sales and robust profits for Nvidia, catapulting shares to the stratosphere.

However, a production delay sparked turmoil in shares on Monday morning, down as much as 10% in premarket trading to the $96 handle. From the $140 peak in mid-June, shares have slid nearly 31%. Now, we must add that a global selloff is also underway this AM.

Meanwhile, UBS analyst Sunny Lin wrote in a note to clients Monday that Nvidia’s manufacturing partner, Taiwan Semiconductor Manufacturing, might run into potential production issues: 

“We believe Nvidia could be prioritizing CoWoS-L’s tight capacity to B200, which has higher value for the GB200 superchip…this may enable Nvidia [to have] better flexibility and be less constrained by TSMC’s CoWoS capacity.” 

None of this will help bulls argue against iconic fund Elliott Management’s argument that Nvidia is in a “bubble”, and the artificial intelligence technology driving the chipmaking giant’s share price is “overhyped with many applications not ready for prime time”.

It took them four-and-a-half years, but the IRS has issued final rules governing mandatory distributions from traditional 401k’s, IRAs, and other retirement plans inherited in 2020 or later. To the great disappointment of beneficiaries and their financial planners, the agency embraced the most complex procedure possible as it interpreted a law passed by Congress in 2019. 

The new rules apply when the deceased IRA owner was old enough to be making required minimum distributions (RMDs) of their own before they died. Currently, that requirement starts at age 73, but in 2020, it was age 72. It’s scheduled to rise to age 75 in 2033. (Yes, we’re only in the second paragraph and things are already getting knotty. Bear down.)  

Good news: The new requirements do not apply to spouse beneficiaries, who will still be able to take over the inherited retirement plan assets and have them treated as if they had always been theirs. There’s also forgiving flexibility for so-called “eligible designated beneficiaries,” such as those who are disabled or chronically ill, minor children of the deceased owner, and others who are not more than 10 years younger than the deceased owner. 

Other beneficiaries, however — such as an adult child of someone who was of RMD age — are now condemned to mandatory distributions over a 10-year period, with requirements to draw money out each year. It’s not one-tenth of the account per year — rather, the amount is driven by an IRS life-expectancy table. Those who miscalculate the amount, or who neglect the chore altogether, will be penalized 25% of the amount that should have been withdrawn, but wasn’t. 

The hassle springs from December 2019’s SECURE Act, which, among many other retirement-account tweaks, killed the so-called “stretch IRA” — which previously let beneficiaries minimize distributions by spreading them out over their life expectancies. The new law requires most non-spouse beneficiaries to completely empty an inherited IRA by Dec. 31 of the year containing the 10th anniversary of the account owner’s death. For example, an adult child who inherited an IRA from a parent who died in October 2021 has until Dec. 31, 2031 to take all the money out. 

When the law was first passed, tax professionals and financial planners assumed that people covered by that “10-year rule” would be able to take out as little or as much as they wanted until the 10th year, when the entire account would have to be emptied. However, in 2022, the IRS caused an uproar when it said it would force withdrawals every year. The agency then took about two years to reconsider its stance, only to end up imposing the same complex requirement via final rules posted in July.  

The new provision applies to those who inherited an IRA from someone who died in 2020 or after. Between the SECURE Act’s passage in 2019 and this summer’s announcement, countless beneficiaries were subjected to a multi-year, rolling bureaucratic fiasco, unsure what they were supposed to do. In a rare display of mercy, the IRS said it wouldn’t penalize anyone who didn’t take a required distribution in 2021, 2022, 2023 or 2024.  

In 2025, however, it’s game-on, and affected beneficiaries will have to start taking RMDs. There’s no need to “make up” for the years when the IRS waived the penalty, and the 10-year clock is still based on the year of death. (Remember, if you inherited an IRA from someone who died in 2019 or earlier, these new rules do not apply to you.)

It could be in your interest to take out more than the RMD. For example, if the account is big enough, a large, single withdrawal in Year 10 could push you into a higher tax bracket, or have a domino affect on other elements of your tax return that key off your adjusted gross income. Then there’s the question of what future tax rate you’ll be subjected to in a late-stage empire that’s $35 trillion in debt — as the pending Jan. 1, 2026 expiration of the Trump-era tax cuts swings in the balances of the November election.  

In the first few years after the SECURE Act passed, many financial institutions threw up their hands on inherited IRA RMD calculations, merely telling investors to ask a tax advisor. Now, they’re starting to come around. Vanguard, for example, offers an online, inherited IRA RMD calculator that anyone can access.  

As always, the maddening complexity of the income tax makes us wish 1913 never happened…

Authored by Colin Crossman via Bitcoin Magazine,

Following the announcement on July 27th at the Bitcoin conference in Nashville, the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide” or BITCOIN Act of 2024, introduced by Senator Cynthia Lummis of Wyoming, seeks to firmly establish Bitcoin as a strategic asset in the United States’ financial arsenal. At its core, the Act proposes the creation of a Strategic Bitcoin Reserve (SBR) and a structured Bitcoin Purchase Program, and comprehensive national custody policy. While the bill is quite brief, what follows is a breakdown of the Act’s key provisions, their implications, and the innovative funding mechanisms employed.

The Strategic Bitcoin Reserve

The establishment of the SBR signifies a paradigm shift in how the United States government manages and custodies Bitcoin at the Federal level. Mirroring many of the best practices currently discussed in the field, such as geographically distributed keys, a cold storage mandate, and independent proof-of-reserves audits, the SBR creates a decentralized network of secure Bitcoin storage facilities across the United States. (Notably not mentioned, however, is a multi-signature system, however it is not explicitly prevented either.) The Act thereby aims to protect against breaches and vulnerabilities to a single catastrophic event.

Bitcoin Purchase Program

The Act lays out a plan to acquire up to 1,000,000 Bitcoins over a five-year period, capping purchases at 200,000 Bitcoins annually, and then holding such reserves for twenty years. Furthermore, the Act places limits on the use and sale of the reserve following the holding period. During the minimum holding period, no Bitcoin held by the Federal government in the SBR may be sold, swapped, auctioned, encumbered, or otherwise disposed of for any purpose other than retiring outstanding Federal debt instruments.

Funding the Bitcoin Purchase Program

In order to minimize the impact on taxpayers, the Act employs several methods to finance the acquisition of Bitcoin, ensuring economic sustainability without increasing Federal debt.

It first proposes an amendment to the Federal Reserve Act to reallocate discretionary surplus funds from the Federal Reserve Banks. This reduces the discretionary surplus funds from $6.825 billion to $2.4 billion. The Federal Reserve is then required to remit net earnings to the Treasury, and the Act redirects the first $6 billion towards purchasing Bitcoin.

Furthermore, the Act also involves an adjustment in the valuation of gold certificates held by the Federal Reserve. Currently, the Federal Reserve holds gold certificates which are marked at $42.22/oz, while the market price of gold is closer to $2,400 today. Essentially, this forces the Federal Reserve to mark-to-market the gold certificates, then remit the gain on the gold to the Treasury for the purpose of funding the initial acquisition.

State Participation

The Act contemplates accepting State-level Bitcoin holdings into the national framework through voluntary participation. This aspect allows individual states to store their Bitcoin holdings within the SBR in segregated accounts. By offering this option, the Federal government allows (but does not require) States to add Bitcoin to their own treasuries, without having to reinvent and reimplement a robust security plan.

States participating in the program maintain exclusive and segregated title to their Bitcoin, and the right to withdraw or transfer their Bitcoin holdings from the SBR, subject to the terms of their contractual agreement and any applicable Federal regulations, but are not subject to the Federal restrictions otherwise applicable to the SBR. This flexibility ensures that States can manage their Bitcoin treasuries in accordance with their specific financial strategies and needs.

Implications & Next Steps

By tapping into existing financial resources and leveraging the economic value of gold, the BITCOIN Act aims to acquire Bitcoin without directly burdening taxpayers or increasing federal debt. This multifaceted approach underscores the innovative financial strategies the Act employs to integrate Bitcoin into the national reserve system, setting the stage for a comprehensive Bitcoin policy throughout all levels of the United States government.

Readers who wish to support the Act should contact their legislators, either directly or through a tool such as this one built by the Satoshi Action Fund.

Ukraine’s President Zelensky has continued poking the Russian bear, this time by showing off $60+ million (a pop) new toys given by Western allies.

His office published video of Zelensky addressing a military ceremony from an undisclosed location inaugurating the country’s first US-made F-16s into combat deployment.

The video featured scenes of a pair of F-16s flying low over the event, as well as a jet fighter with a newly minted national trident logo parked on the tarmac behind him.

“We often heard the word ‘impossible’. Now it is a reality. Reality in our skies. F-16s in Ukraine. We made it happen,” Zelensky said with jets flying overhead.

“I am proud of all our guys who are mastering these aircraft and have already started using them for our country,” he said, following an over year-long training program which was based in the United States and northern Europe.

AFP and other international journalists present for the event witnessed at least two of the newly transferred F-16s, but the public has been kept in the dark as to precisely how many have already been transferred.

Kiev will be immediately worried about Russian forces taking them out, given the symbolism of such a big transfer from external backers. In prior months, Ukraine even signaled it would park some at nearby partner countries’ airbases, just out of Moscow’s reach.

Ironically, even while unveiling the first of dozens of jets to be transferred, Zelensky complained that it is still not enough from the West. “Our partners know that the number of F-16s we have in Ukraine, the number of pilots who have already been trained, is not enough,” he said. “The good news is that we are expecting additional F-16s.”

We are now in a new phase of development for the Air Force of the Armed Forces of Ukraine. We have done a lot to transition the Ukrainian Air Force to a new aviation standard – Western combat aviation. From the beginning of this war, we have been talking with our partners about… pic.twitter.com/z21yTU0Hjo

— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) August 4, 2024

“Our guys are training a lot,” he also confirmed of the ongoing pilot program which includes learning English technical terms which are unique to the aircraft. He further thanked Denmark, the Netherlands, the United States and additional allies for providing the jets and supporting the training program.

While something like 80 of the jets have been promised, Zelensky has been urging that partner nations secure at least 130 jets so Ukraine can secure its skies, which thus far Russia has dominated.

Authored by Marina Zhang via The Epoch Times (emphasis ours),

Twenty years ago, professor Fredrik Almqvist, an organic chemistry professor at Umeå University in Sweden, was asked by his collaborating researchers at Washington University in St. Louis (WashU) to design a compound that would prevent urinary tract infections, which are often caused by Gram-negative bacterial infections.

Almqvist’s team created various compounds that were then screened for their effects.

Rather than controlling Gram-negative bacteria adherence, they found some of the compounds were highly effective at killing various Gram-positive bacteria. These included multidrug-resistant strains classified as concerning threats by the U.S. Centers for Disease Control and Prevention (CDC).

The researchers singled out one compound, which they named PS757. Lab testing has shown PS757 to be effective against methicillin-resistant Staphylococcus aureus (MRSA), vancomycin-resistant Enterococcus faecalis (VRE), multidrug-resistant Streptococcus pneumoniae, and erythromycin-resistant Streptococcus pyogenes (S. pyogenes), among others.

They further studied the effect of PS757 on S. pyogenes, a potentially flesh-eating bacteria, in animals.

Kills Flesh-Eating Bacteria

S. pyogenes can cause a wide range of infections, from mild localized ones to potentially fatal soft-tissue infections, or necrotizing fasciitis.

In an animal study published Friday in Science Advances, researchers showed that the compound may help control the spread of the flesh-eating bacteria in rats and aid in recovery.

Rats with PS757 injected into their skin had more minor ulcers and open wounds. They also healed faster than those not treated with the compound.

S. pyogenes causes flesh-eating-like wounds by releasing toxins that kill soft tissue. These wounds are treated with antibiotics and surgical interventions to remove the infected tissues.

The animal study did not assess PS757’s effects on other bacterial infections. However, the research team’s previous laboratory studies showed that the compound was effective against other Gram-positive bacteria.

Current antibiotics for S. pyogenes control infections by blocking the bacteria’s toxins. However, antibiotic resistance has been on the rise. Lab experiments showed that PS757 worked as well as conventional antibiotics like vancomycin and clindamycin in killing S. pyogenes.

In necrotizing fasciitis caused by S. pyogenes, “clindamycin is the drug of choice due to its ability to suppress production of potent exotoxins,” Dr. Dennis Stevens, professor of medicine at the University of Washington’s Division of Allergy & Infectious Diseases, who was not involved in the study, told The Epoch Times via email.

Resistance to clindamycin has been reported in China, the United Kingdom, and the United States, and linezolid, another antibiotic, is a useful alternative, he said.

Dr. Stevens said the study used a strain of S. pyogenes rarely associated with toxic shock or necrotizing infection.

“Looks promising in their model. No toxicity studies yet,” he told The Epoch Times.

While the compound is far from ready to be made into a pharmaceutical, the authors hope that by conducting further research, they will be able to form a new antibiotic class for treating various drug-resistant bacterial infections.

A Broad Gram-Positive Bacteria-Killer

Almqvist designed the compound by making it mimic a bacterial peptide.

With this peptide as the base, he and his team added various components to change the compound’s properties. Compound PS757 is their latest variation.

“They work against a broad spectrum of Gram-positive bacteria, including the ones that already were running out of antibiotics to treat, like VRE and MRSA,” Michael Caparon, a professor of molecular microbiology at WashU and one of the study’s senior authors, told The Epoch Times.

Bacteria can be divided into two major classes: Gram-positive and Gram-negative. Gram-negative bacteria have an extra outer membrane, while Gram-positive do not.

“The bactericidal effect so far on wild-type bacteria is only seen with the Gram-positives, but we are pretty certain that we can also develop them further and affect Gram-negative bacteria,” Almqvist told The Epoch Times.

Caparon said that PS757 has several unique properties that may make it more effective than other antibiotics if research is successful.

“[These properties are] particularly effective against what are called persister cells,” living bacteria that have stopped growing, he said.

Most antibiotics on the market kill bacteria that are actively growing and replicating. They are ineffective against non-growing bacteria, which can contribute to bacterial resistance.

When a bacterial population is treated with antibiotics, “about 99 percent of them” die, Caparon said, but a small percentage of bacteria—persister cells—live on.

“When the antibiotic goes away, [the persister cells] grow out again and start the infection all over again,” Caparon explained.

PS757, however, has also been shown to kill persister cells, which may reduce antibiotic resistance.

Another unique aspect of the compound is that it can kill bacteria in biofilms. Biofilms are created when bacteria attach to a surface and form a community.

An example of a biofilm is the slick masses that grow in the moist areas of bathrooms.

Bacteria in biofilms are more resistant to antibiotics, often requiring a higher dose to kill them, but the researchers found that PS757 could kill these biofilm bacteria even without increasing the dose, Caparon said.

Only Early Developments

Almqvist and Caparon told The Epoch Times that much more work is needed before the compound is ready for pharmaceutical use.

“In this particular study, we don’t have what’s called the candidate drug; it’s not at that level. This is more like a really cool starting point towards a candidate drug,” Almqvist said.

He said that more work is needed to fine-tune the final compound, as is more research to understand how the drug behaves, its dosage, why and how it kills the bacteria, and how to optimize its effects.

With some drug designs, researchers know why the drug works because its functions were designed into the drug from the get-go. With PS757, however, the properties were discovered unintentionally.

Another way to find out how the drug works is to look for bacteria resistant to it. By understanding why the bacteria are resistant, researchers may determine why the drug works. However, PS757 has been successful to the point that no resistant bacteria have yet to be detected, making exploring its mechanism all the more complicated.

Almqvist, Caparon, and the other senior author, Scott Hultgren, have patented the compound used in the study and licensed it to a company with the expectation of facilitating pharmaceutical development and clinical trials.

According to its conflict minerals report (CMR) for 2023, Amazon cannot rule out having sourced minerals from nine of ten African countries where human rights-violating militias finance themselves through mining.

These countries are the Democratic Republic of the Congo, the Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola.

But, as Statista’s Florian Zandt shows in the chart below, the other four members of GAMAM, a group synonymous with the moniker Big Tech, also potentially source some of the raw materials processed in contracted smelters from these regions.

You will find more infographics at Statista

Both Apple and Google’s parent company Alphabet reported that smelters integrated into their supply chains potentially processed minerals from six of the ten countries on the African continent mentioned above. Meta lists five of these countries in its report, while Microsoft claims to have reason to believe that minerals from two of the ten countries listed might end up in their products. However, the country list provided by Alphabet was last updated in 2021 and has been absent from their annual CMR since 2022. Additionally, Microsoft doesn’t clarify if the countries listed in its report are merely those where smelters are located or if they are the source countries for potential conflict materials.

Contractors working for GAMAM companies are also active in extracting and processing raw materials in countries defined as CAHRAs, short for Conflict-Affected and High-Risk Areas. The extended CAHRA definition, which includes the extraction of minerals as well as other conflict resources, encompasses specific regions in Afghanistan, Mexico, Myanmar, and Yemen, among others.

According to Microsoft’s conflict minerals report, the company relies on “responsible sourcing” rather than restricting or avoiding the usage of the conflict minerals tantalum, tin, tungsten, and gold, known as 3TG, from these regions. Stopping operations in Covered Countries and CAHRAs would allegedly cause significant economic harm to the affected countries.

U.S. importers of raw materials have been required to disclose their sources for potential conflict minerals under the Dodd-Frank Act since 2010. A similar regulation has been in effect in the European Union since January 1, 2021, aimed at curbing the financing of violent militias, particularly in the Democratic Republic of Congo and surrounding countries, where said groups control the mining of tin and coltan. In the 1990s, the term “blood diamonds” gained significant attention in this context, referring to gemstones mined in Sierra Leone and Angola and sold by rebel groups to finance their operations.

Via Middle East Eye

Russian military intelligence officers are believed to have been deployed to Yemen to assist the Iran-backed Houthis with targeting commercial vessels in the Red Sea, Middle East Eye can reveal. Members of Russia’s GRU military intelligence are operating in the Houthi-controlled territory of Yemen in an advisory role, a senior US official told MEE, speaking on condition of anonymity and citing US intelligence.

The exact nature of the Russians’ role is murky, but the US official said that GRU officers have been operating in Yemen for “several months” to assist the Houthis in their targeting of commercial shipping, which the Houthis say is in solidarity with besieged Palestinians in Gaza.

The sensitive deployment comes as Russia has been eyeing ways to step up its support for the Iran-backed Houthis.

President Vladimir Putin mulled providing the Houthis with sophisticated anti-ship cruise missiles, but was dissuaded from doing so after the direct intervention of Saudi Arabia’s Crown Prince Mohammed bin Salman, MEE revealed in June.

The Wall Street Journal confirmed the report in July but added that the US is still concerned Putin could arm the Houthis, potentially as a way to dissuade the US from allowing Ukraine to strike deeper into Russian territory. 

“If Russia were to give the Houthis arms, putting technical advisors on the ground would be the first step to doing so,” Samuel Ramani, an expert on Russia’s foreign policy in the Middle East and Africa at the Royal United Services Institute, told MEE.

“But it could also just be a sign of deepening cooperation. Given the Saudis’ concerns, this would be a middle ground as Putin holds off on arming the Houthis.”

The US intelligence shared with MEE did not reveal where the Russian advisors are operating. The White House and Department of Defence didn’t respond to MEE’s request for comment on this story by the time of publication. 

The US anticipates Iran’s so-called “axis of resistance”- which includes Yemen’s Houthis, Lebanese Hezbollah and Iraq’s Popular Mobilisation Forces – to take a more prominent role in a retaliatory attack on Israel compared to April when Iran directly launched hundreds of drones and missiles at Israel. 

Publicly, the Houthis and Russians have been engaging more closely. In July, Putin’s top Middle East diplomat, deputy foreign minister Mikhail Bogdanov, met in Moscow with a Houthi delegation led by the group’s spokesman, Mohamed Abdel Salam. 

Middle East Eye reached out to Russia’s foreign ministry for comment on the story but did not receive a reply by the time of publication.

‘Red Sea payback’

The Houthis started firing missiles and drones at commercial ships in the Red Sea shortly after the Hamas-led 7 October attacks on southern Israel. They say the attacks have been in response to Israel’s offensive on the Gaza Strip. In January, the US started bombing the Houthis but the strikes have not deterred the group.

The US says the Houthi attacks have been “indiscriminate” but the Houthis have guaranteed that vessels linked to Russia, Iran and China are safe in the Red Sea. But while Russian-flagged vessels have avoided attacks, those carrying Russian cargo have been hit.

Analysts say those attacks underscore the difficulty the Houthis face trying to sort through the interconnected world of global shipping, and their maritime intelligence limitations. Current and former US officials have told MEE they believe Putin sees the rising tensions in the Middle East as a weak spot to pressure the US over its support for Ukraine.

Vladimir Putin says Israel isn’t fighting a war with Gaza but is committing a complete destruction of the civilian population pic.twitter.com/TIjrYraZfA

— Jake Shields (@jakeshieldsajj) June 6, 2024

“There is a connection between Russia’s war on Ukraine and the Red Sea,” General Frank Mckenzie, the retired commander of US Central Command, previously told MEE. “Putin sees the US responsible for Ukrainian attacks on Russian vessels in the Black Sea. It is possible he could see doing something in the Red Sea as payback,” he said.

The US says the Houthis are relying on Iranian support to conduct their strikes, but the group also appears to be leaning heavily on open-source shipping data to draw up their target lists.

Putin’s decision to dispatch GRU officials on the ground in Yemen could be motivated by a desire to better organize the Houthis’ intelligence capabilities. Russia is not shy about putting boots on the ground in the Middle East.

Russia’s Wagner mercenary group operates in Libya and the arid Sahel region. Russia’s military is also deployed in Syria where it supports President Bashar al-Assad. Meanwhile, in Sudan, Russia is pushing ahead with plans for a Red Sea naval base, MEE has reported. “It makes sense Putin would want people on the ground to see how the Houthis are targeting and make sure Russian vessels aren’t hit,” Ramani said.

China is the world’s leading producer of beer, according to the BarthHaas Report released today. In 2023, the country’s output stood at 360 million hectoliters of beer. A hectoliter is equivalent to one hundred liters.

As Statista’s Anna Fleck shows in the following chart, the United States is the second biggest producer of beer with an output of 193m hl in 2023.

You will find more infographics at Statista

Rounding off the top ten countries are Poland in ninth place with 36m hl and South Africa in tenth position with an estimated 35m hl. Across Europe, beer production decreased by a total of 9m hl.

In the Americas, output fell by 7.2m hl. This figure hides the fact that while the U.S. saw a drop in output of -9.9m hl, South America saw growth of 2.4m hl and Central America and the Caribbean saw an increase of 0.2m hl.

Asia showed more of a mixed picture with production increasing significantly in India (+3.8m hl) and Cambodia (+2m hl), while it fell in Vietnam (-8m hectolitres), as well as declines of over 1m hl in South Korea, Thailand, China and Kazakhstan.

Meanwhile, the African continent saw a 4.6m hl increase in output, with the most significant growth in South Africa (+1.4m hl), Ethiopia (+1.1m hl) and Cameroon (+1.1m hl).

In 2023, world beer production decreased by nearly 17m hl to 1.88 billion hl. In Europe, production fell by 9m hl, largely driven by a drop in output from the United Kingdom (-3.3m hl), Germany (-2.9m hl) and Poland (-2m hl).

Authored by Kit Knightly via Off-Guardian.org,

Those outside the UK might not have heard, but it’s been a violent week in the UK. Here’s a quick rundown of the official story so far:

Four days ago a 17-year-old allegedly walked into a children’s “Taylor Swift dance class” (whatever that might be)  in Southport and started stabbing little girls, wounding 10 and killing 3.

It was initially reported the boy was a muslim immigrant.

This story was, however, reversed within hours, the new story “revealing” that he was actually born in Cardiff, the son of Rwandan immigrants. He was named as “Axel Muganwa Rudakubana” late yesterday.

His  religious affiliation, if any, seems not to have been firmly established.

Another young man was, allegedly,  arrested later while in possession of a machete and balaclava at  a vigil for the victims. He was, again, reportedly Muslim.

This, allegedly, resulted in what are described as protests and riots, the destruction of a brick wall outside a mosque and the burning of a police van.

Further alleged riots subsequently sprang up in London and Hartlepool.

This is the current narrative. None of the details has been substantiated as yet, so how much you decide to believe is your personal preference at this point.

At OffG we reserve the right to be sceptical. Of everything.

There are a lot of unanswered questions, and the current level of  “mourning” by government institutions and groups in no way directly affected  by the tragedy always has a taint of the performative that shouldn’t be too quickly conflated with  insincerity or worse.

And, of course, all of this is coming hot on the heels of the Manchester Airport incident, where police officers and Muslim youths allegedly clashed violently in as yet obscure circumstances.

Plus the violence in Whitechapel and Leeds a couple of weeks ago.

Then, as now, both sides were provided with adequate rage-bait to get them worked up.

Whatever the truth of this latest incident, and whatever long term aims it might be used to further, this “strategy of tension” has an immediate political agenda already becoming clear – and it’s as predictable as ever.

1. Further limit social media/free speech

2. Normalise constant surveillance

Attacking free speech is the ever-present, eternal agenda that comes before everything else and it’s been a real pile-on the last few days.

The Hill headlines “Misinformation floods social media in wake of breakneck news cycle”, Sky News went with “Southport attack misinformation fuels far-right discourse on social media”

ABC News reports: “Online misinformation fueled tensions over the stabbing attack in Britain that killed 3 children”

The Byline Times collectively scolds society’s negligence: “‘We All Need To Consider Our Role in the Wild West of Social Media Hypercriminality’”

The Institute for Strategic Dialogue (an NGO funded by the usual suspects) has timelined it all for our convenience: From rumours to riots: How online misinformation fuelled violence in the aftermath of the Southport attack

The BBC asks “Did social media fan the flames of riot in Southport?” and Telepgraph answers very much in the affirmative, cutting right to the heart of the matter [emphasis added]:

Unregulated social media disinformation is wrecking Britain – Free speech must come with accountability

The Times skips past establishing the problem right to apportioning blame: “Who is behind Southport social media storm — and can they be stopped?”

The Guardian has decided the answer is TikTok (and AI): “How TikTok bots and AI have powered a resurgence in UK far-right violence”

The New York Times demands to know what social media companies are going to do about it:

The U.K. Riots Were Fomented Online. Will Social Media Companies Act?

One particularly drunk uncle decided the whole thing is Putin’s fault, for some reason, but most of the fire is directed at Twitter/X.

Writing in Prospect, former-Guardian editor Alan Rusbridger claims “Elon Musk’s misinformation machine made the horrors of Southport much worse”, while Forbes wails “Elon Musk Isn’t Stopping Misinformation, He’s Helped Spread It”.

This is dual-purpose propaganda, it attacks the idea of free speech but also reinforces Musk/X’s totally false reputation as the savior of free expression.

You cannot begin to fathom how irritating it is to the ruling class that ordinary people are allowed to just say whatever they want whenever they want – including having the audacity to fact check the media in real time, with no repercussions at all.

That, more than anything else, has stalled the Great Reset in its tracks.

So it has to go.

Finally and forever.

It’s why  almost everything in the news cycle – from disease to climate change – can  allegedly be “solved” with censorship.

Because once free speech is abolished everything that comes afterward gets so much easier – including the second agenda being pushed right now: Mass surveillance and facial recognition technology.

When it comes to this secondary goal the media are yet to reach the “call for action” phase. They are still locked into “fearmongering”, with widespread warnings about nineteen future “far-right” marches and calls to proscribe Tommy Robinson’s EDL as a “terrorist organization”

Which, again, has the useful secondary effect of making this gentleman look more like a genuine force for opposition.

Funnily enough, UK Home Secretary Yvette Cooper was already discussing giving police “new powers to crackdown on antisocial behaviour” just a day before the Southport attack occurred.

But it fell to Prime Minister Sir Keir Starmer to formally lay it out in his address yesterday afternoon [transcript].

Pledging to counter the “far-right” with a new police division, and increased use of surveillance and facial recognition technology to “limit their movements”:

Wider deployment of facial recognition technology…And preventive action – criminal behaviour orders…To restrict their movements…

And firing a warning shot across the bows of social media:

And let me also say to large social media companies and those who run them…Violent disorder clearly whipped up online…That is also a crime. It’s happening on your premises. And the law must be upheld everywhere.

He even pointedly made clear his response wasn’t just about now or about countering the “far-right”, rather it was about ALL civil disobedience, for any reason:

A response both to the immediate challenge which is clearly driven by far-right hatred. But als “all violent disorder that flares up […] whatever the apparent cause or motivation – we make no distinction…Crime is crime.”

That means everything.

It means pro-free speech rallies, it means “bladerunners” cutting down ULEZ cameras. It means any potential anti-lockdown and/or anti-vaccine mandate protests during “the next pandemic”.

This is the beginning of a new crackdown on digital free speech and real-world protest…

and people are cheering him on, of course. Because they believe the State is our only shield from the nasty brick throwing baddies of the far-right.

To sum up the last three days in British politics for those not well versed in reading past headlines  and propaganda:

For the cost of one broken wall and a burnt out police van, the new “Labour” government have just won public approval  for new police powers and open season being called on  what remains of our free speech – and they get to distract from the now-inevitable tax raises too.

Not a bad trade.