Category: zerohedge

Authored by Steve Brown via TheDuran.com,

On the US dollar as reserve currency, that is a tough thing to break especially for China since the yuan is not freely convertible. China has renminbi and yuan; one they peg to the dollar and the other is circulated in China. Try converting USD to yuan in Paypal for example?  The option is not there. Payments from the west to china sellers by Paypal (for example) are only in dollars.

It is a complex subject since China is the only foreign nation with a direct link into the US Treasury for purchase of US debt instruments, bypassing the Fed’s crooked relationship with its crooked primary dealers. This is done to manage China’s global trade relationships via the value of its currency which is somewhat pegged to the dollar (even if China and Trump claim otherwise) thus evading Federal Reserve gamesmanship. That’s why Trump messing with China is so dangerous, even if China has few options right now.

As a result of this ‘trade war’ China has let the yuan slide versus the USD which is a warning to Trump, specifically Mnuchin, popularly known as one of the most slippery dealers (IndyMAC and One West) to ever walk the earth (and China knows that). China is hoping that a lower yuan will offset tariffs just as the US has ‘weaponized’ the dollar and has imposed sanctions and tariffs on China. Because the sums are so vast with China holding so much US debt, and because China depends on exports to the west, China is somewhat boxed in.

So far China has been happy building ghost cities and high-quality infrastructure instead of blowing up their monetary reserves on the battlefield in useless wars as others do. If China wanted to blow up their trillion in US dollar reserves on the battlefield that would be very serious for the west indeed and so far, the Chinese leadership — and for that matter China’s people — have expressed no interest in doing so.

China could reduce its ties to the US dollar (USD) by making the yuan freely convertible, noting the IMF’s inclusion of the yuan in the SDR as a first step. Next, China could reduce its US foreign debt holdings but the question is where that money will go… where is a nation to park billions upon billions or even one+ trillion in surplus if not in the US dollar? That’s still the great quandary for China.

Besides the trade war, the US has engaged in Vicky Kagan-Nuland type jiggery-pokery in Hong Kong (perhaps inspired by John Bolton at the time?) attempting to pencilf China’s leadership in some very risky US gamesmanship along with Britain. And Trump gives the impression he is willing to screw the pooch and throw everything away in the China trade confrontation to make a point about US hegemony.

The point being…. what option does China have in this war?  China has another option — rather than sell Treasury’s or fold to US trade demands — China could reveal its physical gold reserves and partially back the yuan with gold. (NB: return to a full gold standard in the present world economy is not possible – we are only discussing a partial backing, which has been the prevalent standard, ie partial not full, throughout modern monetary history until the adoption of a full by-decree currency by the US on August 15, 1971.)

In this scenario China could do the former Swiss thing and partially back the yuan with gold, just as the Swiss once partially backed the swiss franc with gold (40% reduced to 25% in 1997) until the Swiss franc threatened to become the world reserve currency usurping the USD by 1999.

What happened, the Swiss franc got so ‘strong’ against other currencies – and the USD – Swiss industries suffered. Also, the prospect then that the Swiss franc (now called the CHF) would usurp the USD as global reserve currency was absolutely terrifying to Swiss bankers who evidently prefer to be financial parasites instead of monetary leaders. [1]

Deflationary pressures, domestic costs, and tariff problems became so bad by 1999, Switzerland held a public referendum and went off gold in 2000. Then the bankers decided to sell almost two-thirds of their gold reserves — until the US financial collapse of 2008 — for reasons that are still unknown. One suspicion is that the Swiss monetary pharaohs foresaw fiat by-decree currency as a permanent feature and future condition for the global monetary system, but there are many more potential reasons.

The Swiss move to sell off 60% of its gold reserves from 2000 – 2008 was particularly surprising in light of Switzerland’s support for the gold carry trade. The old Swiss franc ended in 2000 and the current currency is the CHF.

Back to China’s potential to re-define the yuan with partial gold backing, should the yuan fall further against the dollar that would be the time to introduce such backing. China would have to reveal its true gold reserves and say, for example, back the yuan by 10% of its gold reserves.

But first, let’s posit that a full 1-to-1 ‘gold standard’ has never existed… not even in the United States, except for the period 1900-1913. Even then, National Bank Notes were not issued based on gold reserves although they purchased gold.

[Historically the gold standard was implemented partially by cooperation of all the major monetary powers, where the chart here uses the example of partial gold backing in Britain showing 1830 to 1931 when Britain officially exited gold backing of its currency:

Note that a gold standard based on gold reserves only imposes monetary discipline on the monetary system, when not all governments intend fiat by-decree governmental and private debt issuance to be used for noble purposes, as Modern Money Theory hopes.

Along with universal convertibility of the yuan, a move to 10% gold reserve backing by China would be a magnet to all currency traders since China would commit to maintain the value of its currency, when the US dollar is in process of continued and accelerating decline and devaluation. This is the bottom line that those who maintain the system wonder if you will ever know, that even partial gold backing of the yuan would dethrone the US dollar very quickly.

The problem being that partial backing of the yuan by gold would impact the global economy, and cause China’s money  – no longer strictly a currency when partially backed by gold – to strengthen enormously in relation to the dollar, and perhaps even achieve a 3-to-1 ratio over time (just a guess) where the yuan is presently 7-to-1.

Such a move would dethrone the US dollar but would also hurt China and possibly even lead to social unrest there. It would represent a fundamental change where China would have to become more like the US, relying on imports instead of exports; relying on ‘consumers’ to drive the economy, and war, just as the US has relied upon since November 22nd, 1963.

So far, a partial gold backing of the yuan to challenge King Dollar is not in the mindset of China’s leaders despite the pointless trade provocations and arrogant prodding of the dragon and meddling in Hong Kong that the US is engaged in. Thus the odds of a partial gold-backed yuan happening soon do not appear hopeful… and note that HSBC is itself a primary Fed dealer!

Which brings us to Fed dealers and the euro. As far as the euro challenging the USD? …that’s an easy one to address.  Some of Europe’s biggest banks are Primary Dealers of the Federal Reserve such as BNP Paribas, Barclays Capital, Credit Suisse AG, Deutsche Bank, and NatWest; they are actively engaged in maintaining the US dollar as global reserve currency.  Inducing the European banks to get their hands dirty with Federal Reserve dollars as primary dealers after 1971 was one key to establishing the USD as global reserve.

Ending that European support for the US dollar is an impossibility now, just witness Europe’s inability to work around US Treasury sanctions on Iran regarding Iran’s oil trade to Europe. The big European banks will attempt to maintain parity with the US Dollar and cannot challenge it, since the USD is interwoven into their economies by their status as Federal Reserve primary dealers and their purchase of US securities and debt instruments.

Even the US financial collapse of 2008 saw foreign funds flee to the ‘safety’ of US Treasury debt instruments, when US debt instruments caused that collapse in the first place. The prospect for Europe of China to dethrone the USD as global reserve currency looks bleak for now. Powell and other economists say the USD has at least fifty years remaining to reign supreme. However with the United States on the monetary path it has been on for fifty years now, the idea that the US can persist for another fifty years in its dominance of the global monetary system seems unlikely at best.

Perhaps of interest is the Federal Reserve’s extraordinary program to pump billions in US Federal Reserve digits into the banking system nightly, mostly to four primary dealers according to Wall Street on Parade. The specific trade detail concerning these massive funding injections is largely unknown to the public… and there is no indication that the Fed will reveal the precise nature of this interbank lending issue any time soon. The Fed calls this massive bank of Big overnight funding operation a “technicality” — and, like the Fed itself, is evidently an opaque technicality with no end.

Australian Prime Minister Scott Morrison and the patron saint of environmentalists, Greta Thunberg, have been duking it out in headlines as far as who is responsible for the raging brushfires near every major city across Australia.

Morrison rejected Thunberg’s call for political action as bushfires spread across the country, reported Bloomberg.

“We’ll do in Australia what we think is right for Australia.”@ScottMorrisonMP responds to @GretaThunberg. #auspol #AustralianFires pic.twitter.com/4zY68Hsvls

— David Marler (@Qldaah) December 23, 2019

Morrison said, during a news conference Sunday, it wasn’t the time to “make commentaries on what those outside of Australia think Australia should do” as he responded to Thunberg’s tweet that draws the connection between climate change and the raging inferno across the country.

Not even catastrophes like these seem to bring any political action. How is this possible?
Because we still fail to make the connection between the climate crisis and increased extreme weather events and nature disasters like the #AustraliaFires
That’s what has to change.
Now. https://t.co/DQcZViKJQz

— Greta Thunberg (@GretaThunberg) December 22, 2019

Morrison said he’s not trying to “impress people overseas” and won’t cave to international climate change demands:

“I have always acknowledged the connection between these weather events and these broader fire events and the impact globally of climate change. But I’m sure people equally would acknowledge that the direct connection to any single fire event, it’s not a credible suggestion to make that link.”

Morrison said bushfires in Australia are nothing new and have been happening for a long time.

“There are some fires that have been started by just carelessness, others sadly have been the result of direct arson, many have been created by dry lightning strikes,” Morrison said. “The drought conditions have certainly been a big contributor in terms of the dryness of the fuel load. There are also many other issues.”

Left-leaning Green politicians have been critical of Morrison for not drawing the connection between extreme heat fueling some of the worst bushfires in the country’s history.

Google News’ Saffron Howden tweeted a visual representation of the bushfires mapped out across the country, raging around almost every major city.

My god pic.twitter.com/hfmqN7eL2Z

— Saffron Howden (@saffronhowden) December 21, 2019

BBC news reported on Saturday that bushfires in Australia’s southeastern state of New South Wales were at the “catastrophic” levels.

“These are the very worst of conditions”

Catastrophic fire warnings are in place across the Australian state of New South Wales, where firefighters are tackling more than 100 blazeshttps://t.co/1jQvxxgMSv pic.twitter.com/IbFJCBMcNo

— BBC News (World) (@BBCWorld) December 21, 2019

A firefighter captured video of flames soaring above the treetops in New South Wales, Australia, where a massive fire raging in the Wollemi National Park area had burned nearly 380,000 hectares by Monday morning. #NSWfires pic.twitter.com/p0IrNLbqWB

— The Weather Network (@weathernetwork) December 17, 2019

Australia has declared a state of emergency in New South Wales as strong winds fan around 100 bushfires across the state.

Around 2,000 firefighters are battling the blazes, many of which are still uncontrolled.

Read the full story here: https://t.co/m5IXnoIeNa pic.twitter.com/rQnL7wZjqg

— Sky News (@SkyNews) December 19, 2019

The map below shows bushfires around Sydney were so bad over the weekend, that most roadways to exit the city were impassible.
 

There are now only 2 routes out of Sydney. Every other road is blocked by fire. pic.twitter.com/Njx6LveYKq

— David Morgan-Mar (@dmmaus) December 21, 2019

And to make matters worse, the Australian Bureau of Meteorology reports there will be no major rain event across the country for at least the next two months.

The Morrison Government appears to be the next target of climate change thugs, led by Thunberg and her “greenie” cult.

Authored by Shiraz Jagati via CoinTelegraph.com,

In its most basic sense, a deepfake is a combination of face- and voice-cloning AI technologies that allow for the creation of life-like, computer-generated videos of a real person. 

image courtesy of CoinTelegraph

In order to develop a high-quality deepfake of an individual, developers need to accumulate tens of hours of video footage associated with the person whose face/voice is to be cloned, as well as a human imitator who has learned the facial mannerisms and voice of the target.

There are two humans involved in the creation of a deepfake, such that the target face/voice is that of the famous person while the other belongs to an unknown individual who is generally closely associated with the project.

From tech to reality

From a technical standpoint, visual deepfakes are devised through the use of machine learning tools that are able to decode and strip down the images of all the facial expressions related to the two individuals into a matrix consisting of certain key attributes, such as the position of the target’s nose, eyes and mouth. Additionally, finer details, such as skin texture and facial hair, are given less importance and can be thought of as secondary. 

The deconstruction, in general, is performed in such a way that it is mostly always possible to fully recreate the original image of each face from its stripped elements. Additionally, one of the primary aspects of creating a quality deepfake is how well the final image is reconstructed – such that any movements in the face of the imitator are realized in the target’s face as well. 

To elaborate on the matter, Matthew Dixon, an assistant professor and researcher at the Illinois Institute of Technology’s Stuart School of Business, told Cointelegraph that both face and voice can be easily reconstructed through certain programs and techniques, adding that:

“Once a person has been digitally cloned it is possible to then generate fake video footage of them saying anything, including speaking words of malicious propaganda on social media. The average social-media follower would be unable to discern that the video was fake.”

Similarly, speaking on the finer aspects of deepfake technology, Vlad Miller, CEO of Ethereum Express — a cross-platform solution that is based on an innovative model with its own blockchain and uses a proof-of-authority consensus protocol — told Cointelegraph that deepfakes are simply a way of synthesizing human images by making use of a machine learning technique called GAN, an algorithm that deploys a combination of two neural networks. 

The first generates the image samples, while the second distinguishes the real samples from the fake ones. GAN’s operational utility can be compared to the work of two people, such that the first person is engaged in counterfeiting while the other tries to distinguish the copies from the originals. If the first algorithm offers an obvious fake, the second will immediately determine it, after which the first will improve its work by offering a more realistic image.

Regarding the negative social and political implications that deepfake videos can have on the masses, Steve McNew, a MIT trained blockchain/cryptocurrency expert and senior managing director at FTI Consulting, told Cointelegraph:

“Online videos are exploding as a mainstream source of information. Imagine social media and news outlets frantically and perhaps unknowingly sharing altered clips — of police bodycam video, politicians in unsavory situations or world leaders delivering inflammatory speeches — to create an alternate truth. The possibilities for deepfakes to create malicious propaganda and other forms of fraud are significant.”

Examples of deepfakes being used for nefarious purposes

Since deepfake technology is able to manipulate and imitate the facial features and personality characteristics of real-world individuals, it raises many legitimate concerns, especially in relation to its use for various shady activities. 

Additionally, for many years now, the internet has been flooded with simple tutorials that teach people how to create digitally altered audio/video data that can fool various facial recognition systems.

Not only that, but some truly disturbing instances of audio/video manipulation have recently surfaced that have called into question the utility of deepfakes. For example, a recent article claims that since 2014, deepfake technology has advanced to such levels that today, it can be used to produce videos in which the target can not only be made to express certain emotions but also bear resemblance to certain ethnic groups as well as look a certain age. On the subject, Martin Zizi, CEO of Aerendir, a physiological biometric technology provider, pointed out to Cointelegraph:

“AI does not learn from mistakes, but from plain statistics. It may seem like a small detail, but AI-based on plain statistics — even with trillion bytes of data — is just that, a statistical analysis of many dimensions. So, if you play with statistics, you can die by statistics.”

Zizi then went on to add that another key facet of facial recognition is that it is based on neural networks that are quite fragile in nature. From a structural standpoint, these networks can be thought of as cathedrals, wherein once you remove one cornerstone, the whole edifice crumbles. To further elaborate on the subject, Zizi stated:

“By removing 3 to 5 pixels from a 12 million pixels image of someone’s face brings recognition to zero!  Researchers have found that adversarial attacks on neural net attacks can find those 3 to 5 pixels that represent the ‘cornerstones’ in the image.”

One last big example of deepfake tech being misused for financial reasons was when the CEO of an unnamed United Kingdom-based energy firm was recently scammed into transferring 220,000 euros ($243,000) to an unknown bank account because he believed he was on the phone with his boss, the chief executive of the firm’s parent company. In reality, the voice belonged to a scammer who had made use of deepfake voice technology to spoof the executive.

Blockchain may help against deepfakes

As per a recent 72-page report issued by Witness Media Lab, blockchain has been cited as being a legitimate tool for countering the various digital threats put forth by deepfake technology. 

In this regard, using blockchain, people can digitally sign and confirm the authenticity of various video or audio files that are directly or indirectly related to them. Thus, the more digital signatures that are added to a particular video, the more likely it will be considered authentic.

Commenting on the matter, Greg Forst, director of marketing for Factom Protocol, told Cointelegraph that when it comes to deepfakes, blockchain has the potential to offer the global tech community with a unique solution — or at least a major part of it. He pointed out:

“If video content is on the blockchain once it has been created, along with a verifying tag or graphic, it puts a roadblock in front of deepfake endeavors. However, this hinges on video content being added to the blockchain from the outset. From there, digital identities must underline the origins and creator of the content. Securing data at source and having some standardization for media will go a long way.”

McNew also believes that owing to the blockchain’s overall immutability, once a particular data block has been confirmed by the network, its contents cannot be altered. Thus, if videos (or even photos, for that matter) are made to flow immediately into a blockchain verification application before being made available for sharing, altered videos could be easily identified as fake. 

Lastly, a similar idea was shared by Miller, who is of the opinion that blockchain technology in conjunction with artificial intelligence can help solve many of the privacy and security concerns put forth by deepfakes. He added:

“AI perfectly copes with the collection, analysis, sorting and transmission of data, improving the speed and quality of execution of internal processes. The blockchain, in turn, ‘makes sure’ that no one intervenes in the work of AI — it protects data and its sequence from any encroachment.”

Blockchain technology has its own limitations

As things stand, there are a few small drawbacks that are preventing blockchain technology from being actively used to monitor deepfakes on the internet. For starters, the technology is limited in its overall scalability, as the amount of computational resources and memory required to combat digitally manipulated A/V data in real-time is quite intense.

Another potential issue that could arise as a result of blockchain being used for deepfake detection is a substantial curbing of crowdsourced video content (such as the material that is currently available on YouTube). On the issue, Dixon pointed out:

“How does someone in a poor country reach the world with their message if they have to be approved by a Silicon Valley-based company? Should we be entrusting tech companies with such power? Liberty is always at stake when trust weakens.”

A similar opinion is shared by Hibryda, creator and founder of Bitlattice, a distributed ledger system that uses a multidimensional lattice structure to address issues such as scalability, security, timing, etc. In his view:

“The biggest drawback of blockchain tech lies in its inability to determine whether the signed media is really genuine or not. But that isn’t an internal issue of blockchain or related technologies — they only provide ledgers that are extremely hard to manipulate. It’s external and there’s no good way to solve that. While crowd-powered verification could be a partial solution, given crowds can be manipulated it’s rather impossible to build a system that provides reliable and objective fact-checking.”

However, Forst told Cointelegraph that while the majority of people tend to believe that leveraging blockchain might be too expensive for deepfake detection, there are several open-source solutions that seek to do this. Forst then added that, “The biggest drawback is that blockchain doesn’t solve the problem with deepfakes in its entirety, rather it can be a piece of the solution.”

China on Monday denied accusations of forced labor at a Shanghai prison, one day after a young girl in a London supermarket was reportedly shocked to find a note from the Chinese gulag, according to Reuters.

The note allegedly read “We are foreign prisoners in Shanghai Qingpu Prison China. Forced to work against our will,” and urged whoever found it to contact British former journalist and corporate fraud investigator Peter Humphrey, who was imprisoned in the same Chinese jail from 2014 – 2015 for illegally obtaining the private records of Chinese citizens and selling the information to various clients – including drugmaker GalaxoSmithKline.

Tesco suspended their relationship with the Chinese Christmas card supplier on Sunday and announced an investigation.

“We were shocked by these allegations and immediately suspended the factory where these cards are produced and launched an investigation,” said a spokesman.

According to Chinese Foreign Ministry spokesman Geng Shuang, however, “I can responsibly say, according to the relevant organs [!?], Shanghai’s Qingpu prison does not have this issue of foreign prisoners being forced to work.“

Ghuang said the entire story was “a farce created by Mr. Humphrey.”

The card was found by six-year-old Florence Widdicombe, who showed it to her alarmed father, who in turn contacted Humphrey on LinkedIn.

Writing in the Sunday Times, Humphrey said he did not know the identities or the nationalities of the prisoners, but he “had no doubt they are Qingpu prisoners who knew me before my release in June 2015”. –Reuters

According to Reuters, Humphrey did not believe his activities in China were illegal. He told Sky News that he believes the card came from the Zheijiang Yunguang Printing factory, where prisoners were used in the production line as slave laborers.  

Authored by Mike Shedlock via MishTalk,

Gold is not as correlated to the US dollar as most think.

I commented on this a few days ago in Gold Surprisingly Correlated With the US Dollar.

Gold has been positively correlated to the US dollar for well over a year.

Most of the time gold is inversely correlated to the US dollar.

The problem, as the lead chart shows, is that the strength of moves in gold vs the strength in moves in the US dollar are totally random.

Look at the period between 1995 and 2005. A huge jump in the dollar index yielded a relatively small decline in the price of gold.

Between 2005 and 2012 gold went on a long one-way tear up regardless of what the dollar did. The net result was a huge blast higher in gold vs the move in the US dollar index.

Gold and Miners vs the S&P 500

A few days ago someone Tweeted I was wrong about the positive correlation between gold and the dollar, stating that the correlation was between gold and miners and the S&P 500.

That idea is more than silly as the following charts shows.

Gold vs the S&P 500

$XAU vs S&P 500

Warning: Don’t use short-term charts as a basis for making generalized statements.

Path of Least Resistance

#Gold Price Forecast: A Weaker Dollar Is The Easiest Path To $2,000 Gold#preciousmetals #markets @KitcoNewsNOW @mike_maloney @SeekingAlpha https://t.co/8hOljcJFaY pic.twitter.com/0UumUhlY9W

— Gold Eagle (@GoldEagleCom) December 16, 2019

That is another one of those blind statements that feeds the widespread belief that gold is largely about the dollar.

Let’s look at this still one more way.

Various Price Points of Gold

With the US dollar right where it is now, gold has been at $450, $380, $1080, and $1480.

Moreover, and as shown above, sometimes gold has a positive correlation to the US dollar and sometimes negative.

Gold’s Big Surge

Gold went on a huge surge from roughly $450 to $1924 with the US dollar index falling from roughly 90 to 72.70.

Gold then fell to $1045 with gold bears coming out of the woodwork. Moves in the dollar once again do not explain. Here is a chart that does explain.

Gold vs Faith in Central Banks

If you believe the Fed has everything under control, then the primary reason to own gold is insurance in case you are wrong.

But one look at repo action and QE that allegedly is not QE ought to be enough reason to convince anyone that the Fed does not have things under control.

Price Target?

I have no price target, but I do have this observation:

If the dollar falls to 72.70 and gold acts the same way, gold will be at well north of $2000.

That is an “if and” statement, not a prediction. Yet, I do think $2000 gold has a very good shot. Dollar fundamentals help.

Dollar Fundamentals

1. The Fed is no longer tightening. The consensus opinion is the Fed is in for a long pause. I believe the Fed’s next move is another series of rate cuts. For discussion and an amusing set of “dot plots”, please see Fed Eyes Long Pause, No Rate Hikes in 2020

2. European central banks are starting to see the folly of negative rate. If the ECB joins the rate hike party or at least stops QE, that will put upward pressure on the Euro and negative pressure on the dollar.

3. Without a doubt the US stock market is extremely overvalued. This has led to dollar inflows from foreigners. When, not if, that reverses, the US dollar will reverse as well. For discussion, please see Where Will the Stock Market Be a Decade From Now?

4. The US also suffers massively from a Ticking Time Bomb of Record High Corporate Debt. When that breaks, it will not be good for US equities.

Where are We?

Not only are gold fundamentals excellent, dollar fundamentals help.

Got Gold?

The latest shooting deaths in Baltimore City bring the homicide count to 336 in 2019, up from 309 last year.

With eight days and 17 hours left in 2019 (as of 7 am est. Monday) — more homicides are expected in the region that could breach the record high of 342, achieved in 2017 and 2015.

A mass shooting occurred over the weekend in Baltimore that got very little attention in the national press. Seven people were shot but no deaths. There were also three homicides, with two on Saturday and one on Sunday.

The violent weekend angered Mayor Bernard C. “Jack” Young in a Sunday afternoon statement to the press that said: “The level of violence late into this weekend is completely unacceptable.”

Baltimore Police Col. Richard Worley said the gunmen in the weekend’s mass shooting were “brazen” and said it is an example of the overall criminal culture in the city.

“I think it’s the same thing that the commissioner [Michael Harrison] has been saying all along. The criminals are just brazen,” Worley said. “This guy gets out of a car with a rifle, not even a handgun, walks up the street and just opens fire on a line of people.”

Cumulative homicide trends in the city show a massive jump in violence was sparked after the 2015 riots. Homicides from 2014 to 2015 jumped 62% over the year, and ever since, have sustained over 300 homicides per year. 2015 and 2016 were record-breaking years for murders, and 2019 could be another year for new highs.

Homicides in Baltimore are seasonal. Homicides ramp up in spring and peak in summer. Winter usually suppresses the number of killings but not this year. Most of the murders are by handguns.

Baltimore is a dangerous city, and if you have plans to visit the collapsing area for the holidays — please be advised you’re risking your life as the per capita homicide rate is some of the highest in the country.

 

Authored by Adam Andrzejewski via Forbes.com,

For the first time in history, 19 million public employee salaries at every level of government across America have been mapped and posted online.

The work of our auditors at OpenTheBooks.com tells a compelling story: Public service is supposed to be about serving the people. However, the good intentions of America’s 19 million public employees come at a very high price for the people – nearly $1 trillion. In many cases, taxpayers generously fund these employee salaries.

Our online database is free to use and includes most employees within the federal, state, and local governments. You can search in your backyard or across the nation. Find out just how much public employees made last year. The salary records include name, salary, position title, and employer for 2017.

The data is full of stunning examples.

• Tree trimmers in Chicago lopped off $106,000.

• New York City school janitors cleaned off $165,000 while out earning the principals at $135,000.

• Lifeguards in Los Angeles County, California, made up to $365,000.

• In the small school district in Southlake, Texas (8,000 students), the school superintendent earned $420,000.

Help the reform-minded mayors, school superintendents, legislators and members of Congress by finding the waste, overspending, and bloated government in your very own neighborhood.

Search our interactive map of the top 2 million most highly compensated public employees across America. Just click a pin (your ZIP code) and scroll down to see the results that render in the chart beneath the map. Click here to access the map below.

Search 2 million public employee salaries by ZIP code at OpenTheBooks.com.

Last year, we found 1.7 million public employees earned $100,000 or more. The vast majority – 1.3 million six-figure earners – worked at the state and local levels. There were 105,000 local and state government employees out-earning every governor of the 50 states at a salary of $190,000 or more.

In Texas, 356 municipal employees made more than all governors ($190,000). Some of these towns are small, like Stanton (pop. 2,900), where the manager earned $314,696. In Whitesboro (pop. 4,000) and Manvel (pop. 10,000), the administrators were paid $312,000 and $292,529, respectively.

In Florida, the city attorney of the seaside community Dania Beach, Florida (pop. 32,000) gleaned $436,917 – that’s more than any U.S. president. At the Port Authority of New York and New Jersey, eight police officers and detectives made between $300,000 and $783,000 last year.

Nearly 10,000 employees of the University of California system pulled down more than $200,000. This includes 65 highly compensated public employees who made between $1 million and $3.6 million.

The top 5 locations for highly compensated public employees.

 OPENTHEBOOKS.COM

Across the country, some of the largest salaries were paid out to athletic coaches at public universities. The retired football coach at University of Oregon received a $558,689 annual pension, and the fired Arizona State football coach got a $15 million payout. Nick Saban, at the University of Alabama, made $11 million.

What will you find while searching the public payrolls in your community?

Our recent investigation with Fox 32 Chicago found an Illinois superintendent earning $407,000 in a Calumet City district with only 1,100 students and no high school. Another superintendent made $206,000 in a New Lenox district with only 11 teachers and less than 100 students. Still another superintendent retired on a $300,000 pension at a Park Forest district, but, was then rehired on a $1,200 a day consulting contract – same position, same district.

Before complaining about Washington, D.C., people must insist on good government where they live. The people have the power to hold local politicians accountable for tax and spend decisions. Our mission is to make this information available to citizens and policymakers.

Government payrolls are the No. 1 issue affecting every service: public safety, healthcare, and welfare. Pay, perks, and pension benefits for public employees must be a priority in budgeting and deserve a rigorous, fact-based public debate.

Highly compensated public employees banded by 2017 income.

 OPENTHEBOOKS.COM

Compiling this database was a spending genome project of sorts. It was a million-dollar effort. In one year, we filed requests and captured data from nearly 60,000 government employers, broke open the files, mapped the information, and posted it online.

The result is treasure-trove of oversight opportunity. It represents approximately 85% of all public employment at every level of government.

Now, it’s up to you to call out waste and inefficiency in your government bodies. Use our interactive map and search by ZIP code, the top 2 million public employees making more than $95,000. Or, use our website to see all 19 million salary records.

Open the books on your local taxing body. See how they are spending your property, sales, and income taxes. Then, raise your voice and demand better government in your own backyard.

Remember, it’s your money.

Often referred to as the “Fourth Estate”, the media plays an important role in any democratic society. A free press is essential to holding governments accountable and informing the public, thus enabling voters to partake in political debate and make qualified decisions.

The United States also has a long history of a free and independent press, with organizations such as the New York Times, TIME or CNN historically renowned and respected around the world.

In recent years however, as Statista’s Felix Richter notes, Americans themselves started losing faith in their country’s media organizations.

You will find more infographics at Statista

While the trend in the loss of faith in the media, as the infographic above shows, has been going on for over two decades, the recent acceleration is possibly inspired by a presidential candidate who made no secret of his aversion towards the press (which has for four years done nothing but attack him and parrot establishment anti-Trump rhetoric – only to be busted for it numerous times thanks to Mueller and Horowitz), the percentage of U.S. adults having a great deal or a fair amount of trust and confidence in mass media dropped to a historic low of 32 percent in 2016, according to Gallup data.

Since then, some trust has been recovered, but 2019 saw the level of trust in American media deteriorate again after consecutive improvements in 2017 and 2018.

Authored by Art Carden via The American Institute for Economic Research,

The price system is a thing of beauty. F.A. Hayek was exactly right when he said that it would be considered among humanity’s greatest achievements had it actually been designed, created, and implemented. Instead, it just emerged without central planning or a wise order from a wise ruler. 

The prices free markets generate aggregate and convey important information about what, how, where, when, and for whom to produce. As the economist Tim Harford put it in his book The Undercover Economist, competitive markets create a world of truth: he notes that in a competitive market, we produce the right stuff the right way for the right people and in the right proportions. The properties of competitive equilibrium have a certain beauty to them. We produce everything that is worth more than it costs to produce. We produce nothing that is worth less than it costs to produce. What gets produced is produced by the lowest-cost producers and consumed by the highest-value consumers. It’s an undesigned and unappreciated marvel.

That raises an uncomfortable question. If markets are so great, why do we have business cycles? What’s the deal with the roller coaster rides of boom and bust that create widespread reductions in output and employment, also known as recessions?

There are a lot of reasons. 

In what follows, I want to explore one of the elements of the Austrian theory of the business cycle: a cluster of errors by people who, presumably, aren’t stupid and who, presumably, don’t waste resources intentionally.

Here’s the punchline: monetary mischief means that prices are conveying inaccurate information about what, when, where, how, and for whom to produce. The signals that make markets work — prices, profits, and losses — are distorted relative to those that would what would tell the truth about underlying patterns of preferences and production possibilities. Hence, people make systematic errors. The prices, in other words, are lying.

Friedrich Hayek emphasizes the price we pay for the right to use other people’s money and stuff now rather than later: the interest rate. Let’s consider a couple of concrete scenarios. In the first case, the interest rate changes due to a change in saving and tells us the truth about people’s willingness to sacrifice present for future consumption. In the second case, the interest rate lies about what is really going on because the creation of new money is not the same thing as the creation of new resources. Here’s a parable: the parable of the asteroid miners and the chicken restaurants.

Suppose there is a change in people’s saving behavior. For this paper, I have been rereading James M. Buchanan’s Ethics and Economic Progress, and he devotes one chapter to the idea that, by our own standards and preferences, we would be better off if we all saved more — hence, Buchanan argues, the saving ethic has important “economic content.” Suppose that, on hearing this, people generally start saving more. This increases the supply of loanable funds and decreases the interest rate.

In his legendary lectures on Austrian business cycle theory, Roger Garrison distinguishes between the derived-demand effect and the interest rate effect. For retailers, restaurants, and other firms that serve consumers directly, the derived-demand effect dominates. If people suddenly stop buying sandwiches at Popeye’s and Chick-fil-A, this is going to have a larger effect on their production decisions than lower borrowing costs.

In the late stages of production, firms like Popeye’s and Chick-fil-A contract (relative to what they would have done, at any rate) because they aren’t selling as many sandwiches. Their (relative) contraction is a big part of what frees up the resources that make it easier for firms farther removed from immediate consumption to expand — companies like asteroid-mining firms with their eyes on asteroids said to be worth billions or trillions or even quintillions of dollars.

These firms expand because the interest rate effect dominates the derived-demand effect. They are far enough removed from the retail market for chicken sandwiches that what’s going on there isn’t going to affect them much. What will matter will be what the falling interest rates tell them about the wisdom of long-term investment. Lower interest rates make far-future payoffs more valuable.

At an interest rate of 5 percent, $1,000 one year from today is worth $952.38. At an interest rate of 1 percent, it is worth $990.10. The interest rate is transmitting extremely valuable information: people are now more willing to wait than they were before. Hence, it is a better idea to invest in projects that aren’t going to pay off for a very long time. Even if the payoff is a thousand years from now, we can in principle estimate the present value of a $700 quintillion asteroid. Suppose this is off by many orders of magnitude and the asteroid is worth “only” $7 quadrillion. If the interest rate is 1 percent and the payoff isn’t coming for a thousand years, that $7 quadrillion asteroid still has a present value of over $334 billion. At an interest rate of 2 percent, it’s about $17.5 million. 

The interest rates are almost certainly too low because asteroid mining is a pretty risky venture. Lloyd’s of London will insure a lot of things, but the possibility of a 70.25-mile-wide asteroid hitting the Earth is a pretty spectacular risk. It probably wouldn’t be as dramatic as this simulation of a 500 km asteroid hitting the Earth, but it would almost certainly be an extinction event. The interest rates are low and the time scale is kind of absurd to make a point: small changes in interest rates can lead to big changes in asset values.

This all goes fine if the changes are happening because of an increase in saving. Some firms and sectors — those closest to consumers — contract. Other firms and sectors — those farthest from consumers — expand. The economy grows faster as we add capital goods.

Things go awry, however, when the change in the interest rate comes from the monetary authority messing around with things rather than a change in saving. A credit expansion, where the monetary authority creates new money, lowers interest rates and begins a cascade of errors because the lower interest rates are sending incorrect signals about what is most valuable where. The monetary authority creates more money; it does not, however, create more real resources to support expanded production.

The lower interest rate has two effects, one on consumers and the other on firms in the early stages of the structure of production like mining, where all the action aims at creating stuff and skills that are a few years away from being finished goods or services. People consume more because interest rates are lower and the reward for delaying gratification isn’t what it used to be. In response to higher sales, firms in the late late stages (like retailers and restaurants) sell more and make plans to expand.

In the earlier stages, the interest rate effect dominates. Firms in these stages, like the companies eyeing what they think are trillion- and quadrillion-dollar asteroids elsewhere in the solar system, see the present value of possible long-term investments rise. They try, therefore, to expand as well. In the short run, everything looks great. People are consuming more. People are investing more. Unemployment is falling, wages are rising. The economy is booming.

There’s just one problem: prices are lying. Specifically, the interest rate is lying, and as Hayek emphasizes, the lying prices sow the seeds of an eventual bust even though everything looks wonderful. 

Everyone is trying to expand their operations because of the lower interest rate and higher spending on consumption goods; however, there simply isn’t enough real saving to support everyone’s plans at the same time. To be sure, there are more loanable funds, which gives every appearance of real saving; however, people aren’t actually cutting back on consumption and leaving real materials like lumber, bricks, and nails for others. 

Every chicken restaurant orders more chicken at the same time, driving up prices and encouraging their suppliers to expand. They all plan to build new restaurants while, at the same time, asteroid-mining firms are borrowing money and trying to expand. This increases the prices of lumber, land, construction materials, labor, and everything else, but again, the real saving isn’t there to support it. People are making terrible choices and systematically malinvesting capital goods not because they are stupid but because the prices are not reliable. Importantly, this is not a theory of overinvestment, where people invest too much. It is a theory of malinvestment, where people invest in the wrong things.

They find this out when it turns out the prices they expected to remain stable start rising. This is just an unpleasant surprise for some people who may not enjoy as large a profit as they expected when they decided to expand their chicken restaurants and chicken farms and asteroid-mining concerns, but it is a catastrophe for others who were just on the margin of deciding to enter the market and who pulled the trigger once interest rates fell (in the early stages of production) or sales jumped up just a little bit (in the late stages of production). 

This means there are half-built restaurants and half-built office towers that can’t be completed without more lumber, concrete, window glass, and copper wiring — but there’s not enough of these materials to go around. A lot of people have nowhere to turn but bankruptcy. The boom is over, and a bust — during which capital, land, and materials are liquidated and reallocated — is the inevitable consequence.

Last week we described how “A cold shot of air” was going to blast Boston, New York, Philadelphia, and Washington, D.C., through the weekend, then lead to unseasonably warm temperatures through Jan. 02. Much of the cold weather has already exited the Northeast on Monday, resulting in a plunge in Natgas futures on warmer weather outlooks. 

Front-month gas futures on the New York Mercantile Exchange were down .10 cents, or -4.21%, at $2.231 per million British thermal units (mmBtu) at 12:30 am est. 

Natgas futures stumbling into a bear market.

“(As) the weather last week was colder than normal we would expect a larger than usual storage draw. However, somewhat normal to above normal weather for this week and the holidays would mean reduced demand significantly,” Zhen Zhu, an economist at Oklahoma City-based C.H. Guernsey, told Reuters. 

The Global Forecast System (GFS) shows from Washington, D.C., to New York to Boston, above-trend temperatures will be seen from Dec. 23 through Jan. 01. 

The Northeast heating degree day (HDD) index dips this week and won’t rise above trend until Jan. 02/03. This means that energy demand to heat a structure will decline due to warmer temperatures – more reasons why Natgas futures will remain on a decline through this week, or until weather forecasts show cooler weather is on the way. 

The Lower-48 HDD also shows energy demand across the U.S. to heat a structure will be on the decline for the next ten or so days. 

Traders told Refinitiv that Natgas prices have plunged since early November “due to milder than usual weather and expectations inventories will still rise over the five-year average in the coming weeks. Near-record production enables utilities to leave more gas in storage, wiping away lingering concerns of supply shortages and price spikes during the winter.”