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Authored by Alexander Salter via The American Institute for Economic Research,

John Maynard Keynes, the progenitor of modern macroeconomics, famously dismissed the gold standard as a “barbarous relic.”

Commodity monies have been held in low regard by economists ever since.

The disdain has spread to noneconomists in policy making circles, as well. 

Dr. Judy Shelton is a rare exception. She is a well-known defender of the gold standard. For this reason, her nomination to the Federal Reserve’s Board of Governors has been somewhat controversial. Even the Republicans on the Senate Banking Committee seemed concerned about her support for gold. (Shelton directed the Sound Money Project, before it was acquired by AIER. I have been associated with the project since 2014.) 

The legislators’ hesitance to confirm Dr. Shelton’s nomination seems to have waned. The committee confirmation vote has been scheduled. Nevertheless, it is both interesting and distressing that supporting the gold standard runs the risk of making one a persona non grata, even in supposedly pro-market circles.

The low regard economists and policymakers have for the gold standard is unfounded.

Sadly, many of these supposed “experts” are almost completely innocent of monetary history. To the extent that they are schooled in monetary economics at all, their education is largely theoretical. They can recite the standard academic boilerplate about how a perfectly managed fiat money system outperforms a perfectly operating commodity money system. It seems never to have occurred to them that the relevant comparison is actually existing fiat systems versus actually existing commodity systems. On this margin, the historical evidence is strongly suggestive if not definitive. In practice, the gold standard provides a better anchor for inflation expectations without an obvious cost in terms of lower output or higher unemployment.

Technically, there is no such thing as the gold standard. There were many gold standards. Some use the term to denote a system where physical gold coins are used as money. Others use it to mean any system where a given volume of gold is the unit of account and the medium of redemption for bank liabilities. And others still use it to refer specifically to the “classical” or “international” gold standard, which prevailed from 1879-1914. For the purposes of this essay, I use “gold standard” to mean the US experience under the National Banking System (1863-1914), starting in 1879, when the US retired the last of its lingering Civil War liabilities (greenbacks) and resumed gold redeemability.

If the gold standard were really so inferior to fiat money managed by modern central banks, you would expect it to show up in the historical time series. As it turns out, the evidence suggests the opposite. 

In a 2012 paper, George Selgin, William Lastrapes, and Lawrence White rigorously compared the pre- and post-Fed periods in US economic history. Their findings are clear: even if you ignore the “learning curve” period from 1913 to 1945, there is scant evidence the Fed helped to stabilize markets. In addition to the long-run decline in the purchasing power of the dollar, the Fed period saw more instances of macroeconomic stability, not less. Furthermore, even over the short run, the purchasing power of money (the inverse of the price level) became less predictable. 

The comparison provides an even more damning criticism of fiat money systems when one considers that (1) the US dollar has been one of the better-managed fiat monies and (2) the National Banking System had several known deficiencies. Examples include the requirement that banknotes be backed by government bonds and prohibitions against branch banking, which made the system rather unstable. And yet, the Fed was not an obvious improvement.

Many of these results were confirmed by my AIER colleague, Thomas Hogan, in a 2015 paper. Hogan also subjects the pre- and post-Fed periods to scrutiny. Once again, discretionary central banking is found wanting. Inflation has been higher under the Fed, while GDP growth has been lower. Inflation volatility, a key measure of monetary predictability, was worse under the Fed, too. And, yet, GDP was no less volatile under the Fed. So much for the superiority of fiat money. 

As my friend and coauthor Bryan Cutsinger puts it, the gold standard apparently is “superior in some respects and no worse in others.” Rather than an antiquated holdover retarding economic performance, the gold standard was a crucial component of the impressive economic growth that occurred during the late 19th and early 20th centuries. It is a period in Western history sometimes referred to as La Belle Époque: an era of peace and prosperity, driven largely by the growth of commerce and the extension of markets. That, in turn, depended upon the Western nations’ commitment to sound money, in the form of gold redeemability.

The inescapable conclusion is that gold is no “barbarous relic,” as Keynes maintained. If anything, it is a civilizing force. Don’t let anyone tell you the gold standard is a macroeconomic burden. It just isn’t true. 

The gold standard isn’t perfect. No system is. But it has many virtues. A strong case can be made that it’s the best of all feasible institutional alternatives. As my dissertation adviser, Lawrence White, puts it: The gold standard is still the gold standard among monetary systems.

Senior editor Ash Bennington joins managing editor Ed Harrison to discuss the latest jobless claims numbers and its particular significance this week. They start off by discussing Ed’s latest interview with Robert P. Murphy and Austrian economics. They then distinguish the difference between non-seasonally adjusted data and seasonally adjusted data and why that’s critical to understand the news coverage of this week’s jobless numbers. Ed and Ash end their discussion on Bank of America’s earnings, why several major US banks have had mixed results this week, and what it says about the embedded inequalities in the system. In the intro, Peter Cooper discusses California Resources and why their bankruptcy is a foreshadowing for companies who are in trouble and are tapping into credit markets to carry them through the pandemic.

How much would a Tech Cold War Cost?

That’s the question DB’s new tech strategist Apjit Walia asks in a new research report, in which he looks at the interplay between the Post Covid Tech Rally and the Tech Cold War, which have emerged as two of the most salient aspects of the current market dynamic. And with tensions between US and China continuing to rise and spread to other parts of the world, the strategist conducts a top-down analysis of the impact on the Global Information & Communications Technology sector from a full-blown cold war.

The report finds that the ensuing demand disruption, supply chain upheaval and resultant “Tech Wall” that would delineate the world into rivaling tech standards could cost the sector more than $3.5 Trillion over the next five years.

But before getting into the details, we update on the current state of the DB Tech Cold War Index. As Walia writes, a nuanced observation of the tariff and geopolitical issues between the US and China over the past few year suggest they are primarily a smaller strategy that is part of a larger Global Tech Cold War. To reduce the noise from the subjective geopolitical  commentaries, DB created a systematic measure using machine learning to quantify the intensity of the cold war at any given point of time. It quantitatively analyzes and tracks the sentiment of the Tech Cold War globally. Not surprisingly, the DB Tech Cold War Index has been trending higher since 2016 with peaks coinciding with tit-for-tat measures by US and China on technology IP protection and counter measures. It made an all-time high in April 2020 with the Covid crisis fueling tensions and has spiraled higher since then. The political headlines are matching the sentiment among the populace. Recurrent surveys from April to June show that post Covid tempers remain at elevated levels with 41%+ of Americans and 35%+ of Chinese stating they will not buy each other’s products. An election year in the US further complicates this geopolitical dynamic.

Cold War Impact on Global ICT Sector

US and China have been engaging in an increasing capacity since the 1970s and the level of integration between the two global tech regimes is unprecedented. The integration is a complex demand and labyrinthine supply chain network that has taken 40 years to develop. DB uses a top down approach to ascertain the level of revenues and supply chain links across the global ICT industries to China. To analyze and quantify this complex co-dependent Tech relationship between the two countries is a challenging task, the bank surveyed Tech managements, CTOs, Industry associations and supply chain experts globally. The estimate on the total impact is by no means a solid target but a reference point that should provide context if the cold war escalates significantly and decoupling picks up momentum. The bank’s strategist quantifies the downside impact on the sector from a material escalation of the tech cold war, categorized under the following three broad categories:

• Loss of domestic Chinese demand
• Costs of shifting global supply chain currently located in China
• Higher operating costs due to emergence of two divergent tech standards (the “Tech Wall”)

DB looks at a range of downside scenarios including one of a full-fledged tech cold war and estimate the total impact on the ICT sector from the three factors over a 5-year period to be around $3.5 trillion. And while the bank thinks that 5-8 years is an appropriate time period some supply chain experts believe the time to relocate the cluster of supply chain networks could take as long as 10 years.

Domestic Chinese demand

Globally, China has about 13% of revenues of the ICT sector amounting to around $730 Billion per annum. However, a significant part of this is demand from the Chinese tech sector that is re-exported after some value-add, assembly and packaging (“re-export demand”) – this constitutes supply chain risk. To analyze domestic end demand from China that could be at risk if tensions escalate leading to IP restrictions, product bans and export-restrictions, DB looks at the underlying ICT industry groups and their varied re-export mixes from China. The range varies widely with Telecom services sectors that have minimal revenue exposure all the way to software services that have pure domestic Chinese consumption (low or no re-export). For majority of the ICT sector, the range falls between 25%-75% in re-export mix (semiconductors, electronic components, computer hardware, computer peripherals, electronic equipment sectors). The weighted average of the re-export demand mix for the whole ICT sector comes to 45%. Stripping that out of the total ICT revenues, one gets 55% in current organic Chinese end-demand or $400 Billion in revenues. In the worst case scenario of a full-fledged tech cold war, the ICT sector would stand to lose these revenues.

Supply Chain Risk

A transition out of Mainland China could take 5-8 years to achieve successfully. Lack of infrastructure, clustered networks and skilled labor in other countries versus China are major obstacles. Vietnam, India, Malaysia, Indonesia and Philippines are the primary targets for this transition but most of them would need significant infrastructure upgrades to catch up with the Chinese supply chain cluster strength.

In most categories, exports outstrip imports, except for electronic components, where imports are 3x of exports. Electronic components, such as semiconductors are imported and used as inputs in consumer goods and communication equipment and exported out of China. While Electronic component manufacturers have the risk of end demand from China declining – e.g. semis used in communication equipment, majority of the supply chain costs would fall on the final goods manufacturers who use China as a manufacturing base. When they shift the supply chain outside, component manufacturers would simply shift the destination of where they ship components.

The supply chain risk of the ICT sector is estimated to be the built-up book value that is exposed to China that would require relocation in the event of disengagement. Although book value provides a decent lower bound measure for the capital
deployed in hard assets, it does not fully account for the economic value of the supply chain network, which may be quite costly to rebuild. To arrive at an estimate of the book value that is exposed to supply chain facilities in China, DB analyzed the revenues and Export/Import ratio of various categories of Tech goods. The book value of the ICT sector tied to China comes to approximately $500 billion.

The average cost of rebuilding the supply chain will be approximately 1.5 to 2x of the book value based on feedback from Tech managements and supply chain experts. Using a sustainable capex rate, it would take 5-8 years to relocate the supply chains. The cost of a transition over a five year period would come to around $1 Trillion.

Tech Wall Risk

On top of the demand disruption and supply chain upheaval, it would be unavoidable for Tech companies to operate  efficiently in a large part of the “Non Aligned” world without complying with the two rivaling global standards that would come up as the cold war heats up. The Tech Wall would entail rival internet platforms, satellite communication networks, telecom infrastructure regimes, CPU architectures, operating systems, IOT networks and payment systems with very little inter-operability or interaction. It would mean having to deploy two different communication and  networking standards across several geographies to ensure inter-operability. In this new world order, these non-aligned countries would require companies to have dual standard compliance to operate there.

A divergence in standards could increase costs in multiple ways. Increased R&D, design, product development and related costs for manufacturers. Increased costs of compliance to different IP, networking, data privacy/localization regimes for corporates. Loss of interoperability of devices across geographies for consumer. For example, a high-end smartphone networking gear makes up ~10%-15% of the bill of materials. If phones had to support dual standards that cost could increase by ~30-70% and can add close to $100 for the end consumer. For lower end handsets costs would be high enough that manufacturers would probably choose to cater to a single standard based on geography. Corporations’ compliance to different data localization, privacy rules as well as supporting multiple networking standards would increase costs by 2-3%.

The Tech Wall’s impact on ICT sector could range between 2-3% in incremental costs (capex, labor) or $100-$150 Billion per year. After some time, these costs would get absorbed as economies of scale kick in, but that would take about 5 years  to average out.

Second and third order effects:

There are also going to be cross effects and second order effects.

• One Belt One Road – Loss of market share for ICT would not only be limited to China but can extend to China allied OBOR markets. However there is a cross effect here – in markets adopting US standards, western ICT firms would gain share lost by Chinese firms. The net effect may be relatively small but would be marginally incremental.
• Economic downturn – These potential second order effects with substantial uncertainty and the actual impact would depend to a large extent on policy response – direct government spending, sector specific policy incentives and tax policy. While we estimate the potential impact of a full blown tech cold war at $3.5 Trillion over a five year period, the actual outcome will obviously be path dependent on how both countries approach the economic and geopolitical trade-offs.
• Second and third order effects: There are also going to be cross effects and second order effects. One Belt One Road – Loss of market share for ICT would not only be limited to China but can extend to China allied OBOR markets. However there is a cross effect here – in markets adopting US standards, western ICT firms would gain share lost by Chinese firms. The net effect may be relatively small but would be marginally incremental. Economic downturn – These potential second order effects with substantial uncertainty and the actual impact would depend to a large extent on policy response – direct government spending, sector specific policy incentives and tax policy.

In summary, while DB estimates the potential impact of a full blown tech cold war at $3.5 Trillion over a five year period, the actual outcome will obviously be path dependent on how both countries approach the economic and geopolitical trade-offs.

ICT Sector Correlations to Tech Cold War

The following chart shows ICT industry group’s revenues to China, this includes sales of goods that are re-exported out of China after assembly for end consumption elsewhere.

DB measured sensitivities of these industry groups to escalations between US and China. Using the DB Tech Cold War Index, the bank identified 15 major periods of sustained escalation in news intensity. These are periods where the geopolitical tech dispute news flow picks up from low initial levels and continues to grow in intensity until it reaches a peak, often coinciding with major news events or steps on either side. DB then computed the correlations of these global ICT industry stock returns with the DB Tech Cold War index over these episodes.

As the chart shows, the market is quite efficient. Industries in the right bottom quadrant are the ones with the higher revenue exposure to China and have the most sensitivity or negative stock price correlation to rising tensions. The hardware industries which predominantly have both revenue and supply chain dependence on China respond sharply to escalations. Industries with lower revenue exposure to China display defensive characteristics during rising tensions, and fall in the top left quadrant. Software and service display defensive characteristics as they have very limited revenue exposure to China. Telecom service providers have limited revenue exposure and their returns appear to be uncorrelated to escalation events.

The one surprising exception to this trend is the Semiconductor sector, standing out in the top right hand quadrant. Contrary to consensus opinion, the analysis shows that semiconductor stocks are reacting positively to rising cold war tensions despite the sector being the biggest point of contention in the conflict and high sales exposure to the Chinese market.

This could be driven by several factors. One of the explanations is inventory build that occurs when tensions rise and companies over order as they are concerned about supply chains clogging up. These orders could be viewed by the market as incremental demand.

Another factor could be the market considering the sector as defensive given its long term secular potential and the structural growth becoming less sensitive to business cycles. With digitization ramping up globally in the post Covid tech ramp, this structural dynamic of the sector starts to become self-reinforcing.

Anticipated policy support from governments given the centrality of the sector to nation states in geopolitical tech relevance is also touted as a driving factor in multiples. Clearly, Semis are key to retaining tech supremacy and form the backbone of any AI or Software enhancements to institutions and countries.

However, there remains one tail case scenario and that is in the event of disengagement and escalation of the cold war, Semiconductors will see significant market share and supply chain disruption that will be too big to be offset by government policy support and central bank liquidity. This scenario does not seem to have been factored in the current market.

Authored by Jon Miltimore via The Foundation for Economic Education,

The reason New York failed to “flatten the curve” and Sweden succeeded probably has little to do with lockdowns…

Coronavirus deaths have slowed to a crawl in Sweden. With the exception of a single death on July 13, no deaths in this nation of 10 million have been reported since July 10.

But the debate over Sweden’s approach to the COVID-19 pandemic, which relied on individual responsibility instead of government coercion to maintain social distancing, is far from over.

Last week, The New York Times labeled Sweden’s approach to the pandemic a “cautionary tale” for the rest of the world, claiming it “yielded a surge of deaths without sparing its economy from damage.”

To be accurate, Sweden has outperformed many nations around the world with its “lighter touch” approach and was one of the few nations in Europe to see its economy grow in the first quarter of 2020.

Meanwhile, Anders Tegnell, Sweden’s top infectious disease expert, continues to defend his nation’s approach to the pandemic.

“I’m looking forward to a more serious evaluation of our work than has been made so far,” Tegnell said in a recent podcast published by Swedish public radio before taking a scheduled vacation. “There is no way of knowing how this ends.”

Sweden’s Actual Pandemic Performance

Sweden has become a global lightning rod, but this has less to do with the results of its policies than the nature of its policies.

While Sweden’s death toll is indeed substantially higher than neighbors such as Finland, Norway, and Denmark, it’s also much lower than several other European neighbors such as Belgium, the United Kingdom, Italy, and Spain.

Indeed, a simple comparison between Belgium and Sweden—nations with rather similar populations—reveals that Belgium suffered far worse than Sweden from the coronavirus.

Comparing the epidemic curve in Belgium (11.5m pop), which locked down early on 17 Mar, and Sweden (10.2m pop), with no lockdown. Chart depicts deaths by date of occurrence, with Sweden per capita adjusted. Total per million: Belgium (844); Sweden (547). pic.twitter.com/W7u5pCQ8MV

— Paul Yowell (@pwyowell) July 11, 2020

The reason Sweden is a “cautionary tale” and Belgium is not is because Belgium followed the script. Early in the pandemic, Belgian officials closed all non-essential business and enforced strict social distancing rules.

All non-emergency workers were told to stay home. Shopping was limited to a single family member. Individuals could leave for medical reasons or to walk a pet or get a brief bit of exercise—so long as social distancing was maintained.

These lockdown protocols, the BBC reported, were strictly enforced by Belgian police using “drones in parks and fines for anyone breaking social distancing rules.”

A More Suitable ‘Cautionary Tale’

Sweden clearly endured the pandemic better than Belgium, which had nearly twice as many COVID-19 deaths despite its economic lockdown.

Yet the Times chose Sweden as its “cautionary tale” because Sweden chose not to institute an economic lockdown. Sweden took such an approach for two reasons. First, as Tegnell has publicly stated, there is little to no scientific evidence that lockdowns work. Second, as evidence today shows, lockdowns come with widespread unintended consequences: mass unemployment, recession, social unrest, psychological deterioration, suicides, and drug overdoses.

Even if Sweden has seen its death toll rise more sharply than Scandinavian neighbors such as Finland and Norway, it’s strange that the Times would go thousands of miles across an ocean and continent to find a “cautionary tale.” A far better cautionary tale can be found right under the Grey Lady’s nose.

A simple comparison between New York and Sweden shows the Empire State has suffered far worse from COVID-19 than the Swedes. Yinon Weiss, an entrepreneur and founder of Rally Point, recently compared Sweden and New York using data from the COVID Tracking Project.

Here’s the good news: You can shut down businesses or keep them open. Close schools or stay in session. Wear masks or not. The virus will make its way through in either case, and if we protect the elderly then deaths will be spared. pic.twitter.com/AVg0Vu8aH2

— Yinon Weiss (@yinonw) July 13, 2020

The first thing one notices about the comparison is that Sweden was able to “flatten the curve,” so to speak. Though the phrase is largely forgotten today, flattening the curve was originally the entire purpose of the lockdowns. To the extent that there was a scientific basis for lockdowns, it was in the idea that they were a temporary measure designed to help hospitals avoid being overwhelmed by sick patients.

Dr Robert Katz, founding director of the Yale‐Griffin Prevention Research Center, observed that by flattening the curve “you don’t prevent deaths, you just change the dates.” But a temporary lockdown could at least prevent everyone from getting sick at once, which would be catastrophic.

If flattening the curve was the primary goal of policymakers, Sweden was largely a success. New York, on the other hand, was not, despite widespread closures and strict enforcement of social distancing policies.

The reason New York failed and Sweden succeeded probably has relatively little to do with the fact that bars and restaurants were open in Sweden. Or that New York’s schools were closed while Sweden’s were open. As Weiss explains, the difference probably isn’t related to lockdowns at all. It probably has much more to do with the fact that New York failed to protect the most at-risk populations: the elderly and infirm.

“Here’s the good news: You can shut down businesses or keep them open. Close schools or stay in session. Wear masks or not,” says Weiss, a graduate of Harvard Business School. “The virus will make its way through in either case, and if we protect the elderly then deaths will be spared.”

This is precisely the prescription Dr. John Ioannidis, a Stanford University epidemiologist and one of the most cited scientists in the world, has advocated since the beginning of the COVID-19 pandemic.

Remember when this was still a thing? pic.twitter.com/HqSQ5uTaFz

— Jon Miltimore (Parler: @Miltimore79) (@miltimore79) July 14, 2020

Like Tegnell, Ioannidis early on expressed doubts about the effectiveness of lockdowns and warned they could produce wide-ranging unintended outcomes.

“One of the bottom lines is that we don’t know how long social distancing measures and lockdowns can be maintained without major consequences to the economy, society, and mental health,” Ioannidis wrote in a STAT article in March. “Unpredictable evolutions may ensue, including financial crisis, unrest, civil strife, war, and a meltdown of the social fabric.”

Sadly, many of the adverse consequences Ioannidis predicted have since come to pass, as he has acknowledged.

Is Sweden Truly a ‘Cautionary Tale’?

Tegnell and Swedish leaders have mostly stood by their lighter touch approach, although there is a recognition that they, too, could have more effectively protected at-risk populations.

“We must admit that the part that deals with elderly care, in terms of the spread of infection, has not worked. It is obvious. We have too many elderly people who have passed away,” Sweden’s Prime Minister Stefan Löfven said in June.

Yet it’s a mistake to label Sweden’s approach a failure. As noted above, Sweden is being criticized less because of the results of their public health policies and more because of the nature of them.

By embracing a much more market-based approach to the pandemic in lieu of a centrally planned one, Sweden is undermining the narrative that millions and millions of people would have died without lockdowns, as modelers predicted.

Without Sweden and a few similar outliers, it would be far easier for central planners to say, Sure, lockdowns were harsh and destructive. But we had no choice.

In the wake of the most destructive pandemic in a century, there will be considerable discussion as to whether the lockdowns, which stand to trigger a global depression in addition to other psychological and social costs, were truly necessary.

In a sense, the disagreement over the pandemic largely resembles a much larger friction in society: should individuals be left free to pursue their own interests and weigh risks themselves or should they be guided, coerced, and protected by planners who want to do all this for them.

As Ludwig Von Mises noted long ago, modern social conflict is largely a struggle over who gets to design the world, individuals or authorities. Mises saw few things more dangerous than central planners seeking to supplant the plans of individuals with plans of their own, which they see as a preeminent good.

It was partly for this reason Mises saw market economies as superior to command economies.

“Whatever people do in the market economy, is the execution of their own plans. In this sense every human action means planning,” Mises wrote in Socialism: An Economic and Sociological Analysis.

“What those calling themselves planners advocate is not the substitution of planned action for letting things go. It is the substitution of the planner’s own plan for the plans of his fellow-men. The planner is a potential dictator who wants to deprive all other people of the power to plan and act according to their own plans. He aims at one thing only: the exclusive absolute pre-eminence of his own plan.”

When Mises speaks of the “pre-eminence of his own plan,” it’s hard not to think of New York Gov. Andrew Cuomo, who in March sounded downright indignant when a reporter asked about nursing homes objecting to his plan of prohibiting them from screening for COVID-19.

“They don’t have the right to object,” Cuomo answered.

“That is the rule, and that is the regulation, and they have to comply with it.”

Cuomo clearly saw his central plan as superior to that of individuals acting within the marketplace.

The policy of forcing nursing homes to take COVID carrying patients, which was adopted by numerous US states with high virus death tolls, is a stark contrast to Sweden’s market-based approach that trusted individuals to plan for themselves.

“Our measures are all based on individuals taking responsibility, and that is … an important part of the Swedish model,” Hakan Samuelsson, the CEO of Volvo Cars, observed in April.

Sweden’s approach of encouraging social distancing by giving responsibility to individuals may very well explain why the Swedes fared so much better than New York, where authorities disempowered individual actors and prevented nursing homes from taking sensible precautions.

It’s almost absurd to look at New York’s pandemic plan and declare it superior to Sweden’s, yet many in the intellectual class will continue to hammer away at Sweden while ignoring the catastrophic numbers in New York, New Jersey, Massachusetts, and other states.

This likely would have been no surprise to Mises. As he pointed out, the central planner is primarily concerned with a single factor: the pre-eminence of his own plan.

Once this truth is understood, one can finally understand the drumbeat of criticism against Sweden.

Authored by Ivan Pentchoukov via The Epoch Times,

Sen. Lindsey Graham (R-S.C.) is seeking to declassify a 40-page memo describing the FBI’s interview with the main source that former British spy Christopher Steele used to compile his infamous dossier.

The senator said the FBI interviewed Steele’s source for three days in January 2017 and again in March. During the January interview, the sub-source contradicted some of the key claims in Steele’s dossier, including those the FBI included in its applications to surveil former Trump 2016 campaign associate Carter Page.

“There is a memo about that interview,” Graham said in an appearance on “The Trey Gowdy Podcast” that aired on July 14.

“My staff has finally got to look at it; it’s classified. I’m going to try to get it unclassified. The Horowitz report suggests that the result of the Russia sub-source interview put great doubt into the reliability of the dossier in terms of being able to get a warrant.”

Despite learning of significant contradictions between the claims in the dossier and those by the sub-source, the FBI went on to apply to renew Foreign Intelligence Surveillance Act (FISA) warrants to continue spying on Page. The renewal applications simply stated that the sub-source was “truthful and cooperative” and left out the fact that the source had contradicted Steele.

Department of Justice (DOJ) Inspector General Michael Horowitz highlighted this omission as one of the 17 most significant errors contained in the four FISA applications used to surveil Page.

“The Horowitz report suggests that the result of the Russia sub-source interview put great doubt into the reliability of the dossier in terms of being able to get a warrant,” Graham said.

“Here’s the question: Is it possible, [with] an interview of that magnitude that basically shredded the key document to get a warrant, that the people at the top—McCabe and Comey—were never told, ‘Oh by the way, our entire case has collapsed’? I’m looking at that.”

Graham’s office didn’t immediately respond to a request by The Epoch Times to confirm whether the senator has made a formal declassification request.

The declassification of the notes may shed more light on the identity of the sub-source, who is referred to as the “Primary Sub-source” in Horowitz’s seminal report on the FBI’s spying on the Trump campaign. While the source is described as “Russian-based” in the Horowitz report and “Russia-based” in the Russia report by the House Intelligence Committee, credible evidence suggests that the source resided in the United States at the time of the FBI interviews.

Steele’s boss, Fusion GPS co-founder Glenn Simpson, told DOJ official Bruce Ohr in December 2016 that “much of the collection about the Trump campaign ties to Russia comes from a former Russian intelligence officer … who lives in the U.S.,” according to a copy of Ohr’s notes examined by investigative journalist John Solomon. 

Simpson’s statement would later be confirmed by the release of Ohr’s interviews (pdf) with the FBI that were obtained via a Freedom of Information Act lawsuit by Judicial Watch. In records released to Judicial Watch, the words “former Russian intelligence officer … who lives in the U.S.” are redacted.

During the interview with the FBI, the sub-source said that Steele’s lewd claims about Trump were “rumor and speculation,” as opposed to the dossier’s claim that they were “confirmed.” The sub-source also disputed a claim in the dossier stating that Igor Sechin, a Russian oligarch, offered Page a stake in Rosneft in exchange for the lifting of sanctions on Russia.

The sub-source said that he learned about the claim via a text message from another source, but that the text message made no mention of an offer to Page. The FBI reviewed the text message and confirmed the sub-source’s claim.

President Trump won’t sign a new coronavirus relief package unless Democrats agree to a payroll tax cut, according to Politico, citing three anonymous sources ‘close to the issue.’

Trump’s line in the sand was echoed this week by Vice President Mike Pence, who told House Republicans in a conference call this week that they should be rallying behind the idea, according to sources on the call.

Senate GOP and House Democrats, however, aren’t fans of cutting the payroll tax – which suggests the next stimulus will be yet another showdown between both sides of the aisle, which are trillions of dollars apart in how they propose funding the package, as well has how the funds will be spent, according to the report.

White House officials have also been talking to Senate GOP leaders about potential elements of a new Republican coronavirus relief bill to be unveiled next week, although there is no sign yet whether Majority Leader Mitch McConnell (R-Ky.) will include it in that package. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) has signaled he doesn’t like the idea, and House Democrats have called it a non-starter.

Negotiations will start in earnest next week, when both chambers come back into session following a two-week recess. Speaker Nancy Pelosi (D-Calif.) suggested Thursday that she has been in touch with individual Senate Republicans in advance of the talks, but there’s no sign that she and McConnell have held any discussions. –Politico

So far, $3 trillion has already been spent to mitigate the economic fallout of the COVID-19 pandemic.

House Democrats have already passed a bill for a second round of direct payments of up to $1,200 for individuals and $2,400 for joint filers. Senate Republicans appear amenable, though they want to limit distributions to those making $40,000 or less per year – or around 40% of Americans who lost their jobs in March.

The Democratic plan, meanwhile, raise that cap to those making $75,000 per year or less.

“I think there are many families depending on size of family and so many different things, that the $40,000 would have to be explained, justified and the rest,” said House Speaker Nancy Pelosi last week. “But I think families making over $40,000 probably need assistance. Again, just depending on their family situation.”

Meanwhile, the weekly $600 CARES Act boost to unemployment is set to expire at the end of the month. Democrats want to renew it through the end of the year, while Republicans want to reform the enhanced benefits, or replace them with a ‘back-to-work’ bonus, according to USA Today.

“We’d like to see some unemployment reforms,” said National Economic Council director, Larry Kudlow in a Monday appearance on Fox News. “We’d like a return-to-work-type bonus of a modest nature. We don’t want to give people disincentives.”

Authored by James Bovard via The American Institute for Economic Research,

Last month, I wrote a piece here condemning the Trump administration for refusing to disclose the beneficiaries of bailouts authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The following day, the Trump administration reversed course and promised to reveal Paycheck Protection Program (PPP) loan recipients. 

On July 2, Trump proclaimed that PPP is “saving and supporting the jobs of tens of millions of American workers” and the program “has been a tremendous success, levels that nobody has ever seen before.” Treasury Secretary Steven Mnuchin boasted last month that PPP is “supporting an estimated 50 million jobs.”

We don’t need to worry because benevolent, damn-near-omniscient saviors will rescue the economy from the shutdown ravages that frightened and demagogic politicians have inflicted, right? 

But the Trump team’s data is farcically inaccurate. Last month, the Small Business Administration, which administers the PPP, told the Associated Press that it was “too consumed by the urgent effort of helping small businesses through the economic downturn to provide” data on where the loans went. But the SBA has now specified how many jobs were retained for each PPP loan. While Congress slumbers, the Washington Post speedily crunched the numbers. 

PPP loans – a.k.a. “Magic Beans” – are so effective that they saved more jobs than the total number of employees in at least 15 industries. Landscape architecture firms “retained 114,000 jobs — more than three times the number of people who worked in that sector in 2019,” the Post reported. The SBA also claimed that the PPP loans “preserved tens of thousands more jobs than are known to exist in other industry sectors,” including specialty food stores, cattle ranching, performing arts companies, corn and wheat farming, and fishing.

The SBA reported that a Washington state sprinkler system installer “retained more than 500 jobs” thanks to PPP but the firm has only 20 employees. A Georgia company that sells air guns and shipping bags was credited with saving 500+ jobs but has less than ten people on its payroll. Similarly, a Texas church was credited with retaining 500+ jobs – a true miracle, considering the church has only 12 employees. 

Trump administration officials ignored plenty of warning signs of its “dumpster fire” bailout data. Wells Fargo issued almost 4,000 PPP loans and “every single applicant listed nothing in the jobs field, according to the SBA data,” the Post reported. Whatever.

According to a garbled email that an unnamed Treasury Department official sent the Post, the Trump administration concocted the 50+ million claim on PPP jobs based largely on the fat that “the average small business employee compensation for a 2.5-month period for 51 million employees totals approximately $520 billion.” Since the PPP has doled out more than $500 billion…. Voila! 

There was never any reason to expect PPP to be anything except a train wreck. For decades, the Small Business Administration has consistently produced more boondoggles and scandals than any other (previously) half-pint federal agency. Thirty-five years ago, the Post described the SBA as a “petty cash drawer for members of Congress, who pop it open whenever they need a few dollars for the folks back home.” Congress made sure the COVID bailout package was written so that members of Congress could personally make out like bandits from the federal cash geyser. 

Is the Trump administration relying on an Afghan model for responding to the pandemic? During the Obama administration, the Agency for International Development ludicrously evaluated its foreign aid programs in Afghanistan based on their “burn rate” – whether they were spending money as quickly as possible, almost regardless of the results. AID’s “burn rate” fixation produced endless absurdities, including collapsing school buildings, impassable roads, failed electrification projects, and phantom health clinics. Not surprisingly, vast Afghan corruption is the clearest legacy of AID’s “don’t ask, don’t tell” handouts. It would be naive to expect happier results from the SBA’s “spending so fast we can’t explain what we are doing” panacea. 

Since the start of the pandemic, politicians have entitled themselves to inflict unlimited economic damage as long as they also shovel out almost unlimited handouts. PPP helps politicians shirk responsibility for the economic wreckage from sweeping shutdown orders with little or no connection to protecting public health. Political and bureaucratic dictates have helped bankrupt thousands of businesses since March. But since politicians are showering other businesses with handouts, it balances out, right? This is “macroeconomics justice” that ignores due process and fair treatment of individual Americans.

There is no reason to assume that Trump’s policies are better than his PPP data. Since the onset of the pandemic, both political parties and officials at all levels of government have often performed dismally. The biggest mistake Americans could make would be to permit politicians to absolve themselves now by giving away more of other people’s money.