Month: August 2022

Authored by Victor Davis Hanson,

The late spring scenario of a massive GOP win – in historic proportions analogous to 1938, 1994, or 2010 – is said now to be “iffy.”

The Left boasts that it now has a chance at keeping the House, with even better odds for maintaining control over the Senate.

Polls are all over the place. Now they show generic Republican leads, now Democratic.

The general experience in polling is that they are more often conducted by left-leaning institutions and massaged to show Democratic “momentum.”

Since the polling meltdown of 2016 — when most polls showed a Hillary Clinton Electoral College landslide — they have regained little credibility.

Current progressive heartthrob and spoiler Representative Liz Cheney, R-Wyo., was polled at only 20% behind in her recent primary, only to be crushed in the end, losing by over 37%.

The corporate leftist media does its part by glorifying a now dynamic “Aviator Joe.”

President Joe Biden in cool sunglasses is now constructed into a swaggering “Top Gun” Tom Cruise-like figure, rather than a cognitively challenged 79-year-old.

Biden’s just-passed reconciliation “Inflation Reduction Act,” according to most experts, will raise taxes even on the middle class and spur inflation. So, the media euphemistically renames it a “climate change bill.”

With a stroke of his pen before the midterms, Biden forgives $300 billion in student debt, without a care for the dutiful who paid their loans off or those who did not go to college but will now pay for those that did.

If inflation is running at 8.5% over last July’s prices, the White House giddily announces inflation is “zero” because it did not climb at 9.1% over 2021 prices – as it did in June.

That’s like saying someone entombed in a sinkhole 10 feet below ground is no longer trapped at all since he floated up one foot since falling.

In California, when $6.50 a gallon gas dipped last month to $5.50 a gallon, Biden pronounced the end of high energy costs. He forgets that on his watch, gas prices doubled and remain $2.50 a gallon higher than they were on Inauguration Day.

Despite the propaganda, the Republicans seem confident nonetheless because of the dismal 40% approval ratings of Biden and his even less popular agenda.

Crime is out of control. The Left blew up the southern border. Biden has waged war on energy production and deliberately spiked gas costs.

Foreign policy is in shambles. Racial relations are scary. Historically, presidents are shellacked in their first midterms.

So, there should be a Republican tsunami.

But will there be?

So far, the Republicans have not nationalized congressional races with a uniform contract with America, an agenda that they will seek to enact the moment they take Congress.

If all Republican candidates run on what the Left has done to America in less than two years and offer a systematic corrective, they will win. If they get bogged down in the 24-hour news cycle they will flounder.

Conservatives seem oblivious to the current left-wing strategy. That is odd, since it is unchanged since the Russian collusion hoax and the psychodramatic Ukrainian phone call impeachment.

The left-wing playbook is based on two pillars: the FBI raid on former President Donald Trump’s home, the January 6 “insurrection” investigation – and selective daily leaking about both.

About every week, in efforts at mass distraction from the dismal record of Biden, we will hear of a new “bombshell” and “walls-are-closing-in” Justice Department or FBI leak to an obsequious media.

In 24-hour cycles, we will hear more about how Trump supposedly stole “nuclear secrets”!

And “informed but anonymous sources insist” that Trump is trying to sell memorabilia. Or is Trump trying to hide January 6 evidence at his home? Or was it those Russian collusion files?

Sanctimonious Attorney General Merrick Garland will fight tooth and nail not to release an unredacted historic fishing-expedition affidavit for a warrant to meander through the closets of the Trump home. But he certainly will redact — and leak.

The January 6 Committee will continue to subpoena and flip witnesses with threats of indictments, certain doom before biased Washington, D.C. juries, and crushing legal bills.

Between the raid and the star-chamber House inquiry, we are supposed to forget unaffordable gas and food, dangerous U.S. cities, over 3 million people swarming the border, and the Afghanistan debacle.

Big Tech in November as in 2020 will again flood registrars with billions of dollars in dark money — while denying it.

They will censor and expunge anything unflattering to the Left on social media, and claim they do not.

The Left will systematically try to ensure that, as in 2020, only 30% of the electorate vote in person on election day, as they plead they are underfunded and disorganized.

Yet if the Republicans advance a coherent national plan of action to restore a pre-Biden America, if Trump will focus positively on national issues and not take the bait to obsess on the wrongs done to him, and if grass-roots conservatives this time around prepare to preempt massive left-wing vote harvesting, they will achieve their blowout.

But that is a lot of ifs. And meanwhile, time grows short.

Following the Nancy Pelosi visit which sparked unprecedent sea and aerial Chinese military live fire exercises, Taiwan on Thursday unveiled a huge defense budget increase of just shy of 14%.  Specifically at a 13.9% increase, Taiwan’s cabinet has already approved the spending boost and it will next be debated in parliament, and if approve would bring the island’s total military budge to about $19.41 billion for 2023. 

The flow of weapons from Washington, which Beijing has vehemently condemned as a severe violation of the ‘One China’ principle, is thus expected to only increase, with provisions being made in the budget for more fighter jet funding and other major hardware. 

Taiwan cabinet’s chief budget official Chu Tzer-ming indicated in statements that the bulk of next year’s defense spending will be toward the additional military readiness required to fend off a potential Chinese invasion, given the greatly bolstered PLA presence around the island: 

“The budget for maintaining operations saw the biggest increase among the defense-spending categories this year in response to the cross-strait situation,” Chu said. “Warplanes need to take off and warships need to go to sea, which all lead to higher expenses.”

The White House has accused Beijing of using the early August Pelosi visit to manufacture a crisis. Chinese state media had at the same time expressly stated the PLA drills were a “rehearsal” for forced reunification. 

Meanwhile, the US clearly isn’t backing down, or so much as allowing tensions to cool for a while, given this week marked no less than the fourth Congressional delegation to Taiwan in August alone. 

Sen. Marsha Blackburn (R-TN) arrived Thursday in Taipei on a US Air Force plane in an unannounced visit. She’s a well-known hawk when it comes to all things China, for example having posted on Twitter in 2020 that “China has a 5,000 year history of cheating and stealing. Some things will never change.” She more recently backed a proposed bill that would let the Biden administration lend weapons to Taiwan, akin to what’s already been authorized for Ukraine.

I will continue to stand with the Taiwans and their right to freedom and democracy.

Xi Jinping doesn’t scare me.

— Sen. Marsha Blackburn (@MarshaBlackburn) August 25, 2022

Another well-known moment involved here labeling China as part of a “New Axis of Evil”…

“It’s time we focus on rewarding Taiwan’s commitment to democratic values and ensure they have the necessary resources to combat Communist China and the New Axis of Evil.”

Thus her visit is sure to set off outrage in Beijing, especially given that among Blackburn’s first words upon arrival featured calling for Taiwan pushing forward to become “an independent nation”. The Republican Senator said she “looked forward to continuing to support Taiwan as they push forward as an independent nation.”

She also repeated the Axis of Evil line regarding China…

Blackburn arrived in Taipei late Thursday after visiting Fiji, the Solomon Islands and Papua New Guinea as part of a U.S. push to “expand our diplomatic footprint in the area,” her office said in a statement.

“The Indo-Pacific region is the next frontier for the new axis of evil,” Blackburn, a staunch supporter of former President Donald Trump, was quoted as saying. “We must stand against the Chinese Communist Party.”

And on Friday, while meeting with Taiwan President Tsai Ing-wen, Blackburn referred to Taiwan as a “country”, per Axios: 

Blackburn’s comment that she remembers her 2008 visit to Taiwan fondly “and the opportunity to get to see some of your country firsthand” is likely to further anger Beijing, which has warned of consequences for the U.S. if American officials continue to visit the island it sees as a breakaway province.

The CCP will stop at nothing to achieve global domination and destroy Taiwan’s independence.

That’s why I’m in Taipei to discuss ways to strengthen our relationships with @iingwen. pic.twitter.com/mnpmdIrEZa

— Sen. Marsha Blackburn (@MarshaBlackburn) August 26, 2022

Most likely, this is about to trigger a whole new round of major Chinese PLA drills threatening the island. Certainly Blackburn’s confrontation words just blew past Beijing’s “red lines” concerning the Taiwan crisis.

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

The Internal Revenue Service (IRS) announced on Aug. 24 that it will waive penalties levied against American taxpayers who failed to file their 2019 and 2020 returns in a timely manner during the COVID-19 pandemic.

The agency will also issue over $1.2 billion in refunds or credits to taxpayers who received the fees.

According to the IRS, roughly 1.6 million taxpayers, including individuals and businesses, will automatically receive the billions in refunds or credits by the end of September. Spread across 1.6 million taxpayers evenly, that would amount to an average refund of $750 per taxpayer.

The penalty relief is automatic for people or businesses who qualify, meaning taxpayers won’t have to apply for it.

For those who haven’t yet paid fines, the penalties will be abated.

“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” said IRS Commissioner Chuck Rettig. “The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time.”

The decision comes as the agency faces a huge backlog of tax returns and taxpayer correspondence prompted by the pandemic. The IRS said the move will help them to focus resources on addressing those backlogs and return to normal operations for the 2023 filing season.

Who Qualifies?

A failure-to-file penalty is charged when taxpayers do not file their return by the due date; the fine is a percentage of the taxes that weren’t paid on time. It is calculated at 5 percent of unpaid taxes for each month or part of a month that the return is filed late, up to a maximum of 25 percent.

For example, unpaid taxes of $10,000 could see a penalty of $500 per month, up to a maximum of $2,500.

To qualify for the refunds, taxpayers must file any 2019 or 2020 tax returns that were originally due in 2020 and 2021 by Sept. 30 of this year.

The IRS will not forgive penalties in some situations, however, such as where fraudulent returns were filed and where the penalties are part of an accepted compromise or a closing agreement. They also won’t apply to cases where the penalties were finally determined by a court, the agency said.

Other penalties, such as the failure to pay penalty, are also not eligible under the new relief program, although taxpayers in those cases can utilize other existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First Time Abate program.

“Penalty relief is a complex issue for the IRS to administer,” Rettig said. “We’ve been working on this initiative for months following concerns we’ve heard from taxpayers, the tax community, and others, including Congress. This is another major step to help taxpayers, and we encourage those affected by this to review the guidelines.”

Additionally, the IRS is providing penalty relief to banks, employers, and other businesses required to file various information returns.

To qualify for relief, eligible 2019 returns must have been filed by Aug. 1, 2020, and eligible 2020 returns must have been filed by Aug. 1, 2021.

However, because both of these deadlines fell on a weekend, a 2019 return will still be considered under the relief program if it was filed by Aug. 3, 2020, and a 2020 return will be considered if it was filed by Aug. 2, 2021.

Read more here…

Back in June, we reported that overall US Nat Gas exports had exploded thanks to soaring LNG flows to Europe which has grown increasingly desperate for any “friendly” nat gas now that Russia has almost shut off all pipelines toward Europe, in the process pushing US nattie prices sharply higher – if nowhere near where they are in Europe currently. And while these exports fizzled after the Freeport LNG explosion in June, it was clear that nat gas prices (and to a lesser extent, inventory) in the US would be a factor not only of domestic demand, but increasingly also of European imports from the US.

The same of course, can be said for oil, which is seeing growing demand in Europe – which finds itself increasingly locked out of Russian oil output, which is expected to shrink even more once a Russian oil ban is imposed at the end of the year – as part of gas-to-oil switching which is becoming increasingly prevalent in Europe, and is why US crude sales overseas are also set to hit fresh records through next year as American oil increasingly takes market share in Europe.

Earlier this month, weekly government figures showed an unprecedented 5 million b/d of US crude being exported. Shipments are poised to average over 4 million b/d over the next few months and into next year, according to the most optimistic in the oil industry.

And just like in the case of gas, rising oil exports to Europe mean not only higher US oil and gas prices – as supply/demand dynamics of the two asset classes converge – but also shrinking US inventories which end up in Europe. Which is a problem for US oil because while prices are dropping for now, they are oblivious of the fact that commercial US inventories have slumped to near record lows.

So wouldn’t you know the Biden Administration – the same administration that has been draining record amount of oil from the US strategic petroleum reserve in hopes of pushing gas prices lower by the midterms – now wants to limit fuel exports to Europe.

That’s the message Energy Secretary Jennifer Granholm sent last week in a letter imploring seven major refiners to limit fuel exports. The WSJ obtained a copy of the letter (see below) which the Administration didn’t release publicly, but has since leaked courtesy of Bloomberg’s Javier Blas and others.

Granholm warned that gasoline inventories on the East Coast are at a near-decade low, and diesel stocks are nearly 50% below the five-year average across the region. And while she didn’t address it – as the SPR drain is hardly something the White House is proud of – total crude oil inventories including the SPR have seen a spectacular collapse since the Ukraine war.

“Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports,” she writes.

“It is our hope that companies will proactively address this need,” she adds. “If that is not the case, the Administration will need to consider additional Federal requirements or other emergency measures.” In New Jersey they call that an offer you can’t refuse.

This, as the WSJ notes, is a political escalation from President Biden’s June command to refiners to immediately lower gasoline prices. As average gasoline prices nationwide have fallen to $3.88 from about $5 in mid-June, he has been taking a media victory tour. However, the drop in prices is largely a function of the market expecting an imminent recession, hardly something worthy of a victory tour, and in any case, Biden can thank Americans for driving less.

Yet fuel storage levels are running low heading into hurricane season when it’s not unusual for Gulf Coast refineries to be damaged or shut down. The Administration fears a refinery outage that causes fuel prices to spike in the runup to the November election. Hence, Granholm’s threatening letter.

But, as the WSJ editorial board explains, the problem isn’t U.S. exports. It’s the political and regulatory assault on U.S. production and refining. One culprit is the 2019 closure of the Philadelphia Energy Solutions refinery, which removed about 335,000 barrels a day of refining capacity from the Northeast. This made the region more dependent on Gulf Coast and overseas refineries.

Additionally, fuel storage levels would be much higher in the Northeast if not for New York state’s natural gas pipeline blockade, which has made the region more dependent on oil for energy. One-third of New England residents still use oil to heat their homes, and New York this month is generating more electricity from oil than from solar or wind.

Most ironic, however, is that the Granholm export threat is also a slap in the face to European allies trying to diversify energy sources from Russia. Fuel supplies are tight globally amid sanctions on Russia, which had accounted for 40% of Europe’s oil imports. Europe has had to look elsewhere for diesel fuel, which some manufacturers and power generators are turning to as a substitute for natural gas. U.S. refiners have recently been exporting more fuel to Europe, but Granholm is now telling them to stop.

Restricting fuel exports is one more counterproductive Biden policy on fossil fuels that would merely drive up global fuel prices, including U.S. imports. As the WSJ concludes, “Granholm’s bullying of energy companies shows how little she understands about energy markets.”

The CDC has admitted what was ban-worthy ‘fake news’ just months ago – that Covid mutated to evade current vaccines which were created for the original strains, after nearly 40% of the people hospitalized in the US with Omicron were vaxxed and boosted.

As Bloomberg reports, from the end of March through May, when omicron BA.2 and BA.2.12.1 subvariants were the dominant strains, weekly hospitalization rates for all adults spiked, with those over 65 suffering the worst – though it should be noted that total omicron hospitalizations were far lower than when the delta variant was the dominant strain last fall.

Of course, the CDC’s timing is suspect – as vaccine manufacturers are on the cusp of rolling out their omicron-targeted shots by Labor Day.

We knew omicron evaded vaccines nearly 9 months ago, even if Fauci lied about it.

• Moderna President Warns Vaccines May Struggle To Protect Against Omicron (Dec. 2021)
• Pfizer Vaccine Less Effective Against Omicron Than Beta Variant, South Africa Study Reveals (Dec. 2021)
• Omicron evades immunity better than Delta, Danish study finds (January)

According to the ‘new’ report, CDC scientists found that vaccines and boosters did a better job against Delta when it came to keeping people out of the hospital – with efficacy dropping slightly with the BA.1 variant, and then ‘significantly’ falling off when BA.2 hit the scene.

Adults with at least two booster shots fared better than other people when BA.2 was dominant. The majority of those admitted to the hospital also had at least one underlying condition. Unvaccinated adults were more than three times as likely to be hospitalized, but breakthrough infections still represented a significant number of the severe Covid cases, the data show.

US regulators have pushed Moderna Inc., Pfizer Inc. and BioNTech SE to expedite development of omicron-specific boosters for a September rollout. The drugmakers this week submitted early data to the US Food and Drug Administration seeking emergency clearance for updated shots that target the BA.4 and BA.5 virus strains. Scientists and vaccinemakers are already beginning to look toward next-generation shots that may provide longer-lasting protection against more variants.  -Bloomberg

Stay tuned for more of tomorrow’s news today.

Authored by André Marques via The Mises Institute,

On August 15, 1971, Richard Nixon announced that the US dollar (USD) would no longer be redeemable in gold. This was supposed to be temporary. And yet, fifty-one years later, here we are. The gold standard was gradually destroyed in the twentieth century.

Now people are experiencing the consequences: less purchasing power, more economic cycles, and a weaker economy.

In the chapter 4 of his book What Has Government Done to Our Money?, Murray Rothbard goes over the steps the government took to end the gold standard over the twentieth century, from the end of the classical gold standard to the closing of the gold window in 1971.

The Classical Gold Standard (1815–1914)

The classical gold standard tended to prevent the government from running budget deficits and going into debt, as it could not easily create inflation. In 1913, the Federal Reserve (Fed) was born. When the US entered the World War I, US dollars were printed at an excess of the gold reserves. At this point, the US got off the classical gold standard and this money printing contributed to the depression of 1920–21.

The Gold Exchange Standard (1926–31)

In this regime, the USD and the pound sterling (GBP) were the two currencies of reference (“key currencies”). The US went back to the classical gold standard (converting USD into gold). GBP and other currencies were not convertible into gold (except for large bars). The Great Britain converted GBP to USD and the other European countries converted their currencies to GBP. So, the Great Britain inflated GBP and the other European countries did the same with their respective currencies (a “pyramiding” of GBP on USD and of other European currencies on GBP). Consequently, as Rothbard stated:

Britain and Europe were permitted to inflate unchecked, and British deficits could pile up unrestrained by the market discipline of the gold standard…. Britain was able to induce the United States to inflate dollars so as not to lose many dollar reserves or gold to the United States. As sterling balances piled up in France, the United States, and elsewhere, the slightest loss of confidence in the … inflationary structure was bound to lead to general collapse. This is precisely what happened in 1931; the failure of inflated banks throughout Europe, and the attempt of “hard money” France to cash in its sterling balances for gold, led Britain to go off the gold standard completely. Britain was soon followed by the other countries of Europe.

Fluctuating Fiat Currencies (1931–45)

In 1933–34 the US abandoned the classical gold standard once again. The USD was defined as 1/35 of an ounce of gold and only foreign governments and central banks could convert it into gold. So, there was a certain link to gold, but the US was in a floating exchange rate regime. As Rothbard stated, by cutting the ties to gold, this regime

leave[s] the absolute control of each national currency in the hands of its … government [which can] allow its currency to fluctuate freely with respect to all other fiat currencies … [The flaw] is to hand total control of the money supply to [the government], and then to … expect that it will refrain from using that power.

the disastrous experience of … the 1930s world of fiat paper and economic warfare, led the United States authorities to [aim] the restoration of a viable international monetary order

Bretton Woods and the New Gold Exchange Standard (1945–68)

Thus, enter the Bretton Woods system (conceived and implemented by the US at a conference in Bretton Woods, New Hampshire in 1944, and ratified by the US Congress in 1945). It was similar to the gold exchange standard, but with the USD being the only “key currency,” priced at $35 an ounce of gold and being redeemable in gold only by foreign governments and central banks.

However, this system eventually met its end. The US inflated the USD (“pyramided” it on its gold reserves), and other governments held USD as their reserves and “pyramided” their currencies on those dollars. And throughout the 1960s, the US constantly inflated the dollar in absolute terms and relative to Europe and Japan. This decade was marked by the “War on Poverty,” the Vietnam War, and space programs.

To finance all this, the US started running large budget deficits, with the Fed monetizing the debt (expanding the money supply). However, the Western European countries that had adopted more solid monetary policies (Western Germany, Switzerland, France and Italy), started to oppose the obligation to accumulate dollars. Europe began to redeem dollars in gold, and the Bretton Woods system began to collapse in 1968 (ending in 1971, when Nixon suspended the redemption of the USD in gold).

The Closing of the Gold Window and the Rise of the Floating Exchange Rate Regime (1971–?)

In order to keep the redemption of the USD in gold, the US government had two options:

1. Cut spending and taxes to reduce the budget deficit. The supply of money would decrease, and the USD would appreciate, which would allow prices to fall to levels that would be consistent with an ounce of gold at $35 and restore demand for the currency.

2. Dollar devaluation. This would mean that the price of an ounce of gold would have to rise to a level that would be consistent with the supply of USD and the higher prices for goods and services. But this would require the government to reduce the budget deficit to prevent future devaluations.

Both options were inconvenient for the government. Thus, in February 1973, after two devaluations of the USD that raised the price of an ounce of gold to $42.22, the closing of the gold window became permanent. Therefore, the USD returned to the floating exchange rate regime (as in 1931–45, but with no link to gold).

As a result, the USD devalued and the 1970s were marked by stagflation. In 1980, the price of an ounce of gold was $850. The price of oil rose from just under $3 a barrel in 1970 to just under $40 in 1980. The Consumer Price Index (CPI) was over 14 percent in 1980 (chart 1). It was only in the early 1980s that the CPI began to decline, when Paul Volcker, Fed chairman at the time, raised the federal funds rate to almost 20 percent (chart 2).

Chart 1: Consumer Price Index (1965–85)

Source: Trading Economics; author’s own elaboration.

Chart 2: Federal Funds Rate (1970–88)

Source: FRED; author’s own elaboration.

However, in 1980, the US federal debt was “only” $930.2 billion (chart 3). Thus, it was possible to significantly increase interest rates without causing major impacts on the economy. Today, the federal debt is above $30.5 trillion. The Fed can’t raise rates without crashing the economy. The US has gone from being the world’s biggest creditor in the early 1970s to the world’s biggest debtor today (the US has more debt than all other governments in the world combined).

Chart 3: Federal Debt for the United States (1970–2021)

Source: FRED; author’s own elaboration.

As the federal funds rate rose, the USD appreciated and there was a restoration of confidence in the currency. This (along with the fact that the US dollar was already the currency in which oil and other commodities were priced) allowed the USD to remain the main world reserve currency. And this, along with the fact that the USD has been unbacked since 1971, has allowed the US to inflate it over time, destroying its value. As of August 3, 2022, the ounce of gold costs $1765:

Chart 4: Price of Gold (In US Dollars)

Price of 1 Kg – 1Kg = 2.20462 Pounds (Left Axis); Price of an Ounce (Right Axis).

Source: goldprice.org; author’s own elaboration.

Conclusion

The consequences of the end of the gold standard began to be felt in the 1970s.

The devaluation of the USD substantially reduced Americans’ real wages. 

Before 1970, usually only one member of a family was able to support it.

From the 1970s onwards, this began to change to the point where today this is only possible for wealthier people. Despite all the technological advancements, the standard of living today is lower than in the 1950s and the 1960s, as today, in order to live and to buy things they want or need, people need to work a lot more (and even go into debt).

If the USD had not been devalued since 1913 (or even if it had been appreciated, which is what tends to occur when there is no monetary expansion), the standard of living would be much higher today.