Month: August 2022

A plethora of data points show the consumer is absolutely miserable: real wages trend lower, cost of living skyrockets, the employment market softens, savings rate collapses, credit cards maxed out, and the US economy falls into the “technical definition” of recession. 

Capturing the plunge in consumer sentiment (at record lows) is a new Gallup survey that reveals a record number of Americans are “suffering.”

Gallup’s Life Evaluation Index measures the quality of life of Americans by asking respondents if they’re “thriving,” “struggling,” or “suffering.” The survey is between 0 to 10. Those who check four or below are classified as suffering; seven or higher is thriving. 

The poll found that 5.6% of Americans rate their lives as “suffering,” the highest since the index’s inception in 2008. 

The percentage of respondents classified as thriving fell to 51.2% in July from a record high of 59.2% in June 2021. The number of people thriving is at an 18-month low. The lowest reading of respondents thriving was 46.4%, which was only measured twice, the first in November 2008 and the second in the early covid months (April 2020). 

For the last 16 consecutive months, consumers have been crushed by four-decade high inflation as it eats away wage gains. 

Elevated suffering rates come as the $6 trillion-plus in covid stimulus funds from 2020 has cycled through the retail chain and out of people’s pockets. It’s gone, and the massive increase in economic activity triggered is also over. The hangover stage of the covid helicopter money period is materializing — the only suffering will only worsen from here until another round of stimmy checks is seen. 

It’s time to exit the rat-race…

This is amazing pic.twitter.com/dAU8uFrpUv

— Council Estate Socialism (@RickyDHale) August 21, 2022

Authored by Jonathan Turley,

Defense Department Inspector General has released its long-awaited report on what the Biden Administration left behind in Afghanistan.

It is an unbelievable list of equipment left to one of the most violent groups in the world with a history of supporting terrorist organizations. I opposed the long war in Afghanistan, so I was not among those critical of Trump or Biden in pushing to leave the conflict. However, no one has ever explained why the Biden Administration left this equipment in Afghanistan as opposed to removing it or destroying it.

While the collapse of the Afghan government was rapid in the final days, the government had many months to prepare for the scheduled withdrawal. Yet, it took no steps to remove or destroy this equipment. Instead, it elected to leave this arsenal intact to the Taliban.

The ground vehicle inventory alone was worth about $4.12 billion.

In addition, the U.S. military lost $923.3 million worth of military aircraft and $294.6 million in aircraft munitions.

The Taliban was instantly made one of the best equipped militaries in the world due to this windfall gift by the Biden Administration.

While the report says that “some” of the aircraft were “demilitarized and rendered inoperable during the evacuation,” most of this equipment was left ready-to-use, including 316,260 small arms, including sniper rifles, machine guns and grenade launchers, were left behind, amounting to $511.8 million.

I do not understand how this clear and unimaginable blunder has gone unaddressed. No one was fired. There is not even any evidence of discipline of any kind. The Biden Administration decided to give the Taliban billions in weapons rather than destroy them. Yet, there seems little more than a shrug and a yawn from Congress and the press.

While one wouldn’t know it from looking at USDA data for the uncooked beef prices…

… there are some good news for those seeking to upgrade – however briefly – from horse or cricket in these dystopic days: according to the WSJ, beef is finally getting cheaper, bringing some economic relief to U.S. consumers. Prices of beef, typically among the costliest grocery store purchases, are falling after more than a year of increases as consumer demand softens for some cuts.

While demand has shrunk due to the recent record surge in prices, supplies are improving due to better staffing at meat plants, and supermarkets are offering more discounts on rib-eye, New York strip and other often-expensive products.

For months, prices for food and consumer products have been rising across grocery aisles due to higher costs of transportation, ingredients and labor. Some of the biggest increases have been in the meat section, and shoppers have been buying cheaper cuts or switching to less expensive protein like chicken, pork, horse or cricket. But now that beef prices have plateaued, consumers are finding more deals and options, industry executives and analysts told the WSJ.

Unlike the recent USDA data, retail beef prices fell 0.7% for the four-week period ended Aug. 7, compared with the same period a year ago, according to data from research firm Information Resources Inc. That decline came after beef prices fell 1% during the prior four-week period, which was the first monthly decline since June 2021. U.S. retail beef prices hadn’t fallen for two straight months in over a year and a half, though they remain at historically high levels.

While the pace of U.S. inflation eased slightly in July from a four-decade high as gasoline costs fell from June levels, grocery prices continued their ascent and were up 1.3% in July compared with June, and the cost of eating out at restaurants also increased. But other prices dropped: prices for rib-eye and beef loin are down nearly 10% for the four weeks ended Aug. 7 compared with a year ago, while brisket decreased about 18%. On the other ends, ground beef prices—among the cheapest beef products and still in high demand—increased about 7% over the period, compared with a roughly 20% increase in January.

“The cost of all the stuff is piling up and it’s starting to hit people’s pocketbooks,” said Carey Otwell, director of meat and seafood at Mitchell Grocery Corp. The Alabama-based grocer is selling less premium meat such as grass-fed beef. People continue to buy lower-priced cuts like ground beef, holding up prices for those products. Mitchell’s average cost of a case of beef declined about 13% over the past 12 weeks compared with the same period a year ago.

Arkansas-based Tyson Foods, the biggest U.S. meat processor by sales, said the company’s own average sales price for beef was 1.2% lower over the three months ended July 2, as customers opted for cheaper cuts. The wholesale price of boxed beef shipped from meatpackers as of Aug. 13 is down about 15% from a year ago, according to the Agriculture Department.

Howard Radziminsky, a retiree who lives in Scottsdale, Ariz., said he recently bought rib-eye for $5.97 a pound and New York strip steaks for $4.77 a pound. Radziminsky, who follows a protein-heavy diet and eats red meat five to six days a week, said he hadn’t seen rib-eye sell for under $6 a pound in a while.

“Promotional prices have come back to where they were two years ago,” he said. “I always eat red meat. I’m happy.”

Since the start of the pandemic, meatpacking companies such as Tyson Foods, JBS USA Holdings, National Beef Packing and Cargill have said they couldn’t process as many cattle as usual because their plants were short-staffed. That constrained supplies, they said, and pushed prices higher while demand stayed hot.

But in recent days, some of the bottlenecks at processing plants that drove prices up over the past two years have eased, improving the U.S. beef supply, said Katelyn McCullock, senior agricultural economist at the Livestock Marketing Information Center.

“We’re getting healthier from a labor perspective,” said Shane Miller, head of Tyson’s beef and pork unit, adding that higher wages and a variety of new benefits programs have helped staffing. “We’re running more volume to our plants.”

That said, don’t expect plunging beef prices any time seen: a tight labor market and higher employee turnover and absenteeism rates than before the pandemic at meat plants are expected to keep processing capacity limited in the industry. Boxed beef prices remain roughly 30% above their five-year average, according to the USDA. At the same time, more cattle are being directed to processing plants as ranchers shrink the size of their herds because of persistent drought conditions in parts of the U.S., helping to improve the supply of beef in stores.

Indeed, prices for some beef cuts may not stay down for long as the cattle supply tightens. U.S. beef production is expected to decline later in 2023, constraining the supply of cattle and ultimately raising the price of beef, according to USDA and agriculture executives.

Tyson Chief Executive Donnie King said on a call with analysts this month that he expects the company to pay more for cattle going into 2023 and even 2024 as supply tightens.

Authored by Rajan Laad via AmericanThinker.com,

A new study by the Populace organization revealed the obvious: that Americans are “self-silencing” – people saying what they think others want to hear rather than what they truly feel.

People often reshape their privately held views to conform to what they think their group believes, despite that assessment frequently being inaccurate.

This causes the illusion of consensus.

The following are two of the most significant revelations from the study:

• Four times as many Democrats say Corporate CEOs should take a public stand on social issues (44%) than actually care (11%).

• On Education, one in three Democrats think parents should have more influence over public school curriculum, however, only one in four dares to say it publicly.

In the current climate, it is the left that is championing the idea of groupthink which they claim is the only ‘appropriate’ way of thinking.

Under the guise of being woke, the left is ‘canceling’ dissenters and rendering them outcasts, often by inventing claims of bigotry. Wokeism that claims to emanate from empathy is merely a euphemism for totalitarianism.

It is hence essential to revisit the principle of free expression which is the core tenet of Democracy.

This includes the right to opine without repercussions i.e. the right to offend, insult, satirize, and ridicule.  The result is obscene, hateful, abhorrent, and shocking ideas may be expressed.

But personal taste can never ever be the criteria for the expression of ideas.

The reason being what is hateful to one may be compelling to another. What is bigoted to one may be a fresh perspective to another. What is obscene to one may be artful to another. What is lewd to one may be hilarious to another. What is blunt and blatant to one may be hard-hitting to another. What is repulsive to one can be riveting to another.  

A dogmatist to one may be a maverick to another. A rabid right-winger to one is a voice of reason to another. A hateful bigot to one could be a revolutionary to another. A mad man to one could be a genius to another.

A healthy exchange of ideas and relentless debates, not echo chambers, facilitates personal growth and in turn societal growth. It also causes unity as people begin to empathize with the opposing point of view and indeed the individual.

Quite often, a solitary contrarian idea that is expressed begins like a flickering flame but ends up illuminating an entire people. If a society sticks to convention, it ceases to grow.

What is troubling is that this practice of adhering to groupthink and self-silencing is spreading like an epidemic.

The corporate world, the news media, the entertainment industry, and even educational institutes have all been silenced by the mob.

Individuals from this mob have been cultivated from a very young age. The indoctrination that begins young is often irreversible. For this mob, being offended or calling others pejorative epithets is the equivalent of being virtuous. Hence, they function like puritans who are perpetually looking for heresy to condemn.

Social media plays a huge part in the development of groupthink. Quite often PR firms use bots or dummy accounts to push their agenda, which gullible users presume to be the opinion of the majority. Frequently an individual or a firm is targeted for holding the ‘wrong’ ideas.

The result is that some chose to self-silence.

Most people want to live a simple life. They do not want to be ostracized or rendered unemployed and unemployable.

Hence, they nod to the most ridiculous ideas to avoid being called anachronistic or bigoted. 

Some hope they will be spared by appeasing the mob. They hope that by making slight compromises they can avoid being attacked. But cowardice only emboldens a mob; in time, major compromises are demanded, and soon everything you held dearly has melted into thin air.

It is also essential to understand no individual, irrespective of how cautiously restrained they are, can always hold the mob-approved thoughts. It is only a matter of time before the mob turns on its appeasers.  It therefore makes sense to challenge the mob when they take their first step.

The mob often claims to hold the right ideas and that the rest are ignorant or bigoted. If they are indeed on the right side, they should be eager to debate and vanquish their opponents. But they do the exact opposite: instead of engaging, they shut down their opponents. Despite their claims, they live in perpetual fear that fresh ideas may sway their supporters away.

The mob always claims to be standing against fascism.  Perhaps they fail to see the irony that it was fascists who suppressed opposing views and Nazis that burned books that they considered dissenting.

What is troubling is that government seems to be adopting these intimidatory tactics.

Last year the Biden’s FBI said was investigating “a disturbing spike in harassment, intimidation, and threats of violence against school administrators, board members, teachers, and staff.”  

The goal behind this announcement was to shut down critics of the undesirable occurrences within educational institutes.

Early this year Homeland Security secretary Alejandro Mayorkas testified that the Department of Homeland Security had set up a Disinformation Governance Board to “work and to equip local communities, to identify individuals who could be descending into violence by reason of ideologies, hate, false narratives, or other disinformation and misinformation propagated on social media and other platforms.”  The board has been ‘paused’ now.

The goal behind this board was to cause self-silencing.

This revelation that Americans are self-silencing should come as no surprise.

So, what impact does this self-silencing have on society?

A deep resentment begins to brew as a result of the repression that is almost like a ticking timebomb that explodes one day.

It is said that to destroy a society you first begin by killing ideas. An unexpressed idea is an equivalent of killing an idea.

All the great modern inventions, discoveries, great works of art, and literature exist because someone, somewhere dared to think differently — but most importantly, dared to express this difference of opinion without fear.  If we had all stuck to consensus, we would probably be living in the Stone Age.

Freedom of expression emanates from freedom of thought. If people are censoring themselves, democratic values are being compromised.

The time to rise up against this sinister totalitarian cult is now, by being the change you want to see and expressing yourself freely.

Former President Trump filed a lawsuit against the Justice Department on Monday in which he asked a federal judge to appoint a ‘special master’ watchdog to review documents seized from his Florida home as part of an investigation into the removal of records from the White House.

“To date,the government has failed to legitimize its historic decision to raid the home of a President who had been fully cooperative,” reads the civil complaint, titled Trump v. United States Government.

The legal filing, which suggests that the Aug. 8 raid was politically motivated, asks the judge to block the DOJ from “further review of seized materials” until the special master can review them first.

Special masters, usually a retired judge, are typically appointed in a criminal case where there are concerns over materials that are protected by attorney-client privilege, or due to other concerns – such as the fact (in this case) that the same agency involved in the Russiagate hoax raided Trump’s residence to recover documents Trump felt were exonerating.

Earlier in the day, a federal judge in Florida reiterated that he is inclined to make part of an affidavit underlying the search warrant public, saying it would “promote public understanding of historically significant events.”

“Particularly given the intense public and historical interest in an unprecedented search of a former President’s residence, the Government has not yet shown that these administrative concerns are sufficient to justify sealing,” wrote Judge Bruce Reinhart, giving the DOJ until Noon on Thursday to explain why portions of the document should remain hidden from public view.

More than two-dozen boxes were removed during the search of Mar-a-Lago, including 11 sets of classified documents – some marked top secret.

Trump, meanwhile, claims he declassified all materials which left the White House – while his supporters have reacted with outrage over what they say is a clear case of government overreach.

As the Wall Street Journal notes, it could be a while before the public sees any of the document, as Judge Reinhart said he would assess the proposed redactions before unsealing it.

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

West Virginia Senator Joe Manchin recently claimed the 15 percent corporate minimum tax contained in the Inflation Reduction Act, which should be called the Inflation Creation Act, is not a tax increase. Instead, he claimed, the bill simply closes a loophole that allows corporations to avoid paying all the taxes they owe. Despite what Senator Manchin says, the fact is the new minimum tax increases the amount of money some corporations must hand over to the government; in other words, it increases their taxes.

It is common for politicians, policy wonks, and even some libertarians to demonize loopholes for making the tax system too complex, but loopholes are simply ways that individuals can keep more of their money. Loopholes are thus pro-liberty and pro-sound economics.

In addition to raising taxes, the Inflation Reduction Act provides 80 billion dollars to the Internal Revenue Service (IRS). Some of the money will go to improving taxpayer services so, for example, taxpayers may actually talk to a real person who can provide information about the tax law when they call the agency. But, over 50 percent will be spent on enforcement.

The IRS is expected to hire approximately 87,000 new agents. Supporters of the expansion say the IRS will use the enhanced enforcement capacity to target only “the rich.” However, it is not necessary to massively increase the IRS’s enforcement capacity just to go after “rich tax cheats.”

Furthermore, rich people and big corporations can hire attorneys and accountants to make sure they limit their tax liability while staying within the legal limits. They can also fight any attempt by the IRS to make them pay more. Middle- and working-class Americans are unable to afford legions of attorneys and accountants to limit their tax liability or fight the IRS, so they are more likely to pay whatever the IRS demands.

The IRS has a history of disrespecting due process rights of Americans, so creating a new army of IRS agents with a mission to extract more money will lead to massive liberties violations. Given the IRS’s shameful history of harassing the political enemies of whoever holds power at the moment, we should expect the new agents to target opponents of US foreign policy, gun control, government promotion of green energy, and other policies of the current administration.

The IRS recently ran an ad seeking agents who are willing to carry a firearm and use deadly force. This comes after the tax agency’s purchase this year of 700,000 dollars worth of ammunition. Perhaps the agency is worried that the latest attempt to get more taxes from Americans already suffering from the inflation tax will lead to violence, or perhaps the IRS wants its agents to carry firearms to remind taxpayers that the tax laws are backed by the threat of government violence.

The premise behind the income tax is that the government is the true owner of all property and thus has the right to take as much from the people as it desires. Therefore, the income tax, like the other monstrosity created in 1913 — the Federal Reserve, is incompatible with a free society but necessary for an authoritarian welfare-warfare state.

To avoid 1984, repeal 1913.

Lately not a day passes without some China stimulus headline (with a lot of zeroes but not enough to reverse the sharp slowdown in the world’s 2nd biggest economy) and today was no exception.

With China’s property sector shrinking with every passing day, following not just last year’s developer defaults of giants such as Evergrande, but this summer’s historic grassroots mortgage boycott which has sent shockwaves across China’s property developers and threatened to crash the world’s largest asset class…

… in its latest show of (not-a-bailout) support for its beleaguered property sector, Beijing will offer 200 billion yuan ($29.3 billion) in “special loans” to ensure stalled housing projects are delivered to buyers, Bloomberg reported citing people familiar with the matter said.

The previously unreported size of the lending program – which was announced with scant details by China’s housing ministry, finance ministry and the central bank late Friday – would make it the biggest financial commitment yet from Beijing to contain a property crisis that’s seen home prices slump and real estate sales plummet, Bloomberg reported, pointing out that housing market instability is a growing threat to political stability during the sensitive run-up to the Communist Party’s leadership transition later this year.

Bloomberg adds that the PBOC and the Ministry of Finance will channel the money through such “policy” banks such as China Development Bank and Agricultural Development Bank of China. And since all banks in China are state-owned, this is effectively the start of the latest housing market bailout. The special loans will only be used on homes that have already been sold but are yet to be finished.

“We view the central government’s introduction of bailout funding as the first meaningfully positive development in the past five to six weeks,” said Jizhou Dong and Stella Guo, analysts at Nomura Holdings Inc. in a note on Sunday. They expected the funding would need to reach at least 200 billion yuan to 300 billion yuan as an initial investment to be effective.

The direct bailout comes just days after the central bank last week unexpectedly lowered its key policy rate to support growth; this in turn led Chinese banks to cut their benchmark lending rates for a second time since May 20, as Beijing urges them to boost overall lending to support the nation’s flagging economy. The five-year loan prime rate, a reference for mortgages, was reduced by a larger than expected 15 basis points to 4.3% after being cut by the same magnitude in May. The one-year loan prime rate was also cut on Monday by a smaller-than-expected 5 basis points to 3.65%, the first decline since January. The drop in the LPRs followed the central bank’s surprise move last week to lower the rate on its one-year policy loans by 10 basis points.

The rate cuts were the latest in a series of actions intended to help the real estate sector as the liquidity crisis is exacerbating a slowdown in the world’s second-largest economy. China is poised to miss its growth target of around 5.5% this year and youth unemployment is at a record 20%.

“We’ve already reached the point where the central government really needs to step in,” said Hyde Chen, head of strategy and asset management for Haitong International, in an interview with Bloomberg TV. With the housing market contributing around 20-30% of gross domestic product, it’s become an “elephant in the room.”

Earlier this year, China allowed banks and bad-debt managers to loosen restrictions on some loans to ease a cash crunch. In April, the central bank held a meeting with about 20 major banks and asset-management firms to help resolve crises at a dozen large real estate firms including China Evergrande Group. Local authorities have offered a variety of housing incentives, including lowering down-payment requirements and even encouraging families with more children to own multiple properties.

However, China’s dogged pursuit of Covid zero, including reoccuring lockdowns, and an increase in bad debt have dimmed confidence and made banks reluctant to lend. Bank loans to the real estate sector have dropped for the first time in 10 years, and the decline could persist, according to Bloomberg Intelligence analyst Kristy Hung.

By Kuppy from Adventures in Capitalism

I have frequently described “Project Zimbabwe” as a highly inflationary cycle where both fiscal and monetary stimulus go into insanity mode. While I sincerely hope we don’t go hyperinflationary like Zimbabwe, I certainly think we see an elongated period of substantial and debilitating inflation. When this cycle finally ends, society and our financial system will have been irreparably changed. For those who are aware of where we’re heading, this is going to be the golden age of inflection and Event-Driven investing. For everyone else, it will be absolutely miserable.

One point that I made last year, was that “Project Zimbabwe” will be a process. It will not be linear. Look back at old charts of Weimar Germany, they all look like parabolas, however that is quite deceptive—there was actually a whole lot of volatility. There were multiple deep pullbacks that bankrupted speculators who knew what was coming on the inflationary side but got over-levered or overstayed their welcome in the various rolling bubbles of the period. Looking into the weeds and ignoring the parabolas; there were frequent sector rotations, speculative bubbles that crested and collapsed, and multiple 50% or greater pullbacks. As I have said many times, the trick to managing “Project Zimbabwe” is to be as long as possible, without getting taken out during one of these pullbacks—especially as the increased level of stimulus warps the market’s ability to price securities, leading to violent and often arbitrary movements.

Let’s go back a century to Weimar. Most speculators knew that the government had lost control and that the only path forward was to print money. However, occasionally the politicians would try and arrest the inflation—as inflation crushes voters. Sometimes, it was an offhand quote from a government official, sometimes it was concrete action. The market would convulse in panic, only to find that the authorities had zero tolerance for pain. Voters hate inflation, but they hate losing their jobs even worse. Politicians work for the speculators, not the voters—caught in a stall-speed between inflation and depression, politicians will almost always choose inflation. However, there were brief moments where the market believed the politicians—or at least worried that they’d lose control to the downside and things would crash. Once again, the trick to navigating what is coming is to stay as long as possible, while not getting taken out during the inevitable pullbacks. If your timing is good, you can add size at the end of each pullback and dramatically increase your returns, especially as the amplitude of each incremental move will usually be greater—besides, as money gets debased, it is imperative to have some financial leverage.

I bring all of this up as the Fed has followed through much as I expected they would. Look back to my prior posts that warned that they’d turn against the markets for a bit (Post 1, Post 2, Post 3). They’ve done a whole lot of talking, but precious little in terms of concrete actions. They got people convinced that they’d go full-Volcker and take rates into the teens, but we all know that they won’t. A pause is inevitable.

Of course, they will do the bare minimum to try and regain some credibility, but it is all for show. These guys don’t actually care about inflation—they care about enriching their buddies in Private Equity while pretending to care about “inclusive economic policy” and other woke-word-salad nonsense. Of course, they’ll pause on rates at the first sign of real economic pain. The history of the Federal Reserve for the past few decades is that they overstimulate, then try to reign things in; until they break something, leading them to overstimulate again. Once on the hamster wheel, their only choice is to spin it faster. Meanwhile, the fiscal side is already preparing for another trillion in stimulus to supposedly fight inflation—they clearly have even less stomach for a pullback.

Therefore, I find it baffling that so many investors got so bearish back in June and July. Look, we all have PTSD from 2008. It was a miserable experience that I never want to repeat. That said, this isn’t 2008. Anyone who thinks that it is, is asking to get their portfolio debased by “Project Zimbabwe.” The lesson that the Fed learned from blowing up the financial system back then, is that once it starts to unravel, it’s harder to put it all back together again—just look at how extreme their response in March of 2020 was. Even after it was obvious that they had flooded the market with too much liquidity and inflation was spiraling out of control, the Fed wasn’t taking any chances—they kept plowing ahead with QE until the first quarter of 2022.

It is clear that they prefer inflation to another lost decade of patching up the financial system like in the 2010’s. Oddly, investors think that the Fed will take rates to a level where it detonates things. JPOW doesn’t want to be the next Arthur Burns, but that is still preferable to being the guy who blew up the Eurozone and Japan. Given the level of debt in the system, tightening too much could very well blow up the US as well. These things cascade fast—markets cannot even get close to stall-speed. All the bluster is for show—these guys know that the Fed is Fuct—they’ll go back to money printing at the first sign of panic.

I go on vacation because it focuses the mind. Vacations ensure that I stop worrying about each data-point and instead focus on the big picture. It is clear that we’re in the early innings of “Project Zimbabwe” and we just had our first real shake-out. Plenty of speculators were over-levered, mostly in Ponzis. They got shredded for staying too long in last-cycle’s rolling bubble. They missed their chance to pivot into the next rolling bubble. The only thing that matters during “Project Zimbabwe” is staying as levered long as you can be, while correctly choosing the right rolling bubble. Energy is one of the few asset classes that is still up on the year—it’s giving you a clear message about what’s coming—it sure feels like energy is going to be the next rolling bubble. Miss it at your own peril.

Remember, in a highly inflationary environment, you need to not only be long to keep up, but highly levered long to actually get ahead—especially when taxes get factored in. Think back to Weimar; those who didn’t max it out, those who guessed the cycles wrong and overstayed the prior rolling bubbles, they all ended up broke. Sure, they were Weimar billionaires, but everyone was a Weimar billionaire at the end. Weimar completely upended society and when it all concluded only the shrewdest speculators were on top—everyone else lost everything, despite becoming a Weimar billionaire in the process. Making money in nominal terms was not enough, you needed to create value in real terms. Therefore, the main risk that I see, is not losing money, as everyone makes money during inflation. Rather, the risk is not making enough and essentially falling behind the inflation. When the next bubble heats up, I intend to be maxed out—especially as each subsequent rolling bubble will likely be larger and sillier than the prior one.

Meanwhile, JPOW hasn’t started The Pause yet. In fact, he may be forced to keep going until something breaks. As I learned during this June and July, even next cycle’s rolling bubble can experience sharp pullbacks. Timing The Pause and maxing it out is critical. It’s dangerous to get too exposed before The Pause, but at the same time, you CANNOT miss The Pause. Therefore, timing The Pause is everything here. EVERYTHING.

I naturally struggle to square my view that I need to be maxed out long, with my view that prices may swoon on the day before JPOW finally cries uncle. I also know that by the time he publicly pauses, all his buddies will have been buying for weeks. The violence of the up-move after The Pause will stun those who do not understand “Project Zimbabwe.” Everyone will need to chase and then keep chasing. Once the chase starts, equities won’t stop, especially as levered players will continue to lever up as we rampage higher.

I need to be maxed-out before The Pause, but not too far before. At the same time, imagine missing the next up-move in Weimar and having all your liquidity turn to dust?? Too early and I get taken out, too late and I fall behind. This is the dilemma that I’ve struggled with ever since last fall when I realized that the Fed would temporarily pull back on the liquidity. I’m up this year, but not up enough and it is this dilemma that has held me back from large gains, but also from losses. Now, as we’re nearing the end of this cycle in terms of duration, but potentially not price, the only thing that matters is timing The Pause. When this turns, you cannot miss it.

I thought we were close to The Pause in June. Now I’m less convinced. All great bubbles have an echo-rally. Tech is having its echo rally now. It is giving JPOW the message that he needs to keep pushing on rates. I think he gives it a few more whacks and finally succeeds in breaking something. I also worry that we cannot have a real bottom to the first real pullback in “Project Zimbabwe” without a flush. This pullback never got particularly scary. I got rather long at the end of June because the selling felt cathartic. I’m now reducing my non-energy exposure on this bounce and booking some sizable gains from the lows in June. I am thinking I get another chance to max it all out.

I can afford to play a bit more aggressive here, due to my massive energy call option position—it is the perfect hedge. Of course, I define aggressive quite differently than most. To me, being aggressive is tantamount to having reduced exposure, as all the real risk in the market will be right-tailed during this decade. Underperformance will equate to not having enough leverage, which will equate to trailing inflation and destroying capital—even if your stocks go up in Dollar terms. My thinking is increasingly that we get one last test before The Pause. As a result, all vacation long, I’ve been taking my exposure down, as I need to have room to plow into cheap assets when it is obvious that The Pause is imminent. My massive call position fortunately gives me the flexibility to focus on the timing in other sectors. This equity market bounce seems anemic and weak-willed—it likely collapses when oil bottoms—which may have already happened. As oil gets going again to the upside, we’ll get a proper test of the equity speculators before seeing the real bottom. I want capital to deploy into that moment.

In conclusion, my thinking from a six week vacation, is that we’re progressing along in “Project Zimbabwe” roughly as I expected things to progress. The risk is missing it. The only question is how to get more upside exposure, while not getting taken out. Long-dated call options are far too cheap. This is where I need to be pressing it and with far more capital on this pullback. These options give me cheap exposure to what’s about to happen. The skew is all wrong. When JPOW declares that The Pause is in effect, the market will positively explode to the upside and the IV will spike as the skew shifts. The next up-surge will make the last cycle’s trading in monkey JPEGs look tame—except this time I expect it will be an energy bubble. Every time I think about it, I realize that I need more long-dated upside exposure before the dealers realize just how badly offsides they are. The turn, when it comes, will stun people.

The Pause is coming, but first we need some real pain to get inflicted by energy on the speculators. The Energy Vigilantes took the summer off. This fall, they’re going to re-assert their control of the narrative…

Colombia, the world’s largest producer of cocaine, and the origin of more than 90% seized in the United States – is considering decriminalizing the drug in an experiment to end Washington DC’s never-ending “war on drugs,” according to the Washington Post.

After just two weeks in office, the country’s first leftist government has proposed an end to “prohibition” – in what would become the first government-regulated market for cocaine. Officials would work with other leftist governments in the region via legislation and alliances in order to “turn their country into a laboratory for drug decriminalization.”

“It is time for a new international convention that accepts that the war on drugs has failed,” said President Gustavo Petro in his inaugural address this month.

The move would likely upend the country’s long-standing (and profitable) counternarcotics relationship with the US – whose officials, both past and present, are sounding the alarm.

Jonathan Finer, Biden’s White House deputy national security adviser, who met with Petro in the US before his inauguration, said that “the United States and the Biden administration is not a supporter of decriminalization.”

The United States has spent billions of dollars to fund a strategy to seek and destroy cocaine plants in the fields of rural Colombia, with US intelligence and other agencies having provided support to Colombia’s decades-long military efforts to rid the country of coca, the plant from which cocaine is derived.

Despite more than half-a-century at war on the drug, cocaine production has hit record levels according to recent figures.

Petro’s drug czar, Felipe Tascón, says this is a rare opportunity to unite the governments of cocaine-producing countries such as Peru and Bolivia, which are similarly led by leftists.

“Drug traffickers know that their business depends on it being prohibited,” said Tascón, adding “If you regulate it like a public market … the high profits disappear and the drug trafficking disappears.“