Category: Economy

Biden Considers Killing Another US Pipeline as Oil Crisis Continues.

As gas prices continue to skyrocket and the feckless President of the United States continues to blame Russia and OPEC for the U.S. oil shortage he and he alone created — on purpose — on day one of his installation in the Oval Office, by killing the Keystone XL Pipeline.

Joe Biden is weighing shutting down another oil pipeline, which would all but guarantee further increased fuel prices in the affected region.

As reported by Daily Wire, the Biden administration is reportedly gathering data on a Michigan-based pipeline that delivers oil from western Canada across Wisconsin, the Great Lakes, and Michigan, and into Ontario.

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This administration hates you and enjoys your suffering. The Secretary of Energy who continually reminds me of Tinkerbell, let’s you know exactly what she thinks about it.

 

Venezuelans Turn to Gold Nuggets as the Local Currency Implodes

The Venezuelan government recently lopped off six zeros from its hyperinflating currency, the bolivar. The highest denomination currency note of 1 million bolivars, worth less than $0.25, was replaced by a one-bolivar note. At the same time, a 100-bolivar note, worth about $25.00, was introduced as the new highest denomination of the bolivar.

The currency conversion was designed to spare the government the embarrassment of having to issue a 100-million bolivar note to enable people to purchases everyday items without having to carry around bundles of notes, given that the price of a loaf of bread had risen to 7 million old bolivars. Of course, the arbitrary scaling down of the denomination of the currency will not slow inflation, because the new currency notes can be printed just as cheaply as the old. The bolivar has already lost 73 percent of its value in 2021 alone and the IMF estimates the annual inflation rate will reach 5,500 percent by the end of 2021.

It is not surprising, then that all but the poorest Venezuelans have abandoned the bolivar as a medium of exchange, let alone a store of value or unit of account. US dollars are the exchange medium of choice in Caracas and other large cities, while the Colombian peso dominates along the Colombian border, particularly in the regional city of San Cristobal. The Brazilian real is current along the southern border with Brazil and the euro and cryptocurrencies have also found niche uses.

What is wonderfully surprising is the spontaneous emergence of a pure gold currency in a remote region of southeastern Venezuela around the towns of Tumeremo and El Callao. The region abounds with precious metal ores and has a long history of luring prospectors and miners seeking their fortunes. Today, however, many of the larger mines are controlled by the government military, which is battling local gangs and guerillas.

Despite the violence and lawlessness, jobless Venezuelans from far and wide are flooding into the area to work in thriving illegal mines in exchange for payment in gold nuggets. As a result, gold flakes, which are peeled off raw nuggets with hand tools, have become the currency of choice in the region with prices for commodities and services quoted in grams of gold. Half a gold gram buys you a one-night stay in a local hotel, while a meal for two at a Chinese restaurant and a haircut will cost you a quarter of a gram and an eighth of a gram, respectively.

The gold flakes are carried in people’s pockets—usually wrapped in the nearly worthless bolivar notes. While some shops are equipped with scales to weigh the gold flakes, most sellers and their customers have become so familiar with the flakes that they evaluate them by sight. For example, the barber and his customer who transacted for the haircut agreed that three gold flakes equaled the one-eighth gram price (approximately $5.00). Gold is also starting to penetrate the nearby cities, such as the regional capital Ciudad Bolivar, as stores in shopping malls gladly accept the gold in exchange for dollars from miners who are seeking to cash out.

For gold to become a full-blown currency that can viably compete with depreciating dollars and other foreign currencies, the raw nuggets need to be minted into convenient shapes and sizes and their weight and fineness certified by reputable firms. This means that any legal barriers to private mints must be eliminated. In addition, sales and capital gains taxes on gold must be abolished. Since it is highly unlikely that these measures will be implemented by the Maduro government, we can only cheer on the inroads made by the people’s gold flake currency.

It’s not the senile moron in the White House. It’s the puppetmasters who are pulling his strings.

Bidenomics’ Build Back Better Blunder

Swedish socialist economist Assar Lindbeck is semi-famous for saying that “in many cases rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.”

It’s becoming clearer that one of the most efficient ways to destroy the U.S. economy, outside of bombing the country, is to put Joe Biden in the White House.

Economic growth in the third quarter was a meager 2%, the Commerce Department reported Thursday, the most feeble increase of the pandemic recovery. Some economists had forecast a gain closer to 3%, leaving many disappointed. As the Asia Times accurately summed it up, the U.S. “economy ground to a halt.”

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GDP Misses as US Economy Grows Only 2% in Q3, Weakest Growth Since COVID Struck

See the source image

With the Atlanta Fed cutting its GDPNow estimate to just 0.2% yesterday…

… there were big worries that today the BEA could reveal a shocker of a number, one far below the rapidly falling consensus estimate of 2.6%. Well, the Q3 GDP number just came out and it was bad, but not nearly as bad as it could have been: at 2.0%, it did indeed miss the 2.6% consensus by a lot but it could have been far worse.

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BLUF:
On the rare occasions that he comes to the cameras to deliver remarks, most often he finishes speaking, turns around abruptly, and returns to the recesses of the White House.

It’s an apt image presented by an administration that is usually very concerned about visuals and symbolism.

Biden is leaving the lasting impression that, as he does to members of the press, he is simply turning his back on the American people.

Biden on Energy Crisis: Begging Others to Save Him From Himself.

President Joe Biden is drowning in a sea of crises of his own creation, and Americans are the ones who are paying the price.

There’s an ongoing humanitarian and national security calamity at the southern border.

Thirteen U.S. service members are dead, and an unknown number of our citizens remain stranded in Afghanistan following Biden’s disastrous withdrawal.

COVID-19 is still rampant, despite Biden’s promises that he would defeat the virus, while his vaccine mandate has divided the country.

Americans are not taking the millions of jobs available and the economy is stalled, as many have chosen the option of being paid by the government to stay home instead of working.

Biden’s administration failed to identify the growing supply chain disruption, which did not occur overnight and threatens to further strangle the economy. Labor shortages are a contributing factor, including a lack of truck drivers to help unload ships and transport goods (see the above point about workers not accepting available jobs).

And energy prices continue to rise, helping to drive mounting inflation and hurting Americans—especially those with moderate or low incomes—at a time when the economy should be hitting its stride coming out of the pandemic lockdowns.

It is on the costs of energy where Biden’s failures are most starkly visible.

On his very first day in office, Biden scrapped the Keystone XL pipeline, killing 11,000 jobs in the process and making good on his campaign promise to be hostile to the fossil fuel industry.

Continuing his assault on natural resource development, Biden suspended oil and natural gas leases in Alaska.

Former President Donald Trump had propelled America to energy independence, but Biden has purposely squandered it. His policies are designed to reduce domestic production of petroleum, meaning we have become necessarily more reliant on foreign sources.

Biden’s approach has been an economic disaster.

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Comment O’ The Day

“It is interesting that the group that claimed Trump was an instrument of Russia are actually putting people in power that believe the completely failed economic system of the Soviet Union should inspire what we do in the US.”

Biden Comptroller pick Saule Omarova refuses to turn over Moscow State University thesis on Marxism
Sen. Pat Toomey claimed Omarova removed the thesis from her recent CV

President Biden’s pick for Office of the Comptroller of the Currency is facing a hard fight over her past comments and studies as she refuses to turn over her thesis on Marxism while a student at Moscow State University.

Saule Omarova was born in the Soviet Union in what is now called Kazakhstan and graduated from Moscow State University in 1989. She has pointed to the USSR’s practices as recently as 2019, when she tweeted about the gender pay gap, citing the USSR as a better model.

U.S. Senate Banking Committee Ranking Member Pat Toomey, R-Pa., last week asked Omarova to turn over a copy of her thesis – in both English and the original Russian – for review by the committee no later than Oct. 13. Her thesis, titled “Karl Marx’s Economic Analysis and the Theory of Revolution in The Capital,” remains an item of interest to some members on the committee.

Saule Omarova

Ms. Saule T. Omarova, Professor of Law and Director, Jack Clarke Program on the Law and Regulation of Financial Institutions and Markets, Cornell University.

“While it appears that you have deleted any reference to your thesis in the version of your curriculum vitae (CV) that is currently available on the Cornell Law School website, the paper appeared on your CV as recently as April 2017,” Toomey wrote on Oct. 6.

Omarova had not complied with the request as of Thursday, Oct. 14, a spokesperson for Senate Banking Committee Republicans claimed.

“Ms. Omarova has time to attack Republicans in an interview with the Financial Times, but she can’t bother to comply with a Banking Committee requirement that nominees— regardless of their political party or ideology—submit copies of their writings,” said Amanda Gonzalez Thompson. “We certainly hope she reconsiders so Senators have the information necessary to fulfill their constitutional duty to advise and consent on appointments.”

Thompson argued that such requests are a common part of the vetting process, and other candidates have faced similar requests from committees in the past.

Omarova spoke with the Financial Times in an interview published Thursday in which she claimed that Republicans find her an easy target to “demonize” because she is “an immigrant, a woman, a minority.”

“There is definitely a different standard applied to someone like me,” Omarova said. She asserted that she believes some of the criticism leveled against her is racist in nature.

Toomey stated in no uncertain terms during a committee hearing last week that he does not believe her country of origin factors into consideration for her nomination.

“I also pointed out that some of the most wonderful, loyal, and greatest Americans that I’ve ever met are Americans who happen to have been born and raised behind the Iron Curtain and come to this country,” Toomey said. “That fact of her background has no bearing whatsoever on my judgement about how profoundly misguided the policies she has advocated are and it is perfectly appropriate for us to examine those policies.”

Republicans have targeted past comments by Omarova in which she praised the USSR economic model, citing it as an example of a system that the U.S. should look to for inspiration.

“Until I came to the U.S., I couldn’t imagine that things like gender pay gap still existed in today’s world,” Omarova wrote. “Say what you will about old USSR, there was no gender pay gap there. Market doesn’t always ‘know best.’”

A number of officials have written to voice opposition to Omarova’s nomination, pointing to other comments she has made in which she laid out her intention to reshape “the basic architecture and dynamics of modern finance.”

Omarova did not respond to FOX Business’ request for comment.

 

Nothing is Real: A Visual Journey Through Market Absurdity

When it comes to modern markets, risk assets and the now normalized yet twisted tango of fiscal and monetary policy gone wild, it’s safe (rather than sensational) to simply confess that nothing is real.

As I recently watched BTC drop by 16% in one hour from $50K to $43K, only to reach back up to $46K in 20 minutes, my 20+ years of Wall Street experience watched with bemused yet experienced awe at what amounted to just another day of leverage, emotion and institutionalized front-running as the big money whales in crypto pulled off yet another media and SEC-ignored pump-dump-and-pump trade.

In short, the unreal has simply become business as usual.

Real Education vs. Surreal Facts

By 1997, I had graduated from a steady, iconic and expensive list of higher educational institutions which emphasized critical thinking, objective data, historical context and basic math.

But had I told a single professor back then that one day we’d see the simultaneous occurrence of Treasury Yields at 1.35%, and

Negative treasury yields occur when nothing is real in the economy.

….an “official” YoY CPI (inflation) growth rate of 5.4%, and

Inflation is soaring.

…an S&P reaching all-time highs above 4000,

Traders announce "Nothing is real!" as equity valuations repeatedly hit record levels.

…despite negative annual GDP rates, and

GDP is falling

… consumer sentiment tanking,

Consumer sentiments tank as consumers catch on that nothing is real.

… it’s likely they’d ask me to return my diplomas.

Why?

Because everything I (and all the rest of us) had been taught long ago was that rising risk assets reflect healthy economic growth, vigorous natural demand and a robust confidence in continued productivity and hence free-market price discovery.

That, at least, was the “reality” that nine years of secondary (post high-school) education gave me before I began my first toe-dip into the public exchanges (i.e., asset bubbles) of 1999.

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One more indication that SloJoe is merely a meatpuppet.

Biden Is Nominating Soviet-Trained Radicals Now

Presidentish Joe Biden wants to put an actual Communist — self-proclaimed “radical” Cornell University law school professor Saule Omarova — in charge of the nation’s banking system.

Omarova graduated from the Soviet Union’s Moscow State University in 1989 on the Lenin Personal Academic Scholarship, according to the Wall Street Journal. As recently as 2019, she was still praising the USSR’s economic system as in some ways superior to our own. “Say what you will about old USSR, there was no gender pay gap there. Market doesn’t always ‘know best.’”

As a matter of fact, I will say what I will about the old USSR.

Teachers there were paid the same as doctors — because medicine was considered “women’s work” and both were paid crap numbers of worthless rubles. Sexism and central mismanagement, all in one murderously totalitarian package.

There’s a reason the USSR is defunct and the U.S. isn’t — at least until Omarova gets her way.

Omarova’s goal is the eventual elimination of private banking and the establishment of the Federal Reserve as the nation’s only bank.

In her own words:

“The core idea here is simply to allow all U.S. citizens and lawful residents, local governments, non-banking firms and non-business entities to open transactional accounts directly with the Federal Reserve, thus bypassing private depository institutions,” she wrote. “In this sense, it is a variation on the familiar FedAccounts — or FedCoin, ‘digital dollar wallets,’ etc. — theme. In principle, FedAccounts can be made available as an alternative to bank deposit accounts, upon a person’s request.”

Omarova herself wrote that her proposal is “deliberately radical in scope and substance.”

Indeed. Or as Kristin Tate wrote for The Hill on Wednesday:

Taken to its extreme, this would mean that the Federal Reserve, acting on behalf of Washington, could become the only place citizens could deposit their money. Such a massive transformation would be accomplished by replacing consumer deposits into a new digital dollar, held by the Fed.

Nationalized banking with, if I’m reading this correctly, nothing but a centrally-controlled digital currency for legal tender — what could go wrong?

The top Republican on the House Financial Services Committee, Patrick McHenry, said of her last week:

I am concerned Professor Omarova will prioritize a progressive social agenda over the core mission of the OCC — supervising and managing risk in our financial system. Our financial regulators must focus on pro-growth policies that foster innovation to build a robust and inclusive economic recovery, rather than Democrats’ obsession with vague social objectives.

True, although I wonder what’s so “vague” about Omarova’s objectives.

Nominating Omarova to serve as Comptroller of the Currency, as Biden has done, is worse than putting the inmates in charge of the asylum. It’s more like putting a convicted arsonist in charge of the Forest Service.

There’s just no making up anything so absurd, and in Biden’s America, you don’t have to.

Bitcoin Crashes After China Rules All Crypto-Related Transactions Illegal

The People’s Bank of China revived its tough stance on digital currencies on Friday, ruling all crypto-related trading activities illegal and banning overseas crypto exchanges from providing services to mainland investors.

The regulator announced plans to bar financial institutions, payment companies and internet firms from facilitating cryptocurrency trading, as well as to strengthen monitoring of risks from such activities.

“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity,” the PBOC said in a Q&A posted to its website.

“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the central bank said.

The move sent bitcoin and other virtual currencies plummeting. The world’s number one digital asset by market capitalization dropped over 5% to below $42,000. Other cryptocurrencies followed the declining trend with ether dropping 10% to below $2,800, while dogecoin crashed over 8% to below $0.20, according to the Coinmarketcap website.

The latest ruling comes as part of a broader state-run campaign by Chinese regulators against cryptocurrencies. Earlier this year, Beijing banned mining in major bitcoin hubs, such as Sichuan, Xinjiang and Inner Mongolia, which led to a sharp drop in bitcoin’s processing power, as multiple miners took their equipment offline.

Biden Has a Plan to Create a Gestapo Force…Using an Agency That’s Already Been Engulfed in Controversy

What was the joke? We don’t have an SS-Gestapo because we already have the Internal Revenue Service (IRS). Taxes are probably some of the records, if not the only records that the government is meticulous about when it comes to reporting. For years, the IRS simply did not have the resources to act like the bloodthirsty hawk it has always wanted to be. Now, Joe Biden is hoping to rebuild the IRS into a tax Gestapo force. How? Well, if the vaccine mandates were any indication, it’s the usual formula of government overreach that’s overlooked because the liberal media loves this guy.

Yes, the media were tough on Biden during the Afghanistan fiasco. A broken clock is right twice a day. And while gold stars are warranted here, it’s sort of sad — since this is the media’s job.

The Afghanistan withdrawal was shambolic. It was terrible. Now, when are the media going to hit him on how we left Americans behind in Afghanistan? When will they hit him for his lackadaisical approach to rising inflation, which is seen first and foremost by female voters who balance the budgets in America’s homes? The jobs reports are abysmal. The French are recalling their ambassador. And the border is lost. This administration is a serial failure.

Yet, I digress. How creepy is Biden’s IRS plan? Well, any account, personal or business, that has over $600 will be monitored. Yeah, you heard that right. Virtually every Americans’ bank account will be under the microscope of the IRS. Why is this being missed? Well, first, it’s buried in that monstrosity of a human infrastructure bill that comes in at a “conservative” price tag of $3.5 trillion, which is on top of the so-called bipartisan infrastructure bill that comes in at $1.2 trillion. And people wonder why inflation is through the roof (via Fox Business):

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As long as the $$ is the world’s main reserve currency, the goobermint can kick this can down the road for awhile longer.
If that ever changes – and China and Russia are hard at work on it -it will quickly go from bad to worse.

And I don’t think he’s actually ‘bought it’. He’s just caught between the political rock and hard place, where he can’t dare do anything but lie.

WEIMAR? IT’S US

Modern Monetary Theory has officially arrived. That theory, embraced by ignoramuses like Alexandria Ocasio-Cortez but by no economists, to my knowledge, holds that a government can just print money and distribute it to taxpayers Democratic Party constituencies, with no ill effects. And it will be real money, representing wealth, that will raise everyone’s standard of living.

It is hard to imagine anyone being dumb enough to fall for such nonsense (AOC and the Squad excepted), but the Chairman of the House Budget Committee has bought it hook, line and sinker:

One obvious question is, if the government can just print money and thereby create wealth, why do we have taxes at all? To be consistent, the Democrats should advocate abolishing the federal personal and corporate income taxes, as well as the federal estate tax.

Of course, Modern Monetary Theory is not modern at all. It has been tried by desperate governments for several centuries, and arguably back to ancient times. Just ask residents of the Weimar Republic, Argentina, Zimbabwe and Venezuela, to name only a few of the most famous instances, how Modern Monetary Theory worked out for them.

Although, to be fair, none of those countries had anything like our $28 trillion national debt. As we cruise in uncharted waters, we are passing the shipwrecked hulks of governments that embraced Modern Monetary Theory, but to a more modest degree than the Democratic Party now contemplates.

I Feel Like I Am Living In Crazytown

We haven’t had an extended bout of painful inflation like this since the days of the Carter administration, and our leaders in Washington have decided that the best way forward is to rapidly create even more inflation.  They keep using words like “transitory” to describe the current inflation crisis, but then they turn right around and talk about the need to create, borrow and spend even more money.  It is utter madness, but at this point there is nobody that is going to stop them.  We are all passengers on a “highway to Weimar”, and those that have their hands on the wheel have gone completely nuts.

On Wednesday, we learned that on a year-over-year basis inflation continues to rise at the fastest pace that we have seen since the last financial crisis…

Federal data released on Wednesday showed that for the 12 months through July, the consumer price index rose 5.4 percent, unchanged from June and at the highest level since the Great Recession in 2008.

But since the way that the rate of inflation is calculated has literally been changed dozens of times over the decades, the only way to get an apples for apples comparison is to calculate what the rate of inflation would be if it was still calculated the same way it was at some previous moment in our history.

John Williams of shadowstats.com has done just that.  According to Williams, if inflation was still calculated the same way it was back in 1990, we would be at about 9 percent at this moment.

And if inflation was still calculated the same way it was back in 1980, we would be way into double digits right now.

Many Americans had assumed that we would never again see the sort of crazy inflation that we witnessed during the Carter years, but now it is here.

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Welcome back, Carter

Key Inflation Gauge Posts Fastest Annual Price Gain In 30 Years.

Consumer prices, excluding the volatile food and energy components, soared well beyond the Federal Reserve’s 2 percent target in the year to June, reaching levels not seen since 1991 and reinforcing concerns about inflation.

The so-called core personal consumption expenditures (PCE) price index, which excludes food and energy and is the Fed’s preferred method for gauging inflation, rose 3.5 percent in the 12 months to June, after rising 3.4 percent in the year to May, the Commerce Department said on Friday. The last time the core PCE inflation gauge saw a similar year-over-year vault was in July 1991.

The Fed looks to core PCE as the key inflation gauge that informs its monetary policy, which has an inflation target of a longer-run average of 2 percent.

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World’s Largest Food Company Will Raise Prices Amid Inflation

Nestlé, the world’s largest food and beverage company, announced it would hike prices in response to inflation.

As of June, inflation in the United States reached a year-over-year rate of 5.4%. Businesses and consumers are therefore seeking to retain their margins in the face of the diminishing purchasing power offered by the dollar.

As Nestlé CEO Mark Schneider explained to journalists on Thursday: “What we’ve seen this year is some kind of a turning point, where after several years of low inflation, all of a sudden it accelerated very strongly.”

CNN Business reports:

Schneider said he believes that inflation is transitory. But the owner of brands including Nescafe, Gerber and Cheerios said it would need to raise prices by roughly 2% to offset cost increases of 4%. Nestlé hiked prices by 1.3% in the first half of 2021.

The company can hedge against some cost increases, such as rising coffee prices, said Schneider. But it can’t avoid the rising cost of things like transportation, which puts pressure on the company’s margins.

Nestlé is not the only company to raise prices. CNN Business adds that General Electric, Unilever, and other large firms in a variety of industries are seeking to hedge against an increasingly salient inflation risk.

Meanwhile, many businesses are selling their items in smaller packages while maintaining the same price, a phenomenon known as “shrinkflation.” For instance, Walmart’s Great Value Paper Towels did not alter prices while reducing the number of sheets per roll from 168 to 120; Frito-Lay cut the typical bag of Doritos from 9.75 ounces to 9.25 ounces; and General Mills shrank its “family size” boxes from 19.3 ounces to 18.1 ounces.

A recent CNBC survey of leading CFOs revealed that at least one-third will be forced to raise prices if inflation continues. No financial executive said that they trust the Federal Reserve to effectively manage inflation over the next year.

Consumers are likewise feeling the effects of rising prices.

According to a survey from accounting firm KPMG, Americans are forecasting a 9% year-over-year increase in their back-to-school spend. Last year, they anticipated spending $247; this year, they anticipate spending $268.

Despite a strong economic recovery from COVID-19 and the lockdown-induced recession, inflation is counteracting a hike in Americans’ wages. The Bureau of Labor Statistics found that “average hourly earnings” rose by 3.6% over the past year. After considering inflation, however, “real average hourly earnings” have diminished by 1.7%.