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Central Parkway could get new life, a century later

Can downtown’s underdeveloped Central Parkway corridor become the Queen City’s next crown jewel?.....»»

Category: topSource: bizjournalsNov 25th, 2021

Rabobank: The NecronOmicron Has Been Opened, And The Results Will Be Terrible

Rabobank: The NecronOmicron Has Been Opened, And The Results Will Be Terrible By Michael Every of Rabobank Put and Call of Cthulhu options “Nor is it to be thought...that man is either the oldest or the last of earth’s masters, or that the common bulk of life and substances walks alone. The Old Ones were, the Old Ones are, and the Old Ones shall be. Not in the spaces we know, but between them….Their hand is at your throats, yet ye see Them not; and Their habitation is even one with your guarded threshold….Man rules now where They ruled once; They shall soon rule where man rules now. After summer is winter, and after winter summer. They wait patient and potent, for here shall They reign again.” - H.P. Lovecraft, The Dulwich Horror Yesterday was a terrifying day. Even market mania could not compete with the evil spirits that gripped them. US stocks started up but closed down, the S&P sitting at a key moving average; so did key bond yields, with a pronounced curve flattening, US 2s down 6bp peak to trough and US 10s down 10bp to 1.40%; so did energy; and so did basically everything. The Russell up 2%+ intraday but finished the day down over 2%, only the 9th time in history it has done that. The ostensible reason for the terror was the new Covid variant, Omicron, being found in the US. Despite the fact this was inevitable given the recent pick up in global travel and cases elsewhere, the NecronOmicron was taken as being as evil a portent as the horror book ‘The Necronomicon’ created by H.P. Lovecraft a century ago. Which is odd, because while there are genuine reasons to be deeply fearful of a virus variant that could underline what some sceptics have been warning about since day one --that, in a worst case, mutations might outrun vaccines, keeping us trapped in our present insanity forever-- there is also a possibility Omicron is highly transmissible AND mild, which is exactly what one would *want* to see in order to defeat this biological foe. The scientific jury is still out on that one, but for once there is at least some logical reason to travel in hope. Yet there was reason to fear other Old Ones: inflation and central-bank policy errors. Indeed, as The Hill states, ‘Powell, Yellen say they underestimated inflation and supply snarls’ in testimony to Congress. Of course, the message from Yellen was still that fiscal stimulus must proceed anyway, and was only a small driver of inflationary pressures, and all the proposed fiscal spending was inflation neutral(!) because it was revenue neutral(!)…because there are no differences in marginal propensities to consumer between rich and poor(?!); but Powell did not walk back the hawkishness he showed earlier this week when given the opportunity to do so. The horror! Yes, Omicron could complicate re-opening the US economy, and is already disrupting supply chains in Asia again. It will of course be used as an argument for more stimulus ahead if so – on top of the same fractured supply chains that helped drive inflation so high in the first place. So, while markets might like the idea of said stimulus, they won’t like the inflation that will come with it. After all, even the Beige Book just noted: “Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy,” without saying “But lumber! But used cars!” Trust me, neither Powell nor Yellen truly understand this issue yet even after their limited mea culpas yesterday (as long-term shipping rates move higher, and The Federal Trade Commission ordered nine major retailers, including Amazon, Kroger, and Walmart, to release company information on ongoing supply chain issues to help better understand them). If they did, then just like hapless characters in Lovecraft novels, they would have been driven mad by the knowledge of their true powerlessness in the face of far greater forces. Yet in that ignorance, if Omicron is just a shadow and not a monster, the Fed has little excuse not to press ahead with what the market is screaming will be a huge policy error. On which note, horror fans know the Necronomicon gained a second lease of ‘life’ in ‘The Evil Dead’ movie of 1981. You want to scare markets? Look where Fed Funds and 10-year Treasuries were then, if you dare: “Groovy”, as Ash from the Evil Dead likes to say? I think not. Yet that is what happens when you push up demand in response to supply-side shocks that shift the economic paradigm in ways arrogant mortals don’t understand – and, after the inevitable blood and tears, an adult with a shotgun and chainsaw hand has to sort things out. (As well as going all neoliberal, moving supply chains offshore, and so setting us up for the inevitable horror sequel we are now deep into.) True, the collapse in energy prices we have just seen is deflationary – and indeed, the real fear for many is a surge in supply-side inflation, and then a Fed policy error, and then a deflationary monster on the other side. Which would (un)naturally release all kinds of ancient evils of its own on the policy front, no doubt. Volatility is something we can expect: things will go bump in the night – and intra-day too. What put and Call of Cthulhu options does that suggest? And there are other Old Ones markets are opting to remain deliberately ignorant of. Escalation between Russia and Ukraine continues: Moscow claims Kyiv is stoking tensions along the border, alleging 125,000 Ukrainian troops, half its total, have been moved to the hotspot Donbass region; Belarus’s Lukashenko gave a TV interview in which he stressed “Ukraine is ours,” and he would support Russia if required (as if there was any doubt); US Secretary of State Blinken stated Russia is "laying the groundwork for an invasion"; and NATO argues Russia has no right to declare Ukraine can never join, which has always been a red line for Moscow. To some, this is all taking place ‘At the Mountains of Madness’. Yet things are starting to edge towards the territory where either someone blinks --meaning either the US or Russia gives enormous geopolitical ground on Ukraine and relative global power-- or the growing tail risk is both sides create an inexorable dynamic towards another kind of terrible policy error. It would also flow through to supply chains globally in ways we cannot grasp – and comes on top of former Japanese PM Abe stating that if China were to move on Taiwan, it would be “economic suicide,” prompting diplomatic complaints from Beijing. Frankly, all we can be sure of now is volatility, and that if the Necronomicon is opened, the results will always be terrible. Worry about that more than Omicron? Tyler Durden Thu, 12/02/2021 - 10:32.....»»

Category: smallbizSource: nytDec 2nd, 2021

Why Bitcoin Is Generational Wealth

Why Bitcoin Is Generational Wealth Authored by 'NAMCIOS' via BitcoinMagazine.com, Bitcoin truly enables people to plan for the future well beyond their own life, a luxury and necessity many throughout history did not have... The short film "Bitcoin Is Generational Wealth" by Matt Hornick and Tomer Strolight premiered on November 1, 2021, to shed light on the true value proposition of Bitcoin. While many projects in the world today seek to enrich their founding members and provide palpable profits in U.S. dollars for anyone who joins, the world's most secure and robust monetary network aims to propel humanity forward based on the fundamental rights to property and freedom. As people around the world watched the film, many different reactions emerged. Bitcoiners, aware of the goal for which Bitcoin was brought to the world in 2009 as a direct response to the bailouts of central banks to financial institutions the year before, got emotive when seeing the future reality that proper sound money could enable. "The film stirred many emotions within the community, Twitter exploded with feedback and people sharing that they had been moved to tears," Daniel Prince, host of the “Once BITten” podcast, said. "Hope was the main emotion shared in our home, a feeling so devoid in that place we call “normie” land." Driven by the desire to change the world, Bitcoin evangelists already preach that hopeful reality today; however, skeptics often fall for fallacious narratives instead and dismiss the nascent monetary network for some characteristics inherent to its early monetization stage. "Few understand the gravity of Bitcoin and the problems that it solves," Christian Keroles, managing director at Bitcoin Magazine, commented after watching the film. Robert Breedlove, host of the "What is Money?" show, echoed Keroles' comments by remarking that the film posed "a trenchant critique on the prevailing fiat currency paradigm and a hopeful look into a more harmonious future for humanity through the monetization of Bitcoin." In contrast, people who don't understand the Bitcoin revolution, and thus don't hold any bitcoin, experienced a mix of awe and confusion as the film progressed to show what the 22nd century could look like if humanity adopted bitcoin as its money. An extensive gap between the reality of the here and now and that of the depicted future led many to wonder how Bitcoin could bridge that difference. "Bitcoin is Generational Wealth" portrays different epochs of humanity, starting from the war and hunger dominant in 1948, just a few years after the end of World War II, when a significant portion of human society had endured lengthy conflict and extensive loss. People then had to rebuild everything from scratch while passing warnings to future generations of what tyrants and the fall of individual rights could lead to. However, they didn't have the means to defend themselves from similar occurrences in the future –– they could only hope such chaos wouldn't be repeated. Fast-forward 50 years to 2008, and society had reconstructed itself. Information flowed globally, and trading networks evolved to encompass nearly every edge of the planet while entrepreneurship flourished. However, the subprime mortgage crisis ensued, wreaking havoc on businesses across the U.S. and leaving millions of people without a job. However, the Federal Reserve Board rescued the most prominent players, bailing them out with soft money freshly printed through cheap debt. The principle of fairness had been thrown out of the window, and amid chaos, Bitcoin was born while the system got addicted to easy wealth. At a time of unequal treatment by the government and its monetary policies, Bitcoin promised the establishment of an incorruptible financial system in which users wouldn't be favored or discriminated against based on their credentials, status, power, or wealth. All participants are equal in the Bitcoin network, and anyone who participates can store or transfer value without needing permission. Compared to the then 37-year-old petrodollar system, which firmly applied double standards based on a political agenda and still does, the new system envisioned by Bitcoin challenged many established beliefs. The film moves to 2021, the year this article is being written, a time that proved Bitcoin's value proposition to be even more relevant. Mandates and decrees enforced by authorities suppressed the freedom of many, leading to fear, hysteria, and division. A war over property and money began, and soft fiat currencies started to debase quickly. Society divided between those who believed in easy rewards and those who fought for freedom and honest work. The former proved very seductive, and leaders enacted laws to increase the money printing and make empty promises that things would get better if people complied. Despite the barriers, Bitcoin began to flourish even more as El Salvador became the first country in the world to make BTC a legal tender. The antifragility of Bitcoin would be demonstrated through the protection of wealth, property, and freedom. The shift Bitcoin enables society to make, and the point nocoiners don't yet grasp relates to incentives. The fiat system is based on the premise that high time preference decisions are conducive to economic growth. As people spend more, the economy grows further, and more money is created, and more money is needed in the now-more-productive economy. Bitcoin challenges that status quo by reintroducing the values of hard, honest work and corresponding rewards. The analogy made from the network's consensus protocol, proof-of-work (PoW), is that participants are incentivized to behave honestly through economic incentives and game theory dynamics. By standing by honest work, compensation follows, and every participant benefits. This dynamic isn't valid with the current fiat system because the closer one is to the money printer, the more they benefit. Therefore, rewards are based on each participant's status and position in the system, rather than their proven work. Furthermore, by reestablishing incentives, Bitcoin allows people to save and invest for the future –– a stance that contrasts the "spend" mentality that reigns in the fiat currency system. Bitcoin is generational wealth because it allows individuals, families, companies, and governments to have a low-time preference and to think long term, resting assured that their money will preserve their purchasing power and enable more significant, multigenerational investments to be made. Time preference is central because it underpins all decisions in society –– from choosing what you want to eat for breakfast to the more complex investment in a new house. With distorted incentives, society fluctuates without constancy, forever seeking out the most gratifying purchase now instead of focusing on the long term. Many of the changes this simple shift would enable are depicted in the film, including agriculture, food, enterprises, education, and basic needs such as water, bureaucracy, and energy. A prosperous society focuses on the small actions that can be done now to bring about a better future instead of focusing on what they can do now for instant gratification. Since most of a society's decisions are based on monetary trade-offs, money is central to establishing the proper incentives, and people act accordingly. By restoring sound money and ending the addictive, easy money culture, Bitcoin enables humanity to march together to achieve a second renaissance and achieve hope, productivity, creativity, and optimism. "The world is building wealth that is no longer measured in the quantity of currency, since the amount of currency is hardly changing. What has wealth become? It is now the sustainable, expanding, uncorrupted productivity of all humanity, enjoyed by all. It is measured in the quality of life of all mankind," Strolight narrated in the film. Ultimately, by restoring proper incentives and freeing society from worrying about outperforming the inflation rate through paper investments, that's what Bitcoin enables. Tyler Durden Sat, 11/27/2021 - 07:00.....»»

Category: blogSource: zerohedgeNov 27th, 2021

David Rosenberg: "To Bet On Inflation Is To Bet Against Human Ingenuity"

David Rosenberg: "To Bet On Inflation Is To Bet Against Human Ingenuity" David Rosenberg, founder of Rosenberg Research, doesn't expect a sustained surge in inflation. In an in-depth interview with Christoph Gisiger of The Market.ch, he explains how investors can position themselves for a disinflationary market environment and which indicators he’s paying particular attention to. * * * It's the all-important question for 2022: Will inflation come down again in the course of the coming months, or has a new regime of persistently high inflation begun in the wake of the pandemic? For David Rosenberg, the case is clear: The economist and investment strategist expects the economy to cool down next year. At the same time, supply bottlenecks will ease as more capacity is built up everywhere. "My outlook for the economy – for the lack of a better term in two words or less – is muddle through", Mr. Rosenberg says. "And that means inflation will come down next year", he adds. In this in-depth interview with The Market/NZZ, he explains why he does not believe that the Federal Reserve will raise interest rates anytime soon, how investors can position themselves for a disinflationary market environment, and which economic indicators one should keep a particularly close eye on. Mr. Rosenberg, inflation in the U.S. has risen to its highest level in thirty years. Is this trend persistent or transitory? First of all, the definitions of transitory and persistent represent gray areas. So if you believed that transitory meant weeks, months or even quarters, this is obviously not proving to be transitory. But transitory truly defined just means an event that is expected to be short-term or brief in nature. What we’re seeing right now is a very sharp inflationary experience, and its magnitude has altered people’s perception on the duration of this inflationary period. Certainly, inflation rates are higher today than I would have thought several months ago. It also has proven to be a little stickier. And what happens next? Where I really differ – more than just on whether this is transitory or persistent – is with the prevailing view that somehow inflation has broadened out substantially. That’s not the case. It’s still narrowly confined to rent and automotive, basically anything with a microchip attached to it. This is still very much part and parcel of all the distortions we’ve seen through the entire pandemic. Therefore, I’m in agreement with Treasury Secretary Janet Yellen that this inflation situation lasts as long as the pandemic lasts. We do have a mismatch between supply and demand. But within the next year, the pandemic likely and hopefully morphs into an endemic, and with that process the supply bottlenecks will resolve. What does this mean for the economic outlook? I actually think that the tables are going to be turning on the demand/supply equation. This time next year, demand is going to be quite a bit weaker. Recurring large rounds of fiscal stimulus have been the key component of demand growth, and that is going to decline. People have not appreciated the extent of the fiscal boost on aggregate demand. That is going to dissipate substantially, even with the Biden infrastructure package. At the same time, supply will come back on stream. We know that because that is what history tells us. So to bet on inflation is to bet against human ingenuity – and I’m not willing to do that. Following President Biden’s infrastructure package, however, Democrats are expected to push another stimulus package through Congress in the coming weeks. For one thing, investments in physical infrastructure are going to end up improving productivity which is an anti-inflationary supply side development. It would be like saying that Eisenhower’s rollout of the interstate highway system in the 1950s was inflationary. In reality, it was far from that. Also, it’s still unclear what’s going to happen with the social infrastructure part which doesn't have as much support politically as the physical infrastructure part does. In this regard, it’s important to say that there is no such thing as a free lunch. The next round does not come tax free. Any future stimulus will be accompanied by tax increases, and that is going to make it less beneficial for aggregate demand. Perhaps, you get a more just and fair society out of it, but that doesn’t mean it’s going to be a pervasive boost to aggregate demand. So at what pace will the U.S. economy grow next year? The economy will likely grow in line with potential, call it roughly 2%. The Fed is at 3.8%, so I’m positioned squarely below, and that’s why I don’t have a very bearish outlook for bonds. Right now, a lot of the Street’s interest rate outlook is premised on inflation, and it’s premised on the Fed starting to raise interest rates by the summer of 2022. I’m pushing back very hard on that prognostication. My outlook for the economy - for the lack of a better term in two words or less - is «muddle through». And that means inflation will come down next year. What does this mean for your forecast on the Fed’s monetary policy? In terms of rate hikes next year, I’m at zero. A lot of the reason why the 10-year Treasury note is at 1.6% instead of 1.2% is that the market has aggressively priced in an early return to a rate hike cycle. But I don’t see that happening so quickly. The Fed has told us that it is going to take a flexible policy approach premised on the evolution of the economy relative to its baseline forecast. Importantly, the Fed historically had an institutional bias in its forecast towards growth being stronger than it ultimately proved to be. That’s why I’m in the camp that the economy will expand next year in line with potential. That means capacity pressures will stabilize, and this will provide the backdrop for inflation to come back down towards the Fed’s target. What would happen if the Fed nevertheless raised rates as early as next summer? As I said, I don’t see the need for a new rate hiking cycle quickly in the aftermath of the first global pandemic in over a century. There are still way too many uncertainties over the economic outlook. Remember, everything the Fed does in a moment of time has a peak impact on the economy 12 to 18 months later. Thus, raising rates too early in 2022 in what is perceived as a transitory inflation environment - no matter how you define transitory - will risk a recession in 2023. Then again, the stronger dollar also points to a somewhat tighter monetary policy in the United States, doesn't it? The dollar had a pickup because of the reset of interest rate expectations by the Fed at a time when the ECB has pushed back on rate hike expectations out of Europe. So part of that strengthening move has happened against the Euro. But it’s been quite broadly based, mostly in view of Fed Chair Powell starting to sound less dovish and more hawkish after the September FOMC meeting. That’s when the U.S. dollar started to circle around. In my view, this dollar rally has a short shelf life because interest rate expectations are going to head in the opposite direction next year. Hence, I am more of a dollar bear than a dollar bull, especially at today’s levels. What would it take to change your mind? The one thing that is going to be very important is the labor participation rate. That is where the rubber meets the road on the extent to which the inflation backdrop proves to me more pertinacious than what I’m talking about. I’m not worried about transportation costs or freight rates, and I’m not worried about the semiconductor and the automotive industry. But the biggest risk is if this turns into an accelerating wage cycle. Why? The only reason why the unemployment rate is at 4.6% and not above 6% is because of the very sluggish performance turned in by the labor force participation rate. In the next several months, it’s going to be critical for the labor participation rate to hook up more forcefully which means that the competition for job openings is going to expand, even with continued job creation. That puts a lid on the wage growth we had over the course of the past several months. This is going to be critical for bond bears and inflationists alike: Their call really stands on the participation rate remaining extremely low. Why do you assume otherwise? I like to make the comparison to Canada where the participation rate has gone almost back up to where it was pre-COVID, and wage growth is running at around 2%. In the United States, the participation rate has only reversed 40% of last year’s pandemic and lockdown induced decline. As a result, wage growth in the U.S is running close to 5%. The key difference, of course, is that the vaccination rate in the U.S. is almost 20 percentage points lower than in Canada. I bet that gap will be closing over time meaning people who have been less inclined to go back to work for health concerns will have those concerns alleviated, especially in industries within the sphere of the consumer cyclical sector. Therefore, if the participation rate is going to head back up towards the pre-COVID level, I think the unemployment rate ends up going back towards 7%. And, if that happens, the Fed is not raising rates, wage inflation recedes and the Treasury market embarks on what is otherwise known as a «bull flattener», a yield-rate environment in which long-term rates are decreasing more quickly than short-term rates. What does it mean for the stock market if monetary policy remains loose for the foreseeable future and speculative mania continues to rise? There are bubbles everywhere: residential real estate, equities, corporate credit, cryptos. But there is nothing in my interest rate forecast that is bearish for risk assets. Because in the final analysis, the central banks have to offer a policy based on the real economy. Without doubt, the valuations are crazy, and there will be a day of reckoning. It’s just not clear that it will be in the next twelve months. Against this backdrop, what’s your advice in terms of investment strategy? What’s interesting to me is that the pundits out there that have the highest inflation forecast and the highest interest rate forecast are also the ones that are most bullish on these risk assets which are long duration in nature. This is a classic case of cognitive dissonance: The people that are most bearish on bonds are the most bullish on stocks, not realizing that they are both joined at the hip. If bond yields really ratchet up, the bull market in equities and almost everything else that is considered risk and long duration is going to come under a serious correction if not an outright bear market. In other words, U.S. government bonds are an attractive investment? We can argue if they are a good investment. But if you agree with my view, they will be a good trade. If you have anything remotely close to a contrary antenna, you have to be owning Treasuries right now, I mean the very long end of the curve. That will generate the biggest return. With the new fiscal stimulus packages, however, government debt in the U.S. will rise even more. At the same time, the Fed is tapering its bond purchases. Aren't these unfavorable conditions for Treasuries? It’s very interesting. We’ve thrown so much at the treasury market: repeated rounds of fiscal stimulus, ubiquitous inflation, unrelenting growth, the re-opening of the economy and the Fed’s taper. Yet, here we have the 10-year note at below 1.6%. So what do you do for an encore? All the bad news for bonds is already out there. That is telling you a lot about the resilience of the bond market. We’re not at the bottom of a recession with clear skies ahead. We’re coming out of this best part of the growth, with inflation likely peaking. So how much will 10-year Treasuries yield next year? A lot of the factors that took us from 1.25% to 1.60% on the 10-year note are going to be unwinding. We are going to see disinflation next year and weaker than expected economic activity. That’s why I’m very bullish on treasuries. In the next twelve months I think the yield on the 10-year note is probably going to be gravitating towards 1.25%. And the long bond, the 30-year, is probably going to head down towards 1.5%. Also, keep in mind: This is a contrarian call which makes it all the more rewarding. All the hedge funds are more underweight treasuries than they ever have been at any point in the past two decades. And what about the outlook for equities? Right now, the cyclically adjusted Shiller P/E Ratio of the U.S. equity market is close to 40, and in the past century it’s only been at 40 or higher at 2% of the time. I mean, that’s a three standard deviation event. In the past, when we had the starting point on the multiple for equities this high, forward returns - whether it’s one, three or five years - were negative. So the starting point of the multiple is telling you the same thing as Treasury yields: We’re into a future of anemic expected returns because so much of those returns have already been harvested over the course of the past years. This means that active investing is going to be superior to passive investing, and that the ETF industry might have a tougher time. But didn’t you just say that the party for risk assets like stocks will go on? The legendary Wall Street veteran Bob Farrell famously said: Exponentially rising markets can go further than you think, but they don’t correct by going sideways. We’re still in the first part of that sentence. If my interest rate forecast is correct, it means real rates stay negative, and the bubble probably gets bigger. But in the name of prudence, I want to be invested in the sectors that will benefit from a bull flattening in the treasury curve and from slowing growth. That means I want to be positioned in utilities, healthcare and consumer staples. What, for example, speaks in favor of healthcare stocks? What I like about healthcare in particular is that it doesn’t have a correlation with GDP growth. If you go through a big slowdown, healthcare will be a very good place to be. What we learned with the pandemic and the variants is that the battle against these sorts of viruses is not going to go away any time soon. We also learned that healthcare has been an underinvested sector, and it will remain a focus for capital spending for an extended period of time. On top of that, healthcare is a secular theme that is tied at the hip with the aging demographic profile of the population. To me, healthcare has secular tailwinds that I want to be involved with at all times. Especially, in a year when we expect a rotation towards the most defensive sectors and out of the more cyclical sectors as GDP growth underperforms expectations. In this context, how do you assess the risk of drug price regulation? There is always political risk with investing in healthcare. That’s just the nature of the beast. But it’s not a reason to not have at least a few toes in the sector. And let’s face it, what happens next year is that the Republicans will likely take back the House and the Senate, and we end up with another two years of political gridlock. So I’m not really concerned about that aspect. When it comes to international investments, your bullish call on India this year turned out great. Where else do you spot opportunities for investments outside the U.S.? According to our models, valuations are much more compelling in Asia than they are in the United States. Thus, I like Asia over the U.S., particularly in the case of Japan. Japan is one of the most inexpensive stock markets in the world. And, with the recent victory of the Liberal Democratic Party, the political outlook has eliminated a source of uncertainty. What’s more, in the past few months, Japan has done a stellar job in getting their COVID case count down and their vaccination rates up. And of course, the recent cheapening of the Yen is a boon for their large cap exporters. What is the best way to invest in Japan? It is still very difficult to get a pulse of the Japanese consumer, but the business sector seems to be in very good shape. I think the industrials will perform well, especially with the upcoming fiscal stimulus and the weakening of the Yen. So large cap exporters will probably benefit the most. Are there any other opportunities for compelling investments? If you’re looking for a hard asset that is unloved and underowned, gold and gold mining stocks will be a very good place to be. Very recently, gold has been firming despite a strong U.S. dollar. If I’m right with my forecast and the dollar depreciates next year and real interest rates stay negative, this will be a very important tailwind for gold. There’s also the prospect that China continues to embark on its regulatory crackdown on crypto currencies, which should also be a positive for gold. Finally, you see it on a technical basis: Gold has been breaking out. That’s why I think that what I call the «bond-bullion barbell» will work very well in 2022. Tyler Durden Tue, 11/23/2021 - 17:00.....»»

Category: blogSource: zerohedgeNov 23rd, 2021

A Brief History Of West African Slavery

A Brief History Of West African Slavery Submitted by ICE-9 via The Burning Platform Slave [sleyv] from Middle English, from Old French sclave, from Medieval Latin sclāvus (“slave”), from Late Latin Sclāvus (“Slavic Person”), from Byzantine Greek Σκλάβος (Sklábos), from Proto-Slavic slověninъ … The seminal image many 50+ year old Americans have regarding the West African slave trade’s operating model can be traced back to the 1977 television miniseries Roots.  Some of you may recall sitting in front of your CRT television screen unknowingly watching the roots of a future social justice movement unfold before your eyes as a gang of European men magically appear deep within the Heart of Darkness wielding nets, superior numbers, and incredible brutality and snatch up a young and happy Kunta Kinte from his ancestral homeland. Like me, I bet the knot in your gut got tighter at each stage as Kunta Kinte was first shipped off in chains to a slave depot, sold at auctioned, and finally sent to America where his foot got cut off and he was renamed Toby.  The miniseries was a monumental success at implanting those first seeds of suburban white guilt into what had previously been infertile terrain.  Afterwards, many Americans could never innocently watch OJ Simpson run through airports in quite the same way. Roots was the initial vector that dug its pernicious roots into the formerly oblivious white collective consciousness.  It succeeded where back in the 1960s continuous years of three minute lead story action clips on the Six O’clock Evening News showing groups of helpless southern Negroes getting pummeled by police truncheons and slammed with water cannons had failed.  Thus those January nights back in 1977 unleashed the power of humanized myth that unequivocally proved superior to the old ways of cold impersonal facts.  It was through this new found power of myth and the visceral emotions it conjured that a primordial wokeness was spawned. Today, when discussing even the most oblique references to slavery in America, the emotions ignite, misguided passions reign supreme, facts equate to racism, and the phenomenology of history devolves into one where history becomes but a construct derived to aid and abet a white supremacist patriarchy.  Case in point – according to current woke orthodoxy, evil cis-male Europeans just up and sailed 3,500 miles south to forgotten lands like Zenaga, trekked hundreds of miles inland without roads, maps, or logistic support, and – according to some extraordinary unverified estimates – kidnapped up to six million innocent Africans. But was this the reality on the ground in West Africa circa 1619, or did Europeans instead rely on intermediaries to conduct their dangerous, high opex dirty work and if so, who were these intermediaries?  Do Americans have an accurate understanding of the West African slavery supply chain, or have they instead meekly decided to go along to get along and ingest without question a toxic narrative that is an antipathy encumbered product tainted by a combination of pop culture and political agenda?  And last, did slavery in West Africa materialize out of thin air with the first appearance of Europeans, or did it exist long before their arrival? The answer to this last question is both morally and legally significant, as it could nullify any and all claims to both tangible and ethical debts of reparation borne by ancestral liability.  For if Caucasian Americans are collectively guilty – including those who immigrated here after the Civil War – as a result of their ancestors’ theoretical participation in the West African slave trade, would not a basis be equally established to extend slavery’s collective culpability to African Americans if it were shown that their ancestors too participated to an equal degree in the West African slave trade?  Would not equal culpability on both ancestral sides of the Atlantic nullify any and all claims by one party against the other?  Further still, if slavery in West Africa was shown to be prevalent long before the arrival of Europeans, based on the premise of hereditary culpability, then slavery in America could no longer exist as some kind of alleged “Original Sin”. The forthwith exposition can be considered a template for countering the unreasonable and fanciful woke dogma surrounding the realities of West African slavery and specifically, the false claims regarding Europe’s and America’s sole complicity in this industry.  It is an attempt – described here in broken wokespeak – to deconstruct the prevailing narrative derived to aid and abet a People of Color aligned, non-binary, trans-supremacist heterarchy.  Let us begin our journey of enlightenment. The Songhai Empire as Gateway to Europe’s Appetite for African Slaves Between the 4th and early 16th centuries AD, through a succession of kingdoms that included Wagadou (Ghana), Mali, and Songhai, the West African Sahel was among the wealthiest regions on earth during a period when most of Europe wallowed in medieval feudalism.  Prior to the discovery of the Americas, West Africa was the world’s largest source of gold – so much gold in fact that when the Malian king Mansa Musa visited Mecca during his 14th century hajj, his 60,000 strong retinue (including 12,000 slaves) distributed so much gold that he crashed its value and created a decade of economic chaos on the Arabian peninsula. The Niger River during this time possessed six times more arable land than the Nile.  In the adjacent Sahara to the north, Africans operated extensive salt mining operations.  With the arrival of the Arabs in the 8th century AD, a prodigious iron smelting and blacksmithing industries occupied entire villages from one end of the Sahel to the other.  The West African political economy was such that no king ever enforced strict ownership over the entirety of his realm, so after the millet harvest an African peasant could earn good extra income panning for alluvial gold, mining iron ore, harvesting trees to make charcoal fuel for iron smelting, or travelling north to labor in the salt mines. The Sahel during this period was awash in food and gold and large prosperous cities like Gao grew into architectural wonders.  So what happened that would drain not only the wealth of an established long-standing power center yet leave nothing behind but piles of dirt from what were formerly majestic structures of timber and adobe brick?  The short answer is that it all fell to pieces due to horses. In the 9th and 10th centuries AD, trade caravans from what are today Morocco and Algeria began regularly making their way south through the Sahara desert during the winter months. These caravans initially brought with them manufactured goods and luxury items to exchange for gold, ivory, specialty woods, animal skins, and salt.  But during the 13th century these caravans started supplying a vital military component to the various competing rulers of the Sahel – Barb horses.  Ownership of horses gave each ruler a cavalry, and ownership of large herds could facilitate military superiority over rivals. The Malian, Hausa, Mossi, Bornu, Kanem and Songhai cavalries regularly battled each other for over three hundred years to what could be considered an equilibrium sometimes punctuated with transient victories and an occasional ebb or flow of juxtaposed borders.  Continuous combat was made possible only by a steady supply of Barb horses from the Maghreb, a market that traders were happy to oblige as the supply of gold from the Sahel appeared endless. But with its monsoonal climate and tropical diseases like trypanosomiasis, the Sahel Africans found it difficult to breed horses – the local Dongola sub-breed had a short life expectancy – and thus a steady flow of imported Barb horses were required to both replenish the high equine mortality rates and maintain at least military parity with the surrounding kingdoms. These imported horses were expensive and were initially paid for with alluvial gold, which was starting to go into productive decline during the 15th century at about the same time the Songhai king Sonni Ali Ber led a successful campaign to defeat his enemy Mali and consolidate rule over the Sahel from Lake Chad to the Cap-Vert peninsula.  So the height of Songhai power coincided with maximum operating costs to retain that power just as alluvial gold production from the Niger River went into decline. Saddled with the mounting expense of maintaining many cavalry regiments stretching across an 1,800 mile expanse, the Songhai lords began to launch slave raids upon the various Sahel peoples.  So as the 15th and 16th centuries progressed, slaves rather than gold became more and more the medium of exchange between the Songhai lords and the horse traders of the Maghreb.  As these traders brought more and more slaves to the Mediterranean coast of North Africa, most were purchased by Arabs but many were sold on to Europeans where they were employed as domestic servant in wealthy cities like London and Antwerp and were considered a high status symbol – the “negars and blackmoores” of 16th century Elizabethan England.  So it was not the Europeans that first procured slavery in West Africa, but the Songhai themselves that introduced Europe to African slaves via Arab and Berber intermediaries.  Europeans at this time were a minor end customer, where the primary slave demand was provided by Arabs. As the 16th century ground out successive years, the gold really began to play out.  Continuous and devastating slave raids depopulated the Niger River goldfield regions – crashing not only gold but also food production – and drove its inhabitants onto marginal lands that had been earlier deforested to manufacture charcoal for the formerly prodigious iron smelting industry.  Over a period of 200 years the once prosperous Sahel was transformed into a land inhabited by subsistence food scavengers and all powerful cavalry lords where the incessant demand for horses laid economic waste to this once prosperous region. With Songhai power in the late 16th century at its nadir as a result of internecine strife and succession wars among the dead king Askia Daoud’s many sons, the Sultan of Morocco, Ahmad al-Mansur, took advantage of the ensuing political instability and sent a military expedition across the Sahara and in 1591 these 4,000 Moroccans and their cannons defeated the Songhai at the battle of Tondibi. Thus with the defeat of the powerful Songhai Empire the coast of West Africa south of the Arab stronghold Nouakchott was left wide open to European maritime exploitation.  By 1625 the Dutch had established a permanent settlement at Gorée and the Portuguese likewise at Portudal, both located in modern day Senegal.  These initial European forays onto West African soil provided the vital resupply anchorage that enabled further permanent settlements along the entirety of the Gulf of Guinea and as far south as Namibia.  And it is at this point where the Kunta Kinte mythology begins with the permanent settlement of Europeans on African soil who allegedly trekked hundreds of miles inland into dangerous areas they did not control to randomly kidnap happy Africans into slavery.  Was this the reality on the ground in Africa back in 1619?  The Angolan experience provides the answers. The Angolan Model of Contracted Slave Procurement The gradual encroachment of European settlements down the Atlantic coast of West Africa did not lead to immediate mass colonization as malaria and tsetse flies kept out all but the hardiest and most rapacious adventurers.  But how did these Europeans procure so many slaves to service the burgeoning and incredibly profitable sugar and tobacco charters of the Caribbean?  The Kunta Kinte procurement model would have eventually led to depopulation of the local areas as the traditionally semi-mobile Africans would have just up and moved out of reach like they did to avoid the Songhai lords, and Africans were beginning to adopt European weapons in their defense.  So – how did so many Africans end up as slaves in the Americas despite their overwhelming numbers back in Africa? The answer lies in the Angolan model which was by no means confined to this region alone.  During the first half of the 16th century the Portuguese established a permanent trading station at the port of Soyo, a province within the Kingdom of Kongo on the south bank at the mouth of the Congo River.  The significance of Soyo was it established the first European occupation in West Africa outside the provenance of the tsetse fly, and with trypanosomiasis absent, colonists could settle and import European livestock for the first time on the African Atlantic coast.  Entire families of Portuguese colonists began to arrive and by 1575 the city of Luanda was founded, followed by Benguela in 1587.  With Angola’s drier, more temperate climate, these early European colonists got to the business of building homes, clearing land, farming, fishing, and raising their livestock.  But one thing they did not do was get to the business of travelling hundreds of miles inland to hunt down and capture slaves.  They left that to others – and these others weren’t Europeans. Soon after the Portuguese planted their flag at Soyo, they granted a trade monopoly to the Kingdom of Kongo which ruled over what is now northwestern Angola.  But as Portugal established colonies to the south of Soyo, these new colonies were located in lands claimed by Kongo but occupied by Ambundu peoples of the N’Dongo and Kisama states within the Kwanza River valley.  Because of the trade monopoly specifics granted to Kongo, the Bakongo could sweep through the Kwanza River valley and capture the local Ambundu and sell them into slavery to the Portuguese, but the Ambundu could not capture these Bakongo raiders and sell them into slavery to the same customer.  This egregious injustice incensed the N’Dongo king to the point of declaring war on – not the Portuguese – but the Bakongo in an attempt to break the discriminatory trade monopoly.  The Ambundu were successful and in 1556 they defeated the Bakongo in a war fought not to end the enslavement of their fellow Africans, but to extend to themselves the right to capture, enslave, and sell their Bakongo neighbors to the Portuguese. Despite the N’Dongo victory and elimination of Kongo influence in the Kwanza River valley, the Portuguese insisted on upholding their original trade agreement, so the Kongo trade monopoly remained in place with the Ambundu still cut out of all commercial activity with the Portuguese.  Realizing they had prosecuted a war for nothing, the N’Dongo spent the next several decades threatening colonists and harassing Portuguese interests up and down the Kwanza River valley without any penetration into the colonial economy.  In 1590 N’Dongo had had enough of the commercial status quo so it allied itself with its eastern Ambundu neighbor Matamba and together they declared war on all Portuguese interests across Angola. This war led the Portuguese to construct a network of fortalezas up and down the Angolan coastline and after years of protracted violence the Portugal finally defeated the N’Dongo in 1614.  Portugal’s first act after victory was to invite their old trading partner – the Bakongo – to commence mop-up operations across the Kwanza River valley in order to clear out the defeated Ambundu and bring them in chains to the new network of fortalezas, which not only served as troop garrisons and acropoli for the local inhabitants, but also as slave depots that accommodated the swelling numbers of captured Ambundu before being auctioned off and sent to Brazil. With the defeat of the Ambundu the N’Dongo matriarchal dynasty fled east to their ally Matamba.  There, a royal refugee named N’Zinga M’Bandi betrayed the hospitality shown her by Matamba and began secret negotiations with Luanda for a return of the Ambundu to the Kwanza River valley.  N’Zinga M’Bandi secured agreements that not only deposed the sitting Matamban queen – handing her the crown by subterfuge – but also convinced the Portuguese to nullify their long standing trade monopoly granted to the Kingdom of Kongo which, in effect, established the Ambundu peoples in the slave procurement business. The new Matamban queen made haste regarding her political and business affairs and quickly consolidated N’Dongo and the neighboring Kasanje states under her rule.  By 1619, Queen N’Zinga had grown her realm into the most powerful African state in the region using the wealth generated from her industrial scale slave procurement undertaking.  Within a few decade of Queen N’Zinga’s ascension, the regions surrounding central Angola were depopulated of not only the rival Bakongo peoples, but of its Ovimbundu, Ganguela, and Chokwe peoples too. The lucrative Angolan slave trade not only flourished under female African leadership, but grew scientific and efficient and continued unabated until the Portuguese crown outlawed the colonial slave trade in 1869.  However, avarice and ingenuity always prevail so after this slavery prohibition a vibrant slave black market continued unabated as abolition only served to drive up the price of slaves and therefore the incentive to procure them in the field.  These lucrative smuggling operations from Angola lasted up until the day its primary customer Brazil abolished slavery in 1888. Today the dominance of the Ambundu peoples in the business, political, and military affairs of modern day Angola is directly traced to the business acumen, organizational skills, and operational efficiency that the Ambundu peoples’ developed during their 269 year monopoly over slave procurement in Angola.  From the tens of thousands of their fellow African “brothers” and “sisters” that the Ambundu sold into slavery, they accumulated incredible wealth that enabled them to occupy a position of respect, influence, and near equality in colonial Angola unparalleled anywhere in colonial Africa.  They became, in a sense, the “Master Ethnicity” of the region. Twilight of the Woke Idols The irony behind the etymology for the word slave, lost upon the woke and the allies of Critical Race Insanity, is that slave derives from ancient words describing Caucasian Slavic peoples.  If slavery were at the core of the “American Experience”, America long ago would have adopted a word for slave that describe African peoples just as the Romans employed Sclāvus to describe a Slav.  But in the 402 years since 1619, Americans have not made this linguistic transition because there is an older and deeper collective history of slavery that can be traced back millennia to Eastern Europeans who constitute a large proportion of the American population. Yet somehow this deeper history has not affected Caucasians of eastern European descent – even the generational poor – in the same way it has tormented the collective psyche of African Americans.  Maybe these demons are not so much the product that African Americans were once slaves, but instead a manifestation of the incessant bombarded of acerbic messages from the Academia-Media-Technocracy Complex demanding that African Americans play the role of perpetual victims and that they deserve some abstract redress from those who themselves have never benefitted from systemic anything. Or is there a deeper pathological diagnosis, a sepsis of personal ontology whereby the current woke narrative is a desperate attempt at mass cognitive dissonance to blot out the humiliating reality that one’s ancestors were traded in bulk by one’s own kind for the likes of a horse? Africans were one of many peoples in a long line of slaves procured by Europeans but they are the last group before the prohibitions of the Utilitarian campaigns of universal human rights put an end to the practice. Thus it is this ‘Last In, First Out” queuing that gives African Americans claim to their title of “systemic victims” without regard to the broader history of European slavery during the preceding two millennia – including Medieval feudalism.  The reality on the ground for centuries in Europe was that slave relations were between Caucasian Master and Caucasian slave. And with the advent and maturing scientific efficiency of institutions such as central banking, nation states, denominational religions, non-governmental organizations, together with the application of mass psychology, one finds upon further scrutiny that this predominant relationship between Master and slave has changed little over the millennia.  We Americans are, in a sense, all slaves – caught in a systemic nexus of control with few options of escape.  Therefore, claims of “systemic injustice” and demands for redress are nothing more than demands to be promoted from field hand to domestic slave unless the true, invisible system of enslavement is abolished for all Americans. Slavery existed for millennia throughout the entirety of the Bantu populated African continent prior to the arrival of Europeans.  African slaves were captured, worked hard in the millet fields, scolded, beaten, sold multiple times, raped, and murdered well before the first European footprint was impressed on a West African beach.  Slavery was the natural African social condition, it continued as Europeans colonized the continent, and in some places it continues today after most Europeans have left.  Thus any conception of an “Original Sin” borne by Americans through ancestry lies not with Caucasians, but with those of African ancestry as Africans themselves were the origination point for the West African slavery supply chain where they occupied the roles of contractor, planner, procurer, and transporter to distribution hubs. The indigenous Africans were, in modern terms, the Chief Operating Officers of the West African slave trade.  Europeans played the roles of wholesale customer, clearing house, and retail distributor of a product offered to them by brazen and entrepreneurial local rulers who amassed great wealth from their endeavors and whose ancestors today are the beneficiaries of an “ethnic privilege” derived from this wealth and societal status as former Masters. The truth is that this seminal enduring image created with Kunta Kinte’s abduction is a fraud and was fabricated to not only impugn the Caucasian audience and henceforth brand them evil and complicit through ancestry, but was also consciously constructed to expiate the guilt surrounding the ugly and brutal truth that Africans themselves were the culpable party.  Had indigenous Africans not captured and sold so many of their brethren into slavery, there would likely be very few African Americans today. Epilogue The woke will never mention the 800 years of an East African slave trade conducted by Arab merchants up and down the Indian Ocean coast.  The woke won’t utter a word regarding present day slavery across the Sahel countries of Mauritania, Mali, Niger, Chad, and Sudan.  One hears only silence from the woke when one mentions the “Systemic Ethniscism” that permeates every Bantu nation where wealth and power are concentrated into the hands of a dominant ethnic group. The woke ignore the 3,000+ freed African slaves who show up in the ante bellum US census who were granted manumission, inherited plantations from their former owners, and kept the slaves.  No woke person ever admits that American Indians owned African slaves nor will they / them accept that slavery permeated Nahuatl culture even as they / them espouse the virtues of Greater Aztlán.  And the woke will never accept that it was Europeans who eventually stamped out slavery within the Bantu cultural world despite it being the natural human condition there for centuries. And, most importantly, the woke will never acknowledge that all Americans are trapped in a nexus of corporate, bureaucratic, technological, and psychological control where the true “American Experience” has devolved into one where everyone is a slave serving invisible Masters. Until these Masters’ hands are removed from every lever of power and influence in our nation – by any means necessary – abstractions like “equality” and “equity” are nothing more than job promotions on the American plantation.  The woke will never become unwoke because they love their servitude, it has opened the door for them to serve an irresponsible existence free of rationality, logic, true meaning in their existence.  Through their wokeness, they have essentially been freed from Freedom – they can place no hope in death, and their blind lives are so abject that they are envious of every other fate.  The world should let no fame of theirs endure; both true Justice and Compassion must disdain them. One final comment about those 4,000 Moroccans at the Battle of Tondibi.  The invading Moroccan army was commanded by a one Judar Pasha, but he was not always known by this name.  Judar was born Diego de Guevara, an inhabitant of the Spanish region of Andalusia who as a boy was captured by Arab slave raiders, packed off in chains to Morocco, and sold into slavery to the Moroccan Sultan.  And just like Kunta Kinte, Diego’s name got changed, but where Kunta Kinte had his foot cut off, Judar was castrated and forced to serve this foreign Sultan as a eunuch.  But we will never see a TV miniseries where an Arab slave wrangler hangs one Diego de Guevara upside down by his ankles, thrashes him with a bull whip, and screams repeatedly, “Your name is not Diego, your name is Judar!” Tyler Durden Fri, 11/19/2021 - 23:40.....»»

Category: blogSource: zerohedgeNov 20th, 2021

When The Global Monetary Reset Happens, Don"t You Dare Forget Who To Blame

When The Global Monetary Reset Happens, Don't You Dare Forget Who To Blame Submitted by QTR's Fringe Finance "What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?" -Morpheus, The Matrix Not unlike the movie The Matrix, when Morpheus makes this now-famous speech to Neo, many people in the U.S. are walking around feeling the same type of intangible that Neo carried with him before being introduced to the matrix. Many of these people, myself included, know deep down that something went horribly askew when we were taken off the gold standard in 1971. And today, many people witnessing soaring inflation are starting to feel their spider senses tingle even more: something is definitely wrong with “the system”. But not everybody can put their finger on exactly what is wrong. This is what makes our system so nefarious to begin with: its complexity. It’s also why I try to explain these feelings for people in podcasts like my most recent one discussing why now must be the time we start to discuss inflation seriously. Source: ForbesLeft unchecked by gold, it took us less than half a century to destroy our currency, run production out of the U.S., become reliant on importing almost everything we use on a daily basis, turn the country into a third world country and run up a nearly $30 trillion national tab, all while the Fed has stacked almost $10 trillion in subprime crap onto its balance sheet. Along our merry way we have also pissed on and/or made a mockery of almost every safeguard (like the debt ceiling) we once put in our place for our own future good. Holy shit. Source: ForbesMake no mistake about it: we have become severely addicted debt and spending junkies, horrifyingly misinformed at best and nefariously negligent to the consequences of our actions at worse. And now, the train is officially off the tracks. Tea leaf reading isn’t my specialty and I’m hardly the world’s greatest analyst, but I like to think that I’m not totally numb to common sense and certain signs that pop up during my day-to-day. For example, I was one of the first to point out that it was just common sense that Covid would be a big deal in the U.S., and I also pointed out that it was just common sense that the lab leak theory was the most likely theory. Other “bold” predictions that I’ve made - like that President Biden won’t finish his first term - to me, fall into the realm of common sense, too. Much of my macro analysis is also simply just common sense. And so common sense tells me that a Bloomberg headline like this one, from August 17 of this year, shouldn’t be overlooked: FED'S POWELL: COVID IS STILL WITH US, LIKELY TO BE THE CASE FOR A WHILE. WE'RE NOT SIMPLY GOING BACK TO THE PRE-PANDEMIC ECONOMY Read it again: “We’re simply not going back to the pre-pandemic economy…” And here’s AP’s version: "There's no returning to the pre-pandemic economy" Read it again: “There’s no returning…” Now, read this part of the Bloomberg headline again, by itself: WE'RE NOT SIMPLY GOING BACK TO THE PRE-PANDEMIC ECONOMY The statement looks so different when you take it out of an hour long mishmash of Powell’s testimony in front of Congress, doesn’t it? When you parse out this line and write it out, like a lawyer looking at a transcript after a deposition, the words carry a different weight than they did when it was one of 1,000 sentences replete with backtalk and jargon being read in monotonous fashion. Statements like this and other “tea leaves” have been ubiquitous - surely you’ve heard of the World Economic Forum’s Great Reset already, right? It’s a plan that has been slid right under your nose - a plan to reset the entire global economy while blaming decades of abuse by the powerful and the elite on Covid. And I have no doubts: a great reset of any sort isn’t going to benefit the average citizen of Earth. Rather, it’s going to bail out and then redistribute power to those in charge. Think of our various monetary bailouts and how they’ve widened the inequality gap - then multiply the intensity by a factor of the entire globe. Whether it comes from directly stealing purchasing power from the everyday citizen, like central banking already does without people noticing , or if it comes from an invasion of privacy (digital money tracking what you spend, vaccine passports, etc.) anytime we “progress” and “move forward” according to the government, we wind up surrendering some of our civil liberties. “You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.” - Rahm Emanuel As a result, our quality of life may move incrementally lower and we may wind up with less civil liberties, but there will still be a large chunk of our country - and the globe - that mindlessly advocates for these policies as part of the belief that everything government does for me is in my best interest. I think it’s safe to say that most of my readers are not in that group. They’ve either been red-pilled already or I am helping them along the way at this very moment. Most of my readers understand that once you lose civil liberties, you never get them back. Most of my readers understand how precious civil liberties and freedom from government truly are. Ask Australia how it has felt to lose the right to bear arms while the government essentially keeps the populace in a prison state right now. I’d be willing to bet that one or two people who advocated for giving up their guns wouldn’t think it’s such a bad idea for them to have them back right now. The point of this article is to remind you that even worse than losing your civil liberties and/or your quality of life right under your nose is why it’s going to be happening. I’m writing to remind us, for as long as this blog stays on the web, to never forget where the blame should go. I get this feeling that when the “Great Reser” does happen, no matter how it is pitched to us, many people are simply going to move forward with their heads down, do what they’re told and not question why things have happened to begin with. In other words, they will be happy to adopt whatever they are told is best for them without questioning it – you can spot these people nowadays by searching for the people walking outside in the park, hundreds of feet from other human beings, with three masks on. The point of this article is to offer a stark reminder: when this reset does happen, regardless of whether or not you immediately find the faults in it, just remember what got us here: decades of arrogance from power-hungry politicians and elites that would’ve rather kicked the can down the road like cowards than do the patriotic thing and truly embrace how damaged our monetary system has become. And this isn’t just a United States issue – it’s a global elite issue – but my focus is on the United States because that’s where I live. Photo: ABCFor decades, our government, its officials and career politicians have refused to play it straight and do the honorable thing by informing our citizens about what truly needs to take place in order for our country to rectify its deteriorating financial system. We spent decades lying to ourselves and imagining that we were still living in a prosperous 1950s and 1960s, where the country was productive and experienced its last true boom before the money printer was turned on and while we still had sound money. Politicians chose to pretend that was still happening for decades even as we went off the gold standard and started to embrace quantitative easing. Back then, it would be easier to make the argument that they just didn’t know what kind of negative consequences their actions would have. Now, in an era of bloated Fed balance sheets and soaring inflation, that argument is clearly ridiculous - even to those without backgrounds in finance. Make no doubt about it, there have certainly been times where politicians had the chance to level with the American people and tell them that the country needs to address its debt, produce more, spend less, and protect the integrity of our currency. However, cowardly elected officials almost always arrive at the conclusion that it’s not in their best interest to do so because an unpopular message doesn’t help them get elected. So instead of somebody – any fucking body - along the way trying to stand in the way of the power-hungry elites that want to assert power and are arrogant enough to think that they can usurp economic laws, we have now broken the system so badly that talk of a great reset is inevitable. The system, for lack of a better term, is FUBAR. Given that context, comments like Jerome Powell‘s last summer read in an entirely different light than most people would think. WE'RE NOT SIMPLY GOING BACK TO THE PRE-PANDEMIC ECONOMY To the average observer, his words were scattered commentary about economics. To anybody paying attention, it’s an admission that the road of monetary policy and fiscal policy disaster that we have willingly traveled down has finally come to an end. Just one government official or elite that chose to speak out against what was an obviously flawed path could’ve changed the course of history in our country. And so when it’s time to place blame decades from now and we look back, these people are a great place to start looking. In conclusion, the point is this: when the reset happens – whatever it entails - and you go to be vocal about your first gripes or raise your first questions about why this was ever pitched to be a good idea in the first place, just remember how we got here. -- This was a free look at paid subscriber content from QTR's Fringe Finance. If you enjoy and want to support my work, I'd love to have you as a subscriber. Zerohedge readers get 10% off a subscription for life by using this link.  Tyler Durden Wed, 11/17/2021 - 17:00.....»»

Category: dealsSource: nytNov 17th, 2021

Brown & Brown (BRO) Expands in Central Florida With Buyout

Brown & Brown, Inc. (BRO) buyout of Heacock Insurance reflects its continuous effort to expand footprint, add capabilities and boost operations. Brown & Brown, Inc. BRO has acquired Heacock Insurance. The addition of Heacock Insurance will boost Brown & Brown’s presence in central Florida.Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues.Heacock Insurance has been providing risk management solutions in Central Florida for about a century. Heacock’s clients include both individual and business customers in Lakeland and Sebring area.Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments. Also, strategic acquisitions and mergers help it spread its operations. Through the first line months of 2021, this Zacks Rank #2 (Buy) insurance broker completed 11 acquisitions with annual revenues of approximately $65 million.  Brown & Brown intends to make consistent investments in boosting organic growth and margin expansion. Its solid earnings have allowed the company to expand its capabilities, with the buyouts extending the company’s geographic footprint.Consistent operational results have been aiding Brown & Brown in generating solid cash flows for deployment in strategic initiatives. It has maintained a strong liquidity position, with $944 million of cash and cash equivalents as well as $800 million of accessible capital on revolver credit.Given the insurance industry’s adequate capital level, players like Arthur J. Gallagher & Co. AJG, Marsh & McLennan Companies MMC and Chubb Limited CB are pursuing strategic mergers and acquisitions.Recently, Arthur J. Gallagher acquired Mark J. Becker & Associates to boost consulting capabilities and access in Iowa and the Heartland region. The insurance broker boasts an impressive inorganic story with a strong merger and acquisition pipeline of about $400 million revenues associated with nearly 50 term sheets either agreed upon or being prepared.A solid capital position supports Arthur J. Gallagher in its growth initiatives. It estimates more than $2.5 billion for mergers and acquisitions, consisting of $1 billion in cash, about $650 million of net cash generation in the second half of 2021 and $600 million to $700 million of borrowing capacity.Marsh & McLennan’s unit Marsh McLennan Agency acquired Pelnik Insurance to widen client offerings in the North Carolina region.Marsh & McLennan has made numerous purchases within its different operating units that enabled it to enter new geographies, expand within the existing locations, foray into new businesses, develop new segments and specialize within its current businesses.Chubb inked a definitive agreement to take over the life and non-life insurance companies of Cigna to expand its presence in the Asia-Pacific region. The company has always considered acquisitions as an effective strategy for growth and global expansion. Acquisitions provide Chubb with a competitive edge in terms of scale, efficiencies and balance sheet size, which would lead to considerable value creation in the future.Shares of Brown & Brown have rallied 36.1% year to date compared with the industry’s increase of 25.5%. A sustained operational performance, higher commissions and fees and a sturdy capital position to help the broker retain the momentum. Image Source: Zacks Investment ResearchShares of Arthur J. Gallagher, Marsh & McLennan and Chubb have gained 34%, 42.5% and 25.3%, respectively, in the same time frame.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chubb Limited (CB): Free Stock Analysis Report Marsh & McLennan Companies, Inc. (MMC): Free Stock Analysis Report Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report Brown & Brown, Inc. (BRO): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 15th, 2021

America"s Woke Colleges Can"t Be Salvaged. We Need New Ones

America's Woke Colleges Can't Be Salvaged. We Need New Ones Authored by Niall Ferguson, op-ed via Bloomberg.com, I'm Helping to Start a New College Because Higher Ed Is Broken If you enjoyed Netflix’s “The Chair” - a lighthearted depiction of a crisis-prone English Department at an imaginary Ivy League college - you are clearly not in higher education. Something is rotten in the state of academia and it’s no laughing matter.   Grade inflation. Spiraling costs. Corruption and racial discrimination in admissions. Junk content (“Grievance Studies”) published in risible journals. Above all, the erosion of academic freedom and the ascendancy of an illiberal “successor ideology” known to its critics as wokeism, which manifests itself as career-ending “cancelations” and speaker disinvitations, but less visibly generates a pervasive climate of anxiety and self-censorship. Some say that universities are so rotten that the institution itself should simply be abandoned and replaced with an online alternative — a metaversity perhaps, to go with the metaverse. I disagree. I have long been skeptical that online courses and content can be anything other than supplementary to the traditional real-time, real-space college experience. However, having taught at several, including Cambridge, Oxford, New York University and Harvard, I have also come to doubt that the existing universities can be swiftly cured of their current pathologies. That is why this week I am one of a group of people announcing the founding of a new university — indeed, a new kind of university: the University of Austin. The founders of this university are a diverse group in terms of our backgrounds and our experiences (though doubtless not diverse enough for some). Our political views also differ. To quote our founding president, Pano Kanelos, “What unites us is a common dismay at the state of modern academia and a belief that it is time for something new.” There is no need to imagine a mythical golden age. The original universities were religious institutions, as committed to orthodoxy and as hostile to heresy as today’s woke seminaries. In the wake of the Reformation and the Scientific Revolution, scholars gradually became less like clergymen; but until the 20th century their students were essentially gentlemen, who owed their admission as much to inherited status as to intellectual ability. Many of the great intellectual breakthroughs of the Enlightenment were achieved off campus. Only from the 19th century did academia become truly secularized and professional, with the decline of religious requirements, the rise to pre-eminence of the natural sciences, the spread of the German system of academic promotion (from doctorate up in steps to full professorship), and the proliferation of scholarly journals based on peer-review. Yet the same German universities that led the world in so many fields around 1900 became enthusiastic helpmeets of the Nazis in ways that revealed the perils of an amoral scholarship decoupled from Christian ethics and too closely connected to the state. Even the institutions with the most sustained records of excellence — Oxford and Cambridge — have had prolonged periods of torpor. F.M. Cornford could mock the inherent conservatism of Oxbridge politics in his “Microcosmographia Academica” in 1908. When Malcolm Bradbury wrote his satirical novel “The History Man” in 1975, universities everywhere were still predominantly white, male and middle class. The process whereby a college education became more widely available — to women, to the working class, to racial minorities — has been slow and remains incomplete. Meanwhile, there have been complaints about the adverse consequences of this process in American universities since Allan Bloom’s “Closing of the American Mind,” which was published back in 1987. Nevertheless, much had been achieved by the later years of the 20th century. There was a general agreement that the central purpose of a university was the pursuit of truth — think only of Harvard’s stark Latin motto: Veritas — and that the crucial means to that end were freedom of conscience, thought, speech and publication. There was supposed to be no discrimination in admissions, examinations and academic appointments, other than on the basis of intellectual merit. That was crucial to enabling Jews and other minority groups to take full advantage of their intellectual potential. It was understood that professors were awarded tenure principally to preserve academic freedom so that they might “dare to think” — Immanuel Kant’s other great imperative, Sapere aude! — without fear of being fired. The benefits of all this defy quantification. A huge proportion of the major scientific breakthroughs of the past century were made by men and women whose academic jobs gave them economic security and a supportive community in which to do their best work. Would the democracies have won the world wars and the Cold War without the contributions of their universities? It seems doubtful. Think only of Bletchley Park and the Manhattan Project. Sure, the Ivy League’s best and brightest also gave us the Vietnam War. But remember, too, that there were more university-based computers on the Arpanet — the original internet — than any other kind. No Stanford, no Silicon Valley. Those of us who were fortunate to be undergraduates in the 1980s remember the exhilarating combination of intellectual freedom and ambition to which all this gave rise. Yet, in the past decade, exhilaration has been replaced by suffocation, to the point that I feel genuinely sorry for today’s undergraduates. In Heterodox Academy’s 2020 Campus Expression Survey, 62% of sampled college students agreed that the climate on their campus prevented them from saying things they believed, up from 55% in 2019, while 41% were reluctant to discuss politics in a classroom, up from 32% in 2019. Some 60% of students said they were reluctant to speak up in class because they were concerned other students would criticize their views as being offensive. Such anxieties are far from groundless. According to a nationwide survey of a thousand undergraduates by the Challey Institute for Global Innovation, 85% of self-described liberal students would report a professor to the university if the professor said something that they found offensive, while 76% would report another student. In a study published in March entitled “Academic Freedom in Crisis: Punishment, Political Discrimination and Self-Censorship,” the Centre for the Study of Partisanship and Ideology showed that academic freedom is under attack not only in the U.S., but also in the U.K. and Canada. Three-quarters of conservative American and British academics in the social sciences and humanities said there is a hostile climate for their beliefs in their department. This compares to just 5% among left-wing faculty in the U.S. Again, one can understand why. Younger academics are especially likely to support dismissal of a colleague who has made some heretical utterance, with 40% of American social sciences and humanities professors under the age of 40 supporting at least one of four hypothetical dismissal campaigns. Ph.D. students are even more intolerant than other young academics: 55% of American Ph.D. students under 40 supported at least one hypothetical dismissal campaign. “High-profile deplatformings and dismissals” get the attention, the authors of the report conclude, but “far more pervasive threats to academic freedom stem … from fears of a) cancellation — threats to one’s job or reputation — and b) political discrimination.” These are not unfounded fears. The number of scholars targeted for their speech has risen dramatically since 2015, according to research by the Foundation for Individual Rights in Education. FIRE has logged 426 incidents since 2015. Just under three-quarters of them resulted in some kind of sanction — including an investigation alone or voluntary resignation — against the scholar. Such efforts to restrict free speech usually originate with “progressive” student groups, but often find support from left-leaning faculty members and are encouraged by college administrators, who tend (as Sam Abrams of Sarah Lawrence College demonstrated, and as his own subsequent experience confirmed) to be even further to the left than professors. There are also attacks on academic freedom from the right, which FIRE challenges. With a growing number of Republicans calling for bans on critical race theory, I fear the illiberalism is metastasizing. Trigger warnings. Safe spaces. Preferred pronouns. Checked privileges. Microaggressions. Antiracism. All these terms are routinely deployed on campuses throughout the English-speaking world as part of a sustained campaign to impose ideological conformity in the name of diversity. As a result, it often feels as if there is less free speech and free thought in the American university today than in almost any other institution in the U.S. To the historian’s eyes, there is something unpleasantly familiar about the patterns of behavior that have, in a matter of a few years, become normal on many campuses. The chanting of slogans. The brandishing of placards. The letters informing on colleagues and classmates. The denunciations of professors to the authorities. The lack of due process. The cancelations. The rehabilitations following abject confessions. The officiousness of unaccountable bureaucrats. Any student of the totalitarian regimes of the mid-20th century recognizes all this with astonishment. It turns out that it can happen in a free society, too, if institutions and individuals who claim to be liberal choose to behave in an entirely illiberal fashion.  How to explain this rapid descent of academia from a culture of free inquiry and debate into a kind of Totalitarianism Lite? In their book “The Coddling of the American Mind,” the social psychiatrist Jonathan Haidt and FIRE president Greg Lukianoff lay much of the blame on a culture of parenting and early education that encourages students to believe that “what doesn’t kill you makes you weaker,” that you should “always trust your feelings,” and that “life is a battle between good people and evil people.” However, I believe the core problems are the pathological structures and perverse incentives of the modern university. It is not the case, as many Americans believe, that U.S. colleges have always been left-leaning and that today’s are no different from those of the 1960s. As Stanley Rothman, Robert Lichter and Neil Nevitte showed in a 2005 study, while 39% of the professoriate on average described themselves as left-wing in 1984, the proportion had risen to 72% by 1999, by which time being a conservative had become a measurable career handicap. Mitchell Langbert’s analysis of tenure-track, Ph.D.-holding professors from 51 of the 66 top-ranked liberal arts colleges in 2017 found that those with known political affiliations were overwhelmingly Democratic. Nearly two-fifths of the colleges in Langbert’s sample were Republican-free. The mean Democratic-to-Republican ratio across the sample was 10.4:1, or 12.7:1 if the two military academies, West Point and Annapolis, were excluded. For history departments, the ratio was 17.4:1; for English 48.3:1. No ratio is calculable for anthropology, as the number of Republican professors was zero. In 2020, Langbert and Sean Stevens  found an even bigger skew to the left when they considered political donations to parties by professors. The ratio of dollars contributed to Democratic versus Republican candidates and committees was 21:1. Commentators who argue that the pendulum will magically swing back betray a lack of understanding about the academic hiring and promotion process. With political discrimination against conservatives now overt, most departments are likely to move further to the left over time as the last remaining conservatives retire. Yet the leftward march of the professoriate is only one of the structural flaws that characterize today’s university. If you think the faculty are politically skewed, take a look at academic administrators. A shocking insight into the way some activist-administrators seek to bully students into ideological conformity was provided by Trent Colbert, a Yale Law School student who invited his fellow members of the Native American Law Students Association to “a Constitution Day bash” at the “NALSA Trap House,” a term that used to mean a crack den but now is just a mildly risque way of describing a party. Diversity director Yaseen Eldik’s thinly veiled threats to Colbert if he didn’t sign a groveling apology — “I worry about this leaning over your reputation as a person, not just here but when you leave” — were too much even for an editorial board member at the Washington Post. Democracy may die in darkness; academic freedom dies in wokeness. Moreover, the sheer number of the administrators is a problem in itself. In 1970, U.S. colleges employed more professors than administrators. Between then and 2010, however, the number of full-time professors or “full-time equivalents” increased by slightly more than 50%, in line with student enrollments. The number of administrators and administrative staffers rose by 85% and 240%, respectively. The ever-growing army of coordinators for Title IX — the federal law prohibiting sex-based discrimination — is one manifestation of the bureaucratic bloat, which since the 1990s has helped propel tuition costs far ahead of inflation. The third structural problem is weak leadership. Time and again — most recently at the Massachusetts Institute of Technology, where a lecture by the University of Chicago geophysicist Dorian Abbot was abruptly canceled because he had been critical of affirmative action — academic leaders have yielded to noisy mobs baying for disinvitations. There are notable exceptions, such as Robert Zimmer, who as president of the University of Chicago between 2006 and 2021 made a stand for academic freedom. But the number of other colleges to have adopted the Chicago statement, a pledge crafted by the school’s Committee on Freedom of Expression, remains just 55, out of nearly 2,500 institutions offering four-year undergraduate programs. Finally, there is the problem of the donors — most but not all alumni — and trustees, many of whom have been astonishingly oblivious of the problems described above. In 2019, donors gave nearly $50 billion to colleges. Eight donors gave $100 million or more. People generally do not make that kind of money without being hard-nosed in their business dealings. Yet the capitalist class appears strangely unaware of the anticapitalist uses to which its money is often put. A phenomenon I find deeply puzzling is the lack of due diligence associated with much academic philanthropy, despite numerous cases when the intentions of benefactors have deliberately been subverted. All this would be bad enough if it meant only that U.S. universities are no longer conducive to free inquiry and promotion based on merit, without which scientific advances are certain to be impeded and educational standards to fall. But academic illiberalism is not confined to college campuses. As students collect their degrees and enter the workforce, they inevitably carry some of what they have learned at college with them. Multiple manifestations of “woke” thinking and behavior at newspapers, publishing houses, technology companies and other corporations have confirmed Andrew Sullivan’s 2018 observation, “We all live on campus now.” When a problem becomes this widespread, the traditional American solution is to create new institutions. As we have seen, universities are relatively long-lived compared to companies and even nations. But not all great universities are ancient. Of today’s top 25 universities, according to the global rankings compiled by the London Times Higher Education Supplement, four were founded in the 20th century. Fully 14 were 19th-century foundations; four date back to the 18th century. Only Oxford (which can trace its origins to 1096) and Cambridge (1209) are medieval in origin.  As might be inferred from the large number (10) of today’s leading institutions founded in the U.S. between 1855 and 1900, new universities tend to be established when wealthy elites grow impatient with the existing ones and see no way of reforming them. The puzzle is why, despite the resurgence of inequality in the U.S. since the 1990s and the more or less simultaneous decline in standards at the existing universities, so few new ones have been created. Only a handful have been set up this century: University of California Merced (2005), Ave Maria University (2003) and Soka University of America (2001). Just five U.S. colleges founded in the past 50 years make it into the Times’s top 25 “Young Universities”: University of Alabama at Birmingham (founded 1969), University of Texas at Dallas (1969), George Mason (1957), University of Texas at San Antonio (1969) and Florida International (1969). Each is (or originated as) part of a state university system. In short, the beneficiaries of today’s gilded age seem altogether more tolerant of academic degeneration than their 19th-century predecessors. For whatever reason, many prefer to give their money to established universities, no matter how antithetical those institutions’ values have become to their own. This makes no sense, even if the principal motivation is to buy Ivy League spots for their offspring. Why would you pay to have your children indoctrinated with ideas you despise? So what should the university of the future look like? Clearly, there is no point in simply copying and pasting Harvard, Yale or Princeton and expecting a different outcome. Even if such an approach were affordable, it would be the wrong one. To begin with, a new institution can’t compete with the established brands when it comes to undergraduate programs. Young Americans and their counterparts elsewhere go to college as much for the high-prestige credentials and the peer networks as for the education. That’s why a new university can’t start by offering bachelors’ degrees. The University of Austin will therefore begin modestly, with a summer school offering “Forbidden Courses” — the kind of content and instruction no longer available at most established campuses, addressing the kind of provocative questions that often lead to cancelation or self-censorship. The next step will be a one-year master’s program in Entrepreneurship and Leadership. The primary purpose of conventional business programs is to credential large cohorts of passive learners with a lowest-common-denominator curriculum. The University of Austin’s program will aim to teach students classical principles of the market economy and then embed them in a network of successful technologists, entrepreneurs, venture capitalists and public-policy reformers. It will offer an introduction to the world of American technology similar to the introduction to the Chinese economy offered by the highly successful Schwarzman Scholars program, combining both academic pedagogy and practical experience. Later, there will be parallel programs in Politics and Applied History and in Education and Public Service. Only after these initial programs have been set up will we start offering a four-year liberal arts degree.  The first two years of study will consist of an intensive liberal arts curriculum, including the study of philosophy, literature, history, politics, economics, mathematics, the sciences and the fine arts. There will be Oxbridge-style instruction, with small tutorials and college-wide lectures, providing an in-depth and personalized learning experience with interdisciplinary breadth.   After two years of a comprehensive and rigorous liberal arts education, undergraduates will join one of four academic centers as junior fellows, pursuing disciplinary coursework, conducting hands-on research and gaining experience as interns. The initial centers will include one for entrepreneurship and leadership, one for politics and applied history, one for education and public service, and one for technology, engineering and mathematics. To those who argue that we could more easily do all this with some kind of internet platform, I would say that online learning is no substitute for learning on a campus, for reasons rooted in evolutionary psychology. We simply learn much better in relatively small groups in real time and space, not least because a good deal of what students learn in a well-functioning university comes from their informal discussions in the absence of professors. This explains the persistence of the university over a millennium, despite successive revolutions in information technology. To those who wonder how a new institution can avoid being captured by the illiberal-liberal establishment that now dominates higher education, I would answer that the governance structure of the institution will be designed to prevent that. The Chicago principles of freedom of expression will be enshrined in the founding charter. The founders will form a corporation or board of trustees that will be sovereign. Not only will the corporation appoint the president of the college; it will also have a final say over all appointments or promotions. There will be one unusual obligation on faculty members, besides the standard ones to teach and carry out research: to conduct the admissions process by means of an examination that they will set and grade. Admission will be based primarily on performance on the exam. That will avoid the corrupt rackets run by so many elite admissions offices today. As for our choice of location in the Texas capital, I would say that proximity to a highly regarded public university — albeit one where even the idea of establishing an institute to study liberty is now controversial — will ensure that the University of Austin has to compete at the highest level from the outset. My fellow founders and I have no illusions about the difficulty of the task ahead. We fully expect condemnation from the educational establishment and its media apologists. We shall regard all such attacks as vindication — the flak will be a sign that we are above the target. In our minds, there can be no more urgent task for a society than to ensure the health of its system of higher education. The American system today is broken in ways that pose a profound threat to the future strength and stability of the U.S. It is time to start fixing it. But the opportunity to do so in the classic American way — by creating something new, actually building rather than “building back” — is an inspiring and exciting one. To quote Haidt and Lukianoff: “A school that makes freedom of inquiry an essential part of its identity, selects students who show special promise as seekers of truth, orients and prepares those students for productive disagreement … would be inspiring to join, a joy to attend, and a blessing to society.” That is not the kind of institution satirized in “The Chair.” It is precisely the kind of institution we need today. *  *  * Niall Ferguson is the Milbank Family Senior Fellow at the Hoover Institution at Stanford University and a Bloomberg Opinion columnist. He was previously a professor of history at Harvard, New York University and Oxford. He is the founder and managing director of Greenmantle LLC, a New York-based advisory firm. His latest book is "Doom: The Politics of Catastrophe." Tyler Durden Wed, 11/10/2021 - 22:05.....»»

Category: smallbizSource: nytNov 10th, 2021

David Stockman On The "GreenMageddon" (And What It Means For You)

David Stockman On The 'GreenMageddon' (And What It Means For You) Authored by David Stockman via InternationalMan.com, With COP26 now underway, it’s not too soon to start clanging the alarm bells - not about climate catastrophe, of course - but about the stupidest act of the assembled nations since Versailles, when the vindictive WWI victors laid the groundwork for the catastrophes of depression, WWII, the Holocaust, Soviet tyranny, the Cold War and Washington’s destructive global hegemony, all of which followed hard upon the next. Politicians and their allies in the mainstream media, think tanks, lobbies and Big Business (with its cowardly sleep-walking leaders) are fixing to do nothing less than destroy the prosperity of the world and send global life careening into a modern economic Dark Ages. And worse still, it’s being done in the service of a bogus climate crisis narrative that is thoroughly anti-science and wholly inconsistent with the actual climate and CO2 history of the planet. Cutting to the chase, during the past 600 million years, the earth has rarely been as cool as at present, and almost never has it had as low CO2 concentrations as the 420 ppm level that today’s climate howlers decry. In fact, according to the careful reconstructions of actual earth scientists who have studied ocean sediments, ice cores and the like, there have been only two periods encompassing about 75 million years (13% of that immensely long 600 million year stretch of time) where temperatures and CO2 concentrations were as low as it present. These were the Late Carboniferous/Early Permian time from 315 to 270 million years ago and the Quaternary Period, which hosted modern man 2.6 million years ago. You might say, therefore, that the possibility of a warmer, CO2-richer environment is a case of planetary “been there, done that”. And it is most certainly not a reason to wantonly dismantle and destroy the intricate, low-cost energy system that is the root source of today’s unprecedented prosperity and human escape from poverty and want. But that’s hardly the half of it. What actually lies smack in the center of our warmer past is a 220-million-year interval from 250 million years ago through the re-icing of Antarctica about 33 million years ago that was mainly ice-free. As shown by the blue line in the chart below, during most of that period (highlighted in the brown panels), temperatures were up to 12C higher than at present, and Mother Earth paid no mind to the fact that she lacked polar ice caps or suitable habitats for yet un-evolved polar bears. Global Temperature And Atmospheric CO2 Over Geologic Time As it happened, during what has been designated as the Mesozoic Age, the planet was busy with another great task, namely, salting away the vast deposits of coal, oil and gas that power the modern economy and allow billions of people to have a living standard enjoyed only by kings just a few centuries ago. There is no mystery as to how this serendipitous gift to present-day man happened. In a world largely bereft of ice and snow, the oceans were at vastly higher levels and flooded much of the landmass, which, in turn, was verdant with plant and animal life owing to warmer temperatures and abundant rainfall. Stated differently, Mother Nature was harvesting massive amounts of solar energy in the form of carbon-based plant and animal life, which, over the eons of growth and decay, resulted in the build-up of vast sedimentary basins. As the tectonic plates shifted (i.e., the single continent of Pangaea broke up into its modern continental plates) and the climates oscillated, these sedimentary deposits were buried under shallow oceans and, with the passage of time, heat and pressure, were converted into the hydrocarbon deposits that dot the first 50,000 feet (at least) of the earth’s crust. In the case of coal, the most favorable conditions for its formation occurred 360 million to 290 million years ago during the Carboniferous (“coal-bearing”) Period. However, lesser amounts continued to form in some parts of the Earth during subsequent times, in particular, the Permian (290 million to 250 million years ago) and throughout the Mesozoic Era (250 million to 66 million years ago). Likewise, the formation of petroleum deposits began in warm shallow oceans, where dead organic matter fell to the ocean floors. These zooplankton (animals) and phytoplankton (plants) mixed with inorganic material that entered the oceans by rivers. It was these sediments on the ocean floors that then formed oil sands while buried during eons of heat and pressure. That is to say, the energy embodied in petroleum initially came from the sunlight, which had become trapped in chemical form in dead plankton. Moreover, the science behind this isn’t a matter of academic armchair speculation for the simple reason that it has been powerfully validated in the commercial marketplace. That is, trillions of dollars have been deployed in the last century in the search for hydrocarbons, based on immensely complicated petroleum engineering research, theory and geologic models. Oil drillers weren’t throwing darts at a wildcatter’s wall but were coincidentally proving these “facts” of climate history are correct, given that they led to the discovery and extraction of several trillions of BOEs (barrels of oil equivalent). Consequently, it is solidly estimated by industry experts that today’s petroleum deposits were roughly formed as follows: About 70% during the Mesozoic age (brown panels, 252 to 66 million years ago) which was marked by a tropical climate, with large amounts of plankton in the oceans; 20% was formed in the dryer, colder Cenozoic age (last 65 million years); 10% were formed in the earlier warmer Paleozoic age (541 to 252 million years ago). Indeed, at the end of the day, petroleum engineering is rooted in climate science because it was climate itself that produced those economically valuable deposits. And a pretty awesome science it is. After all, billions of dollars have been pushed down the wellbores in up to two miles of ocean waters and 40,000 feet below the surface in what amounts to an amazingly calibrated and targeted search for oil-bearing needles in a geologic haystack. For instance, the Cretaceous Period from 145 million to 66 million years ago, which was especially prolific for oil formation, was a period with a relatively warm climate, resulting in high open sea levels and numerous shallow inland seas. These oceans and seas were populated with now-extinct marine reptiles, ammonites and rudists, while dinosaurs continued to dominate on land. And it is knowing this science that permits multi-billion barrel hydrocarbon needles to be found in the earth’s vasty deep. Needless to say, the climate warmed sharply during the Cretaceous, rising by about 8 degrees C, and eventually reached a level 10 degrees C warmer than today’s on the eve of the asteroid-driven Great Extinction Event of 66 million years ago. As shown in the graph below, at that point, there were no ice caps at either pole, and Pangaea was still coming apart at the seams–so there was no circulating ocean conveyor system in the infant Atlantic. Yet during the Cretaceous, CO2 levels actually went down while temperatures were rising sharply. That’s the very opposite of the Climate Alarmists’ core claim that it is rising CO2 concentrations which are currently forcing global temperatures higher. Moreover, we are not talking about a marginal reduction in CO2 concentrations in the atmosphere. Levels actually dropped sharply from about 2,000 ppm to 900 ppm during that 80 million year stretch. This was all good for hydrocarbon formation and today’s endowment of nature’s stored work, but it was also something more. To wit, it was yet another proof that planetary climate dynamics are far more complicated and ridden with crosscurrents than the simple-minded doom loops now being used to model future climate states from the current far lower temperature and CO2 levels. As it happens, during the periods since the Great Extinction Event 66 million years ago, both vectors have steadily fallen; CO2 levels continued to drop to the 300–400 ppm of modern times, and temperatures dropped another 10 degrees Celsius. It is surely one of the great ironies of our times that today’s fanatical crusades against fossil fuels are being carried out with not even a nod to the geologic history that contradicts the entire “warming” and CO2 concentration hysteria and made present energy consumption levels and efficiencies possible. That is to say, the big, warm and wet one (the Mesozoic) got us here. True global warming is not the current and future folly of mankind; it is the historical enabler of present-day economic blessings. Yet, here we are on the eve of COP26, manically focused on reducing emissions to the levels required to keep global temperatures from rising more than 1.5 degrees Celsius from preindustrial levels. Then again, exactly which pre-industrial level might that be? We will address the more recent evolution, including the Medieval Warm Period and the Little Ice Age in Part 2, but suffice it to say that the chart below reflects broadly accepted geologic science. Still, we are hard-pressed—even with the aid of a magnifying glass—to see any time in the last 66 million years in which the global temperatures weren’t a lot higher than 1.5 degrees Celsius above current levels—even during much of the far-right margin labeled the “Pleistocene Ice Age” of the past 2.6 million years. If your brain is not addled by the climate change narrative, the very term rings a resoundingly loud bell. That’s because there have been on the order of 20 distinct “ice ages” and interglacial warming periods during the Pleistocene, the latest of which ended about 18,000 years ago and from which we have been digging out ever since. Of course, the climb away from retreating glaciers in Michigan, New England, northern Europe, etc. to warmer, more hospitable climes has not been continuously smooth, but rather a syncopated sequence of advances and retreats. Thus, it is believed that the world got steadily warmer until about 13,000 years ago, which progress was then interrupted by the Younger Dryas, when the climate became much drier and colder and caused the polar ice caps to re-expand and ocean levels to drop by upwards of 100 feet as more of the earth’s fixed quantity of water was reabsorbed back into the ice packs. After about 2,000 years of retreat, however, and with no help from the humans who had repaired to cave living during the Younger Dryas, the climate system swiftly regained its warming mojo. About 8,000 years ago, during the subsequent run-up to what the science calls the Holocene Optimum, global temperatures rose by upwards of 3 degrees Celsius on average and up to 10 degrees Celsius in the higher latitudes. And it happened quite rapidly. One peer-reviewed study showed that in parts of Greenland, temperatures rose 10°C (18°F) in a single decade. Overall, scientists believe that half of the rebound from the “ice age” conditions of the Younger Dryas may have occurred in barely 15 years. Ice sheets melted, sea levels rose, forests expanded, trees replaced grass and grass replaced desert—all with startling alacrity. In contrast to today’s climate models, Mother Nature clearly did not go off the rails in some kind of linear doomsday loop of ever-increasing temperatures and without any hectoring from Greta, either. Actually, Greenland got all frozen up and thawed several more times thereafter. Needless to say, the Holocene Optimum 8,000 years ago is not the “preindustrial” baseline from which the Climate Howlers are pointing their phony hockey sticks. In fact, other studies show that, even in the Arctic, it was no picnic time for the polar bears. Among 140 sites across the western Arctic, there is clear evidence for conditions that were warmer than now at 120 sites. At 16 sites for which quantitative estimates have been obtained, local temperatures were on average 1.6 °C higher during the optimum than they are today. Say what? Isn’t that the same +1.6 degrees C above current levels that the COP26 folks are threatening to turn off the lights of prosperity to prevent? In any event, what did happen was far more beneficent. To wit, the warmer and wetter Holocene Optimum and its aftermath gave rise to the great river civilizations 5,000 years ago, including the Yellow River in China, the Indus River in the Indian subcontinent, the Tigris-Euphrates and the Nile River civilizations among the most notable. Stated differently, that +1.6 degrees C was reflective of the climate-based catalyzing forces that actually made today’s world possible. From the abundances of the river civilizations, there followed the long march of agriculture and the economic surpluses and abundance that enabled cities, literacy, trade and specialization, advancement of tools and technology and modern industry—the latter being the ultimate human escape from a life based on the back muscles of man and his domesticated animals alone. At length, the quest for higher and higher industrial productivity spurred the search for ever-cheaper energy, even as intellectual, scientific and technological advances which flowed from these civilizations led to the rise of a fossil fuel-powered economy based on energy companies harvesting the condensed and stored solar BTUs captured by Mother Nature during the planet’s long warmer and wetter past. In a word, what powers prosperity is ever more efficient “work,” such as moving a ton of freight by a mile or converting a kilogram of bauxite into alumina or cooking a month’s worth of food. Alas, during the 230 million mainly ice-free years of the Mesozoic, the planet itself accomplished one of the greatest feats of “work” ever known: Namely, the conversion of massive amounts of diffuse solar energy into the high-density BTU packages embodied in coal, oil and gas-based fuels. As it happens, when one of the previous “preindustrial” warming eras (the Roman Warming) was coming to an end in the late 4th century AD, St. Jerome admonished the faithful “never look a gift horse in the mouth.” Yet that’s exactly what the assembled nation’s will be doing at COP26. *  *  * We’ve seen governments institute the strictest controls on people and businesses in history. It’s been a swift elimination of individual freedoms. But this is just the beginning… Most people don’t realize the terrible things that could come next, including negative interest rates, the abolition of cash, and much more. If you want to know how to survive what the central bankers and the Deep State have planned, then you need to see this newly released report from legendary investor Doug Casey and his team. Click here to download it now. Tyler Durden Mon, 11/08/2021 - 19:40.....»»

Category: blogSource: zerohedgeNov 8th, 2021

Fifty Years Since The End Of Bretton Woods: A Geopolitical Review

Fifty Years Since The End Of Bretton Woods: A Geopolitical Review Authored by Mauricio Metri via The Strategic Culture Foundation, On August 15th, 1971, the then-president of the United States, Richard Nixon, made an eighteen-minute speech to the country whose effects impacted the world. Among other subjects, he announced the end of the dollar-gold parity, which was a shock. First of all, that decision meant the death of the Bretton Woods Monetary System without telling what would replace it. This fact represented an abrupt change in the international economic order. Secondly, Nixon’s initiative undermined the economic development strategies used since 1947, when the Cold War had started. Those strategies were called “development by invitation” in the center countries and “national developmentalism” in the peripheral ones. Thirdly, the decision strengthened the attacks against the dollar as the main currency in the world, putting more pressure on the international currency hierarchy since then. Finally, in the history of monetary standards, the abandonment of precious metals, as a reference of value, revealed the “charter nature” of money to the detriment of the metallist one. In the debates on the Bretton Wood system, from its birth and development to its crisis and implosion, a particular narrative seems to prevail. This mainstream interpretation ascribes to the traumas of the great social-economic crisis in the thirties, the system’s origins. Besides the austerity public policies and the automatic recessive adjustments, at the heart of the twenties’ liberal economic order was the freedom of capital movements, whose behavior destabilized the exchange rates, the payments balances, and even the national economies. They were the root causes of the great depression of the thirties, mainly after the Wall Street crash of 1929 when the social and economic context got pretty worse. This scenario fostered the rise of far-right wings mainly in Europe, which created the elements of the beginning of the Second World War. According to this view, to avoid another experience such as the great economic depression of the thirties and its disastrous effects, the diplomatic representatives of forty-four countries gathered in July 1944 in Bretton Woods, aiming to negotiate a new economic order to the post-war. The talks concluded that the most relevant cause of the economic crisis was the financial capital and its liberty to act against markets, currencies, and national economies. The central proposal was to guarantee the autonomy of the national economic policies. For this reason, they agreed on some points. For instance, capital controls; a system of fixed exchange rates but manageable when necessary; and stabilization funds via IMF without counterparts of recessive policies. It was a victory of Keynesianism against liberal economic orthodoxy. The very participation of John Maynard Keynes as the British government representative in the negotiations was a symbol of it, despite his defeat in defense of a supranational currency, the Bancor, as a new monetary standard. As a result, the capitalist world, mainly Europe and Japan, achieved excellent economic outputs during the 50s and 60s in terms of product, income, and employment growth, just as international trade and foreign direct investments. Finally, the mainstream narrative alleges that, during the period, the deficits in the U.S. balance of payments led to the sprawl of the dollar liquidity in the international system without an increase in the Fed’s gold reserves. According to this argument, the military spending growth due to the Vietnam War, above all, triggered such macroeconomic imbalances. So, pressures and speculative attacks against the dollar-gold parity became inevitable. Therefore, in 1971, the situation turned out to be unsustainable. Nevertheless, from a geopolitical view, it is possible to consider another interpretation for the Bretton Wood system, from its creation to its collapse. First of all, although the authorities of different countries had signed the accords in July 1944, since Roosevelt’s death in March 1945, relevant parts of the agreements were shelved. Henry Morgenthau and Harry White, architects of the postwar new economic order, lost room in the Truman administration. In their place, the bankers constrained the president to implement the Key Currency Plan, which proposed to rebuild a liberal international financial order as it had been in the twenties. However, the new system would rest on the dollar and Wall Street instead of the Pound and the City. Regarding Germany and Japan, the new U.S. orientation aimed to wreck their large industrial conglomerates, transforming their national economies into semiperipheral ones. Indeed, the international economic order established from 1945 to 1947 operated quite differently than the Agreements of 1944, and the results were terrible. The attempts to recover the national economies stumbled upon the dollar shortage and the difficulties in the Balances of Payments. In this context, the financial capitals in Europe ran to the United States, destabilizing the exchange rates, the external accounts, and, therefore, the national economies in Western Europe. As is natural to all liberal finance orders, not considering capital controls was the core of the economic problems. Furthermore, during the war, Josef Stalin expanded the borderlines of the Soviet Union and its area of influence to a position unthinkable to any Romanov Emperor. Not to mention that Russia found itself, for the first time in its history, without a single great rival power in all of Eurasia, as said by George Kennan himself, in an official document of May 1945, entitled The International Position of Russia at the End of the War with Germany. Anyway, the change in the strategy of the Truman Administration lingered to happen. And it took place only in 1947 for two reasons: the civil war in Greece between the old monarchy supported by the British against the anti-fascist forces led by communists and upheld by the Kremlin; and the pressure of Moscow on Ankara to control territories in Anatolia and install two military bases at the straits. Since then, the U.S. president opted for occupying part of the Rimland that Nicholas Spykman had written about before, in his book of 1942, America’s Strategy in the World Politics. From a geo-historical point of view, it meant a long-standing tradition of Anglo-Saxon geopolitical thought of maintaining Russia outside of the Mediterranean Sea. Its roots had already been in the British imperial policy of the 19th century, as the Greek independence process during 1821-1830 demonstrates. The head orientation of the new security doctrine launched by Truman in 1947 pointed to the necessity of permanent and global containment of the USSR. The objective was to freeze their respective areas of influence, leaving both countries, in effect, in a continuous opposition against each other. The U.S. projection of securities lines from their Atlantic borders to the Eurasian continental mass required the stabilization of the new disputed regions, mainly in the fimbriae of Asia. Working out the social and economic problems in these regions became part of the U.S. national security strategy. And, at that moment, the main actions prioritized Europe and Japan. Then, to avoid the Soviet projection in a Europe marked by a severe economic crisis, the United States resumed rebuilding an international order focused on national product expansions, income growths, and employment improvements. The Marshall Plan and the rescue of the Bretton Woods proposals shaped the core of American economic initiatives. Therefore, both of them had a main geopolitical objective. They were an expression of the submission of the economic order to the geopolitical one. In other words, one could define both Marshall Plan and Bretton Woods system as pieces of economic geostrategy of a new kind of conflict, born around 1947, the Cold War. So, the starting point of the Bretton Woods implementation relies essentially on geopolitics, not on social-economic traumas from the thirties. It could be said, in this way, that the Soviet Union and its leader, Josef Stalin, were respectively the entity and personal genuinely responsible for the economic reconstruction of Europe and the Bretton Woods system’s birth. As a result, the United States could stabilize the national economies in the sensitive regions relative to Cold War and freeze the frontiers with the communist nations. In the limit, they promoted a quarter-century of extraordinary development in first-world countries. In short, the Cold War was the background that allowed the Bretton Woods System to work out from 1947 until the moment when the U.S. economic strategy to its geopolitical struggles changed. Concerning Bretton Woods’ contradictions, the creation of Euromarkets in 1958 within England, supported by U.S. authorities, allowed the British government to conciliate two different challenges: on the one hand, carrying out a growth-oriented economic policy; and, on the other, defending London’s position in the international financial business. However, these new markets, out of the control of any monetary authorities, expanded more and more the dollar liquidity in the system. Unlike the mainstream narrative, the U.S. external accounts weren’t unbalanced, shown in the rather unexpressive U.S. compensatory capital flows in its Balance of Payments during the Bretton Woods period. Part of the system dollar liquidity arose from what Charles Kindleberger and Hyman Minsky described as the deepening process of resources inflows and outflows from the United States to the world. While the Trade Balance and the Current Account were positives, the U.S. Capital Account was negative due to the Foreign Direct Investment. So, the pressure against the dollar-gold parity didn’t come from the supposed deficits in their external accounts. It stemmed from the financial markets, whose operations manifolded without restrictions to the dollar assets in the capitalist world, namely, Euromarkets. The problem was that it occurred without a counterpart of growth in the Fed’s gold reserves. Therefore, if the Bretton Woods implementation were geopolitical and not due to the traumas of the thirties’ economic crisis, its contradictions came from the Euromarkets and not from the North American external accounts’ imbalances. In turn, its existence depended on how useful it would be to U.S. foreign policy. In 1969, the international context changed expressively. If Bretton Woods System had already promoted the most important historical era of capitalism, the Soviet Union had also achieved substantial strategic improvements in the 60s. There had been its nuclear weapons’ progress, the strengthening of its navy, the development of edge-cutting aerospace technology, and the expansion of its oil production, among others. And this new Soviet success in the 60s had pressured not only the United States and its allies from the first world but also the Popular Republic of China. In that background, Beijing signalized to Washington a careful approach in 1969. The Nixon administration, in turn, took advantage and started the Triangular Diplomacy. Since then, the American government implemented concessions to Beijing and Moscow, such as reductions of economic sanctions. For example, in that year, the United States created new legislation, altering the Export Control Act of 1949. Later, in April 1971, only three months before the famous Nixon’s speech, the United States lifted some previous restrictions once more. It allowed the purchase of dollars by China and USSR to encourage their import of products from the capitalist world. So, a valuable triangular diplomacy result was the beginning of the entrance process of China and the Soviet Union into the dollar monetary territory on the eve of the end of the Bretton Woods System. When Nixon addressed the American people on television in August 1971, the strategy of 1947 had already achieved its economic aims. Besides, Japan and Germany had already become strong adversaries in the international economic competition. Not to mention, the Bretton Woods contradictions still required efforts and coordination with the Europeans and Japanese in financial governance, such as in the Gold Pool and the IMF due to Special Drawing Rights, which sometimes was causing tension and opposition among them. Finally, the Bretton Woods System still enforced restrictions on the U.S. managing their economic policy, as in the dollar-gold parity defense. Richard Nixon started his famous speech by mentioning: alleged advances in “achieving the end of the Vietnam War,” the “challenges of peace,” despite not specifying them, and the “prosperity without military conflicts.” Next, he connected the last of these issues directly to jobs creation in the United States, control of the internal cost of living, and dollar protection, going quickly from tricky subjects of international relations to national issues in daily life. Then, Nixon announced some economic measures with an orthodox bias to encourage the employment increase, for example, tax reductions and spending cuts. He also ordered radical heterodox economic policies to contain the rise in prices: the freeze on all prices and wages for 90 days. The population was likely astonished and pretty worried about such sort of economic measures, because it always creates graves problems of relative price imbalances. Probably, when Nixon approached the theme of “protection the position of the American dollar as a pillar of monetary stability around the world,” as he said, the attention in the country was still in the freeze on prices and salaries. After describing the speculators’ efforts in “waging an all-out war on the dollar,” he argued that the strength of a nation’s currency rests on the strength of that nation’s economy. And, then, Nixon claimed the U.S. position in the international monetary hierarchy by saying that “the American economy is by far the strongest in the world.” Next, he clarified the U.S. disposition when he ordered the Secretary of the Treasury to take any necessary action to defend the dollar. And, finally, he announced what would be unthinkable until that moment: the suspension of the dollar-gold convertibility. According to him, a bugaboo that it should lay to rest. For the domestic audience, Nixon justified the decision by the devaluation advantages to the American-made products in America. For that matter, he also imposed an additional tax of 10% on goods imported into the United States. Nixon announced the abandonment of the old economic geostrategy inaugurated in 1947 by the Truman administration. He pointed that economies of the major industrial nations of Europe and Asia had become strong competitors against the United States. Then, there was no longer any need for “the United States to compete with one hand beyond her back.” According to Nixon, the time had come for first-world nations to compete as equals. In other words, President Nixon put an end to the development by invitation, except for China, which had been engaging in a strategic rapprochement with the United States. Summarizing the argument, before 1969, as long as the foreign policy hadn’t changed, the successive U.S. administrations had carried on upholding the Bretton Woods System and its aims, despite its contradictions. To circumvent its problems, they had implemented some efforts, as Gold Pool, Special Drawing Rights, etc. Therefore, during the Cold War’s first decades, the U.S. support for the Bretton Wood order had occurred since this economic system had reached its geopolitical objectives. However, since the international context had changed expressively in the 60s, the economic order had become more and more inappropriate. It had depleted as a Cold War’s strategic instrument, and it had been inadequate and outdated for the new geopolitical struggles and geoeconomic challenges. In other words, the emergence of new economic competitors and mainly the outcomes of Soviet projection in the system brought shifts in U.S. foreign policy in 1969, originating the triangular diplomacy. And, two years later, in 1971, the United States unilaterally abandoned the Bretton Woods Agreements. It sounds ironic that the most significant historical experience of western capitalism was related to Stalin’s strategy of enlarging the Soviet frontiers in the context of the Second World War and the capacity of the Soviet Union to respond to the Cold War against the United States, mainly during the 60s. Tyler Durden Mon, 11/08/2021 - 02:00.....»»

Category: worldSource: nytNov 8th, 2021

The Bonfire Of The Currencies?

The Bonfire Of The Currencies? Authored by Benjamin Cohen via Project Syndicate, Two recent books by renowned economists have set the stage for today's great debate over the future of money in a digital age. In particular, public and private moneys are entering into a sustained rivalry, with far-reaching implications for markets and politics. Eswar S. Prasad, The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance, Harvard University Press, 2021. Kenneth S. Rogoff, The Curse of Cash: How Large-Denomination Bills Aid Crime and Tax Evasion and Constrain Monetary Policy, Princeton University Press, 2017. Ready or not, the financial world is being forced to face the possibility of a future without traditional notes and coins. Is cash going the way of the dodo? Should the prospect of its extinction be welcomed or feared? And what would its disappearance mean for domestic and global markets and politics? Two recent books by renowned economists have set the stage for the coming debates, highlighting two questions in particular. The first is whether cash should disappear. The second is whether it actually will disappear. Kenneth Rogoff of Harvard University and Eswar Prasad of Cornell University have much to say on both issues. DOES MONEY MAKE THE WORLD GO AROUND? For Rogoff, cash is a curse. Paper currency, he argues, “lies at the heart of some of today’s most intractable public finance and monetary problems,” and thus should be phased out as quickly as possible. He highlights two big problems. On one hand, by permitting large recurrent and anonymous transactions, cash facilitates tax evasion and other crimes. High-denomination bills like US “Benjamins” ($100 notes) or Switzerland’s 1,000 franc note play a starring role in a broad range of criminal activities, from drug trafficking and money laundering to racketeering and extortion. On the other hand, cash handicaps monetary policy. The availability of currency effectively sets a “zero lower bound” on interest rates. Returns on Treasury bills or other fixed-income securities cannot fall much below zero so long as people have the option of holding paper money, which at least pays zero interest. Cash therefore ties central bankers’ hands, inhibiting negative-interest-rate policies. The Curse of Cash represents the culmination of a campaign that Rogoff has waged for more than two decades, and he pulls no punches in his advocacy of a “less-cash” economy. Written in accessible if somewhat colorless language, it is a clarion call for action – in effect, a manifesto for our times. The sense of urgency is palpable. Prasad, by contrast, is more in the forecasting business. He believes we are in the midst of a financial revolution that is being driven by “FinTech” – the ongoing wave of innovations in financial technologies that are dramatically disrupting traditional ways of doing business. In the vanguard are cryptocurrencies, a new class of financial instruments that threaten to displace conventional notes and coins. “The era of cash is drawing to an end,” Prasad declares, though he hesitates to offer any firm predictions concerning what will come next. Prasad’s text is relatively easy to read, showing flashes of humor despite the complexities of the subject. Its analysis, however, is ultimately inconclusive, because most of its discussions end cautiously (and rather unhelpfully) with words like “seem,” “may,” or “could.” In a book that aspires to be virtually encyclopedic in its coverage, Prasad’s takeaway message is that there remain “many unanswered questions.” THE FINTECH DISRUPTION Cryptocurrencies have become one of the hottest sectors in finance, led by Bitcoin, which is barely a decade old. New cryptocurrencies have since proliferated like dandelions; according to the International Monetary Fund, there are around 9,000 digital tokens listed on various exchanges today. Earlier this year, the market value of all crypto assets surpassed $2 trillion – a tenfold increase in not much more than a year. The roots of the crypto boom go back to the dawn of the digital age in the last years of the twentieth century. Traditional notes and coins are creatures of an analog world, physical in nature and reliant on face-to-face interactions. Cryptocurrencies, by contrast, are digital – that is, based on encrypted strings of zeros and ones – and transferable through vast electronic networks. Once computers and the internet came to be part of our daily life, smart operators realized that it might be possible to create units of purchasing power that would be fully usable through cyberspace. The race was on to produce “virtual” money that could be employed as easily as conventional paper money or coins to acquire real goods, services, or assets. The earliest attempts to achieve this, going back to the 1990s, aimed simply to facilitate the settlement of payments electronically. These initiatives, which The Economist once playfully labeled “e-cash version 1.0,” included diverse card-based systems as well as network-based systems. Operating on a principle of full pre-payment by users, each scheme functioned as not much more than a convenient proxy for conventional cash – in effect, something akin to a glorified traveler’s check. Few caught on with the general public. Subsequent models, “e-cash version 2.0,” were more ambitious, aspiring to produce genuine substitutes for traditional notes and coins. Examples included Flooz (using the comedienne Whoopi Goldberg as a spokesperson) and Beenz. But the impact of these schemes, too, was limited, because most were offered as a reward for buying products or services from designated vendors – constituting, in effect, updated electronic versions of ancient scrip. Vendor-specific media live on in airline mileage programs and the like; but they failed to provide a direct substitute for traditional currency. Most disappeared after the brief downturn in financial markets at the turn of the century. REVOLUTIONARY DAWN Then came Bitcoin, a revolutionary innovation introduced in 2009 by a person (or persons) who remains anonymous. Bitcoin could be called “e-cash version 3.0.” Designed as a decentralized payments system independent of governments and private financial institutions, the currency has soared in popularity. Since Bitcoin’s unheralded inception, its price has skyrocketed from $1 per unit to as much as $66,000 earlier this month. Many other digital currencies, including increasingly well-known rivals such as Ether, Litecoin, and Ripple, have followed in its wake, especially over the past year. Prasad calls Bitcoin the “granddaddy” of cryptocurrencies. Digital money is now an established part of the global financial ecology, and has been declared legal tender in two countries, El Salvador and Cuba. Prasad finds it hard to conceal his enthusiasm for Bitcoin, which he describes as “truly ingenious and innovative.” Words like “magic,” “genius,” and “elegant” are liberally sprinkled throughout his discussion. For anyone who really wants to understand how the currency works in all its technical splendor, there is no better introduction than Prasad’s fourth chapter, which dwells on the Bitcoin revolution in elaborate detail. There you will find a step-by-step tutorial on the currency’s underpinnings – the so-called blockchain technology that enables Bitcoin to function without any trusted central authority to manage it. No government agency or private institution is needed to validate transactions. Instead, blockchain relies exclusively on a public consensus mechanism managed through a peer-to-peer network that alerts participants to every exchange in real time. A publicly shared ledger of transactions is created and maintained in a decentralized network. The ledger is called a blockchain because once transactions coming into the network are grouped into blocks of data and validated, the blocks are then chained together. The “magic” comes from delegating trust and verification to the public square. As Prasad breathlessly puts it, “This is people power, backed up by computing power, at its finest.” People power to manage money is obviously attractive to libertarians and others who, taking inspiration from the Austrian economist Friedrich von Hayek, have long argued for the “denationalization” of currency. Governments, driven by politics, all too frequently abuse their control of “state” money, sooner or later generating runaway inflation. In recent years, we have seen that ruinous process devastate countries like Venezuela and Zimbabwe. Cybercurrencies, by contrast, are designed to rely on market forces to keep the growth of money supply in line with real economic activity. Inflation, crypto enthusiasts contend, will be contained by the wisdom of crowds. THE CRACKS IN CRYPTO But there are also downsides, and they are not insignificant. First and most obvious is the danger that competition among cybercurrencies could lead their sponsors to take ever greater risks. Many of the thousands of digital tokens currently available are backed by nothing more than flimsy promises. Even so-called “stablecoins” like Tether or USD Coin, which in principle are fully backed by conventional reserves, are in practice often quite lacking in transparency. Observers frequently liken today’s cybercurrencies to the private bank notes that circulated in the United States during the co-called free-banking era of the nineteenth century. But that system was fragile and frequently subject to “runs,” owing to the ebb and flow of public trust. Crowds did not always show the greatest wisdom. Why should we expect today’s cybercurrencies to be any less prone to panics and wild price fluctuations? Just in the last year, Bitcoin has traded up and down by over 50%. Prasad calls it “wacky ... a wild roller-coaster ride.” Others might call it a bubble that could burst any time. Second, the prospect of unfettered price volatility limits cybercurrencies’ usefulness as a medium of exchange. Who wants to accept payment in a currency whose value might drop through the floor tomorrow? Admittedly, there will always be some market actors, particularly criminal elements, who might value cryptocurrencies’ supposed anonymity enough to take the risk. It stands to reason, then, that Rogoff’s complaints about the role of cash in facilitating tax evasion and other nefarious activities apply to cybercurrencies as well. But Rogoff himself suggests that the real threat from cybercurrencies lies elsewhere. “Yes,” he says, “digital currencies raise important questions for the future, but more as competitors for other financial instruments and institutions, not so much for paper currency.” Prasad agrees, suggesting that the allure of digital currencies for illegal activities is wearing off. Some scholars, however, estimate that criminal activities still account for as much as 50% of Bitcoin transactions. Moreover, the legitimate business world does not appear to be attracted to the quotidian use of cybercurrencies. Instead, cybercurrencies have primarily become a vehicle for risk-loving investors, serving as a class of speculative assets reminiscent of the seventeenth-century tulip mania in the Netherlands, when a single bulb sold for the equivalent of a mansion on the Amsterdam Grand Canal. In a sense, the “cybercurrency” label is a misnomer, because none of these new creatures actually perform all three of the traditional functions of money: medium of exchange, unit of account, and store of value. They are, at best, liquid quasi-moneys. THE STATE VS. CRYPTO Looming over the entire incipient debate is the possibility of a real threat to state authority in monetary affairs. The more that ordinary transactions come to be conducted in cryptocurrencies, the more difficult it will be for monetary authorities to manage existing payments systems via traditional interest-rate policy or open-market operations. If traditional cash becomes largely extinct, so, too, does much of the power of central banks. That is why we now see mounting interest around the world in the development of central-bank digital currencies (CBDCs). As Prasad points out, there is nothing mysterious about central-bank digital money. It is simply an existing fiat currency that is issued by a monetary authority in digital form as a complement to or in place of conventional notes and coins. For a clear guide to the merits and risks of such an innovation, readers could do worse than to consult Prasad’s sixth chapter, which provides a careful point-by-point examination of the case for CBDCs. The rationale for CBDCs is simple: fight fire with fire. If conventional paper money really is going the way of the dodo, monetary authorities should create a more attractive alternative. In any competition with privately issued rivals, CBDCs would have the advantage of being firmly backed by the full faith and credit of their sovereign governments. One country, the Bahamas, has already created a CBDC of its own – the sand dollar – and others like Sweden and Uruguay are quickly moving in the same direction. Who will prevail? Writing some five years ago, before the cryptocurrency craze really took off, Rogoff expressed confidence in governments’ ability to fend off any competitive threat from the private sector. This is not the first time, he points out, that currency innovations have emerged from the private sector to leapfrog ahead of publicly issued money, at least for a time. In every previous instance, he insists, innovations were either tamed by regulation or appropriated by governments, which have broad advantages in providing a safe guaranteed asset. Some governments, most notably China, have already begun cracking down on cryptocurrencies. “If the private sector comes up with a much better way of doing things,” Rogoff observes, not without a touch of cynicism, “the government will eventually adapt and regulate as necessary to eventually win out.” But Prasad is not so sure. Writing more recently, he notes that cryptocurrencies have come a long way in the last half-decade. Yes, he concedes, central banks are likely to remain central. But that does not rule out sustained rivalry between the private and public sectors. Privately issued digital currencies have competitive advantages of their own, including faster, lower-cost transactions and broader access to financial products and services. A “glorious future” beckons, Prasad concludes – before adding, “perhaps.” Tyler Durden Sat, 10/30/2021 - 10:30.....»»

Category: blogSource: zerohedgeOct 30th, 2021

Waypoints On The Road To Currency Destruction (And How To Avoid It)

Waypoints On The Road To Currency Destruction (And How To Avoid It) Authored by Alasdair Macleod via GoldMoney.com, The few economists who recognise classical human subjectivity see the dangers of a looming currency collapse. It can easily be avoided by halting currency expansion and cutting government spending so that their budgets balance. No democratic government nor any of its agencies have the required mandate or conviction to act, so fiat currencies face ruin. These are some waypoints to look for on the road to their destruction: Monetary policy will be challenged by rising prices and stalling economies. Central banks will almost certainly err towards accelerating inflationism in a bid to support economic growth. The inevitability of rising bond yields and falling equity markets that follows can only be alleviated by increasing QE, not tapering it. Look for official support for financial markets by increased QE. Central banks will then have to choose between crashing their economies and protecting their currencies or letting their currencies slide. The currency is likely to be deemed less important, until it is too late. Realising that it is currency going down rather than prices rising, the public reject the currency entirely and it rapidly becomes valueless. Once the process starts there is no hope for the currency. But before we consider these events, we must address the broader point about what the alternative safety to a fiat collapse is to be: cryptocurrencies led by bitcoin, or metallic money to which people have always returned when state fiat money has failed in the past. Introduction When expected events begin to unfold, they can be marked by waypoints. These include predictable government responses, and the confused statements of analysts who are unfamiliar with the circumstances. We see this today in the early stages of an inflation that threatens to become a terminal cancer for fiat currencies. Harder to judge is the human element, the pace at which realisation dawns and the public’s consequential response to the discovery that their currency is being debauched and their wealth being transferred stealthily to the state. But history can provide some guidance. If we consider the evidence from Austria before the First World War, we see that the economic prophets who truly understood economics became thoroughly despondent long before the First World War and the currency collapse of the early 1920s. Carl Menger, the father of subjectivity in marginal price theory became depressed by what he foresaw. As von Mises in his Memoirs wrote of Menger’s discouragement and premature silence, “His keen intellect had recognized in which direction Austria, Europe, and the world were pointed; he saw this greatest and highest of all civilizations rushing toward the abyss”. Mises then recorded a conversation his great-uncle had had with Menger’s brother, which referred to comments made by Menger at about the turn of the century, when he reportedly said, “The policies being pursued by the European powers will lead to a terrible war ending with gruesome revolutions, the extinction of European culture and destruction of prosperity for people of all nations. In anticipation of these inevitable events, all that can be recommended are investments in gold hoards and the securities of the two Scandinavian countries” [presumably being on the periphery of European events]. The few economists who have studied American and European monetary and economic policies dispassionately and how they have evolved since the Nixon shock will resonate with Menger’s concerns. Mises also noted that this “pessimism consumed all sharp-sighted Austrians”. Menger’s pupil and friend, Crown Prince Rudolf, successor to the Austro-Hungarian throne took his own life and that of his lover in 1889 because of his despair over the future of his empire and that of European civilisation, and not because of his love affair. As with all historical comparisons, today’s decline in American hegemony is only a most generalised repetition of the process by which an empire dies. But from this distance of over a century from events in Vienna it is easy to forget how important the Hapsburgs were and that before Napoleon the Austro-Hungarian empire had been the largest and most important of the European empires. But putting aside the obvious differences between then and now, today we see little or no evidence of cutting-edge economists sharing the despair of the early Austrians. There is a good reason why this despair is absent today. Instead of economists independent from the state, universities, and professorial sponsorship, the entire economic profession is paid for by governments and their departments to promote statist intervention in the economic affairs of humanity. Feeding off statistics, mathematics is every policy-makers and investor’s religion. But economics is not a natural science governed by mathematics, like physics or chemistry, but a social science governed by markets; markets being forums where humans interact to satisfy their needs and wants, to exchange their production for consumption, and to manage their savings and capital. As Hayek said of his friend Keynes, Keynes was a mathematician and not an economist. Today we can confidently state that students are taught mathematics and not economics. Economists are no longer economists, but statisticians and mathematicians devoid of the a priori reasoning that was central to the science before Keynes. With the entire profession taught to believe in statist intervention, perhaps we should not be surprised that economists are not ringing the alarm bells warning of the consequences of decades of state manipulation of markets and of the catastrophe that evolves from denying there is any difference between money and currency, that is gold or silver, and infinitely expandable promissory notes and credit. Even many modern “Austrians” seem oblivious to the danger of a fiat money collapse, let alone the dire economic consequences. Among them there is even an antipathy against metallic money, which suggests they have not fully absorbed the theories of money and credit so lucidly explained by their earlier mentors. Hopefully, the decline of America and its dollar hegemony we will not result in military conflict, let alone one on the scale of the 1914-18 European catastrophe. But that might be a vain hope. In today’s America we see a hegemon struggling to get to terms with its decline and the reality that the rise of Asia cannot be stopped. But what concerns us here is the more obvious and immediate problem of its currency, dollars backed by nothing more than the faith and credit of the declining US Government. It is not too late to avoid a complete collapse of the dollar-led global currency regime, but there is no sign that the measures to avoid it will be taken. And with the exclusive dominance of mathematical economists: neo-Keynesians, monetarists, and modern monetary theorists alike, there is hardly anyone, like Menger, Mises, and the other Austrian economists who, before the First World War foresaw the economic and monetary consequences of unfettered statism and inflationary financing. Bitcoin — the canary in the currency mine We find ourselves not being warned of potential inflationary dangers by the state-educated pseudo-economists but by a motley crowd of geeks and speculators instead, who have grasped the relative price effect from different rates of currency issuance. Bitcoin’s quantity is capped while those of fiat currencies are not. All you need to exploit this simple fact is believe and convince yourself and others that bitcoin is the replacement currency of tomorrow for the comparison between bitcoin and state fiat to appear valid. This was certainly the story being promoted by crypto enthusiasts from shortly after bitcoin’s first trade until the end of last year. But they have become increasingly convinced that the future for bitcoin is not so much as a currency (after all, while its price in dollars is rising it is in no one’s interest to use it as a medium for exchanging goods), but simply that, like a stock index on steroids, it is the inflation hedge par excellence. And for fear of missing out, even investing institutions run by custodians of other peoples’ money are now piling in. But an index based on equities has the fundamental prop under it of being comprised of stocks the objective of which is to earn money for shareholders by selling goods and services for profit. With bitcoin there are no underlying earnings and nothing which is inflation-linked. In that sense it is a chimera. An argument has therefore developed, with investors and speculators buying bitcoin only because the relative rate of issue relative to fiat currencies is capped, which is expected to drive the price still higher as governments continue to print their currencies. The underlying rationale, that bitcoin is a replacement currency for state fiat currencies has been disproved and I have little more to add in this respect. It cannot be used for economic calculation, because for a borrower there is uncertainty of repayment value. Nor does bitcoin as a rival to state currencies hold water because no central bank will permit it to act as such. This is one reason why they are heading private cryptocurrencies off at the pass by developing their own, state-issued, and state-controlled digital currencies which can be used for economic calculation. Not only has the argument for ever rising bitcoin prices become its sole support, but the underlying rationale, that cryptocurrencies such as bitcoin qualify as a medium for transactions and will be permitted to replace state-issued fiat currencies cannot apply. By identifying relative rates of currency issue as a valuation factor the tech-savvy millennial generation has understood a partial truism. The other part of which they appear not to be fully aware is that the effect of monetary inflation is to undermine a currency’s purchasing power. It is a separate argument from one based solely on relative rates of currency issue. However, having half the story understood at least is an advance from not comprehending any of it, and when further rises in prices for goods become widely expected, as they appear to be beginning to today, crypto fans are likely to learn the consequences of monetary inflation earlier than their non-tech predecessors, and perhaps even before state-educated economists as well. For now, investors are being enticed by nothing other than the promise of riches to buy bitcoin as an inflation hedge, being disappointed by gold’s non-performance. In a recent quote in the UK’s Daily Telegraph a Morgan Stanley analyst stated just that: “We believe the perception of bitcoin as a better inflation hedge than gold is the main reason for the current upswing… triggering a shift away from gold [funds] into bitcoin funds since September”. But without the prop of being a credible form of replacement money the only reason to buy bitcoin is that circular argument: it should be bought because it is being bought. Furthermore, buying bitcoin funds dissipates potential bitcoin demand, because for a bitcoin fund to qualify as a regulated investment, obtaining regulatory permission is easiest when a fund deals mostly or wholly in contracts on a regulated futures exchange instead of the underlying unregulated bitcoin. In other words, much of the demand for bitcoin is being side-lined into paper versions rather than for bitcoin itself. Bubbles based on pure speculation always fail. That is not to say that speculative flows won’t drive bitcoin’s price higher still; as a possibility it seems highly likely. But that is for speculators, not those who seek protection from evolving economic and monetary events. Attention should be paid to Menger’s reported words 120 years ago, quoted above, that “In anticipation of these inevitable events, all that can be recommended are investments in gold hoards and the securities of the two Scandinavian countries” — except the securities of the two Scandinavian countries offer no escape today. That being the case, the price of gold measured in bitcoin would appear to present a remarkable opportunity for lucky holders of bitcoin and similar private-sector cryptocurrencies. This is shown in Figure 1 below. Since April 2015, the ratio of gold to bitcoin prices has fallen from over 5 to 0.03, a decline of over 99%. We have established why bitcoin has advanced: it is now due solely to the madness of an investing crowd, given that it is apparent that it will have no monetary role in the future. Market participants have either forgotten about or turned their backs against the metallic monies of millennia which have always returned as circulating media when state-issued fiat currencies fail. Why gold is under-owned and unappreciated Bitcoin is just part of this story: the other is the central banks’ resistance to rivalry to their fiat currencies from sound money. When US citizens were banned from owning gold coin, gold bullion, and gold certificates by executive order in 1933, the US Government’s desire to escape the discipline of gold as money became public. The resetting of international currency arrangements at Bretton Woods replaced gold with the dollar as the reserve currency with convertibility into gold limited to central banks and certain post-war supranational organisations. Even that failed, leading to the Bretton Woods agreement being suspended by President Nixon in 1971. Led by the US Fed, ever since the Nixon shock central banks have run a propaganda campaign to convince their private sectors that gold’s historic role as the money “of last resort” had been made redundant through the magic of monetary progress. That propaganda campaign is now fifty years old and encompasses the entire working lives of employees in all financial sectors. The dollar myth as the ultimate form of money is now fully institutionalised. In parallel with statist propaganda there has been a fundamental reform of the financial system to permit the development of various forms of derivatives. While derivatives previously existed in limited quantities, their massive expansion since the mid-eighties big-bang and the repeal of the Glass-Steagall Act created the means to absorb speculative demand for all commodities, including metallic money. According to the Bank for International Settlements, outstanding notional amounts of gold OTC derivatives at the end of last year stood at $834bn, to which must be added derivatives on regulated markets totalling a further $100bn. Together they are the equivalent together of over 15,000 tonnes of gold. There is little doubt that, like bank credit, the financial system’s ability to create paper gold out of thin air has had a profound effect on the price. Backing this inflation of derivative paper has been the expansion of bank and shadow bank credit. That is now coming to an end, with the implementation of the latest phase of Basel 3 banking regulations. Basel 3 and the net stable funding ratio If you Google it, you find that Basel 3 is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. It was a crisis centred on derivatives, which highlighted the inadequacies of minimum capital requirements, banking supervision and market discipline, the three pillars of banking regulation. Basel 3 is gradually being introduced, but the regulations which concern gold and silver derivatives are what specifically concern us. Curbing balance sheet risk from inappropriate funding of precious metal derivative positions has already been introduced in Europe, Switzerland, and the US with the introduction of the net stable funding ratio. The last major financial jurisdiction to be affected is the UK, which introduces appropriate regulations from the first trading day of 1922 — in only nine weeks’ time. Put briefly, a bank will no longer be able to run unrestricted derivative assets and liabilities without them being tied together. In other words, if a bank has a derivative as an asset on its balance sheet, it must relate specifically to and match a liability for netting purposes and be otherwise unencumbered if a balance sheet funding penalty is to be avoided. If a bank owns unencumbered physical gold as an asset, it can match that against a customer’s unallocated account without a funding penalty, if it has successfully sought and obtained regulatory permission to do so. Two consequences follow. The first is that a bullion bank can only run an uneven book if it is prepared to accept a funding penalty through the application of the net stable funding ratio.[iii]Therefore, liquidity will almost certainly be withdrawn from futures and forwards markets, at least because banks want to appear fully compliant with the regulations. And the second is that most of the BIS gold derivative number of $834bn referred to above reflects bullion banks liabilities to their gold deposit accounts. By the year-end bullion banks will want to remove them, and the only way this can be achieved is by paying off customer gold accounts in fiat currency. There could be thousands of tonnes equivalent of paper gold to reconcile in this way, leaving gold account depositors to either abandon their gold exposure entirely or to buy physical replacements in the market. And while the gaff is being blown on gold forwards and futures, reconciling central bank swaps and leases could also emerge as a problem. In short, the factors that have suppressed the gold price since the early 1970s are not only coming to an end but are being reversed. The liquidation of paper gold threatens a gold liquidity crisis, which in the past would have been resolved by making bullion available through central bank gold swaps. But with central banks already owed bullion by the commercial banks and increasingly concerned about monetary inflation, this facility may be restricted. For the leading central banks, the introduction of Basel 3’s net stable funding ratio therefore comes at a difficult time. They are already fighting to convince their markets that inflation is only a transient price effect and are beginning to reluctantly admit it is more intractable than they thought. The last thing they need is for the gold price to be forced higher by their own regulations, adding to fears of yet higher inflation to come. But for individuals seeking to escape a fiat money catastrophe it appears that the ratio of gold to bitcoin is at an extreme of overvaluation for bitcoin and an extreme undervaluation for gold. The next waypoints in understanding inflation Because bitcoin has introduced the concept of relative rates of issue for currencies, the masses of the millennial generations will be alerted to the debasement of fiat currencies sooner than they would otherwise have been. We are less interested in how this is reflected in cryptocurrency prices than how this knowledge changes relations between consumers and state currencies. Statist economists and monetary policy makers at the major central banks insist that higher prices for consumer goods are being driven by a combination of increased spending, which was stored up during covid lockdowns, and logistics disruption. To this can be added labour problems, with acute shortages in certain industry sectors and absenteeism due to continuing covid infections. Furthermore, energy and other input costs for businesses have been rising rapidly. Monetary policy makers are aware that a wider consumer panic over rising prices must be avoided. They understand that continuing reports of product shortages will risk encouraging consumer stockpiling, driving consumer prices even higher. They will fear that interest rates would have to be increased significantly to bring price inflation back under control. But growth in the major economies appears to be stalling, which in the Keynesian playbook calls for lower interest rates and monetary stimulation instead. This leads us to... Waypoint 1. Commentary in the main-stream media has yet to address this dilemma. It is to be expected at any time. Following our first waypoint, we can assume that interest rates will be forced to rise by markets beginning to discount further losses of currency purchasing power for which interest compensation is demanded. That will inevitably terminate the bull market in equities because it undermines bond prices, pushing up yields and disrupting relative valuations. Figure 2 shows that this process has probably started, though markets are not yet discounting a rise in bond yields beyond a minor amount. The technical message from this chart confirms that the 10-year UST yield is set to go significantly higher, affecting government borrowing adversely through rising interest costs. And when the bear market in these bonds becomes more obvious to investors and foreign holders of them alike, funding the government deficit will become much more difficult. The scale of the rise in fixed interest yields is likely to take market participants and policy planners alike by surprise. The only way in which monetary policy planners can attempt to control rising bond yields and to stop equities sliding into a bear market is to increase the pace of currency creation, particularly through enhanced QE. But for now, the Fed’s stated intention is to taper QE, not increase it. This leads us to... Waypoint 2. No anticipation of this dilemma in the media or independent commentary has yet been detected. Look out for it. In the run up to the northern hemisphere winter and the Christmas shopping season, energy prices and fuel costs are set to rise further. There is no sign of product shortages being resolved. The danger is that with continuing product shortages, consumers will push their purchases of goods not immediately needed even further into the future in case they become unavailable. This will drive consumer prices even higher, creating expectations of yet higher interest rates in financial markets. The Fed will have a straightforward choice: resist market pressures for higher interest rates to save financial markets, stave off insolvencies by over-leveraged borrowers and minimise government funding costs; or protect the dollar by raising the funds rate sufficiently to take all expectation of higher rates out of the market and ignore the financial carnage. This will be next... Waypoint 3. No anticipation of this dilemma in the media or independent commentary has yet been detected. There is a specific danger developing from consumer demand leading to a general stockpiling goods. When the process goes beyond a certain point the consequences of consumers disposing of their currency and credit in favour of goods become apparent. Currency no longer works as the objective value in a transaction, this role being switched to goods, because people begin to buy goods just to get rid of currency. When that process starts in earnest, the fate of the currency is sealed. A hundred years ago this was called the crack-up boom, the final abandonment of currency. Waypoint 4. No anticipation of the final nails in the fiat currency coffin is currently anticipated. When it is, the fate of the currency will have already been sealed. Summary and conclusions Those of us not under the direct management of the US monetary policies will not escape the consequences. All western central banks accept the dollar as their reserve currency and not metallic money, so events affecting the dollar affect all the other fiat currencies. Furthermore, the other major central banks led by the Bank of Japan, European Central Bank, and the Bank of England are pursuing similarly inflationary monetary policies. Central bank groupthink is concreted into global monetary policies. Without a change in their mandate the end of modern currencies is only a matter of time — and a shortening one at that. The dying days of fiat are foreshadowed by the speculative fervour in bitcoin and other leading cryptocurrencies. A new millennial tech-savvy class of investors has got at least half the message, that fiat currency quantities are being inflated. That a significant element of the population has grasped this much about currencies early challenges the long-held wisdom that not one in a million understands money, which allows governments to oversee a limitless expansion of currency and credit for significant periods of time. Therefore, the danger to state inflationism is that significant numbers will act sooner to avoid currency depreciation by dumping it in favour of goods. It is a process that once started is impossible to stop. While the establishment appears vaguely aware of this danger, it lacks the theoretical knowledge to deal with it. Ninety years of denying classical economics in favour of Keynesianism and other statist monetary theories are too embedded in the official mind. And in the absence of understanding the destructive forces of inflationism, prescient individuals seeking protection for their families, close friends and themselves have no option but to reduce their dependency on fiat currencies and all ephemeral financial assets tied to them. These include savings deposits and “stores of wealth”, particularly fixed-interest bonds and equities. The fashionable alternative is distributed ledger cryptocurrencies which are beyond the interference of the state, exemplified by the rise and rise of bitcoin. But this article points out that this has now become dominated by speculation, so much so that in their ignorance of catallactics investors are discarding metallic money in favour of bitcoin. This is a mistake. There are sound reasons why metallic money, gold and silver, have always been money used as a medium of exchange. And as Figure 1 in this article illustrates, relative to bitcoin gold is now less than 1% of its value in 2016. Bitcoin is the bubble; gold has become the anti-bubble. The systematic suppression of gold in favour of the dollar as the world’s reserve currency is now coming to an end. The fact that westerners hardly own any bullion as part of their savings is a mistake they will rue, if, as seems inevitable, current monetary and economic policies persist. Tyler Durden Fri, 10/29/2021 - 22:00.....»»

Category: blogSource: zerohedgeOct 29th, 2021

Green Energy: A Bubble In Unrealistic Expectations

Green Energy: A Bubble In Unrealistic Expectations Authored by David Hay via Everegreen Gavekal blog, “You see what is happening in Europe. There is hysteria and some confusion in the markets. Why?…Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition.” - Vladimir Putin (someone with whom this author rarely agrees) “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of its citizens.” – John Maynard Keynes (an interesting observation for all the modern day Keynesians to consider given their support of current inflationary US policies, including energy-related) Introduction This week’s EVA provides another sneak preview into David Hay’s book-in-process, “Bubble 3.0” discussing what he thinks is the crucial topic of “greenflation.”  This is a term he coined referring to the rising price for metals and minerals that are essential for solar and wind power, electric cars, and other renewable technologies. It also centers on the reality that as global policymakers have turned against the fossil fuel industry, energy producers are for the first time in history not responding to dramatically higher prices by increasing production.  Consequently, there is a difficult tradeoff that arises as the world pushes harder to combat climate change, driving up energy costs to painful levels, especially for lower income individuals.  What we are currently seeing in Europe is a vivid example of this dilemma.  While it may be the case that governments welcome higher oil and natural gas prices to discourage their use, energy consumers are likely to have a much different reaction. Summary BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary. Even though it’s early in the year, energy prices are already experiencing unprecedented spikes in Europe and Asia, but most Americans are unaware of the severity. To that point, many British residents being faced with the fact that they may need to ration heat and could be faced with the chilling reality that lives could be lost if this winter is as cold as forecasters are predicting. Because of the huge increase in energy prices, inflation in the eurozone recently hit a 13-year high, heavily driven by natural gas prices on the Continent that are the equivalent of $200 oil. It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure.  Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays. I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal. In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined. China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future. About 70% of China’s electricity is generated by coal, which has major environmental ramifications in regards to electric vehicles. Because of enormous energy demand in China this year, coal prices have experienced a massive boom. Its usage was up 15% in the first half of this year, and the Chinese government has instructed power providers to obtain all baseload energy sources, regardless of cost.  The massive migration to electric vehicles – and the fact that they use six times the amount of critical minerals as their gasoline-powered counterparts –means demand for these precious resources is expected to skyrocket. This extreme need for rare minerals, combined with rapid demand growth, is a recipe for a major spike in prices. Massively expanding the US electrical grid has several daunting challenges– chief among them the fact that the American public is extremely reluctant to have new transmission lines installed in their area. The state of California continues to blaze the trail for green energy in terms of both scope and speed. How the rest of the country responds to their aggressive take on renewables remains to be seen. It appears we are entering a very odd reality: governments are expending resources they do not have on weakly concentrated energy. And the result may be very detrimental for today’s modern economy. If the trend in energy continues, what looks nearly certain to be the Third Energy crisis of the last half-century may linger for years.  Green energy: A bubble in unrealistic expectations? As I have written in past EVAs, it amazes me how little of the intense inflation debate in 2021 centered on the inflationary implications of the Green Energy transition.  Perhaps it is because there is a built-in assumption that using more renewables should lower energy costs since the sun and the wind provide “free power”.  However, we will soon see that’s not the case, at least not anytime soon; in fact, it’s my contention that it will likely be the opposite for years to come and I’ve got some powerful company.  Larry Fink, CEO of BlackRock, a very pro-ESG* organization, is one of the few members of Wall Street’s elite who admitted this in the summer of 2021.  The story, however, received minimal press coverage and was quickly forgotten (though, obviously, not be me!).  This EVA will outline myriad reasons why I think Mr. Fink was telling it like it is…despite the political heat that could bring down upon him.  First, though, I will avoid any discussion of whether humanity is the leading cause of global warming.  For purposes of this analysis, let’s make the high-odds assumption that for now a high-speed green energy transition will continue to occur.  (For those who would like a well-researched and clearly articulated overview of the climate debate, I highly recommend the book “Unsettled”; it’s by a former top energy expert and scientist from the Obama administration, Dr. Steven Koonin.) The reason I italicized “for now” is that in my view it’s extremely probable that voters in many Western countries are going to become highly retaliatory toward energy policies that are already creating extreme hardship.  Even though it’s only early autumn as I write these words, energy prices are experiencing unprecedented increases in Europe.  Because it’s “over there”, most Americans are only vaguely aware of the severity of the situation.  But the facts are shocking…  Presently, natural gas is going for $29 per million British Thermal Units (BTUs) in Europe, a quadruple compared to the same time in 2020, versus “just” $5 in the US, which is a mere doubling.  As a consequence, wholesale energy cost in Great Britain rose an unheard of 60% even before summer ended.  Reportedly, nine UK energy companies are on the brink of failure at this time due to their inability to fully pass on the enormous cost increases.  As a result, the British government is reportedly on the verge of nationalizing some of these entities—supposedly, temporarily—to prevent them from collapsing.  (CNBC reported on Wednesday that UK natural gas prices are now up 800% this year; in the US, nat gas rose 20% on Tuesday alone, before giving back a bit more than half of that the next day.) Serious food shortages are expected after exorbitant natural gas costs forced most of England’s commercial production of CO2 to shut down.  (CO2 is used both for stunning animals prior to slaughter and also in food packaging.)  Additionally, ballistic natural gas prices have forced the closure of two big US fertilizer plants due to a potential shortfall of ammonium nitrate of which “nat gas” is a key feedstock.  *ESG stands for Environmental, Social, Governance; in 2021, Blackrock’s assets under management approximated $9 ½ trillion, about one-third of the total US federal debt. With the winter of 2021 approaching, British households are being told they may need to ration heat.  There are even growing concerns about the widespread loss of life if this winter turns out to be a cold one, as 2020 was in Europe.  Weather forecasters are indicating that’s a distinct possibility.   In Spain, consumers are paying 40% more for electricity compared to the prior year.  The Spanish government has begun resorting to price controls to soften the impact of these rapidly escalating costs. (The history of price controls is that they often exacerbate shortages.) Naturally, spiking power prices hit the poorest hardest, which is typical of inflation whether it is of the energy variety or of generalized price increases.  Due to these massive energy price increases, eurozone inflation recently hit a 13-year high, heavily driven by natural gas prices that are the equivalent of $200 per barrel oil.  This is consistent with what I warned about in several EVAs earlier this year and I think there is much more of this looming in the years to come. In Asia, which also had a brutally cold winter in 2020 – 2021, there are severe energy shortages being disclosed, as well.  China has instructed its power providers to secure all the coal they can in preparation for a repeat of frigid conditions and acute deficits even before winter arrives.  The government has also instructed its energy distributors to acquire all the liquified natural gas (LNG) they can, regardless of cost.  LNG recently hit $35 per million British Thermal Units in Asia, up sevenfold in the past year.  China is also rationing power to its heavy industries, further exacerbating the worldwide shortages of almost everything, with notable inflationary implications. In India, where burning coal provides about 70% of electricity generation (as it does in China), utilities are being urged to import coal even though that country has the world’s fourth largest coal reserves.  Several Indian power plants are close to exhausting their coal supplies as power usage rips higher. Normally, I’d say that the cure for such extreme prices, was extreme prices—to slightly paraphrase the old axiom.  But these days, I’m not so sure; in fact, I’m downright dubious.  After all, the enormously influential International Energy Agency has recommended no new fossil fuel development after 2021—“no new”, as in zero.  It’s because of pressure such as this that, even though US natural gas prices have done a Virgin Galactic to $5 this year, the natural gas drilling rig count has stayed flat.  The last time prices were this high there were three times as many working rigs.  It is the same story with oil production.  Most Americans don’t seem to realize it but the US has provided 90% of the planet’s petroleum output growth over the past decade.  In other words, without America’s extraordinary shale oil production boom—which raised total oil output from around 5 million barrels per day in 2008 to 13 million barrels per day in 2019—the world long ago would have had an acute shortage.  (Excluding the Covid-wracked year of 2020, oil demand grows every year—strictly as a function of the developing world, including China, by the way.) Unquestionably, US oil companies could substantially increase output, particularly in the Permian Basin, arguably (but not much) the most prolific oil-producing region in the world.  However, with the Fed being pressured by Congress to punish banks that lend to any fossil fuel operator, and the overall extreme hostility toward domestic energy producers, why would they?  There is also tremendous pressure from Wall Street on these companies to be ESG compliant.  This means reducing their carbon footprint.  That’s tough to do while expanding their volume of oil and gas.  Further, investors, whether on Wall Street or on London’s equivalent, Lombard Street, or in pretty much any Western financial center, are against US energy companies increasing production.  They would much rather see them buy back stock and pay out lush dividends.  The companies are embracing that message.  One leading oil and gas company CEO publicly mused to the effect that buying back his own shares at the prevailing extremely depressed valuations was a much better use of capital than drilling for oil—even at $75 a barrel. As reported by Morgan Stanley, in the summer of 2021, an US institutional broker conceded that of his 400 clients, only one would consider investing in an energy company!  Consequently, the fact that the industry is so detested means that its shares are stunningly undervalued.  How stunningly?  A myriad of US oil and gas producers are trading at free cash flow* yields of 10% to 15% and, in some cases, as high as 25%. In Europe, where the same pressures apply, one of its biggest energy companies is generating a 16% free cash flow yield.  Moreover, that is based up an estimate of $60 per barrel oil, not the prevailing price of $80 on the Continent. *Free cash flow is the excess of gross cash flow over and above the capital spending needed to sustain a business.  Many market professionals consider it more meaningful than earnings.  Therefore, due to the intense antipathy toward Western energy producers they aren’t very inclined to explore for new resources.  Another much overlooked fact about the ultra-critical US shale industry that, as noted, has been nearly the only source of worldwide output growth for the past 13 years, is its rapid decline nature.  Most oil wells see their production taper off at just 4% or 5% per year.  But with shale, that decline rate is 80% after only two years.  (Because of the collapse in exploration activities in 2020 due to Covid, there are far fewer new wells coming on-line; thus, the production base is made up of older wells with slower decline rates but it is still a much steeper cliff than with traditional wells.)  As a result, the US, the world’s most important swing producer, has to come up with about 1.5 million barrels per day (bpd) of new output just to stay even.  (This was formerly about a 3 million bpd number due to both the factor mentioned above and the 2 million bpd drop in total US oil production, from 13 million bpd to around 11 million bpd since 2019).  Please recall that total US oil production in 2008 was only around 5 million bpd.  Thus, 1.5 million barrels per day is a lot of oil and requires considerable drilling and exploration activities.  Again, this is merely to stay steady-state, much less grow.  The foregoing is why I wrote on multiple occasions in EVAs during 2020, when the futures price for oil went below zero*, that crude would have a spectacular price recovery later that year and, especially, in 2021.  In my view, to go out on my familiar creaky limb, you ain’t seen nothin’ yet!  With supply extremely challenged for the above reasons and demand marching back, I believe 2022 could see $100 crude, possibly even higher.  *Physical oil, or real vs paper traded, bottomed in the upper teens when the futures contract for delivery in April, 2020, went deeply negative.  Mike Rothman of Cornerstone Analytics has one of the best oil price forecasting records on Wall Street.  Like me, he was vehemently bullish on oil after the Covid crash in the spring of 2020 (admittedly, his well-reasoned optimism was a key factor in my up-beat outlook).  Here’s what he wrote late this summer:  “Our forecast for ’22 looks to see global oil production capacity exhausted late in the year and our balance suggests OPEC (and OPEC + participants) will face pressures to completely remove any quotas.”  My expectation is that global supply will likely max out sometime next year, barring a powerful negative growth shock (like a Covid variant even more vaccine resistant than Delta).  A significant supply deficit looks inevitable as global demand recovers and exceeds its pre-Covid level.  This is a view also shared by Goldman Sachs and Raymond James, among others; hence, my forecast of triple-digit prices next year.  Raymond James pointed out that in June the oil market was undersupplied by 2.5 mill bpd.  Meanwhile, global petroleum demand was rapidly rising with expectations of nearly pre-Covid consumption by year-end.  Mike Rothman ran this chart in a webcast on 9/10/2021 revealing how far below the seven-year average oil inventories had fallen.  This supply deficit is very likely to become more acute as the calendar flips to 2022. In fact, despite oil prices pushing toward $80, total US crude output now projected to actually decline this year.  This is an unprecedented development.  However, as the very pro-renewables Financial Times (the UK’s equivalent of the Wall Street Journal) explained in an August 11th, 2021, article:  “Energy companies are in a bind.  The old solution would be to invest more in raising gas production.  But with most developed countries adopting plans to be ‘net zero’ on carbon emissions by 2050 or earlier, the appetite for throwing billions at long-term gas projects is diminished.” The author, David Sheppard, went on to opine: “In the oil industry there are those who think a period of plus $100-a-barrel oil is on the horizon, as companies scale back investments in future supplies, while demand is expected to keep rising for most of this decade at a minimum.”  (Emphasis mine)  To which I say, precisely!  Thus, if he’s right about rising demand, as I believe he is, there is quite a collision looming between that reality and the high probability of long-term constrained supplies.  One of the most relevant and fascinating Wall Street research reports I read as I was researching the topic of what I have been referring to as “Greenflation” is from Morgan Stanley.  Its title asked the provocative question:  “With 64% of New Cars Now Electric, Why is Norway Still Using so Much Oil?”  While almost two-thirds of Norway’s new vehicle sales are EVs, a remarkable market share gain in just over a decade, the number in the US is an ultra-modest 2%.   Yet, per the Morgan Stanley piece, despite this extraordinary push into EVs, oil consumption in Norway has been stubbornly stable.  Coincidentally, that’s been the experience of the overall developed world over the past 10 years, as well; petroleum consumption has largely flatlined.  Where demand hasn’t gone horizontal is in the developing world which includes China.  As you can see from the following Cornerstone Analytics chart, China’s oil demand has vaulted by about 6 million barrels per day (bpd) since 2010 while its domestic crude output has, if anything, slightly contracted. Another coincidence is that this 6 million bpd surge in China’s appetite for oil, almost exactly matched the increase in US oil production.  Once again, think where oil prices would be today without America’s shale oil boom. This is unlikely to change over the next decade.  By 2031, there are an estimated one billion Asian consumers moving up into the middle class.  History is clear that more income means more energy consumption.  Unquestionably, renewables will provide much of that power but oil and natural gas are just as unquestionably going to play a critical role.  Underscoring that point, despite the exponential growth of renewables over the last 10 years, every fossil fuel category has seen increased usage.  Thus, even if China gets up to Norway’s 64% EV market share of new car sales over the next decade, its oil usage is likely to continue to swell.  Please be aware that China has become the world’s largest market for EVs—by far.  Despite that, the above chart vividly displays an immense increase in oil demand.  Here’s a similar factoid that I ran in our December 4th EVA, “Totally Toxic”, in which I made a strong bullish case for energy stocks (the main energy ETF is up 35% from then, by the way):  “(There was) a study by the UN and the US government based on the Model for the Assessment of Greenhouse Gasses Induced Climate Change (MAGICC).  The model predicted that ‘the complete elimination of all fossil fuels in the US immediately would only restrict any increase in world temperature by less than one tenth of one degree Celsius by 2050, and by less than one fifth of one degree Celsius by 2100.’  Say again?  If the world’s biggest carbon emitter on a per capita basis causes minimal improvement by going cold turkey on fossil fuels, are we making the right moves by allocating tens of trillions of dollars that we don’t have toward the currently in-vogue green energy solutions?” China's voracious power appetite increase has been true with all of its energy sources.  On the environmentally-friendly front, that includes renewables; on the environmentally-unfriendly side, it also includes coal.  In 2020, China added three times more coal-based power generation than all other countries combined.  This was the equivalent of an additional coal planet each week.  Globally, there was a reduction last year of 17 gigawatts in coal-fired power output; in China, the increase was 29.8 gigawatts, far more than offsetting the rest of the world’s progress in reducing the dirtiest energy source.  (A gigawatt can power a city with a population of roughly 700,000.) Overall, 70% of China’s electricity is coal-generated. This has significant environmental implications as far as electric vehicles (EVs) are concerned.  Because EVs are charged off a grid that is primarily coal- powered, carbon emissions actually rise as the number of such vehicles proliferate. As you can see in the following charts from Reuters’ energy expert John Kemp, Asia’s coal-fired generation has risen drastically in the last 20 years, even as it has receded in the rest of the world.  (The flattening recently is almost certainly due to Covid, with a sharp upward resumption nearly a given.) The worst part is that burning coal not only emits CO2—which is not a pollutant and is essential for life—it also releases vast quantities of nitrous oxide (N20), especially on the scale of coal usage seen in Asia today. N20 is unquestionably a pollutant and a greenhouse gas that is hundreds of times more potent than CO2.  (An interesting footnote is that over the last 550 million years, there have been very few times when the CO2 level has been as low, or lower, than it is today.)  Some scientists believe that one reason for the shrinkage of Arctic sea ice in recent decades is due to the prevailing winds blowing black carbon soot over from Asia.  This is a separate issue from N20 which is a colorless gas.  As the black soot covers the snow and ice fields in Northern Canada, they become more absorbent of the sun’s radiation, thus causing increased melting.  (Source:  “Weathering Climate Change” by Hugh Ross) Due to exploding energy needs in China this year, coal prices have experienced an unprecedented surge.  Despite this stunning rise, Chinese authorities have instructed its power providers to obtain coal, and other baseload energy sources, such as liquified natural gas (LNG), regardless of cost.  Notwithstanding how pricey coal has become, its usage in China was up 15% in the first half of this year vs the first half of 2019 (which was obviously not Covid impacted). Despite the polluting impact of heavy coal utilization, China is unlikely to turn away from it due to its high energy density (unlike renewables), its low cost (usually) and its abundance within its own borders (though its demand is so great that it still needs to import vast amounts).  Regarding oil, as we saw in last week’s final image, it is currently importing roughly 11 million barrels per day (bpd) to satisfy its 15 million bpd consumption (about 15% of total global demand).  In other words, crude imports amount to almost three-quarter of its needs.  At $80 oil, this totals $880 million per day or approximately $320 billion per year.  Imagine what China’s trade surplus would look like without its oil import bill! Ironically, given the current hostility between the world’s superpowers, China has an affinity for US oil because of its light and easy-to-refine nature.  China’s refineries tend to be low-grade and unable to efficiently process heavier grades of crude, unlike the US refining complex which is highly sophisticated and prefers heavy oil such as from Canada and Venezuela—back when the latter actually produced oil. Thus, China favors EVs because they can be de facto coal-powered, lessening its dangerous reliance on imported oil.  It also likes them due to the fact it controls 80% of the lithium ion battery supply and 60% of the planet’s rare earth minerals, both of which are essential to power EVs.     However, even for China, mining enough lithium, cobalt, nickel, copper, aluminum and the other essential minerals/metals to meet the ambitious goals of largely electrifying new vehicle volumes is going to be extremely daunting.  This is in addition to mass construction of wind farms and enormously expanded solar panel manufacturing. As one of the planet’s leading energy authorities Daniel Yergin writes: “With the move to electric cars, demand for critical minerals will skyrocket (lithium up 4300%, cobalt and nickel up 2500%), with an electric vehicle using 6 times more minerals than a conventional car and a wind turbine using 9 times more minerals than a gas-fueled power plant.  The resources needed for the ‘mineral-intensive energy system’ of the future are also highly concentrated in relatively few countries. Whereas the top 3 oil producers in the world are responsible for about 30 percent of total liquids production, the top 3 lithium producers control more than 80% of supply. China controls 60% of rare earths output needed for wind towers; the Democratic Republic of the Congo, 70% of the cobalt required for EV batteries.” As many have noted, the environmental impact of immensely ramping up the mining of these materials is undoubtedly going to be severe.  Michael Shellenberger, a life-long environmental activist, has been particularly vociferous in his condemnation of the dominant view that only renewables can solve the global energy needs.  He’s especially critical of how his fellow environmentalists resorted to repetitive deception, in his view, to undercut nuclear power in past decades.  By leaving nuke energy out of the solution set, he foresees a disastrous impact on the planet due to the massive scale (he’d opine, impossibly massive) of resource mining that needs to occur.  (His book, “Apocalypse Never”, is also one I highly recommend; like Dr. Koonin, he hails from the left end of the political spectrum.) Putting aside the environmental ravages of developing rare earth minerals, when you have such high and rapidly rising demand colliding with limited supply, prices are likely to go vertical.  This will be another inflationary “forcing”, a favorite term of climate scientists, caused by the Great Green Energy Transition. Moreover, EVs are very semiconductor intensive.  With semis already in seriously short supply, this is going to make a gnarly situation even gnarlier.  It’s logical to expect that there will be recurring shortages of chips over the next decade for this reason alone (not to mention the acute need for semis as the “internet of things” moves into primetime).  In several of the newsletters I’ve written in recent years, I’ve pointed out the present vulnerability of the US electric grid.  Yet, it will be essential not just to keep it from breaking down under its current load; it must be drastically enhanced, a Herculean task. For one thing, it is excruciatingly hard to install new power lines. As J.P. Morgan’s Michael Cembalest has written: “Grid expansion can be a hornet’s nest of cost, complexity and NIMBYism*, particularly in the US.”  The grid’s frailty, even under today’s demands (i.e., much less than what lies ahead as millions of EVs plug into it) is particularly obvious in California.  However, severe winter weather in 2021 exposed the grid weakness even in energy-rich Texas, which also has a generally welcoming attitude toward infrastructure upgrading and expansion. Yet it’s the Golden State, home to 40 million Americans and the fifth largest economy in the world, if it was its own country (which it occasionally acts like it wants to be), that is leading the charge to EVs and seeking to eliminate internal combustion engines (ICEs) as quickly as possible.  Even now, blackouts and brownouts are becoming increasingly common.  Seemingly convinced it must be a role model for the planet, it’s trying desperately to reduce its emissions, which are less than 1%, of the global total, at the expense of rendering its energy system more similar to a developing country.  In addition to very high electricity costs per kilowatt hour (its mild climate helps offset those), it also has gasoline prices that are 77% above the national average.  *NIMBY stands for Not In My Back Yard. While California has been a magnet for millions seeking a better life for 150 years, the cost of living is turning the tide the other way.  Unreliable and increasingly expensive energy is likely to intensify that trend.  Combined with home prices that are more than double the US median–$800,000!–California is no longer the land of milk and honey, unless, to slightly paraphrase Woody Guthrie about LA, even back in the 1940s, you’ve got a whole lot of scratch.  More and more people, seem to be scratching California off their list of livable venues.  Voters in the reliably blue state of California may become extremely restive, particularly as they look to Asia and see new coal plants being built at a fever pitch.  The data will become clear that as America keeps decarbonizing–as it has done for 30 years mostly due to the displacement of coal by gas in the US electrical system—Asia will continue to go the other way.  (By the way, electricity represents the largest share of CO2 emission at roughly 25%.)  California has always seemed to lead social trends in this country, as it is doing again with its green energy transition.  The objective is noble though, extremely ambitious, especially the timeline.  As it brings its power paradigm to the rest of America, especially its frail grid, it will be interesting to see how voters react in other states as the cost of power leaps higher and its dependability heads lower.  It’s reasonable to speculate we may be on the verge of witnessing the Californication of the US energy system.  Lest you think I’m being hyperbolic, please be aware the IEA (International Energy Agency) has estimated it will cost the planet $5 trillion per year to achieve Net Zero emissions.  This is compared to global GDP of roughly $85 trillion. According to BloombergNEF, the price tag over 30 years, could be as high as $173 trillion.  Frankly, based on the history of gigantic cost overruns on most government-sponsored major infrastructure projects, I’m inclined to take the over—way over—on these estimates. Moreover, energy consulting firm T2 and Associates, has guesstimated electrifying just the US to the extent necessary to eliminate the direct consumption of fuel (i.e., gasoline, natural gas, coal, etc.) would cost between $18 trillion and $29 trillion.  Again, taking into account how these ambitious efforts have played out in the past, I suspect $29 trillion is light.  Regardless, even $18 trillion is a stunner, despite the reality we have all gotten numb to numbers with trillions attached to them.  For perspective, the total, already terrifying, level of US federal debt is $28 trillion. Regardless, as noted last week, the probabilities of the Great Green Energy Transition happening are extremely high.  Relatedly, I believe the likelihood of the Great Greenflation is right up there with them.  As Gavekal’s Didier Darcet wrote in mid-August:  ““Nowadays, and this is a great first in history, governments will commit considerable financial resources they do not have in the extraction of very weakly concentrated energy.” ( i.e., less efficient)  “The bet is very risky, and if it fails, what next?  The modern economy would not withstand expensive energy, or worse, lack of energy.”  While I agree this an historical first, it’s definitely not great (with apologies for all the “greats”).  This is particularly not great for keeping inflation subdued, as well as for attempting to break out of the growth quagmire the Western world has been in for the last two decades.  What we are seeing in Europe right now is an extremely cautionary case study in just how disastrous the war on fossil fuels can be (shortly we will see who or what has been a behind-the-scenes participant in this conflict). Essentially, I believe, as I’ve written in past EVAs, we are entering the third energy crisis of the last 50 years.  If I’m right, it will be characterized by recurring bouts of triple-digit oil prices in the years to come.  Along with Richard Nixon taking the US off the gold standard in 1971, the high inflation of the 1970s was caused by the first two energy crises (the 1973 Arab Oil Embargo and the 1979 Iranian Revolution).  If I’m correct about this being the third, it’s coming at a most inopportune time with the US in hyper-MMT* mode. Frankly, I believe many in the corridors of power would like to see oil trade into the $100s, and natural gas into the teens, as it will help catalyze the shift to renewable energy.  But consumers are likely to have a much different reaction—potentially, a violently different reaction, as I noted last week.  The experience of the Yellow Vest protests in France (referring to the color of the vest protestors wore), are instructive in this regard.  France is a generally left-leaning country.  Despite that, a proposed fuel surtax in November 2018 to fund a renewable energy transition triggered such widespread civil unrest that French president Emmanuel Macron rescinded it the following month. *MMT stands for Modern Monetary Theory.  It holds that a government, like the US, which issues debt in its own currency can spend without concern about budgetary constraints.  If there are not enough buyers of its bonds at acceptable interest rates, that nation’s central bank (the Fed, in our case) simply acquires them with money it creates from its digital printing press.  This is what is happening today in the US.  Many economists consider this highly inflationary. The sharp and politically uncomfortable rise in US gas pump prices this summer caused the Biden administration to plead with OPEC to lift its volume quotas.  The ironic implication of that exhortation was glaringly obvious, as was the inefficiency and pollution consequences of shipping oil thousands of miles across the Atlantic.  (Oil tankers are a significant source of emissions.)  This is as opposed to utilizing domestic oil output, as well as crude from Canada (which is actually generally better suited to the US refining complex).  Beyond the pollution aspect, imported oil obviously worsens America’s massive trade deficit (which would be far more massive without the six million barrels per day of domestic oil volumes that the shale revolution has provided) and costs our nation high-paying jobs. Further, one of my other big fears is that the West is engaging in unilateral energy disarmament.  Russia and China are likely the major beneficiaries of this dangerous scenario.  Per my earlier comment about a stealth combatant in the war on fossil fuels, it may surprise you that a past NATO Secretary General* has accused Russian intelligence of avidly supporting the anti-fracking movements in Western Europe.  Russian TV has railed against fracking for years, even comparing it to pedophilia (certainly, a most bizarre analogy!).  The success of the anti-fracking movement on the Continent has essentially prevented a European version of America’s shale miracles (the UK has the potential to be a major shale gas producer).  Consequently, the European Union’s domestic natural gas production has been in a rapid decline phase for years.  Banning fracking has, of course, made Europe heavily reliant on Russian gas shipments with more than 40% of its supplies coming from Russia. This is in graphic contrast to the shale output boom in the US that has not only made us natural gas self-sufficient but also an export powerhouse of liquified natural gas (LNG).  In 2011, the Nord Stream system of pipelines running under the Baltic Sea from northern Russia began delivering gas west from northern Russia to the German coastal city of Greifswald.  For years, the Russians sought to build a parallel system with the inventive name of Nord Stream 2.  The US government opposed its approval on security grounds but the Biden administration has dropped its opposition.  It now appears Nord Stream 2 will happen, leaving Europe even more exposed to Russian coercion.  Is it possible the Russian government and the Chinese Communist Party have been secretly and aggressively supporting the anti-fossil fuel movements in America?  In my mind, it seems not only possible but probable.  In fact, I believe it is naïve not to come that conclusion.  After all, wouldn’t it be in both of their geopolitical interests to see the US once again caught in a cycle of debilitating inflation, ensnared by the twin traps of MMT and the third energy crisis? *Per former NATO Secretary General, Anders Fogh Rasumssen:  Russia has “engaged actively with so-called non-governmental organizations—environmental organizations working against shale gas—to maintain Europe’s dependence on imported Russian gas”. Along these lines, I was shocked to listen to a recent podcast by the New Yorker magazine on the topic of “intelligent sabotage”.  This segment was an interview between the magazine’s David Remnick and a Swedish professor, Adreas Malm.  Mr. Malm is the author of a new book with the literally explosive title “How To Blow Up A Pipeline”.   Just as it sounds, he advocates detonating pipelines to inhibit fossil fuel distribution.  Mr. Remnick was clearly sympathetic to his guest but he did ask him about the impact on the poor of driving energy prices up drastically which would be the obvious ramification if his sabotage recommendations were widely followed.  Mr. Malm’s reaction was a verbal shrug of the shoulders and words to the effect that this was the price to pay to save the planet. Frankly, I am appalled that the venerable New Yorker would provide a platform for such a radical and unlawful suggestion.  In an era when people are de-platformed for often innocuous comments, it’s incredible to me this was posted and has not been pulled down.  In my mind, this reflects just how tolerant the media is of attacks on the fossil fuel industry, regardless of the deleterious impact on consumers and the global economy. Surely, there is a far better way of coping with the harmful aspects of fossil fuel-based energy than this scorched earth (literally, in the case of Mr. Malm) approach, which includes efforts to block new pipelines, shut existing ones, and severely restrict US energy production.  In America’s case, the result will be forcing us to unnecessarily and increasingly rely on overseas imports.  (For example, per the Wall Street Journal, drilling permits on federal land have crashed to 171 in August from 671 in April.  Further, the contentious $3.5 trillion “infrastructure” plan would raise royalties and fees high enough on US energy producers that it would render them globally uncompetitive.) Such actions would only aggravate what is already a severe energy shock, one that may be worse than the 1970s twin energy crises.  America has it easy compared to Europe, though, given current US policy trends, we might be in their same heavily listing energy boat soon. Solutions include fast-tracking small modular nuclear plants; encouraging the further switch from burning coal to natural gas (a trend that is, unfortunately, going the other way now, as noted above); utilizing and enhancing carbon and methane capture at the point of emission (including improving tail pipe effluent-reduction technology); enhancing pipeline integrity to inhibit methane leaks; among many other mitigation techniques that recognize the reality the global economy will be reliant on fossil fuels for many years, if not decades, to come.  If the climate change movement fails to recognize the essential nature of fossil fuels, it will almost certainly trigger a backlash that will undermine the positive change it is trying to bring about.  This is similar to what it did via its relentless assault on nuclear power which produced a frenzy of coal plant construction in the 1980s and 1990s.  On this point, it’s interesting to see how quickly Europe is re-embracing coal power to alleviate the energy poverty and rationing occurring over there right now - even before winter sets in.  When the choice is between supporting climate change initiatives on one hand and being able to heat your home and provide for your family on the other, is there really any doubt about which option the majority of voters will select? Tyler Durden Tue, 10/26/2021 - 19:30.....»»

Category: worldSource: nytOct 26th, 2021

Learning From Trader Joe’s, Joe Coulombe

It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. Q3 2021 hedge fund letters, conferences […] It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more If you choose a manager to whom you entrust your capital, in the words of Charlie Munger, choose a ‘business fanatic.’ Such individuals live, sleep and breathe their businesses. They’re not bound by the same restraints as most business people; constantly pushing boundaries, trialing new approaches, thinking outside the box, challenging conventional wisdom and always looking for business improvements. If you’re in business, these are the last type of people you want to compete with. One man that epitomized such fanaticism was the late Joe Coulombe, founder of the convenience store chain that carried his name, Trader Joe’s. “Edward H. Heller, a pioneer venture capitalist used the term ‘vivid spirit’ to describe the type of individual to whom he was ready to give significant financial backing. He said that behind every unusually successful corporation was this kind of determined entrepreneurial personality with the drive, the original ideas, and the skill to make such a company a truly worthwhile investment.” Phil Fisher Joe tells his story in the book, ‘Becoming Trader Joe - How I Did Business My Way and Still Beat the Big Guys.’ It contains a wealth of wisdom, particularly when it comes to thinking about running a successful retailer. Over more than a quarter of a century, Trader Joe’s sales grew at a compound rate of 19% per year and the company’s net worth grew at a compound rate of 26% per annum over the same period - no mean feat for a commodity business that’s hard to differentiate. Furthermore, the business never lost money in a year and incredibly each year was more profitable than the last. When the competitor 7-Eleven extended it’s footprint into California in the 1970’s, Pronto Markets, the precursor to Trader' Joe’s, already enjoyed the highest sales per store of any convenience operator in America by a factor of three. A high wage policy, strong locations, a few liquor licences, and the beginnings of a differentiated strategy through product knowledge was the core of their success. One of the mental models I particularly enjoyed in the book was Joe’s concept of ‘Double Entry Retailing.’ A form of second level thinking, Joe recognised that making changes to Demand Side factors had an influence on Supply Side factors which aren’t always obvious. A striking example was the introduction of orange juice freshly squeezed on the premises. While a great Demand Side success - customers embraced the product - it was a total nightmare to administer because of the Supply Side issues; the great variation in sweetness of oranges over the course of a year, difficulty in ensuring machines squeezed the right amount and disposal of the leftover rinds. As a result it was eventually phased out. You’ll recognise many of the characteristics that form a common link with the other great businesses we’ve studied. I’ve included some of my favourite extracts from the book below. Harnessing Demographic & Technological Change ‘The clue, the keystone of the arch of Trader Joe’s, was a small news item in Scientific American in 1965. When we left Stanford, my father-in-law, Bill Steere, a professor of botany, gave me a subscription to Scientific American. In terms of creating my fortune, it’s the most important magazine I’ve ever read. The news item said that, of all the people in the US who were qualified to go to college in 1932, in the pit of the Depression, only 2 percent did. By contrast, in 1964, of all the people qualified to go to college 60 percent in fact actually did. The big change, of course, was the GI Bill of Rights that went into effect in 1945. A second news item, one from the Wall Street Journal, told me that the Boeing 747 would go into service in 1970, and that it would slash the cost of international travel. In Pronto Markets we had noticed that people who travelled - even to San Francisco - were far more adventurous in what they were willing to put in their mouths. Travel is, after all, a form of education. Trader Joe’s was conceived from those two demographic news stories. What I saw here was a small but growing demographic opportunity in people who were well educated. 7-Eleven, and the whole convenience store genre, served the most basic needs of the most mindless demographics with cigarettes, Coca-Cola, milk, Budweiser, candy, bread, eggs. I saw an opportunity to differentiate ourselves radically from mainstream retailing to mainstream people.” Obliquity “I hope you’ll consider the following, my favourite quote from my favourite book on Management, ‘The Winning Performance’ by Clifford and Cavanaugh,’ ‘The fourth (general themes in winning corporations] is a view of profit and wealth-creation as inevitable byproducts of doing other things well. Money is a useful yardstick for measuring quantitative performance and profit and an obligation to investors. But … making money as an end in itself ranks low.’” A Bias to Action & Tenacity “In 1962, Barbara Tuchman published ‘The Guns of August’, an account of the first ninety days of WWI, It’s the best book on management - and, especially, mismanagement - I’ve ever read. The most basic conclusion I drew from from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you’ll probably succeed. Tenacity is as important as brilliance.” “Trying to find an optimum solution in business is a waste of time; the factors in the equation are changing all the time.” Value, Empower & Pay Employees Well “You’ve got to have something to hang your hat on. The one core value I chose was our high compensation policies, which I put in place from the very start in 1958… This is the most important single business decision I ever made: to pay people well. First Pronto Markets and then Trader Joe’s had the highest-paid, highest benefitted people in retail.” “Time and again I am asked why no one has successfully replicated Trader Joe’s. The answer is that no one has been willing to pay the wages and benefits, and thereby attract - and keep - the quality of people who work at Trader Joe’s.” “[I was asked,] ‘But how could you afford to pay so much more than your competition?’ The answer, of course, is that good people pay by their extra productivity. You can’t afford to have cheap employees.” “Equally important was our practice of giving every full-time employee an interview every six months. At Stanford I’d been taught that employees never organise (join unions) because of the money; they organise because of un-listened-to grievances.” “The [store] Captains had the salary plus a bonus that theoretically had no limit. The bonus was based on Trader Joe’s overall profit, allocated among the stores based on each store’s contribution. In 1988, several Captains made bonuses of more than 70 percent of their base pay. Unless a bonus system promises, and delivers big rewards, it should be abandoned.” “My idea, often stated to everybody, was that the [store] Captains should have the chance to make more than executives in the office. In a traditional chain store, managers aspire to become bureaucrats with cushy, high-paying jobs in the office. I wanted to kill such aspirations at the start.” “Part timers .. at a time when the minimum wage was $4.35, we often paid $13.00 per hour because these people were worth it.” “Productivity in part is a product of tenure. That’s why I believe that turnover is the most expensive form of labor expense.” “We instituted full health and dental insurance back in the 1960's when it was cheap. When I left, we were paying $6,000 per employee per year!” “Each full-timer was supposed to be able to perform every job in the store, including checking, balancing the books, ordering each department, stocking, opening, closing, going to the bank, etc. Everybody worked the check stands in the course of the day, including the [store] Captain.” “In thirty years we never had a layoff of full-time employees. Seasonal swings in business were handled with overtime pay to full-time employees, and by adjusting part-time hours. The stability of full-time employment at Trader Joe’s was due in part to caution opening new stores, and insisting on high volume stores.” “Cost of goods sold is the dominant expense. The funny thing is that grocers seem to spend more effort squeezing payroll than squeezing Cost of Goods Sold, though there is at least five times more opportunity in the latter.” Retail & Real Estate Decisions ‘First we upped the investment ante by taking only prime locations, which could generate the most sales, even though the rents were higher. A lease is an investment, perhaps the most serious and certainly the least changeable a retailer can make. Financially, a lease is simply a long-term loan… Most retail bankruptcies come from bad real estate leasing decisions… Early in my career I learned there are two kinds of decisions: the ones that are easily reversible and the ones that aren’t. Fifteen-year leases are the least-reversible decisions you can make. That’s why, throughout my career, I kept absolute control of real estate decisions.” “The keys to management are strong locations with good people.” “People often ask me, how many stores did we have at such-and-such time? It’s the wrong question to ask. What’s important is dollar sales. For example, from 1980 to 1988, we increased the number of stores by 50 percent but sales were up 340 percent.” “My preference is to have a few stores, as far apart as possible, and to make them as high volume as possible.” “Too many stores, to many irreversible leases, too much geographical saturation was a recurrent theme in the failure of American retail chains in the twentieth century.” “Ancient Mariner Retailers claim that ‘volume solves everything.’ If it’s profitable volume, they’re right. Things go most sour in the lowest-volume stores. It’s like riding a bicycle, the faster it goes, the more stable it is. The ‘normal distribution’ of most chains is 20% dogs, 60% okay stores, and 20% winners. I believe in ruthlessly dumping the dogs at whatever cost. Why? Because their real cost is in management energy. You always spend more time trying to make the dogs acceptable than in raising the okay stores into winners. And it’s in the dogs that you always have the most personnel problems." “I believe that the sine qua non for successful retailing is demographic coherence: all your locations should have the same demographics whether you are selling clothing or wine.” “I liked semi-decayed neighbourhoods, were the census tract income statistics looked terrible, but the mortgages were all paid-down, and the kids had left home. Housing and rental prices tend to be lower, and more suitable for those underpaid academics. Related to this, I was more interested in the number of households in a given area than the number of people in a ZIP code. Trader Joe’s is not a store for kids or big families. One or two adults is just fine.” “Computerisation has radically upgraded the statistics available: I’d probably do it more formally now. But there’s no substitute for ‘driving’ a location to ferret out traffic problems. And do it at night, too.” “I hardly need to mention that a trading area is rarely determined by a radius. It’s determined by geographical barriers, boulevard access, and where the demographics lie.” “Let’s go back to the question of number of stores. How do you space them? Here are some parameters: You need to have enough stores in a trading area to economically amortise the radio advertising. You need enough stores in an area to have a large enough pool of employees. My rule was that distance between stores should not be measured in miles but in driving time. I wanted no less than twenty minutes between stores. That pretty much avoided the dread word, cannibalisation. Could a given trading area support more Trader Joe’s? Almost certainly! I figured we could break even at ten thousand core residences. But I wanted super-volume stores. If the credo that super-volume stores have the fewest operating problems is valid, then the overall health of the chain, in the long run, is maximised.” “How many trading areas should you enter? As long as you can preserve the culture of the company, and as long as logistics don’t kill you, go ahead.” “Never, never, never sign a lease with a ‘continuous operation’ clause. That clause means you must stay open - you can’t ‘go dark’ and just pay the rent.” Product Knowledge “The buyers at the supermarket chains knew nothing about what they sold, and they don’t want to know. What they did know all about was extorting slotting allowances, cooperative ad revenue, failure allowances, and back-haul concessions from the manufacturers.” Four Tests “The advantage of hard liquor merchandise was that it met three tests: a) A high value per cubic inch, essential to a small store format b) A high rate of consumption c) It had to be easily handled If we could have added a fourth test, it would be that we had to be outstanding in the field. Still trying to maximise the use of a small store, I looked for categories that met the Four Tests; high value per cubic inch, high rate of consumption; easily handled; and something in which we could be outstanding in term of price or assortment. For example, diamonds met the first test but flunked the second. Fruits and vegetables met the first and second but flunked the third because produce requires constant reworking. Fresh meat flunked the third test even more.” Purpose “Most of my ideas about how to act as an entrepreneur are derived from ‘The Revolt of the Masses’ by Jose Ortega y Gasset, the greatest Spanish philosopher of the twentieth century. I believe it offers a master ‘plan of action’ for the would-be entrepreneur, who usually has no reputation and few resources. Ortega offers an explanation of how such a person can get an enterprise started. In the context of the career of Julius Caesar, an entrepreneur who started without power, Otega says of the state: ‘Human life, by its very nature, has to be dedicated to something, an enterprise glorious or humble, a destiny illustrious or trivial .. The State begins when groups, naturally divided, find themselves obliged to live in common. The obligation is not of brute force, but implies an impelling purpose, a common task which is set before the dispersed groups. Before all, the State is a plan of action and a Programme of Collaboration. The men are called upon so that together they may do something .. It is pure dynamism, the will to do something in common, and thanks to this the idea of the state, is bounded by no physical limits.” Most of my career has been spent selling ‘plans of action and programmes of collaboration.’ If you want to know what differentiates me from most manager’s that’s it. From the beginning, thanks to Ortega y Gasset, I’ve been aware of the need to sell everybody.” Radical Transparency “Throughout my career, my policy has been full disclosure to employees about the true state of affairs, almost to the point of imprudence. I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn the plans, but that his own troops would not.” Growth “Growth for the sake of growth still troubles me. It seems unnatural, even perverted. This helps explain why I went from 1974 to 1978 without opening another store. To keep sales increasing during the mid-1970s, we relied on new ideas implemented in existing stores. This was my favourite form of growth. I don’t think that any given store ever fully realises its potential.” Smallness & Empowerment “We developed a prototype [Trader Joe’s] store of 4,500 square feet. Here’s a good question: Given my need to get away from convenience stores, why did I stick with small stores? The answer was verbalised for us in ‘In Search of Excellence,’ Tom Peter’s best-selling book on management. He called it ‘The Power of Chunking’: ‘The essential building block of a company is the section [which] within its sphere does not await executive orders but takes initiatives. The key factor for success is getting one’s arms around almost any practical problem and knocking it off… The small group is the most visible of the chunking devices.’ The fundamental ‘chunk’ of Trader Joe’s is the individual store with its highly paid [store] Captain and staff; the people who are capable of exercising discretion. I admire Nordstrom’s fundamental instruction to its employees: use your judgement. Trader Joe’s finally settled down at an average of about eight thousand square feet in the 1980’s, but the concept of a relatively small store with a relatively small staff remains in force.” Marketing & Customers “At all times I wrote the Fearless Flyer [marketing newsletter] for over-educated, underpaid people. This requires two mindsets: Trader Joe’s Fearless Flyer Newsletter 1) There are no such things as consumers - dolts who are driven by drivel to buy stuff they don’t need or even want. There are only customers, people who are reasonably well informed, and very well focused in their buying habits. 2) We always looked up to the customers in the text of the Fearless Flyer. We assumed they knew more than they did, we never talked down to them. 3) Given the first two assumptions, we assumed that our readers had a thirst for knowledge, 180 degrees opposite from supermarket ads. We emphasised ‘informative advertising.’ Originally, we distributed the Fearless Flyer only in stores and to a small but growing list. [Later,] by mailing to addresses rather than to individuals - by blanketing entire ZIP codes - we were able to tremendously expand the distribution of the Fearless Flyer. The ZIPs to which we mailed, of course, were chosen on the basis of the likely concentration of over-educated and underpaid people.” Word of Mouth “Word of Mouth: The Power of True Believers. As everyone knows, word of mouth is the most effective advertising of all. I have been known to say that there’s no better business to run than a cult. Trader Joe’s became a cult of the over-educated and underpaid, partly because we deliberately tried to make it a cult and partly because we kept the implicit promises with our clientele.” “There aren’t many cult retailers who successfully retain their cult status over a long period of time. A couple in California are In-N-Out Burger and Fry’s Electronics. But across America, in every town, there’s a particular donut shop, pizza parlour, bakery, greengrocer, bar, etc. that has a cult following of True Believers.” Pricing “One of the fundamental tenets of Trader Joe’s is that retail prices don’t change unless costs change. There are no weekend ad prices, no in-and-out pricing… I have always believed that supermarkets pricing is a shell game and I wanted no part of it.” Retailing “The fundamental job of a retailer is to buy goods whole, cut them into pieces, and sell the pieces to the ultimate consumers. This is the most important mental construct I can impart on those of you who want to enter retailing. Most ‘retailers’ have no idea of the formal meaning of the word. Time and again, I had to remind myself just what my role in society was supposed to be.” “[We decided] no outsiders of any sort were permitted in the store. All the work was done by employees.]” “From 1958 through 1976, we tried to carry what the customer asked for, given the limits of our small stores and other operational parameters. Each store probably had access to ten thousand stock keeping units (SKUs), of which about three thousand were actually stocked in any given week. By the time I left in 1989, we were down to a band of 1,100 to 1,500 SKUs, all of which were delivered through a central distribution system.” “Along the way not only did we drop a lot of products that our customers would have liked us to sell, even at not-outstanding prices, but we stopped cashing checks in excess of the amount of purchase, we stopped full-case discounts, and we persistently shortened the hours. We violated every received wisdom of retailing except one: we delivered great value, which is where most retailers fall.” “[We were] willing to discontinue any product if we were are unable to offer the right deal to the customer.” “Instead of national brands, [we] focused on either Trader Joe’s label products or ‘no label’ products like nuts and dried fruits.” “We wouldn’t try to carry a whole line of spices, or bag candy, or vitamins. Each SKU had to justify itself as opposed to riding piggyback into the stores just so we had a ‘complete’ line. Depth of assortment was of no interest.” “Each SKU would stand on its own two feet as a profit centre. We would earn a gross profit on each SKU that was justified by the cost of handling that item. There would be no ‘loss leaders.’” “Above all we would not carry any item unless we could be outstanding in terms of price (and make a profit at that price) or uniqueness.” ‘I do not believe in keeping ‘spoils’ in the back room until some salesperson comes by to pick them up. I believe that products should move in only one direction, never back up the supply chain. When a bottle was broken, a can dented, or a ‘short fill’ was discovered, it went to the trash bin.” “A guideline: No private label product was introduced for the sake of having a private label. This is 100 percent contrary to the policy of most supermarkets… Each private label product had to have a reason, a point of differentiation.” “The willingness to do without any given product is one of the cornerstones of Trader Joe’s merchandising philosophy.” “No bulky products like paper towels or sugar, because the high-value-per-cubic inch rule still prevailed.. We simply went out of business on the ‘bulkers’ and did not replace them with private labels.” “I believe in the wisdom that you gain customers one by one, but you lose them in droves.” “Back in 1967, [we] made a bet that rising levels of education would fragment the masses, that a small but growing group of people would be dissatisfied with having to consume what everybody else consumed… This philosophical approach put us in conflict with the mainstream of American retailing, which emphasises continuous products. Thus when a supermarket promotes Coca-Cola it doesn’t have to explain that Coca-Cola is a secret formula for a soft drink created a century ago in Atlanta.. Wines have not been popular in America because, intrinsically, they are not continuous products. You can’t just order up some more sugar and chemicals and make another batch. In 1987, I outlined to the buyers where I thought we should go: 1) we want continuous products. Any sane person does. We want continuous products which are profitable without creating a high-price image. 2) to create such products, they needed to be differentiated at least in order to avoid direct price comparison. 3) products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. 4) I was willing to continue to indulge in the spectacular ‘closeout’ sales of branded products, but I wanted to do so in the context of much greater overall sales, principally generated by continuous products, most of them private label.” “I don’t think that the internet grocery store will successfully invade food retailing because you’re dealing with four different temperatures: dry grocery, refrigerated products, frozen products, and ice cream when you try to home-deliver foods.” “Showmanship is the sum total of all efforts to make contact with the customer. It’s the most ephemeral, the most difficult, and the most important of the Demand Side activities.” “All the research on whether people turn to the left or the right, or whether you can ‘force’ people to the rear of the store, is irrelevant if you’re a value retailer.” Win-Win “Honour thy vendors: After all, these are the guys you’re buying from. They should not be treated as adversaries. Five year plan 1977 said, ‘Buying, therefore, is not just a matter of trying to beat down suppliers on price. It is a creative exercise of developing alternatives.’ Many of our best product ideas and special buying opportunities came from our vendors.” “Vendors should be regarded as an extension of the retailer, a Marks and Spencer concept. Their employees should be regarded almost as employees of the retailer. Concern for their welfare should be shown, because employee turnover at vendors sometimes can be more costly than turnover of your own employees.” “Tenants who enter negotiations with the idea of beating the landlord at the objective future game usually get the kind of landlords they deserve. And vice versa.” “Other non-merchandise vendors are very much extensions of Trader Joe’s and should be treated as much. Since we owned no trucks, warehouses, etc., I asked our people to keep track of the outsourced drivers and do their best to see that our contractors were paid reasonable wages with reasonable working conditions. Turnover is the most expensive labour expense!’ Committees “I want to make it quite clear that I called all the shots. I reject management by committee.” Economies of Scale “The point where the ‘buying power’ and ‘selling power’ curves cross each other creates the magical physical thresholds. There are two magical physical thresholds that a retailer must achieve to be competitive: the truckload, and the ocean container load. These thresholds mark the limit of most economies of scale.” Focus & Outsource “We tried to stay out of all functions that were not central to our primary job in society: namely, buying and selling merchandise.. [We’d] been getting rid of all functions except those buying and selling. We got rid of our own maintenance people, we sold off almost all the real estate we had acquired during the 1970’s, we never took mainframe computing in-house, etc. Some choice quotes from Dr. Drucker: ‘In-house service activities have little incentive to improve their productivity .. The productivity is not likely to ramp up until it is possible to be promoted for doing a good job at it. And that will happen in support work only when such work is done by separate, free standing enterprises.’” Business Problems “All businesses have problems. It’s the problems that create the opportunities. If a business is easy, every simple bastard would enter it.” “This is one of the most important things I can impart; in any troubled company the people at lower levels know what ought to be done in terms of day-to-day operations. If you just ask them, you can find answers.” Adapt, Challenge the Status Quo “Believe me, you have to have a system for everything that has to happen in your business - you just may not be conscious of it. And you probably have still other systems that are not needed. That’s why The Winning Performance calls for a ‘continued contempt for business as usual.’ To practice ‘constitutional contempt,’ you have to arrive every day with the attitude, ‘Why do we do such-and-such that way?’ Better yet, why do we do it at all? Usually the answer is, ‘We’ve always done it that way,’ ‘That’s the way we did it at my last job,’ or ‘All our competitors are doing it.’ Mental Model - Double Entry Retailing “I hit on the idea of using double entry accounting as an analogy, what I call Double Entry Retailing. On the left side of the ledger is the business in terms of how its customers see it: I call this the Demand Side. On the right side of the ledger are the factors that limit or determine the retailer's ability to satisfy those demands: the Supply Side. All businesses, whether manufacturing, wholesaling, services, etc., have [the] fearful symmetry of both Demand and Supply sides. And all businesses are subject to the ultimate supply-side constraint of cash: you can do anything, no matter how stupid, within that fearful symmetry, as long as you don't run out of cash. From my view, the Demand Side of Retailers can be analysed in terms of five variables: The assortment of merchandise offered for sale. Pricing: stability and relative to competition. Convenience: geographical, in-store, and time. Credit: the accepted methods of payment. Showmanship: the sum of all activities that result in making contact with the customer, from advertising to store architecture to employee cleanliness. Here are factors on the Supply Side: Merchandise Vendors Employees  The way you do things: "habits" and "culture" Systems Non-merchandise vendors Landlords Governments Bankers and investment bankers Stockholders Crime As in double entry accounting, the change in any factor must be matched by a corresponding change in another factor. For example, a decision to increase geographical convenience (Demand Side) obviously involves some change of policy with landlords (Supply Side) including the amount of rent you're willing to pay. Consider how Barney's paid through the nose because they thought they had to offer the geographical convenience of being in Beverly Hills. How big a factor was this in Barney's subsequent bankruptcy? Was it Demand Side success at the price of Supply Side failure? The lists above aren't much different from other businesses. What distinguishes retailing is the asymmetry of the fearful symmetry: the huge number of customers (Demand Side) vs. the number of suppliers. This is the exact opposite of a government defence contractor. This lopsided butterfly may cause a retailer to act as if the only people they have to ‘sell’ to are customers: the Demand Side. That’s a major mistake. All the people on the supply side have to be sold, too.” “One of the smartest things we ever did was to cut the hours of Trader Joe’s. This is mostly a Supply Side question, but the quality and attitude of the employees handling our customers is a Demand Side factor.” Employee Ownership “From the beginning of Pronto Markets, one of my basic principles, one of my basic goals, was employee ownership of the business. Getting there, however, was complicated.” Summary I found the similarities between Trader Joe’s approach to retailing and the German retailer Aldi strikingly similar. Despite being on opposite sides of the world, both businesses evolved complementary retailing practices: a focus on private label, above market wages for employees, a win-win mentality and continuous innovation. It’s little wonder the Albrecht family were attracted to the business. Aldi acquired Trader Joe’s in 1979 and retained Joe as the independent manager for another ten years. Paying staff well, empowering and sharing information with them and maintaining smallness are consistent themes across many of the successful business stories we’ve studied. When it comes to the specifics of retailing, the analogy of super-volume stores better able to provide balance is a useful one. As are the insights into economies of scale, pricing strategy, jettisoning poorly performing stores, the power of word-of-mouth marketing and the means to abolish bureaucracy through the outsourcing of non-essential functions. Every business has its own quirks and idiosyncrasies. Identifying what they are and how they contribute to a firm’s success can provide clues in our own quest to find compounding machines; in the long run, it’s business success which determines share prices. The more businesses you study, the larger the toolkit of mental models you’ll have to apply in your investment endeavours. Source: 'Becoming Trader Joe - How I Did Business My Way & Still Beat the Big Guys,’ Joe Coulombe, Patty Civalleri. Harper Collins. 2021. Follow us on Twitter : @mastersinvest * NEW * Visit the Blog Archive Article by Investment Masters Class Updated on Oct 26, 2021, 1:11 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 26th, 2021

David Card Shares Nobel Prize in Economics for Natural Experiments

The award, this year shared between three economists, chimes with a focus of the academy on real-world applications of the economics discipline in recent years Three U.S.-based academics won the 2021 Nobel Prize for economics for work using experiments that draw on real-life situations to revolutionize empirical research. David Card at the University of California Berkeley, Joshua D. Angrist of the Massachusetts Institute of Technology and Guido W. Imbens at Stanford University will share the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, officials of the Royal Swedish Academy of Sciences announced in Stockholm on Monday. “This year’s economic sciences laureates have demonstrated that many of society’s big questions can be answered,” the academy said on Twitter. “Their solution is to use natural experiments—situations arising in real life that resemble randomized experiments.” [time-brightcove not-tgx=”true”] BREAKING NEWS: The 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded with one half to David Card and the other half jointly to Joshua D. Angrist and Guido W. Imbens.#NobelPrize pic.twitter.com/nkMjWai4Gn — The Nobel Prize (@NobelPrize) October 11, 2021 The winners have specialized in such analysis and methodology, and Card used this approach to address key questions in labor economics such as the effects of minimum-wage policies and immigration. The award chimes with a focus of the academy on real-world applications of the economics discipline in recent years. The 2020 laureates, Paul Milgrom and Robert B. Wilson of Stanford University, invented new auction formats used in mobile-phone frequencies, while researchers whose work ranged from inequality to climate change have been among other prior recipients this century. “I’m just thrilled to share the prize,” Imbens, who hails originally from the Netherlands, told reporters by phone. “I’m just very fortunate in having had lots of great colleagues doing very interesting work.” The winners of the economics prize will share prize money of 10 million kronor ($1.1 million), with Card getting half of it and the other two sharing the rest. Male Winners The announcement on Monday means 89 men have now won in this category. The economics prize has a particularly poor record of honoring women compared to the other more longstanding Nobel awards, and had never done so until Elinor Ostrom won in 2009. In 2019, Esther Duflo became the second female recipient. The peace prize given on Friday to journalists Maria Ressa and Dmitry Muratov is the only one this year to have featured a female winner. Alfred Nobel, the Swedish inventor of dynamite who died in 1896, left much of his fortune for the creation of the annual prizes in physics, chemistry, medicine, peace and literature. Sweden’s central bank added the prize for economics in 1968. William Nordhaus, Paul Krugman, Amartya Sen and Milton Friedman are among the most well-known recipients of the award......»»

Category: topSource: timeOct 11th, 2021

Snowden: Your Money AND Your Life

Snowden: Your Money AND Your Life Submitted by Edward Snowden via Continuing Ed, 1. This week's news, or “news,” about the US Treasury’s ability, or willingness, or just trial-balloon troll-suggestion to mint a one trillion dollar ($1,000,000,000,000) platinum coin in order to extend the country’s debt-limit reminded me of some other monetary reading I encountered, during the sweltering summer, when it first became clear to many that the greatest impediment to any new American infrastructure bill wasn’t going to be the debt-ceiling but the Congressional floor. That reading, which I accomplished while preparing lunch with the help of my favorite infrastructure, namely electricity, was of a transcript of a speech given by one Christopher J. Waller, a freshly-minted governor of the United States’ 51st and most powerful state, the Federal Reserve. The subject of this speech? CBDCs—which aren’t, unfortunately, some new form of cannabinoid that you might’ve missed, but instead the acronym for Central Bank Digital Currencies—the newest danger cresting the public horizon. Now, before we go any further, let me say that it’s been difficult for me to decide what exactly this speech is—whether it’s a minority report or just an attempt to pander to his hosts, the American Enterprise Institute.  But given that Waller, an economist and a last-minute Trump appointee to the Fed, will serve his term until January 2030, we lunchtime readers might discern an effort to influence future policy, and specifically to influence the Fed’s much-heralded and still-forthcoming “discussion paper”—a group-authored text—on the topic of the costs and benefits of creating a CBDC. That is, on the costs and benefits of creating an American CBDC, because China has already announced one, as have about a dozen other countries including most recently Nigeria, which in early October will roll out the eNaira. By this point, a reader who isn’t yet a subscriber to this particular Substack might be asking themselves, what the hell is a Central Bank Digital Currency?  Reader, I will tell you. Rather, I will tell you what a CBDC is NOT—it is NOT, as Wikipedia might tell you, a digital dollar. After all, most dollars are already digital, existing not as something folded in your wallet, but as an entry in a bank’s database, faithfully requested and rendered beneath the glass of your phone. In every example, money cannot exist outside the knowledge of the Central Bank Neither is a Central Bank Digital Currency a State-level embrace of cryptocurrency—at least not of cryptocurrency as pretty much everyone in the world who uses it currently understands it. Instead, a CBDC is something closer to being a perversion of cryptocurrency, or at least of the founding principles and protocols of cryptocurrency—a cryptofascist currency, an evil twin entered into the ledgers on Opposite Day, expressly designed to deny its users the basic ownership of their money and to install the State at the mediating center of every transaction.  2. For thousands of years priors to the advent of CBDCs, money—the conceptual unit of account that we represent with the generally physical, tangible objects we call currency—has been chiefly embodied in the form of coins struck from precious metals. The adjective “precious”—referring to the fundamental limit on availability established by what a massive pain in the ass it was to find and dig up the intrinsically scarce commodity out of the ground—was important, because, well, everyone cheats: the buyer in the marketplace shaves down his metal coin and saves up the scraps, the seller in the marketplace weighs the metal coin on dishonest scales, and the minter of the coin, who is usually the regent, or the State, dilutes the preciosity of the coin’s metal with lesser materials, to say nothing of other methods. Behold the glory of thelaw The history of banking is in many ways the history of this dilution—as governments soon discovered that through mere legislation they could declare that everyone within their borders had to accept that this year’s coins were equal to last year’s coins, even if the new coins had less silver and more lead. In many countries, the penalties for casting doubt on this system, even for pointing out the adulteration, was asset-seizure at best, and at worst: hanging, beheading, death-by-fire. In Imperial Rome, this currency-degradation, which today might be described as a “financial innovation,” would go on to finance previously-unaffordable policies and forever wars, leading eventually to the Crisis of the Third Century and Diocletian’s Edict on Maximum Prices, which outlived the collapse of the Roman economy and the empire itself in an appropriately memorable way: Tired of carrying around weighty bags of dinar and denarii, post-third-century merchants, particularly post-third-century traveling merchants, created more symbolic forms of currency, and so created commercial banking—the populist version of royal treasuries—whose most important early instruments were institutional promissory notes, which didn’t have their own intrinsic value but were backed by a commodity: They were pieces of parchment and paper that represented the right to be exchanged for some amount of a more-or-less intrinsically valuable coinage. The regimes that emerged from the fires of Rome extended this concept to establish their own convertible currencies, and little tiny shreds of rag circulated within the economy alongside their identical-in-symbolic-value, but distinct-in-intrinsic-value, coin equivalents. Beginning with an increase in printing paper notes, continuing with the cancellation of the right to exchange them for coinage, and culminating in the zinc-and-copper debasement of the coinage itself, city-states and later enterprising nation-states finally achieved what our old friend Waller and his cronies at the Fed would generously describe as “sovereign currency:” a handsome napkin. Sovereign currency, as known to history Once currency is understood in this way, it’s a short hop from napkin to network. The principle is the same: the new digital token circulates alongside the increasingly-absent old physical token. At first. Just as America’s old paper Silver Certificate could once be exchanged for a shiny, one-ounce Silver Dollar, the balance of digital dollars displayed on your phone banking app can today still be redeemed at a commercial bank for one printed green napkin, so long as that bank remains solvent or retains its depository insurance.  Should that promise-of-redemption seem a cold comfort, you’d do well to remember that the napkin in your wallet is still better than what you traded it for: a mere claim on a napkin for your wallet. Also, once that napkin is securely stowed away in your purse—or murse—the bank no longer gets to decide, or even know, how and where you use it. Also, the napkin will still work when the power-grid fails. The perfect companion for any reader’s lunch. 3. Advocates of CBDCs contend that these strictly-centralized currencies are the realization of a bold new standard—not a Gold Standard, or a Silver Standard, or even a Blockchain Standard, but something like a Spreadsheet Standard, where every central-bank-issued-dollar is held by a central-bank-managed account, recorded in a vast ledger-of-State that can be continuously scrutizined and eternally revised. CBDC proponents claim that this will make everyday transactions both safer (by removing counterparty risk), and easier to tax (by rendering it well nigh impossible to hide money from the government).  CBDC opponents, however, cite that very same purported “safety” and “ease” to argue that an e-dollar, say, is merely an extension to, or financial manifestation of, the ever-encroaching surveillance state. To these critics, the method by which this proposal eradicates bankruptcy fallout and tax dodgers draws a bright red line under its deadly flaw: these only come at the cost of placing the State, newly privy to the use and custodianship of every dollar, at the center of monetary interaction. Look at China, the napkin-clingers cry, where the new ban on Bitcoin, along with the release of the digital-yuan, is clearly intended to increase the ability of the State to “intermediate”—to impose itself in the middle of—every last transaction. “Intermediation,” and its opposite “disintermediation,” constitute the heart of the matter, and it’s notable how reliant Waller’s speech is on these terms, whose origins can be found not in capitalist policy but, ironically, in Marxist critique. What they mean is: who or what stands between your money and your intentions for it. What some economists have lately taken to calling, with a suspiciously pejorative emphasis, “decentralized cryptocurrencies”—meaning Bitcoin, Ethereum, and others—are regarded by both central and commercial banks as dangerous disintermediators; precisely because they’ve been designed to ensure equal protection for all users, with no special privileges extended to the State. This “crypto”—whose very technology was primarily created in order to correct the centralization that now threatens it—was, generally is, and should be constitutionally unconcerned with who possesses it and uses it for what. To traditional banks, however, not to mention to states with sovereign currencies, this is unacceptable: These upstart crypto-competitors represent an epochal disruption, promising the possibility of storing and moving verifiable value independent of State approval, and so placing their users beyond the reach of Rome. Opposition to such free trade is all-too-often concealed beneath a veneer of paternalistic concern, with the State claiming that in the absence of its own loving intermediation, the market will inevitably devolve into unlawful gambling dens and fleshpots rife with tax fraud, drug deals, and gun-running.  It’s difficult to countenance this claim, however, when according to none other than the Office of Terrorist Financing and Financial Crimes at the US Department of the Treasury, “Although virtual currencies are used for illicit transactions, the volume is small compared to the volume of illicit activity through traditional financial services.” Traditional financial services, of course, being the very face and definition of “intermediation”—services that seek to extract for themselves a piece of our every exchange. 4. Which brings us back to Waller—who might be called an anti-disintermediator, a defender of the commercial banking system and its services that store and invest (and often lose) the money that the American central banking system, the Fed, decides to print (often in the middle of the night). You’d be surprised how many opinion-writers are willing to publicly pretend they can’t tell the difference between an accounting trick and money-printing. And yet I admit that I still find his remarks compelling—chiefly because I reject his rationale, but concur with his conclusions. It’s Waller’s opinion, as well as my own, that the United States does not need to develop its own CBDC. Yet while Waller believes that the US doesn’t need a CBDC because of its already robust commercial banking sector, I believe that the US doesn’t need a CBDC despite the banks, whose activities are, to my mind, almost all better and more equitably accomplished these days by the robust, diverse, and sustainable ecosystem of non-State cryptocurrencies (translation: regular crypto).  I risk few readers by asserting that the commercial banking sector is not, as Waller avers, the solution, but is in fact the problem—a parasitic and utterly inefficient industry that has preyed upon its customers with an impunity backstopped by regular bail-outs from the Fed, thanks to the dubious fiction that it is “too big too fail.” But even as the banking-industrial complex has become larger, its utility has withered—especially in comparison to crypto. Commercial banking once uniquely secured otherwise risky transactions, ensuring escrow and reversibility. Similarly, credit and investment were unavailable, and perhaps even unimaginable, without it. Today you can enjoy any of these in three clicks. Still, banks have an older role. Since the inception of commercial banking, or at least since its capitalization by central banking, the industry’s most important function has been the moving of money, fulfilling the promise of those promissory notes of old by allowing their redemption in different cities, or in different countries, and by allowing bearers and redeemers of those notes to make payments on their and others’ behalf across similar distances. For most of history, moving money in such a manner required the storing of it, and in great quantities—necessitating the palpable security of vaults and guards. But as intrinsically valuable money gave way to our little napkins, and napkins give way to their intangible digital equivalents, that has changed. Today, however, there isn’t much in the vaults. If you walk into a bank, even without a mask over your face, and attempt a sizable withdrawal, you’re almost always going to be told to come back next Wednesday, as the physical currency you’re requesting has to be ordered from the rare branch or reserve that actually has it. Meanwhile, the guard, no less mythologized in the mind than the granite and marble he paces, is just an old man with tired feet, paid too little to use the gun that he carries.  These are what commercial banks have been reduced to: “intermediating” money-ordering-services that profit off penalties and fees—protected by your grandfather. In sum, in an increasingly digital society, there is almost nothing a bank can do to provide access to and protect your assets that an algorithm can’t replicate and improve upon. On the other hand, when Christmas comes around, cryptocurrencies don’t give out those little tiny desk calendars. But let’s return to close with that bank security guard, who after helping to close up the bank for the day probably goes off to work a second job, to make ends meet—at a gas station, say.  Will a CBDC be helpful to him? Will an e-dollar improve his life, more than a cash dollar would, or a dollar-equivalent in Bitcoin, or in some stablecoin, or even in an FDIC-insured stablecoin? Let’s say that his doctor has told him that the sedentary or just-standing-around nature of his work at the bank has impacted his health, and contributed to dangerous weight gain. Our guard must cut down on sugar, and his private insurance company—which he’s been publicly mandated to deal with—now starts tracking his pre-diabetic condition and passes data on that condition on to the systems that control his CBDC wallet, so that the next time he goes to the deli and tries to buy some candy, he’s rejected—he can’t—his wallet just refuses to pay, even if it was his intention to buy that candy for his granddaughter. Or, let’s say that one of his e-dollars, which he received as a tip at his gas station job, happens to be later registered by a central authority as having been used, by its previous possessor, to execute a suspicious transaction, whether it was a drug deal or a donation to a totally innocent and in fact totally life-affirming charity operating in a foreign country deemed hostile to US foreign policy, and so it becomes frozen and even has to be “civilly” forfeited. How will our beleagured guard get it back? Will he ever be able to prove that said e-dollar is legitimately his and retake possession of it, and how much would that proof ultimately cost him? Our guard earns his living with his labor—he earns it with his body, and yet by the time that body inevitably breaks down, will he have amassed enough of a grubstake to comfortably retire? And if not, can he ever hope to rely on the State’s benevolent, or even adequate, provision—for his welfare, his care, his healing?  This is the question that I’d like Waller, that I’d like all of the Fed, and the Treasury, and the rest of the US government, to answer:  Of all the things that might be centralized and nationalized in this poor man’s life, should it really be his money? Subscribe here Tyler Durden Sun, 10/10/2021 - 20:40.....»»

Category: personnelSource: nytOct 10th, 2021

One Ring To Rule Us All: A Global Digital Fiat Currency

One Ring To Rule Us All: A Global Digital Fiat Currency Via SchiffGold.com, We’ve written extensively about the “war on cash.” In a nutshell, governments would love to do away with cash in order to better track and control their citizens. There have been numerous moves closer to a cashless society in recent years, from capping ATM withdrawals to doing away with large-denomination bills. Last year, China launched a digital yuan pilot program and the US has floated moving toward a digital dollar. We got a first-hand look at what happens when governments restrict access to cash when India plunged into a cash crisis after the country’s government enacted a policy of demonetization in November 2016. It’s bad enough that various countries are exploring ways to move toward cashlessness, but there’s an even worse scenario - a global digital currency. Economist Thorsten Polleit compares it to the “master ring” in J.R.R. Tolkien’s classic Lord of the Rings. The following article was originally published by the Mises Wire. 1. Human history can be viewed from many angles. One of them is to see it as a struggle for power and domination, as a struggle for freedom and against oppression, as a struggle of good against evil. That is how Karl Marx (1818–83) saw it, and Ludwig von Mises (1881–1973) judged similarly. Mises wrote: The history of the West, from the age of the Greek Polis down to the present-day resistance to socialism, is essentially the history of the fight for liberty against the encroachments of the officeholders. But unlike Marx, Mises recognized that human history does not follow predetermined laws of societal development but ultimately depends on ideas that drive human action. From Mises’s point of view, human history can be understood as a battle of good ideas against bad ideas. Ideas are good if the actions they recommend bring results that are beneficial for everyone and lead the actors to their desired goals; At the same time, good ideas are ethically justifiable, they apply to everyone, anytime and anywhere, and ensure that people who act upon them can survive. On the other hand, bad ideas lead to actions that do not benefit everyone, that do not cause all actors to achieve their goals and/or are unethical. Good ideas are, for example, people accepting “mine and yours”; or entering into exchange relationships with one another voluntarily. Bad ideas are coercion, deception, embezzlement, theft. Evil ideas are very bad ideas, ideas through which whoever puts them into practice is consciously harming others. Evil ideas are, for example, physical attacks, murder, tyranny. 2. With Lord of the Rings, J. J. R. Tolkien (1892–1973) wrote a literary monument about the epic battle between good and evil. His fantasy novel, published in 1954, was a worldwide success, not least because of the movie trilogy, released from 2001 to 2003. What is Lord of the Rings about? In the First Age, the deeply evil Sauron—the demon, the hideous horror, the necromancer—had rings of power made by the elven forges. Three Rings for the Elven-kings under the sky, Seven for the Dwarf-lords in their halls of stone, Nine for Mortal Men doomed to die, One for the Dark Lord on his dark throne In the Land of Mordor where the Shadows lie. One Ring to rule them all, One Ring to find them, One Ring to bring them all, and in the darkness bind them. In the Land of Mordor where the Shadows lie. But Sauron secretly forges an additional ring into which he pours all his darkness and cruelty, and this one ring, the master ring, rules all the other rings. When Sauron puts the master ring on his finger, he can read and control the minds of everyone wearing one of the other rings. The elves see through the dark plan and hide their three rings. The seven rings of the dwarves also fail to subjugate their bearers. But the nine rings of men proved to be effective: Sauron enslaved nine human kings, who were to serve him. Then, however, in the Third Age, in the battle before Mount Doom, Isildur, the eldest son of King Elendils, severed Sauron’s ring finger with a sword blow. Sauron is defeated and loses his physical form, but he survives. Now Isildur has the ring of power, and it takes possession of him. He does not destroy the master ring when he has the opportunity, and it costs him his life. When Isildur is killed, the ring sinks to the bottom of a river and remains there for twenty-five hundred years. Then the ring is found by Smeagol, who is captivated by its power. The ring remains with its finder for nearly five hundred years, hidden from the world. Over time, Sauron’s power grows again, and he wants the Ring of Power back. Then the ring is found, and for sixty years, it remains in the hands of the hobbit Bilbo Baggins, a friendly, well-meaning being who does not allow himself to be seduced by the power of the One Ring. Years later, the wizard Gandalf the Gray learns that Sauron’s rise has begun, and that the Ring of Power is held by Bilbo Baggins. Gandalf knows that there is only one way to defeat the ring and its evil: it must be destroyed where it was created, in Mordor. Bilbo Baggins’s nephew, Frodo Baggins, agrees to take the task upon himself. He and his companions—a total of four hobbits, two humans, a dwarf, and an elf—embark on the dangerous journey. They endure hardship, adversity, and battles against the dark forces, and in the end, they succeed at what seemed impossible: the destruction of the ring of power in the fires of Mount Doom. Good triumphs over evil. 3. The ring in Tolkien’s Lord of the Rings is not just a piece of forged gold. It embodies Sauron’s evil, corrupting everyone who lays hands or eyes on it, poisons their soul, and makes them willing helpers of evil. No one can wield the cruel power of the One Ring and use it for good; no human, no dwarf, no elf. Can an equivalent for Tolkien’s literary portrait of the evil ring be found in the here and now? Yes, I believe so, and in the following, I would like to offer you what I hope is a startling, but in any case, entertaining, interpretation. Tolkien’s Rings of Power embody evil ideas. The nineteen rings represent the idea that the ring bearers should have power over others and rule over them. And the One Ring, to which all other rings are subject, embodies an even darker idea, namely that the bearer of this master ring has power over all other ring bearers and those ruled by them; that he is the sole and absolute ruler of all. The nineteen rings symbolize the idea of establishing and maintaining a state (as we know it today), namely a state understood as a territorial, coercive monopoly with the ultimate power of decision-making over all conflicts. However, the One Ring of power stands for the particularly evil idea of creating a state of states, a world government, a world state; and the creation of a single world fiat currency controlled by the states would pave the way toward this outcome. 4. To explain this, let us begin with the state as we know it today. The state is the idea of the rule of one over the other. This is how the German economist, sociologist, and doctor Franz Oppenheimer (1864–1946) sees it: The state … is a social institution, forced by a victorious group of men on a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished and securing itself against revolt from within and attacks from abroad…. This dominion had no other purpose than the economic exploitation of the vanquished by the victors. Joseph Stalin (1878–1953) defined the state quite similarly: The state is a machine in the hands of the ruling class to suppress the resistance of its class opponents. The modern state in the Western world no longer uses coercion and violence as obviously as many of its predecessors. But it, too, is, of course, built on coercion and violence, asserts itself through them, and most importantly, it divides society into a class of the rulers and a class of the ruled. How does the state manage to create and maintain such a two-class society of rulers and ruled? In Tolkien’s Lord of the Rings, nine men, all of them kings, wished to wield power, and so they became bearers of the rings, and because of that, they were inescapably bound to Sauron’s One Ring of power. This is quite similar to the idea of the state. To seize, maintain, and expand power, the state seduces its followers to do what is necessary, to resort to all sorts of techniques: propaganda, carrot and stick, fear, and even terror. The state lets the people know that it is good, indispensable, inevitable. Without it, the state whispers, a civilized coexistence of people would not be possible. Most people succumb to this kind of propaganda, and the state gets carte blanche to effectively infiltrate all economic and societal matters—kindergarten, school, university, transport, media, health, pensions, law, security, money and credit, the environment—and thereby gains power. The state rewards its followers with jobs, rewarding business contracts, and transfer payments. Those who resist will end up in prison or lose their livelihood or even their lives. The state spreads fear and terror to make people compliant—as people who are afraid are easy to control, especially if they have been led to believe that the state will protect them against any evil. Lately, the topics of climate change and coronavirus have been used for fear-mongering, primarily by the state, which is skillfully using them to increase its omnipotence: it destroys the economy and jobs, makes many people financially dependent on it, clamps down on civil and entrepreneurial freedoms. However, it is of the utmost importance for the state to win the battle of ideas and be the authority to say what are good ideas and what are bad ideas. Because it is ideas that determine people’s actions. The task of winning over the general public for the state traditionally falls to the so-called intellectuals—the people whose opinions are widely heard, such as teachers, doctors, university professors, researchers, actors, comedians, musicians, writers, journalists, and others. The state provides a critical number of them with income, influence, prestige, and status in a variety of ways—which most of them would not have been able to achieve without the state. In gratitude for this, the intellectuals spread the message that the state is good, indispensable, inevitable. Among the intellectuals, there tend to be quite a few who willingly submit to the rings of power, helping—consciously or unconsciously—to bring their fellow men and women under the spell of the rings or simply to walk over, subjugate, dominate them. Anyone who thinks that the state (as we know it today) is acceptable, a justifiable solution, as long as it does not exceed certain power limits, is seriously mistaken. Just as the One Ring of power tries to find its way back to its lord and master, an initially limited state inevitably strives towards its logical endpoint: absolute power. The state (as we know it today) is pushing for expansion both internally and externally. This is a well-known fact derived from the logic of human action. George Orwell put it succinctly: “The object of power is power.”  Or, as Hans-Hermann Hoppe nails it, “[E]very minimal government has the inherent tendency to become a maximal government.” Inwardly, the state is expanding through all sorts of interventions in economic and social life, through regulations, ordinances, laws, and taxes. Outwardly, the economically and militarily strongest state will seek to expand its sphere of influence. In the most primitive form, this happens through aggressive campaigns of conquest and war, in a more sophisticated form, by pursuing political ideological supremacy. In recent decades the latter has taken the form of democratic socialism. To put it casually, democratic socialism means allowing and doing what the majority wants. Under democratic socialism, private property is formally upheld, but it is declared that no one is the rightful owner of 100 percent of the income from their property. People no longer strive for freedom from being ruled but rather to participate in the rule. The result is not people pushing back the state, but rather coming to terms and cooperating with it. The practical consequence of democratic socialism is interventionism: the state intervenes in the economy and society on a case-by-case basis to gradually make socialist ideals a reality. All societies of the Western world have embraced democratic socialism, some with more authority than others, and all of them use interventionism. Seen in this light, all Western states are now acting in concert. What they also have in common is their disdain for competition, because competition sets undesirable limits to the state’s expansive nature. Therefore, larger states often form a cartel. Smaller, less powerful states are compelled to join—and if they refuse, they will suffer political and economic disadvantages. But the cartel of states is only an intermediate step. The logical endpoint that democratic socialism is striving for is the creation of a central authority, something like a world government, a world state. 5. In Tolkien’s Lord of the Rings, the One Ring, the ring of power, embodies this very dark idea: to rule them all, to create a world state. To get closer to this goal, democracy (as we understand it today) is proving to be an ideal trailblazer, and that’s most likely the reason why it is praised to the skies by socialists. Sooner or later, a democracy will mutate into an oligarchy, as the German-Italian sociologist Robert Michels pointed out in 1911. According to Michels, parties emerge in democracies. These parties are organizations that need strict leadership, which is handed to the most power-hungry, ruthless people. They will represent the party elite. The party elite can break away from the will of the party members and pursue their own goals and agendas. For example, they can form coalitions or cartels with elites of other parties. As a result, there will be an oligarchization of democracy, in which the elected party elites or the cartel of the party elites will be the kings of the castle. It is not the voters who will call the tune but oligarchic elites that will rule over the voters. The oligarchization of democracy will not only afflict individual states but will also affect the international relations of democracies. Oligarchical elites from different countries will join together and strengthen each other, primarily by creating supranational institutions. Democratic socialism evolves into “political globalism”: the idea that people should not be allowed to shape their own destiny in a system of free markets but that it should be assigned and directed by a global central authority. The One Ring of power drives those who have already been seduced by the common rings to long for absolute power, to elevate themselves above the rest of humanity. Who comes to mind? Well, various politicians, high-level bureaucrats, court intellectuals, representatives of big banking, big business, Big Pharma and Big Tech and, of course, big media—together they are often called the “Davos elite” or the “establishment.” Whether it is about combating financial and economic crises, climate change, or viral diseases—the one ring of power ensures that supranational, state-orchestrated solutions are propagated; that centralization is placed above decentralization; that the state, not the free market, is empowered. Calls for the “new world order,” the “Great Transformation,” the “Great Reset” are the results of this poisonous mindset inspired by the one ring of power. National borders are called into question, property is relativized or declared dispensable, and even a merging of people’s physical, digital, and biological identities—transhumanism—is declared the goal of the self-empowered globalist establishment. But how can political globalism be promoted at a time when there are (still) social democratic nation-states that insist on their independence? And where people are separated by different languages, values, and religions? How do the political globalists get closer to their badly desired end of world domination, their world state? 6. Sauron is the undisputed tyrant and dictator in his realm of darkness. He operates something like a command economy, forcing his subjects to clear forests, build military equipment, and breed Orcs. There are neither markets nor money in Sauron’s sinister kingdom. Sauron takes whatever he wants; he has overcome exchange and money, so to speak. Today’s state is not quite that powerful, and it finds itself in economies characterized by property, division of labor, and monetary exchange. The state wants to control money—because this is one of the most effective ways to gain ultimate power. To this end, the modern state has already acquired the monopoly of money production; and it has replaced gold with its own fiat money. Over time, fiat money destroys the free market system and thus the free society. Ludwig von Mises saw this as early 1912. He wrote: It would be a mistake to assume that the modern organization of exchange is bound to continue to exist. It carries within itself the germ of its own destruction; the development of the fiduciary medium must necessarily lead to its breakdown. (6) Indeed, fiat money not only causes inflation, economic crises, and an unsocial redistribution of income and wealth. Above all, it is a growth elixir for the state, making it ever larger and more powerful at the expense of the freedom of its citizens and entrepreneurs. Against this backdrop, it should be quite understandable why the political globalists see creating a single world currency as an important step toward seizing absolute power. In Europe, what the political globalists want “on a large scale” has already been achieved “on a small scale”: merging many national currencies into one. In 1999, eleven European nation-states gave up their currencies and merged them into a single currency, the euro, which is produced by a supranational authority, the European Central Bank. The creation of the euro provides the blueprint by which the world’s major currencies can be converted into a single world currency. This is what the 1999 Canadian Nobel laureate in economics, Robert Mundell, recommends: Fixing the exchange rates between the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound against each other and also fixing them against a new unit of account, the INTOR. And hocus pocus: here is the world fiat currency, controlled by a cartel of central banks or a world central bank. 7. Admittedly, creating a single world fiat currency seems to have little chance of being realized at first glance. But maybe at second glance. First of all, there is a good economic reason for having a single world currency: if all people do business with the same money, the productive power of money is optimized. From an economic standpoint, the optimal number of monies in the world is one. What is more, nation-states have the monopoly of money within their respective territory, and since they all adhere to democratic socialism, they also have an interest in ensuring that there is no currency competition—not even between different state fiat currencies. This makes them susceptible to the idea of reducing the pluralism of currencies. Furthermore, one should not misinterpret the so-called rivalry between the big states such as the US and China and between China and Europe, which is being discussed in the mainstream media on a regular basis. No doubt that there is a rivalry between the national rulers: they do not want to give up the power they have gained in their respective countries; they want to become even more powerful. But the rivalry between the oligarchic democracies of the West has already weakened significantly, and there are great incentives for the oligarchic party elites to work together across borders. In fact, it is the oligarchization of democracy in the Western world that allowed for the rapprochement with a socialist-communist regime: the state increasingly taking control of the economic and societal system. This development could be called “the Chinacization of the West.” The way the Western world has dealt with the coronavirus—the suspension, perhaps the termination of constitutional rights and freedoms—undoubtedly shows where the journey is headed: to the authoritarian state that is beyond the control of the people—as is the case in Communist China. The proper slogan for this might be “One System, Many Countries.” Is it too farfetched to assume that the Western world will make common cause with Communist China not only on health issues but also on the world currency issue? The democratic socialists in the West and the Chinese Communist Party have a great deal of common ground and common interest, I would think. It is certainly no coincidence that China has pushed hard for the Chinese renminbi to be included in the International Monetary Fund’s special drawing rights, and that the IMF already agreed in November 2015. 8. The issue of digital central bank money, something the world’s major central banks are working on, could be a catalyst in the creation of a single world currency. The issue of digital central bank money not only heralds the end of cash—the anonymous payment option for citizens and entrepreneurs. Once people start using digital central bank money, it will be easy for the central bank and the state to spy on people’s transactions. The state will not only know who pays what, when, where, and what for. It will also be in a position to determine who gets access to the deposits: who gets them and who doesn’t. China is blazing the trail with its “social credit system”: behavior conforming to the Communist regime is rewarded, behavior that does not is punished. Against this backdrop, digital central bank money would be particularly effective at stifling unwanted political opposition. Digital central bank money will not only replace cash, but it will also increasingly compete with money from commercial banks. Why should you keep your money with banks that are exposed to the risk of default when you can keep it safe with the central bank that never goes bankrupt? Once commercial bank deposits can be exchanged one to one for digital central bank money—and this is to be expected—the credit and monetary system is de facto fully nationalized. Because under these conditions, the central bank transfers its unlimited solvency to the commercial banking sector. This completely deprives the financial markets of their function of determining the cost of capital—and the state-planned economy becomes a reality. In fact, this is the type of command and control economy that emerged in National Socialist Germany in the 1930s. The state formally retained ownership of the means of production. But with commands, prohibitions, laws, taxes, and control, the state determines who is allowed to produce what, when, and under what conditions, and who is allowed to consume what, when, and how much. In such a command and control economy, it is quite conceivable that the form of money production will change—away from money creation through lending toward the issue of helicopter money. The central bank determines who gets how much new money and when. The amount of money in people’s bank accounts no longer reflects their economic success. From now on, it is the result of arbitrary political decisions by the central banks, i.e., the rulers. The prospect of being supplied with new money by the state and its central bank—that is, receiving an unconditional basic income—will presumably drive hosts of people into the arms of the state and bring any resistance to its machinations to a shrieking halt. 9. Will the people, the general public, really subscribe to all of this? Well, government-sponsored economists, in particular, will do their very best to inform us about the benefits of having a globally coordinated monetary policy; that stabilizing the exchange rates between national currencies is beneficial; that if a supranational controlled currency—with the name INTOR or GLOBAL—is created, we will achieve the best of all worlds. And as the issuance of digital central bank money has shut down the last remnants of a free capital market, the merging of different national currencies into one will be relatively easy. The single world currency creature that the political globalists want to create will be a fiat money, certainly not a commodity money. Such a single world fiat currency will not only suffer from all the economic and ethical defects which weigh on national fiat currencies. It will also exacerbate and exponentiate the damages a national fiat currency causes. The door to a high inflation policy would be pushed wide open—as nobody could escape the inflationary single world fiat currency. The states are the main beneficiaries: they can get money from the world central bank at any time, provided they adhere to the rules set out by the world central bank and the special interest groups that govern it. This creates the incentive for national states to relinquish sovereignty rights and to submit to supranational rules—for example, in taxation and financial market regulation. It is therefore the incentive resulting from a single world currency that paves the way toward a world government and a world state. In this context, please note what happened in the euro area: the starting point was not the creation of the EU superstate, which was to be followed by the introduction of the euro. It was exactly the opposite: the euro was introduced to overcome national sovereignty and ultimately establish the United Nations of Europe. One has good reason to fear that the idea of issuing a world fiat currency—which the master ring relentlessly pushes for—would bring totalitarianism—that would most likely dwarf the regimes established by Joseph Stalin, Adolf Hitler, Mao Zedong, Pol Pot, and other criminals. 10. In Tolkien’s Lord of the Rings, evil is eventually defeated. The story has a happy ending. Will it be that easy in our world? The ideas of having a state (as we know it today), of tolerating it, of cooperating with it, of giving the state total control over our money, of accepting fiat money, are deeply rooted in people’s minds as good ideas. Where are the forces supposed to come from that will enlighten people about the evil that the state (as we know it today) brings to humanity? Particularly when in kindergartens, schools, and universities—which are all in the hands of the state—the teachings of collectivism-socialism-Marxism are systematically drummed into people’s (especially impressionable children’s) heads, when the teachings of freedom, free market and free society, and capitalism are hardly or not at all imparted to the younger generation? Who will explain to people the uncomfortable truth that even a minimal state will become a maximal state? That states’ monopolies over money will lead to a single world currency and thus world tyranny? It does not take much to become bleak when it comes to the future of the free economic and social order. However, it would be rather shortsighted to get pessimistic. Those who believe in Jesus Christ can trust that God will not fail them. If we cannot think of a solution to the problems at hand, the believers can trust God. Because “[e]ven in the darkest night, there is a bright light shining somewhere.” Or: please remember the Enlightenment movement in the eighteenth century. At that time, the Prussian philosopher Immanuel Kant explained the “unheard of” to the people, namely that there is such a thing as “autonomy of reason.” It means that you and I have the indisputable right to lead our lives independently; that we should handle it according to self-imposed rules, rules that we determine ourselves based on good reason. People back then understood Kant’s message. Why should such an intellectual revolution—triggered by the writings and words of a free thinker—not be able to repeat itself in the future? Or: the fact that people have not yet learned from bad experience does not mean that they won’t eventually learn from it. When it comes to thinking about changes for the better, it is important to note that it is not the mass of people that matters, but the individual. Applied to the conditions in today’s world, among those thinkers who can defeat evil and help the good make a breakthrough are Ludwig von Mises, Murray Rothbard, and Hans-Hermann Hoppe—and all those following their teachings and fearlessly disseminating them—as scholars or as fans. They are—in terms of Tolkien’s Lord of the Rings—the companions. They give us the intellectual firepower and the courage to fight and defeat evil. I don’t know if Ludwig von Mises knew Tolkien’s Lord of the Rings. But he was certainly well aware of the struggle between good and evil that continues throughout human history. In fact, the knowledge of this struggle shaped Mises’s maxim of life, which he took from the verse of the Roman poet Virgil (70 to 19 BC): “Tu ne cede malis, sed contra audentior ito,” which means “Do not give in to evil but proceed ever more boldly against it.” I want to close my interpretation with a quote from Samwise Gamgee, the loyal friend and companion of Frodo Baggins. In a really hopeless situation, Sam says to Frodo: “There is something good in this world, Mr. Frodo. And it’s worth fighting for.” So if we want to fight for the good in this world, we know what we have to do: we have to fight for property and freedom and against the darkness that the state (as we know it today) wishes to bring upon us, especially with its fiat money. In fact, we must fight steadfastly for a society of property and freedom! Tyler Durden Sat, 10/09/2021 - 22:00.....»»

Category: dealsSource: nytOct 9th, 2021

Economic Theory & Long-Wave Cycles

Economic Theory & Long-Wave Cycles Authored by Alasdair Macleod via GoldMoney.com, Investors and others are confused by the early stages of accelerating price inflation. One misleading belief is in cycles of industrial production, such as Kondratieff’s waves. The Kondratieff cycle began to emerge in financial commentaries during the inflationary 1970s, along with other wacky theories. We should reject them as an explanation for rising prices today. This article explains why the only cycle that matters is of bank credit, from which all other cyclical observations should be made. But that is not enough, because on their own cycles of bank credit do not destroy currencies - that is the consequence of central bank policies and the expansion of base money. The relationship between base money and changes in a currency’s purchasing power is not mechanical. It merely sets the scene. What matters is widespread public perceptions of how much spending liquidity is personally needed. It is by altering the ratio of currency-to-hand to anticipated needs that purchasing power is radically altered, and in the earliest stages of a hyperinflation of prices it leads to imbalances between supply and demand, resulting in the panic buying for essentials becoming evident today. Panics over energy and other necessities are only the start of it. Unless it is checked by halting the expansion of currency and credit, current dislocations will slide rapidly into a wider flight from currency into real goods - a crack-up boom. Introduction For eighteen months, the world has seen a boom in commodity prices, which has inevitably led to speculation about a new Kondratieff, or K-wave. Google it, and we see it described as a long cycle of economic activity in capitalist economies lasting 40—60 years. It marks periods of evolution and correction driven by technological innovation. Today’s adherents to the theory describe it in terms of the seasons. Spring is recovery, leading into a boom. Summer is an increase in wealth and affluence and a deceleration of growth. Autumn is stagnating economic conditions. And winter is a debilitating depression. But these descriptions did not feature in Kondratieff’s work. Van Duijan construed it differently around life cycles: introduction, growth, maturity, and decline. We must discard the word growth, substituting for it progress. Growth as measured by GDP is no more than an increase in the amount of currency and bank credit in circulation and therefore meaningless. Most people who refer to growth believe they are describing progress, or a general improvement in quality of life. Instead, they are sanctioning inflationism. There is little doubt that economic progress is uneven, but that is down to innovation. Kondratieff’s followers argue that innovation is a cyclical phenomenon, otherwise as a cyclical theory it cannot hold water. An economic historian would argue that the root of innovation is the application of technological discoveries which by their nature must be random, as opposed to cyclical, events. Furthermore, a decision must be made about how to measure the K-wave. Is it of fluctuations in the price level and of what, or of output volumes? Bear in mind that GDP and GNP were not invented until the 1930s, and all prior GDP figures are guesswork. Is it driven by Walt Rostow’s contention that the K-wave is pushed by variations in the relative scarcity of food and raw materials? Or is it a monetary phenomenon, which appeared to cease after the Second World War, when currency expansion was not hampered by a gold standard? It was an argument consistent with that put forward by Edward Bernstein, who was a key adviser to the US delegation at Bretton Woods, when he concluded that the war need not be followed by the deep post-war depression which based on historical precedent was widely expected at the time. Kondratieff’s wave theories were buried by the lack of a post-war slump, until price inflation began to increase in the 1970s and Kondratieff became fashionable again. Kondratieff maintained that his wave theory is a global capitalist phenomenon, applicable to and detected in major economies, such as those of Britain, America, and Germany. But there is no statistical evidence of a long wave in Britain’s industrial production in the first half of the nineteenth century, when Britannia ruled the economic waves. And while there were financial crises from time to time, the downward phase to complete Kondratieff’s cycle never materialised. Today, with K-waves being fundamental to so much analysis of cyclical factors and their extrapolation, the lack of evidence and rigour in Kondratieff theory should be concerning to those who believe in it. That there are variations in the pace of human progress is unarguable, and that there is a discernible cycle of them beyond mundane seasonal influences cannot be denied. But that is a cycle of credit, a factor which was at least partially understood by Bernstein, when he correctly surmised that the way to bury a post-war depression was by expanding the quantity of money. Bank credit cycles and inflation When the inflation of money supply is mostly that of bank credit, it is cyclical in nature. Its consequences for the purchasing power of the currency conforms with the cycle, but with a time lag. Furthermore, the effect is weaker in a population which tends to save than with one which tends to spend more of its income on immediate consumption. No further comment is required on this effect, other than to state that over the whole cycle of bank credit prices are likely to be relatively stable. This was the situation in Britain, which dominated the global economy for most of the period between the introduction of the gold sovereign following the 1816 Coinage Act until the First World War. Figure 1 confirms that despite fluctuating levels of bank credit, from 1822—1914 the general level of prices was broadly unchanged. The price effect of the expansion of coin-backed currency between the two dates and the increase in population offset the reduction of costs in production through a combination of improvements in production methods, technological developments, and increased volumes. What cannot be reflected in the graph is the remarkable progress made in improving the standards of living for everyone over the nineteenth century. The gold standard was abandoned at the start of the First World War, and the general level of prices more than doubled. Having seen prices rise during the war, in December 1919 the Cunliffe Committee recommended a return to the gold standard and the supply of currency was restricted from 1920 with this objective in mind. A gold bullion standard instead of a coin standard was introduced in 1925, tying sterling at the pre-war rate of $4.8665, which remained in place until 1931.[iv] From thereon, the purchasing power of the currency began its long decline as central bank money supply expanded. There is no long-term cyclicality in these changes. Following the abandonment of the gold standard, and in line with other currencies which abandoned gold convertibility in the 1930s sterling simply sank. The key to this devaluation is not fluctuations in bank credit, but the expansion of base currency. And there is no evidence of a Kondratieff, or any other long-term cycle of production. It can only be a monetary effect. The role of money in long waves It is worth bearing in mind that the so-called evidence discovered by Kondratieff was in the mind of a Marxist convinced that capitalism would fail. The downturn of a capitalist winter, or decline in growth — whatever definition is used, was baked in the anti-capitalist cake. The Marxists and other socialists were and still are all too ready to claim supposed failings of capitalism, evidenced in their eyes by periodic recessions, slumps, and depressions. Kondratieff’s economic bias may or may not have coloured his analysis — only by digging deeply into his own soul could he have answered that. But in the absence of firm evidence supporting his wave theory we should discard it. After all, there is a rich history of the religious zeal with which spurious theories in the fields of economics and money arise. The consequences of sunspot cycles and the supposed importance of anniversary dates are typical of this ouija board theme. Non-monetary cycle themes such as that devised by Kondratieff have socialism at their core. It is assumed that capitalists, bourgeois businessmen seeking through the division of labour to manufacture and supply consumer goods for profit, in their greed are reckless about commercial risks from overinvestment. This is nonsense. Fools are quickly discovered in free markets, and they are also quickly dismissed. Successful entrepreneurs and businessmen are very much aware of risk and do not embark on projects in the expectation they will be unprofitable, and it is therefore untrue to suggest that the capitalist system fails for this reason. To the contrary, markets that are truly free have been entirely responsible for the rapid improvement in the human condition, while it is government intervention that leads to periodic crises by interfering in the relationships between producers and consumers and setting in motion a cycle of interest rate suppression and currency expansion. Markets which are truly free deliver economic progress by anticipating consumer demands and deploying capital efficiently to meet them. It is no accident that economies with minimal government intervention deliver far higher standards of living than those micro-managed by governments. Hong Kong under hands-off British administration, with no natural resources and enduring floods of impoverished refugees from Mainland China stood in sharp contrast with China under Mao. Post-war East and West Germany, populated by the same ethnic people, the former communist and the latter capitalist, provides further unarguable proof that capitalism succeeds where socialism fails. Marxist socialism kills cycles by the most brutal method. It cannot entertain the economic calculations necessary to link production with anticipated demand. There is no mechanism for the redistribution of capital for its more efficient use. Consumption is never satisfied, and consumers must wait interminably for inferior products to be supplied. Any pretence at a cycle is simply suppressed out of existence. Almost all long-wave literature assumes that prices change due to supply and demand for commodities and goods alone, and never from variations in the quantity of money and credit. But even under a gold standard, the quantities of money and credit varied all the time. In Britain, and therefore in the rest of the financially developed world which adopted its banking practices, gold was merely partial backing for currency and bank deposits, which since the days of London’s goldsmiths also lubricated the creation of debt outside the banking system. While originally gold was used as coin money, since 1914 when Britain went off the gold coin standard even this role in transactions ceased. Having explained the random nature of free market capitalism, the difference from capitalistic banking must be explained. It owes its origin to London’s goldsmiths, who took in deposits to use for their own benefit, paying six per cent out of the profits they made by dealing in money. This evolved into fractional reserve banking which became the banking model for the British Empire and the rest of the world. As well as renewing the Bank of England’s charter, the Bank Charter Act of 1844 further legitimised fractional reserve banking by giving in to the Banking School’s argument that the amount of credit in circulation is adequately controlled by the ordinary processes of competitive banking. If banks acted independently from one another competing for customers and business, we might reasonably conclude that there would be from time-to-time random bank failures without cyclicality, as the Banking School argued. In capitalistic commerce, it is this process of creative destruction that ensures consumers are best served and an economy progresses to their advantage. But with banks, it is different. Each bank creates deposits which are interchanged between other banks, and imbalances are centrally cleared. Therefore, every bank has financial relations with its competitors and is exposed to its competitors’ counterparty risks, which if acted upon creates losses for themselves and other banks, risking in extremis a system-wide crisis. Banking is therefore a cartel whose members acting in their own interests tend to act in unison. In the nineteenth century his led to systemic crises, the most infamous of which were the Overend Gurney and Baring failures. It was to address this systemic risk that central banking took upon itself the role of lender of last resort, so that in future these failures would be contained. But this mitigation of risk merely strengthened the banking cartel even further, leading to the possibility of a complete banking and currency failure. And since bankers have limited liability and personally risk little more than their salary in the knowledge that a central bank will always backstop them, reckless balance sheet expansion is richly rewarded — until it fails. Fred “the shred” Goodwin, who grew a staid Royal Bank of Scotland to become the largest bank in Europe before it collapsed into government ownership was a recent example of the genre. It is these differences between banking and other commercial activities that drive a cycle of bank credit expansion and contraction while non-financial business activities cannot originate cycles. The state-sponsored structure of the banking system attempts to control it. Governments through their central banks also trigger a boom in business activity by suppressing interest rates as the principal means of encouraging the growth of currency and credit. The distortions created by these interventions and their continuence inevitably lead to a terminating crisis. As Ludwig von Mises put it: “The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." A long period of credit expansion with relatively minor hiccups ending in such a crisis could easily be confused with a Kondratieff 40—60-year cycle. But the error is to mistake its origins. Kondratieff tried to persuade us that the boom and bust was a feature of capitalist business failings when it is a currency and credit problem. The irony is that Stalin refused to admit even to an expansionary phase in capitalism, condemning Kondratieff to the gulags, and then a firing squad in 1938. He lived as a Marxist-Leninist and was executed by the system he venerated. Having identified the source of cycles as being a combination of state action and fluctuations in currency and credit in a state-sponsored banking system and not capitalistic production for profit, we can admit that there are further cyclical consequences. Whether they exist or not is usually a matter of conjecture. Purely financial cycles, such as Elliott Wave Theory, will also owe their motive forces to cycles of credit and not business activity. The effect on commodity and consumer prices Kondratieff wave followers claim that commodity bull and bear markets are the consequence of a K-wave spring and summer followed by autumn, when it tops out, and winter when it collapses before rising into the next K-wave cycle. But we have demonstrated that the K-wave is not supported by the evidence. Instead, changes in the general level of commodity prices are a function of changes in the quantity of money. And as we have seen, there is a base component and a cyclical component of bank credit. We must now refocus our attention from the long-run UK statistics shown in Figure 1 to the contemporary situation for the US dollar, in which commodities have been priced almost exclusively since the early 1970s. The chart from the St Louis Fed below is of an index of industrial materials from 1992. We can see why the Kondratieff myth might be perpetuated, with industrial material prices more than halving between 2011 and 2016. But these swings came substantially from the dollar side of prices, whose trade-weighted index rose strongly between these dates. Between 2016—2018 the dollar weakened, before strengthening into 2020. Clearly, it was the purchasing power of the dollar driving speculative as well as commercial flows in international commodity markets. In March 2020, the Fed reduced its fund rate to the zero bound and announced QE (money-printing) of an unprecedented $120bn every month. Figure 2 below shows the consequences for the general level of commodity prices. Since late-March, the components of this ETF have almost doubled in price, and after a period of consolidation appear to be increasing again. K-wave followers might conclude that it is evidence of a new Kondratieff spring or summer, with the global economy set for a new spurt of economic “growth”. But this ignores the expansion of the Fed’s balance sheet reflected in base money, which is the next FRED chart. The monetary base has approximately doubled since the Fed’s March 2020 stimulus, additional to the post-Lehman crisis expansion. The last expansion undermined the purchasing power of the dollar to a similar extent in terms of the commodity prices shown in Figure 2. Evidential consequences of price inflation Sudden increases in the money quantity have disruptive effects on markets for goods and services and the behaviour of individuals. As well as undermining a currency’s purchasing power, supplies of essential goods become disordered by unexpected shifts in demand. Throughout history there has been evidence of these inflationary consequences, often exacerbated by statist attempts to impose price controls. The Roman emperor Diocletian with his edict on maximum prices caused starvation for citizens, who were forced to leave Rome to forage for food in the surrounding countryside. The edict made the provision of food uneconomic, leading to extreme scarcity. During the reign of Henry I in England there was a monetary crisis in 1124 from the debasement of silver coins, which combined with a poor harvest drove up the prices of staples, causing widespread famine. The French revolution has been attributed to the insensitivity of royalty and the aristocracy to the masses; but it occurred at the time of the assignat inflation, which led to aggravated discontent among the lower orders and the storming of the Bastille. And today, we have widespread disruption of essential supplies, ranging from energy to carbonated foodstuffs. The lesson from history is it has only just started. Why today’s logistics and energy disruptions have only just started The problems arise because individuals’ knowledge of the relationship between money and goods comes from the immediate past. They use that knowledge to decide what to buy for future consumption, and if they are in business, for production. In the latter case, they might change inventory policies from today’s just-in-time practices to ensure an adequate stock of components is available, driving up demand for them and creating shortages of vital factors of production. Consumers faced with shortages will alter the balance between their money liquidity and goods for which they may not have an immediate need but expect to consume at a future date. Bank account balances and credit available on credit cards will be drawn down, for example, to fill their car tanks with fuel, even though no journey is planned. And as we see in the UK today, it rapidly leads to fuel shortages and rationing at the petrol pumps. While the authorities try to calm things down, either by denying there is a supply problem or by imposing price controls, consumers are likely to see these moves as propaganda and justification for reducing money liquidity even further by purchasing yet more goods. The flight out of currency liquidity has a disproportionate effect on prices, particularly for essentials. They will simply drive prices higher until no further price rises are expected. Or put more accurately, the value of the currency continues to fall. It is worth illustrating the problem for its true context. If on the one hand everyone decides they would rather have as much cash in hand money as possible rather than goods, prices will collapse. It is, as a matter of fact, a situation which cannot occur. If alternatively, everyone decides to dispose of all their liquidity by buying everything just to get rid of the currency, then the purchasing power of the currency sinks to zero. Unlike the former case, this can and does happen, when it becomes widely recognised that the currency might become worthless. In other words, a state-issued unbacked currency then collapses. Almost no one, so far, attributes today’s logistical and economic dislocations to monetary inflation, yet as pointed out above, empirical evidence points to a clear connection. Governments and central banks also seem unaware. But they appear to sense that there is an undefinable risk of consumer panic, making fuel and other shortages even worse. So far, the blame lies with logistic failures, which seem to be getting worse. Comments from leading central bankers, currently meeting in Portugal and organised by the ECB, confirm the official position of playing popular tunes while the ship goes down. The heads of the Fed, the ECB, the Bank of England, and the Bank of Japan are quoted in the Daily Telegraph as agreeing that staff shortages, shipping chaos and surging fuel costs are likely to cause further disruption as winter draws near. Andrew Bailey, Governor of the Bank of England, warned “…that the UK’s GDP will not recover to pre-pandemic levels until early next year”. But besides the Bank keeping a close watch on inflation, he commented that monetary policy can’t solve supply side shocks. Jay Powell admitted that at the margin apparently bottleneck and supply chain problems are getting marginally worse. But all the central bankers agreed that price pressures will be temporary. We can see from these comments a desire not to rock the boat and cause further panic among consumers. More worrying is the insistence that inflation remains a temporary problem. Unless there is a move to stop the monetary printing presses, they must believe it. It is confirmation that there is no intention to change monetary policy. But these problems are not restricted to the West. This week we learn that even China, which has followed a policy of restricting monetary growth, faces an energy crisis with coal at power plants critically low, and coal prices up fourfold. Energy is being rationed with production of everything from food and animal feedstuffs to steel and aluminium plants supplying other factories, which in turn face power outages. China is the world’s manufacturing hub. The United States relies on China’s exports. There were some seventy container ships at anchor or at drift areas off San Pedro earlier this week, but after dropping slightly the numbers are expected to rise again. And in China, there are delays at ports of more than three days in Busan, Shanghai, Ningbo and Yantian. Ship charter rates have rocketed from $10,000 a day to as much as $200,000.[ix] There can be no doubt as the northern hemisphere enters its winter that the consuming nations in America and Europe will see yet more product shortages, more price rises, and continuing logistics disruption. Central banks will become increasingly desperate to discourage consumers’ from hoarding items by claiming that shortages and price increases are transitory. What they fail to realise is that the consequences of currency debasement have led to consumption goods being wrongly priced, fuelling the shortages. These shortages can only be addressed by yet higher prices, even in the absence of further monetary debasement — until no further price increases are expected by consumers. But with massive and increasing government deficits to finance, central banks have no mandate to restrict the expansion of currency. An acceleration of monetary debasement as each unit of it buys less is therefore inevitable because consumers and businesses alike will begin to understand there is no limit to prices increasing. Left to its logical conclusion, the purchasing power of a currency falls exponentially until it has no value left. The speed at which it happens depends on the time taken for acting humans to realise what is happening. Unless it is stopped, an economy experiences what in the 1920s was described as a flight into real goods, or a crack-up boom. Economists today seem unable to comprehend the instability caused by monetary inflation. They adopt their models to ignore it. As von Mises put it, “The mathematical economists are at a loss to comprehend the causal relation between the increase in the quantity of money and what they call ‘velocity of circulation’". The confusion in the minds of central bank economists renders it unlikely that they will take the actions necessary to stop their currencies sliding towards worthlessness sooner rather than later. Central to resolving the problem is maintaining confidence that the currency will retain its purchasing power. But with the advent of cryptocurrencies, there is a growing proportion of the public who understand in advance of inflationary consequences that fiat currencies are being debauched at an accelerating rate. This represents a major change from the past, when, as Keynes put it supposedly quoting Lenin, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in one million is able to diagnose”. The fact that millions now do understand the currency is being debauched is likely to make it more difficult for the state to maintain confidence in the currency in these troubled times. We should know that what is happening to commodity prices is not some long-term Kondratieff wave, or any other wave with origins in production beyond purely seasonal factors. We can say unequivocally that the cause is in changing quantities of currency and bank credit. We can also see that there are yet further effects driving prices higher from the expansion of currency so far. We can expect currency expansion to continue, so prices of commodities and consumer goods will continue to rise. Or put in a way in which it is likely to become more widely understood as the current hiatus continues, the purchasing power of the currencies in which prices are measured will continue to fall. Tyler Durden Mon, 10/04/2021 - 21:40.....»»

Category: blogSource: zerohedgeOct 4th, 2021

Luongo: Energy Subsidies, Bitcoin, & The Socialist Takeover That Isn"t

Luongo: Energy Subsidies, Bitcoin, & The Socialist Takeover That Isn't Authored by Tom Luongo via Gold, Goats, 'n Guns blog, “When you subsidize something, you get more of it." - RON PAUL I have a friend who once described Bitcoin to me as an organism which feeds on electricity subsidies. Bitcoin searches out the lowest cost of electricity available and consumes as much of it as it can to produce profit for the miners, since electricity costs are their biggest costs. This is partly why China, for years, attracted the lion’s share of Bitcoin mining. Miners could co-locate next to hydroelectric power plants in China and suck up every extra available cheap and subsidized kilowatt-hour. This is the essence of the free market. It finds inefficiencies and exploits them as capital flows to where it is treated best. It may be ‘predatory’ from the central planners’ point of view, but they opened themselves up to this effect the moment they intervened by subsidizing the market in the first place. Bitcoin exposed a structural weakness in China’s electricity grid this summer which was under massive stress thanks to drought conditions there dimming the output of its hydroelectric generators. This is partly why Chairman Xi Jinping took the aggressive steps to kick the Bitcoin miners out of China this summer. He could see the real costs of electricity rising as coal, oil and natural gas prices skyrocketed but, because of rate subsidies to end-users, revenue to power generating companies was flat. It served him in other strategic ways, like kicking out the flow of Bitcoin within the Chinese economy, cutting down would-be mining company financial oligarchs and ultimately lessening competition for the Digital Yuan. The response from the Socialist is always the same, however. Today Russia is getting blamed for gas prices in Europe. Price gouging in a crisis a moral failure, not the original wealth transfer (itself a theft) from one group of people to another, which is what an electrical subsidy is. They see this as a market failure because to them the greater good is served by subsidizing certain aspects of the economy to achieve political and/or social goals. And, in some ways, they may be correct, but you’ll never know it because there can be no rational calculation of the costs versus the benefits, c.f. Mises’ critique of Socialism from 1921. You see, the market is neutral. It doesn’t have a perspective other than expressing the very human response of seeing an arbitrage opportunity and exploiting it. Rather than being a failure of the free market, Bitcoin miners seeking out and exposing the unsustainability of electricity subsidies is a massive success of market principles. It is firmly rooted in actual human behavior rather than some fantastical one created by a central committee and the force of the gun. China kicking out the Bitcoin miners only forestalled the day of reckoning for its energy industry because their presence was a symptom of a deeper problem not the source of the problem itself. Today, four months later China is now rationing electricity to force demand down. Rather than let market forces raise the prices, divert capital away from energy intensive (and possibly uneconomic) activity and give accurate signals to producers and consumers, China will do the authoritarian thing to blame the people and take away a basic function of a first world society. This is a simple, yet dramatic, example of what’s fundamentally wrong with the world we live in today. China isn’t the only one guilty of this. Subsidies like these are everywhere and they do nothing except create pricing dislocations which attract massive amounts of capital creating economic bubbles in price. If you’re wondering where this headline could come from: Zerohedge answers it with the pullquote. In fact, it is the Austrian School critique of these subsidies which is its core competency; to explain in real terms why government intervention in a market ultimately subsidizes overinvestment in one activity at the expense of another. Capital at any given moment is finite. That means there is competition for it ceteris paribus. That competition means that if better profits can be made mining Bitcoin in China rather than building a new road or gas pipeline, then that’s what will happen. We can create more capital but that requires time, ingenuity and labor. Capital compounds at a pretty linear rate and all we do with things like deficit spending is pull forward capital from the future to subsidize production in the present. Today we produce far more electricity than we use. It’s estimated that as much as 30% of global electricity goes to ground. Bitcoin uses up less than 0.5% of that wasted electricity. It’s actually performing a major market function to blow apart these layers of bureaucratic insanity by preying on a fraction of this over-production. Since prices are set at the margin, small demand or supply shocks can create massive spikes or drops in price if the market is operating at peak capacity. If you really stop to think about it, it’s quite astounding that the world’s economic system is this vulnerable to this basic application of free market principles. Today Bitcoin mining is co-locating next to the cheapest electricity produced on the planet, next to volcanos and nuclear power plants. It’s coming to America in a big, big way where it will further expose rural electrical subsidies here in the U.S. just like it did in China. But, for now, this organism is healthy, strong and in no danger of dying from the heavy hand of inept socialists. French Fried Grid Lines What prompted this article was my reading with a certain perverse glee that France is dealing with the same problem China has but in a different way. They are now suspending a planned tax hike in electricity tariffs because prices to the French consumer are spiking thanks to rising gas, oil and coal prices that its nuclear power infrastructure can’t overcome. Even if France fully passed on the input cost rises to the consumer, the tariffs the government charges for using electricity are another form of subsidy, not to the electricity generator, but to government itself. Why was France considering raising taxes on electricity during a global energy price spike? Because its government spends too much money, doing what…? …regulating its economy, which it has done an objectively miserable job of. So, to subsidize its bloated and now openly tyrannical government France wanted to squeeze its citizens for more money to keep that arrangement in place: to fund The Davos Crowd’s mandates about COVID-9/11 vaccines, restrictions on travel, blasting protestors with water cannons… you know, protecting and serving the public. But with massive protests around the country and the people’s falling confidence and patience with its government, France had to back off lest this latest tax hike enflame passions there even more six months out from a Presidential election. In typical central planner Newspeak they called the simple act of not raising taxes, the ultimate form of government aggression, ‘price protection.’ It’s patently absurd for them to frame it this way when the last thing the French government actually does is protect its people, except those that work for it, from, well, anything. He {French Prime Minister Jean Castex} said any new natgas tariffs following Friday’s scheduled 12.6% hike would be postponed until prices decrease in late March/April, adding that it will shield 5 million households who are on floating-rate contracts. Castex said the French government would lower taxes on power prices, capping the scheduled increase in residential electricity tariffs at 4% in February. In the midst of an energy price crisis the French government, in a blatant pander to voters for the 2022 election, not only scrapped raising taxes but also further subsidized lower income households, encouraging them to use even more electricity and worsening the government’s fiscal position. Someone has to pay to move those electrons around just not those that might vote to re-elect Emmanuel Macron. These are decisions not made with any long-term economic benefits in mind, but rather the most crass short-term political consequences trying to put a band-aid on a government-inflicted wound on the people themselves. “The government is good at one thing. It knows how to break your legs, and then hand you a crutch and say, ‘See if it weren’t for the government, you wouldn’t be able to walk.” - HARRY BROWNE Capital Gone Walkabout Meanwhile, Germany is now running out of coal, as a major coal power plant there had to shut down because it ran out. German utility Steag halted its coal-fired power plant Bergkamen-A after it ran out of hard coal supplies amid an energy crunch globally and logistics challenges domestically, the company told Bloomberg on Friday. “We are short of hard coal,” Steag spokesman Daniel Muhlenfeld told Bloomberg via email. Germany has been the poster child for Europe’s Quixotic quest for carbon-neutrality. What it’s wound up with is windmills not spinning (and the birds chirped in excitement), solar panels covered in snow when the cloud cover clears and gas prices never before seen in history, at over $1200 per thousand cubic meters. Oil prices keep trying to fall and new conflicts and controls keep trying to push the price higher, be it from OPEC+ members trying to subsidize their national governments, or the U.S. actively pushing supply off the market to subsidize its LNG exports. But, none of the price rise is because we’re running out but because supply is being artificially restricted by central planners wanting to create a false reality. How does anyone expect the mighty German industrial economy to absorb these costs without some kind of output slowdown? The answer is no one. In fact, if you think through the situation, it’s clear Davos is happy about this because this puts downward pressure on growth, starving out Germany’s powerful industrial and middle class, who stand confused as to the cause, if the results of the election there are any indication. Because those people produce wealth. Growing wealth to those of limited understanding is problematic. If the world is finite, they argue, growth must be finite. That’s only true, however, at any single point on the timeline of our understanding of the universe. Tomorrow we’ll figure out some new thing, some new efficiency, material or overcome some obstacle we didn’t have time for yesterday. We’ll take our surplus time we earned as profit today and deploy it to fix some other problem tomorrow, opening up new pathways for growth. But this type of growth, where it isn’t directed by oligarchs and governments who stand in front of them, is somehow evil or unsustainable. Yeah, for them. For the past fifty years they’ve been telling us peak oil would end modern civilization and yet, absent their manipulations of energy markets through lockdowns, wars, currency manipulation and regulation, the real price of oil has risen just 12% over the past fifty years, when indexed for inflation, which they manipulate to the downside to sustain their power. One could easily argue that today’s price shocks aren’t any more sustainable than any other commodity whose supply and demand fundamentals are driven by politics more than they are the markets themselves. Remove those obstacles and I bet we’ll see oil production subsidies driven out of the market the same way that bitcoin drove China and France to ‘protect consumers’ from electricity subsidies. We had to invent a new word to describe the fight over energy, geopolitics, because of our adherence to the socialists’ maleducation on basic human behavior. We also had to invent a new definition of inflation in the age of money unmoored from the stored energy of gold and other hard assets, based on prices not the supply of money. Instead of basing our money on our past work, tokenized by gold, they gave us a money based on what we will produce for them, debt. What I didn’t show in the above graph is the stability of oil in real terms before we entered this era. All Malthusian arguments about the end of cheap energy are themselves indefensible and unsustainable and yet that is all we are ever told is coming. They deny the Marginal Revolution (1871-74) in economics, which negated all of Marx’s complaints about capitalism before his death (1883), and yet his idiotic ideas fuel the unquenchable thirst for power of midwit oligarchs and the envy of their socialist useful idiots. When someone is lying to you, you really owe it to yourself to ask why. Davos has broken the world supply chain for energy for the sole purpose of proving a point that history itself has already debunked, Facebook be damned. They do this, nominally, in the name of sustainability, arguing the wastefulness of capitalism is the end state of it. But, as I’ve already shown with bitcoin and electricity, oil and money printing, it is the over-production of something through subsidization that creates unsustainable waste and malinvestment which eventually has to be liquidated in a rational system. But instead of bowing to the rational, ending that system of privilege for them, they make the monetary system ever more irrational to the point of absurdity. Last year, Paul Krugman was calling the $1 trillion coin “an accounting gimmick” that “wouldn’t even fool anyone”, now he’s all in on the illegal power grab with a New York Times column headlined, “Biden Should Ignore the Debt Limit and Mint a $1 Trillion Coin”. That only took a little over a year.   The End of Socialism This brings me to the final point of this essay. They are losing. They are losing not because they aren’t powerful or aren’t making our lives miserable but because their system of subsidy, which produces unearned wealth (or rent) for them is failing rapidly. They embarked on this Great Reset solely for the purpose of defaulting on their socialist promises made by buying off present generations with the labor of future generations. We call this in modern parlance debt. Now that the debt is unpayable and the future liabilities of their governments overwhelming everything they have unleashed a torrent of policies around the world to starve, freeze and kill off entire generations of taxpayers who they can’t afford to bribe anymore. COVID-9/11, no matter how you look at it, as a political operation has shortened lifespans in the U.S. by 18 months in 2020, according to the CDC. What will those numbers look like in 2021? This is a radical contraction which lifted trillions of unfunded liabilities in Social Security and Medicare payments from future U.S. governments. And they call libertarians heartless? Draw your own conclusions from this but I think you know what it means. Davos is purposefully shrinking the division of labor in order to prove the Marxist critique of capitalism correct when it has done nothing but lift billions out of poverty which the Malthusian central planners told us a century ago then was unsustainable. Central planners aren’t rational. They are simply tyrants who prey on the fear and weakness of people grown soft through abundance. Because in their mind sustainability is only measured by the continuity of their power over society not the actual economics of that society. The instability, chaos and conflict come from their inability to accept that someone else may have a better solution to society’s problems than they do. And what truly keeps them up at night is the gnawing feeling that the best system is the one where no one person or group of people could ever manage a system as complex and dynamic as seven-plus billion people acting in their own self-interest creating a spontaneous and self-correcting order which doesn’t need their help. When I look out today and see bills in the U.S. Congress to deny unvaccinated people from flying or children from getting an education all I see is a failing system of energy distribution and subsidy trying to protect itself from the ravages of its own stupidity. I’ve said it before and I’ll say it again here, power doesn’t prove you’re smart, it simply makes you stupid. Bitcoin, among other technologies, is slowly eating away at these unsustainable markets while the socialists in China, France and yes, Washington D.C. scramble to keep the central planners’ dream alive of a world where they control access to everything you need to live your most productive life. They are scared to death of a private banking system that doesn’t need them or a division of labor that coordinates production where their toll booths can’t collect. To them we are just livestock to be farmed, batteries to be discharged and liabilities on their balance sheets to be written down. Energy isn’t scarce, it is abundant. Human energy, that is. Oil is finite. So is gas. So is coal. But until we properly price its costs, we’ll never figure out what’s the best replacement for them and at what point in time that change should occur. Between now and then it will be a long, cold winter. “I know you’re out there. I can feel you now. I know that you’re afraid. You’re afraid of us. You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin. I’m going to hang up this phone, and then I’m going to show these people what you don’t want them to see. I’m going to show them a world without you, a world without rules and controls, without borders or boundaries, a world where anything is possible. Where we go from there, is a choice I leave to you.”. - NEO, THE MATRIX *  *  * Join my Patreon if you want to subsidize the truth BTC: 3GSkAe8PhENyMWQb7orjtnJK9VX8mMf7ZfBCH: qq9pvwq26d8fjfk0f6k5mmnn09vzkmeh3sffxd6rytDCR: DsV2x4kJ4gWCPSpHmS4czbLz2fJNqms78oELTC: MWWdCHbMmn1yuyMSZX55ENJnQo8DXCFg5kDASH: XjWQKXJuxYzaNV6WMC4zhuQ43uBw8mN4VaWAVES: 3PF58yzAghxPJad5rM44ZpH5fUZJug4kBSaETH: 0x1dd2e6cddb02e3839700b33e9dd45859344c9edcDGB: SXygreEdaAWESbgW6mG15dgfH6qVUE5FSE Tyler Durden Sun, 10/03/2021 - 13:32.....»»

Category: blogSource: zerohedgeOct 3rd, 2021

Indigenous communities were the originators of sustainability management. Here are 3 of their best practices.

Indigenous communities have been practicing several kinds of sustainable strategies for thousands of years. Executives can learn from them. It's worth listening to the people who know forests best. Marco Bottigelli/Getty Images More companies are investing in sustainability methods with roots in Indigenous cultures. Indigenous communities have long-term experience with several climate solutions. Corporations can also learn adaption and risk-management methods from Indigenous cultures. Sustainability is now a major issue for many corporations and governments, especially with the upcoming United Nations Climate Change Conference and the publication of the latest report from the Intergovernmental Panel on Climate Change. But sustainability has been a central operating principle for Indigenous communities for hundreds of years, through strategies like controlled burns and regenerative agriculture that are designed to establish a long-term balance between human activity and the natural world.The World Bank defines Indigenous communities as "distinct social and cultural groups that share collective ancestral ties to the lands and natural resources where they live." Corporate executives developing and investing in sustainability strategies can learn from their best practices, especially in industries like agriculture, fishing, and land management.Indigenous communities are among the groups most vulnerable to the climate crisis because of lower incomes, fewer resources, and often isolated geographic locations. But research indicates how they've maintained a wide variety of plants and animals across many conditions, and the UN has recognized their development of successful and cost-effective adaptation measures.Companies may also be considering solutions to the climate crisis without knowing how they borrow from Indigenous cultures.Here are three of the most important ones to know about:1. Rotational farmingInstead of fields dominated by one or a few kinds of crops, rotational farming (also known as swidden agriculture or shifting cultivation) involves planting a large variety of crops to maximize resources and allow for harvesting over different periods. A UN report says this method yields a more varied inventory for food and medicinal uses, reduces risk due to changes in weather or other growing conditions, and helps increase soil fertility and species adaptations.2. Regenerative agricultureA more popular term than rotational farming, regenerative agriculture is described as "any and all forms of agricultural practice that actively restore soil quality, biodiversity, ecosystems health, water quality while producing sufficient food of high nutritional quality." Benefits can include a higher quality of life for farmers, higher profits, and more carbon trapped in the ground than conventional farming methods. Large companies like Timberland, Kering, Allbirds, Patagonia, General Mills, and Nestlé have poured millions of dollars into figuring out how their suppliers can help restore soil and become one of the solutions to the climate crisis.3. Forestry managementThe UN has estimated that just in Latin America, Indigenous and tribal peoples are involved in the communal governance of 320 million to 380 million hectares of forests, which are crucial in holding and filtering carbon.Indigenous peoples have been setting controlled, deliberate burns for thousands of years. These strategic, purpose-driven fires promote the growth of food sources like morel mushrooms and animal species like deer and salmon. They also help clear underbrush and open pasture lands.However, for most of the 20th century, the federal fire policy in the US stressed suppression, aimed at protecting watersheds, communities, and commercial lumber sources. Only recently have Indigenous groups' valuable experience in and knowledge of controlled burning to help prevent much more expensive and catastrophic damage to homes and communities become widely understood.Corporations need to be aware of this issue because of the amount of Indigenous forest area that has been cut down for commercial uses such as large-scale palm-oil production in Indonesia and cattle ranching in Brazil.While there may be short-term economic gains from not cooperating with Indigenous communities, it is important to remember the long-term costs to everyone from the use of herbicides, pesticides, and fertilizers; increased water pollution; burned forests; and infertile land.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 30th, 2021

The 10 nonfiction books on the 2021 National Book Award longlist

This year's finalists for the National Book Award for nonfiction include books by Hanif Abdurraqib, Clint Smith, Grace M. Cho, and Heather McGhee. When you buy through our links, Insider may earn an affiliate commission. Learn more. This year's finalists for the National Book Award for nonfiction include books by Hanif Abdurraqib, Clint Smith, Grace M. Cho, and Heather McGhee. Amazon; Alyssa Powell/Insider The National Book Foundation recently published its longlist for the nonfiction National Book Award. Find the complete 2021 longlist of the 10 best nonfiction titles below. Want more books? Check out the 2021 National Book Award longlists for fiction and poetry. Every summer since 1989, five National Book Award judges have spent long sunny days reviewing over 500 nonfiction books to determine the best US nonfiction books published that year. Their top 10 are published in a longlist in September, narrowed to the top five in a shortlist in October. On November 17, one winner is awarded the National Book Award in nonfiction. Past winners include Joan Didion's "The Year of Magical Thinking," Patti Smith's memoir "Just Kids," Ta-Nehisi Coates' "Between the World and Me," and Ibram X. Kendi's "Stamped from the Beginning: The Definitive History of Racist Ideas in America." The winners receive $10,000, and finalists receive $1,000. Both can expect an uptick in book sales and prestige. The 10 books on the 2021 National Book Award longlist for non-fiction:Descriptions are provided by Amazon and edited lightly for length and clarity. "A Little Devil in America: Notes in Praise of Black Performance" by Hanif Abdurraqib Amazon Available at Amazon and Bookshop from $15.99At the March on Washington in 1963, Josephine Baker was 57 years old, well beyond her most prolific days. But in her speech, she was in a mood to consider her life, her legacy, and her departure from the country she was now triumphantly returning to. "I was a devil in other countries, and I was a little devil in America, too," she told the crowd. Inspired by these few words, Hanif Abdurraqib has written a profound and lasting reflection on how Black performance is inextricably woven into the fabric of American culture. Each moment in every performance he examines — whether it's the 27 seconds in "Gimme Shelter" in which Merry Clayton wails the words "rape, murder," a schoolyard fistfight, a dance marathon, or the instant in a game of spades right after the cards are dealt — has layers of resonance in Black and white cultures, the politics of American empire, and Abdurraqib's own personal history of love, grief, and performance. "Running Out: In Search of Water on the High Plains" by Lucas Bessire Amazon Available at Amazon and Bookshop from $19.69The Ogallala aquifer has nourished life on the American Great Plains for millennia. But less than a century of unsustainable irrigation farming has taxed much of the aquifer beyond repair. Anthropologist Lucas Bessire journeyed back to western Kansas, where five generations of his family lived as irrigation farmers and ranchers, to try to make sense of this vital resource and its loss. His search for water across the drying High Plains brings the reader face to face with the stark realities of industrial agriculture, eroding democratic norms, and surreal interpretations of a looming disaster. Yet the destination is far from predictable, as the book seeks to move beyond the words and genres through which destruction is often known. Instead, this journey into the morass of eradication offers a series of unexpected discoveries about what it means to inherit the troubled legacies of the past and how we can take responsibility for a more inclusive, sustainable future. "Tastes Like War: A Memoir" by Grace M. Cho Amazon Available at Amazon and Bookshop from $16.51Grace M. Cho grew up as the daughter of a white American merchant marine and the Korean bar hostess he met abroad. They were one of few immigrants in a xenophobic small town during the Cold War, where identity was politicized by everyday details — language, cultural references, memories, and food. When Grace was 15, her dynamic mother experienced the onset of schizophrenia, a condition that would continue and evolve for the rest of her life.Part food memoir, part sociological investigation, "Tastes Like War" is a hybrid text about a daughter's search through intimate and global history for the roots of her mother's schizophrenia. In her mother's final years, Grace learned to cook dishes from her parent's childhood in order to invite the past into the present, and to hold space for her mother's multiple voices at the table. And through careful listening over these shared meals, Grace discovered not only the things that broke the brilliant, complicated woman who raised her — but also the things that kept her alive. "The Ground Breaking: An American City and Its Search for Justice" by Scott Ellsworth Amazon Available at Amazon and Bookshop from $21.49And then they were gone.More than 1,000 homes and businesses. Restaurants and movie theaters, churches and doctors' offices, a hospital, a public library, a post office. Looted, burned, and bombed from the air. Over the course of less than 24 hours in the spring of 1921, Tulsa's infamous "Black Wall Street" was wiped off the map — and erased from the history books. Official records disappeared, researchers were threatened, and the worst single incident of racial violence in American history was kept hidden for more than 50 years. But there were some secrets that would not die.A riveting and essential new book, "The Ground Breaking" not only tells the long-suppressed story of the notorious Tulsa Race Massacre. It also unearths the lost history of how the massacre was covered up, and of the courageous individuals who fought to keep the story alive. Most importantly, it recounts the ongoing archaeological saga and the search for the unmarked graves of the victims of the massacre, and of the fight to win restitution for the survivors and their families. "Covered with Night: A Story of Murder and Indigenous Justice in Early America" by Nicole Eustace Amazon Available at Amazon and Bookshop from $18.32On the eve of a major treaty conference between Iroquois leaders and European colonists in the distant summer of 1722, two white fur traders attacked an Indigenous hunter and left him for dead near Conestoga, Pennsylvania. Though virtually forgotten today, this act of brutality set into motion a remarkable series of criminal investigations and cross-cultural negotiations that challenged the definition of justice in early America.An absorbing chronicle built around an extraordinary group of characters — from the slain man's resilient widow to the Indigenous diplomat known as "Captain Civility" to the scheming governor of Pennsylvania — "Covered with Night" transforms a single event into an unforgettable portrait of early America. "The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together" by Heather McGhee Amazon Available at Amazon and Bookshop from $20.90What would make a society drain its public swimming baths and fill them with concrete rather than opening them to everyone? Economics researcher Heather McGhee sets out across America to learn why white voters so often act against their own interests. Why do they block changes that would help them, and even destroy their own advantages, whenever people of color also stand to benefit? Their tragedy is that they believe they can't win unless somebody else loses. But this is a lie. McGhee marshals overwhelming economic evidence, and a profound well of empathy, to reveal the surprising truth: even racists lose out under white supremacy. And US racism is everybody's problem. As McGhee shows, it was bigoted lending policies that laid the ground for the 2008 financial crisis. There can be little prospect of tackling global climate change until America's zero-sum delusions are defeated. Note: This is set to be adapted as a Spotify Podcast series by Barack and Michelle Obama's production company, Higher Ground. "The Free World: Art and Thought in the Cold War" by Louis Menand Amazon Available at Amazon and Bookshop from $20.49How did elitism and an anti-totalitarian skepticism of passion and ideology give way to a new sensibility defined by freewheeling experimentation and loving the Beatles? How was the ideal of "freedom" applied to causes that ranged from anti-communism and civil rights to radical acts of self-creation via art and even crime? With the wit and insight familiar to readers of "The Metaphysical Club" and his New Yorker essays, Menand takes us inside Hannah Arendt's Manhattan, the Paris of Jean-Paul Sartre and Simone de Beauvoir, Merce Cunningham and John Cage's residencies at North Carolina's Black Mountain College, and the Memphis studio where Sam Phillips and Elvis Presley created new music for the American teenager. Stressing the rich flow of ideas across the Atlantic, he also shows how Europeans played a vital role in promoting and influencing American art and entertainment. By the end of the Vietnam era, the American government had lost the moral prestige it enjoyed at the end of the Second World War, but America's once-despised culture had become respected and adored. With unprecedented verve and range, this book explains how that happened.Note: Menand's earlier book "The Metaphysical Club" won the Pulitzer Prize in 2002. "All That She Carried: The Journey of Ashley's Sack, a Black Family Keepsake" by Tiya Miles Amazon Available at Amazon and Bookshop from $24.99In 1850s South Carolina, an enslaved woman named Rose faced a crisis, the imminent sale of her daughter Ashley. Thinking quickly, she packed a cotton bag with a few precious items as a token of love and to try to ensure Ashley's survival. Soon after, the nine-year-old girl was separated from her mother and sold.Decades later, Ashley's granddaughter Ruth embroidered this family history on the bag in spare yet haunting language — including Rose's wish that "It be filled with my Love always." Ruth's sewn words, the reason we remember Ashley's sack today, evoke a sweeping family story of loss and of love passed down through generations. Now, in this illuminating, deeply moving new book inspired by Rose's gift to Ashley, historian Tiya Miles carefully unearths these women's faint presence in archival records to follow the paths of their lives — and the lives of so many women like them — to write a singular and revelatory history of the experience of slavery, and the uncertain freedom afterward, in the United States. "How the Word Is Passed: A Reckoning with the History of Slavery Across America" by Clint Smith Amazon Available at Amazon and Bookshop from $17.84Beginning in his hometown of New Orleans, Clint Smith leads the reader on an unforgettable tour of monuments and landmarks — those that are honest about the past and those that are not — that offer an intergenerational story of how slavery has been central in shaping our nation's collective history, and ourselves.It is the story of the Monticello Plantation in Virginia, the estate where Thomas Jefferson wrote letters espousing the urgent need for liberty while enslaving more than four hundred people. It is the story of the Whitney Plantation, one of the only former plantations devoted to preserving the experience of the enslaved people whose lives and work sustained it. It is the story of Angola, a former plantation–turned–maximum-security prison in Louisiana that is filled with Black men who work across the 18,000-acre land for virtually no pay. And it is the story of Blandford Cemetery, the final resting place of tens of thousands of Confederate soldiers.A deeply researched and transporting exploration of the legacy of slavery and its imprint on centuries of American history, "How the Word Is Passed" illustrates how some of our country's most essential stories are hidden in plain view—whether in places we might drive by on our way to work, holidays such as Juneteenth, or entire neighborhoods like downtown Manhattan, where the brutal history of the trade in enslaved men, women, and children has been deeply imprinted. "The Black Civil War Soldier: A Visual History of Conflict and Citizenship" by Deborah Willis Amazon Available at Amazon and Bookshop from $31.50Though both the Union and Confederate armies excluded African American men from their initial calls to arms, many of the men who eventually served were Black. Simultaneously, photography culture blossomed ― marking the Civil War as the first conflict to be extensively documented through photographs. In The Black Civil War Soldier, Deb Willis explores the crucial role of photography in (re)telling and shaping African American narratives of the Civil War, pulling from a dynamic visual archive that has largely gone unacknowledged.With over seventy images, "The Black Civil War Soldier" contains a huge breadth of primary and archival materials, many of which are rarely reproduced. The photographs are supplemented with handwritten captions, letters, and other personal materials; Willis not only dives into the lives of Black Union soldiers, but also includes stories of other African Americans involved with the struggle ― from left-behind family members to female spies. Willis thus compiles a captivating memoir of photographs and words and examines them together to address themes of love and longing; responsibility and fear; commitment and patriotism; and ― most predominantly ― African American resilience. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 27th, 2021