Tag: economy

Lessons From Germany’s Economic Contraction

Germany’s once-envied efficient economy is in freefall, and the climate change cult and European Green Deal are directly to blame. State policies subsidizing EVs and other products, shutting down coal and nuclear plants, and mandating forced conversion to untested, unimplemented “renewables” resources for energy have decimated industrial efficiency. Industries and blue-collar jobs are fleeing Germany for polluting, profitable operations in China, India, and elsewhere abroad. Will the United States follow suit?

As natural gases skyrocket during a European cold snap, and Russian gas pipelines through Ukraine are shut down for the first time since 1991, Germany has transitioned from Europe’s economic darling to its leading economic anchor. Followed closely by France and the UK, similarly weighted by economically destructive climate fantasies that are crashing to Earth like ideological meteors, the latest blow to gas supplies compounds the crisis occasioned by the mysterious sabotage of Nord Stream 1 and 2.

The results of this disastrous state-controlled economic carbon dioxide experiment continue to be as evident as explosives in a controlled demolition. Germany terminated massive EV subsidies at the end of 2023; EV sales promptly fell 69%. Despite gushing economic promises of “high-paying jobs” in the renewables industry, Germany announces more layoffs almost daily. Chinese companies, unhindered by escalating energy and regulatory costs, are leading in EV and other manufacturing technologies while spewing more chemicals into the ecosystem than German manufacturing industries.

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Why America Is in So Much Trouble

Shortly before Milton Friedman’s death in 2006, I had the privilege of interviewing him over dinner in San Francisco. The last question I asked him was: What are the three things we have to do to make America more prosperous?

His answer I have never forgotten: “First, allow universal school choice; second, expand free trade; third and most importantly, cut government spending.” That was long before Barack Obama and Joe Biden came along.

There aren’t too many problems in America that can’t be traced back to the growth of big and incompetent government.

It is notable that the two big bursts of inflation during modern times both occurred when government spending exploded. The first was the gigantic expansion of the Lyndon B. Johnson “war on poverty” welfare state in the 1970s with prices nearly doubling. Second was the post-COVID-19 spending blitz in the last year of Donald Trump’s first term, followed by the Biden $6 trillion spending spree, with the Consumer Price Index sprinting from 1.5% to 9.1%.

Coincidence? Maybe. But I doubt it.

The connection between government flab and the decline in the purchasing power of the dollar is obvious. In both cases the Washington spending blitz was funded by Federal Reserve money printing. The helicopter money caused prices to surge. (I still find it laughable that 11 Nobel Prize-winning economists wrote in the New York Times in 2021 that the Biden multitrillion-dollar spending spree wouldn’t cause inflation. Were they on hallucinogenic drugs?)

The avalanche of federal spending hasn’t stopped even though the COVID-19 pandemic ended over a year ago. We are three months into the 2025 fiscal year and on pace to spend an all-time-high $7 trillion and borrow $2 trillion. If we stay on this course, the federal budget could reach $10 trillion over the next decade.

This road to financial perdition cannot stand. It risks blowing up the Trump presidency.

Upon entering office, Trump should on day one call for a package of up to $500 billion of rescissions — money the last Congress appropriated but has not been spent yet. Canceling the green energy subsidies alone could save nearly $100 billion. Why are we still spending money on COVID-19?

We could save tens of billions of dollars by ending corporate welfare programs — such as the wheelbarrows full of tax dollars thrown at companies like Intel in the CHIPS Act. The Elon Musk Department of Government Efficiency is already identifying low-hanging fruit that needs to be cut from the tree.

Along with extending the Trump tax cut of 2017, this erasure of bloated federal spending is critical for economic revival and for reversing the income losses to the middle class under Biden.

This is especially urgent because the curse of inflation is NOT over. Since the Fed started cutting interest rates in October, commodity prices are up nearly 5%, and mortgage rates have again hit 7%, in part because the combination of cheap money and government expansion is a toxic economic brew — as history teaches us.

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Seattle Set Minimum Wage Over $20 and You’ll Totally Believe What Happened Next

Seattle closed the door on the subminimum wage for people who work for small businesses, earn tips, or enjoy medical benefits under a punishing new minimum wage law. This forced one popular spot to close up shop the same day the new ordinance went into effect.

“Previously, if an employee earned at least $2.72 per hour in medical benefits or tips,” Fox 13 Seattle reported, “a business could pay its workers $17.25 per hour.” As of New Year’s Day, all the exceptions and exemptions are gone. Seattle’s new no-excuses minimum wage is now a payroll-busting $20.76 an hour.

Bebop Waffle Shop threw a big party on Dec. 31 and permanently locked its doors on Jan. 1. My shocked face was last seen sipping a brandy by the fire and reading a dog-eared copy of Milton Friedman’s “Why Government Is the Problem.” That’s my amusingly wordy way of saying that I totally believe it happened.

The local diner’s finances were already suffering due to inflation and lower downtown foot traffic. It was against this economic backdrop that the city chose to impose a 20% pay hike on restaurant workers because politicians put moral preening and virtue signaling ahead of any other considerations.

Then there’s the part I didn’t believe at first but, on reflection, seemed almost inevitable. “I hate to close a safe space for queer people at this time,” Bebop Waffle Shop owner Corina Luckenbach explained on Instagram, “but the money just isn’t there after the minimum wage increase (which I fully support).”

Emphasis added because some folks are just too far gone ever to take the red pill. Still, you want to grab Corina by the hoodie and explain things to her in words she’ll understand, tell her, “Minimum wage laws are bad for queer people and other living things, mmkay?”

Anthony Anton, head of the Washington Hospitality Association, estimated that Seattle will see 5%-8% of its restaurants go out of business — in 2025 alone.

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Fiat Money And Dark Forces At Work

The Bible recounts how the Holy Spirit led Jesus into the wilderness to be tempted by the devil. The devil appeared and first wanted Jesus to turn stones into bread. (In fact, Mises criticized Keynesianism, saying, “the stones do not turn into bread”). Jesus refused. Then, the devil challenged Jesus to throw himself from the pinnacle of the temple in the holy city, asserting that the angels would catch him. Again, Jesus refused. But the devil did not give up. In Matthew 4:8–11, it says:

Again, the devil took Him to a very high mountain and showed Him all the kingdoms of the world and their splendor. 9And he said to Him, “I will give you all these things if you will fall down and worship me.” 10Then Jesus told him, “Go away, Satan! For it is written: Worship the LORD your God, and serve only Him.” 11Then the devil left him, and angels came and began to serve him.”

The last temptation is particularly significant. The devil promises Jesus “all the kingdoms of the world and their splendor,” meaning all power and wealth there is. Jesus resisted this temptation as well. However, humans, in their imperfection, often and all too easily fail in resisting similar temptations. For instance, the rulers and the ruled in the Western world have long succumbed to a particularly devilish temptation: replacing commodity (or precious metal) money with state-issued, unbacked money, known as fiat money. In a sense, they have been seduced by the tempting prospect of securing “all the kingdoms of the world and their splendor,” that is, the power to increase the quantity of money arbitrarily and in unlimited amounts at any time. The temptation to centrally control the economy was irresistible.

The transition from gold to fiat money happened quite some time ago. Many people probably no longer remember August 15, 1971, when the end of the gold-backed monetary system was announced. On that day, the US administration under President Richard Nixon (1913-1994) declared that the US dollar would no longer be redeemable in gold. And, with the end of the dollar’s gold backing, a global fiat money system was effectively created, a system in which all major currencies are literally produced “out of thin air.” But why did the shift away from commodity, or gold-backed, currencies occur?

The US took this step to avoid impending insolvency. The amount of US dollars it had issued over the years far exceeded the amount of gold the US Treasury had in its vaults, and which was redeemable at 35 US dollar per ounce (31.10… grams) of physical gold. By the late 1960s, more and more countries with US dollar reserves began converting their greenbacks into physical gold at the Federal Reserve Bank in New York. It became evident to the Nixon administration that sooner or later the US would no longer be able to fully redeem the dollar for gold. To avoid insolvency, the Americans simply suspended the gold convertibility of the US dollar “temporarily.”

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US Credit Card Defaults Soar To Crisis Highs As Inflation Storm Crushes Working-Poor

The party is long over for the bottom third of US consumers, as maxed-out credit cards and depleted personal savings have pushed credit card loan defaults to their highest level since the 2008 financial crisis.

Financial Times cited new data from BankRegData revealing that credit card companies wrote off $46 billion in “seriously delinquent loan” balances in the first nine months of the year—an alarming 50% increase from the same period last year and the highest level in 14 years.

US credit debt recently surpassed $1 trillion and continues to expand rapidly. Making matters worse, annual percentage rates (APRs) on credit card debt have hit record highs, compounding the financial misery for cash-strapped consumers in the era of failed ‘Bidenomics’. 

Despite the interest rate cut, the average APR on credit card debt reached a new record at the end of the third quarter. 

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Every Bureaucrat Destroys 138 Jobs

An Auburn University study says every single regulator destroys fully 138 private sector jobs every year you keep him on the job.

With nearly 300,000 federal regulators, the shock is that we still have any jobs at all.

The Two Scariest Words in the English Language

A lot of the excitement around the Department of Government Efficiency — DOGE — focuses on the dollars saved. But more important is all the things the federal government destroys with those dollars.

Specifically, the millions of jobs destroyed by the two scariest words in the English language: federal regulators.

A few weeks ago I mentioned how DOGE under Elon and Vivek is taking aim at the regulatory mothership that strangles the American economy and fuels the totalitarian administrative state — you may remember it from Covid.

A mother ship that is oddly enough unconstitutional according to a pair of recent Supreme Court decisions — Loper Bright Enterprises v Raimondo and West Virginia v EPA.

I asserted this could unleash the economy like nothing we’ve seen in the past century.

And the reason is because it’s hard to overstate just how destructive regulations are. 

Every Regulator Destroys 138 Jobs

One 2017 study by the Phoenix Center and Auburn University found that every single full-time regulator destroys 158 jobs. 

GDP-adjusted to today, that translates to $16.5 million of economic output. For a hundred-thousand dollar bureaucrat.

This lost output is made of jobs and businesses that were never started. Or were stunted by strangling regulations — which are generally bought by big corporations specifically to strangle small competitors.

Along with mom and pops chased into bankruptcy as collateral damage to new regulations — say, a diner forced to spend $30,000 on a low-energy exhaust fan.

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Communism Fumbles Again: Cuba Importing Resource It Was Once Famed For Producing

It’s undeniably one of economist Milton Friedman’s most famous sayings about the failures of central planning: “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”

This was, of course, a stroke of hyperbole. Not even a billion Keynesian ditch-diggers could empty the Sahara.

However, we have seen the closest thing to Friedman’s vision coming true: In Cuba, an island practically made of sugarcane, the communist government now needs to import sugar.

It’s bad enough that, according to CiberCuba — an expatriate-run outlet which is critical of the government — a pound of sugar now costs 600 pesos on the island, or about $25 USD.

“Despite efforts to revive the sugar industry, the sector continues to face serious challenges, including failures in the last harvest,” CiberCuba reported earlier this month.

“During the session of the National Assembly of People’s Power, Cuban Prime Minister Manuel Marrero Cruz recalled when Raúl Castro remarked that ‘it would be an embarrassment to have to import sugar.’ He then stated, ‘and well, we are experiencing that embarrassment because we are importing sugar.’”

Cruz “emphasized that the crisis in the sector is such that the country has also stopped exporting sugar, which was a key component of the economy,” according to CiberCuba.

And it’s not just dissident outlets like CiberCuba that are reporting on the failures of Cuba’s sugar industry, either. Earlier this year, the BBC’s Cuba correspondent, Will Grant, filed a piece about the failures of the system.

Shocker of shockers, you know what’s to blame? Communism!

“Cutting cane is all Miguel Guzmán has ever known. He comes from a family of farm hands and started the tough, thankless work as a teenager,” the May piece began. “For hundreds of years, sugar was the mainstay of the Cuban economy. It was not just the island’s main export but also the cornerstone of another national industry, rum.”

“Today, though, he readily admits he has never seen the sugar industry as broken and depressed as it is now – not even when the Soviet Union’s lucrative sugar quotas dried up after the Cold War,” Grant noted. “Spiraling inflation, shortages of basic goods and the decades-long US economic embargo have made for a dire economic outlook across the board in Cuba. But things are particularly bleak in the sugar trade.”

“There’s not enough trucks and the fuel shortages mean sometimes several days pass before we can work,” Guzmán said under a “tiny patch of shade” while he waited for Soviet-era trucks to arrive.

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Germany’s Economic And Political Suicide

It’s that festive time of the year when interesting tales get told around a fireplace. So here goes (minus the fireplace).

Once upon a time there lived a country that was the envy of the world. It was among the world’s pre-eminent producers of manufactured goods. From chemicals and pharmaceuticals to precision engineering and the brewing of beer, it was second to none. Its people’s work skills, industriousness and discipline became the national hallmark of civilisational success. The country gained fame and fortune in bringing the luxuries of fine automobiles to the world’s rich and aspiring middle classes.

Alas, a blight visited that once great country not more than a score of years ago, though its destructive seed had been planted earlier. It was not some external force or act of God. Rather it was a sickness of the mind, a debilitating disease of the soul, that vexed that country’s ruling class. In restless search for virtue, the country’s rulers paid obeisance to the Goddess Gaia and promised the nation’s blood and treasure to satiate her inviolable sovereignty over her earthly domains.

This, then, is a tale of woe and misery. This Christmas shall not have been one of unalloyed merry times and good cheer. And while beer will have been drunk and dinners eaten in many a hearth and eating place, the lifeblood of that nation shall be constricted and its breathing blocked by a cursed phlegm as normal life resumes in the New Year.

Within the fateful score of years of becoming afflicted by the primordial cult of Gaia, the world’s envy has now become a sad basket case. Its economy has been tarnished as “the sick man of Europe”.

The beginning of the end of the German miracle

While the travails of Germany along with the economic stagnation of Europe as a whole have been apparent for some years now, the spate of dire headlines have gathered pace in recent weeks as the coalition government collapsed.

“Behind Germany’s Political Turmoil, a Stagnating Economy” — New York Times (December 17th)

“Germany Is Unraveling Just When Europe Needs It Most” – Bloomberg (December 15th)

“Europe’s Economic Apocalypse Is Now” – Politico (December 19th)

If Europe – and its economic powerhouse Germany – remains on its current trajectory, its future, Politico says, “will also be Italian: that of a decaying, if beautiful, debt-ridden, open-air museum for American and Chinese tourists”.

The economic rot induced by the adoption of Energiewende policies for the “energy transition” in 2010 resulted ultimately in the recession of the German economy in the last two years.

Among the manifestations of this rot are the growth of corporate bankruptcies in double digits, soaring layoffs as the Federal Employment Agency said that the unemployment figure could exceed the three million mark for the first time in 10 years at the beginning of 2025, and the crown jewel of German industry, its automative sector, announcing massive job cuts.

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Economic Reconstruction and the Police State

One of the most common justifications for increasing state police and military power is that it guarantees the security of citizens. Without basic security, it is impossible for people to devote themselves to the pursuit of their social and economic goals. In the US there are proposals to send in the military to help enforce a crackdown on illegal immigration. In the UK, some police stations have proposed to send armed police patrols to Christmas markets, to keep traders and shoppers safe from terrorists. Yet it is less often recognized that the police state, which may be defined as “an enormous government apparatus of prisons, prosecutors, police, and bureaucrats,” is inimical to economic liberty.

Debates on the role of the police state are also pertinent in understanding the Reconstruction Era (1865-1877) in the American South. One of the main justifications given for the presence of federal militia in the South was that this was necessary to maintain law and order. It is too often presumed that social and political upheaval in the Reconstruction South was entirely explained by the fact that “racists” did not like the idea of black people being armed or enfranchised. The federal militia was said to be required to protect black people from such racism.

This reduction of Reconstruction history to a tale of racism disregards all the other factors involved, including a phenomenal rise in the role of state militia in daily life. It overlooks the fact that the presence of federal and state troops across the South was an ever-present sign of living under occupation, one that was greatly resented by Southerners.

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“Surprising Link” Between UAP Sightings and Economic Conditions Revealed in Controversial New Research

New research reveals a surprising connection between Unidentified Aerial Phenomena (UAP) sightings and financial conditions across the United States, according to a study by a team with The Hebrew University of Jerusalem.

Dr. Ohad Raveh of Hebrew University and Dr. Nathan Goldstein of Bar-Ilan University have introduced innovative methods of measuring public interest by analyzing UAP reports, which they say has revealed “a surprising link between UAP sightings and macroeconomic conditions at the U.S.-county, state, and national levels.”

Their findings challenge conventional metrics for assessing economic behavior, revealing how UAP sightings align with financial trends, inform policymaking, and provide insights into public adaptation to economic shocks, such as the COVID-19 pandemic and shifts in monetary policy.

In an email to The Debrief, Dr. Raveh explained what motivated he and Goldstein to explore the potential connection between UAP sightings and economic conditions.

“As a social scientist fascinated by the UAP phenomenon, I was disappointed by the grave scarcity of studies that examine the social aspects of it,” Dr. Raveh explained, “especially as official reports (by NASA and others) confirm that about 95-98 percent of UAP sightings have conventional explanations, thus suggesting that patterns of UAP sightings are rooted in human and social behavior.

“This inspired undertaking a deeper examination, pursuing an unconventional hypothesis which ties sky viewing to economic attention,” Raveh said.

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