Tag: economy

Mathematical Models Are Weapons of Mass Destruction

In 2007, the total value of an exotic form of financial insurance called Credit Default Swap (CDS) reached $67 trillion. This number exceeded the global GDP in that year by about fifteen percent. In other words – someone in the financial markets made a bet greater than the value of everything produced in the world that year. 

What were the guys on Wall Street betting on? If certain boxes of financial pyrotechnics called Collateralized Debt Obligations (CDOs) are going to explode. Betting an amount larger than the world requires a significant degree of certainty on the part of the insurance provider. 

What was this certainty supported by? 

A magic formula called the Gaussian Copula Model. The CDO boxes contained the mortgages of millions of Americans, and the funny-named model estimated the joint probability that holders of any two randomly selected mortgages would both default on the mortgage. 

The key ingredient in this magic formula was the gamma coefficient, which used historical data to estimate the correlation between mortgage default rates in different parts of the United States. This correlation was quite small for most of the 20th century because there was little reason why mortgages in Florida should be somehow connected to mortgages in California or Washington.

But in the summer of 2006, real estate prices across the United States began to fall, and millions of people found themselves owing more for their homes than they were currently worth. In this situation, many Americans rationally decided to default on their mortgage. So, the number of delinquent mortgages increased dramatically, all at once, across the country. 

The gamma coefficient in the magic formula jumped from negligible values ​​towards one and the boxes of CDOs exploded all at once. The financiers – who bet the entire planet’s GDP on this not happening – all lost.

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What Do They Know? Russia Increases Daily Gold Purchases by 700%

In a significant move, Russia’s Finance Ministry has announced plans to allocate 8.2 billion rubles ($92 million) each day for gold and foreign currency purchases until October 4, the nation’s Finance Minister announced.

“The amount of funds allocated for purchases of foreign currency and gold totals 172.9 billion rubles,” the ministry said in a statement. “Transactions will be carried out from September 6 to October 4, 2024, respectively, daily volume of purchase of foreign currency and gold will equal 8.2 billion rubles.”

This marks a sevenfold increase in purchases of physical precious metals over the previous spend, which has already been much higher for the last year. The Finance Ministry also projected “windfall” oil and gas revenues of 162 billion rubles in September, noting that actual oil and gas revenue in August exceeded initial expectations by 10.9 billion rubles ($129 million).

These revised figures “make it possible to estimate the volume of operations conducted by the Bank of Russia on the currency market related to the replenishment and use of the National Wealth Fund,” the ministry added.

With the new transaction volumes set for the September 6 to October 4 period, the Central Bank is expected to sell 0.2 billion rubles per day during the previous period.

After an 18-month hiatus, Russia’s finance ministry resumed gold and currency purchases in August 2023, capitalizing on higher oil prices. The country had previously paused foreign exchange interventions in January 2023, selling yuan reserves as part of a budgetary strategy to shield the economy from commodity market volatility. This program was initially suspended following the invasion of Ukraine in February 2022.

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Biden Admits Inflation Reduction Act was NEVER Intended to Reduce Inflation

PSA:  Joe Biden is still the president of the United States. Biden has been hiding on a beach in Delaware ever since his disastrous debate with Donald Trump that hard-launched Kamala Harris as the Democrat nominee. Biden is speaking off the prompter once again and revealing hard truths that have been concealed from the public. The Inflation Reduction Act, the largest spending measure in American history, was never intended to reduce inflation.

“We should have named it what it was!” Biden said at an event in Westby, Wisconsin, where he unsuccessfully attempted to tout the success of Bidenomics. The president referred to the Inflation Reduction Act as “the most significant CLIMATE CHANGE LAW ever,” adding, “by the way, it is a $369 billion bill, it’s called the–we we we should’ve named it what it was.”

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US-born workers lost 1.3 million jobs in last year, foreign-born workers gained 1.2 million

US-born workers lost over 1.3 million jobs in the past 12 months, while foreign-born workers gained more than 1.2 million jobs during the same period.

According to a review of Bureau of Labor Statistics (BLS) data from Fox 13, as of August, there were 129.7 million native-born workers, down from 131 million in August of last year. Conversely, the number of foreign-born workers increased from 30.4 million to 31.6 million over the same period.

These figures emerge amid recent data from the Congressional Budget Office, showing that over 9 million immigrants have entered the United States since the beginning of the Biden administration, with about 6.5 million being illegal immigrants, according to Fox News. The jobs report from the BLS does not differentiate between foreign-born workers who are in the country legally versus those who are not.

Additionally, the latest jobs report fell short of expectations. Initially, it was projected that 160,000 new jobs would be added in August, but the actual number came in at 142,000. Despite this, the unemployment rate dropped slightly from 4.3 percent in July to 4.2 percent in August. The 4.3 percent rate in July was the highest since October 2021, a period when the country was still grappling with the effects of the COVID-19 pandemic.

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Great Replacement Job Shock: 1.3 Million Native-Born Americans Just Lost Their Jobs, Replaced by 635,000 Immigrants

At the start of the year, many months after we first pointed out that the biggest untold story of the US labor market was the “great replacement” of native born workers with foreign-born workers (most of whom we subsequently learned were illegal aliens), we asked how is the great replacement of US workers “not the biggest political talking point right now” considering that “since October 2019, native-born US workers have lost 1.4 million jobs; over the same period foreign-born workers have gained 3 million jobs.”

Nine months later, we are delighted to see that our relentless efforts to bring attention to this critical topic finally worked, and the relentless replacement of native-born workers with immigrants and illegal aliens was finally the biggest political and media talking point, as demonstrated by such articles as “How Immigration Remade the U.S. Labor Force” by the WSJ and “Without Immigrants, US Working-Age Population Would Shrink” from Bloomberg, both of which are an extension of the latest and greatest narrative, first spawned by Fed chair Powell, and then picked up by Goldman, which came down to the following: you can have (record) illegal immigration, or you can have even more (breakneck) inflation. So don’t be bad and just accept the roving gangs of Venezuelan murderers in your neighborhood if you know what’s good for you.

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The Regime’s War on Cash Could Destroy the Economy

According to some “experts,” there is an urgent need to remove cash from the economy. It is held that cash provides support to the “shadow economy” and permits tax evasion. Another justification for its removal is that, in times of economic shocks, which push the economy into a recession, the run for cash exacerbates the downturn—it becomes a factor contributing to economic instability. Moreover, it is argued that, in the modern world, most transactions can be settled by means of electronic funds transfer. Money in the modern world is allegedly an abstraction.

The emergence of money

Money emerged because barter could not support the market economy. A butcher, who wanted to exchange his meat for fruit, might not be able to find a fruit farmer who wanted his meat, while the fruit farmer who wanted to exchange his fruit for shoes might not be able to find a shoemaker who wanted his fruit. The distinguishing characteristic of money is that it is the general medium of exchange. It has evolved as the most marketable commodity. On this process, Mises wrote,

“…there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.”

Similarly, Rothbard held that,

Just as in nature there is a great variety of skills and resources, so there is a variety in the marketability of goods. Some goods are more widely demanded than others, some are more divisible into smaller units without loss of value, some more durable over long periods of time, some more transportable over large distances. All of these advantages make for greater marketability. It is clear that in every society, the most marketable goods will be gradually selected as the media for exchange. As they are more and more selected as media, the demand for them increases because of this use, and so they become even more marketable. The result is a reinforcing spiral: more marketability causes wider use as a medium which causes more marketability, etc. Eventually, one or two commodities are used as general media—in almost all exchanges—and these are called money.

Since the general medium of exchange emerged from a wide range of commodities, money is a commodity. Again, according to Rothbard,

Money is not an abstract unit of account, divorceable from a concrete good; it is not a useless token only good for exchanging; it is not a ‘claim on society’; it is not a guarantee of a fixed price level. It is simply a commodity.

Moreover, in the words of Mises, “…an object cannot be used as money unless, at the moment when its use as money begins, it already possesses an objective exchange value based on some other use.” Why must this be the case? Rothbard explains further,

In contrast to directly-used consumers’ or producers’ goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium to the previous demand for direct use (e.g., for ornaments, in the case of gold).

Hence, money is that for which all other goods and services are traded. Through an ongoing selection process over thousands of years, people settled on gold as money. In today’s monetary system, the money supply is no longer gold, but coins and notes issued by the government and the central bank. This fiat-money still has exchange-value because of its prior connection with true money and the inertia caused by the fact that it is already accepted as a general medium of exchange. Consequently, coins and notes still constitute money, known as cash, which are employed in transactions. Goods and services are exchanged for cash.

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Has US Supremacy Ended?

America has caught a whiff of a changing world. CIA Director William Burns has grudgingly acknowledged that “the United States… is no longer the only big kid on the geopolitical bloc. And our position at the head of the table isn’t guaranteed.” But America’s dogmatic inability to see past its old paradigm has prevented it from understanding that change. The United States has drifted outside the geopolitical current.

Russia, China and India insist that multipolarity is not a goal on the distant horizon but a current reality. “The trend toward multipolarity in the world is inevitable. It will only intensify. And those who do not understand this and do not follow this trend will lose,” Putin has said. Russian Foreign Minister Sergey Lavrov has called multipolarity “a fact, a geopolitical reality.” “The landscape,” India’s External Affairs Minister Subrahmanyam Jaishankar agrees “has now changed irreversibly.”

But in its inability to adapt, the U.S. clings to the battle to prevent the unipolar world’s slip back into bipolarity. The U.S. remains capable only of seeing a world divided into two blocs: it sees every nation that accepts its hegemony as one bloc and every nonaligned nation in the multipolar world that refuses to choose between two sides as the other bloc. The U.S. is incapable of seeing past the bipolar world and mistakes the multipolar reality as the other bloc in a bipolar world.

That is a misconception that prevents the U.S. from aligning itself with the inevitable new reality of the international order. Being unaligned with reality has frustrated American foreign policy.

In the outdated American model, India, the largest country in the world and a growing power, is the weight whose choice of sides will determine which block prevails. Long a partner of the U.S. and a key friend of Russia, India has a foot in both blocs of the world as the U.S. sees it. Bringing India fully into the American camp is a key to U.S. foreign policy.

But the members of the emerging multipolar world do not see the new world as one in which they have to choose sides. The U.S. continues to woo countries with gifts and to threaten countries with sanctions to seduce them into exclusive partnerships. But the outdated U.S. worldview restricts it to desperately courting countries into exclusive relationships that their worldview no longer allows them to enter into.

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Comrade Kamala? Assessing Three of Harris’s New Economic Proposals

The Kamala Harris campaign is still relatively young. The current Vice President and previous US Senator from California has barely been in the race for a month. Her first concrete economic plans are being announced and, for the most part, panned by economists. Let’s examine some of these proposals, their effects, and why economists oppose them.

1. Price Caps on Groceries

Let’s begin with the most shocking Harris proposal—a federal ban on “price gouging” for groceries. Let’s start with the rhetoric and then get down to brass tacks. What is price gouging? It’s a term without any clear tie to economic facts.

Historically, “price gouging” referred to price increases caused by disasters (e.g., bottled water being more expensive during hurricanes). But of course, when demand increases or supply decreases, prices do naturally rise to prevent shortages. Labeling this as “gouging” in certain circumstances is arbitrary at best.

Furthermore, what sort of crisis are we appealing to in order to say there is price gouging? Covid still? Since the Covid pandemic ended over two years ago (even according to Fauci), that really doesn’t make sense. Is the crisis that inflation is making things unaffordable? Well, if the disaster behind this gouging is price increases, then all price increases are defined as gouging. That doesn’t make any sense either.

To be blunt, gouging is just a word used for emotional effect. We can always pick some arbitrary benchmark of “fair” or “unfair” price increases, but that benchmark will remain arbitrary.

Now let’s move to the brass tacks. What would this mean? The way the language is couched, this policy would amount to nothing more than a form of price control. Regardless of the particular form this ban takes, any law which penalizes a store for having prices above some point is a price control. Insofar as this policy affects prices at all, it is a price control. Insofar as it doesn’t affect prices, the policy is spurious.

What’s the problem here? Well, when either demand increases or supply decreases (or both), the competition to buy a good increases relative to the available supply. This means that more people will be bidding for the same number of products. If prices do not rise, the products will run out, and some people who are willing to pay the current price cannot purchase the good in question because it has run out. Economists call this a shortage.

If, instead, prices are allowed to rise, two things happen. First, higher prices cause buyers to decrease their consumption relative to lower prices. Second, higher prices incentivize producers to supply more of a product, since a higher price commands a higher revenue. These two forces work together to make sure that all potential buyers can purchase the number of goods they are willing to pay for.

Harris’s team claims that the pandemic was used by businesses as a pretext to trick people, to increase prices more than rising costs called for, and that this is a corrective measure. So are grocery stores pulling one over on people? Not so.

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Extreme Gaslighting: Here Are 7 Signs That The Mainstream Media Is Flat Out Lying To Us About The Economy

How many times have you heard the mainstream media tell you that the economy is doing just great in recent months?  Personally, I have seen the word “booming” used over and over again to describe the economy, and it makes me sick.  The level of gaslighting that we are witnessing right now is off the charts.  Millions of Americans are sleeping in their vehicles, thousands of businesses are failing all over the nation, and most of the country now believes that the American Dream is no longer attainable. 

If this is what a “booming” economy feels like, I would hate to see what would happen during a “recession”.

I totally understand why the mainstream media is gaslighting us.  They want us to believe that everything is fine so that we will vote a certain way in November.  They have an agenda, and they are pushing it really hard.

But what they are telling us simply does not match up with reality.

The following are 7 signs that the mainstream media is flat out lying to us about the economy…

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Democrat “economist” appears on CNBC and claims Trump caused 8 trillion bucks of the 35 trillion bucks in national debt – BIG FAT LIAR!!!!! 2 trillion bucks out -ignores C19 and debt interest entirely

Bharat Ramamurt thinks that the US government is not raising enough money in taxes and is especially targeting 60,000 Americans earning more than 1 million bucks a year with a 24% capital gains tax. You know how socialists hate anyone with money or who earns it. I wonder if he knows how many of these are Democratic Party donors?

He also states that discretionary spending, excluding defence, is at a very low level of 16% and uses this as an argument for tax increases. He claims that plans to increase taxes will not impact 100 million Americans – so presumably it will impact 240 million other Americans.

One big fat lie he brazenly told was that under Trump, 8 trillion of the US’ 35 trillion national debt was raised during Trump’s term. So, let’s fact check that.

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