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Jim Chanos: China’s “Leveraged Prosperity” Model Is Doomed…And That’s Not The Worst Of It

Jim Chanos: China’s "Leveraged Prosperity" Model Is Doomed…And That’s Not The Worst Of It

Authored by Lynn Parramore via The Institute for…



This article was originally published by Zero Hedge

Jim Chanos: China’s “Leveraged Prosperity” Model Is Doomed…And That’s Not The Worst Of It

Authored by Lynn Parramore via The Institute for New Economic Thinking,

Famed short-seller is even more concerned with political fallout from Evergrande than economic/financial woes.

Renowned short-seller Jim Chanos, founder of Kynikos Associates, is what you might call the “ever-bear” of China. For more than a decade, he has warned that the country was building a real estate-driven economy on a feeble house of cards. He spoke to the Institute for New Economic Thinking’s Lynn Parramore about how he views the chickens coming home to roost as the property giant Evergrande – now the world’s most indebted property developer — teeters on the verge of collapse.

Lynn Parramore: Back in ’09, when you started looking at China, your real estate analysts alerted you to the mind-boggling amount of real estate overdevelopment there. You warned that this overdevelopment would end badly. After Xi Jinping became president in 2013, you expressed the then-minority view that a different kind of leader had arrived on the scene. What’s your take on what has happened since then?

Jim Chanos: In 2013, we put a slide in our presentation for investors and talks that was very controversial – especially for Chinese nationals. It showed President Xi Jinping in emperor’s garb. People thought we should take it out, that it was offensive. At the time, Xi was widely seen as just the latest in a series of technocrats who had risen through the ranks — one who would follow along with Deng Xiaoping’s reforms. It’s “capitalism with Chinese characteristics.” It’s okay to get rich as long as the country prospers.

But a few things made us think, no, this guy is different. His first speech in China after becoming president was critical of the Soviet Union for being soft on perestroika. They should have crushed it when they had the chance, he said. Xi then set up an institute to study the Soviet Union’s collapse. That was a red flag to us that he was going to be more hardline than people thought. He went on to do an anti-corruption drive, which people dismissed as a typical settling of scores that Chinese leaders do. But it actually extended beyond that. A couple of years later, he began talking in Puritanical terms about social issues. Again, that was different. Nobody had cared about that stuff for 20 years. Do what you want as long as you don’t question the party. Next, we had the book collecting his speeches and writings, which people could be seen carrying around. He started showing up in military events dressed in Mao jackets. This symbolism isn’t lost in China.

We noticed all this, but the real switch occurred in 2019 when he started going after celebrities like Jack Ma [co-founder of Alibaba]. At that point, it was clear that this president was not stepping down at the end of 10 years. He was taking a much harder line on the “flowers of capitalism,” if you will, than past presidents. In 2021, all of this exploded into the open. There’s been initiative after initiative. Redistributing wealth to the masses. Going after other leaders. Overlaid on top of this is the Evergrande saga.

LP: Let’s talk about Evergrande, the Shenzhen developer whose crisis has got everybody worried. How did things get so bad?

JC: Last year, as the tech crackdown was gaining momentum, Xi’s administration put down a set of rules called the “three red lines.” They were sort of balance sheet financial tests. It was an attempt to deleverage the real estate developers.

LP: Which means he knew something was wrong.

JC: Well, here’s the problem. I always joke that when you have an investment-driven economic model, you know your annual GDP on January 1st of that year, because you can stick shovels in the ground to make your growth numbers. That’s how the model works. It’s not a consumption-based model. As we now know — and the Wall Street Journal just had some phenomenal numbers in a recent piece – that real estate construction is now larger than it was when he took office. I would always hear, well, don’t worry: these are smart guys, technocrats who see the problem and will wean themselves off this apartment construction-on-steroids. But they haven’t.

LP: Why haven’t they been able to slow it down?

JC: Since we started following China at the end of ’09, this is the fourth time that they’ve attempted to slow the real estate market down, because they do know that this is going to be basically too big to deal with if it keeps growing at the rate it’s growing. But every time they’ve done it, the economy has hit stall speed very quickly, and they panicked. They went from hitting the breaks to hitting the accelerator. That’s why we’ve seen higher levels of real estate. The idea that “I can’t lose buying apartments” became ingrained with bankers, real estate speculators, and the public.

LP: So with Evergrande, everyone came to expect a bailout?

JC: I think we’re at that crossroads. The problem is that these companies are so much bigger than they were in 2015 or 2011. Can you bail everybody out? In the case of the developers, you have an additional problem. The biggest amount of liabilities is not necessarily to banks and bondholders. It’s to apartment buyers. Here’s why: the Chinese real estate finance system is exactly the opposite of ours. In our system, when there’s a new development, you’re typically required to put 10% down to sign a contract, with the balance due on closing. You go get your financing and your mortgage proceeds pay for the rest of the house or the apartment. In China, you pay upfront. You are extending the developer a loan. So, of the $300 billion in liabilities Evergrande owes, I think the biggest chunk, last time I checked, is basically what we would call a deferred revenue item. It’s money that you took in from people, and you owe them an apartment. And the apartments aren’t done, but the money’s been spent. So the problem is not just bailing people out, but the question of who is going to put up more capital to pay off the retail people that have bought apartments that haven’t gotten anything.

These numbers are big, and Evergrande is not the only one. There are a handful of developers that are missing interest payments and have their bond prices reflecting distress.

LP: How much has corruption played a role in this mess?

JC: That’s a problem with their economic model focusing so much on real estate. Because they don’t have a local tax system, like property taxes, the local governments sell land to pay for local services. But whenever you have private developers buying land from municipalities controlled by one party, yeah, it’s ripe for corruption. We know that’s rampant in China.

LP: How do you view the policy reaction to Evergrande?

JC: So, what do the policymakers do? It’s not a Lehman moment in that there’s not a lot of cross-border interbank lending here. The Chinese system is still pretty much a closed financial system. That’s not the risk. During the Global Financial Crisis [GFC], what brought us to our knees was the liability side of the banks’ books. They couldn’t roll over the loans to each other because no one trusted the assets. Here, it’s the assets. I think that if they try to inflate it again, if they try to bail it out again, we’re only going to be right back in this soup in another two or three years, with even bigger problems.

LP: Is this only a problem with the real estate sector, or is it more extensive?

JC: Based on our analysis of the numbers – and you have to take the Chinese numbers with more than a shaker of salt – we’ve long thought that residential real estate was probably 20% of GDP and that all in, real estate construction and related services was about 25%. Ken Rogoff came out with a study last year that said it was 29%. That’s already a huge amount compared to other countries.

Well, the numbers that the Wall Street Journal just put out were staggering, implying that there were 1.6 million acres of residential real estate under construction. If you do the math, it’s the equivalent of 72 million apartments. We believed that they were selling 20 million a year, but the WSJ story seems to imply that the numbers are actually much, much bigger. That tells me that our numbers and Rogoff’s numbers regarding GDP are probably on the low side. It could be a 30-40% problem, not a 20-25% problem. It’s just magnitudes bigger. We’ve never seen anything like this. And there’s no game plan, no historical analog. Maybe Tokyo in ’89? But this is worse than that. It’s worse than Spain in ’06 or Ireland in ’06. We’ve just never seen an economy this dependent on putting up apartment buildings — apartments that nobody is residing in. Everybody already has an apartment! These additional ones are second and third apartments at this point, and only for people who can afford them because they’re extremely expensive.

I think the Chinese government has convinced themselves that by borrowing lots of money from their own citizens and elsewhere, that there’s ongoing activity that is sustainable. But as we find out in every real estate bubble that bursts, when your activity is constructing real estate itself and you’re taking capital and turning it into income by paying construction workers and real estate brokers and everybody else, when that activity ends, it goes poof! And there’s no income from the asset you’ve just financed. It’s not like building a factory where you have demand for your products. It’s just apartments sitting empty in Beijing or Shenzhen.

LP: How does this problem relate to Chinese politics?

JC: As all of this is happening on the financial and economic front, along with the crackdown on business elites, we’ve seen a commensurate rise in bellicosity, in saber-rattling toward Taiwan, India, and Tibet. We’ve seen a much more aggressive posture from Xi in relating to the West. Now every day there’s a warning in one of the Chinese Communist Party organs threatening Australia if they come to Taiwan, threatening Japan. I don’t know if the Party is preparing the citizenry for a “them.” Someone to blame.

LP: As we’ve seen with the pandemic already.

JC: Yes, and in the way they’ve treated the West’s outrage about the concentration camps in Xinjiang province. That’s the classic authoritarian move. We know it from our own country. Blame someone. “It’s their fault, not our fault.” We need an enemy. I don’t know how real the saber-rattling is. Is it a distraction from domestic belt-tightening that’s coming? Planting the idea that we’re going through hard times because the whole world is against us? We’ll see. It’s an incredibly interesting time to be watching China.

LP: What does it all mean to the rest of the world?

JC: Again, I think it’s not a financial transmission issue reverberating through the financial systems and markets. I do think that it will affect global growth. China was a full point of the 3% global real growth we’ve had since the GFC. Without China, it’s 2%. So China itself, by growing 7 or 8% a year was a disproportionate amount of global growth. It’s also going to impact what I call Greater China, which is Taiwan, South Korea, Singapore – the areas that trade very actively with China. And it will definitely impact commodity exporters. In this massive build-out, China has continued to suck in iron ore and copper and all kinds of things from a variety of different countries like Brazil and Australia. But I think that the impact might be more political than financial. That’s what worries me.

LP: How would you characterize these worries?

JC: It’s the rise of bellicosity, the rise of a more militant China as the economy and the financial situation has gotten more precarious. That’s a 1930s kind of problem. We know that a rise in authoritarianism and statism around the world was one of the upshots of ’29-’32. You had leaders saying, “I’m the one that can get us out of this problem” and “They are the ones who got us here.” This situation in China is a little bit frightening to the student of history, because there’s no doubt, whether you’re flying over Taiwan airspace or coming close to ships in the South China Sea, that there’s a rise of tensions in and around China. I don’t think it’s a coincidence.

LP: To touch on Xi’s crackdown on the tech industry, how do you view that in the context of the need to lessen this dependency on the real estate sector? Certainly, we can see in our own case with Silicon Valley — Facebook and so on — that poorly regulated tech is a problem. But what does Xi’s stance mean in the context of his desire for China to be a leader in innovation, on the cutting edge of technology?

JC: That was always one of the responses to our concerns about the investment-driven model. People said, well, everyone does everything on their smartphone in China. They’re far more advanced in social media than we are and more advanced in payment systems, and so on.

The problem was that, number one, it gave rise to these global tech celebrities, and number two, I think China, or the Party, realized a little bit later than they might have that the control of databases and information that these companies have is certainly a power center. And the one thing that the Communist Party cannot brook is a threat to its control. There are no other political parties, no free press. The only thing that could challenge control is the thing that people said would liberalize China – the internet. Access to the internet, access to ideas, access to global media. People thought these things would democratize China, but Xi is saying no: we’re going to put up a Great Firewall and we’re not going to allow Alibaba to have as much power as the Party.

LP: And it looks like he’s going after the banks next.

JC: The real estate system is so big, and so levered – the banking system has grown with it, of course. It seems to me that Xi is basically going through all the power centers — technology, finance, etc., and cracking down. He’s making sure his people are completely in charge and that there’s no interference, no other power centers. And it makes me ask why. What’s the end game? I mean, the Party has control of the country for the most part. The citizens understand that. So why? What is coming that he feels he needs to make sure that all of his people are in control? I can’t help but think of Stalin. The end game puzzles me the most. Is it to prepare for a takeover of Taiwan? To be more forceful on the international stage? I don’t know.

LP: What is distinct about China’s vision of capitalism in the context of a one-party system? What are its particular features and challenges?

JC: What distinguishes China and what makes it so unique from my perspective, putting on the financial historian’s hat, is that the speed at which they developed was unprecedented, and the amount of risk they have taken to do that is unprecedented. Their banking system is now the largest in the world. The amount of real estate construction is just completely insane, and until, perhaps, this past 12 months, we haven’t seen a real, serious effort to say, “Maybe we should rethink this fantasy where everybody is going to have six apartments. Maybe we need to do other things in our economy to balance it out.”

How are they going to deal with the transition? Because they’re going to have to do it at some point. I think it’s going to be fascinating to see how they try to get out of it. Do they switch spending to defense spending? Do we get an arms race? Can they keep a closed currency? There are a whole lot of big questions.

They’ve got to make some tough decisions on how the economic model is going to work going forward. In the late ‘80s, everybody thought Japan was going to surpass the U.S., but they had the same problems – a banking system that was bloated, real estate prices too high, too dependent on exports, and they’ve had 30 years of muddling through. The idea that China is going to be growing 6 or 7% while the rest of the world is growing 2% just has to be revisited. It’s not gonna happen. That realization is going to be the bucket of cold water that’s going to force them to rethink next steps. The population has been used to this leveraged prosperity, and everybody has borrowed money to buy real estate. What are the next steps? It’s otherworldly what they have done with real estate. Whatever happens, it’s going to be severe somehow. Whether it’s politically or financially — whatever it is, it’ll be severe.

Tyler Durden
Wed, 10/20/2021 – 22:10

Author: Tyler Durden

Precious Metals

The US Dollar Implosion: Questions To Consider For Non-Bitcoiners

The US Dollar Implosion: Questions To Consider For Non-Bitcoiners

Authored by Riste Simnjanovski via,

One approach to…

The US Dollar Implosion: Questions To Consider For Non-Bitcoiners

Authored by Riste Simnjanovski via,

One approach to orange-pilling no-coiners is to simply draw attention to the various economic uncertainties facing the U.S. Dollar today…


The purpose of the article is to examine the current state of the U.S. dollar in reference to the average American’s mentality during economic hardship. The article will serve as a potential onboarding ramp for non-bitcoin holders through an exploration of current events and posing of questions to the reader.


If you currently work, or have ever worked, what was the goal? OK, slow down there, turbo. Don’t just read that question and move forward, stop, think, and genuinely ask yourself, why did I work? Why do I work? Have you found a passion in your life where work and engagement run hand-in-hand? Perhaps you are paid to do what you love; are you even paid at all? If so, how do you take payment? Is it with U.S. dollars, exchange or trade, food, material goods, gold or silver, cryptocurrency (tokens or fractions of tokens) or some other means? Have you been paid in eggs for working on a chicken ranch? Are you a computer programmer, plumber, rocket scientist, attorney, mathematician, pediatric dentist, professor, kindergarten teacher, food service worker, engineer, manager, car salesperson, banker, peace officer, government employee or run a lemonade stand? Maybe something else entirely. The point is, you’ve been lied to. We’ve been lied to. So let’s talk, and please, keep an open mind and do your best to not get reckless as I lay out my position. In the end, know that I love you, the community that supports me loves you, and all we’re trying to do is share a position that could benefit you and your family.

Humans, in modern times, exchange time for money, in the form of “work.” We often have grandiose ideals of work, or perhaps, genuinely, you despise the notion of work. There are foundational theorists I could include here to appease the academic community; however, in truth, at this point, I don’t care if the academic community is impressed with this work, I’ve lost respect for many of them and they genuinely have no idea who I am. In reality, I’ve lost most of them already through my use of a first-person narrative, missing references and/or citations, using “and/or” like I just did, twice, ending sentences with a preposition, et cetera, so relax and cheer up. This could get ugly.

Before I was born in the 1970s, my parents bought a home in Southern California, a three-bedroom, two-bath, single-story place on about a quarter acre for around $36,000. Today, the home is “valued” closer to the $1 million mark than it is to the original $36,000 they spent. Here is the first question: Did the home go up in value? A normal response is “Yes, that ‘asset’ appreciated.” I would argue, as many others might as well, that in fact, “No, that home has not changed in any manner whatsoever.” So what happened?

The truth is that the original $36,000 U.S. dollars that home was purchased for now is not enough for a down payment on that same home a several decades later. Why is that? Consider that the home has not changed, rather, the amount of U.S. dollars required to purchase that same home has increased. So, which is it, is the home more valuable or is the U.S. dollar less valuable (or powerful) and, as such, that same home now REQUIRES more U.S. dollars to own? If the latter is the case, we have a problem. When you hear the media say “the U.S. dollar is strong” that is only because they are comparing it to worse fiat currencies. It’s akin to saying, “This is the best tasting crap of all the crap.” It’s still crap you’re eating.

A bigger question is why is “work” in the past worth “less” than work in the present or in the future? My position is that this “work” should not be any less valuable for a person who worked for a lifetime in 1914 to purchase and pay off a home versus someone today or 100 years into the future. And that is the challenge, is it not? Why can’t value in the monetary system be stored for future use; why does the “value” depreciate and lose purchasing power immediately once transferred to the worker? Moreover, why can a government simply “print” value? The moment someone is “paid” for their work, that U.S. dollar (and let’s be real, it isn’t just the U.S. dollar, it’s any/all currency printed by any/all governments with no actual value or backing, I’m just picking on the USD for now) purchase less than it did the day before? That is terrifying. This scenario is also why most Americans chase “gains” in a stock market or risky investments; the goal is to “make money” but in reality, the money (currency) is simply the vehicle necessary to exchange for the possessions, items, things or time they really want. So what do you want? A nice home, security, your business’s cash on hand to not deteriorate in purchasing power, time with the family, something else?


Americans don’t trust their government. Remember that the Constitution was written to limit governmental authority and provide as much freedom to citizens as possible, not vice versa. Yet, the same untrusting Americans habitually entrust this same government with their livelihood and future economic selves. The dichotomy of this is puzzling. A typical American worker distrusts the government and in the same breath accepts payment for their labor in a form that, once accepted, loses value exponentially, indefinitely and until that value has disappeared. How is this rational? Why haven’t the masses realized that the home they live in has never increased in value — ever. The amount of U.S. dollars required to purchase that same home has increased. Put in another way, the dollar’s purchasing power has decreased, violently, and one needs more of the plummeting currency for the same goods or services.

How does this not sink into the consciousness of American consumers? At the lumberyard, a two-by-four board may cost $2 one day and $20 the next. Did the board increase in “value” or are more dollars simply required to purchase the same piece of wood? How about blueberries? Bottled water? A gallon of gas? Have those items increased in value, have they changed in any way whatsoever, or have they remained constant and the variable society has missed the devaluation of the dollar? Queue a distracting supply-and-demand argument from a professor who has taken a few economics classes here. Dear professor, no one wants to hear your consumer price index rants when it costs the average person a day of work to fill their gas tanks and another day of work to buy groceries.

The more horrifying realization comes when an American spends a lifetime working to accumulate dollars and attempts to store that economic energy in a bank. How is it equitable that a couple who managed to save $250,000 should have 3%–20% or more of their purchasing power stolen through inflation, annually, by a government who can print dollars, at will, and literally steal the economic energy of a family who worked an entire lifetime for the promise of security? In exchange for devaluing your U.S. dollars, the bank would like to offer you a teaser rate of 0.01% interest. Enough already.

Why would any rational person save something that another person could create from nothing? The answer: We are irrational. We cling to what we know, what we’re told, and what we’re sold. We are not independent thinkers, we seek approval, and we seek significance through material goods in the past and virtual goods in the future. We attempt to finance our happiness through the leveraged debt of our time.

Ironically, governments work to ensure taxation limits the political, social and fiscal expansion of the lower and middle classes. On a Likert scale of zero to 100, where zero was the required burden of “0%” taxation and 100 was “100%” taxation of an individual’s income; the 0% population would be completely free, essentially sovereign entities, and the 100% taxed population would be, for all intents and purposes, slaves or indentured servants. This is why, I propose, corporate billionaires pay no taxes and why they have so much political influence.

American employees rationally dismiss logic and entrust their hard-earned economic future to those whom they trust the least. They place their hard-earned economic energy, in hopes of conserving their purchasing power in a bank, only to find that their purchasing power was whittled away with inflation, reckless federal spending, governmental expansion and monetary policy. Americans put in grueling work weeks, forgo invaluable time with loved ones and then exchange those hard-earned hours for pieces of printed paper with no true monetary backing. To go a step further, some attempt to invest these earned pieces of paper in a rigged financial system or worse yet, attempt to “save” a debased currency in a banking system that systematically and methodically devalues their efforts and savings each time a new dollar is printed. As such, I hope I’ve gotten your attention in an attempt to, at a minimum, question the current status quo of American savings and investing. Perhaps there is an alternative.


Before one understands concepts such as inflation, deflation, devaluation, debasement, et cetera, they must come to the realization that every moment they are on Earth, the U.S. dollar in their pocket or bank account is losing purchasing power. As such, the longer that dollar is not spent, the less it will purchase in the future. The U.S. dollar, or any fiat currency for that matter, is a terrible store of value and, for all intents and purposes, is not a long-term store of value. Think of the dollar in your pocket like a perishable good from the grocery store. To be an exceptional store of value, the medium in which economic energy is converted into stored economic energy, that medium (the store of value) must, at a minimum, store that same value over an extended period of time. Why shouldn’t I be able to work for an hour, save that hour’s purchasing power if I did not need it, and then pass that purchasing power onto my children, or children’s children? This should not be a radical idea; this should be a question every rational person in America, every person in the world for that matter, asks of their government. As humanity becomes more aware of fiat currencies, workers will undoubtedly discover the difference between currency and money. Gold and silver bugs, you’ve been preaching about this for a while, thanks for the continued history lessons.

For the purposes of this article, it is understood that the printed U.S. dollar has no true value other than what is perceived to be its value by those around them. Simply put, the dollar is something one can use to exchange for goods or services, it is not a store of value. Taken a step further, the U.S. dollar is a written declaration of debt. So, when the government, via the Federal Reserve, prints more currency, they are creating new debt, not simply increasing the monetary supply. The alarming truth is that the moment “faith” in the U.S. dollar begins to deteriorate, Americans will offload paper debt-dollars in an attempt to acquire assets or true historically perceived stores of wealth (e.g., gold, silver, commodities, property) and digital assets (bitcoin/BTC).

In this vein, Americans, while engaged in heated discourse about society and the monetary system, act in a manner in line with what society expects. Americans put their faith and future, in hopes of currency having purchasing power decades from now, into savings accounts designed to systematically siphon purchasing power from them. A logical question that arises: Why does currency need to be invested or saved at all? The answer: Because if it isn’t, any currency saved will have less purchasing power in the future. Again, the ringing question is, why can’t you store your economic energy for future usage?

The average American should be aware of the fact that one hour of work 30 years ago produced “X” amount of currency and that currency, if deployed today, would purchase less than half of what it did at the time the currency was earned. Sadly, this timetable is accelerating. Inflation shouldn’t be a “fact of life” or reality for any logical person. This reality does not make sense. This fact, inflation, is beyond unfair; inflation is downright cruel and inhumane.

Some pundits would argue that an hour of work today has the same purchasing power of an hour of work a year ago, 10 years ago or beyond; it doesn’t. One may argue that, sure, when the minimum wage was $0.10 per hour or $7.00 per hour, a loaf of bread, a gallon of gas, or a home was proportional to the amount earned at these times. Unfortunately, that is inaccurate and is part of the lie Americans have been taught to believe. The “proportional lie” is where the wealth gap, the inequity and the systematic decimation of the middle class have occurred. This is not a Democratic or Republican issue, the issue is not with politics per se, it is with the financial system as a whole and a public lack of understanding.

Why does an hour of work from 30 years ago become, over time, less valuable than an hour of work completed 30 minutes ago? Additionally, why can’t American workers simply store that economic energy and deploy it when they see fit? The reality is that as a result of currency debasement and continued currency creation, each dollar earned is devalued (can purchase less in the future than it could versus when it was immediately earned) by each additional dollar printed and put into circulation. The reason a dollar today will have less purchasing power in the future is because the federal government has already spent the dollars Americans have earned and as such, to pay off their (the government’s) debt in future dollars, plus interest, your dollars must become less valuable.

Every moment you don’t spend your currency is a moment that you lose purchasing power; and this is exactly how the Federal Reserve and the federal government want it. Continue to spend, continue to consume and discourage saving; or better yet, risk your economic stored energy in a stock market where the system can, in an instant, separate you from your wealth and transfer it to someone or something with no appreciable, economic or socially supportive skill set. Americans want to shock the system with an old mentality? Liquidate all cash holdings, purchase tangible assets, commodities and items with true stores of value; someone would have done well with toilet paper, paper towels and cleaning products during the beginning of the COVID-19 pandemic in early 2020; as did firearms and ammunition dealers; as did persons selling live chickens that would eventually produce eggs for consumption. Note that these examples did not “increase in value,” rather the dollars required of them increased and conversely, the dollars’ purchasing power decreased. Imagine a system where millions of workers stopped working for the system and began working for themselves and any excess “value” they earned was not stored in a bank to depreciate and die, but potentially “paused in time” and retained purchasing power, indefinitely. This is the promise of Bitcoin.

While a complete detachment from the system is improbable for the masses, one can begin to see the logic of the social “fringe” and perhaps empathize with those whom the media casts out as doomsayers, paranoid or illogical. How does someone who lives on an environmentally sustainable farm, with its own well water, food source and neighbors willing to barter when crops are harvested, threaten America? By definition, it is American. The threat lies in the fact that these farmers have detached themselves from the system as much as possible. We’ve been conditioned that the “rich” or “poor” are the problem; this isn’t the case, monetary policy is the problem. The politicians, on both sides, who benefit from loose monetary policy are the problem. A legacy banking system that steals percentages of every digital transaction is the problem.

Let’s get back to that rancher. In some cases, the rancher’s home is paid off, they live below their means, their waste is often recycled and reused back into the land or animals, they have invested in tangible assets that hold their value (a farmhouse, stables, land, livestock, gold, silver, weapons, tools, machinery, etc.). The real threat is that these assets are privately held in the family’s hands and not as binary inputs on a server. They are real, tangible, valuable and a historically true store of value; yet they are imperfect. Homes and stables need repair, land is taxed, livestock get sick and die, gold and silver require storage, and so on. Of course, “assets” are still subject to government overreach via taxation and law, in an attempt to force the government’s will on the rancher’s livelihood and independence. Even farming families today have explored options of wealth preservation outside physical, tangible assets. Once the farmer has the tractors and supplies needed, what are they to do with potential excess currency earned from an abundant year? Should every morning they wake prior to sunrise, every splinter, cut, scrape, blood, sweat or tear be converted into a currency and then placed in a bank to subsequently die a slow death or is there an alternative for their family? Why can’t the rancher store excess economic energy from abundant years and deploy that same energy when crop yields are potentially low in the future?


What is a loaf of bread worth to the average family? One may posit that a typical response, in any given amount, would be associated with the U.S. dollar. Perhaps one would suggest, in 2021, $2.00 or $4.00 would be a fair price for a loaf of bread. The purpose of this section is to propose that any U.S. dollar amount is irrelevant. As a commodity, bread, electricity, fuel or other essentials for existence are traded in exchange for human energy. In modern times, Americans have expended energy in the form of work, exchanged that energy for a currency (the U.S. dollar) and then used that currency to purchase essential commodities for existence, pleasure or prosperity.

A standard loaf of bread in 1904 has been reported to cost between $0.04 to $0.08, with an average annual family income of $438.00 to $827.00 (according to conflicting reports). When divided by 50 work weeks per year, at five days per week and thus totaling 250 work days per year, the daily average income for an American worker in 1900 was $1.75 to $3.31 per day. This meant that, in 1900, depending on a person’s average income, they could purchase between 21 and 41 loaves of bread per day of work. I know this is a lot of bread, but follow me here for a minute.

In 2013, the real median income level, measuring half of households below and half above this level, in the United States was $57,000 per year. When dividing this number by 250 (as conducted above) with a reported average recorded price of a loaf of bread being $3.75, equals over 60 loaves of bread per day of work. One could then argue that either the cost of living has gone down, the technological advancements of bread-making have made it more efficient and thus, driven the prices down, or perhaps something out of an economist’s playbook, a mathematical formula that takes into account government subsidies on wheat producers addresses this dilemma. Trust me, I’m sure a model is being worked on by a tenured professor somewhere. Perhaps the fact that the government subsidized the American farmer and thus drove down the cost the raw materials needed to make bread played a factor? Either way, life is easier and the cost of living is cheaper today, right? This is the lie you’ve been told. This section suggests these assumptions are inaccurate and outright dangerous.

The annual or real median income level reported above includes the incomes of multimillionaires and billionaires in the census. The key term is “median.” Remember, in school, you probably learned that mean is the average, median is the “middle” value and mode is the highest frequency (most repeated) value. One would have been better suited to explore the mean or mode for the “real income level” but in doing so, statistics begin to look unfavorable for the American worker.

How would these results change if a minimum wage earner were examined? The federal minimum wage, in 2013, was $7.25. Per day, a minimum wage earner in 2013 earned $58.00. This would translate to approximately 15.5 loaves of bread per workday; a far cry from the potential 60 loaves in 2013 earned by the “median” American data and well below even an average laborer in 1900. With these calculations, for a minimum wage earner to earn the equivalent commodities (in this example, bread), the minimum wage for a U.S. laborer would need to earn a minimum of $18.75 per hour. These results do not compensate for state or federal taxes; however, this is not a call for an $18.75 per hour minimum wage. By simply raising the minimum wage, short-term purchasing power is increased, yet, in the long term, simple inflation washes away the purchasing power. For example, in an America with an $8.00 minimum wage, perhaps a loaf of bread is $4.00. In an America with an $18.75 minimum wage, that loaf of bread may double in price; moreover, the taxes paid by the employee would increase.

Unfortunately, simply raising the minimum wage of American employees will not solve the issue. A massive influx of dollars by the Federal Reserve has crushed any hopes of the poverty line moving in any direction but up. Detailing the current issues with the inflationary challenges presented by a fiat currency and the challenges presented in this article, in reference to an increased cost of living but decreased currency for survival, one can imagine the impossible task presented to a minimum wage worker attempting to provide for their family as well as attempt to prepare for the future.


For thousands of years, gold was the “go to” store of value for individuals, nations and thriving economies. There are history books riddled with tales of everything from buried treasure to mass murder in attempts to take possession of the golden rock. In several instances, physical gold backed printed paper currencies, well, that was until the debasement of the currency reached a threshold that was unstainable and the “backing” was broken. Queue Nixon’s 1971 speech and the lie in the use of the phrase “suspend temporarily” or Romans clipping the edges of coins or melting them down with cheaper metals. Again and again, we’ve been lied to.

Gold is good, but it isn’t perfect as a store of value. Each year around 2% is mined and thus, the supply increases. When the price increases, miners are incentivized to ramp up production, and thus, pricing fluctuates in accordance with the supply. Bitcoin is different as there will only be a set supply ever created, 21 million. Moreover, as currency continues to be printed, gold continues to be mined, Bitcoin’s production remains constant, until, well, there are no more to be mined, ever.

This will be the second major lie I’ll cover. Big banks, media tycoons, members of Congress, senators, politicians, doctors, lawyers, dentists, professors, peace officers, even some kids, own bitcoin. The Chinese government essentially banned Bitcoin and yet they own, as of 2021, around 300,000 coins. American politicians seek to regulate the digital asset on one hand, and mayors and professional athletes are scurrying to be paid in bitcoin as the legal landscape unfolds.

What do many of these pro-Bitcoin Americans know about the digital asset that non-Bitcoin owners do not? My assumption is that, honestly, most Americans haven’t given this much thought. Odds are, you are in one of a few camps at this point. One, you hold bitcoin and continue to accumulate — as such you’re probably reading this article for affirmation, I feel you. Two, you do not hold bitcoin and are beginning to become increasingly aware that your purchasing power has been diminished — it’s OK to ask questions, this community is a good egg for the most part. Three, you own some Bitcoin, or have in the past, but you trade altcoins like a degenerate in your mom’s basement — no love lost here, but please don’t begin to spew those OG arguments about BitcoinSV and how massive gains in LawnClippingsCoin are the only way to go for real gains. The question I have for the third group is this: What is your end goal for the coin(s), NFTs or tokens that you hold? If the answer is to sell them at a profit, then that is the ultimate trajectory for the coin, to be habitually “gotten rid of” so please be careful with those hot potatoes.

Bitcoin is different. The holders of the digital asset, in many instances, may never sell, ever. Many see the asset, the property, beyond something of “digital gold;” they see digital property, digital real estate and a claim on future prosperity. This mindset should tell you more about the trajectory of Bitcoin than the daily price predictions. Non-Bitcoin holders, your first step in considering when to “get off of zero” (i.e., not holding any Bitcoin) is to work to answer the questions I’ve laid out above. Consider yourself, your family and those you care for. Explore options of how to “store your economic energy” and what instruments and tools are at your disposal. After hundreds of hours of homework (years for me), you’ll probably come to the same conclusion I did in 2016 (after being exposed to cryptocurrencies in 2012). Bitcoin (BTC) is a potential solution. Bitcoin, with all the volatility and negative news at times, is my safer bet, long term, than the dollar. Now, I could be wrong, we could all be wrong, and there is always the disclaimer that this is not financial advice and that I’m not a financial planner, however, what keeps me up at night is knowing that every dollar I have today will purchase less tomorrow. One suggestion, exchange your fiat, depreciating, U.S. dollars, when you have excess, for a true store of value. From my perspective, that store of value is bitcoin. Do this every day, week, month or year. Accumulate, buy often and consistently. I wish you the best.

Tyler Durden
Mon, 11/29/2021 – 03:30

Author: Tyler Durden

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Jim Quinn: Fear Of Our Escalating Power Is Leading Elites To Increasingly Reckless Directives

Jim Quinn: Fear Of Our Escalating Power Is Leading Elites To Increasingly Reckless Directives

Authored by Jim Quinn via The Burning Platform…

Jim Quinn: Fear Of Our Escalating Power Is Leading Elites To Increasingly Reckless Directives

Authored by Jim Quinn via The Burning Platform blog,

The Wall Was Too High, As You Can See

Hey you, out there in the cold
Getting lonely, getting old
Can you feel me?
Hey you, standing in the aisles
With itchy feet and fading smiles
Can you feel me?
Hey you, don’t help them to bury the light
Don’t give in without a fight

Pink Floyd – Hey You

I wrote an article in December 2012, a week after the Newtown school shooting, called Hey You. My interpretation of this classic Pink Floyd song was related to how our culture has created generations of alienated and isolated people, allowing Big Pharma to peddle their pharmaceutical concoctions to the masses as the “easy” solution to living “normally” in a profoundly abnormal society. My contention was these mass shootings by young men (Newtown, Columbine, Aurora, Virginia Tech, Tucson) were caused by the Big Pharma psychotropic drugs prescribed to all these young killers by sick industry peddlers (aka physicians).

The hugely profitable Big Pharma solution to alienation, isolation and depression is drugs that turn a percentage of those afflicted into psychotic killers. The article’s premise was how our techno-narcissistic society, encouraged and enabled by our totalitarian overlords through mind manipulation, drugs, public education indoctrination, and propaganda, has purposely created the alienation, isolation, and hopelessness to further their goals of power, control, and wealth.

When it comes to dystopian literature, there is always a clash between Huxley’s softer totalitarianism versus Orwell’s boot on your face tyranny when assessing how our governments enforce their dictates upon their subjects. The Wall certainly has an Orwellian bent, as it explores the issues of abandonment, isolation, alienation, authoritarianism, the brutality of war, a tyrannical conformist educational system, and the walls individuals and society build to protect themselves from having to confront reality and deal with the consequences of their actions.

Once alienated from society, having built a wall between yourself and the outside world, attempting to reengage with society can be almost impossible, as the wall becomes too high, and no one can hear your pleas. Sometimes, there is no escape.

The opening lyrics are haunting to me. I have felt like I’ve been out in the cold since the outset of this pandemic of herd madness in March 2020. I’ve gotten older and feel older. While family, friends, and coworkers have been drawn into this vortex of falsity, I feel like I am standing alone behind walls constructed by the government, the media, and society in general. It’s lonely when you chose to make a stand against the lies being peddled 24/7 by corrupt politicians, fake news pundits, faux medical “experts” bought off by Big Pharma, mega-corporations, and Hollywood propagandists playing their parts. These demonic forces have tried to bury the light of truth under an avalanche of lies.

I’m unsure of their true purpose, but I am sure it will not be beneficial to me, my family or the honest hard-working people trying to survive this dystopian nightmare. Most days it feels like the evil forces arrayed against me and other lovers of liberty and freedom have the upper hand and cannot be defeated. I do feel isolated and alienated from the majority, as they have been psychologically manipulated to obey their masters, as their double vaccine dose, now requires a booster after six months, and will require annual boosters for eternity. They will unquestioningly submit, without ever using their critical thinking skills to grasp these are not real vaccines and do not work. I will not give in to their mass psychosis.

Since I was relating the song to the Big Pharma drug induced mass shootings, my 2012 article gravitated towards Huxley’s view of totalitarianism, as he believed our overlords would use pharmaceuticals, conditioning, and mind control to achieve their evil means.

“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” – Aldous Huxley – Brave New World

“And always, everywhere, there would be the yelling or quietly authoritative hypnotists; and in the train of the ruling suggestion givers, always everywhere, the tribes of buffoons and hucksters, the professional liars, the purveyors of entertaining irrelevances. Conditioned from the cradle, unceasingly distracted, mesmerized systematically, their uniformed victims would go on obediently marching and countermarching, go on, always and everywhere, killing and dying with the perfect docility of trained poodles.” –  Aldous Huxley

My dire view of our future was just as grim nine years ago as it is today. My belief was the alienation and isolation created by our sprawling, automobile dependent, technology obsessed, government controlled, debt financed society had spread like a cancerous tumor, slowly killing our country. As with most of my early articles I gravitated towards our dire fiscal situation and how it was surely unsustainable. My example was:

Since 1979, Total Credit Market Debt in the United States has risen from $4.3 trillion to $55.3 trillion, a 1,286% increase in 33 years.

It had gone up $51 trillion in 33 years. Well guess what? It now stands at $85 trillion, up another $30 trillion in 9 years, with no deceleration in sight. Since I wrote that 2012 article, the national debt went from $16 trillion to $29 trillion (up 81%), GDP went from $16 trillion to $23 trillion (up 44%), the Dow went from 13,000 to 36,000 (up 177%), and consumer debt went from $2.9 trillion to $4.4 trillion (up 52%).

As usual, the plebs went further into debt, while their overlords saw their trillions in stock holdings almost triple in nine years. I thought the debt growth was unsustainable, but the Fed said hold my beer. Their debt creation orgy accelerates by the minute, with real inflation (as opposed to the fake BLS bullshit) running in excess of 10% hitting average Americans, while the Wall Street oligarchs get richer by the second. Even using the BLS bullshit inflation figures, the USD has lost 17% of its purchasing power since 2012, again screwing the little guy.

The USD has lost 96.4% of its purchasing power since the creation of the Federal Reserve in 1913. So much for meeting their “mandate” of stable prices. Do you get it yet? The Fed’s job is to enrich their owners (bankers & billionaire oligarchs) while enslaving you in debt and making sure your meager wages buy less and less each year. This is where the “You Will Own Nothing and Be Happy” slogan begins to make sense.

The Build Back Better slogan, created by Schwab and his Davos co-conspirators, really refers to building a better wall around the plebs so they remain isolated, alienated and under control. Roger Waters has explained the song Hey You was also an exhortation to make connections with people, help each other, and overcome the alienation and isolation created by those pulling the strings of our societal dystopia.

When I heard the song on the radio the other day, my take on the lyrics is now colored by the last two years of this engineered, weaponized, marketed Covid pandemic. The alienation and isolation have not been a choice of individuals, but a mandate from our authoritarian overlords. The wall is being built by those who want to destroy our existing structural paradigm and replace it with something they consider better, but which will be far worse for liberty and freedom minded individuals.

A more Orwellian dystopia is being ushered in by Soros, Gates, Schwab and their chief lieutenants Biden, Pelosi, Fauci, Powell, along with the other highly paid apparatchiks in government, media, medical industrial complex, and military industrial complex.

We were already in the death throes of the most dysfunctional, decadent, delusional, debt engendered era in the long history of mankind. Their debt saturated “solutions” from 2008 through 2019 reflected an air of desperation. Those in power realized their stranglehold on the narrative was slipping away and were in danger of seeing a sudden decline in their wealth and control over the masses.

Rather than accept their slightly less profitable fate like normal human beings, these psychopaths have doubled down by using a relatively non-serious flu for anyone under 85 years old and not morbidly obese, to try and implement a new world order, where they continue to reap all the benefits and the masses incur the pain, suffering and death. The diabolical aspects of this evil undertaking are almost too outrageous to believe. They have redoubled their propaganda endeavors in order to convince the ignorant masses to willingly love their servitude.

But it was only fantasy
The wall was too high
As you can see
No matter how he tried
He could not break free
And the worms ate into his brain

Pink Floyd – Hey You

In today’s circumstances those lyrics reflect this fantasy/nightmare of Covid being used as the justification to destroy our economic system, drive hundreds of thousands of small businesses into bankruptcy, locking people in their homes for months, mandating useless masks as a dehumanization and fear tactic, mandating the injection of an experimental gene therapy into our bodies as a requirement to make a living, and using a bottomless supply of lies and media propaganda to convince an already dumbed down populace to beg for increased levels of servitude to those who haven’t been right about one thing since this scamdemic was launched.

As others have noted, this hasn’t been a pandemic, it’s been an IQ test. And as a society we’ve scored low enough to be put on the short bus to the school for the slow-witted. The global oligarchs began constructing our wall, but millions of willing collaborator Karens and Todds are gleefully adding bricks to that wall.

I’ve been flabbergasted since the outset of this propagandized and highly marketed fearfest, over a strain of the annual flu, by the lack of critical thinking skills exhibited by average Americans and their inability to understand simple mathematical risk calculations when they are told blatant lies by the likes of Fauci, Walensky and a plethora of Big Pharma bribed “medical experts” paraded on the boob tube every day. They have let feelings, emotions, and false narratives guide their actions, rather than facts, data, and scientific proof.

Everyone has the freedom to verify what they are being told and calculate for themselves the 99.7% overall survival rate and 99.999995% survival rate for those under 25 years old. But they have been psychologically compelled to not question the State or embrace their Constitutional freedom to dissent and not comply. They unquestioningly inject their children with these drugs when unequivocal evidence shows a much higher risk from the jab than from Covid. Huxley realized decades ago a weak-minded populace could be easily manipulated. We have now reached peak complicity, compliance and cowering to the national State and those pulling the strings of our government.

“This concern with the basic condition of freedom — the absence of physical constraint — is unquestionably necessary but is not all that is necessary. It is perfectly possible for a man to be out of prison and yet not free — to be under no physical constraint and yet to be a psychological captive, compelled to think, feel and act as the representatives of the national State, or of some private interest within the nation, want him to think, feel and act.” –  Aldous Huxley

Huxley was not a big fan of technological “progress” as he just saw it as a more efficient means of going backwards. Those who believe technology is the answer to all of our problems are either insanely myopic or profiting from this fallacy. Technology has certainly contributed to allowing corporations to generate profits through efficiencies, marketing, logistics, and replacing human beings with computers and robots.

Technology has also made it very efficient for the State to utilize propaganda, fear, and social indoctrination through electronic media to control the population and manipulate the narrative to suit their diabolic purposes. For the few who dissent from their commands, technology is used to sensor, de-platform, restrain, monitor, and destroy their lives, if necessary.

Modern technology has a dual purpose, as an entertainment aphrodisiac, and an electronic boot stomping on your face forever. They want you distracted, amused, and consumed by trivialities, while they execute their wealth pillaging scheme and slowly build a technological wall which grows ever higher and impossible to escape. Consumption, diversion, and obedience is all they asked.

Societal stability, in the eyes of the sociopath unseen rulers behind the curtain, is based upon state designed happiness, social indoctrination disguised as public education, endless war, fear-based propaganda, and the use of pharmaceuticals to alleviate dissent and wrong thinking. Normalcy, traditional families, community standards, hard work, thrift, self-responsibility, neighborly connections, faith, and self-governing are all antithetical to the societal breakdown required to implement the Great Reset. Therefore, these values are banned in the world we inhabit today.

The best laid plans of the ruling class began to go awry in late 2019, as the gears of the financial system began to grind and fracture. The never-ending Trump coup was floundering under the weight of lies. Their wealth, power, and control were going to take a major hit. So, they decided to pull it. They had laid the groundwork for decades, creating generations trained to value material possessions, require instant gratification, shun critical thinking, let feelings guide their actions, believe debt acquired possessions constituted wealth, trust politicians are working in their best interests, and do whatever those deemed “experts” by the corporate media tell them to do.

They have created tens of millions of mentally ill sheep who only appear normal because they fit in to this profoundly abnormal society, where they forfeited the thinking and decision making for their lives to people like Gates, Soros, Biden, Fauci and Zuckerberg, who despise them. Because of their government created neurosis and cowardly compliance, we are all victims, and the wall we must scale to escape gets higher by the day.

“The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives that they do not even struggle or suffer or develop symptoms as the neurotic does. They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.” –  Aldous Huxley

The walls erected within Roger Waters’ lyrics were figurative, referring to the isolation and alienation from society chosen by an individual (himself). My interpretation, based on what myself and many others are experiencing today, is more literal, with the isolation and alienation being created by government and their mentally ill, willfully ignorant advocates of lockdowns, masking, jabs, mandates, passports, quarantine camps, and coercion to command compliance.

This entire pandemic scheme has been designed as a divide and conquer undertaking, with the purpose of implementing their Great Reset plan to own everything while the plebs own nothing and happily do as they are told. For those of us not willing to go along with their plan, they have alternate arrangements in store. We are in the midst of this struggle for the future of our country and the world.

The Party has told you to reject unequivocal facts during this entire engineered psychological operation. They convinced the vast majority of the population to be terrorized by a virus with a 99.7% survival rate that only kills the very old and the very obese. They said it didn’t come from the Wuhan lab and wasn’t funded by Fauci. They convinced the masses masks worked when they knew they didn’t.

They said a fifteen-day lockdown would slow the spread and end the pandemic. They said their vaccines would immunize you from catching Covid before they changed the definition of vaccines and told you it was always supposed to just reduce the symptoms. They have convinced a couple hundred million people to participate in an experiment as guinea pigs for an unproven untested gene therapy.

They continue to proclaim vaccines work, even though they don’t, and of course get your booster, also because they don’t work. They refuse to acknowledge natural immunity to be far more effective and long-lasting than their jabs. No money to be made from natural immunity. They have censored and de-platformed anyone who showed proof ivermectin and hydroxychloroquine worked better than the vaccines.

No money in subscribing either safe and effective treatment. They deny the vaccines have caused millions of adverse reactions and tens of thousands of deaths. They have instructed you to reject all of this evidence of their deceit and demonic designs to abscond with your wealth, freedoms, and liberties.

As we enter Biden’s dark winter, you can sense the desperation of the Party/Deep State/Oligarchy as they employ more coercive and destructive tactics to force the non-compliant to obey and do as they are told. They are attempting to isolate and alienate those who refuse to submit to their clearly unlawful vaccine mandates by excluding them from society and threatening their livelihoods.

The threats and intimidation have succeeded with a significant portion of the holdouts, but tens of millions are refusing to bend the knee. Many feel alone in their resistance to these totalitarian measures, as those in control of the narrative have painted a picture of only a small minority of conspiracy theorists rejecting their Great Reset authoritarian blueprint. The wall seems too high for many.

The truth be told, their blueprint is growing stale, as they desperately attempt to strike fear into the masses with their latest variant of the month. The truth is they fear our opposition. They fear we will inspire more people to resist. They fear we will band together. They fear the truth, which is the backbone for our resistance. They fear we are heavily armed. They fear us realizing we are actually the majority. They fear they are starting to lose.

Their fear of our escalating power is leading them to make increasingly reckless and drastic pronouncements and demands. The push back to their directives is gaining in intensity. They believe they can make the wall high enough to deter those who could foil their Great Reset scheme. The odds are in their favor because they control the politicians, media, corporations, and the minds of the indoctrinated sheep, but don’t tell me there’s no hope at all. We have truth, the Constitution, the 2nd Amendment, and millions of liberty-minded truculent partisans who will not bend to their will. We have no choice but to fight, using any means at our disposal. We realize we must stand together, because divided we will fall.

Hey you, out there on the road

Always doing what you’re told

Can you help me?

Hey you, out there beyond the wall

Breaking bottles in the hall

Can you help me?

Hey you, don’t tell me there’s no hope at all

Together we stand, divided we fall

Pink Floyd – Hey You

*  *  *

The corrupt establishment will do anything to suppress sites like the Burning Platform from revealing the truth. The corporate media does this by demonetizing sites like mine by blackballing the site from advertising revenue. If you get value from this site, please keep it running with a donation.

Tyler Durden
Sun, 11/28/2021 – 23:30

Author: Tyler Durden

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Weekly Market Pulse: This Again??!!

Here we go again. Or maybe, more accurately here we go still. COVID has reared its ugly head again, this time in the form of a new variant called Omicron….

Here we go again. Or maybe, more accurately here we go still. COVID has reared its ugly head again, this time in the form of a new variant called Omicron. The name surprised some folks because the next letter in the Greek alphabet was Nu but the WHO thought that sounded too much like “new” so they skipped that one as Greek speakers are generally confined to Greece these days. And the next letter was “Xi” which the WHO said was a common last name and that their policy required “avoiding causing offense to any cultural, social, national, regional, professional, or ethnic groups.” Well, goodness no, wouldn’t want to offend anyone, certainly not the most famous man with the last name of Xi. What I’m trying to figure out is if I actually slept through epsilon, zeta, eta, iota, kappa, lambda and mu or if WHO thought those might offend someone too, like maybe some fraternity or sorority. They sure didn’t seem to mind offending Animal House fans by naming the last one Delta. Maybe they were worried about offending nerds (Lamda, Lamda, Lamda). Ah, WHO cares?

About the only thing we know for sure is that last Friday’s selloff didn’t have anything to do with the name because that happened while the WHO was deep into research on the Greek alphabet and who it might offend. We were having a nice pleasant Thanksgiving week, eating turkey and ham and yams, watching football – if that’s what you call what the Lions play – and just generally enjoying a couple of days away from the market when WHAM! Here comes Mu or Nu or Xi or Omega or whatever and the market tanks like it hasn’t done since all the way back in February. Worst week since, um, well, last month. The S&P 500 was down 2.2% last week which, in normal times, would be barely worth a mention. But in today’s speculative market, that qualifies as a correction and Twitter is all atwitter this evening about the rebound everyone expects tomorrow.

We don’t know anything about this new variant yet and so there is no way to judge the impact. Yes, some countries are closing borders but they can be opened just as quickly. I have said since the onset of this pandemic that we better learn how to live with this thing because it isn’t going away. And unless Omicron turns out to be an extremely deadly version of COVID, my guess is that people are just going to go on with their lives; COVID exhaustion has set in. So, whatever the state of the economy was prior to the arrival of the big O, that’s what it is now too no matter the WHO’s permanent state of panic.

The global economy is still recovering from the COVID shock – the shutdowns and the response. The first two quarters of this year were a big rebound as the vaccines were rolled out. Last quarter was a bummer with the emergence of the delta variant (or at least that was the accepted wisdom). And this quarter so far is looking like a pretty good rebound from that slowdown. The Chicago Fed National Activity index rebounded in October to 0.76, a big improvement from -0.18 in September. The 3 month average is now 0.21, showing growth as just a bit above trend. Until the new variant news hit Friday, markets were starting to confirm the improvement in the economy. Both nominal and real rates were up on the week – for a change – and the economic data was almost uniformly positive. But rates were down hard on Friday and finished the week in the red. We’ll see if that lasts this week.

When it comes to economic and market data I try not to react too much to any one report. I learned a long time ago that the first pass on economic data is really just a guess and revisions can change your entire view of the economy. And this week we got reason number bajillion why that is true. Last month we got a report on goods trade that showed a large drop in exports. A lot of pixels were expended in explaining why that was a big warning sign about the global economy. But the drop was confined to one category of goods called “industrial supplies” and I warned that we didn’t know what caused it. Well, since then we discovered that the biggest drop was in “non-monetary gold” which means essentially nothing to the global economy. I don’t know why it dropped that month but it rebounded this month and the entire drop has now been wiped away. There were some other weak items in that category as well – crude oil and petroleum products – but none of it was that surprising or important to the global economy. The point is that one shouldn’t make any rash judgments about the markets or the economy based on one report.

And the same applies to the latest virus news, whatever it might be. The emergence of the Omicron variant could be negative – or not. It may evade the vaccines – or not. It may be deadly – or have mild symptoms with low hospitalization and death rates. We just don’t know. I do believe, based on my own reading about coronaviruses, that COVID-19 will eventually mutate into something our immune systems can handle. It could become like the flu or even better like the common cold (which is actually a bunch of viruses). That is, after all, what coronaviruses do (not all viruses obviously). They evolve and mutate to a form that allows it and its host to survive. How long that takes is anyone’s guess but if history is a guide it doesn’t happen quickly. You could be talking years before we reach that point. In the meantime, we need to do the best we can and live with it. Because it isn’t going away. Still.


As I said above, the economic data released last week was almost uniformly positive. New and existing home sales rebounded although both are still down year over year. Durable goods were lower for the second straight month but ex-transportation orders were up a solid 0.5%, the eight consecutive monthly gain. Core capital goods were also higher again, up 0.6% for the sixth consecutive gain.

Personal income and consumption were both up in October as wages and salaries continue to move up. Incomes fell off some after the end of the extended unemployment benefits but that is rapidly fading in the rear view mirror. Consumption remains well above the pre-COVID trend and shows little sign of abating. And by the way, that is true of real, inflation adjusted consumption too. Incomes are still struggling a bit after inflation and taxes are taken into account; real disposable income was down 0.3% last month and 0.9% year over year.

Despite that we continue to classify the current environment as one of falling growth. That is primarily due to real rates which are still near their lows of this cycle at -1.07% for the 10 year TIPS. The nominal 10 year at 1.48% is still quite a bit below the peak last spring of about 1.75%. Lastly, the yield curve continues to flatten although it is still a long way from flat or inverted. The dollar is also still in an uptrend, hitting its highest level since June 2020 last week before pulling back on Friday. While we might see some near term weakness the short term trend is obviously up.


We get more housing data this week in the form of pending home sales which will give us a better idea of how the market is right now.

Jobless claims should be interesting this week. Last week’s report dropped under 200k. The last time initial weekly claims were that low the summer of love was just ending (September 1969 for all you youngsters out there). It seems like a possible seasonal adjustment mistake but maybe not. The trend should put this week’s number up around 250k.

We get payrolls this week and that is often a market moving event. It is backward looking and subject to huge revisions but for some reason people still pay attention so we will too, at least for this week.

Finally, we get the ISM reports this week.

Stocks were down across the board last week while bonds were mostly higher (in the chart below is shows the 3-7 Year Treasury index as down for the week but that is wrong for some reason; the ETF for the index was up on the week.) Corporate bonds, high grade and junk, were down last week as spreads have widened every so slightly. Junk spreads are still very tight historically so just something to keep an eye on at this point.

Commodities also took a beating last week as crude oil dropped below $70. Blame it on omicron I guess but it was due for a pullback in any case. The commodity line below is the GSCI index which we sold months ago. Our preferred index right now is the BCOM which was down about half as much as the GSCI last week. In any case, commodities are still the best performing asset of the ones we track and own in our portfolios.

In a strong dollar year it isn’t surprising to see foreign markets lagging. Global ex-US stocks are up just about 5% this year while EM, Asia ex-Japan and China are all down YTD. Japan is clinging to a small gain. It is hard to fathom the gap in performance between US and international markets over the last decade. Just truly stunning and the reversal, when it comes, will likely be just as spectacular. But we aren’t there yet.

Value outperformed last week but it wasn’t anything to write home about.

With everyone expecting the market to rebound tomorrow I wouldn’t be surprised at all to see us take another leg down. A lot of Friday may have been nothing more than a convenient excuse to take profits in a wildly overvalued market. A 2% down day hasn’t changed that. About the only thing that would is a certified bear market but with the economy at least okay for now, that doesn’t seem likely. So, what do we do to our portfolios? Nothing is the usually the best answer to that and this is no exception. Our portfolios continue to be defensive with a larger than normal allocation to cash. That’s what the current environment of falling growth and rising dollar calls for. Maybe omicron will be the catalyst for the long overdue correction of at least 10%. With margin debt as high as it is, it probably wouldn’t take much more to really accelerate the selling, forced or otherwise. And 10% is nothing, a normal market fluctuation that comes, on average, about every 19 months. This is the 20th month since the bottom of the COVID bear. Just sayin’.

Joe Calhoun

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