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Weekly Market Pulse: Inflation Scare!

The S&P 500 and Dow Jones Industrial stock averages made new all time highs last week as bonds sold off, the 10 year Treasury note yield briefly breaking…

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This article was originally published by Alhambra Investment Market Research

The S&P 500 and Dow Jones Industrial stock averages made new all time highs last week as bonds sold off, the 10 year Treasury note yield briefly breaking above 1.7% before a pretty good sized rally Friday brought the yield back to 1.65%. And thus we’re right back where we were at the end of March when the 10 year yield hit its high for the year. Or are we? Well, yes, the 10 year is back where it was but that doesn’t mean everything else is and, as you’ve probably guessed, they aren’t. In the early part of this year, the 10 year yield was rising as anticipation built for a surge in post vaccination economic growth. The 10 year yield rose about 85 basis points from the beginning of the year to the peak in late March. 10 year TIPS yields, meanwhile, were also rising, a little more than 50 basis points. There was agreement between the two that growth expectations were improving, inflation expectations rising a bit more than real growth expectations. The 10 year Treasury ended March right about where it was last Thursday, 1.7%. But there is considerably less agreement between the two markets now with the 10 year TIPS yield still 35 basis points lower (more negative) than the March peak.

So, no, things are not back where they were. The recent rise in nominal bond yields is much more about inflation fears than growth hopes. Markets provide us with a wealth of information that allows us, to some degree, to get inside the heads of investors. The changes in the bond markets recently show that investors have a very specific and nuanced view about the economy. They are certainly concerned about inflation and doing what people do when they are scared – trying to protect themselves. TIPS have been very popular of late for exactly that reason, as the inflation narrative gets louder and louder. But what is interesting is that, in a way, investors are taking the Fed at its word, that the inflation is transitory. The 5 year breakeven inflation rate hit 2.91% last week while the 10 year rose to 2.64%. But the 5 year, 5 year forward rate (5 year inflation expectations starting 5 years hence), has fallen over the last week to 2.37%. Investors think inflation will average nearly 3% over the next 5 years but less than 2.4% over the following 5. So investors do see inflation as transitory even if their definition of the term seems quite a bit different than the Fed’s.

Another big difference between now and March is the steepness of the yield curve. The 2 year note yield has been on a steep rise of late, up 140% since the beginning of September, with most of that coming in October. The 2 year rate roughly doubled in the early part of the year too but the absolute change was small because rates started so low. The recent change in the 2 year has been more rapid than the 10 and is being driven by expectations for Fed policy changes. The 10/2 curve was 1.58% at the end of March but just 1.18% today. The short term trend is still toward steeper but the climb has stalled a bit:

I interpret these changes in the obvious way. Nominal growth expectations are rising with most of the recent change focused on inflation but with some pickup in real growth expectations too. In addition, investors do not seem willing to believe yet that inflation is a long term problem. Given the high profile of the inflation narrative and the lack of much concrete evidence of a growth pickup, these changes seem perfectly rational and reasonable. I think it is important to note too that these changes in inflation expectations are small but also rapid. The 10 year breakeven rate is up about 65 basis points this year but over half of that has happened in the last month. The same is true for the 5 year breakeven rate. As for the change in real growth expectations I’d just say that it isn’t very impressive regardless of the rate of change. Unfortunately, that makes sense too since, as I discussed last week, we haven’t done anything to change the trajectory of either workforce or productivity growth. My long term expectation for growth hasn’t changed much since the first few months of COVID. We came into it with growth averaging roughly 2.2% over the previous decade. After adding a lot of debt to that economy during the pandemic my assumption is that, when things finally settle out from the virus and the response to it, economic growth will be lower. How much? I don’t know of any way to quantify that.

But that long term expectation is just that, long term. It doesn’t say anything about growth over the near term, the next 6 to 12 months. We’ll get a report on Q3 GDP next week and all indications are that it will be a pretty big fall off from the first half of the year. But anyone who’s been paying the slightest bit of attention knows that so it really won’t matter. Investors will be focused on the current quarter and the one after that. Will there be a reacceleration in growth as the delta variant fades? Will businesses be able to get goods for Christmas or will America get a lump of coal in its stocking? Or are we out of coal too? I don’t know but I do think we need to be careful about getting too negative about, at least, the immediate future. Inflation expectations can change rapidly while growth expectations take more time so TIPS and nominal yields are often on different songs, even if in the same hymnal.

I don’t generally put much emphasis on the PMIs or regional Fed surveys. They are basically sentiment surveys and rely on people’s anecdotal observations which, as we know, can be skewed for a whole host of reasons. But they can be interesting at turning points, inflection points, where sentiment does have a bearing on actions and ultimately the economy. While I don’t think we’re near a negative inflection point, the Philly Fed survey and the Markit PMIs do seem to point to a more positive near term outlook. The Philly Fed survey itself was down considerably from September but it is still higher than 3 months ago and the details hint at a near term pickup. The new orders index rose to 30.8 from 15.9, employment to 30.7 from 26.3. They also asked a special question about capital spending plans that showed expectations for increased spending in 5 of 6 categories for next year:

Of course, those expectations could change dramatically if Q4 turns out to be a bust but it is, for now, a positive indication for future growth.

The Markit PMIs also offered some near term optimism as the overall measure rose to 57.3 from 55 in September. That’s the best in 3 months with a sharp rise in service sector activity and a 3rd consecutive month of slowing in manufacturing activity (which is still at a high level). New orders in services rose at the fastest pace in 3 months. Job creation was the highest since June although companies still report having a hard time finding workers. All of this is perfectly consistent with the expectations for a growth resurgence post delta. Will those expectations be met? I don’t know obviously but if these expectations start to be met, we should see a response in the bond market with better balance between TIPS and nominal bonds.

There was also some potentially good news in the Census Bureau’s weekly household pulse survey which showed a big drop in people reporting not working.

Again, I don’t think we should put a lot of emphasis on these surveys. I’m always more interested in what people are doing rather than what they say they’re doing and especially what they say they intend to do. But these seem to be more significant changes than we’d normally see month to month.

We’re going through a bit of an inflation scare right now and we can see the changes in markets. They are fairly small changes though and they can, probably will, change again in coming weeks. Growth and inflation expectations are always changing as new information enters the market. Millions of investors speculate about how the future will look and their bets on that future move markets as new consensus expectations emerge. And the market changes that come from these new expectations also affect the economy in an ongoing feedback loop that changes expectations and markets again in a never ending search for equilibrium. The ebb and flow of the markets and the economy are intertwined, one influencing the other to produce the best prediction of the future we’ll ever get. Just don’t get too attached to that future because it can – and often does – change quickly.

————————————————————————————————————————————————————————————————————————————————————————————————————————-

The economic environment is unchanged.

The trend in the nominal 10 year rate is obviously up

But we’re interested mostly in real growth expectations and TIPS yields are not in an uptrend yet:

The dollar remains in a short term uptrend but we are at a pretty obvious resistance point. In addition, the futures market shows a pretty strong preference by speculators for the long side of the dollar trade. So the short term trend may be running into some trouble and with real rates still flailing at low levels, I think that makes a lot of sense. The real long term trend of the dollar is no trend at all, still stuck in the middle of a 10% trading range that has prevailed for now 7 years:

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Despite my comments above about the Philly Fed survey and the Markit PMIs (not shown here), the economic data wasn’t that encouraging last week. Industrial production was down for the second straight month but there were a lot of caveats. Hurricane Ida is alleged to have taken 0.6% off the total and the auto industry is still flagging due to the chip shortage. Mining output (shale) was down, shocking exactly no one except maybe Joe Biden. On a more positive note, IP rose at a 4.3% annual rate in Q3, the fifth consecutive quarterly gain over 4%.

The Housing Market Index rose in September with single family especially strong. But the news on the new home front otherwise was not that great with starts and permits both down. Existing home sales did have a big rise but that was probably driven by rising mortgage rates.

 

A lot of data releases next week with GDP the highlight for most observers. The more important items will be the CFNAI to get an idea of how much we’ve slowed overall, durable goods orders and especially core capital goods orders, personal income and consumption and consumer sentiment.

 

 

We were reminded last week that US markets are still under the spell of speculators when a SPAC announced a deal with an entity associated with Donald Trump. Digital World Acquisition Corp. rose from $10 to, at one point, over $170 in two days of trading last week before settling the week up a mere 9 fold to $94.20. SPACs are Special Purpose Acquisition Corps or more commonly blank check companies. The fact that these companies with no business plan beyond a vague notion to purchase an operating company are so popular, is an indication by itself, of the speculative nature of these markets. But when a blank check company with no business plan acquires a shell company that consists of a powerpoint presentation and the stock has to come down to be up 9 fold in a couple of days, well, I think we’ve entered something beyond speculation. This is the post-modern economy where value is socially determined, reality is anything but objective, “where there are no hard distinctions between what is real and and what is unreal, nor between what is true and what is false”. It is an absurd world where the value of Donald Trump’s future social media empire is determined through the interactions of speculators on existing social media.

Back in the real world, stocks were up last week with the US continuing to outperform. Growth had a good week and the value/growth debate YTD now amounts to a draw. China rebounded last week as Evergrande made an interest payment and you may see a rebound in Chinese markets as people get comfortable with the heavier hand of the communist party. I’m going to have to miss that if it happens as I am decidedly not comfortable with China. There are other places in Asia that look a lot more attractive in my opinion, Japan prominent among them.

 

 

Real estate has recovered quickly and led last week but financials continue to perform well too. Healthcare had a good week after lagging recently.

With stocks near or at all time highs, it is easy to assume that means something about future economic growth. But stocks move based on expectations about future EPS growth which isn’t even close to the same thing. Last week’s move up in stock prices was more likely a consequence of the death of the corporate tax hike as the Biden economic plan continues to get pared down to something more manageable. The economy just isn’t the focus of stock investors right now but that could change if growth doesn’t pick up soon from the big Q3 slowdown. There is little evidence of that yet beyond the surveys I mentioned above so we won’t guess at the outcome. If real rates join nominal rates and start to rise more decisively, that will be a sign that we can be more optimistic. But we aren’t there yet.

Joe Calhoun

 

 






Economics

Now Or Never: The Great ‘Transition’ Must Be Imposed

Now Or Never: The Great ‘Transition’ Must Be Imposed

Authored by Alastair Crooke via The Strategic Culture Foundation,

A new wave of restrictions,…

Now Or Never: The Great ‘Transition’ Must Be Imposed

Authored by Alastair Crooke via The Strategic Culture Foundation,

A new wave of restrictions, more lockdowns, and – eventually – trillions of dollars in new stimmie cheques may be in prospect…

Were you following the news this last week? Vaccine mandates are everywhere: one country, after another, is doubling-down, to try to force, or legally compel, full population vaccination. The mandates are coming because of the massive uptick in Covid – most of all in the places where the experimental mRNA gene therapies were deployed en masse. And (no coincidence), this ‘marker’ has come just as U.S. Covid deaths in 2021 have surpassed those of 2020. This has happened, despite the fact that last year, no Americans were vaccinated (and this year 59% are vaccinated). Clearly no panacea, this mRNA ‘surge’.

Of course, the Pharma-Establishment know that the vaccines are no panacea. There are ‘higher interests’ at play here. It is driven rather by fear that the window for implementing its series of ‘transitions’ in the U.S. and Europe is closing. Biden still struggles to move his ‘Go-Big’ social spending plan and green agenda transition through Congress by the midterm election in a year’s time. And the inflation spike may well sink Biden’s Build Back Better agenda (BBB) altogether.

Time is short. The midterm elections are but 12 months away, after which the legislative window shuts. The Green ‘transition’ is stuck too (by concerns that moving too fast to renewables is putting power grids at risk and elevating heating costs unduly), and the Pharma establishment will be aware that a new B.1.1.529 variant has made a big jump in evolution with 32 mutations to its spike protein. This makes it “clearly very different” from previous variants, which may drive further waves of infection evading ‘vaccine defences’.

Translation: a new wave of restrictions, more lockdowns, and – eventually – trillions of dollars in new stimmie cheques may be in prospect. And what of inflation then, we might ask.

It’s a race for the U.S. and Europe, where the pandemic is back in full force across Europe, to push through their re-set agendas, before variants seize up matters with hospitals crowded with the vaccinated and non-vaccinated; with riots in the streets, and mask mandates at Christmas markets (that’s if they open at all). A big reversal was foreshadowed by this week’s news: vaccine mandates and lockdowns, even in highly vaccinated areas, are returning. And people don’t like it.

The window for the Re-Set may be fast closing. One observer, noting all the frenetic Élite activity, has asked ‘have we finally reached peak Davos?’. Is the turn to authoritarianism in Europe a sign of desperation as fears grow that the various ‘transitions’ planned under the ‘re-set’ umbrella (financial, climate, vaccine and managerial expert technocracy) may never be implemented?

Cut short rather, as spending plans are hobbled by accelerating inflation; as the climate transition fails to find traction amongst poorer states (and at home, too); as technocracy is increasingly discredited by adverse pandemic outcomes; and Modern Monetary Theory hits a wall, because – well, inflation again.

Are you paying attention yet? The great ‘transition’ is conceived as a hugely expensive shift towards renewables, and to a new digitalised, roboticised corporatism. It requires Big (inflationary) funding to be voted through, and a huge parallel (inflationary) expenditure on social support to be approved by Congress as well. The social provision is required to mollify all those who subsequently will find themselves without jobs, because of the climate ‘transition’ and the shift to a digitalised corporate sphere. But – unexpectedly for some ‘experts’ – inflation has struck – the highest statistics in 30 years.

There are powerful oligarchic interests behind the Re-Set. They do not want to see it go down, nor see the West eclipsed by its ‘competitors’. So it seems that rather than back off, they will go full throttle and try to impose compliance on their electorates: tolerate no dissidence.

A 1978 essay “The Power of the Powerless” by then dissident and future Czech President Vaclav Havel begins mockingly that, “A SPECTRE is haunting Eastern Europe: the spectre of what in the West is called ‘dissent’”. “This spectre has not appeared out of thin air. It is a natural and inevitable consequence of the present historical phase of the system it is haunting.” Well, today, as Michael Every of Rabobank notes, “the West has polarisation, mass protests, riots, talk of obligatory vaccinations in Europe, and Yanis Varoufakis arguing capitalism is already dead; and that a techno-feudalism looms”. Now, prompting even greater urgency, are the looming U.S. midterms. Trump’s return (even if confined just to Congress), would cut the legs from under BBB, and ice-up Brussels too.

It was however, precisely this tech revolution, to which Varoufakis calls attention, that both re-defined the Democrat constituency, and turned tech oligarchs into billionaires. Through algorithmically creating a magnetism of like-minded content, cascaded out to its customers, it has both smothered intellectual curiosity, and created the ‘un-informed party’, which is the today’s Managerial Class – the party of the credentialed meritocracy; the party, above all, smugly seeing themselves as the coming era’s ‘winners’ – unwilling to risk a look behind the curtain; to put their ‘safe space’ to the test.

Perversely, this cadre of professionally-corralled academics, analysts, and central bankers, all insist that they completely believe in their memes: That their techno-approach is both effective, and of benefit to humanity – oblivious to the dissenting views, swirling around them, down in the interstices of the internet.

The main function then of such memes today, whether issued by the Pharma Vaccine ‘Command’; the MMT ‘transition’ Command; the energy ‘transition’ Command; or the global managerial technocracy ‘transition’, is to draw a ‘Maginot line’ – a defensive ideological boundary, a “Great Narrative” as it were – between ‘the truth’ as defined by the ruling classes, and with that of any other ‘truth’ that contradicts their narrative. That is to say, it is about compliance.

It was well understood that all these transitions would overturn long-standing human ways of life, that are ancient and deeply rooted and trigger dissidence – which is why new forms of social ‘discipline’ would be required. (Incidentally, the EU leadership already refer to their their official mandates as ‘Commands’). Such disciplines are now being trialled in Europe – with the vaccine mandates (even though scientists are telling them that vaccines cannot be the silver bullet for which they yearn). As one high ‘lodge’ member, favouring a form of global governance notes, to make people accept such reforms, you must frighten them.

Yes, the collective of ‘transitions’ must have their ‘Big, overarching Narrative’ – however hollow, it rings (i.e. the struggle to defend democracy against authoritarianism). But it is the nature of today’s cultural-meme war that ultimately its content becomes little more than a rhetorical shell, lacking all sincerity at its core.

It serves principally, as decoration to a ‘higher order’ project: The preservation of global ‘rules of the road’, framed to reflect U.S. and allied interests, as the base from which the clutch of ‘transitions’ can be raised up into a globally managed order which preserves the Élite’s influence and command of major assets.

This politics of crafted, credentialised meme-politics is here to stay, and now is ‘everywhere’. It has long crossed the partisan divide. The wider point here – is that the mechanics of meme-mobilisation is being projected, not just in the western ‘home’ (at a micro-level), but abroad, into American ‘foreign policy’ too (i.e. at the macro-level).

And, just as in the domestic arena, where the notion of politics by suasion is lost (with vaccine mandates enforced by water-cannon, and riot police), so too, the notion of foreign policy managed through argument, or diplomacy, has been lost too.

Western foreign policy becomes less about geo-strategy, but rather is primordially focussed on the three ‘big iconic issues’ – China, Russia and Iran – that can be given an emotional ‘charge’ in order to profitably mobilise certain identified ‘constituencies’ in the U.S. domestic cultural war. All the various U.S. political strands play this game.

The aim is to ‘nudge’ domestic American psyches (and those of their allies) into mobilisation on some issue (such as more protectionism for business against Chinese competition), or alternatively, imagined darkly, in order to de-legitimise an opposition, or to justify failures. These mobilisations are geared to gaining relative domestic partisan advantage, rather than having strategic purpose.

When this credentialled meme-war took hold in the U.S., millions of people were already living a reality in which facts no longer mattered at all; where things that never happened officially, happened. And other things that obviously happened never happened: not officially, that is. Or, were “far-right extremist conspiracy theories,” “fake news,” or “disinformation,” or whatever, despite the fact that people knew that they weren’t.

Russia and China therefore face a reality in which European and U.S. élites are heading in the opposite direction to epistemological purity and well-founded argument. That is to suggest, the new ‘normal’ is about generating a lot of contradictory realities, not just contradictory ideologies, but actual mutually-exclusive ‘realities’, which could not possibly simultaneously exist … and which are intended to bemuse adversaries – and nudge them off-balance.

This is a highly risky game, for it forces a resistance stance on those targeted states – whether they seek it, or not. It underlines that politics is no more about considered strategy: It is about being willing for the U.S. to lose strategically (even militarily), in order to win politically. Which is to say gaining an ephemeral win of having prompted an favourable unconscious psychic response amongst American voters.

Russia, China, Iran are but ‘images’ prized mainly for their potential for being loaded with ‘nudge’ emotional-charge in this western cultural war, (of which these states are no part). The result is that these states become antagonists to the American presumption to define a global ‘rules of the road’ to which all must adhere.

These countries understand exactly the point of these value and rights-loaded ‘rules’. It is to force compliance on these states to acquiesce to the ‘transitions, or, to suffer isolation, boycott and sanction – in a similar way to the choices being forced on those in the West not wishing to vaccinate (i.e. no jab; no job).

This approach reflects an attempt by Team Biden to have it ‘both ways’ with these three ‘Iconic States’: To welcome compliance on ‘transition issues’, but to be adversarial over any dissidence to mounting a rules framework that can raise the ‘transitions’ from the national, to the supra-national plane.

But do the U.S. practitioners of meme-politics, absorb and comprehend that the stance by Russia-China – in riposte – is not some same-ilk counter-mobilisation done to ‘make a point’? That their vision does stand at variance with ‘the rules’? Do they see that their ‘red lines’ may indeed be ‘red lines’ literally? Is the West now so meme-addicted, it cannot any longer recognise real national interests?

This is key: When the West speaks, it is forever looking over its shoulder, at the domestic, and wider psychic impact when it is ‘making a point’ (such as practicing attacks by nuclear-capable bombers as close to Russia’s borders as they dare). And that when Russia and China say, ‘This is our Red Line’, it is no meme – they really mean it.

Tyler Durden
Sat, 12/04/2021 – 23:30







Author: Tyler Durden

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Precious Metals

Sound Money Is A Prerequisite To Peace, Prosperity, And Freedom

Sound Money Is A Prerequisite To Peace, Prosperity, And Freedom

Authored by Patrick Barron via The Mises Institute,

There are many good recommendations…

Sound Money Is A Prerequisite To Peace, Prosperity, And Freedom

Authored by Patrick Barron via The Mises Institute,

There are many good recommendations promoted by Austrian school economists for improving the economy. Although we enjoy successes periodically, most–such as deregulating trucking and airline pricing–involve eliminating previous government interventions. These successes are to be celebrated, of course. But no one can deny that government intervention into the economy has continued, despite these occasional success stories.

The reason Big Government has continued to grow is that it controls money production. Not only does government grow in terms of spending, regulations, and interventions everywhere (both internally and overseas), but it threatens our very freedoms. In other words, government’s control of money is diametrically opposed to peace, prosperity, and freedom and eventually will destroy our republican democracy. For this reason, returning to sound money–i.e., money that is created by the private market, is part and parcel of the market, and is controlled by no one–should be goal number one for every lover of peace, prosperity, and freedom. Nothing less than the survival of our western-style way of life is at stake.

Here are a few examples of how unsound money progresses and masks its destructive power.

  • One, unsound money allows government to confiscate resources at will. For example, in 2020 America’s bloated military spent as much as the next eleven nations of the world combined. Of course, military spending went up in 2021 and will continue to increase in 2022. America’s annual budget deficit is projected to be somewhere between $1.84 trillion and $3.4 trillion, depending upon whether you ask the Biden administration or the Congressional Budget Office. All of this money is created out of thin air. Americans’ taxes will not increase enough to cover even a fraction of the Biden estimate, and there is no appetite in the bond market for more American debt. Therefore, the Fed will monetize the new debt onto its balance sheet. The resulting increase in base money will cause the prices of most goods and services to rise. This impoverishment of the American people through the hidden tax of inflation is possible only because money is completely fiat; i.e., produced out of nothing except the government’s printing press and computer terminals.

  • Two, unsound money masks the destructive power of government market interventions. An example is former President Trump’s tariffs on Chinese goods. According to a friend of mine, the data is irrefutable that the tariffs worked. Well, as Mark Twain said, there’s lies, damned lies, and statistics. What really is irrefutable is the economic law of opportunity cost; i.e., that choosing one thing means the giving up of another. Another is individual preference. The very fact that people must not be allowed to purchase Chinese goods means that they valued those goods to a higher extent than American goods. The reason does not have to be financial. There’s always service, availability, quality, etc. So preventing Americans from buying Chinese goods means less satisfaction for Americans. This is just one example. Another is keeping zombie companies in business through artificially lower interest rates means that capital is misallocated to less productive uses. There’s a whole panoply of labor laws that artificially raises the cost of American labor, reduces American productivity, and lowers business income. Some workers are priced out of the market through minimum wage and mandatory benefit packages. Business has less capital to invest for expansion. New business starts are discouraged. There’s something there for everyone! The destruction is masked by monetarily inflated GDP numbers, artificially suppressed Consumer Price Index (CPI) statistics, increased unemployment payments, and other government programs and manipulated data.

  • Three, and most importantly, Americans’ freedom is threatened. Government can print enough money to buy unlimited enforcers of its rules. More IRS agents. More agents for enforcing arbitrary rules of the Occupational, Safety, and Health Administration (OSHA). More agents for enforcing new environmental regulations and laws arbitrarily established by the Environmental Protection Agency (EPA). More Drug Enforcement Agency (DEA) agents. Perhaps even agents to confiscate guns.

Conclusion

Returning to limited government, creating a more free market order, having a less intrusive government, etc. requires sound money. Sound money is not a guarantee of a free society, but a free society is impossible without sound money.

I conclude with these quotes from The Quotable Mises. The last quote is especially pertinent to the point of this brief essay. (Emphases are mine.)

  • The gold standard alone makes the determination of money’s purchasing power independent of the ambitions and machinations of governments, of dictators, of political parties, and of pressure groups. The gold standard alone is what the nineteenth-century freedom-loving leaders (who championed representative government, civil liberties, and prosperity for all) called “sound money.”

  • All those intent upon sabotaging the evolution toward welfare, peace, freedom, and democracy loathed the gold standard, and not only on account of its economic significance. In their eyes the gold standard was the labarum, the symbol, of all those doctrines and policies they wanted to destroy.

  • The classical or orthodox gold standard alone is a truly effective check on the power of the government to inflate the currency. Without such a check all other constitutional safeguards can be rendered vain.

I do not want to close on a pessimistic note. Therefore, I offer this final quote from Ludwig von Mises, ever the optimist and ever the gentleman: “Every nation, whether rich or poor, powerful or feeble, can at any hour once again adopt the gold standard.”

Tyler Durden
Sat, 12/04/2021 – 19:30






Author: Tyler Durden

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Economics

Dark Winter Looms For Pennsylvanians As Power Bills Set To Soar 

Dark Winter Looms For Pennsylvanians As Power Bills Set To Soar 

Power prices in some parts of Pennsylvania are set to jump as much as 50%…

Dark Winter Looms For Pennsylvanians As Power Bills Set To Soar 

Power prices in some parts of Pennsylvania are set to jump as much as 50% beginning this month, according to the Pennsylvania Public Utility Commission (PUC).

“Most Pennsylvania regulated electric utilities are adjusting the price they charge for the generation portion of customers’ bills on December 1 for non-shopping customers, also known as the ‘Price to Compare’ (PTC). The PTC averages 40% to 60% of the customer’s total utility bill. However, this percent varies by the utility and by the level of individual customer usage,” PUC said in a press release.

PUC lists power increases for residential customers. The most significant increase comes from Pike County Light & Power, which serves nearly 5,000 customers, is expected to raise power prices by 50%. The second highest is PPL Corporation, serving about 1.4 million customers in central and eastern parts of the state, which is expected to raise power prices by 26%. 

  • Citizens’ Electric, up from 6.9777 cents to 7.9476 cents per kWh (13.9%);

  • Duquesne Light, up from 7.41 cents to 7.98 cents per kWh (7.7%);

  • Met-Ed, up from 7.114 cents to 7.414 cents per kWh (4.2%);

  • PECO, up from 6.597 cents to 7.021 cents per kWh (6.4%);

  • Penelec, down from 6.761 cents to 6.507 cents per kWh (3.8%);

  • Penn Power, down from 7.657 cents to 7.593 cents per kWh (less than 1%);

  • PPL, up from 7.544 cents to 9.502 cents per kWh (26%);

  • Pike County Light & Power, up from 6.5234 cents to 9.796 cents per kWh (50.2%);

  • Wellsboro Electric, up from 7.2596 cents to 7.5051 cents per kWh (3.4%); and

  • West Penn Power, up from 5.447 cents to 5.698 cents per kWh (4.6%);

A PUC spokesperson told Fox News that rising energy prices are due to “market forces.” 

Many Pennsylvanians will be in for a sticker shock this winter as the Northern Hemisphere winter approaches. Customers are already stretched thin with soaring food, fuel, and shelter inflation. It’s a good thing Fed Chairman Jerome Powell told Congress on Tuesday that he would “retire” the “transitory” narrative to explain the inflationary environment that continues to crush the working poor. 

We noted last week that Americans, already preparing for one of the darkest cold seasons in years, have been panic buying cords of firewood and stoves as they seek alternative methods to heat their homes to mitigate soaring power prices. 

Persistent inflation this winter will continue to increase discontent for President Biden and could be favorable for Republicans ahead of midterm next year. 

Tyler Durden
Sat, 12/04/2021 – 19:00


Author: Tyler Durden

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