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You just can’t make stuff like this up … except the government does … over and over!

person in black hoodie with orange flame in the background — Photo by Ahmed Zayan on Unsplash

On April 20th, I wrote about how CNBC had reported that something looked rather rigged about the government’s new jobless-claims data in this election year:

What a Wonderful World!·

APR 20

“Something strange” (REALLY STRANGE) “has been happening with jobless numbers lately” says the CNBC headline. You know it is strange anytime the mainstream media starts agreeing with my longtime criticism of government reports, even using my blunt language—that “the books look cooked.” In fact, the Bidenomics unemployment claims reports don’t just look

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Indeed, it was strange at the level of just about statistically impossible:

CNBC just noted that five out of the last six jobless reports gave an identical reading of 212,000 new claims and quoted someone observing that the odds against that exact number happening over and over are astronomical.

As CNBC reported, none of the raw numbers for all of those reports were even close to matching each other, but somehow the government’s “seasonal adjustments” always brought the derived numbers to the same 212K. Imagine that! One would almost think, I commented, they were goal-seeking the headline numbers in order to hit the sweet spot for this election year so that the labor market would look neither too hot for inflation nor two cold for the economy. One would almost think.

Well, they did it again. So, think again. Only this time, having been called out with suspicion by one of their usual parrot-press operations that normally takes all government data as gospel truth, they must have decided they needed to tweak the outcome just a bit. So, today, they reported 208,000 new jobless claims.

…click on the above link to read the rest of the article…

The Cold Hard Truth About Renewable Energy Adoption

May 3, 2024

The Cold Hard Truth About Renewable Energy Adoption

The energy transition is essential but complex and challenging.
The pace of the transition and the balance between future and current energy security are key issues.
Economic and logistical barriers, as well as geopolitical and environmental concerns, need to be addressed for a successful transition.

The future of the global energy sector is caught up in a messy and misleading ideological debate. Depending on which politically informed echo chamber one inevitably finds themself confined to on social media, they are either told that the energy transition is a dangerous myth that will end in economic disaster and permanent rolling blackouts, or that clean energy is going to save the world overnight – as soon as conservatives get out of the way. As usual, the truth lies somewhere in between.

The energy transition is strictly necessary. But it’s going to be very, very hard. It’s damaging to deny that there will almost certainly be shocks, missteps, and setbacks as we undergo one of the most disruptive chapters in industrial history. In large part we’re relying on untested and in many cases as-yet unproven technologies to emerge in the nick of time.

There’s a temptation to sugar-coat the scale of the imperative to make the energy transition more palatable and less daunting. But there’s no denying it – it’s a very uncomfortable, and even frightening, petition to be in. And there will be winners and losers as economic priorities shift – the energy transition is good for humanity as a whole, but it certainly isn’t good for everyone. Acknowledging these difficult truths is essential to properly planning for and managing humanity’s greatest cooperative project.

…click on the above link to read the rest of the article…

The Oil and Energy Macro

May 3, 2024

The Oil and Energy Macro

U.S. oil reserves reached a new record in 2022. Crude oil and condensate proved reserves exceed 48 billion barrels (Figure 1). Reserves declined from 1969 to 2006 then increased with additions from the deepwater Gulf of Mexico and Tight Oil. Tight oil accounted for 27 billion barrels (56% of total) in 2022.

Figure 1. U.S. proved oil reserves reached a new record in 2022.
Reserves declined from 1969 to 2006 then increased with deepwater Gulf of Mexico and Tight Oil
Source: EIA & Labyrinth Consulting Services

The U.S. does not, however, have world-class oil reserves. It’s a respectable, second-tier reserve holder similar to Libya. U.S. reserves are about half of Russia’s, one-third of Iraq’s, & about one-fifth of Iran’s & Saudi Arabia’s (Figure 2). It holds roughly 3% of the world’s reserves compared to Iraq’s 9%, Iran’s 12% and Saudi Arabia’s 15%.

Figure 2. The United States is a respectable, second-tier world oil reserve holder similar to Libya.
Reserves are about half of Russia's, 1/3 of Iraq's, & about 1/5 of Iran's & Saudi Arabia's.
Source: EIA & Labyrinth Consulting Services, Inc. — Figure 2. The United States is a respectable, second-tier world oil reserve holder similar to Libya.
Reserves are about half of Russia’s, 1/3 of Iraq’s, & about 1/5 of Iran’s & Saudi Arabia’s.
Source: EIA & Labyrinth Consulting Services, Inc.

Countries in the Persian Gulf have almost half of the world’s oil, and 42% of the worlds remaining proved reserves are in just four countries: Saudi Arabia, Iran, Iraq and the United Arab Emirates. Iraq is now a vassal state of Iran—an enemy of the U.S.—and, together, they have more than 20% of the oil that’s left. Add Russia and our principal enemies control a quarter of the world’s oil.

Those are terrible odds. U.S. foreign policy after World War II was founded on oil security from the Middle East. The last four energy-blind U.S. presidents managed to undo that. One of those two will be the next president of the United States.

Most people know that the wars in Ukraine and in the Middle East are serious but think of them in parochial terms—that they developed out of long-standing feuds between people who have always been at each other’s throats.

…click on the above link to read the rest of the article…

David Stockman on the $1.3 Trillion Elephant In The Room

May 3, 2024

David Stockman on the $1.3 Trillion Elephant In The Room

These people have to be stopped!

We are talking about the nation’s unhinged monetary politburo domiciled in the Eccles Building, of course. It is bad enough that their relentless inflation of financial assets has showered the 1% with untold trillions of windfall gains, but their ultimate crime is that they lured the nation’s elected politician into a veritable fiscal trance. Consequently, future generations will be lugging the service costs on insuperable public debts for years to come.

For more than two decades these foolish PhDs and monetary apparatchiks drove the entire Treasury yield curve to rock bottom, even as public debt erupted skyward. In this context, the single biggest chunk of the Treasury debt lies in the 90-day T-bill sector, but between December 2007 and June 2023 the inflation-adjusted yield on this workhorse debt security was negative 95% of the time.

That’s right. During that 187-month span, the interest rate exceeded the running (LTM) inflation rate during only nine months, as depicted by the purple area picking above the zero bound in the chart, and even then by just a tad. All the rest of the time, Uncle Sam was happily taxing the inflationary rise in nominal incomes, even as his debt service payments were dramatically lagging the 78% rise of CPI during that period.

Inflation-Adjusted Yield On 90-Day T-bills, 2007 to 2022

The above was the fiscal equivalent of Novocain. It enabled the elected politicians to merrily jig up and down Pennsylvania Avenue and stroll the K-Street corridors dispensing bountiful goodies left and right, while experiencing nary a moment of pain from the massive debt burden they were piling on the main street economy..

…click on the above link to read the rest of the article…

The Permian Shrugs Off Below-Zero Natural Gas Prices in Texas

May 2, 2024

The Permian Shrugs Off Below-Zero Natural Gas Prices in Texas

Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April.
Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity.
In the oil rig basins, producers aren’t rushing to boost oil production, but aren’t scaling back production, either.

Permian producers are not shutting in oil wells with associated natural gas despite the fact that the Texas regional gas price has been stuck at below-zero levels since early March.

Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity as producers are look to maximize oil realizations at West Texas Intermediate crude prices at above $80 per barrel.

But the U.S. natural gas benchmark, Henry Hub, has been depressed below $2.00 per million British thermal units (MMBtu) since early February due to weak winter demand amid milder weather, record output at the end of 2023, and higher-than-average natural gas stocks.

Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April as the recent rise in oil prices prompted producers to bring drilled but uncompleted wells online. The Waha hub prices remained below zero for most of March and April amid high production and not enough takeaway capacity.

The price at the Waha Hub rose by $1.25 in the latest reporting week, from -$1.18/MMBtu to $0.07/MMBtu on April 24, only the second day the price was above zero since April 1, per EIA data.

The negative Waha gas prices and the supply glut are creating a problem for Permian producers regarding how they should dispose of part of the excess natural gas output.

…click on the above link to read the rest of the article…

Record PBoC gold purchases may indicate that China is planning to invade Taiwan – Experts

May 2, 2024

Record PBoC gold purchases may indicate that China is planning to invade Taiwan – Experts

(Kitco News) – China’s massive and sustained central bank gold purchases are raising fears that the country may not only be shoring up its currency but may also be laying the economic groundwork for a full-scale invasion of Taiwan, according to a Telegraph report published Tuesday.

“The relentless purchases and the sheer quantity are clear signs that this is a political project which is prioritised by the leadership in Beijing because of what they see is a looming confrontation with the United States,” Jonathan Eyal, associate director of the Royal United Services Institute (RUSI) in the UK, told the newspaper. “Of course, it’s connected also to plans for a military invasion of Taiwan.”

China’s gold-buying spree began in October 2022, building up its official reserves to a record high of 2,262 tonnes, valued at $170.4 billion at current prices. The People’s Bank of China (PBOC) added 27 tonnes of gold in just the first three months of 2024.

The PBoC’s current purchase streak came shortly after the United States and its Western allies froze $350 billion in Russian currency reserves held at foreign central banks in response to its invasion of Ukraine.

“There is absolutely no question that the timing and the sustained nature of the purchases are all part of a lesson that [China] have drawn from the Ukraine war,” Eyal said, adding that China’s burgeoning gold reserves are an attempt to insulate the country from the impact of U.S. dollar sanctions if and when it launches its own invasion.

“It was a major shock that it is possible to take sovereign holdings and freeze them,” Eyal said. “I think that was a fundamental change as far as Xi Jinping was concerned.”

President Xi Jinping devoted a part of his New Year’s address to the nation to calls for reunification with Taiwan.

…click on the above link to read the rest of the article…

We’re Getting GhostGirled

May 2, 2024

We’re Getting GhostGirled

A lesson from history.

They glowed in the dark.

In 1917, the U.S. Radium Corporation began hiring women and girls as young as 14 to paint the dials on their watches. They used a special radium paint called Undark. The corporation sold the watches to the U.S. military for a huge profit. The girls made 1.5 cents per dial. It was good money back then. Plus, glowing in the dark made these patriotic young women popular.

They became known as the ghost girls.

As you can imagine, working with radium is dangerous. This wasn’t a case of naivety. Scientists already knew the danger of radium. Chemists at the U.S. Radium Corporation wore protective gear when handling the stuff. And yet, the ghost girls were told it was completely safe.

Not only were the ghost girls told not to worry, but the Radium Corporation deliberately deprived them of the rags and rinse solution they needed to clean their brushes. They thought it was too expensive. Instead, managers told them to wet their brushes by licking them between dials.

They called it lip pointing.

Of course, the general public thought radium was good for you.

Radium was the goop of the day.

In the 1910s and 20s, you could go to a radium spa. You could do radium cleanses. You could irradiate your junk to restore your lost manhood. Schools used radium byproducts as sand on playgrounds. Radium was used in everything from toothpaste to hemorrhoid cream. Countless grifters founded sketchy little companies claiming to sell “authentic” radium products. Did I mention scientists already knew radium was bad for you? They knew it was useful, but it was dangerous. You had to be careful with it.

…click on the above link to read the rest of the article…

If Treasury Bonds Hit 5%, You’re Gonna See Some Serious Sh*t

May 2, 2024

If Treasury Bonds Hit 5%, You’re Gonna See Some Serious Sh*t

Almost as if all of us Austrian Economists (read: any carbon based life form using common sense when it comes to finance) live in an echo chamber together, a third expert I respect came out over the last few days and has warned that 5% on the 10 year treasury would be the breaking point for markets and the economy.

If my calculations are correct, when this thing hits 5%…you’re going to see some serious sh*t.

Peter Schiff now argues that the Federal Reserve and US Treasury are being forced to confront the reality that inflation is persistent, which has led to an increase in yields, recently reaching 4.7% on the 10 year, the highest since November.

The thought process, for financial neophytes, is that bond traders will continue to sell bonds, driving yields up, in order to make it difficult for the Fed to cut rates — and essentially forcing the Fed to fight inflation head-on instead of capitulating to the economy and markets (should they crash).

This follows Jack Boroudjian’s analysis from last week, stating that rates will keep drifting higher and that 5% to 5.5% is the danger zone: Yields To Trigger “Serious Earthquakes” Across Economy: Jack Boroudjian

It also follows Harris Kupperman’s similar take: Bond Market About To Have An “Aneurism”: Harris Kupperman

Put simply, the Fed faces a dilemma: it needs to raise rates to combat inflation and make Treasuries more appealing, but higher rates would exacerbate the already burdensome debt servicing costs and threaten industries reliant on borrowing. Or, to use the parlance of my recent interview with Matt Taibbi, higher rates simply serve up another day of “sh*t burgers” to the economy, whereas lower rates act as rocket fuel for economic activity (and market confidence).

…click on the above link to read the rest of the article…

How to Collapse: Hyperinflationary Depression

May 1, 2024

How to Collapse: Hyperinflationary Depression

How crop failure leading to a 20% caloric deficit might cause a financial crisis.

It’s Wednesday. You wake up, let the dog out for a piss, shower and drag yourself to work. Eight to ten hours of pointless grin-fucking pass by and you’re ready to collapse on your sofa with a mind-bending substance to stare at the idiot box for the rest of the night.

If you’re lucky, you have a companion with whom to share your misery.

The joy you once had for life has turned to drudgery and you wonder where you went wrong. The thing is, for most of us this is life now.

The weekly jaunts to a family restaurant: gone. Too expensive.

The desire to achieve greatness at work: that died with your youthful vigor.

Extended family: torn apart by tribalism.

A home to call your own: Only for the rich. 80% of Canadians believe ownership is now only for the wealth.

It wasn’t always like this. I can’t pinpoint when this all began, but it feels like everything started deteriorating at the turn of the century.

There are many causes and symptoms, but two deeply scarring events helped tip the West into decline. September 11th, 2001 cracked the veneer of trust within America. Enabled by new technologies, governments salivated at the ability to wrest control in the name of security. The surveillance state reached maturity.

The global financial crisis also gave us a peak behind the curtain of capitalism. It demonstrated how the winners and losers of capitalism were demarcated, with captains of industry bailed out while individuals were held to account. Wealth and power became inseparable, forging an impenetrable barrier beyond which most will never reach. The wealthy – still unhealthily revered by most – gained more control and extended the moat between them and the unwashed masses.

…click on the above link to read the rest of the article…

Unification Of CBDCs? Global Banks Are Telling Us The End Of The Dollar System Is Near

April 30, 2024

Unification Of CBDCs? Global Banks Are Telling Us The End Of The Dollar System Is Near

World reserve status allows for amazing latitude in terms of monetary policy. The Federal Reserve understands that there is constant demand for dollars overseas as a means to more easily import and export goods. The dollar’s petro-status also makes it essential for trading oil globally. This means that the central bank of the US has been able to create fiat currency from thin air to a far higher degree than any other central bank on the planet while avoiding the immediate effects of hyperinflation.

Much of that cash as well as dollar denominated debt (physical and digital) ends up in the coffers of foreign central banks, international banks and investment firms where it is held as a hedge or used to adjust the exchange rates of other currencies for trade advantage. As much as one-half of the value of all U.S. currency is estimated to be circulating abroad.

World reserve status along with various debt instruments allowed the US government and the Fed to create tens of trillions of dollars in new currency after the 2008 credit crash, all while keeping inflation under control (sort of). The problem is that this system of stowing dollars overseas only lasts so long and eventually the consequences of overprinting come home to roost.

The Bretton Woods Agreement of 1944 established the framework for the rise of the US dollar and while the benefits are obvious, especially for the banks, there are numerous costs involved. Think of world reserve status as a “deal with the devil” – You get the fame, you get the fortune, you get the hot girlfriend and the sweet car, but one day the devil is coming to collect and when he does he’s going to take EVERYTHING, including your soul.

…click on the above link to read the rest of the article…

Do U.S. Presidents Matter for Carbon Dioxide Emissions Reduction?

April 30, 2024

Do U.S. Presidents Matter for Carbon Dioxide Emissions Reduction?

The answer is not what most people will expect

Rare glimpse of the Energy Policy control panel in the White House Situation Room

Pop Quiz!

Before reading on, please provide your best guesses matching the presidential administration with with the annual rate of carbon dioxide emissions reductions over each president’s term in office — dating to 2005, which is the baseline year commonly used to assess U.S. emissions reduction progress.

I’ll provide the answers after sharing some data. The figure below shows overall U.S. carbon dioxide emissions from 2005 to 2025 (with 2024 and 2025 estimated in April 2024, via the outstanding U.S. Energy Information Agency).

You can see that over the past two decades U.S. emissions have declined very steadily, with notable departures in 2009 (Global Financial Crisis, GFC) and 2020 (COVID-19 pandemic) only to snap back more or less on trend. The steadiness of the decline is remarkable given that these two decades saw two U.S. presidents who championed emissions reductions (Obama and Biden) and two who did not (Bush and Trump).

This raises a question: How much do U.S. presidents matter for the annual pace of emissions reductions?

To get a better sense of the answer to this question, let’s look at annual rates of changes in emissions, shown in the figure below.

The biggest year-on-year changes were the years of the GFC and COVID-19, and respective bounce backs in the years following. The overall growth rate is negative, which is why U.S. emissions have decreased since 2005. But of note, there is no trend at all in the rate of change in that decline. There is no evidence of an acceleration in emissions reductions, due to policy or anything else, and no such indication is expected in the data before 2026.

…click on the above link to read the rest of the article…

The Fed’s Game of “Make Believe” Comes to an End

April 30, 2024

The Fed’s Game of “Make Believe” Comes to an End

It’s barely been a year since the 2023 bank crisis in which several large banks, including Silicon Valley Bank and Signature Bank, failed.

At the time, I wrote that the bank failures weren’t over, and that there would be more.

But it’s been quiet for most of the last year; the banking system has been pretty calm thanks in large part to an emergency program that the Federal Reserve created to bail out other troubled banks.

They called it the Bank Term Funding Program (BTFP), and it essentially expired a few weeks ago. In other words, no more emergency lending to troubled banks.

Barely a month later, we have already witnessed our first casualty: Pennsylvania-based Republic First (not to be confused with First Republic, which failed last year) was shut down by regulators on Friday afternoon.

Republic First had the same issues as the others that failed last year — too many ‘unrealized bond losses’ on their balance sheet.

Just like Silicon Valley Bank, Signature Bank, etc. last year, Republic First had used their customers’ deposits to buy US Treasury bonds in 2021 and 2022, back when bond prices were at all-time highs.

By early 2023, the situation had reversed. Bond prices had plummeted; even supposedly ‘safe’ and ‘stable’ US Treasury bonds had fallen substantially in price, and banks were sitting on huge losses.

Remember that bond prices fall when interest rates rise. So when the Fed jacked up interest rates from 0% to 5% in an attempt to control inflation, they were simultaneously creating huge losses in the bond market… which also meant huge losses for banks.

Silicon Valley Bank was just the tip of the iceberg. Plenty of other banks (including Bank of America) had racked up enormous bond losses. In fact the total unrealized losses in the banking sector last year amounted to a whopping $620 billion.

…click on the above link to read the rest of the article…

Banking on Surveillance: Republicans Investigate Major Banks’ Warrantless Data Sharing with Federal Agencies

April 30, 2024

Banking on Surveillance: Republicans Investigate Major Banks’ Warrantless Data Sharing with Federal Agencies

Congressional inquiry into banks’ role in warrantless data surveillance following January 6 raises alarm over potential civil liberties violations and improper government collaboration.

Congressional Republicans are further investigating claims that at least 13 major US banks collaborated with federal agencies to monitor private transactions for signs of “extremism” following the January 6 Capitol events. The House Select Subcommittee on the Weaponization of the Federal Government, led by Republican Jim Jordan from Ohio, is delving further into the alleged cooperation between these financial institutions and federal agencies without proper warrants.

These banks, including Bank of America, Chase, US Bank, Wells Fargo, Citi Bank, and more, are among those scrutinized for their roles in the reported surveillance. We previously reported about how Bank of America was found to be handing over data of everyone in the area during the events of January 6, whether they were suspect or not – and whether they had a warrant or not. But now, investigations suggest that the transfer of data was more systematic, potentially involving multiple financial institutions and the Biden administration itself.

Read an example of the letter sent to a bank here.

Already-uncovered information suggests that the Biden administration worked with banks to identify potential “extremism” by monitoring certain purchases such as religious texts like the Bible, or by flagging searches that included terms like “MAGA” and “TRUMP.”

According to the House Judiciary Committee, the probe has now expanded to include additional financial firms: Charles Schwab, HSBC, MUFG, PayPal, Santander, Standard Chartered, and Western Union. Letters sent to these institutions by the committee request documentation and communications with FinCEN (Financial Crimes Enforcement Network) and the FBI to further investigate potential warrantless surveillance.

…click on the above link to read the rest of the article…

The Federal Reserve Is About to Go Full Banana Republic

April 30, 2024

The Federal Reserve Is About to Go Full Banana Republic

Peeling back the truth, one banana at a time.

According to an article on Yahoo! today, the top banana in finance, J. Powell, has already decided to go full bananatard. It is the financial hallmark of banana republics to print money in order to finance their debts. The Federal Reserve has never been allowed by law under its charter to do that because politicians were, long ago, smart enough to notice that all nations that take that path to financing their ambitious government programs turn to ash in the flames of hyperinflation.

We already have high inflation to deal with. After just writing a Deeper Dive that explained why we are already in a situation of true stagflation—the very situation that banana republics try to print their way out of—another financial writer this morning says the same thing on Seeking Alpha:

An old “new word” has entered the economic and market narratives in recent weeks: Stagflation. It’s an old word because the United States suffered from two bouts of “stagflation” from the middle 1970s to early 1980s. It’s a new word because there’s a new generation of market participants.

Stagflation is an economic cycle when economic growth is low (the “stag”) and inflation (the “flation”) are high. Low growth in past bouts also included high unemployment. A key factor in those stagflations was OPEC’s manipulation of oil supplies….

One of the key components of inflation has always been energy. We can see that going back a century in the data. It was most acutely felt during the 1970s and early 1980s stagflationary periods.

…click on the above link to read the rest of the article…

WEF Report Supports CBDC and Digital ID, Urges Public-Private Collaboration in Finance

April 30, 2024

WEF Report Supports CBDC and Digital ID, Urges Public-Private Collaboration in Finance

WEF’s ambiguous stance on digital currencies raises eyebrows, suggesting a veiled push for CBDCs under the guise of collaboration.

The World Economic Forum (WEF) is clearly championing the introduction not only of (retail) central bank digital currencies (CBDCs) for the general public but also the wholesale version, wCBDC, geared toward interbank payments and securities transactions.

It is not uncommon to come across leading financial institutions and banks linking to WEF reports while explaining and promoting their own activities in this space.

And yet, a new WEF report (a collaborative effort with Accenture) titled, “Modernizing Financial Markets with Wholesale Central Bank Digital Currency (wCBDC),” states that the group does not actually explicitly “advocate” for issuance of wCBDCs.

(Nonetheless, the same report, “a critical analysis,” at one point in fact states that it “advocates for collaboration among central banks, commercial banks and financial market infrastructures to use wCBDC to address interbank payment and securities transaction challenges.”)

The WEF, an informal group gathering global elites, seems aware that CDBCs, in general, are a controversial proposition, and may be trying to control the optics regarding the depth of its involvement, since it doesn’t necessarily help elected national governments if WEF is seen as the main driving force behind the schemes.

However, the WEF also obviously again trying to position itself at the center of incoming policies: “This report offers timely insights for public and private sector leaders evaluating the potential role of wCBDC in their jurisdictions,” it reads.

Either way, WEF has for a while now evidently been taking the lead in crafting a template of sorts for policies that will allow mass adoption of (w) CBDCs around the world.

…click on the above link to read the rest of the article…

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